LEASE AGREEMENT
THIS LEASE Agreement (the "Lease"), made and entered
into this day of
January, 1994, by and between P. B. Realty, Inc.,
hereinafter called "LANDLORD," and
Brendle's Stores, Inc., a North Carolina corporation,
hereinafter called "TENANT."
W I T N E S S E T H:
In consideration of the mutual covenants, promises
and agreements herein contained,
the parties hereto do hereby covenant, promise and agree,
each with the other, as follows:
1. GRANT: The LANDLORD does hereby lease and
demise unto TENANT,
to have and to hold, 224,000 square feet of the east section
of the approximately 390,000
square foot building currently known as the Brendle's
Distribution Center ("Distribution
Center"), located in Elkin, Surry County, North Carolina.
for the term hereinafter specified.
Said 224,000 square foot portion of the Distribution Center
is more particularly described
in the diagram attached as Exhibit 1 and incorporated herein
by reference (the "Premises").
The real property on which the Distribution Center is
located is more particularly described
on Exhibit 1(a) attached hereto and incorporated by
reference. TENANT hereby agrees to
take and lease from the LANDLORD said premises for the term
hereafter specified.
Also granted to TENANT, its employees, agents and
invitees is a non-exclusive right
to use the common area and common facilities of the
Distribution Center during the term
of the Lease. TENANT'S intended use of the Premises is for
a distribution operation for
TENANT'S stores. Accordingly, LANDLORD acknowledges that
TENANT'S non-exclusive
right to use the common areas includes, without limitation,
the right for trucks and other
delivery vehicles to enter upon and exit the Premises 24
hours a day.
2. TERM: The term of the Lease shall begin upon
execution of the Lease by
both parties and shall end at the end of the ninth lease
year following the "Rent
Commencement Date" as hereinafter defined. For purposes of
the Lease, a "lease year"
shall mean February 1 through January 31. TENANT shall have
the option to extend the
term of the lease for three consecutive, independent option
periods of three years each (the
Renewal Term(s)) with the rental rate during each option
period to be based on a
Consumer Price Index ("CPI") increase at the end of the
preceding period. Such option
shall be exercised by written notice to LANDLORD of TENANT'S
election to exercise such
an option 365 days prior to the end of the then current
term of the Lease.
3. RENT COMMENCEMENT DATE AND DELIVERY OF
PREMISES: The
"Rent Commencement Date" of this lease shall be February 1,
1994. LANDLORD
acknowledges that LANDLORD's ownership interest in the
Distribution Center was
acquired from TENANT pursuant to that certain Purchase and
Sale Agreement between
Brendle's Stores, Inc. and P.B. Realty, Inc. dated January
____, 1994 (hereinafter the "Sale
Agreement"). Therefore, notwithstanding the fact that the
Rent Commencement Date does
not begin until February, 1994, LANDLORD acknowledges
TENANT'S right to be in possession of the
Premises during the period between from
the closing of the Sale
Agreement to the Rent Commencement Date.
4. RENTAL: The TENANT hereby agrees to pay to
the LANDLORD as Rent
for the Premises during the term of the Lease, including
renewals, the following amounts:
(a) Five Hundred Four Thousand Dollars
($504,000.00) per annum, payable in
equal monthly installments of Forty-Two
Thousand Dollars ($42,000.00) each,
beginning on the Rent Commencement Date and
continuing during years one
through three of the initial term of the
Lease;
(b) Five Hundred Sixty Thousand Dollars
($560,000.00) per annum, payable in
equal monthly installments of Forty-Six
Thousand Six Hundred Sixty-Six and
67/100 Dollars ($46,666.67) each, during years
four through six of the initial
term of the Lease;
(c) Six Hundred Sixteen Thousand Dollars
($616,000.00) per annum, payable in
equal monthly installments of Fifty-One
Thousand Three Hundred Thirty-
Three and 33/100 Dollars ($51,333.33) each, during years
seven through nine of the initial term of the Lease;
(d) During each of the Renewal Terms, the Rent
during each renewal period shall
be determined by the percentage increase of
the Consumer Price Index
("CPI") published by the U.S. Department of
Commerce for the Southeastern
United States for urban areas, from the first
day of the preceding term of the
Lease to the first day of the renewal term.
However, in no event shall the
Rent for any given year be less than for the
immediately preceding year.
Each monthly installment of Rent shall be due and
payable on the first day of each
calendar month following the Rent Commencement Date and
shall be past due if not paid
on or before the tenth day of each month. If a monthly
installment of Rent becomes past
due, LANDLORD may provide written notice, via facsimile, to
the TENANT of such past
due Rent. If, after five business days from the date of the
written notice, LANDLORD has
not received the past due monthly Rent installment, then, in
that event, a penalty of 1% of
the past due monthly Rent installment shall become due and
payable in addition to the past
due monthly Rent installment.
5. OTHER CHARGES:
(a) TENANT: The TENANT hereby agrees to pay for
the following items as
they are incurred, beginning on the Rent
Commencement Date, by direct
payment, with proof of such payment being
provided to LANDLORD if requested:
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(i) All routine maintenance of the
leased Premises, as well as utilities
attributable to the Premises and such
other charges as are set forth in
Paragraph 7.
