1
Exhibit 10.2
BALLSTON COMMON MALL
Arlington, Virginia
LANDLORD
=================================================================
BALLSTON COMMON ASSOCIATES, L.P.
a Delaware limited partnership
TENANT
=================================================================
CIAO CUCINA CORPORATION
d.b.a. CIAO BABY CUCINA
Unit No. 1258
2
BALLSTON COMMON MALL
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DEED OF LEASE
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TABLE OF CONTENTS
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Section 1.0 - Basic Lease Provisions................................ 1
Section 1.1 - Defined Terms......................................... 5
Section 2.1 - Exhibits.............................................. 6
Section 3.1 - Premises.............................................. 7
Section 3.2 - Gross Leasable Area of the Premises................... 7
Section 3.3 - Revisions to Premises GLA............................. 7
Section 3.4 - Landlord's Reservation................................ 8
Section 4.1 - Use................................................... 8
Section 4.2 - Management and Operation of Common Areas.............. 9
Section 5.1 - Site Plan and Leasing Plan............................ 10
Section 5.2 - Changes to Shopping Center Site Plan and
Leasing Plan...................................... 10
Section 6.0 - Landlord's Contribution to Tenant's Work.............. 10
Section 6.1 - Landlord's Responsibilities........................... 11
Section 6.2 - Tenant's Responsibilities............................. 12
Section 6.3 - Tenant's Trade Fixtures............................... 13
Section 6.4 - Construction Lien..................................... 13
Section 6.5 - Labor Cooperation..................................... 13
Section 7.1 - Submission of Plans................................... 14
Section 8.1 - Use................................................... 15
Section 8.2 - Tenant's Covenant to Operate.......................... 15
Section 8.3 - Prohibitions on Use................................... 16
Section 8.4 - Manner of Operation of Business....................... 17
Section 9.1 - Term.................................................. 17
Section 9.2 - Commencement Date Agreement........................... 17
Section 9.3 - Holding Over.......................................... 18
Section 9.4 - Expiration of the Term................................ 18
Section 10.1 - Rent Commencement Date............................... 19
Section 10.2 - Failure of Delivery of Premises to Tenant............ 19
Section 10.3 - Tenant's Failure to be Open by the Scheduled
Opening Date...................................... 20
Section 11.1 - Fixed Minimum Rent................................... 20
Section 11.2 - Percentage Rent...................................... 21
Section 11.3 - Gross Revenue........................................ 21
Section 11.4 - Exclusion from Gross Revenue......................... 22
Section 11.5 - Reporting............................................ 23
Section 11.6 - Books and Records.................................... 24
Section 12.1 - Status of Charges.................................... 25
Section 12.2 - Common Area Maintenance Costs........................ 26
Section 12.3 - Real Estate Taxes.................................... 28
Section 12.4 - Renovation/Expansion Assessment...................... 30
Section 12.5 - Marketing Fund....................................... 30
Section 12.6 - Parking.............................................. 31
Section 13.0 - Status of Charges.................................... 32
Section 13.1 - Water, Electricity, Telephone and Sanitary
Sewer............................................. 32
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Section 13.2 - Central and Premises Ventilating and Air-
Conditioning Systems.............................. 34
Section 13.3 - Discontinuance of Service......................... 35
Section 13.4 - Interruption of Service.............................. 35
Section 13.5 - Premises Sprinkler System............................ 35
Section 13.6 - Alternate Service.................................... 35
Section 14.1 - Tenant's Obligation.................................. 36
Section 14.2 - Interior Signs and Advertising....................... 36
Section 15.1 - Repairs by Landlord.................................. 36
Section 15.2 - Repairs by Tenant.................................... 37
Section 15.3 - Alterations and Remodeling........................... 37
Section 15.4 - Renovation........................................... 38
Section 16.1 - Indemnification by Tenant............................ 39
Section 16.2 - Tenant's Right of Contest............................ 39
Section 17.1 - Mutual Indemnification............................... 39
Section 17.2 - Tenant's Insurance................................... 40
Section 17.3 - Landlord's Insurance................................. 42
Section 17.4 - Waiver of Subrogation................................ 43
Section 17.5 - Landlord Not Responsible for Acts of Others.......... 43
Section 18.1 - Uniformity........................................... 43
Section 18.2 - Rubbish.............................................. 44
Section 18.3 - Lighting............................................. 44
Section 18.4 - Merchandise Display, Loading and Unloading........... 44
Section 18.5 - Obstruction of Passageways........................... 44
Section 19.1 - Subordination of Lease............................... 44
Section 19.2 - Attornment by Tenant................................. 45
Section 19.3 - Landlord as Attorney-in-Fact for Tenant.............. 45
Section 20.1 - Landlord's Right to Repair........................... 46
Section 20.2 - Landlord's Right to Affix Sign....................... 46
Section 20.3 - Landlord's Right to Make Payments on Behalf
of Tenant......................................... 46
Section 21.1 - Landlord's Consent Required.......................... 46
Section 21.2 - Insolvency Proceedings............................... 47
Section 21.3 - Return of Premises by Tenant......................... 47
Section 21.4 - Transfer of Corporate Shares......................... 47
Section 21.5 - Transfer of Other Business Interests................. 48
Section 21.6 - Acceptance of Rent by Landlord....................... 48
Section 21.7 - No Release of Tenant's Liability..................... 48
Section 21.8 - Fees................................................. 48
Section 22.1 - Landlord's Obligation to Repair and
Reconstruct....................................... 49
Section 22.2 - Option to Terminate.................................. 49
Section 23.1 - Effect of Taking..................................... 50
Section 23.2 - Compensation and Awards.............................. 51
Section 23.3 - Condemnation or Breach of Lease...................... 51
Section 24.1 - Events of Default.................................... 51
Section 24.2 - Remedies and Damages................................. 52
Section 24.3 - Repeated Default..................................... 55
Section 24.4 - Waiver of Rights of Redemption....................... 55
Section 24.5 - Limitation On Counterclaims.......................... 55
Section 25.1 - Restriction on Tenant................................ 56
Section 25.2 - Imposition of Damages................................ 56
Section 25.3 - Tenant's Exclusive................................... 56
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Section 26.1 - Notices to Tenant and Landlord....................... 57
Section 26.2 - Notices to Mortgagee................................. 57
Section 27.1 - Accord and Satisfaction.............................. 57
Section 27.2 - Complete Agreement................................... 58
Section 27.3 - Consents............................................. 58
Section 27.4 - Compliance with Governmental Authorities............. 59
Section 27.5 - Brokerage............................................ 59
Section 27.6 - Effective Date of Lease.............................. 60
Section 27.7 - Estoppel Certificates................................ 60
Section 27.8 - Force Majeure........................................ 60
Section 27.9 - Interpretation....................................... 60
Section 27.10 - Memorandum of Lease................................. 60
Section 27.11 - Quiet Enjoyment..................................... 61
Section 27.12 - Rent Demand......................................... 61
Section 27.13 - Section Headings.................................... 61
Section 27.14 - Successors and Assigns.............................. 61
Section 27.15 - Waiver by Landlord.................................. 61
Section 27.16 - Exculpation......................................... 62
Section 27.17 - Transfer of Landlord's Interest..................... 62
Section 27.18 - Litigation.......................................... 63
Section 27.19 - Partial Invalidity.................................. 63
Section 27.20 - Financing Contingency............................... 63
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Exhibit 10.2
D E E D O F L E A S E
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THIS DEED OF LEASE ("LEASE") MADE AND ENTERED INTO AT
Cleveland, Ohio, this ______ day of _________________, 1997, by and between
BALLSTON COMMON ASSOCIATES, L.P., a Delaware limited partnership, having an
address for purposes hereof at 1160 Terminal Tower, 50 Public Square, Cleveland,
Ohio 44113-2203, hereinafter called "LANDLORD," and CIAO CUCINA CORPORATION, an
Ohio corporation having an address for purposes hereof at 700 Walnut Street,
Suite 300, Cincinnati, Ohio 45202, hereinafter called "TENANT."
WITNESSETH:
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ARTICLE I
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INTRODUCTORY PROVISIONS
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Section 1.0 - Basic Lease Provisions.
-----------------------
The following Basic Lease Provisions are an integral part of this
Lease, are referred to in other Sections hereof, including, but without
limitation, the Sections identified below and are presented in this Section for
the convenience of the parties. The charges described below are not intended to
constitute an exhaustive list of all charges which may become due and payable
under this Lease.
(a) Shopping Center: (Article I, Section 1.1[a])
Ballston Common Mall
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(b) Unit Number: (Article III, Section 3.1)
1258
6
(c) Approximate (Article III, Section 3.1)
Premises GLA: 6,622 square feet
(d) Term of Lease (Article IX, Section 9.1)
("Term") Fifteen (15) Lease Years commencing on the
"RCD" (as hereinafter defined) and expiring
on the "Term Expiration Date" or "TED" (as
hereinafter defined).
(e) Scheduled Opening (Article X, Section 10.1)
Date: INTENTIONALLY OMITTED.
(f) Rent Commencement (Article X, Section 10.1)
Date ("RCD"): The earlier of 150 days after Landlord
delivers possession of the Premises to Tenant
(the "Outside Date") or the date Tenant opens
for business.
(g) Fixed Minimum (Article XI, Section 11.1)
Rent: (i) $25.00 per square foot of Premises GLA,
$165,550.08 per Lease Year,
$13,795.84 per month, for Lease Years 1
through 5;
(ii) $30.00 per square foot of Premises GLA,
$198,660.00 per Lease Year, $16,555.00 per
month, for Lease Years 6 through 10;
(iii) $35 per square foot of Premises GLA,
$231,770.04 per Lease Year, $19,314.17 per
month, for Lease Years 11 through 15;
(iv) Fixed Minimum Rent (Article III, Section
3.3) Subject to Adjustment if Premises GLA
adjusted
X yes no
----- -----
(h) Percentage (Article XI, Section 11.2)
Rent: (i)60% of Gross Revenue in excess of
$2,200,000.00 ("Annual Breakpoint") for Lease
Years 1 through 15;
(i) Payment of (Article XI, Section 11.2)
Percentage
Rent: By the fifteenth (15th) day of the month
immediately following the four-week period in
which Gross Revenue for the Lease Year
exceeds the then applicable Annual
Breakpoint.
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(j) Sales Reports: (Article XI, Section 11.5)
Thirteen (13) times per calendar year, within
fifteen (15) days after the end of each of Tenant's
four (4) week reporting cycles. Annually on or before
forty-five (45) days following the close of each
Lease Year.
(k) One Time (Article XII, Section 12.4)
Renovation/Expansion
Assessment: INTENTIONALLY OMITTED
(l) Annual Marketing (Article XII, Section 12.5)
Fund
Contributions: $3.00 per square foot of Premises GLA,
subject to being waived as provided in
Section 12.5(f)
(m) Tenant Insurance: (Article XVII, Section 17.2)
(i) Liability: $1,000,000 combined
single limit per occurrence basis
for property damage and personal and
bodily injury or death.
(ii) Boiler: $1,000.00, if applicable.
(iii) Liquor Liability Insurance:
$1,000,000 combined single limited
per occurrence basis.
(iv) Environmental Impairment Liability:
$1,000,000 for bodily injury or
property damage.
(v) All-Risk Coverage: Full replacement
cost
(vi) Self-Insurance yes X no
--- ---
(n) Common Area (Article XII, Section 12.2)
Maintenance
"CAM"): $5.00 per square foot per annum
increasing by five percent (5%)
every two Lease Years.
(o) Taxes: (Article XII, Section 12.3)
Proportionate Share; payable monthly
on estimated bill.
(p) Food Court (Article XII, Section 12.5)
Obligations: INTENTIONALLY OMITTED
(q) Utility Services (Article XIII, Section 13.1)
and Charges: Payable by Tenant as billed per metered
or estimated and adjusted billing.
(r) Tenant's Trade (Article VIII, Section 8.1)
Name: CIAO BABY CUCINA
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(s) Permitted Use: (Article VIII, Section 8.1)
A sit down, full service, Italian-
Mediterranean Trattoria with a full-
service bar. The Trattoria shall be
operated as a waiter/waitress
upscale white tablecloth operation
with a complete liquor license and
bar. The restaurant shall provide
full service, lunch and dinner. All
food shall be in prepared form for
immediate on-premises consumption.
All food shall be in accordance with
Exhibit "M" attached hereto and made
a part hereof. It is understood that
Tenant may make modifications to
Exhibit "M" provided that all
modifications are consistent with
Exhibit "M" and are Italian upscale
food. In addition to the foregoing
and as incidental thereto, a portion
of the Premises attached to the
restaurant will be an
"Italian-style" market for the
retail sale of pastries, breads,
coffee and Italian cuisine in
prepared form for immediate on and
off-Premises consumption. Such
market shall sell food items only,
provided, however, in the market
portion of the Premises only, Tenant
may engage in the retail sale of
mugs and other gifts/retail items
provided that all such mugs and
other gifts/retail items are
consistent with Tenant's high end
Italian market/restaurant concept.
(t) Tenant's Billing (Preamble)
Address: 700 Walnut Street, Suite 300
Cincinnati, Ohio 45202
(u) Tenant's Legal (Article XXVI, Section 26.1)
Notice Address: Same as (t) above.
(if different
from above)
(v) Parking Charge: (Article XII, Section 12.6)
$3.66 per square foot of Premises
GLA.
Increases: Yes, five percent (5%) of
previous year's charge as of each
October 1st.
(w) Security Deposit: (Article XII, Section 12.8)
None
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(x) Guarantor: None
(y) Landlord's (Article VI, Section 6.0)
Contribution: $585,000.00 to be paid as more
particularly set forth in Section 6.0.
In addition, a $165,500.00 Fixed Minimum
Rent credit as more particularly set forth
in Section 11.1(e).
Section 1.1 - Defined Terms.
--------------
Wherever used in this Lease, the following terms shall be construed to
mean as follows:
(a) "SHOPPING CENTER" shall mean those buildings, land and common areas
comprising the regional shopping center development known as "Ballston Common,"
owned and/or ground leased by Landlord and/or the Major Tenants (as hereinafter
defined) and located in Arlington County, Virginia, all as shown on Exhibit "A"
attached hereto and made a part hereof. Notwithstanding the foregoing, Landlord
expressly reserves the right, in the exercise of its sole discretion, to change
the name of the Shopping Center at any time during the Term.
(b) "PREMISES" shall mean the specific demised store space leased to
Tenant by Landlord now existing or to be constructed in the Shopping Center. The
Premises are cross-hatched on the Leasing Plan attached hereto as Exhibit "B"
for the sole purpose of more specifically locating said area.
(c) "COMMON AREAS" shall mean the Enclosed Mall and its amenities,
plaza areas, surface parking areas, if any, parking decks, if any, structures or
garages, if any, driveways, aisles, sidewalks, loading docks, passageways,
landscaping, courts, stairs, ramps, elevators, escalators, meeting rooms, public
restrooms and other common service areas, to the extent applicable, now or
hereafter provided for by Landlord for the common or joint use and benefit of
the tenants and occupants of the Shopping Center, their employees, agents,
servants, customers and other invitees.
(d) "ENCLOSED MALL" shall mean that portion or portions of the climate
controlled enclosed mall sections of the Shopping Center which are used in
common, among other things, for pedestrian traffic.
(e) "LEASE YEAR" as used herein shall mean each consecutive
twelve-month period beginning with the RCD provided it has occurred on the first
day of a calendar month. In the event that the RCD should occur on a day other
than the first day of a calendar month, a Lease Year shall be each consecutive
twelve-month period commencing on the first day of the calendar month next
following the RCD. For Percentage Rent purposes only, the
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"Lease Year" shall end at the end of Tenant's four-week reporting cycle which
ends closest to when the Lease Year in question would otherwise end.
(f) "MAJOR TENANTS" shall mean those tenants whose floor area exceeds
30,000 square feet and which are known as department stores, large chain stores
or other occupants who now or hereafter lease, own or occupy tracts or stores in
the Shopping Center, including but not limited to, J.C. Penney Company and
Hechts.
(g) "TENANT'S PROPORTIONATE SHARE" shall mean a fraction the numerator
of which is the Premises GLA (as hereinafter defined), and the denominator of
which is: (i) with respect to CAM Costs, the total number of square feet of
actually occupied gross leasable area in the Shopping Center ("Occupied Center
GLA") (except that the Occupied Center GLA shall not be deemed to be less than
eighty percent [80%] of aggregate Shopping Center GLA), excluding the number of
square feet of floor area of the Major Tenant spaces; and (ii) with respect to
real estate taxes (as hereinafter defined), the total number of square feet of
occupied Center GLA in the Shopping Center (excluding Major Tenant parcels and
"outparcels" along the perimeter of the Shopping Center which may be separately
assessed for real estate tax purposes subject to the provisions of Section 12.3
herein).
(h) "RENTS," unless otherwise specifically noted, shall mean Fixed
Minimum Rent, Percentage Rent Additional Charges and any other sums of money
required to be paid by Tenant to Landlord or others pursuant to this Lease,
whether or not any of such sums
are specifically described as Rents.
ARTICLE II
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EXHIBITS
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Section 2.1 - Exhibits.
---------
The following exhibits are attached hereto or otherwise incorporated
herein by reference, and made a part of this Lease;
EXHIBIT "A" - Site Plan of the Shopping Center.
(Attached and incorporated herein.)
EXHIBIT "B" - Leasing Plan of the Shopping Center.
(Attached and incorporated herein.)
EXHIBIT "C" - Description of Landlord and Tenant Work.
(Attached and incorporated herein)
EXHIBIT "M" - Tenant's Menu (Attached and incorporated
herein)
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EXHIBIT "BC1.0" - Tenant Handbook for non-Food Court Space, Sign and
Design Criteria - (not attached but incorporated
herein by reference.)
ARTICLE III
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PREMISES
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Section 3.1 - Premises.
