LEASE AGREEMENT BETWEEN
TANGER PROPERTIES LIMITED PARTNERSHIP
AND
DM MANAGEMENT COMPANY
FOR THE
TANGER FACTORY OUTLET CENTER
IN
LANCASTER, PENNSYLVANIA
Section Page #
1. Premises.................................................................................................1
2. Term and Option to Renew.................................................................................2
3. Rent.....................................................................................................4
(a) Fixed Rent......................................................................................4
(b) Percentage Rent.................................................................................4
(i) Percentage Rent Payment....................................................................5
(ii) Books of Accounts.........................................................................6
(iii) Gross Sales..............................................................................6
(c) Payments Between Commencement Date and First Lease Year. .......................................7
(d) Taxes; Insurance; Repairs and Common Area Maintenance; Promotion Fund..........................7
4. Construction of Premises................................................................................11
(a) Construction...................................................................................11
(b) Completion Date................................................................................11
(c) Ready for Occupancy............................................................................12
5. Installations by Tenant.................................................................................13
6. Use of Parking Areas and Walkways.......................................................................13
(a) Common Areas...................................................................................13
(b) Changes by Landlord............................................................................14
(c) Right to Close Common Areas....................................................................14
7. Use and Care of Premises by Tenant......................................................................15
(a) Tenant's Use of Premises.......................................................................15
(b) Nature of Use..................................................................................15
(c) Reputation of the Site.........................................................................15
(d) Extra Hazardous Activity.......................................................................16
(e) Painting and Decorating........................................................................16
(f) Snow and Ice...................................................................................16
(g) Rubbish and Trash..............................................................................16
(h) Indemnification by Tenant......................................................................17
(i) Signs..........................................................................................17
(j) Waste..........................................................................................17
8. Operation of Business...................................................................................17
(a) Open for Business..............................................................................17
(b) Business Hours.................................................................................18
(c) Landlord Approval of Advertising...............................................................18
(d) Use of Space...................................................................................18
(e) Character of Operations........................................................................19
(f) General Covenants of Tenant....................................................................19
(g) Insurance......................................................................................20
(h) Payment of Personal Property Taxes.............................................................21
9. Utilities...............................................................................................21
(a) Installation...................................................................................21
(b) Gas, Electricity, Water and Sewer, Lights, Heat, Power and Telephone Charges...................21
(c) Advances by Landlord...........................................................................21
10. Alterations or Improvements by Tenant...................................................................21
11. Removal of Improvements.................................................................................22
12. Access to Premises......................................................................................23
13. Repairs by Landlord.....................................................................................23
14. Reservation of Landlord.................................................................................24
15. Liability...............................................................................................24
16. Repairs by Tenant / HVAC Contract.......................................................................25
(a) Repairs by Tenant..............................................................................25
(b) HVAC Contract..................................................................................25
17. (a) Default by Tenant...................................................................................26
18. Rent Demand.............................................................................................29
19. Notices / Time..........................................................................................29
(a) Notices........................................................................................29
(b) Time...........................................................................................30
20. Damage and Destruction..................................................................................30
21. Mortgage Subordination..................................................................................30
22. Eminent Domain..........................................................................................31
23. Assignment and Subletting...............................................................................33
24. Accord and Satisfaction.................................................................................34
25. Estoppel Certificates...................................................................................34
26. Waiver..................................................................................................35
27. Quiet Enjoyment.........................................................................................35
28. Interpretation..........................................................................................36
29. No Partnership..........................................................................................36
30. Exceptions to Demise....................................................................................36
31. Paragraph Headings......................................................................................36
32. Lease Inures to Benefit of Assignees....................................................................36
33. Entire Agreement / Severability.........................................................................36
(a) Entire Agreement...............................................................................36
(b) Severability...................................................................................37
34. Surrender and Holding Over..............................................................................37
35. Liability of Landlord...................................................................................37
36. Waiver of Subrogation...................................................................................38
37. Retail Restriction Limit................................................................................38
38. Financial Statements....................................................................................39
STATE OF PENNSYLVANIA LEASE AGREEMENT
COUNTY OF LANCASTER LANCASTER, PENNSYLVANIA
THIS LEASE is entered into as of October 23rd, 1998 by and between
TANGER PROPERTIES LIMITED PARTNERSHIP, a North Carolina limited partnership,
having an office or located at P. O. Box 29168, Greensboro, North Carolina 27429
(hereinafter referred to as "Landlord") and DM MANAGEMENT COMPANY, a Delaware
corporation, having an office at 25 Recreation Park Drive, Hingham,
Massachusetts, 02043 (hereinafter referred to as "Tenant") doing business as J.