(b) LANDLORD: The LANDLORD hereby agrees to pay
for the following items as they are incurred, by
direct payment, with proof of such payment
being provided to TENANT if requested by TENANT:
(i) All city and county taxes and
assessments, insurance and structural
maintenance on the Premises and such
other charges are set forth in
Paragraph 7.
6. TENANT'S RESPONSIBILITIES: TENANT shall:
(a) Keep the interior of the Premises in good
condition and repair, reasonable
wear and tear excepted;
(b) Keep the Premises, entryways and delivery
areas, if any, reasonably clean and
free from rubbish and dirt;
(c) Not make or suffer any waste on the Premises
or permit anything to be done
in or upon the Premises creating a nuisance
thereon;
(d) Permit the LANDLORD or its agents, at
reasonable agreed upon times, to
enter upon the Premises for purpose of
examining or showing the same to
prospective purchasers; and
(e) Comply with all lawful requirements of local,
state or Federal authorities
having jurisdiction respecting the manner in
which the Premises are used.
(f) Be responsible for the following common area
maintenance services needed at the building:
(1) Snow removal;
(2) Repairs for parking lot lighting;
(3) Landscaping replacement needs; and
(4) Grass cutting.
TENANT shall have the right to contract, in the name of the
LANDLORD, for the above
common area maintenance services to be provided by a
qualified contractor. LANDLORD
shall have the right to approve any such contract, but
LANDLORD's approval shall not be
unreasonably withheld. Contracts for common area maintenance
services shall be in the
name of the LANDLORD, however, bills for common area
maintenance services shall be sent by the
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contractor directly to the TENANT, based pro-rata on the portion of the square
footage of the Distribution Center leased to TENANT. Should
TENANT fail to contract for said services, LANDLORD shall have the right to
contract for the above common area maintenance services with a qualified
contractor and TENANT shall be billed for its pro-rata
portion, based on square footage leased, of the common area
maintenance costs.
7. LANDLORD'S RESPONSIBILITIES: LANDLORD shall,
at its cost and expense, keep and maintain the structure and parking lot of
the Distribution Center, including without limitation, the roof, gutters,
elevators, downspouts, exterior and structural
walls, and foundation and shall make structural repairs as
necessary for both the exterior and interior of the Distribution Center.
If any portion of the common area (including any
portion of the building which is the responsibility of the
LANDLORD) shall at any time be in need of repair, LANDLORD will repair the
same promptly upon receipt of written notice
from TENANT to do so. Included without limitation, within
the repair responsibilities of LANDLORD shall be the replacement of the
heating, ventilation and air conditioning
system ("HVAC") for the Premises or any of its major
components. LANDLORD stipulates and agrees, that notwithstanding any of the
provisions of this Lease agreement, if TENANT
notifies LANDLORD that the HVAC maintenance contractor has
advised that the HVAC or one of its major components must be replaced, LANDLORD
shall have five (5) business days from the date of such notice to commence
replacement of the HVAC or its major
components, and if LANDLORD has not commenced this
replacement within five (5) business days after notice, TENANT may undertake
to make the replacement to the HVAC
or its major components and charge the reasonable cost to
LANDLORD, including at TENANT'S option as an offset of future rent due under
the Lease. TENANT agrees to provide a quarterly maintenance contract in the
name of the LANDLORD, on the HVAC system currently installed at the
Distribution Center, for services to be provided by a
qualified HVAC contractor. This contract shall be subject
to approval by the LANDLORD but LANDLORD's approval shall not be unreasonably
withheld. Should TENANT fail to contract for said quarterly HVAC maintenance
services, LANDLORD shall have the right to enter into a contract with a
qualified HVAC contractor and send the bill for said
quarterly maintenance services to TENANT for payment. This
quarterly maintenance contract shall cover routine maintenance and service of
the HVAC system but shall not include the replacement of major components such
as motors and compressors. TENANT shall provide this maintenance contract
only for so long as TENANT is the only occupant
of the Distribution Center. If at any time another tenant
occupies any portion of the Distribution Center, TENANT shall transfer the
quarterly maintenance contract to the
LANDLORD and TENANT shall only be responsible for a pro rata
share of the quarterly maintenance contract costs based on square footage
leased by TENANT.
If, in order to protect the TENANT'S property in the
building, it shall be necessary that TENANT make emergency repairs to any
portion thereof which is the responsibility of
the LANDLORD to repair, or if the LANDLORD within sixty (60)
days after notice from TENANT to do so, fails or neglects to make with all due
diligence such other repairs to the building or
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common areas (including parking areas) which are the responsibility of
LANDLORD, TENANT shall have the right to make such repairs
and to deduct from the rental installments then due or thereafter to become
due, such sums as may be necessary to reimburse the TENANT for the money
expended or expense incurred by it in making
such repairs. PROVIDED, HOWEVER, if TENANT notifies
LANDLORD that the roof of the Premises is leaking, it shall be TENANT's
responsibility to contact the appropriate
warranty party to commence repairs to the roof, and such
repairs shall be undertaken at LANDLORD'S cost and expense. Notwithstanding
anything to the contrary contained herein, TENANT does not waive any right or
remedy available to TENANT at law or equity should TENANT suffer any damage
to its property.