---------
In consideration of the payment of all Rents and the performance of the
covenants as hereinafter set forth, Landlord demises unto Tenant, and Tenant
leases from Landlord, subject to all conditions and easements of record, for the
Term and upon the terms and conditions set forth in this Lease, the Premises
which is situated in Arlington County, Virginia, and being Unit No. 1258 in the
Shopping Center and further being a storeroom of irregular dimensions containing
approximately 6,622 square feet of floor space.
Section 3.2 - Gross Leasable Area of the Premises.
------------------------------------
The gross leasable area of the Premises (the "Premises GLA") shall be
computed based on the "lease lines" for the Premises, defined as follows: The
lease line for common demising walls between adjoining tenants shall be the
center line of the common demising wall. Along the storefront the lease line
shall be the "designated line" ("DL") separating the Premises from the Common
Area, regardless of where Tenant's storefront is actually built unless Tenant's
storefront extends or "pops out" past such DL in which event the storefront
exterior, to the extent of such extension or pop out, shall be Tenant's lease
line. On non- common demising walls such as between the Premises and service
corridors, mechanical rooms, or the building exterior, the lease line shall be
the outside face of the demising wall. Any recesses required to accommodate the
door swing of the exit door for the Premises shall be considered part of the
Premises. No deductions shall be made for existing columns or bracing within the
Premises or along the demising walls but deductions shall be made for the areas
occupied by major vertical duct shafts.
Section 3.3 - Revisions to Premises GLA
-------------------------
The square footage set forth in Section 3.1 has been determined
pursuant to the provisions of Section 3.2 by reference to either "CAD" or scaled
architectural drawings of the Premises. Landlord and Tenant acknowledge that
irrespective of whether or not the Premises shall have been constructed as of
the date of this Lease, in the event that Landlord's final as-built field or CAD
measurements of the Premises after Tenant's leasehold improvements have been
constructed should disclose a different square footage than the Premises GLA set
forth in Section 3.1
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above ("Final Revised Premises GLA"), then Landlord agrees to notify Tenant in
writing of the Final Revised Premise GLA. Tenant further acknowledges and
agrees, that such notice by Landlord shall be deemed sufficient to amend the
Premises GLA set forth in Section 3.1, such amendment being deemed
self-operative without the necessity of further formal mutual acknowledgment or
documentation between Landlord or Tenant. When so finally determined, the Final
Revised Premises GLA shall be used as the numerator in computing Tenant's
Proportionate Share and in all computations of Fixed Minimum Rent if such has
been determined on a square foot (as opposed to a fixed rate) basis. If the
Fixed Minimum Rent should be revised, Landlord's revised billing to Tenant shall
be deemed sufficient notice of such rent revision, however, the Annual
Breakpoint set forth in Section 1.0(h) herein shall not be correspondingly
adjusted. Notwithstanding anything to the contrary contained in this Section
3.3, the Premises GLA shall not increase or decrease from the stated amount by
more than five percent (5%). If Tenant advises Landlord that it disagrees with
Landlord's determination of the Premises GLA, Landlord shall meet with Tenant in
an attempt to amicably resolve their differences. If the parties cannot agree,
then Tenant shall have the right to pursue its legal remedies to determine such
amount.
Section 3.4 - Landlord's Reservation.
-----------------------
Landlord reserves to itself the roof and exterior walls of the building
containing the Premises and all space above the ceiling within the Premises, to
accommodate the Shopping Center's structural, mechanical and electrical conduit
piping, ducting or venting requirements. Landlord and its agents further reserve
the right on behalf of themselves or an authorized utility company to run
utility lines, pipes, conduit or ductwork when necessary or desirable through
the air space above Tenant's ceiling, columns or within walls of the Premises
and to maintain, repair, alter, replace or remove the same in locations which
will not materially interfere with Tenant's use of the Premises.
ARTICLE IV
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COMMON AREAS
------------
Section 4.1 - Use.
----
(a) Landlord grants to Tenant and its agents, employees and customers,
a non-exclusive license, subject to the reasonable uniform rules and regulations
promulgated by Landlord, to use the Common Areas in common with other tenants
and occupants of the Shopping Center, their agents, employees and customers
during the term of this Lease and any renewal period thereof, subject to the
exclusive control and management thereof at all times by Landlord
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and subject further to the rights of Landlord as set forth in Section 4.2
herein.
(b) Landlord reserves to itself the right to construct, lease and/or
license kiosks, carts, and sales areas on any portion of the Common Areas.
Notwithstanding anything to the contrary contained in this Section 4.1(b),
Landlord shall not place any of the foregoing items in such a manner so as to
block access to the Premises or to materially adversely affect the visibility of
the Premises.
(c) Tenant shall not use the Common Areas for any other purpose than
herein designated.
Section 4.2 - Management and Operation of Common Areas.
-----------------------------------------
Landlord will use commercially reasonable efforts to operate and
maintain or cause to be operated and maintained, the Common Areas in a
first-class manner and in the best interest of the Shopping Center. Landlord
will have the right (1) to establish, modify and enforce reasonable and uniform
rules and regulations with respect to the Common Areas for the general benefit
of Landlord and all tenants of the Shopping Center; (2) to enter into, modify
and terminate easements and other agreements pertaining to the use and/or
maintenance of Common Areas and fees for the use of Common Areas; (3) to provide
for employee parking and formulate reasonable and uniform rules and regulations
for the same; (4) to close such portions of said parking areas or other common
areas to such extent as may, in the reasonable opinion of Landlord, be necessary
to prevent a dedication thereof or the accrual of any right to any person or to
the public therein or for any other reason in the best interest of Landlord and
all tenants, provided, however, to the extent possible such closure shall take
place during non-business hours and shall be accomplished in a manner so as not
to materially adversely affect Tenant's operations; (5) to close temporarily any
or all portions of the Common Areas for repairs or refurbishing, provided,
however, to the extent possible such closure shall take place during
non-business hours and Landlord shall exercise its rights in such manner so as
not to materially adversely affect Tenant; (6) to move, remove, relocate and/or
replace seats, trees, planters and other amenities commonly found in first-class
regional shopping centers; and (7) to do such other acts in and to said areas
and improvements as in the exercise of good business management, and the
maintenance of a first-class regional shopping center, as Landlord, in the
exercise of its reasonable business judgment, shall deem to be advisable.
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ARTICLE V
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CHANGES AND ADDITIONS TO
------------------------
SHOPPING CENTER SITE PLAN AND LEASING PLAN
------------------------------------------
Section 5.1 - Site Plan and Leasing Plan.
---------------------------
The Site Plan and Leasing Plan attached hereto as Exhibits "A" and "B",
respectively, are for the sole purpose of showing the approximate shape, design,
proposed locations of buildings, tenant spaces and common areas located within
the Shopping Center.
Section 5.2 - Changes to Shopping Center Site Plan and Leasing
------------------------------------------------
Plan.
----
Landlord reserves the right at any time and from time to time (a) to
make or permit changes or revisions in the Site Plan and Leasing Plan for the
Shopping Center including additions to, subtractions from, rearrangements of,
alterations of, modifications of or supplements to the building areas, walkways,
parking areas, driveways or other Common Areas, (b) to construct other buildings
or improvements in the Shopping Center and to make alterations thereof or
additions thereto and to build additional stories on any such building or
buildings and to build adjoining same, and (c) to make or permit changes or
revisions in the Shopping Center, including additions thereto, and to convey
portions of the Shopping Center to others for the purpose of constructing
thereon other buildings or improvements, including additions thereto and
alterations thereof.
ARTICLE VI
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IMPROVEMENTS
------------
Section 6.0 - Landlord's Contribution to Tenant's Work
----------------------------------------
(a) Landlord shall pay to Tenant as its total obligation hereunder, the
sum of Five Hundred Eighty-Five Thousand Dollars ($585,000.00) which sum
represents Landlord's contribution to Tenant's Work. Ninety percent (90%) of the
Landlord's contribution shall be forwarded to Tenant in monthly installments. By
the twentieth (20th) day of each month, Tenant shall submit to Landlord its draw
for that month. If the required paperwork and conditions are satisfied for a
draw, Landlord shall make the draw payment on the first day of the following
month. Draws shall be made based upon an agreed schedule of values. There shall
always be sufficient sums not advanced to complete the work. Each draw shall be
paid based upon ninety percent (90%) of the value of the work actually completed
by the 20th of the month until ninety percent (90%) of the Landlord's
contribution has been paid. Each draw shall be
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accompanied by an architect's certificate in a form and substance satisfactory
to Landlord setting forth the amount of work completed and the value of that
work based upon the agreed upon schedule of values. Each draw shall be
accompanied by lien waivers in which all contractors and materialmen waive their
right to file a lien to the extent of the previous payments made. No draw shall
be made if there is an outstanding mechanic's lien which has not been discharged
of record. No draw payment shall be made if Tenant is in default of any of its
material obligations pursuant to the Terms of this Lease. The final ten percent
(10%) of Landlord's contribution shall be due and payable to Tenant provided
that the following conditions have been met:
(1) The Premises have been completed according to the Plans
and Specifications previously approved in writing by Landlord, and
(2) Tenant has opened the Premises for business, and
(3) Tenant has furnished Landlord with affidavits that comply
with the Mechanic's Lien laws of the Commonwealth of Virginia, showing that all
contractors, subcontractors, materialmen and laborers have been paid for all
work, material and labor furnished for said Premises.
(b) In the event that there are claims unpaid, work unfinished, or
liens filed for such work and labor that have not been bonded or otherwise
secured, Landlord may retain from the amount due to Tenant for said contribution
a sum sufficient to pay said claims, unfinished work or liens and all costs
resulting therefrom and to pay said claims or liens, if necessary. If the amount
owed to Tenant by Landlord shall not be sufficient to pay for said claims or
liens and the costs resulting therefrom, Tenant shall forthwith pay said claims
or liens or cause the same to be properly discharged.
(c) Tenant shall have the right at all times and at its own expense to
contest and defend on behalf of Tenant or Landlord any action involving the
collection, validity or removal of such lien or liens, upon giving adequate
security to Landlord for payment of said lien.
(d) Notwithstanding anything contained herein, the amount of Landlord's
contribution shall not exceed the documented costs of Tenant's construction
work.
(e) Tenant is not in default of any of its material obligations
pursuant to the terms of this Lease.
Section 6.1 - Landlord's Responsibilities.
----------------------------
(a) Landlord, at its sole cost and expense, shall perform or cause to
be performed the work more specifically described in
- 11 -
16
Exhibit "C" ("Landlord's Work") Tenant acknowledges that it is otherwise
accepting the Premises in its present "as-is" condition with no expectation
that, except for Landlord's Work, Landlord will or should perform or (except for
Landlord's Contribution), otherwise contribute toward the cost of any leasehold
improvements required to prepare the Premises for Tenant's occupancy;
(b) Landlord warrants that its work shall, be delivered free and clear
of liens, encumbrance and violations, or conditions which may constitute
violations of any laws, ordinances, or regulations relating to the use,
occupancy and construction of the Premises and the building containing the same;
and
(c) Within thirty (30) days after Tenant takes possession of the
Premises, Tenant shall inform Landlord in writing, of any items required to be
formed by Landlord which are incomplete or inadequate; otherwise, Tenant shall
be deemed to have acknowledged that all work required to be performed in
connection with the Premises and any and all obligations to be performed by
Landlord shall have been fully performed.
Section 6.2 - Tenant's Responsibilities.
--------------------------
On or before the RCD, Tenant shall at its own expense and in accordance
with Exhibits ("C") and "BC1.0", or as may be otherwise required in or pursuant
to this Lease:
(a) Secure all permits and licenses necessary for the construction of
any of its installations and the prosecution of its work, and Tenant shall
comply with all laws and regulations relating to the conduct and design of said
work.
(b) Construct the remainder of the Premises and installations therein
and/or construct the leasehold improvements necessary to enable Tenant to occupy
the Premises as shown in Tenant's plans and/or specifications as approved by
Landlord, or Landlord's architect. Any installation to be made or work to be
performed by Tenant on or for the Premises shall be first approved in writing by
Landlord prior to commencement of any work by Tenant. Landlord's approval of any
plans for Tenant's work shall, however, create no responsibility or liability on
the part of Landlord for their completeness, design sufficiency or compliance
with the Requirements of governmental agencies or authorities, as hereinafter
described in Section 27.4.
(c) Obtain on behalf of itself, its contractors and subcontractors, all
insurance protection required by Landlord in Exhibit "BC1.0" and/or as may be
otherwise reasonably required.
- 12 -
17
(d) Install equipment and appliances in said construction and all trade
fixtures installed shall be new and first quality items.
(e) In the event Landlord performs any work at the request or on behalf
of Tenant which is Tenant's responsibility hereunder, Landlord shall from time
to time bill Tenant for the costs thereof and Tenant shall pay said costs to
Landlord no later than twenty (20) days following receipt of Landlord's billing.
Section 6.3 - Tenant's Trade Fixtures.
------------------------
All trade fixtures, signs and apparatus (as distinguished from
leasehold improvements) owned by Tenant and installed in the Premises shall
remain the property of Tenant and shall be removable upon the expiration of the
Term, provided (i) Tenant shall not at such time be in default of any terms or
covenants of this Lease, and (ii) Tenant shall promptly repair any damage to the
Premises caused by the removal of said fixtures. Landlord shall have the benefit
of its landlord's lien and all other applicable liens on Tenant's property
located in or on the Premises, including on Tenant's trade fixtures, signs and
apparatus, as may be provided, or permitted under the laws of the Commonwealth
of Virginia, and Tenant shall not remove or permit the removal of any of said
property until the lien has been removed and all defaults have been cured, if
any, and the Lease has expired. Any of Tenant's property not removed by Tenant
may be construed by Landlord as abandoned by Tenant or Landlord may order Tenant
to remove said items or have the same removed at Tenant's expense.
Section 6.4 - Construction Lien.
------------------
Nothing contained in this Lease shall be deemed or construed in any way
as constituting the consent or request of Landlord, express or implied by
inference or otherwise, to any contractor, sub-contractor, laborer or
materialman for the specific performance of any labor or the furnishing of any
materials or equipment for any specific improvement, alteration to or repair of
the Premises or any part thereof, nor as giving Tenant any right, power or
authority to contract for or permit the rendering of any services or the
furnishing of any materials on behalf of Landlord that would give rise to the
filing of any lien against the Premises or the Shopping Center.
Section 6.5 - Labor Cooperation.
------------------
Tenant shall perform or cause Tenant's contractor to perform all work
in the making and/or installation of any repairs, alterations or improvements in
a manner so as to avoid any labor dispute which causes or is likely to cause
stoppage or impairment of work or delivery services or any other services in the
- 13 -
18
Shopping Center. In the event there shall be any such stoppage or impairment as
the result of any such labor dispute or potential labor dispute, Tenant shall
immediately undertake such action as may be necessary to eliminate such dispute
or potential dispute, including, but not limited to (i) removing all disputants
from the job site until such time as the labor dispute no longer exists, (ii)
seeking an injunction in the event of a breach of contract between Tenant and
Tenant's contractor, and (iii) filing appropriate unfair labor practice charges
in the event of a union jurisdictional dispute. Nothing in this Section 6.5
requires Tenant to use union labor.
ARTICLE VII
-----------
PLANS
-----
Section 7.1 - Submission of Plans.
--------------------
Tenant shall prepare, at its sole cost and expense, and in full
compliance with the provisions of Exhibit "BC1.0", complete plans and
specifications for all of Tenant's work, including store front design, and shall
submit such plans and specifications to Landlord or Landlord's designated
representative for approval prior to commencement of any work. No further
material changes to said plans shall be made after such approval by Landlord
without Landlord's prior written consent. Landlord's approval of any plans for
Tenant's work shall, however, create no responsibility or liability on the part
of Landlord for their completeness, design, sufficiency or compliance with the
Requirements of governmental agencies or authorities, or otherwise, as
hereinafter described in Section 27.4.
Tenant shall be required to submit its plans and specifications to
Landlord in a timely manner so that Tenant's construction in the Premises shall
be completed on or before the RCD. In the event Tenant's plans are not submitted
in a timely fashion as required above, due to reasons within Tenant's or its
architect's control, Landlord reserves the right in addition to any other rights
it may have hereunder, to require Tenant to commence the payment of Rents as of
the Outside Date notwithstanding the fact that Tenant may not be open for
business on such date.
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19
ARTICLE VIII
------------
USE
---
Section 8.1 - Use.
----
Tenant agrees to: (i) operate its business in the Premises under the
trade name specified in Article I, Section 1.0(r), and (ii) use the Premises
solely for the permitted use specified in Article I, Section 1.0(s) and for no
other business or purpose. Tenant further agrees not to conduct catalog sales in
or from, the Premises except of merchandise which Tenant is permitted to sell
"over-the-counter" consistent with its permitted use. Tenant recognizes that the
specific limited use prescribed herein is a material consideration to Landlord
in order that the Shopping Center will maintain an appropriate tenant mix so as
to produce the maximum Gross Revenue possible for all tenants and that the
continued operation of a first-class regional enclosed mall shopping center
development will be assured. Notwithstanding the foregoing, Tenant's specific
limited use hereunder shall not be construed to imply that Tenant has an
exclusive right to conduct the use permitted by Article I, Section 1.0(s).
Landlord, in its sole discretion, may permit other tenants or occupants of the
Shopping Center to operate the same or similar use unless expressly stated
herein to the contrary. If Tenant's business in the Premises is to be conducted
pursuant to a franchise agreement, the existence and continuation of such
franchise agreement is a material consideration to Landlord in entering into
this Lease and if such franchise agreement is terminated, Landlord shall be
entitled to treat such event as an event of default and elect any of the
remedies provided in Article XXIV. Notwithstanding anything to the contrary
contained in this Section 8.1, Landlord shall not unreasonably withhold, delay
or condition the giving of its consent to a change in the trade name of Tenant
provided that there is no change in the manner of Tenant's operation of the
Premises and provided that the change in name shall be utilized by all of
Tenant's operations which are comparable to the Premises. Subject to Landlord's
right to approve the plans and specifications therefor, Tenant's signage may be
changed to reflect the change in trade name.
Section 8.2 - Tenant's Covenant to Operate.