Jill.
IN CONSIDERATION of Ten Dollars ($10.00) and other good and valuable
consideration and the mutual covenants contained herein and intending to be
legally bound hereby, Landlord and Tenant hereby agree with each other as
follows:
1. Premises. Landlord leases to Tenant and Tenant leases from Landlord
upon and subject to the terms and conditions and provisions hereof approximately
2,780 square feet of floor area (hereinafter sometimes referred to as the
"Premises"). The building is shown on the Site Plan attached hereto as EXHIBIT
"A" and made a part hereof. The Premises shall be designated as Phase I, Unit
No. 609 on EXHIBIT "A".
At any time within thirty (30) days after the Premises are ready for
occupancy (as hereinafter defined), Tenant shall have the right to cause the
Premises to be measured by an architect who shall certify to Landlord and to
Tenant the number of square feet in the Premises. Such certification shall be
deemed final unless disputed in good faith by Landlord and a certification to
the contrary is made by Landlord's architect. In the event of such dispute,
Landlord's architect and Tenant's architect shall mutually agree upon a third
architect (whose cost will be shared equally by Landlord and Tenant) who shall
measure the Premises, whose determination shall be final. If Tenant does not
notify Landlord in writing of a discrepancy in the square footage of the
Premises on or before the Commencement Date, then the Premises shall be
conclusively deemed to be 2,780 square feet.
If the measurement of the Premises discloses that the actual square
foot area differs by more than one percent (1%) from that
1
stated in the Lease, the rentals and other charges due and payable under this
Lease shall be proportionately adjusted. If the actual square foot area is
between 2,752 square feet and 2,808 square feet, then the area shall be deemed
to be 2,780 square feet.
The Premises are located on property in Lancaster, Pennsylvania, said
property being more fully described on EXHIBIT "B" attached hereto and made a
part hereof (the "Site"). It is understood and agreed that all other parcels
shown on the Site Plan are shown for the sole purpose of locating and
designating such parcels for the purposes of Section 6 hereof.
2. Term and Option to Renew.
(a) The term of this Lease shall be five (5) years beginning upon (i)
the date sixty (60) days after the date specified in a written notice from
Landlord to Tenant on which the Premises are or shall be "ready for occupancy"
as such term is defined in Section 4(c) hereof or (ii) the date on which Tenant
shall open the Premises for business to the public, whichever of said dates
shall first occur, such date being hereinafter referred to as the "Commencement
Date". Unless terminated by Landlord as hereinafter provided, the term of this
Lease shall end on the last day of the fifth consecutive full lease year
thereafter, as said term "lease year" is defined in Section 2(b) hereof;
provided however, that if the Landlord has not given the notice that the
Premises are ready for occupancy as provided above on or before the date which
is one year after the date this Lease is fully executed by both parties, then
upon written notice of termination by either party delivered prior to such
notice of ready for occupancy, this Lease shall become null and void and both
parties hereto shall be relieved of all obligations hereunder.
Landlord's and Tenant's obligations under this Lease are conditioned
upon the current tenant, Welcome Home, vacating the Premises and delivering over
legal possession of the Premises to Landlord. Landlord agrees to use reasonable
efforts to see that such vacation of the Premises and delivery of the Premises
to Landlord is accomplished.
Notwithstanding any other provisions of this Lease, if at least
sixty-five percent (65%) of the leasable floor space of the
2
Shopping Center of which the Premises is a part is not leased and/or open for
business to the public for one hundred twenty (120) consecutive days
("Non-Operating Co-Tenancy") and Tenant notifies Landlord in writing of the
Non-Operating Co-Tenancy ("Non-Operating Co-Tenancy Notice"), then Tenant may
pay four percent (4%) of Gross Sales in lieu of Fixed Rent beginning with the
date of delivery of the Non-Operating Co-Tenancy Notice to Landlord and
continuing until such time as the Non-Operating Co-Tenancy no longer exists, at
which time Tenant shall pay Fixed Rent as set forth in Item 3(a) or 2(d) hereof.