In the event that LANDLORD fails to repair items
which are LANDLORD'S responsibility within thirty (30) days after notice from
TENANT to do so, TENANT shall have the right to make such repairs at a
reasonable cost, and if LANDLORD does not reimburse TENANT for the reasonable
cost of those repairs within thirty (30) days after
presentation of an invoice therefor, to deduct from the
rental installments then or thereafter due, such sums as may be necessary to
reimburse the TENANT for monies expended by it in making such repairs.
LANDLORD covenants and agrees that during the term
of the Lease, TENANT and its employees, agents, officers, customers, licensees
and invitees shall have a license for the non-exclusive use for pedestrian and
vehicular traffic, as the case may be, of the common
areas and facilities of the Distribution Center, including,
but not limited to parking areas, streets, sidewalks, roadways, public
washrooms, public shelters, landscape areas and all other areas and
facilities located in and about the Distribution Center, such use to be in
common with the LANDLORD and all other to whom LANDLORD has or may hereafter
grant rights to use the same. The common areas, shall, at all times, be
subject to reasonable control and management of LANDLORD and such use by TENANT
shall be subject to such reasonable rules and regulations as LANDLORD may, from
time to time, adopt after consultation with TENANT, provided, however, that
any such rules and regulations do not interfere with the distribution
operations of the TENANT in the Premises.
8. SIGNS: TENANT may, at its own expense, place,
erect and maintain exterior signs on the wall or any other place on or about
the Premises, and on any "center pylon" or "center monument" with the prior
written consent of the LANDLORD, which consent shall not be unreasonably
withheld or delayed, and which signs shall remain the property of the
TENANT and may be removed at any time during the term of the Lease, or any
extension thereof, provided TENANT shall repair or reimburse LANDLORD
for the costs of any damage to the Premises resulting from the installation or
removal of such signs. In the event the LANDLORD shall fail to respond to a
written request of TENANT to consent to a sign within thirty days of said
written request, LANDLORD shall be deemed to have consented to such sign.
9. INTERIOR ALTERATIONS: The TENANT, at its own expense, may from
time to time during the term of the Lease make any interior alterations,
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additions and improvements in and to the Premises which it may deem
necessary or desirable, and which do not adversely affect the structural
integrity thereof, but it shall make them in a good,
workmanlike manner and in accordance with all express
requirements of governmental authorities. If TENANT desires to make material
structural or material exterior changes
to the Premises, the prior written consent of the LANDLORD
is required and such written consent shall not be unreasonably withheld.
All permanent structural improvements shall
belong to the LANDLORD and become a part of the Premises
upon termination of this lease. Any temporary improvements shall belong to the
TENANT and may be removed by the TENANT at any time during the term of the
Lease, or at the expiration of the lease, but
TENANT shall be required, at its own expense, to repair any
damage to the Premises resulting from the installation or removal of such
items.
10. FIRE, OTHER CASUALTIES AND INSURANCE: If the Premises, the
appurtenances thereto, the common facilities or areas, or
any other portion of the Distribution Center shall, during the term of the
Lease, or any extensions thereof, be damaged or destroyed by fire or other
casualty, or any cause whatsoever, either in whole or
in part, LANDLORD shall forthwith remove any resulting
debris and repair and/or rebuild the damaged or destroyed structures or other
improvements, including any improvements made by LANDLORD or any of LANDLORD'S
Tenant's, in accordance with the plan
pursuant to which such property was most recently
constructed. In the event LANDLORD
fails or refuses to make the necessary repairs or
reconstruction with reasonable expedition
in order to minimize TENANT'S inconvenience and loss, TENANT
shall have the option to make such necessary repairs to protect its interest
and to restore the Premises to its former condition, and TENANT shall claim
and be entitled to a credit against rentals now
due or to become due hereafter for the monies expended to
make such necessary repairs. In any event, until such time as the Premises,
the appurtenances thereto, the common
facilities or areas or any other portions of the
Distribution Center are repaired, rebuilt and
put in good and tenantable order, the TENANT shall be
allowed a proportionate abatement in rent for the area rendered untenantable,
and if the damage is to the Premises, there shall
be an abatement of rent for an additional sixty (60) days
from the date the repairs are completed for TENANT to refixture and restock.
It is expressly provided, however, that if the
LANDLORD for any reason whatsoever
fails to commence the repair and restoration work within
thirty (30) days from the date that
such damage or destruction occurred, or fails thereafter to
proceed diligently to complete such repair or restoration, and should the
TENANT not elect to undertake the repair or restoration itself, then and in
that event, the TENANT in addition to such other rights and
remedies as may be accorded the TENANT by law, shall have
the right and option to terminate the Lease by giving LANDLORD written notice
of the TENANT'S election so to do at any time prior to the completion of such
repairs or rebuilding, provided the
LANDLORD shall not be actively undertaking such restoration
and upon such notice being given, the term of the Lease shall automatically
terminate and end retroactive to the date when the damage or destruction
occurred.