-----------------------------
Tenant agrees to complete Tenant's work and open the Premises for
business to the public fully fixtured, stocked and staffed on the RCD, and,
thereafter throughout the Term, to continuously operate in one hundred percent
(100%) of the space within the Premises the business prescribed in Article I,
Section 1.0(t), Mondays through Saturdays from 11:30 A.M. to 9:00 P.M. and on
Sundays from 12:00 Noon until 6:00 P.M., or such other operating days and hours
as may be reasonably determined by Landlord for the operation of the Shopping
Center. Tenant agrees
- 15 -
20
it will not open earlier or close later than such hours without Landlord's prior
written consent. Tenant acknowledges and agrees that it is difficult to assess
damages resulting from its failure to comply with the terms and conditions
contained in this Section 8.2. Consequently, Tenant agrees to pay Landlord $100
on demand as and for liquidated damages and additional rent under this Lease for
each such failure, and if there occurs three (3) such failures during any
consecutive twelve (12) month period during the Term, an Event of Default shall
then be deemed to have occurred hereunder. Notwithstanding anything to the
contrary contained in this Section 8.2, Tenant may be open for additional hours
in excess of those provided above provided that Tenant coordinates such requests
for additional hours with Landlord's Mall Manager and receives the Mall
Manager's written approval therefore, which approval shall not be unreasonably
withheld, delayed or conditioned. In addition, Tenant may close for business on
Christmas, Thanksgiving and Easter. Landlord shall not unreasonably withhold,
delay or condition any reasonable requests by Tenant to be closed for business
for the purpose of repairing and/or remodeling the Premises, provided, however,
that Landlord must agree in writing to the exact number of days when Tenant may
be closed for business.
Section 8.3 - Prohibitions on Use.
--------------------
(a) Tenant shall not use or permit or suffer the Premises, or any part
thereof, to be used by anyone else or for any other business or purpose than
that specifically defined and permitted by this Article and further provided
that Tenant shall not divert any portion of the Premises GLA for any other use
other than the use described above.
(b) Tenant shall not permit the Premises to be used in violation of any
laws or local ordinances or any way which in the sole judgment of Landlord will
injure the reputation of, be a nuisance, annoyance, or do damage to the other
tenants of the Shopping Center or Landlord, including without limitation, the
sale of patently offensive material and merchandise and the use of audio
devices, flashing lights, machinery and equipment creating noise or odors, or
the committing of acts, which will disturb, impair or interfere with the use and
enjoyment by the other tenants of their respective premises within the Shopping
Center.
(c) Tenant agrees not to use or allow the Premises to be used for any
auction, fire, bankruptcy or "going out of business" sales therein unless
ordered by a court of competent jurisdiction after reasonable notice to Landlord
and an opportunity by Landlord to be heard.
- 16 -
21
Section 8.4 - Manner of Operation of Business.
--------------------------------
(a) Tenant agrees that the above business is to be conducted in a
reputable manner, in keeping with good practices as established in the trade.
Tenant shall keep upon the Premises an adequate staff of employees throughout
the Term so as to insure a maximum volume of business in and from the Premises.
(b) Subject to Section 15.1 of this Lease, Tenant agrees to assume full
responsibility and at its own cost to keep and maintain the Premises neat,
clean, in proper repair and decor, and free from waste and offensive odors, and
in an orderly and sanitary condition, free of vermin, rodents, bugs and other
pests.
(c) Landlord and its agents shall have the right, but not the duty,
upon reasonable advance telephonic notice to the Premises (except in an
emergency when no notice shall be required) to inspect the Premises at any time
to determine whether Tenant is complying with the terms of this Section. If
Tenant is not in compliance with this Section, Landlord shall have the right
upon reasonable advance telephonic notice to the Premises (except in an
emergency when no notice shall be required) to enter upon the Premises to remedy
said noncompliance at Tenant's expense. Landlord shall use its best efforts to
minimize interference with Tenant's business, but shall not be liable for any
interference caused thereby. Notwithstanding anything to the contrary contained
in this Section 8.4(c), Landlord shall endeavor not to enter the Premises or
perform work during Tenant's rush hours.
ARTICLE IX
----------
TERM
----
Section 9.1 - Term.
-----
The Term shall commence on the RCD (see Sections 1.0[f] and 10.1) and
the Term, unless the Lease should be terminated earlier, shall expire at
midnight on the "Term Expiration Date" or "TED" which shall be the day prior to
the fifteenth (15th) anniversary of the RCD (provided that the RCD has occurred
on the first day of a calendar month). In the event that the RCD should occur on
a day other than the first day of a calendar month, the TED shall be deemed to
be midnight on the last day of the calendar month in which the fifteenth (15th)
anniversary of the RCD occurs.
Section 9.2 - Commencement Date Agreement.
----------------------------
At any time following full execution of this Lease, Landlord and Tenant
may, upon the request of either party, execute a
- 17 -
22
supplemental agreement in form for recording, setting forth the commencement and
termination dates of the Term.
Section 9.3 - Holding Over.
-------------
If, at the expiration of the Term of this Lease, Tenant continues to
occupy the Premises with or without Landlord's consent, its tenancy shall become
month-to-month terminable by either party on thirty (30) days written notice
given prior to the end of the month. Tenant shall be subject to all the
conditions of this Lease excepting the Term thereof and Tenant's obligation to
pay hold-over rent equal to one hundred fifty percent (150%) of the monthly
Fixed Minimum Rent payable by Tenant immediately prior to expiration of the
Term, and Tenant shall be further subject to any changes which Landlord has
given Tenant, in writing, during any thirty (30) day period for the following
thirty (30) day period. Notwithstanding anything contained herein to the
contrary, nothing contained in this subparagraph shall be deemed or construed to
give Tenant the right to hold over. Tenant shall not be permitted to hold over
if Landlord gives Tenant notice before the expiration of the Term of this Lease
that Tenant may not hold over.
Section 9.4 - Expiration of the Term.
-----------------------
(a) This Lease shall expire at the end of the Term thereof without the
necessity of any notice from either Landlord or Tenant to terminate the same,
and subject to Section 9.3 hereof, Tenant hereby waives notice to vacate or quit
the Premises and agrees that Landlord shall be entitled to the benefit of all
provisions under this Lease respecting the summary recovery of possession of the
Premises from Tenant holding over to the same extent as if statutory notice had
been given. However, if Tenant should vacate prior to the expiration of the
Term, without limiting any other remedies available to Landlord, Tenant will
nevertheless be liable for all Rents due and owing up to the expiration of the
Term.
(b) For a period of three (3) months prior to the expiration of the
Term, upon reasonable prior notice to Tenant, Landlord shall have the right and
may show the Premises and all parts thereof to prospective tenants during normal
business hours.
(c) Tenant shall deliver and surrender to Landlord possession of the
Premises upon the expiration or earlier termination of this Lease, in as good
condition and repair as the same shall be at the commencement of said term
except ordinary wear and tear and casualty loss.
(d) Tenant shall have no right to quit the Premises, cease to operate
its business, cancel or terminate this Lease except as said right is expressly
granted to Tenant herein.
- 18 -
23
ARTICLE X
---------
RENT COMMENCEMENT DATE
----------------------
Section 10.1 - Rent Commencement Date.
----------------------
(a) As used in this Lease, the term "Rent Commencement Date" shall mean
the earlier of the dates specified in Section 1.0(f).
(b) Should the RCD occur on a day other than the first day of a
calendar month, Tenant shall be liable for Fixed Minimum Rent and Additional
Charges due for said previous partial month on a prorated basis based upon a
thirty (30) day month.
Section 10.2 - Failure of Delivery of Premises to Tenant.
------------------------------------------
In the event Landlord shall be unable to deliver possession of the
Premises to Tenant on any specified date or on the date of the commencement of
the term for any cause within Landlord's or outside Tenant's control (except
however, Tenant's failure to comply with the timely plan submission requirements
of Section 7.1 or any other cause within the control of Tenant or its agents,
employees, architects or contractors) including, but not limited to, delay in
commencing or completing construction of Landlord's work, if any, or the holding
over of any tenant or tenants, or the total failure to deliver the Premises, the
Fixed Minimum Rent and Additional Charges shall not commence until the earlier
to occur of the date Tenant opens for business or one hundred fifty (150) days
following the date that possession of the Premises is available to Tenant for
the commencement of its leasehold improvement work. Tenant agrees to accept such
abatement of Fixed Minimum Rent and Additional Charges as liquidated damages in
full satisfaction for the failure of Landlord to deliver possession on time or
in the event of a complete failure of delivery of possession, to the exclusion
of all right and claims for damage which Tenant otherwise may have suffered as a
result of Landlord's delayed or complete failure of delivery of possession.
Notwithstanding anything to the contrary contained in this Section 10.2, if
Landlord has not delivered possession of the Premises to Tenant by January 1,
1999, Tenant may terminate this Lease upon thirty (30) days prior written notice
to Landlord provided, however, Landlord may vitiate such termination by
delivering possession of the Premises to Tenant within thirty (30) days after
receipt of Tenant's notice of termination. In the event that Landlord does not
proceed with the construction of the premises in which the Premises will be
located, then Landlord shall reimburse Tenant for the actual costs incurred by
Tenant not to exceed Ten Thousand Dollars ($10,000.00) for the production of
Tenant's plans and specifications for the Premises provided that such plans and
specifications have been approved by Landlord.
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Section 10.3 - Tenant's Failure to be Open by the Scheduled
--------------------------------------------
Opening Date.
------------
INTENTIONALLY OMITTED
ARTICLE XI
----------
RENT
----
Section 11.1 - Fixed Minimum Rent.
-------------------
(a) Tenant hereby covenants and agrees to pay to Landlord's authorized
agent, without deduction or set-off and without demand, at Forest City
Management, Inc., Commercial Division, Post Office Box 5237, Cleveland, Ohio
44101 or such other place as Landlord may, from time to time, designate in
writing, as Fixed Minimum Rent for the Premises the amount(s) set forth in
Article I, Section 1.0(g), said amount(s) to be due and payable in monthly
installments, in advance, on the first day of each and every calendar month.
Tenant agrees at no time to pay the monthly Fixed Minimum Rent more than one (1)
month in advance of its due date.
(b) Notwithstanding anything in this Lease to the contrary, in the
event Tenant fails to pay any Rents within five (5) days following the due date
of such Rents, then Tenant shall pay a late charge in the amount of five percent
(5%) of such Rents, plus interest at the rate of eighteen percent (18%) per
annum on any such Rents from the due date(s) thereof to the date of payment of
such Rents.
(c) Should any governmental taxing authority acting under any present
or future law, ordinance, or regulation, levy, assess, or impose tax, excise
and/or assessment (other than an income or franchise tax upon Landlord's net
income) upon Landlord with respect to Rents payable by Tenant to Landlord,
either by way of substitution for or in addition to any existing tax on land and
buildings or otherwise, Tenant shall be responsible for and shall pay such tax,
excise and/or assessment, or shall reimburse Landlord for the amount thereof, as
the case may be.
(d) INTENTIONALLY OMITTED
(e) Notwithstanding anything to the contrary contained in this Section
11.1, provided that Tenant is not in default hereunder, Tenant shall have the
right to take a credit of One Hundred Sixty-Five Thousand, Five Hundred Dollars
($165,500.00) against the first (1st) One Hundred Sixty-Five Thousand, Five
Hundred Dollars ($165,500.00) of Fixed Minimum Rent due and payable to Landlord
hereunder. In no event shall the credit given Tenant pursuant to this Section
11.1(e) exceed One Hundred Sixty-Five Thousand, Five Hundred Dollars
($165,500.00).
- 20 -
25
Section 11.2 - Percentage Rent.
----------------
(a) AMOUNT. In addition to Tenant's Fixed Minimum Rent, Tenant
covenants and agrees to pay to Landlord, without deduction or set-off, during
each Lease Year, as "Percentage Rent," the amount(s) equal to the percentage set
forth in Article I, Section 1.0(h), of Gross Revenue (defined below) during such
Lease Year in excess of the then applicable Annual Breakpoint set forth in
Article I, Section 1.0(h).
(b) Payment.
--------
(i) The Percentage Rent due for each Lease Year shall be
payable by no later than the fifteenth (15th) day of the month immediately
following the month in which Gross Revenue for such Lease Year exceeds the then
applicable Annual Breakpoint, and thereafter the Percentage Rent due shall be
paid monthly on all additional Gross Revenue made during the remainder of said
Lease Year. Said payments of Percentage Rent shall be made concurrently with the
submission of Tenant's written statement of monthly Cross Revenue to Landlord as
hereinafter provided.
(ii) Upon submission of Tenant's certified statement of Gross
Revenue at the close of each Lease Year, as provided in Section 11.5 herein,
adjustments of amounts due for Percentage Rent shall be made to the respective
parties.
(iii) Notwithstanding the provision for the payment of
Percentage Rent, Landlord shall not, in any event, be deemed to be a partner or
associate of Tenant in the conduct of its business. The relationship of the
parties hereto shall, at all times, be solely that of Landlord and Tenant.
(c) Notwithstanding anything to the contrary contained in this Section
11.2, Tenant shall have the right to a credit of Eighteen Thousand Dollars
($18,000.00) per Lease Year against the first (1st) Eighteen Thousand Dollars
($18,000.00) of Percentage Rent due Landlord each Lease Year. Such credit shall
not be cumulative in any way. In the event that the full credit is not utilized
for any Lease Year, the amount not used shall not be applied against any
subsequent Lease Year. The credit for any Lease Year shall not in any way exceed
Eighteen Thousand Dollars ($18,000.00).
Section 11.3 - Gross Revenue.
--------------
The term "Gross Revenue" wherever used herein shall be defined to mean
the total amount of all sales of merchandise and/or services and all other
receipts of all business conducted in, at, or from any part of the Premises,
whether the same be for cash, barter, credit, check, charge account, gift, and
merchandise certificates purchased, or other disposition of value regardless of
collection, in the event of sale upon credit or
- 21 -
26
charge account, and whether made by Tenant, sub-tenants, concessionaires,
licensees, or assignees of Tenant. The value of each sale shall be the actual
total sales price charged the customer, and shall be reported in full in the
month that the transaction occurs irrespective of when, or if, payment is
received. Cross Revenue includes orders or sales which originate in, at, or from
the Premises, whether delivery or performance is made from the Premises or from
another place, and orders and sales of goods and services delivered and
performed from the Premises as a result of orders taken elsewhere; orders or
sales mailed, telephoned, or telegraphed, which are received at or filled from
the Premises; all sales and revenue accruing by means of mechanical,
self-operated, or automatic vending devices on the Premises. There shall be no
deduction or exclusion from Gross Revenue except as specifically permitted
hereafter. Any deposit not refunded shall be included in Gross Revenue.
Section 11.4 - Exclusion from Gross Revenue.
-----------------------------
Notwithstanding the foregoing, Gross Revenue shall not include:
(a) Merchandise returned in the amount of cash refunded, credit given,
or discounts and allowance granted or exchanges made, provided that the sale
price of said items was originally included in Gross Revenue.
(b) The amount of any sales, use or gross receipts tax, or excise tax,
imposed by any governmental authority directly on sales and collected from the
customers, providing the amount of such tax is separately recorded.
(c) The exchange of merchandise between stores of Tenant, when such
exchanges are made solely for the operation of Tenant's business and not for the
purpose of consummating a sale which has been made at, in or from the Premises.
(d) Merchandise returned for credit to shippers, jobbers, wholesalers
or manufacturers.
(e) Revenue from sale of trade fixtures after use in the Premises and
sums or credits received in settlement of claims for loss or damage to
merchandise.
(f) Revenue from vending machines for Tenant's employee use only.
(g) Provided that the full amount represented thereby has previously
been included in Gross Revenue, Tenant by a separately stated deduction on its
statements of Gross Revenue may deduct therefrom the actual amount of bad debts
and bad checks which Tenant reports to the Internal Revenue Service as bad debts
provided, however, that the total amount of such deductions may
- 22 -
27
not exceed the lesser of two percent (2%) of the Gross Revenue for any Lease
Year and may not exceed the actual amount of such bad debts and bad checks
actually incurred in such Lease Year.
Section 11.5 - Reporting.
----------
(a) Tenant shall submit to Landlord, on or before the fifteenth (15th)
day of each month of each Lease Year, commencing in the second month of the
first Lease Year, a written statement signed by Tenant showing Tenant's Gross
Revenue, for the preceding calendar month.
(b) On or before forty-five (45) days following the close of each Lease
Year, Tenant shall furnish to Landlord a statement certified by an officer of
Tenant, or a certified public accountant employed by Tenant, if any, of the
Gross Revenue made by Tenant from the Premises during the preceding Lease Year.
(c) For the purpose of ascertaining the amount of reportable sales and
revenue, Tenant agrees to record each and every sale at the time of the
transaction on either a cash register having a sealed, continuous, cash register
tape with cumulative totals, which numbers, records, and duplicates each
transaction entered into the register, (in any event such cash register must
have a non-resettable grand total) or on serially prenumbered sales slips. In
the event Tenant chooses to record each sale by using a cash register, Tenant
agrees that the continuous, cash register tape will be sealed or locked in such
a manner that it is not accessible to the person operating the cash register. If
Tenant chooses to record each sale on individual sales slips, Tenant agrees that
said sales slips (including those canceled, voided, or not used) will be
retained in numerical sequence for the period set forth in section 11.6 herein.
(d) If Tenant shall fail to prepare and deliver any statement of Gross
Revenue in a timely manner required herein, Landlord may do any or all of the
following: (i) elect to treat Tenant's failure to report as a default of this
Lease; (ii) elect to make an audit of all books and records of Tenant which in
any way pertain to or show Gross Revenue and to prepare the statement or
statements which Tenant has failed to prepare and deliver; or (iii) impose a
late/non-reporting fee of One Hundred Dollars ($100.00) for each such failure by
Tenant. The statement or statements so prepared shall be conclusive on Tenant,
and Tenant shall pay on demand all expenses of such audit and of the preparation
of any such statements and all sums as may be shown by such audit to be due as
Percentage Rent.