For purposes of this paragraph, the following shall be deemed open for business
to the public at all times: (a) the Premises; (b) space under assignment or
sublease, space which is controlled by a referee or trustee in bankruptcy or
which is otherwise out of Landlord's control; and (c) space which constitutes
new construction/expansion of the Shopping Center for a period of eighteen (18)
months after substantial completion of such construction/expansion.
(b) The term "lease year" as used herein shall mean a period of twelve
(12) consecutive full calendar months during the initial term or the Extended
Term of this Lease. The first lease year shall begin on the Commencement Date if
said Commencement Date shall occur on the first day of a calendar month; if not,
then the first lease year shall begin upon the first day of the calendar month
next following such Commencement Date. Each succeeding lease year shall commence
upon the anniversary date of the first day of the first lease year.
(c) At the time that the Commencement Date of the term of this Lease is
established the parties will promptly execute a Memorandum of Lease prepared by
Landlord stipulating the actual commencement and expiration dates of the term of
this Lease as provided herein, referring to this Lease, and describing the
property herein leased but containing no other terms or provisions hereof.
(d) Tenant shall have one (1) option to extend this Lease, such option
for five (5) years (such additional period being herein referred to as the
"Extended Term"). Such option period shall be exercised by Tenant giving written
notice to that effect to Landlord at least six (6) months prior to the
expiration of the then pending term. Time is of the essence with respect to the
exercise of the option to extend. Upon the giving of such notice this Lease
shall be extended for an Extended Term without the
3
execution of any further instrument and such exercise of option to extend shall
be irrevocable. Such Extended Term shall be upon the same terms, covenants and
conditions as shall be in effect immediately prior to such extension except that
the Fixed Rent (as hereinafter defined) for each lease year of the Extended Term
shall be as follows:
Lease Year Annual Fixed Rent Monthly Installment
---------- ----------------- -------------------
6 - 10 $69,500.00 $5,791.66
and the applicable Breakpoint used to determine Percentage Rent (as hereinafter
defined) for each lease year of the Extended Term shall be as follows:
Lease Year Applicable Breakpoint
---------- ---------------------
6 - 10 $973,000.00
Tenant's right to exercise its option granted in this subparagraph is
conditioned on (i) Tenant not being in default beyond any applicable grace
period in performance of any of its obligations under this Lease at the time of
the exercise of such option; (ii) during the twelve (12) calendar months
immediately preceding the month in which the option is exercised, Tenant shall
have achieved gross sales of $250.00 per square foot of Premises; (iii) Tenant
not assigning this Lease except in connection with a merger, consolidation or
sale of all or substantially all of Tenant's assets, or to an affiliate of
Tenant, or if such assignment or sublease has been approved by Landlord or
occurs or subletting the Premises, or any part thereof; provided, however, in
the event Tenant has exercised its option to extend the term of this Lease and
prior to the beginning of the Extended Term Tenant then assigns this Lease or
sublets the Premises or any part thereof, Landlord may, at its option deem such
exercise of option to be null and void and of no force or effect; and (iv)
Tenant not being a named Debtor in a bankruptcy action; provided, however, in
the event Tenant has exercised its option to extend the term of this Lease and
prior to the beginning of the Extended Term Tenant becomes a named Debtor in a
bankruptcy action, Landlord may, at its option deem such exercise of option to
be null and void and of no force or effect.
3. Rent.
4
(a) Fixed Rent. Tenant hereby covenants and agrees to pay to Landlord,
at its office or such other place as Landlord may from time to time designate,
as minimum guaranteed fixed rent, hereinafter called "Fixed Rent", for the
Premises during each year of the continuance of this Lease, paid in equal
monthly installments, the following:
Lease Year Annual Fixed Rent Monthly Installment
---------- ----------------- -------------------
1 - 5 $61,160.00 $5,096.66
Each monthly installment shall be paid in advance, on the first day of
each and every calendar month during said term.
Each rental payment payable hereunder by Tenant to Landlord shall bear
interest at the rate of twelve percent (12%) per annum from the date same shall
become payable under the terms of this Lease until the same shall be paid.