Anything herein to the contrary notwithstanding, it
is agreed that: (i) if the Premises
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should be damaged or destroyed by fire or other cause to
such an extent that the cost of
restoration would exceed fifty percent (50%) of the amount
it would cost to replace the Premises in its entirety at the time such
damage or destruction took place; and (ii) if at
the time of such damage or destruction the term or any
renewal of the Lease is scheduled to expire within a period of two (2) years,
then and in that event either the LANDLORD
or TENANT shall have the right and option to terminate the
term of the Lease by giving the other party to the Lease notice of such
election within thirty (30) days after such damage
or destruction shall have taken place, provided, however,
that the TENANT shall have the right to nullify any such notice of termination
given by the LANDLORD if at any time such
notice is given an option herein granted the TENANT to
extend the term of this lease for
an additional period remains unexercised and the TENANT
exercises such option within thirty (30) days after the receipt of such notice
from the LANDLORD, in which event the
LANDLORD'S notice of such termination shall be of no force
or effect and the parties shall be remitted to their various rights under the
Lease.
LANDLORD agrees to keep the Distribution Center of
which the Premises is part of the whole insured against loss or damage by
replacement cost property and casualty
insurance with extended overage to the extent of at least
eighty percent (80%) of the full insurable value thereof, including all
improvements, alterations, additions and LANDLORD
further agrees that all monies collected from such insurance
shall be used toward the full compliance and obligations of the LANDLORD under
this paragraph 10 and under the Lease. The LANDLORD, in furtherance of this
obligation, agrees to furnish the TENANT
a satisfactory certificate of insurance evidencing
replacement costs property and casualty
insurance with extended coverage in force and applicable to
the Distribution Center and agrees to notify the TENANT immediately upon the
lapse of any of the agreed upon
insurance coverage during the term of the Lease. In
addition thereto, LANDLORD will
provide the TENANT, upon request, with an exact copy of the
applicable insurance policy or policies in order to permit the TENANT to
procure such other and further or
supplemental coverage as the TENANT may deem desirable.
11. EMINENT DOMAIN:
(a) CONDEMNATION AWARD: In the event the
Distribution Center or any
part thereof or the Premises or any part
thereof shall be taken or condemned
either permanently or temporarily for any
public or quasi-public use or
purpose by any authority in appropriate
proceedings or by any right of
eminent domain, the entire compensation award
thereof, including but not
limited to, all damages as compensation for
diminution in value of the
leasehold, reversion and fees shall belong to
the LANDLORD without any
deduction thereof for any present or future
estate of TENANT, and TENANT
acknowledges that it has no right, title or
interest to such award. However,
TENANT shall have the right to recover from
the condemning authority but
not from LANDLORD, such compensation as may be
separately awarded to
TENANT on account of interruption of TENANT'S
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business and for moving
and relocation expenses, including, but not
limited to, recovery of TENANT'S
cost to cure damages caused to its leasehold
interests or estate. LANDLORD
shall promptly, following any partial
condemnation that does not result in a
termination of the Lease, restore the demised
Premises as nearly as possible
to the condition as existed immediately prior
to such taking but only to such
extent of the net award received by LANDLORD
and fixed minimum rent
shall equitably abate during such restoration.
(b) TERMINATION BY TENANT:
(i) If thirty-five percent (35%) or
more of the Premises shall be taken or
condemned by any competent authority for
any public or quasi-public
use or purpose, then, and in that event,
the TENANT shall have thirty
(30) days in which to elect to terminate
the Lease and if TENANT
does elect to terminate the lease, the
rent shall be apportioned from
the date of such taking.
(ii) If any material portion of the
common area or the Premises shall be
taken or condemned by any competent
authority for any public or
quasi-public use or purpose and in a
reasonably determination of
TENANT, such taking will materially and
detrimentally affect
TENANT'S use of the Premises, then
TENANT shall have the right to
cancel and terminate the Lease by
delivery of written notice of
termination within thirty (30) days
after such taking or conveyance of
physical possession.
(c) TERMINATION BY LANDLORD: In the case of any
taking or condemnation, then upon actual taking or
conveyance of physical possession
of any material part of the Premises, LANDLORD
may cancel and terminate
the Lease by giving notice to TENANT within
forty-five (45) days after such
taking or conveyance of physical possession.
For the purpose of this
paragraph a "material part" of the
Distribution Center shall mean at least
twenty-five percent (25%) of the Premises.
This lease shall terminate on the
date specified in such termination notice,
provided that such date shall not be
less than one hundred eighty (180) days after
the date of such notice. If the
Lease is not terminated following any actual
takings or conveyances of any
part of the Premises, the LANDLORD shall, at
LANDLORD'S own expense,
make such repairs to the Premises as are
necessary to make the Premises
complete and tenantable space, and a
proportional allowance shall be made
in the rent and additional charges based on
the ration of the square footage
of the new Premises to the square footage of
the original Premises.