(e) All such statements and reports shall be kept in confidence by
Landlord except in connection with the sale or financing of all or a portion of
the Shopping Center, or administrative or judicial proceedings.
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28
Section 11.6 - Books and Records.
------------------
(a) Tenant agrees to keep on the Premises, or at its principal offices,
accurate books and records (as more specifically identified below) of all
business conducted at the Premises in accordance with generally accepted
accounting practices consistently applied, and said records shall be open and
available for examination at all reasonable times to Landlord, or Landlord's
representatives, upon reasonable notice to Tenant, for the purpose of
ascertaining or verifying the Gross Revenue. All records shall be retained by
Tenant for examination by Landlord for a period of at least three (3) years
following the end of the Lease Year for which said records apply.
(b) Tenant further agrees that for the purposes hereinbefore recited,
Tenant shall prepare, preserve and maintain for each Lease Year, the following
documents, books, accounts and records:
(1) Daily cash register summary tapes (normally referred to as
"Z Tapes") and sealed, continuous, cash register tapes or prenumbered sales
slips, maintained as recited herein;
(2) A single, separate bank account into which all receipts of
business and other revenue from operations on or from the Premises are
deposited;
(3) All bank statements detailing transactions in or through
any business bank account;
(4) Daily or weekly sales recapitulations;
(5) A sales journal;
(6) A general ledger or a summary record of all cash receipts
and disbursements from operations on or from the Premises;
(7) Copies of all sales or use tax returns filed with any
governmental authority which reflect in any manner sales, income or revenue
generated in or from the Premises; and
(8) Such other records or accounts as Landlord may reasonably
require in order to ascertain, document, or substantiate reportable Gross
Revenue.
(c) If upon inspection or examination of Tenant's available books and
records of account, Landlord determines that Tenant has failed to maintain,
preserve, or retain the above-recited documents, books, and records of account
in the manner detailed herein, Landlord shall give Tenant notice of and sixty
(60) days to cure said deficiencies. Further, if Tenant is found to be deficient
in maintaining any of the above-recited documents,
- 24 -
29
books or records of account, Tenant shall reimburse Landlord for reasonable
expenses incurred by Landlord in determining said deficiencies, including, but
not limited to, any audit or examination fees incurred by Landlord.
If after receiving the aforesaid notice, and upon expiration
of the sixty (60) day time period specified herein, Tenant fails to cure the
noted deficiencies, Landlord may, at its option, either grant Tenant additional
time to cure the deficiencies, hold Tenant in default of the Lease, or at
Tenant's expense, and for its benefit, retain an independent accounting or
bookkeeping firm to prepare and maintain the above-recited documents, books and
records of accounts. If Landlord elects the latter option, Tenant agrees and
covenants that the representative or representatives of said accounting or
bookkeeping firm will have full right of entry and access to the Premises and
existing financial records, and full cooperation by Tenant, for the purpose of
establishing and maintaining the documents, records and books of account recited
hereinabove. Any expenses incurred by Landlord in furtherance of its rights
hereunder will be considered additional rent for the Premises, due and payable
by Tenant with the next due installment of Rents.
(d) In the event an examination of the records of Tenant to verify said
Gross Revenue shall disclose a deficiency in excess of three percent (3%) of the
Gross Revenue reported for any Lease Year where Percentage Rent is due Landlord,
(1) Tenant agrees to pay to Landlord on demand the reasonable costs and expenses
of such audit, and (2) any additional Percentage Rent found due and owing as a
result of said audit shall be immediately paid by Tenant to Landlord upon
demand. If an examination by Landlord or its representative discloses that
Tenant has overreported Gross Revenue and that, as a result of said
overreporting, Tenant has overpaid Percentage Rent, Landlord shall give Tenant
credit against the next due installment of Rents due and owing by Tenant for the
overpaid Percentage Rent.
ARTICLE XII
-----------
ADDITIONAL CHARGES
------------------
Section 12.1 - Status of Charges
-----------------
As part of the Rents provided for by this Lease, Tenant agrees to pay
to Landlord, as hereinafter provided, the "Additional Charges" as described in
this Article and Article XIII for the purposes as hereinafter set forth. Such
Additional Charges shall be subject to all provisions of this Lease and shall be
deemed included as part of Rents due and owing hereunder.
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30
Section 12.2 - Common Area Maintenance Costs.
------------------------------
(a) The term "Common Area Maintenance ('CAM') Cost" means the total of
all items of cost related to maintaining, managing, operating policing,
securing, repairing, replacing, enhancing and protecting the Common Areas,
including but not limited to: all cost of maintaining, painting and upgrading
facilities, fixtures and improvements, including but not limited to, parking
decks or structures, if and/or when applicable, cleaning, removal of trash, dirt
and debris, snow and ice removal, sweeping and janitorial services; all such
maintenance and construction work as shall be required to preserve and maintain
the utility and appearance of the Common Areas; lighting of outdoor areas, mall
and service corridors; maintenance, repair and replacement of roof/roofs, and
sprinkler systems; cost of plantings, landscaping and mall amenities, interior
and exterior landscaping and supplies incidental thereto to include all seasonal
and similar decorations plus the cost of all utilities utilized in connection
therewith; costs of maintenance and repair of the system which heats, ventilates
and air conditions the Enclosed Mall and Landlord's energy costs incurred in
connection therewith; directional signs, shopping center signs, bumpers and
other markers; installation, maintenance and repair of any security systems,
fire protection systems, lighting and utility systems, and storm drainage
systems; installation, maintenance, repair and replacement of disposal plants,
lift stations, and retention ponds or basins; costs and expenses of payroll,
payroll taxes and employee benefits of all management personnel, including
without limitation managers, security and maintenance people, secretaries and
bookkeepers; costs and expenses of operating, maintaining, repairing and
replacing machinery and equipment used in the operation and maintenance of the
Common Areas, and the personal property taxes and other charges incurred in
connection with such machinery and equipment; management fees, costs and
expenses of purchasing and maintaining in full force insurance (including,
without limitation, liability insurance for personal injury, death and property
damage, rent insurance, insurance against fire, extended coverage, theft or
other casualties, all risk, difference in conditions, sprinkler, malicious
mischief, vandalism, earthquake, flood, worker's compensation insurance covering
personnel, fidelity bonds for personnel, insurance against liability for
defamation and claims of false arrest occurring on or about the Common Areas,
and plate glass insurance), costs and expenses enforcing any operating
agreements pertaining to the Common Areas or any portions thereof, and any
easement agreement, or reservation or any arbitration or judicial actions
undertaken with respect to the same; costs and expense of policing/security,
including uniforms, equipment and all supplies; cost of installation of any cost
saving devices or equipment; all costs relating to separate employee parking
areas, including but not limited to the cost of any shuttle services Landlord
may provide and the cost of transportation services, depreciation of equipment
and buildings used in operating,
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31
maintaining and replacing the Common Areas and/or rent paid for the leasing of
any such equipment or buildings; cost and expense for the rental of music
program service and loudspeaker systems including furnishing electricity;
services furnished by Landlord for nonexclusive use of all tenants on a
non-profit basis including parcel pick up and delivery services and shuttle bus
service; the cost of pest extermination; the cost of improvements not part of
initial construction which are: (i) made to comply with laws, statutes or
insurance requirements not in force at the time of such initial construction; or
(ii) undertaken for the protection of the health and safety of occupants and
customers of the Shopping Center; or (iii) made for the purpose of reducing CAM
Costs; and an administration cost in an amount not more than fifteen percent
(15%) of the total cost and expense of all the foregoing. Contributions toward
CAM Costs by Major Tenants shall be deducted from CAM Costs before Tenant's
share is calculated; and, CAM Costs shall not include such or similar items of
costs or portions thereof, which Landlord allocates and/or attributes to the
costs and expenses of the Food Court (referenced below), including without
limitation, the operation, upkeep and maintenance thereof. Notwithstanding
anything to the contrary contained in this Lease, CAM Costs shall not include
any costs or expenses incurred as follows:
(a) Leasing commissions incurred in entering into any new lease or
renewing any lease;
(b) Legal fees incurred to evict any tenant or lease any space;
(c) Any auditing fees incurred to verify percentage rent for any
tenant; and
(d) Any tenant improvement allowance or other similar payment to a
tenant.
(b) Tenant's responsibility for its share of the CAM Costs shall be
determined by multiplying Tenant's Proportionate Share by the CAM Costs. Such
share of the CAM Costs shall be paid by Tenant to Landlord in equal monthly
installments, in advance, on the first day of each calendar month during the
Term in an amount equal to one-twelfth (1/12) of Tenant's share of the CAM Costs
as estimated by Landlord for the fiscal year. The amount due for any partial
fiscal year shall be prorated accordingly.
(c) Within ninety (90) days after the end of Landlord's fiscal year
(February 1 - January 31), Landlord shall furnish Tenant with a written
statement in reasonable detail of the actual CAM Costs and the amount of
Tenant's share thereof for the preceding fiscal year. Landlord reserves the
right, however, to change its fiscal year at any time during the Term upon
reasonable prior notice to Tenant. If Tenant's share of the actual CAM Costs
exceed the aggregate of Tenant's monthly
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32
payments, Tenant shall pay to Landlord any deficiency due within fifteen (15)
days after receipt of said statement by Landlord. If Tenant's monthly payments
have exceeded the Tenant's share of the actual CAM Costs, any surplus paid by
Tenant shall be credited against the next ensuing installment of Rents until
such surplus is exhausted, unless such surplus has occurred during Tenant's last
year prior to expiration of the Lease, in which event Landlord shall refund such
excess to Tenant within thirty (30) days after determination of such surplus has
been made. Failure of Landlord to provide the statement called for hereunder
within the time prescribed shall not relieve Tenant of its obligations
hereunder.
The obligations of Landlord and Tenant to make the foregoing
adjustment shall survive the expiration or earlier termination of this Lease.
(d) Notwithstanding anything to the contrary contained in this Lease,
in no event shall Tenant's share of the CAM Costs for the first Lease Year
exceed Five Dollars ($5.00) per square foot of Premises GLA on a 365-day
annualized basis (if such first Lease Year contains more or less than 365 days,
then the foregoing amount of Five Dollars ($5.00) shall be equitably adjusted to
equal the product obtained by multiplying Five Dollars ($5.00) by a fraction,
the numerator of which is the number of days in such Lease Year and the
denominator of which is 365.) Such Five Dollars ($5.00) per square foot cap
shall increase by five percent (5%) on a compounded basis starting with the
third Lease Year and thereafter at the beginning of each "odd" Lease Year. For
example, such Five Dollar ($5.00) cap for the seventh Lease Year shall be Five
and 788125/100 Dollars ($5.788125).
Section 12.3 - Real Estate Taxes.
-----------------
(a) (i) The term "real estate taxes" shall mean all taxes, assessments,
charges, levies, fees and other governmental charges, general and special,
ordinary and extraordinary, of any kind and nature whatsoever, including, but
not limited to, assessments for off-site public improvements for the benefit of
the Shopping Center, which shall be laid, assessed, levied, or imposed upon the
Shopping Center or any part thereof and which are payable at any time during the
term hereof, and all gross receipts taxes, rent taxes, business taxes and
occupancy taxes, and shall include all of Landlord's reasonable administrative
costs and any and all costs, including reasonable attorney fees, incurred by
Landlord in contesting or negotiating the taxes with any governmental authority,
excepting only franchise, estate, inheritance, succession, capital levy,
transfer, net income and excess profits taxes imposed upon Landlord.
(ii) The Rents to be paid under this Lease shall be paid to
Landlord absolutely and without deduction for taxes of
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33
any nature whatsoever. Landlord and Tenant recognize and acknowledge that there
may be changes in the current real property tax system and that there may be
imposed new forms of taxes, assessments, charges, levies or fees, or there may
be an increase in certain existing taxes, assessments, charges, levies or fees
placed on, or levied in connection with the ownership, leasing, occupancy or
operation of the Shopping Center or the Premises. All such new or increased
taxes, assessments, charges levies or fees which are imposed or increased as a
result of or arising out of any changes in the structure of the real property
tax system or any limitations on the real property taxes which can be assessed
on real property including, but not limited to, any and all taxes, assessments,
charges, levies and fees assessed or imposed due to the existence of this Lease
(including any surcharge on the income directly derived by Landlord therefrom)
or for the purpose of funding special assessment districts of the type funded by
real property taxes, shall also be included within the meaning of "real estate
taxes". With respect to any general or special assessment which may be levied
against or upon the Premises or the Shopping Center and which under the laws
then in force may be evidenced by improvement or other bonds, or may be paid in
periodic installments, there shall be included within the meaning of "real
estate taxes" with respect to any tax fiscal year only the amount currently
payable on such bond for such tax fiscal year, or the periodic installment for
such tax fiscal year.
(iii) Tenant shall be responsible for payment of any type of
tax, excise or assessment (regardless of label or whether in the form of a
rental tax, gross receipts tax, sales tax, business or occupation tax, use
assessments, privilege tax, franchise tax, or otherwise, except any tax, excise
or assessment which in substance is a net income or franchise tax that is based
solely on landlord's net income), which is levied, assessed or imposed at any
time by any governmental authority upon or against the Premises, the use or
occupancy of the Premises, the Rents payable by Tenant to Landlord, or otherwise
with respect to the Landlord-Tenant relationship hereunder. Tenant shall pay the
full amount of such tax, excise or assessment directly to the appropriate
governmental authority, unless the applicable law expressly imposes solely on
Landlord the duty to pay or collect such tax, excise or assessment, in which
case Tenant shall pay the full amount of such tax, excise or assessment as part
of the Rents due and payable under this Lease to Landlord within twenty (20)
days following receipt of Landlord's billing therefor. Notwithstanding that the
applicable law may impose on Landlord the duty to pay or collect such tax,
excise or assessment, it is understood and agreed that Tenant shall nevertheless
be obligated to pay such tax, excise or assessment and Landlord shall be
indemnified against and saved harmless from the same by Tenant. In the event (i)
Tenant fails to timely pay such tax, excise or assessment and Landlord pays the
same, or (ii) Landlord elects in its sole discretion to pay the same in advance,
Tenant shall
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34
reimburse Landlord on demand for the amount thereof as part of the Rents due and
payable under this Lease. The provisions of this paragraph shall also apply to
any such tax, excise or assessment which may at any time replace or supplement
any tax, excise or assessment described herein.
(b) The Premises, its leasehold improvements and the underlying realty
will not be separately assessed for tax purposes but instead will be assessed as
part of a larger parcel or parcels of land and improvements comprising the
Shopping Center. Accordingly, Tenant agrees to pay its share of said real estate
taxes based on the product of multiplying Tenant's Proportionate Share times the
real estate taxes. Tenant's share of real estate taxes shall be paid by Tenant
to Landlord in equal monthly installments on the first day of each calendar
month during the Term, in an amount equal to one-twelfth (1/12) of such share of
said real estate taxes as estimated by Landlord for the fiscal year. The amount
due for any partial fiscal year shall be prorated accordingly.
(c) Within ninety (90) days after Landlord's payment of real estate
taxes, Landlord shall furnish Tenant with a written statement in reasonable
detail showing the actual amount of said real estate taxes applicable to the
Shopping Center and of Tenant's share thereof ("Actual Taxes"). If the Actual
Taxes exceed the aggregate of Tenant's monthly payments, Tenant shall pay to
Landlord any deficiency due Landlord within fifteen (15) days after receipt of
said statement by Tenant. If Tenant's aggregate monthly payments exceed the
Actual Taxes, any surplus paid by Tenant shall be credited against the next
ensuing monthly installment of Rent until such surplus is exhausted, unless such
surplus has occurred during Tenant's last year prior to expiration of the Lease
in which event Landlord shall refund such excess to Tenant within thirty (30)
days after determination of such surplus has been made. Failure of Landlord to
provide the statement called for hereunder within the time prescribed shall not
relieve Tenant of its obligations hereunder.
The obligations of Landlord and Tenant to make the foregoing adjustment
shall survive the expiration or earlier termination of this Lease.
Section 12.4 - Renovation/Expansion Assessment.
--------------------------------
INTENTIONALLY OMITTED
Section 12.5 - Marketing Fund.
---------------
(a) During the term hereof, Landlord shall maintain a marketing fund
("Marketing Fund") which shall be used by Landlord to pay all costs and expenses
associated with the formulation and carrying out of an ongoing program for the
promotion of the Shopping Center in such a manner as Landlord deems advisable.
- 30 -
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Programs may include, without limitation, special events, shows, displays,
signs, marquees, decor, seasonal events, advertising for the Shopping Center,
promotional literature to be distributed within and outside the Shopping Center
and other activities within the Shopping Center designed to attract customers
and additional tenants.
(b) In addition, Landlord may use the Marketing Fund to defray the
costs of administration of the Marketing Fund, including, without limitation,
the salary of a marketing director and related administrative personnel, rent
and insurance.
(c) Tenant shall make an annual contribution to the Marketing Fund in
the amount set forth in Article I, Section 1.0(1), hereinafter referred to as
"Tenant's Marketing Fund Contribution." Except as provided in Section 12.5(f),
Tenant's Marketing Fund Contribution shall be paid by Tenant in equal monthly
installments, in advance, without deduction or set-off, on the first day of each
calendar month. The amount due for all partial calendar years shall be prorated
accordingly.
(d) INTENTIONALLY OMITTED
(e) INTENTIONALLY OMITTED
(f) Notwithstanding anything to the contrary contained in this Section
12.5, Tenant agrees to spend a minimum of Three Dollars ($3.00) per square foot
of Premises GLA per Lease Year for the marketing of the Premises. Such sum shall
not include any corporate advertising or any advertising which includes any
location other than the Premises. Such Three Dollar ($3.00) per square foot
amount shall be applicable only to marketing which is exclusively for the
Premises. In connection with the marketing of the Premises on a monthly basis by
the twentieth (20th) of each month, Tenant shall submit to Landlord samples of
all marketing, including, without limitation, TV and radio copy utilized by
Tenant for the Premises for the immediately preceding month together with such
proof as Landlord shall reasonably require of the amount Tenant spent for such
marketing for the immediately preceding calendar month. In the event for any
Lease Year the amount spent by Tenant for such marketing is less than Three
Dollars ($3.00) per square foot. Then, on or before the twentieth (20th) day
after the end of the Lease Year in question, Tenant shall pay Landlord a
contribution to the Marketing Fund equal to the difference between (a) the
product obtained by multiplying Three Dollars ($3.00) by the Premises GLA; and
the actual amount spent by Tenant for such marketing for the Lease Year in
question.