(b) Percentage Rent. In addition to the minimum guaranteed Fixed Rent
hereinabove agreed to be paid by Tenant, Tenant shall and will pay to Landlord
at the time and in the manner herein specified, as additional rental an amount
equal to four percent (4%) of the amount of Tenant's gross sales in excess of
the applicable Breakpoint made in, upon or from the Premises during each lease
year of the term hereof ("Percentage Rent"). The applicable Breakpoint for each
lease year of the initial term shall be as follows:
Lease Year Applicable Breakpoint
---------- ---------------------
1 - 5 $903,500.00
(inclusive)
(i) Percentage Rent Payment. The Percentage Rent shall be paid
as follows: Within fifteen (15) days after the end of each calendar
month of the term hereof, commencing with the 15th day of the second
month of the first lease year, Tenant shall furnish to Landlord a
statement, certified by Tenant to be correct, showing the total gross
sales made in, upon, or from the Premises during the preceding calendar
month together with a statement of the total local sales tax payment
for such month (identifying any over payment of sales tax and refunds
actually made to Tenant during such month), and beginning with the
statement for the calendar month in which Tenant's Gross Sales exceed
the applicable Breakpoint Tenant shall accompany
5
each such statement with a payment to Landlord equal to four percent
(4%) of the total gross sales in excess of the applicable Breakpoint
less the amount of the Percentage Rent previously paid for such lease
year.
Within sixty (60) days after the end of each lease year of the
term hereof, Tenant shall furnish to Landlord a statement in writing,
certified by a Chief Financial Officer, showing the total gross sales
by months made in, upon, or from the Premises during the preceding
lease year, at which time an adjustment shall be made between Landlord
and Tenant to the end that the total percentage rent paid for each such
lease year shall be a sum equal to four percent (4%) of the total gross
sales in excess of the applicable breakpoint for that lease year so
that the percentage rent, although payable monthly after the applicable
Breakpoint is reached shall be computed and adjusted on an annual
basis.
Each rental payment payable hereunder by Tenant to Landlord
shall bear interest at the rate of twelve percent (12%) per annum from
the date same shall become payable under the terms of this Lease until
the same shall be paid.
(ii) Books of Accounts. Tenant agrees to keep on the Premises
or at its principal office accurate books and records of the sales made
on the Premises, which books and records shall be kept in accordance
with accepted accounting practice, and shall be open at all reasonable
times during business hours and upon reasonable notice to Landlord or
its representative for the purpose of examining the same to determine
the accuracy of the statements of the gross sales submitted by Tenant
as aforesaid. The books and records of account shall also include all
federal, state and local tax returns of Tenant relating to Tenant's
sales. In the event an examination of the records of Tenant shall
disclose that gross sales as reported in the aforesaid statements were
less, by three percent (3%) or more, than the gross sales actually made
by Tenant during any lease year, Tenant agrees to pay to Landlord the
reasonable cost of any such audit. Any additional Percentage Rent found
due and owing as a result of any audit shall immediately become due and
payable. Landlord shall have the right to inspect the records of Tenant
in
6
connection with sales made by Tenant from other stores operated by it,
but only in the event such examination becomes necessary to ascertain
the gross sales made by Tenant from the Premises.
(iii) Gross Sales. The term "gross sales" as used in this
Lease shall be deemed to mean the aggregate gross amount of all sales
of merchandise made and all charges for services performed by Tenant or
any persons, firms or corporations on its behalf, or any tenants or
concessionaires of Tenant, from, in or upon the Premises, including
orders taken upon the Premises for delivery from sources other than the
Premises, and whether wholesale or retail, and whether cash or credit,
less refunds for merchandise returned for which cash has been refunded
or credit given. Gross sales shall also include the value of any
consideration other than money, as well as money, received by Tenant or
by subtenants, concessionaires or other persons firms or corporations
under subleases or arrangements of any nature for the right to occupy
or to transact business upon the Premises. The amount of any sales and
excise taxes whatsoever, and however imposed, computed or paid for
sales from, in, or upon the Premises, shall, to the extent included in
sales, be deducted when determining gross sales.