12. INDEMNIFICATION: TENANT'S INSURANCE. TENANT
shall indemnify LANDLORD and save it harmless from any default by TENANT in
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the performance of any of the terms of the Lease agreement on TENANT'S part
to be performed and all claims,
suits, demands, actions, damages, liability and expense
(including reasonable attorney's fees)
in connection with the loss of life, bodily or personal
injury or property damage (and each
and all of them) arising from or out of any occurrence in,
upon, at or from the Premises or
occupancy or use by TENANT of said Premises or common area
of the Distribution Center, or any part thereof, which is occasioned wholly
or in part by any act or omission by
TENANT, its agents, contractors, employees, servants,
licensees, or concessionaires, and
which are not a result of any act or omission of LANDLORD,
its agents, contractors, employees, servants, licensees, or concessionaires.
If any action or proceeding shall be
brought against LANDLORD or LANDLORD'S agents, or its
mortgagee based upon any such claim and if TENANT, upon notice from LANDLORD
shall cause such action or proceeding to be defended at TENANT'S expense by
counsel reasonably satisfactory to both
parties, without any disclaimer of liability by TENANT in
connection with such claim, TENANT shall not be required to indemnify
LANDLORD for attorney fees and
disbursements in connection with such action or proceeding.
TENANT shall, at all times during the term of the
Lease agreement, maintain in full
force and effect comprehensive general liability insurance
on an occurrence basis with a
minimum liability and a combined single limit of not less
than $1,000,000 with an additional
umbrella liability policy with combined single limit
coverage of at least $5,000,000 which
insurance shall contain contractual liability endorsement
covering the matters set forth
herein, and a personal injury endorsement including claims
brought by employees, agents or
contractors of an insured.
All insurance policies required by this section
shall be written as primary policies not
contributing with, nor in excess of any coverage that
LANDLORD may carry, and all
insurance procured hereunder by TENANT shall name LANDLORD
and at LANDLORD'S request, its mortgagee, as additional insureds, as their
interests may appear, for the full
amount of the insurance herein required with respect to the
operations and activities of
TENANT on or in connection with the Distribution Center.
Each such policy shall contain
an endorsement that the LANDLORD, although named as an
insured, nevertheless shall be
entitled to recovery under said policies for any loss or
damage occasioned to it, its servants,
agents, employees and contractors by reason of the
negligence of the TENANT, its servants,
agents, employees or contractors.
13. INDEMNIFICATION: LANDLORD'S
INSURANCE. LANDLORD shall
indemnify TENANT and save it harmless from any default by
LANDLORD in the
performance of any of the terms of the Lease on LANDLORD'S
part to be performed and
all claims, suits, demands, actions, damages, liability and
expense (including reasonable
attorney fees) in connection with the loss of life, bodily
or personal injury, or personal
damage (and each and all of them) arising from or out of any
occurrence in, upon, at or
from the Premises, the common areas, the Distribution Center
or any part of the
Distribution Center, which is occasioned wholly or in part
9
by any act or omission by
LANDLORD, its agents, contractors, employees or servants,
and which are not a result of
any act or omission of TENANT, its agents, contractors,
employees, servants, licensees, or
concessionaires. If any action or proceeding shall be
brought against TENANT or
TENANT'S agents, or its mortgagee based upon any such claim
and if LANDLORD, upon
notice from TENANT shall cause such action or proceeding to
be defended at LANDLORD'S expense by counsel reasonably satisfactory to
both parties, without any
disclaimer of liability by LANDLORD in connection with such
sale, LANDLORD shall not
be required to indemnify TENANT for attorney fees and
disbursements in connection with such action or proceeding.
LANDLORD shall, at all times during the term of this
lease agreement maintain in
full force and effect comprehensive general liability
insurance on an occurrence basis with
a minimum liability and a combined single limit of not less
than 5,000,000, which insurance
shall contain a contractual liability endorsement covering
the matters set forth herein, and
a personal injury endorsement including claims brought by
employees, agents or contractors of an insured.
All insurance policies required by this section
shall be written as primary policies not
contributing with, not in excess of any coverage that TENANT
may carry, and all insurance
procured hereunder by LANDLORD shall name its mortgagee, as
additional insured, as its
interest may appear, for the full amount of the insurance
herein required with respect to the
operations and activities of LANDLORD on or in connection
with the Distribution Center.
14. QUIET ENJOYMENT: The LANDLORD covenants,
warrants and represents that LANDLORD has full right and power to execute
the Lease, that LANDLORD has fee simple, marketable title to the Premises
and the Distribution Center, and that the TENANT, on paying the rent and other
charges herein reserved, and
performing the covenants and agreements hereof, shall
peaceably and quietly have, hold and
enjoy the Premises and all rights, easements, appurtenances
and privileges belonging or
appertaining thereto, during the full term of the Lease and
any extension hereof.
LANDLORD further covenants, warrants and represents
that upon the Rent Commencement Date, the Distribution Center, including the
Premises, will be free and clear
of all liens and encumbrances superior to the leasehold
hereby created, with the sole
exception of certain permanent or long-term financing from
LANDLORD'S lender (hereinafter "mortgagee"); that LANDLORD has provided
TENANT with a non-disturbance agreement executed by said mortgagee which will
allow TENANT to continue its quiet enjoyment of the Premises in the event of a
foreclosure of said long-term financing.