Section 12.6 - Parking.
--------
Landlord agrees to cause the parking facilities adjacent to the
Shopping Center to be made available to Tenant, its employees
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36
and customers, for parking motor vehicles. For the period from October 1 to
September 30 of each calendar year, Tenant agrees to pay Landlord annually, in
twelve (12) equal monthly installments, such payments to be made together with
the payments of Fixed Minimum Rent, as additional rent and for providing such
facilities, the amount set forth in Section 1.0(v), multiplied by the Premises
GLA, subject to increase as provided herein. Tenant's obligations set forth in
this Section 12.6 for any partial year shall be prorated accordingly. On October
1, of each calendar year hereafter, the parking charge set forth herein shall be
increased by an amount equal to five percent (5%) of the previous year's parking
charge for each year during the Term.
The operator of such parking facilities shall be entitled to charge for
the use of such facilities.
ARTICLE XIII
------------
PREMISES UTILITY SERVICES
-------------------------
Section 13.0 - Status of Charges.
------------------
As part of the Rents provided for by this Lease Tenant agrees to pay to
Landlord, as hereinafter provided, the utility service charges which shall be
deemed to be included as part of the Additional Charges described in Article
XII.
Section 13.1 - Water, Electricity, Telephone and Sanitary Sewer.
-------------------------------------------------
Landlord will provide at points in or available to the Premises the
facilities necessary to enable Tenant to obtain for the Premises water,
electricity, telephone and sanitary sewer services, such facilities being more
specifically described in Exhibit "BC1.0". Tenant shall arrange for telephone
service for its Premises with the appropriate company supplying the same in the
area in which the Shopping Center is located and shall pay all charges therefor.
Landlord, in its sole discretion, may alter from time to time the method and
source of supply of electricity to the Premises and Tenant shall execute and
deliver such documents or instruments as Landlord shall deem to be necessary or
desirable in order to effect such alteration.
(a) Water. A meter has been installed for the Premises to determine
Tenant's water and sewer charges, and Tenant shall pay to Landlord such charges
upon receipt of a statement therefor from Landlord, such statements to be sent
monthly, if Tenant is located in the Food Court, and bi-monthly if Tenant is not
located in the Food Court.
(b) Electricity. Landlord shall have the right, exercisable at its sole
option to furnish and supply to Tenant electricity for Tenant's reasonable use
for lighting, heating,
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37
air-conditioning and/or ventilating the Premises and operating therein such
other electrical appliances and equipment as may be reasonably necessary for the
operation of Tenant's business (hereinafter referred to as "Tenant's energy
use"). The following terms and conditions shall govern the distribution of
electricity by Landlord to Tenant for Tenant's energy use.
(i) Tenant shall pay Landlord an "annual energy charge" for
such electrical service. The annual energy charge shall be determined and paid
in the following manner:
(1) Landlord shall select from time to time a
consultant ("Consultant") to provide annual estimates of Tenant's energy use.
Tenant shall make the Premises available to Consultant from time to time during
normal business hours to permit Consultant to make an energy survey of the
Premises. In addition, Tenant shall supply Landlord, within fifteen (15) days
after receipt of written request therefor, with all information which may be
reasonably necessary for Consultant to estimate Tenant's energy use, including
without limitation: (a) plans and specifications for the electrical systems
within the Premises (including "as built" drawings); (b) specifications for all
electrical equipment and appliances to be operated within the demised premises;
and (c) reasonable estimates of the hours such equipment shall be used.
Consultant, in preparing the energy estimate, shall consider the information
submitted by Tenant, the days and hours of operation of Tenant's business and
any other factors which Consultant may deem relevant. Consultant shall provide
copies of the energy estimate to both Landlord and Tenant. Consultant's energy
estimate shall be binding upon both Landlord and Tenant.
(2) Based upon the energy estimate described in
subsection (b)(i) above, Consultant shall determine Tenant's "annual energy
charge" for the electricity to be furnished by Landlord. It is the intent of the
Landlord that the amount of the annual energy charge shall neither exceed nor be
less than the total charges (including fuel adjustments and all applicable
taxes) which Tenant would be obligated to pay the electrical utility company
then providing service to the Business Center for such electrical service if the
electrical service was provided by such utility company.
(3) Tenant shall pay the annual energy charge in
twelve (12) equal installments, each of which shall be paid in advance on or
before the first (1st) day of each month.
(4) Not later than sixty (60) days after the end of
such calendar year, Landlord or Landlord's Consultant shall compute the
adjustments if any, for Tenant's energy use during the preceding calendar year.
Such adjustment shall be based upon factors which have caused Tenant's energy
use or the costs therefor to vary from the energy estimates including without
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38
limitation: any revision of rates charged by the local utility company during
such year; any revision due to a tax increase by state or local governments; any
change in energy use by Tenant; any permitted change in the use of the Premises
which affects Tenant's energy use; any adjustments required as a result of
Tenant's actual operating experience or seasonal requirements. The amount of
such adjustment shall be added to or subtracted from, as the case may be,
Tenant's next succeeding monthly payment of Tenant's energy charge.
(b) Landlord's Consultant shall estimate Tenant's annual
energy charge for each succeeding twelve (12) month period in the same manner
described in subsection (b) (i) of this Section 13.1, and Tenant's payment of
Tenant's annual energy charge shall be adjusted accordingly.
(c) In no event shall Tenant's obligation to pay Tenant's
annual energy charge abate, nor shall Tenant have any right of offset or
counterclaim against the payment of Tenant's annual energy charge except for
those adjustments to which Tenant may be entitled under subsection (b) (i) (4)
of this Section 13.1.
(d) Tenant covenants and agrees that at all times, its use of
electric current shall not exceed the capacity of the feeder to the Premises and
the wire installation therein. Tenant shall make no alterations or additions to
the electrical installations within the Premises without the prior written
consent of Landlord in each instance.
(e) If at any time the local utility company shall provide
electrical service directly to the Premises or if submeters are otherwise
available, Tenant shall obtain such service and/or submeters, at its cost and
expense.
Section 13.2 - Central and Premises Ventilating and Air-Conditioning Systems.
--------------------------------------------------------------
Per Exhibit "C", Landlord will perform the roof penetrations for
installation of Tenant's roof-top equipment and facilities for heating,
ventilating and air conditioning the Premises ("Premises HVAC System"). Landlord
will also, per Exhibit "C", install vertical shafts from the first floor to the
roof for Tenant's air systems. Tenant shall be responsible, at its sole cost and
expense, for installing all other components, controls and equipment of Tenant's
Premises HVAC System initially and during the Term of this Lease and all of the
foregoing shall belong to Landlord at the expiration or earlier termination of
the Term of this Lease. Tenant, at Tenant's sole cost and expense, shall
maintain, including replacements, if necessary, the complete Premises HVAC
System in good order, condition and repair.
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Section 13.3 - Discontinuance of Service.
--------------------------
Landlord reserves the right with thirty (30) days prior written notice
to Tenant to cut off and discontinue water, electricity, air conditioning,
heating, ventilating, and any or all other service without liability to Tenant,
whenever and during any period in which bills for the same remain unpaid by
Tenant. Any such action by Landlord shall not be construed by Tenant or any
other party interpreting this Lease as an eviction or disturbance of possession
of Tenant or an election by Landlord to terminate this Lease on account of such
nonpayment. If such service is discontinued or disconnected by Landlord pursuant
to this Section, any reconnection of such service shall be at Tenant's sole cost
and expense.
Section 13.4 - Interruption of Service.
------------------------
Landlord shall not be liable to Tenant in damages or otherwise if any
one or more of said utility services or obligations hereunder is interrupted or
terminated because of necessary repairs, installations, construction and
expansion, non-payment of utility charges due from Tenant, or by reason of
governmental regulation, statute, ordinance, restriction or decree, or any other
cause beyond Landlord's reasonable control. No such interruption or termination
of utility service shall relieve Tenant from any of its obligations under this
Lease.
Section 13.5 - Premises Sprinkler System.
--------------------------
Landlord shall provide and install or has provided and installed within
the Premises a sprinkler system tap. Tenant is responsible for all costs
associated with the installation, maintenance and operation of the sprinkler
system serving the Premises.
Section 13.6 - Alternate Service.
------------------
Landlord, at any time, may elect to discontinue the furnishing of any
and all of the utilities or services provided to the Premises, excepting only
the ventilating and air-conditioning provided by Landlord pursuant to this
Lease. In such event: (a) Landlord agrees to permit Tenant to receive any of
such discontinued utilities directly from the entity supplying same and to
permit the existing equivalent and installations and other facilities serving
the Premises to be used by Tenant for such purpose to the extent they are
available, suitable and safely capable; (b) Landlord agrees, at its sole cost
and expense, to install and to pay for any additional necessary equipment
including, without limitation, rewiring; (c) this Lease shall remain in full
force and effect and such discontinuance shall not constitute an actual or
constructive eviction, nor shall it otherwise entitle Tenant to any abatement or
diminution of Rents, nor shall it relieve Tenant from any of its other
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40
obligations under this lease or, except as provided above, impose any liability
upon Landlord or Landlord's agents.
ARTICLE XIV
-----------
SIGNS
-----
Section 14.1 - Tenant's Obligation.
--------------------
Tenant shall only erect such signs that have been approved by Landlord
in accordance with Exhibit "BC1.0" and requirements of all governmental
authorities, and said signs shall be maintained in good condition by Tenant.
Tenant shall obtain all permits and licenses for its sign(s). Tenant shall not
exhibit or affix any other type of sign, decal, advertisement, notice or other
writing, awning, antenna or other projection to the roof or the outside walls or
windows of the Premises or the building of which the Premises are a part,
without Landlord's written approval. No movable displays or sales fixtures will
be allowed in the Design Control Area (as defined in Exhibit "BC1.0") except
behind the display windows or store closure.
Section 14.2 - Interior Signs and Advertising.
-------------------------------
Tenant further agrees that no advertising material of any kind except
temporary price tags related to merchandise on display shall be placed within
four (4) feet of any customer door or lease line of the Premises or on the
surface of any display window or customer door. All window display advertising
material and signs shall be in keeping in character and standards with the
improvements within the Shopping Center as determined by Landlord and as more
specifically described in Exhibit "BC1.0", and Landlord reserves the right to
require Tenant to correct any nonconformity. Any such display and signs shall
only be related to merchandising of goods from the Premises.
ARTICLE XV
----------
REPAIRS AND ALTERATIONS
-----------------------
Section 15.1 - Repairs by Landlord.
--------------------
(a) Landlord shall keep the roof, structural portions, the exterior of
the Premises, and Common Areas, in good and tenantable condition and repair
during the Term, subject to Section 12.2, provided, however, if the need for
such repair is attributable to or results from the operation or acts of Tenant
or its agents, or is Tenant's responsibility, then in such case Tenant does
hereby agree to and shall reimburse Landlord, on demand, for all costs and
expenses incurred by Landlord with
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41
respect to such repairs, and such reimbursement obligations shall be considered
additional rent.
(b) As used in this Article the expression "structural portions" and
"exterior of the Premises" shall not be deemed to include store front or store
fronts, plate glass, window cases or window frames, doors or door frames, or
alterations required to comply with any Regulations, including, but not limited
to, the Americans with Disabilities Act ("ADA"). It is expressly understood and
agreed that Landlord shall be under no obligation to make any repairs,
alterations, replacements or improvements to or upon the Premises resulting from
compliance with the ADA or the mechanical equipment exclusively serving the
Premises at any time.
(c) Landlord shall not in any way be liable to Tenant for failure to
make repairs as herein specifically required of Landlord, unless Tenant has
previously notified Landlord in writing of the need for such repairs and
Landlord has failed to commence said repairs within a reasonable period of time
following receipt of Tenant's written notification, and has not diligently
pursued said repairs to completion.
Section 15.2 - Repairs by Tenant.
------------------
(a) It shall be Tenant's sole responsibility, at its own expense, to
keep and maintain its storefront and the interior of the Premises in good
condition and repair. All repairs to the Premises or any installation, equipment
or facilities therein or thereabout, other than those repairs required to be
made by Landlord pursuant to Section 15.1, shall be made by Tenant. Said repairs
shall include but not be limited to all necessary painting and decorating, the
maintenance, repair and replacement of the electrical, plumbing and sewer
systems, under the slab and elsewhere which exclusively serve the Premises,
storefronts, window and other glass, entrance and service doors and window
frames, and any other mechanical or operational installations, exclusively
serving the Premises. All such repairs and replacements shall be in quality and
class equal to the original work or item and shall be subject to Landlord's
prior reasonable approval. Tenant shall maintain all grease traps and exhaust
systems in clean condition throughout the Term of this Lease in accordance with
Landlord's requirements therefor.
(b) Notwithstanding anything contained herein, Tenant shall, at
Tenant's sole cost, repair or replace all glass contained in the Premises,
including but not limited to, glass in doors, storefronts and windows.
Section 15.3 - Alterations and Remodeling.
---------------------------
(a) Tenant, at its own expense, shall have the right during
the Term, to make such interior alterations, changes and
- 37 -
42
improvements to the Premises as Tenant may deem necessary for its use and
business, provided, however, that any remodeling of the interior or any
alterations to the Premises, in excess of Two Thousand Five Hundred Dollars
($2,500.00), and any material or structural alterations to the Premises, or
changes in the electrical, heating, ventilating or air conditioning systems
thereof, shall not be made without Landlord's prior written consent. Landlord's
approval of Tenant's alterations shall, however, create no responsibility or
liability on the part of Landlord for their completeness, design, sufficiency or
compliance with the Requirements (defined below) of governmental agencies or
authorities. All such alterations, changes and improvements, except trade
fixtures, shall become the property of Landlord upon installation and shall
remain upon and be surrendered with the Premises upon expiration or earlier
termination of this Lease.
(b) Tenant further agrees not to make any alterations, additions or
changes to any storefront or exterior sign, the exterior walls or roof of the
Premises, nor shall Tenant erect any mezzanine or increase the size of same if
one is initially constructed unless and until the prior written consent of
Landlord shall first have been obtained. In no event shall Tenant make or cause
to be made any penetration through the roof or the floor slab of the Premises
without the prior written consent of Landlord. Tenant shall be directly
responsible for any and all damages resulting from any violation of the
provisions of this Section.
Section 15.4 - Renovation.
-----------
In the event that Landlord develops after eight (8) years from the date
of this Lease, a comprehensive renovation plan for the Shopping Center which may
include structural changes to conform to revised design criteria or to new
additions to the Shopping Center, Tenant agrees, at its sole cost, to redesign
and reconstruct its store front and signs to conform to Landlord's revised
design criteria. Landlord shall provide Tenant with revised design criteria and
Tenant shall commence its renovation within ninety (90) days of receipt of said
criteria and shall thereafter diligently pursue its completion. Notwithstanding
anything to the contrary contained in this Section 15.4, Landlord shall have the
right to enforce this Section 15.4 only once during the Term of this Lease
including any extensions or renewals thereof.
- 38 -
43
ARTICLE XVI
-----------
LIENS
-----
Section 16.1 - Indemnification by Tenant.
--------------------------
Tenant shall allow no liens to be filed against the Premises or the
Shopping Center as a result of work performed at the request or on behalf of
Tenant. Tenant shall indemnify and save harmless Landlord against all loss,
liability, costs, attorney's fees, damages or interest charges as a result of
any mechanic's lien or any other lien caused to be filed against the Shopping
Center, the Premises or Tenant's leasehold estate therein as a result of acts or
omissions of Tenant or its agents, contractors and employees, and Tenant shall,
within thirty (30) days of the filing of any such lien and written notice given
to Tenant, remove, pay or cancel said lien or secure the payment of any such
lien or liens by bond or other security acceptable to Landlord.
Section 16.2 - Tenant's Right of Contest.
--------------------------
(a) Tenant shall have the right at all times and at its own expense to
contest and defend on behalf of Tenant or Landlord any action involving the
collection, validity or removal of such lien or liens, upon giving adequate
security to Landlord for payment of such lien.
ARTICLE XVII
------------
INDEMNITY AND INSURANCE
-----------------------
Section 17.1 - Mutual Indemnification.
-----------------------
(a) Tenant shall defend, indemnify and save Landlord harmless from
legal action, damages, loss, liability and any other expense (including
reasonable attorney fees) in connection with loss of life, bodily or personal
injury or property damage arising from or out of all acts, failures, omissions
or negligence of Tenant, its agents, employees or contractors which occur in the
Premises, Common Areas or other parts of the Shopping Center, unless such legal
action, damages, loss, liability or other expense (including reasonable attorney
fees) results from any sole act, omission or neglect of Landlord, its respective
agents, contractors, employees or persons claiming through it.
(b) Landlord shall indemnify and save Tenant harmless from legal
action, damages, loss, liability and any other expense (including reasonable
attorney fees) in connection with loss of life, bodily or personal injury or
property damage, arising from or out of all acts, failures, omissions or
negligence of Landlord, its agents, employees or contractors which occur in the
- 39 -
44
Premises, Common Areas or other parts of the Shopping Center, unless such legal
action, damages, loss, liability or other expense (including reasonable attorney
fees) results from any sole act, omission or neglect of Tenant, its respective
agents, contractors, employees or persons claiming through it.
Section 17.2 - Tenant's Insurance.