Should zoning or restrictions be in effect or adopted at any
time during the term of this lease, unreasonably preventing or restricting
TENANT from conducting its business or using
the common areas (including the parking areas) in
conjunction therewith, the TENANT at
its option may terminate the Lease and be released of and
from all further liability hereunder.
15. TENANT'S DEFAULTS: If two consecutive monthlyrent payments specified
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in this Lease shall remain unpaid for a period of twenty
(20) days after written notice to
TENANT of said unpaid rent, LANDLORD shall have the right to
terminate this Lease
Agreement with respect to the unexpired term, and accelerate
the balance of the rent
payments remaining under the then current term of the Lease,
except in no event shall this
acceleration provision be for an amount in excess of thirty-
six (36) months of rent payments.
This limitation on the right of acceleration, however, shall
not limit the LANDLORD's right
of recovery for TENANT's default under any other provision
hereof, or as provided by law
or equity. On termination, LANDLORD may recover from TENANT
all damages resulting from TENANT's breach, including, but not limited to
the cost of recovery of the Premises
and placing them in satisfactory condition, and attorneys'
fees, all of which sums shall be
immediately payable to LANDLORD from TENANT. Any receipt of
past due rent by LANDLORD will not constitute a waiver of the provisions of
this paragraph with respect to subsequent past due rentals. TENANT shall be
entitled to mitigation of the amount paid
to LANDLORD as a result of the acceleration of rent payments
due to default in an amount
equal to rent payments received by LANDLORD from any
subsequent tenant occupying the
Premises during the unexpired term of TENANT, less all costs
of reletting the Premises to
such subsequent tenant. LANDLORD shall have a duty to make
reasonable efforts to relet
the Premises after default by the TENANT and shall
reasonably consider any subsequent
tenant offered by TENANT in mitigation of damages to
LANDLORD.
16. LANDLORD'S DEFAULT: If the LANDLORD shall
fail to perform any of
the terms, provisions, covenants or conditions to be
performed or complied with by the
LANDLORD pursuant to the Lease, or if the LANDLORD should
fail to make any payment which the LANDLORD agrees to make, and if any such
failure shall, if it relates
to a matter which is not of an emergency nature, remain
uncured for a period of thirty (30)
days after the TENANT shall have served upon the LANDLORD
notice of such failure (or such shorter period as may be specified hereinabove
in this lease), or for a period of forty-
eight (48) hours after service of such notice if in the
TENANT'S judgment reasonably
exercised such failure relates to a matter which is of an
emergency nature, then TENANT
may, at TENANT'S option, perform any such terms, provisions,
covenants or conditions and
make any such payment, as LANDLORD'S agent, and in TENANT'S
sole reasonable discretion as to the necessity therefor, and the full amount
of the cost and expense entailed,
for the payment so made, shall immediately be owing by the
LANDLORD to TENANT and
TENANT shall have the right to deduct the amount thereof,
together with interest at twelve
percent (12%) per annum from the date of payment, without
liability or forfeiture, from
rents then due or thereafter coming due hereunder and
irrespective of who may own or have
an interest in the Premises at the time such deductions are
made. Any such deduction
made in good faith shall not constitute a default in the
payment of rent unless the TENANT
shall fail to pay the amount of such deduction to the
LANDLORD within thirty (30) days
after the final adjudication that such amount is owing to
the LANDLORD. The option
given in this paragraph is for the sole protection of the
TENANT and its existence shall not
release the LANDLORD from the obligation to perform the
terms, provisions and covenants
and conditions herein provided to be performed by the
LANDLORD, nor shall it deprive
the TENANT of any legal rights which it may have by reason of any such
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default by LANDLORD.
17. NOTICES: All notices required to be given to
TENANT shall be in writing
and shall be deemed given three (3) days after being placed
in the United States mail,
postage prepaid, by either registered or certified mail,
return receipt requested, addressed to the TENANT, as follows:
Brendle's Stores, Inc.
1919 North Bridge Street
Elkin, North Carolina 28621
ATTN: Manager of Property Lease Management
with a copy to :
M. Joseph Allman, Esquire
Allman Spry Humphreys & Leggett, P.A.
PO Drawer 5129
Winston-Salem, North Carolina 27103-5129
or to such other address as TENANT may give to LANDLORD by
the notice required herein.
All notices required to be given to LANDLORD shall
be in writing and be deemed
given three days after being placed in the United States
mail, postage prepaid, by either
registered or certified mail, return receipt requested,
addressed to LANDLORD as follows:
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P.B. Realty, Inc.
PO Box 500
Golfview Park
Lenoir, North Carolina 28645
with a copy to:
T. Paul Hendrick, Esquire
Hendrick, Zotian, Bennett & Blancato
PO Box 5276
Winston-Salem, North Carolina 27113
or to such other address as LANDLORD may give to TENANT by
the notice required herein. Unless otherwise requested, TENANT may make all
rental payments to LANDLORD at this address and the same shall be deemed made
upon the date of mailing.