-------------------
Tenant covenants and agrees that from and after the date of delivery of
the Premises from Landlord to Tenant, and during the Term of this Lease or any
renewal thereof, Tenant will carry and maintain, at its sole cost and expense,
the following types of insurance, naming both Tenant and Landlord as insureds,
in the amount specified and in the form hereinafter provided for with insurance
companies authorized to do business in the state in which the Premises is
located and rated A/VII or better in the most current edition of Best's
Insurance Report:
(a) PUBLIC LIABILITY INSURANCE. Tenant shall keep in full force and
effect commercial general liability insurance, which shall include broad form
property damage liability coverage, extended bodily injury coverage, advertising
injury liability coverage, contractual liability coverage and independent
contractors coverage, in an amount not less than $1,000,000, adjusted annually
for inflation, written on a combined single limit per occurrence basis for
property damage, personal injury and bodily injury or death of one or more
persons.
(b) BOILER AND MACHINERY INSURANCE. If applicable, Tenant shall
maintain in full force and effect at all times during the Term of the Lease a
policy(s) of boiler and machinery breakdown insurance covering all of its
boilers, fired or unfired pressure vessels, heating, ventilating and
air-conditioning units or any other mechanical equipment which may malfunction
or cause damage to property or injury to persons that may be caused by or
results from any equipment existing at the commencement date of this Lease or
added to the Premises at a subsequent date, which equipment is used exclusively
by Tenant, and if said coverage is not included within the policy(s) providing
coverage for Tenant's alterations, improvements and betterments, pursuant to
Section 17.2(e), then said insurance shall be by separate policy in an amount
not less than One Hundred Thousand and 00/100 Dollars ($100,000.00)
(c) ENVIRONMENTAL IMPAIRMENT LIABILITY INSURANCE. If Tenant uses,
stores, handles, processes or disposes of "Hazardous Materials" (as hereinafter
defined) in the ordinary course of its business, then Tenant shall maintain in
full force and effect throughout the Term of this Lease, Environmental
Impairment Liability Insurance with limits of not less than $1,000,000,
providing coverage for bodily injury, property damage or injury or damage of
actual, alleged or threatened emission, discharge, dispersal, seepage, release
or escape of Hazardous Materials,
- 40 -
45
including any loss, cost or expense incurred as a result of any cleanup of
Hazardous Materials or in the investigation, settlement or defense of any claim,
suit, or proceedings against Landlord or its management company arising from
Tenant's use, storage, handling, processing or disposal of Hazardous Materials.
As used herein, the term "Hazardous Material" means: (i) asbestos and
polychlorinated biphenyls; and (ii) hazardous or toxic materials, wastes and
substances which are defined, determined or identified as such as of the date of
this Lease pursuant to all (a) federal, state or local laws, rules or
regulations; and (b) judicial or administrative interpretation thereof.
(d) LIQUOR LIABILITY INSURANCE. If Tenant distributes, sells, serves or
furnishes alcoholic beverages in the ordinary course of its business, then
Tenant shall maintain and keep in full force and effect throughout the Term of
this Lease, Liquor Liability Insurance in an amount not less than $1,000,000
written on a combined single limit per occurrence basis.
(e) PERSONAL PROPERTY, ALTERATIONS, IMPROVEMENTS AND BETTERMENTS.
Tenant shall at all times during the Term hereof maintain in full force and
effect a policy(s) of all risk insurance including coverage for sprinkler
damage, vandalism and malicious mischief, covering all of Tenant's Personal
Property, including alterations, improvements and betterments to the Premises
now existing or to be added, to the extent of their full replacement costs as
updated from time to time during the Term of this Lease.
The proceeds of Tenant's policy(s) to the extent of the cost
of any damage or loss to the Premises, shall be used for the repair and
replacement of the property damaged or destroyed. In the event of Tenant's
failure to commence, within thirty (30) days of availability of insurance
proceeds, and to diligently proceed to reconstruct or repair its portion of the
damaged or destroyed Premises to its former condition prior to said casualty,
then Landlord shall have the right to make all necessary repairs and if the
insurance proceeds described above are not sufficient to cover the repairs,
Tenant shall be liable for all additional costs in excess of such available
insurance proceeds. However, it is expressly understood and agreed that Landlord
shall be under no obligation to insure, reinstall, repair or replace any such
alterations, additions, improvements or betterments. This paragraph is only
applicable if the Lease is not terminated pursuant to Article XXII hereof.
(f) ADDITIONAL HAZARDS. Tenant agrees that it will not keep, use, sell
or offer for sale in or upon the Premises any article which may be prohibited by
the standard form of all risk insurance coverage. Tenant agrees to pay any
increase in premium for All Risk Coverage resulting from the keeping, use, sale
or offering for sale of such prohibited articles that may be charged during the
Term of this Lease for the amount of any insurance
- 41 -
46
which may be carried by Landlord on the Premises. Said additional premiums shall
be payable by Tenant to Landlord as additional rent, upon ten (10) days written
notice to Tenant.
(g) BLANKET POLICIES. Tenant may maintain any of its required insurance
coverages under blanket policies of insurance covering said Premises and any
other premises of Tenant, or companies affiliated with Tenant, provided that the
coverage afforded will not be reduced or diminished by reason of the use of such
blanket policy.
(h) POLICY(S) AND/OR CERTIFICATES OF INSURANCE. The above mentioned
policy(s) or certificates of insurance are to be provided by Tenant to Landlord
prior to occupancy and at least annually thereafter or as requested by Landlord.
The coverage evidenced by the policy(s) or certificates of insurance will be
with insurance company(s) acceptable to Landlord and will be for a period of not
less than one (1) year, and will provide that Landlord be given written notice
thirty (30) days prior to the expiration, material alteration, cancellation,
non-renewal or replacement of the existing policy(s), with the further
understanding that should Tenant fail to furnish said notice or policies as is
provided in this Lease, and at the times herein provided, Landlord may obtain
such insurance and the premiums on such insurance shall be paid by Tenant to
Landlord upon demand, as additional rent.
(i) NOTICE OF LOSS. Tenant shall notify Landlord forthwith in the event
of any damage to persons or property occurring on the Premises from fire, any
other casualty, or serious injury.
Section 17.3 - Landlord's Insurance.
---------------------
Landlord covenants and agrees that from and after the date of delivery
of the Premises from Landlord to Tenant, and during the Term of this Lease or
any renewal thereof, Landlord will carry and maintain, with regard to the
Shopping Center, the following types of insurance, in the amounts specified and
in the form hereinafter provided for with insurance companies authorized to do
business in the state in which the Premises is located and rated A/VII or better
in the most current edition of Best's Insurance Report:
(a) PUBLIC LIABILITY INSURANCE. Landlord shall keep and maintain in
full force and effect commercial general liability insurance in an amount not
less than $1,000,000, adjusted annually for inflation written on a combined
single limit per occurrence basis for property damage and personal and bodily
injury or death of one or more persons.
(b) PROPERTY DAMAGE INSURANCE. Landlord shall, at all times, keep and
maintain in full force and effect all risk policy(s) of insurance, including
coverage for sprinkler damage,
- 42 -
47
vandalism and malicious mischief, covering the roof, structural portions and
perimeter walls of the Shopping Center and equipment (excluding Tenant's
fixtures, merchandise, personal property, wall coverings, alterations,
improvements, betterments and any other item included in Tenant's insurance) in
an amount not less than full replacement cost (exclusive of the cost of
excavations, foundations and footings) updated from time to time during the Term
of this Lease or the amount of such insurance which Landlord's mortgage lender
may require Landlord to maintain, whichever is the greater.
(c) BLANKET POLICIES. Landlord may maintain any of its required
insurance under blanket policies of insurance covering the Premises and any
other premises of Landlord or companies affiliated with Landlord, provided that
the coverage afforded will not be reduced or diminished by reason of the use of
such blanket policy of insurance.
Section 17.4 - Waiver of Subrogation.
----------------------
Notwithstanding anything to the contrary contained elsewhere in this
Lease, or prohibited by law, neither Landlord nor Tenant shall be liable to the
other party or to any insurance company insuring the other party by way of
subrogated rights or otherwise, for any loss or damage caused by fire or any
other hazard or peril covered by fire and extended coverage or all risk
insurance, to the extent such loss or damage is covered by insurance to any
building structure or other tangible property, or any resulting loss of income,
even though such loss or damage may have been occasioned by the negligence of
such party, its agents or employees.
Section 17.5 - Landlord Not Responsible for Acts of Others.
--------------------------------------------
Landlord shall not be responsible or liable to Tenant, or those
claiming by, through or under Tenant, for any loss or damage to their person or
property resulting from the acts or omissions of persons occupying space
adjoining or adjacent to the Premises or connected to the Premises or any other
part of the Shopping Center caused by but not limited to events such as breaking
or falling of electrical cables and wires, the breaking, bursting, stoppage or
leaking of water gas, sewer or steam pipes.
ARTICLE XVIII
-------------
GENERAL RULES AND REGULATIONS
-----------------------------
Section 18.1 - Uniformity.
-----------
Landlord reserves the right, at any time and from time to time for the
general welfare of the Shopping Center, the avoidance of nuisance and the
maintenance of a good reputation,
- 43 -
48
safety, order and cleanliness in the Premises and at the Shopping Center, to
impose reasonable rules and regulations of generally uniform application
governing the conduct of tenants and the use of the Common Areas in the Shopping
Center. Tenant agrees to comply with such rules and regulations imposed by
Landlord as if they had existed and been attached hereto at the time of
execution of this Lease.
Section 18.2 - Rubbish.
--------
Tenant agrees to maintain the Premises, at its expense, free and clear
of all rubbish, garbage or trash in the containers permitted and/or required by
Landlord. Tenant, at its own expense, shall dispose of all said rubbish as
directed by Landlord. In the event Tenant requires the services of a trash
compactor, it agrees to arrange for and coordinate said services through
Landlord's mall manager. If Tenant is required to use the Shopping Center's
trash compactor service, the charge for such service shall be competitive with
the prevailing market rate for such services.
Section 18.3 - Lighting.
---------
Tenant agrees to keep the windows of the Premises properly displayed
and the Premises signs and external lights, where specifically permitted,
properly illuminated during the hours as established by the rules and
regulations of Landlord for the Shopping Center.
Section 18.4 - Merchandise Display, Loading and Unloading.
-------------------------------------------
Tenant agrees not to display merchandise outside the Premises, and to load,
unload or deliver goods and merchandise only at such times and in such areas and
through such entrances as shall be designated by Landlord.
Section 18.5 - Obstruction of Passageways.
---------------------------
Tenant agrees not to obstruct the passageways, driveways, approachways,
walks, roadways, exits and entries in, to, from and through the Common Areas and
all other parts of the Shopping Center used in common with other tenants.
ARTICLE XIX
-----------
SUBORDINATION AND ATTORNMENT BY TENANT
--------------------------------------
Section 19.1 - Subordination of Lease.
-----------------------
This Lease and the estate of Tenant hereunder shall be and remain
subject and subordinate to any ground lease, deed of trust, mortgage lien or
charge or any reciprocal easement
- 44 -
49
agreement or other operating agreement which now encumber or which at any time
hereafter may encumber the Premises (such ground lease, deed of trust, mortgage
lien or charge, or any reciprocal easement agreement or other operating
agreement and any replacement, renewal, modification, consolidation or extension
thereof being hereinafter referred to as an "Encumbrance"). Any Encumbrance
shall be prior and paramount to this Lease and to the rights of Tenant hereunder
and all persons claiming through and under Tenant, or otherwise, in the
Premises. Tenant's acknowledgement and agreement of subordination provided for
in this Section shall be self-operative and no further instrument of
subordination shall be required. However, Tenant, on Tenant's behalf, and on
behalf of all persons claiming through and under Tenant, covenants and agrees
that, from time to time at the request of Landlord or the holder of any
Encumbrance, Tenant will execute and deliver any necessary or proper instruments
or certificates reasonably necessary to acknowledge or confirm the priority of
the Encumbrance over this Lease and the subordination of this Lease thereto or
to evidence Tenant's consent to any Encumbrance. Notwithstanding the foregoing,
any holder of an Encumbrance may elect to the extent possible that this Lease
shall have priority over such Encumbrance and, upon notification of such
election by the holder of such Encumbrance, this Lease shall be deemed to have
priority over such Encumbrance, whether this Lease is dated prior to or
subsequent to the date of such Encumbrance. Notwithstanding anything to the
contrary contained in this Section 19.1, no holder of any Encumbrance shall
disturb Tenant's use and occupancy of the Premises so long as Tenant is not in
default of any of its obligations hereunder beyond the expiration of any cure
period after the giving of all required notices.
Section 19.2 - Attornment by Tenant.
---------------------
Tenant agrees that if the holder of any Encumbrance or any person
claiming under said Encumbrance shall succeed to the interest of Landlord in
this Lease, Tenant shall recognize and attorn to said holder as Landlord under
the terms of this Lease. Tenant agrees that it will, upon the request of
Landlord, execute, acknowledge and deliver any and all instruments necessary or
desirable to give effect or notice of such attornment and failure of Tenant to
execute any such document or instrument on demand shall constitute a default by
Tenant under the terms of this Lease.
Section 19.3 - Landlord as Attorney-in-Fact for Tenant.
----------------------------------------
If Tenant within ten (10) days after submission of such instrument
fails to execute the same, Landlord is hereby authorized to execute the same as
attorney-in-fact for Tenant.
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50
ARTICLE XX
----------
RIGHTS OF LANDLORD
------------------
Section 20.1 - Landlord's Right to Repair.
---------------------------
Landlord, or its authorized agents, after reasonable prior written
notice to Tenant, may go upon and inspect the Premises or any portion of the
Shopping Center and, if necessary shall, if Tenant has failed to commence such
repairs within ten (10) days following written notice from Landlord, make those
needed repairs which are Tenant's obligation to perform and which Tenant has
failed to do. The costs of said work shall be paid by Tenant to Landlord within
ten (10) days following receipt of Landlord's billing therefor, as additional
rent under this Lease.
Section 20.2 - Landlord's Right to Affix Sign.
-------------------------------
Landlord has a right to install or place upon, or affix to the roof and
exterior walls of the Premises equipment, non competitive signs, displays,
antennas and any other object or structure of any kind, provided the same shall
not materially impair the structural integrity of the building or interfere with
Tenant's occupancy.
Section 20.3 - Landlord's Right to Make Payments on Behalf of Tenant.
------------------------------------------------------
Landlord has a right to make payments on behalf of Tenant where Tenant
defaults in its payments or obligations under the terms of this Lease. Said
payments by Landlord shall be due and payable from Tenant within ten (10) days
following receipt of Landlord's billing therefor, as additional rent under this
Lease.
ARTICLE XXI
-----------
ASSIGNMENT AND SUBLETTING
-------------------------
Section 21.1 - Landlord's Consent Required.
----------------------------
(a) Landlord has entered into this Lease with Tenant in order to obtain
the benefit for the Shopping Center of the unique attraction of the trade name
set forth in Article I and of the unique merchandising mix and product line
associated with the business operated by Tenant under such trade name. In
entering into this Lease, Landlord has specifically relied on the identity and
special skill of Tenant in its ability to conduct the business identified in
Article I. Accordingly Tenant shall not mortgage, pledge, encumber, franchise,
assign or in any manner transfer this Lease, voluntarily or involuntarily, by
operation of law or otherwise, nor sublet all or any part of the Premises for
the conduct of any business by any third person or business
- 46 -
51
entity, or for any purpose other than is herein authorized without Landlord's
prior written consent which shall not be unreasonably withheld or delayed by
Landlord.
(b) Any consent by Landlord to any assignment or subletting, or other
operation by a concessionaire, or licensee, shall not constitute a waiver of the
necessity for such consent under any subsequent assignment or subletting or
operation by a concessionaire or licensee.
(c) Reference anywhere else in this Lease to an assignee or subtenant
shall not be considered as a consent by Landlord to such assignment or
subletting nor as a waiver against the same except as specifically permitted in
this Section.
Section 21.2 - Insolvency Proceedings.
-----------------------
In the event an assignment of the Premises is caused by operation of
law due to Tenant's voluntary or involuntary insolvency proceedings under the
Bankruptcy Reform Act of 1978 as amended, said assignment shall be subject to
any and all conditions contained in Section 365 of said Act or any other section
pertaining to the termination, assumption, assignment and rejection of executory
contracts for leases.
Section 21.3 - Return of Premises by Tenant.
-----------------------------
Simultaneously with any request by Tenant for consent as required in
this Article XXI to assign this Lease or sublet any part or the whole of the
Premises, Tenant shall, by written notice and without charge of any kind, offer
the return of the Premises to Landlord herein. Landlord, within sixty (60) days
of receipt of said written notice, shall have the option to accept the Premises
without further liability upon Tenant as to the terms of this Lease or reject
said offer and permit Tenant to assign or sublet the Premises subject to the
conditions of this Section.
Section 21.4 - Transfer of Corporate Shares.
-----------------------------
(a) INTENTIONALLY OMITTED
(b) Notwithstanding the foregoing provisions, Tenant shall have the
right to assign or otherwise transfer this Lease or the entire Premises (but not
part of the Premises), to its parent corporation or to a wholly owned subsidiary
or to a corporation which is wholly owned by the same corporation which wholly
owns Tenant, provided, however, that (i) Tenant shall also remain primarily
liable for all obligations under this Lease, (ii) the transferee shall, prior to
the effective date of the transfer, deliver to Landlord, instruments evidencing
such transfer and its agreement to assume and be bound by all the terms,
conditions and covenants of this Lease to be performed by Tenant, all in form
- 47 -
52
and substance acceptable to Landlord, (iii) Tenant shall not be in default under
this Lease and (iv) Tenant's right to make such transfer is expressly
conditioned on, and shall remain in effect only as long as the transferee
maintains its relationship as parent corporation or wholly owned subsidiary of
Tenant or wholly owned subsidiary of Tenant's parent corporation. Any transfer
of other stock of such parent or subsidiary transferee shall be deemed a change
in the control of Tenant and governed by the provisions of Section 21.4 (a)
unless such parent corporation or subsidiary transferee is not a closely-held
corporation.
Section 21.5 - Transfer of Other Business Interests.
-------------------------------------
INTENTIONALLY OMITTED
Section 21.6 - Acceptance of Rent by Landlord.