18. END OF TENANCY: The TENANT will yield up the
Premises, and all additions thereto (except sign, equipment and trade fixtures
installed by TENANT at its
expense, which shall remain the property of TENANT), at the
termination of the tenancy,
in as good and tenantable condition as the same were at the
beginning of TENANT'S occupancy, reasonable wear and tear, damage by fire and
other casualties, and condemnation, appropriation by eminent domain excepted,
and also excepting any damage,
disrepair and other conditions that the LANDLORD is
obligated hereunder to repair or
correct. In the event the TENANT fails to yield up the
Premises at the end of the term,
with the acquiescence of LANDLORD but without the execution
of a new lease, the tenancy
shall be deemed to be month-to-month, and shall continue
under the same terms and conditions as herein stated.
19. ASSIGNMENT AND SUBLETTING: The TENANT may not
assign or sublet all or any portion of the Premises without the prior
written consent of the Landlord
which consent shall not be unreasonably withheld. Provided,
no part of the Premises shall
be assigned or sublet for a purpose which is unlawful,
dangerous, noxious or offensive. No
assignment or subletting by the TENANT shall affect the
obligation of the TENANT to
perform all of the covenants required to be performed by the
TENANT under the terms of
the Lease, unless and except LANDLORD shall expressly
relieve TENANT of such
obligation. Nothing in this Lease shall be construed to
require continuous business operation
by TENANT in the Premises. In the event TENANT should cease
to operate the business
in the Premises and "go dark" for a period in excess of
ninety (90) days, then and in that
event, LANDLORD shall have the option to terminate this
Lease Agreement provided, upon such termination Tenant shall be relieved of all
further obligations and liabilities under
this Lease Agreement from and after the date of said
termination. For the purpose of this
paragraph "go dark" shall mean a cessation of business other
than for the performance of repairs, maintenance, remodeling, or any closing
caused by the negligence or at the request
of LANDLORD. The ninety (90) day period shall begin to run
from the first business day
that TENANT is not open to the public, and no notice by
LANDLORD is required to
commence this ninety (90) day period. TENANT covenants and
13
agrees to give LANDLORD a notice of its intent to "go dark" before it
ceases business. Upon notice to
LANDLORD by TENANT of its intentions to "go dark", LANDLORD
shall have the option: (1) to require that the TENANT continue to make
timely rent payments under the
Lease until completion of the term; or (2) to terminate the
Lease immediately, however,
LANDLORD shall grant TENANT another 120 days to vacate the
premises and following the vacation of the premises by Tenant, Tenant shall be
relived of all further obligations and
liabilities under this Lease Agreement.
20. HAZARDOUS MATERIALS: LANDLORD covenants and
agrees to indemnify, protect, defend and hold TENANT harmless (except
from hazardous materials placed upon the Center by TENANT) from and against
any and all claims, demands, losses,
liabilities and penalties (including, without limitation,
reasonable attorney's fees at all trial
and appellate levels, whether or not suit is brought)
arising directly or indirectly from or out of or in any way connected with:
(a) The presence of any hazardous materials on the
real property or within the
leased Premises or within the Distribution
Center placed there by
LANDLORD, its agents and employees; or
(b) Any violation or alleged violation of any
local, state or federal environmental
law, regulation, ordinance or administrative
or judicial order relating to any
hazardous materials placed there by LANDLORD,
its agents or employees.
Likewise, TENANT covenants and agrees to indemnify,
protect, defend and hold LANDLORD harmless (except from hazardous materials
placed upon the Premises, Distribution Center, or real property, by LANDLORD)
from and against all claims,
demands, losses, liabilities and penalties, including
without limitation, reasonable attorney
fees at all trial and appellate levels, whether or not suit
is brought) arising from:
(a) The presence of any hazardous materials within
the leased Premises or the
Center brought upon the leased Premises by
TENANT, its agents and employees; or
(b) Any violation or alleged violation of any
local, state or federal environmental
law, regulation, ordinance or administrative
or judicial order relating to any
hazardous materials attributable to events
occurring before or during the
TENANT'S occupancy of the leased Premises
caused by the acts of the
TENANT, its agent or employees.
21. SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE:
TENANT does stipulate and agree that within a reasonable
period of time after request, but
in no event more than twenty (20) days after receipt of the
request, TENANT will execute,
acknowledge and deliver to LANDLORD, at any time and from
time to time, upon demand by LANDLORD, such documents as may be
requested by LANDLORD to subordinate the Lease to any ground
14
lease, underlying lease, mortgage, deed
of trust or other lien,
encumbrance or indenture held by any institution or
mortgagee, together with any renewals,
extensions, modifications, consolidations and replacements
thereof to effect such
subordination. Provided, however, such instrument of
subordination must provide that any
successor in interest to the LANDLORD will not disturb
TENANT in its use, possession and
occupancy of the leased Premises in accordance with the
Lease. If any holder of any
instrument described in the preceding paragraph succeeds to
LANDLORD'S interest in the
Premises, TENANT will pay to it all sums subsequently due
and payable under the provisions of the Lease. TENANT will, upon request
of any one so succeeding to the
interest of LANDLORD, automatically become the TENANT of and
attorn to such successor in interest without changing the Lease. Upon
request by such successor in interest
and without cost to LANDLORD or such successor in interest,
TENANT will execute,
acknowledge and deliver any instrument or instruments
confirming this attornment;
provided, however, that such instruments must provide that
such successor in interest will
not disturb TENANT in its use, possession and occupancy of
the Premises in accordance with the Lease.