-------------------------------
If this Lease be assigned, or if the Premises, or any part thereof, be
subleased or occupied by anybody other than Tenant with or without Landlord's
consent, Landlord may collect from assignee, subtenant or occupant, any rent or
other charges payable by Tenant under this Lease and apply the amount collected
to the Rents herein reserved, but such collection by Landlord shall not be
deemed a waiver of the provisions of this Lease, nor an acceptance of this
assignee, subtenant or occupant, as a tenant of the Premises.
Section 21.7 - No Release of Tenant's Liability.
---------------------------------
No assignment or subletting or any other transfer by Tenant, either
with or without Landlord's consent, required or otherwise, during the Term of
this Lease shall release Tenant from any liability under the terms of this Lease
nor shall Tenant be relieved of the obligation of performing any of the terms,
covenants and conditions of this Lease.
Section 21.8 - Fees.
-----
In each instance where Landlord's consent to an assignment or
subletting is requested by Tenant, Tenant acknowledges and agrees that Landlord
shall not be deemed to be acting unreasonably if Landlord, as one of its
conditions to the granting of such consent, should require (i) a payment from
Tenant in the amount of $2,000 to consider such request, and (ii) Tenant to pay
the reasonable attorney's fees incurred by Landlord, its outside counsel, if
any, and counsel for Landlord's lender if such lender's consent should be
required, in the preparing, reviewing, negotiating and/or processing of
documentation in connection with the requested assignment or subletting
irrespective of whether or not consent is given to such assignment or
subletting.
- 48 -
53
ARTICLE XXII
------------
DAMAGE OR DESTRUCTION
---------------------
Section 22.1 - Landlord's Obligation to Repair and Reconstruct.
------------------------------------------------
(a) If the Premises shall be partially damaged by fire or other
casualty insurable under standard extended coverage insurance but are not
thereby rendered untenantable in any manner, Landlord shall cause the Premises
to be repaired subject to Subsections (c) and (d) herein and the Fixed Minimum
Rent and Additional Charges shall not be abated. If by reason of such occurrence
the Premises shall be rendered untenantable only in part, Landlord shall cause
the Premises to be repaired subject to Subsections (c) and (d) herein, and the
Fixed Minimum Rent and Additional Charges shall be abated proportionately as to
the portion of the Premises rendered untenantable until the earlier to occur of
sixty (60) days after Landlord's restoration work has been substantially
completed or the date the Premises so repaired has reopened for business.
(b) If the Premises shall be rendered wholly untenantable by reason of
such occurrence and the remainder of the term of the Lease (hereinafter called
the "residual term") is two (2) years or more, Landlord shall cause the Premises
to be repaired in accordance with Subsection (c) herein (subject to reasonable
delays occasioned by adjustment of losses with insurance carriers or for any
cause beyond Landlord's control), and the Fixed Minimum Rent and Additional
Charges shall be abated until the earlier to occur of sixty (60) days after
Landlord's restoration work has been substantially completed or the date the
Premises so repaired has reopened for business.
(c) If Landlord is required or elects to repair or reconstruct the
Premises under the provisions of this Article XXII, its obligation shall be
limited to those repairs to the Premises which were Landlord's obligation to
perform for Tenant at the commencement date of this Lease. Tenant, at Tenant's
expense, shall promptly perform all repairs and restoration not required to be
done by Landlord and shall promptly refixture and reconstruct the Premises and
recommence business in all parts thereof.
(d) Tenant shall not be entitled to any compensation or damages, other
than stated herein, from Landlord for the loss of the use of the whole or any
part of the Premises or damage to Tenant's personal property or any
inconvenience or annoyance occasioned by such damage, repair, reconstruction or
restoration.
Section 22.2 - Option to Terminate.
--------------------
If the Premises are (1) rendered wholly untenantable, or damaged as a
result of any cause which is not covered by
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54
Landlord's insurance and Landlord elects not to restore the Premises; or (2)
damaged or destroyed in whole or in part during the last two (2) years of the
Term; or (3) if the Shopping Center is damaged to the extent of fifty percent
(50%) or more of the gross leasable area thereof and Landlord elects not to
restore the Premises, then in any of such events, Landlord or Tenant may elect
to terminate this Lease by giving to the other notice of such election within
ninety (90) days after the occurrence of such event. If such notice is given,
the Lease shall terminate as of the date of such notice, and Fixed Minimum Rent
and Additional Charges shall be adjusted as of the date of such termination.
Tenant hereby waives any statutory rights of termination which may
arise out of partial or total destruction of the Premises which Landlord is
obligated to restore.
Section 22.3 - Demolition of Landlord's Building.
----------------------------------
If the Shopping Center is so substantially damaged that it is
reasonably necessary, in Landlord's judgment, to demolish a portion of the said
Shopping Center, including the Premises, for the purpose of reconstruction,
Landlord may demolish the Premises, in which event Tenant's Fixed Minimum Rent
and Additional Charges shall be abated until the earlier to occur of sixty (60)
days after Landlord's restoration work has been substantially completed or the
date the Premises so restored has reopened for business.
ARTICLE XXIII
-------------
CONDEMNATION
------------
Section 23.1 - Effect of Taking.
-----------------
(a) In the event that the whole or any part of the Premises shall be
taken for public or quasi-public use or condemnation under eminent domain, this
Lease shall terminate as to the part so taken on the date possession is yielded
to the condemning authority.
(b) In the event that any portion of the Shopping Center or Common
Areas is taken and such taking substantially impairs access to or the usefulness
of the Premises for the purposes hereinbefore granted to Tenant, either party
may terminate the Lease by written notice within thirty (30) days prior to the
actual physical taking.
(c) For the purposes of this Article, a voluntary sale or conveyance in
lieu of condemnation, but under threat of condemnation, shall be deemed an
appropriation or taking under the power of eminent domain.
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55
(d) If this Lease has not been terminated as above provided following
any of such actual takings, then Landlord shall, at its expense, make all
necessary repairs or alterations to the basic building and exterior work so as
to constitute the remaining Premises a complete architectural unit and a
proportionate allowance shall be made in the Fixed Minimum Rent and Additional
Charges based on the proportion of the Premises remaining as compared to the
original Premises.
Section 23.2 - Compensation and Awards.
------------------------
All compensation awarded for any taking of the fee and the leasehold,
or any part thereof, shall belong to and be the property of Landlord. Tenant
hereby assigns to Landlord all right, title and interest of Tenant in and to any
award made for leasehold damages and/or diminution in the value of Tenant's
leasehold estate. Tenant shall have the right to claim such other compensation
as may be separately awarded or allocated by reason, of the cost or loss
suffered by Tenant provided that the award to Tenant does not reduce the amount
otherwise payable to Landlord. Compensation as used in this Section shall mean
any award given to Landlord for such taking in excess of, and free and clear of,
all prior claims of the holders of any mortgages or other security interests.
Section 23.3 - Condemnation or Breach of Lease.
--------------------------------
Any such appropriation or condemnation proceedings shall not operate as
or be deemed an eviction of Tenant or a breach of Landlord's covenant of quiet
enjoyment.
Tenant hereby waives any statutory rights of termination which may
arise by reason of any partial taking of the Premises under the power of eminent
domain.
ARTICLE XXIV
------------
DEFAULT
-------
Section 24.1 - Events of Default.
------------------
The following are "Event(s) of Default" under this Lease:
(a) In the event Tenant shall be in default in the payment of any Rents
(including without limitation, the payment of any other sums of money required
to be paid by Tenant to Landlord under this Lease or as reimbursement to
Landlord for sums paid by Landlord on behalf of Tenant in the performance of the
covenants of this Lease), and said default is not cured within ten (10) days
after receipt of written notice thereof from Landlord;
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(b) In the event Tenant shall be in default in the performance of any
other covenants, terms, conditions, provisions, rules and regulations of this
Lease excepting those items listed in the above subsection (a) and if such
default is not cured within twenty (20) days after written notice thereof given
by Landlord, excepting such defaults that cannot be cured completely within such
twenty (20) day period provided Tenant, within said twenty (20) day period, has
promptly commenced to proceed (and thereafter continues) with diligence and in
good faith to remedy such default;
(c) In the event Tenant or any related or affiliated entity thereof,
shall at any time during the Term be a party to a lease or leases with Landlord
for other space(s) in the Shopping Center, then if there shall exist a default
in either this Lease or said other lease(s) such default shall be deemed a
default under all of said leases, pursuant to which default Landlord may take
appropriate action hereunder;
(d) Subject to Section 365 of the Bankruptcy Reform Act of 1978 as
amended, in the event of the filing of a petition proposing the adjudication of
Tenant or guarantor of Tenant's obligation hereunder as a bankrupt or insolvent
or the reorganization of Tenant or any such guarantor or an arrangement by
Tenant or any such guarantor with its creditors, whether pursuant to the Federal
Bankruptcy Act or any similar federal or state proceeding and such action is not
dismissed within thirty (30) days after the date of its filing;
(e) The sale of Tenant's interest in the Premises' under attachment,
execution or similar legal process;
(f) The making by Tenant or any such guarantor of an assignment for the
benefit of creditors; and
(g) If Tenant shall vacate or abandon the Premises or (subject to the
provisions of Section 8.2 hereof) shall fail to operate its business on the days
and hours required, or fails to continuously occupy and conduct Tenant's
business in the Premises.
Section 24.2 - Remedies and Damages.
---------------------
(a) If any Event of Default occurs, Landlord may, at its option and in
addition to any and all other rights or remedies provided Landlord in this Lease
and/or at law or equity, immediately, or at any time thereafter, and without
demand or notice (except as may be otherwise provided herein):
(i) without waiving the Event of Default, apply all or part of
the security deposit, if any, to cure the Event of Default and Tenant shall on
demand restore the security deposit to its original amount;
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57
(ii) without waiving such Event of Default, apply thereto any
overpayment of Rents to curing the Event of Default in lieu of refunding or
crediting the same to Tenant;
(iii) if the Event of Default pertains to work or other
obligations (other than the payment of Rents) to be performed by Tenant, without
waiving such Event of Default, enter upon the Premises and perform such work or
other obligation, or cause such work or other obligation to be performed, for
the account of Tenant; and Tenant shall on demand pay to Landlord the cost of
performing such work or other obligation plus fifteen percent (15%) thereof as
administrative costs;
(iv) terminate this Lease (a) without notice, any notice to
quit, or of Landlord's intention to re-enter being hereby expressly waived, if
due to an Event of Default which arises as the result of the expiration of the
applicable cure period, or (b) after the expiration of five (5) days from the
date Landlord gives Tenant notice of its intention to terminate this Lease
(without additional notice, any such notice to quit or of Landlord's intention
to re-enter being hereby expressly waived), if such Event of Default does not
contain a cure period, and Landlord may proceed to recover possession under and
by virtue of the provisions of the laws of the Commonwealth of Virginia or by
such other proceedings (including re-entry and possession) as may be applicable.
If Landlord elects to terminate this Lease, the obligations herein contained on
the part of Landlord to be performed shall cease without prejudice. Landlord
shall not be liable in any way whatsoever in connection with any action it takes
pursuant to the foregoing. Notwithstanding any such reentry, repossession,
dispossession or removal, Tenant's liability under all provisions of this Lease,
including without limitation the payment of all future Rents, shall survive and
continue.
(b) Should this Lease be terminated before the expiration of the Term
by reason of an Event of Default as hereinabove provided, or if Tenant shall
abandon or vacate the Premises before the expiration or termination of the Term,
the Premises may be relet by Landlord, for such rental and upon such terms as
Landlord, in its sole discretion deems reasonable, and, if the full Rents, and
other charges provided for herein shall not be realized by Landlord, then,
notwithstanding the termination of this Lease, Tenant shall be liable for all
damages sustained by Landlord, including, without limitation, deficiency in
Rents, reasonable attorneys' fees, other collection costs, all court costs and
all other expenses (including, without limitation, leasing commissions) of
placing the Premises in first-class rentable condition. Tenant agrees that any
reletting activities conducted by Landlord shall be conclusively deemed to be
reasonable, and Tenant hereby agrees to and does hereby waive any defense of
failure to mitigate or otherwise relating to mitigation of damages, in a dispute
between the parties arising
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58
out of this Lease. Any damage or loss sustained by Landlord may be recovered by
Landlord, at Landlord's option, at the time of the reletting, or in separate
actions, from time to time, as said damage shall have been made more easily
ascertainable by successive relettings, or, at Landlord's option, may be
deferred until the expiration of the Term, in which event the cause of action
shall not be deemed to have accrued until the date of expiration of the Term.
(c) If Landlord terminates this Lease, Landlord shall have the right,
at any time, at its option, to require Tenant to pay to Landlord, on demand, as
liquidated and agreed final damages in lieu of Tenant's liability under Section
24.2(b), the following amounts: (i) the unamortized costs of any abatement or
reduction of Fixed Minimum Rent, Additional Charges and other charges or
concessions given by Landlord to or on behalf of Tenant (including without
limitation the unamortized portion of leasing commissions), (ii) any cash
payments, or allowances given to Tenant, and (iii) an amount equal to the
difference between (x) the Fixed Minimum Rent and Percentage Rent, which would
have been payable from the date of such payment to the date when this Lease
would have expired, if it had not been terminated, and (y) the THEN PRESENT
RENTAL value of the Premises (less the costs of leasing and rental concessions)
for the same period, reduced to present value using an interest rate of six
percent (6%). Upon payment of such liquidated and agreed final damages, Tenant
shall be released from all further liability under this Lease with respect to
the period after the date of such demand. If, after the Event of Default giving
rise to the termination of this Lease, but before presentation of proof of such
liquidated damages, the Premises, or any part thereof, shall be relet by
Landlord for a term of one (1) year or more, the amount of the Fixed Minimum
Rent and Percentage Rent reserved upon such reletting shall be deemed to be the
fair rental value for the part of the Premises so relet during the term of such
reletting.
(d) In computing damages or rental due under this Lease, the value of
the Percentage Rent for any period subsequent to the termination of this Lease,
or the termination of Tenant's right of possession, shall be included and shall
be an amount per year equal to one-third of the total Percentage Rent chargeable
to Tenant for the last three (3) full Lease Years immediately preceding such
termination, and if less than three (3) full years shall have elapsed, such
value shall be an amount per year equal to the average yearly Percentage Rent
theretofore payable by Tenant.
(e) The rights and remedies of Landlord set forth herein shall be in
addition to any other right and remedy now and hereafter provided by law and/or
in equity; all such rights and remedies shall be cumulative and not exclusive of
each other; Landlord may exercise such rights and remedies at such times, in
such manner, to such extent, and as often as Landlord deems
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59
advisable, without regard to whether the exercise of one right or remedy
precedes, concurs with or succeeds the exercise of another; a single or partial
exercise of a right or remedy shall not preclude (i) a further exercise thereof,
or (ii) the exercise of another right of or impair the same or constitute a
waiver of, or acquiescence in, an Event of Default.
(f) Notwithstanding anything to the contrary contained in this Lease,
Landlord shall use reasonable efforts to mitigate its damages hereunder,
provided, however, in no event shall Landlord be obligated to re-rent the
Premises before it leases all other comparable space in the Premises.
Section 24.3 - Repeated Default.
-----------------
(a) Notwithstanding anything to the contrary set forth in this Lease,
if Tenant shall be in default in the timely payment of any Rents due Landlord
from Tenant or the payment of any other money due Landlord from Tenant under the
terms of this Lease, or in the timely reporting of Gross Revenue as required by
Section 11.5 of this Lease and any such default shall be repeated two (2) times
in any period of twelve (12) consecutive months, then, notwithstanding that such
default shall have been cured within the period after notice, as provided in
this Lease, any further similar default within said twelve (12) month period
shall be deemed to be a "Repeated Event of Default".
(b) In the event of a Repeated Event of Default, Landlord, without
giving Tenant any notice and without affording Tenant an opportunity to cure the
default may terminate this Lease forthwith without notice to Tenant, any such
notice to quit or of Landlord's intention to re-enter being hereby expressly
waived.
Section 24.4 - Waiver of Rights of Redemption.
-------------------------------
Tenant hereby expressly waives any and all rights of redemption granted
by or under any present or future laws in the event of Tenant being evicted or
dispossessed for any cause, or in the event of Landlord obtaining possession of
the Premises by reason of the violation, by Tenant, of any of the covenants or
conditions of this Lease, or otherwise.
Section 24.5 - Limitation On Counterclaims.
----------------------------
If Landlord commences any proceedings for non-payment of any portion of
the Rents, Tenant will not interpose any counterclaim of any nature or
description in such proceedings unless Tenant would lose or waive the
counterclaim by failure to assert it. This shall not, however, be construed as a
waiver of Tenant's right to assert such claims in a separate action brought by
Tenant. The covenants to pay Rents hereunder are independent covenants, and
Tenant shall have no right to hold back, offset or
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fail to pay any such amounts for default by Landlord or any other reason
whatsoever.
ARTICLE XXV
-----------
COMPETITION
-----------
Section 25.1 - Restriction on Tenant.
----------------------
Tenant agrees that for as long as this Lease shall remain in effect,
Tenant, and if Tenant is a corporation or partnership, its partners, officers,
directors, shareholders or any affiliates, shall not directly or indirectly
operate, manage, or have any interest in any business (unless such business is
already in operation on the date of this Lease) which is similar or in
competition with the use set forth in Section 1.0(t) ("Competing Store"), within
a radius of one (1) mile from the perimeter of the Shopping Center ("Restricted
Area"). Notwithstanding anything to the contrary contained in this Section 25.1,
the Restricted Area shall not include any area within the District of Columbia.
However, the Restricted Area shall specifically include the Pentagon City Mall
as the same may from time to time exist.
Section 25.2 - Imposition of Damages.
----------------------
In the event that Tenant shall violate this covenant, Landlord may, at
its option, without limiting Landlord's remedies, effective as of the date such
Competing Store opens for business within the Restricted Area, pursue any and/or
all of the following remedies:
(i) include seventy-five percent (75%) of the Gross Revenue of
the Competing Store(s) in the Gross Revenue generated from the Premises for the
purpose of computing Percentage Rent due hereunder; or (ii) increase Tenant's
Fixed Minimum Rent to the average of the annual "effective" (aggregate of Fixed
Minimum Rent and Percentage Rent) rent paid by Tenant to Landlord during the
immediately preceding two (2) Lease Years; or (iii) increase Tenant's Fixed
Minimum Rent then in effect as well as any future increases in Fixed Minimum
Rent by fifty percent (50%).
Section 25.3 - Tenant's Exclusive.
-------------------
At the insistence of Tenant and as an inducement for Tenant to enter
into this Lease, Landlord agrees that it shall not hereafter lease any space in
the Shopping Center (exclusive of any space occupied by a Major Tenant) for the
operation of a high-end Italian restaurant. Tenant hereby agrees that a Lease of
space, inter alia, for an Italian sandwich shop, Italian pizza restaurant, or
fast-food Italian food operation shall not violate the provisions of this
Section 25.3. In addition, Landlord
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agrees that it shall not modify any existing "use" provision in any existing
lease to permit the operation of a high-end Italian restaurant in the Shopping
Center.
ARTICLE XXVI
------------
NOTICES
-------
Section 26.1 - Notices to Tenant and Landlord.
-------------------------------
Any notice or consent required to be given by or on behalf of either
party upon the other shall be in writing and shall be given by mailing such
notice or consent by registered or certified mail, return receipt requested,
addressed to Landlord at 10800 Brookpark Road, Cleveland, Ohio, 44130, with a
copy also sent to Landlord to the attention of the General Manager, Ballston
Common Mall, Suite 106, 4238 Wilson Boulevard, Arlington, Virginia 22203, and to
Tenant at the address shown on Page 1 of this Lease, and either party may by
notice similarly given designate a substitute address at any later time
hereafter. Any such notice shall be deemed given and received when mailed as in
this Section provided, or delivered personally to the parties hereto or to their
authorized agents and/or an officer thereof. Rejection, refusal, failure to
accept or the inability to deliver any notice sent hereunder shall be deemed to
be receipt of the notice, demand or request sent.
Section 26.2 - Notices to Mortgagee.
---------------------
Tenant shall give Landlord's first mortgagee, namely: Wells Fargo
Realty Advisors Funding, Incorporated, Three First National Plaza, Suite 460, 70
West Madison Street, Chicago, IL 60602 ("Mortgagee") written notice of any
alleged default which could give rise to Tenant's termination of the Lease or
expenditure of money on behalf of Landlord. Such Mortgagee shall also be given
an appropriate time to cure such default including the opportunity to obtain
possession of Landlord's interest, if necessary, to cure the default. Landlord
shall notify Tenant in writing of any change in the Mortgagee for the Shopping
Center.
ARTICLE XXVII
-------------
MISCELLANEOUS
-------------
Section 27.1 - Accord and Satisfaction.
------------------------
No payment by Tenant or receipt by Landlord of a lesser amount than any
payment of Rents herein stipulated shall be deemed to be other than on account
of the earliest stipulated Rents, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment of Rents be deemed an
accord and satisfaction, and Landlord may accept such check or
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payment without prejudice to Landlord's right to recover the balance of such
Rents or pursue any other remedy provided for in this Lease or available at law
or in equity.
Section 27.2 - Complete Agreement.
-------------------
The parties hereto acknowledge that all of the terms and covenants
contained herein were reviewed by both parties and/or their counsel hereto and
all negotiations, consideration, representations, inducements and understandings
between the parties are incorporated herein, and may be modified or altered only
by agreement, in writing, between the parties. This Lease contains the entire
agreement between the parties hereto, and no agent, representative, employee or
officer of Landlord has or had authority to make or has made any statement,
agreement or representation, either oral or written, in connection herewith,
modifying, adding or changing the terms and conditions herein set forth. No
present or past dealings or custom between the parties shall be permitted to
contradict or modify the terms hereof. No modification of this Lease shall be
binding unless such modification shall be in writing and signed by the parties
hereto. Unless otherwise expressly set forth in writing herein, and without
limiting the foregoing, Tenant acknowledges that there are no agreements,
promises, representations, warranties or covenants by Landlord or its agents or
employees as to the following types of matters, including, without limitation:
(i) exclusive rights to sell goods and/or services; (ii) limitations on or
restrictions against competing businesses in the Shopping Center; (iii) the
future opening of other stores or businesses, including, but not limited to,
Major Tenant department stores, not currently in the Shopping Center; (iv)
expected per square foot or total sales from the Premises; (v) type or quality
of existing or prospective tenants located or to be located in the Shopping
Center; (vi) work to be performed by Landlord in improving Tenant's Premises;
(vii) contribution by Landlord towards Tenant's leasehold improvement costs;
(viii) that Tenant's annual share of CAM Costs or real estate taxes will not
exceed a certain amount per square foot of Premises GLA during the Term hereof;
or (ix) promotion and/or advertising of Tenant's business and/or products or
services.
Section 27.3 - Consents.
---------
In the event that in this Lease it is provided that the exercise of any
right by Tenant or the performance of any obligation of Tenant shall be subject
to the consent or approval of Landlord and that the consent or approval of
Landlord shall not be unreasonably withheld, then in any case in which Landlord
shall withhold its consent or approval such determination by Landlord shall be
conclusive upon Tenant, unless within forty-five (45) days after notice from
Landlord of its determination Tenant shall elect to have the matter submitted
for determination by arbitration in accordance with the then effective
commercial
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rules of the American Arbitration Association, which submission to arbitration
shall be the sole and exclusive remedy of Tenant for any such withholding of
consent or approval by Landlord. In the event that any matter shall be submitted
to arbitration by Tenant pursuant to the provisions of this Section 27.3, the
sole issue for arbitration shall be the determination as to whether the
withholding of consent or approval by Landlord shall have been reasonable or
unreasonable, and in the event that a determination shall be made that the
withholding of consent or approval by Landlord was unreasonable, then the
decision shall annul such withholding of consent or approval, such annulment
being the sole and exclusive remedy of Tenant, it being the intention of the
parties hereto (as to which they are conclusively bound) that in no event shall
any such withholding of consent or approval by Landlord, or any decision in
arbitration with respect thereto (a) impose any financial liability upon or
result in any damages being recoverable from Landlord, (b) create any right
cognizable or remedy enforceable in favor of Tenant and against Landlord at law
or in equity or under any special statutory proceeding or at all (except by
arbitration as provided above), and/or (c) provide any basis for the abatement
of Rents.
Section 27.4 - Compliance with Governmental Authorities.
-----------------------------------------
Tenant, at its own expense, shall comply with all laws, rules, orders,
ordinances, directions, regulations and requirements ("Requirements") of
federal, state, county and municipal authorities now in force or which hereafter
may be in force, which shall impose any duty upon Landlord or Tenant with
respect to the initial improvement, use, occupation or alteration of the
Premises by Tenant, including, but not limited to, Requirements of the Americans
With Disabilities Act which may be applicable thereto. Tenant agrees to
indemnify and save Landlord harmless from and against any penalty, damage or
charge imposed for any violation by Tenant, its assignees, subtenants,
licensees, agents and employees of any said Requirements.
Section 27.5 - Brokerage.
----------
Tenant warrants that it has had no dealings with any broker or agent in
connection with the Lease, or in the event Tenant has had such dealings, Tenant
covenants and agrees to pay, hold harmless and indemnify Landlord from and
against any and all costs, expenses or liability for any compensation,
commissions and charges claimed by any broker or agent with respect to this
Lease or negotiation hereof (including, without limitation, the cost of legal
fees in connection therewith).
Section 27.6 - Effective Date of Lease.
------------------------
Submission of this Lease by Landlord for examination or execution by
Tenant does not constitute a reservation of nor
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64
option for Lease, and this instrument shall not become effective as a lease or
otherwise until execution by and delivery to both Landlord and Tenant. This
Lease shall only become effective and binding upon the parties in establishing
the relationship of Landlord and Tenant as of the date first written above, but
not earlier than the date Landlord executes this Lease.
Section 27.7 - Estoppel Certificates.
----------------------
Tenant agrees at any time, upon not less than ten (10) days prior
written request by Landlord, to execute, acknowledge and deliver to Landlord a
written statement certifying that this Lease is unmodified and in full force and
effect (or, if there has been modifications, that the same is in full force as
modified and stating the modifications), the dates to which the Rents have been
paid in pursuance to this Lease, and such other certifications concerning the
Lease as may be reasonably required by Landlord, its successors or assigns, or
Landlord's mortgagee(s). Tenant further agrees that said statement may be relied
upon by any mortgagee or prospective purchaser of the fee or assignee of any
mortgage on the fee of the Premises.
Section 27.8 - Force Majeure.
--------------
Landlord and/or Tenant shall be excused for the period of delay in the
performance of any of their respective obligations hereunder, except their
respective obligation to pay any sums of money due under the terms of this
Lease, and shall not be considered in default, when prevented from so performing
by cause or causes beyond Landlord's or Tenant's control, including, but not
limited to, all labor disputes, civil commotion, war, fire or other casualty,
governmental regulations, statutes, ordinances, restrictions or decrees, or
through acts of God. Notwithstanding anything to the contrary contained in this
Section 27.8, in the event any work performed by Tenant or Tenant's contractors
results in a strike, lockout and/or labor dispute, such strike, lockout and/or
labor dispute shall not excuse the performance by Tenant as provided for herein.
Section 27.9 - Interpretation.
---------------
The laws of the Commonwealth of Virginia shall govern the validity,
performance and enforcement of this Lease. If any part of this Lease shall be
adjudged by any court of competent jurisdiction to be invalid, such judgment
shall not be deemed to affect or impair any other provisions.
Section 27.10 - Memorandum of Lease.
--------------------
This Lease shall not be recorded, but either party may record a
Memorandum of Lease describing the Premises herein demised, giving the Term of
this Lease and renewal rights, if any, and referring to this Lease. The party
requesting that the
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Memorandum of Lease be recorded shall prepare and pay all costs of preparation
and recording of the Memorandum of Lease and the other party agrees to execute
at any and all times such instruments as may be reasonably required for such
recording. Tenant shall execute such documents as Landlord may require, in
recordable form, upon the expiration or earlier termination of the Term in order
to remove the Memorandum of Lease from record.
Section 27.11 - Quiet Enjoyment.
----------------
Subject to the terms and conditions of this Lease and to any
Encumbrances to which this Lease is subordinate pursuant to Section 19.1 herein,
Landlord hereby covenants and agrees that if Tenant shall perform all of the
covenants and agreements herein stipulated to be performed on Tenant's part,
Tenant shall at all times during the continuance hereof have the peaceful and
quiet enjoyment and possession of the Premises without any manner of hindrance
from Landlord or any person or persons lawfully claiming the Premises, save and
except in the event of the taking of the Premises by public or quasi-public
authority as hereinbefore provided.
Section 27.12 - Rent Demand.
------------
Every demand for Rents due wherever and whenever made shall have the
same effect as if made at the time it falls due and at the place of payment, and
after the service of any notice or commencement of any suit, or final judgment
therein, Landlord may receive and collect any Rents due, and such collection or
receipt shall not operate as a waiver of nor affect such notice, suit or
judgment.
Section 27.13 - Section Headings.
-----------------
The section headings and title headings contained herein are for
convenience only and do not define, limit, construe or amplify the contents of
such Sections.
Section 27.14 - Successors and Assigns.
-----------------------
The conditions, covenants and agreements contained in this Lease shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and permitted assigns.
Section 27.15 - Waiver by Landlord.
-------------------
(a) Landlord shall have the right at all times to enforce the
covenants, conditions and legal rights and remedies of this Lease in strict
accordance with the terms thereof, notwithstanding any conduct or custom on the
part of Landlord in refraining from so doing at any time or times. No failure by
Landlord to insist upon the strict performance of any term or
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condition of this Lease or to exercise any right or remedy available, legal or
equitable, for a breach thereof, and no acceptance of full or partial Rents
during the continuance of any such breach shall constitute a waiver of any such
breach or any such term, condition or right.
(b) No term or condition of this Lease required to be performed by
Tenant, and no breach thereof, shall be waived, altered or modified except by a
written instrument executed by Landlord.
(c) A waiver by Landlord in respect to any tenant of the Shopping
Center in which the Premises are located shall not constitute a waiver in favor
of any other tenant, nor shall the waiver of the breach of any condition be
claimed if pleaded to excuse a future breach of the same condition or covenant
or any other condition, covenant, provision, rule and regulation of this Lease.
Section 27.16 - Exculpation.
------------
If Landlord shall fail to perform any covenant, term or condition of
this Lease upon Landlord's part to be performed and, as a consequence of such
default, Tenant shall recover a money judgment against Landlord, such judgment
shall be satisfied only out of the proceeds of sale received upon the execution
of such judgment and levy thereon against the right, title and interest of
Landlord in the Shopping Center and out of rents or other income from the
Shopping Center receivable by Landlord or out of the consideration received by
Landlord from the sale or other disposition of all or any part of Landlord's
right, title and interest in the Shopping Center. Neither Landlord nor any of
the partners, beneficiaries, officers, directors, venturers, shareholders or
affiliated entities of Landlord shall be personally liable for any deficiency.
Section 27.17 - Transfer of Landlord's Interest.
--------------------------------
Landlord shall be liable under this Lease only while owner of the
Premises. If Landlord should sell or otherwise transfer Landlord's interest in
the Premises, then such purchaser/transferee shall be responsible for all of the
covenants and undertakings thereafter accruing of Landlord. Tenant agrees that
Landlord shall, after such sale or transfer of Landlord's interest, have no
liability to Tenant under this Lease or any modification or amendment thereof,
or extensions or renewals thereof, except for such liabilities which might have
accrued prior to the date of such sale or transfer of Landlord's interest to
such purchaser/transferee.
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Section 27.18 - Litigation.
-----------
(a) Any claim, demand, right or defense of any kind by Tenant which is
based upon or arises in connection with this Lease or the negotiations prior to
the execution, shall be barred unless Tenant commences an action thereon or
interposes a defense by reason thereof within six (6) months after the date of
the occurrence of the event or of the action upon which the claim, demand or
right or defense relates, whichever applies.
(b) To the extent permitted by applicable law Landlord and Tenant
hereby waive all right to trial by jury in any claim, action, proceeding or
counterclaim by either Landlord or Tenant against each other on any matter
arising out of or in any way connected with this Lease, the relationship of
Landlord and Tenant or Tenant's use or occupancy of the Premises.
(c) If either party hereto be made or becomes a party to any litigation
commenced by or against the other party involving the enforcement of: (i) any
Requirements against such other party; or (ii) any of the rights or remedies of
such party hereunder, then the prevailing party in any such litigation, or the
party becoming involved in such litigation because of a claim against such other
party, as the case may be, shall receive from the other party all costs and
reasonable attorneys, fees incurred by such party in such litigation.
(d) Any litigation commenced by either Landlord or Tenant against the
other with respect to any matter arising out of or in any way connected with
this Lease, the relationship of Landlord and Tenant or Tenant's use and
occupancy of the Premises shall be brought only in the courts of the State of
Virginia and the parties hereby consent to the jurisdiction of those courts over
them.
Section 27.19 - Partial Invalidity.
-------------------
If any provision of this Lease or the application thereof to any person
or circumstances shall to any extent be held void, unenforceable or invalid,
then the remainder of this Lease or the application of such provision to persons
or circumstances other than those as to which it is held void, unenforceable or
invalid shall not be affected thereby, and each provision of this Lease shall be
valid and enforced to the fullest extent permitted by Law.
Section 27.20 - Financing Contingency.
----------------------
Landlord and Tenant mutually acknowledge and agree that as of the date
this Lease is fully executed, Landlord's construction and/or permanent financing
to construct and develop the portion of the Shopping Center in which the
Premises is located ("New Construction") may not yet be finalized. The parties
further
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acknowledge and agree that under current market conditions for obtaining
construction financing, it is necessary to "pre-lease" the New Construction by
obtaining signed leases as a condition precedent to the financing of the New
Construction. Accordingly, the parties hereto agree that if Landlord has not
closed the loan to finance the construction and development of the New
Construction, upon terms and conditions satisfactory to Landlord in the exercise
of its sole and unfettered discretion, by December 31, 1997, Landlord agrees to
so notify Tenant in writing in which event Landlord shall have the right to
cancel this Lease without liability to Tenant for past, present or future
expenses, claims, losses or profits in connection therewith. Such notice of
cancellation shall be effective thirty (30) days following the date Landlord
gives Tenant notice thereof.
IN WITNESS WHEREOF, the parties hereto have executed these presents,
the day and year first written above.
LANDLORD:
---------
BALLSTON COMMON ASSOCIATES, a
Delaware limited partnership
By: BALLSTON DEVELOPMENT
CORPORATION, General Partner
By:
- ----------------------- ---------------------------------------
David J. LaRue, Vice President
- -----------------------
TENANT:
-------
CIAO CUCINA CORPORATION
By:
- ----------------------- ---------------------------------------
And:
- ----------------------- ---------------------------------------
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69
STATE OF OHIO )
) SS:
COUNTY OF CUYAHOGA )
BEFORE ME, a Notary Public in and for said County and State, personally
appeared the above named BALLSTON COMMON ASSOCIATES, L.P., a Delaware limited
partnership, by Ballston Development Corporation, General Partner, by David J.
LaRue, its Vice President, who acknowledged he they did sign the foregoing
instrument and that the same is his free act and deed and the free act and deed
of said corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
______________________, _________________, this _____ day of ____________, 1997.
-----------------------------------
Notary Public
STATE OF )
--------------- ) SS:
COUNTY OF )
--------------
BEFORE ME, a Notary Public in and for said County and State, personally
appeared the above-named CIAO CUCINA CORPORATION, by ______________________, its
______________________, and ___________________, its ______________________, who
acknowledged that they did sign the foregoing instrument and that the same is
their free act and deed and the free act and deed of said corporation.
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IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at
_________________, _________________, this _____ day of _____________, 1997.
---------------------------------
Notary Public
This Instrument Prepared By:
Harvey J. Levitt, Esq.
10800 Brookpark Road
Cleveland, Ohio 44130-1199
216-267-1200
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