22. ESTOPPEL INSTRUMENTS: At LANDLORD'S request,
from time to time, the TENANT agrees, within a reasonable period of time after
request, but in no event more
than twenty (20) days after receipt of the request, to
execute, acknowledge and deliver to
LANDLORD a certificate which acknowledges tenancy and
possession of the Premises and
recites such other facts concerning any provision of the
Lease or payment made under the
Lease which the mortgagee or prospective mortgagee or a
purchaser or prospective
purchaser of LANDLORD under an underlying lease or
prospective lessor of any premises
which includes the Premises may reasonably request. Such
certification shall include but
shall not be limited to acknowledgments that the TENANT has
accepted possession of the
Premises in the condition that it exists as of the date of
such certificate, statements that
there are no defaults by LANDLORD or TENANT existing under
the Lease as of the date of such certificate, statements that neither the
Lease, nor the validity, obligation or
construction thereof is in arbitration or litigation as of
the date of such certificate, and that
TENANT, as of the date of such certificate has no charge,
lien or claim of offset under this
lease or otherwise against rent or other charges due or to
become due under the Lease.
23. BENEFIT: The Lease and all of the covenants
and provisions thereof shall
inure to the benefit of and be binding upon the heirs, legal
representatives, successors and
assigns of the parties hereto. Each provision hereby shall
be deemed both a covenant and a condition and shall run with the land.
24. HEADINGS: The paragraph headings appearing in
the Lease are for reference only and shall not be considered a part of the
lease or in any way to modify, amend or affect the provisions thereof.
25. COMPLETE AGREEMENT: This written Lease contains the complete
agreement of the parties with reference to the leasing of the Premises. No
15
waiver of any breach of covenant herein shall be construed as a waiver of
the covenant itself or any subsequent breach thereof.
28. RIGHT TO TERMINATE LEASE FOR STRUCTURAL DEFECTS:
Notwithstanding any provisions of the Lease to the contrary,
in the event that any governmental or other authorized agency or any structural
engineer licensed in the state
where the Premises are located declares the Premises as
structurally unfit for occupancy, and
such condition is not the fault of TENANT arising on or
after February 1, 1994, TENANT
shall have the unconditional right to immediately declare
the Lease null and void. Provided,
however, that TENANT stipulates and agrees to give LANDLORD
notice of any such structural defects within five (5) days after discovery by
TENANT or notice to TENANT from any governmental agency or structural engineer
and LANDLORD shall have twenty (20) business days to commence repairs.
29. TRANSFER OF LANDLORD'S INTEREST: In the event
of the sale, assignment or transfer by LANDLORD of its interest in the
Distribution Center or in the
Lease (other than a collateral assignment to secure a debt
to LANDLORD) to a successor in interest who expressly assumes the obligations
of LANDLORD under this lease,
LANDLORD shall thereupon be released and discharged from all
of its covenants and obligations under this lease, except those obligations
that have accrued prior to such sale,
assignment or transfer; and TENANT agrees to look solely to
the successor in interest of
LANDLORD for the performance of those obligations.
LANDLORD'S assignment of the Lease, or any or all of its rights in the Lease,
shall not affect TENANT'S obligations hereunder, and TENANT shall attorn and
look to the assignee as LANDLORD, provided
TENANT has first received written notice of the assignment
of LANDLORD'S interest.
31. RECORDATION OF LEASE: This lease shall not be recorded.
However, after the Rent Commencement Date, the parties agree upon
request to execute a short form "Memorandum of Lease" in statutory form,
which shall include the Rent Commencement
Date and the expiration dates of this lease. Either party
may record the Memorandum of Lease at it own expense.
32. GOVERNING LAW: This lease and the rights of
the parties thereto shall be governed by and construed in accordance with the
laws of the State of North Carolina.
33. SEVERABILITY: If any provision of the Lease
shall be invalid or unenforceable, the rest and remainder of this lease shall
not be effected thereby and each
term and provision of this lease shall be valid and be
enforced to the full extent permitted by law.
34. TIME IS OF THE ESSENCE: The time
and performance of all the covenants, conditions and agreements of this lease
is of the essence of this agreement; it
being agreed that this provision shall in no event be
construed as vitiating any of the cure.
For compliance set forth by virtue of the terms and
provisions of this lease.
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35. RELATIONSHIP OF PARTIES: Nothing herein shall
be construed so as to constitute a joint venture or partnership between
LANDLORD and TENANT.
36. SUBMISSION OF LEASE: Submission of this Lease
for examination does
not constitute an offer to lease or a reservation of or
option for the Premises, and this lease
shall be effected only upon execution and delivery thereof
by LANDLORD and TENANT. IN WITNESS WHEREOF, the parties hereby have caused this
lease to be executed the day and year first above written or on the date given
below.
This the ________ day of __________________, 19__.
.
LANDLORD:
P.B. Realty, Inc.
By: __________________________
Its: _______________________________
TENANT:
Brendle's Stores, Inc.
By: ___________________________
Its: Chief Executive Officer and President
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