Gross Sales shall not include the following: (a) the amount of
cash refunds made to Tenant's customers for the return of merchandise
purchased at the Premises; (b) sum or credits received in settlement of
claims for loss or damage to merchandise; (c) the exchange of
merchandise between the stores of Tenant and its affiliates and
licensees where such exchange is made solely for the convenient
operation of Tenant's business and not for the purpose of depriving
Landlord of the benefit of a sale which would otherwise be made at, in,
from or upon the Premises; (d) the amount of merchandise returned by
Tenant to shippers or manufacturers; (e) the sale of fixtures,
machinery or equipment which are not Tenant's stock in trade; (f)
interest, service or sales carrying charges paid by customers to Tenant
for the extension of credit on sales; (g) delivery charges, provided
same are separately stated and no profit is made thereon; (h) gift
certificates until such time as the same shall be converted into a sale
by redemption or deemed abandoned; (i) catalog
7
orders accepted in the Premises so long as same are accepted via a
separate mail order catalog sales desk and/or direct telephone and
processed directly by Tenant's mail order catalog processing center,
provided such sales do not exceed one-half of one percent (1/2%) of
Tenant's Gross Sales; (j) the amount of sales to Tenant's employees
employed at the Premises, provided such amount does not exceed one
percent (1%) of Tenant's Gross Sales.
(c) Payments Between Commencement Date and First Lease Year. If the
Commencement Date of this Lease precedes the commencement of the first lease
year as provided in Section 2(b) hereof, then Tenant shall pay to Landlord Fixed
Rent on a pro rata basis for any period of time between said Commencement Date
and the date upon which the first lease year begins and any gross sales, as
defined herein, made during such fractional month period shall be added to gross
sales for the first calendar month for the purpose of determining Percentage
Rent under Section 3(b) hereof.
(d) Taxes; Insurance; Repairs and Common Area Maintenance;
Promotion Fund.
(i) In addition to the minimum guaranteed annual Fixed Rent
and the Percentage Rent to be paid by Tenant, Tenant shall pay to the
Landlord as Additional Rent an amount equal to a fraction of the "Real
Estate Taxes", the "Repairs and Common Area Maintenance", and the
"Landlord Insurance". Such fraction shall have as its numerator the
floor area of the Premises and shall have as its denominator the
leasable floor area of the buildings on the Site (calculated exclusive
of anchor tenants occupying 20,000 square feet or greater, but not to
exceed 2 anchor tenants) at the time such taxes, maintenance costs or
insurance shall become due and payable. Landlord shall bill Tenant
monthly for such Additional Rent, and Tenant agrees to pay such bill
rendered by Landlord within fifteen (15) days after receipt thereof by
Landlord.
Landlord shall be entitled to estimate all amounts of
Additional Rent payable during each calendar year and to obtain payment
in advance on account thereof from Tenant on a monthly basis from and
after the Commencement Date. Within ninety (90) days after the end of
each calendar year Landlord
8
shall furnish Tenant with a statement (the "Additional Rent Adjustment
Statement") of the actual costs of Real Estate Taxes, Repairs and
Common Area Maintenance and Landlord Insurance for the preceding
calendar year for which estimated monthly payments were billed, such
statement showing in reasonable detail information relevant to the
calculation of Tenant's share payable under this Lease. If the actual
cost of Additional Rent is greater than Tenant's estimated payments on
account Tenant shall pay any deficiency with Tenant's next due payment
of Additional Rent, or if no payments are next due, Tenant shall make
such payment to Landlord within fifteen (15) days of receipt of the
Additional Rent Adjustment Statement. If the actual cost of Additional
Rent is less than Tenant's estimated payments on account Landlord
shall credit any excess payments to Tenant's next due payment to
Landlord or if no payments are next due, Landlord shall refund such
excess payment to Tenant within fifteen (15) days. Any annual
statement furnished by Landlord pertaining to Additional Rent which is
not disputed by Tenant in writing within one (1) year after such
statement is delivered to Tenant shall be deemed accepted by Tenant.
In the event of a dispute, Tenant shall have the right to
inspect and audit such books and records of Landlord pertaining to
Repairs and Common Area Maintenance, Promotion Costs, Landlord
Insurance, and Real Estate Taxes for the preceding one (1) calendar
years upon at least thirty (30) days prior written notice to Landlord,
but no more frequently than once per lease year and in no event during
the months of December and January. Tenant acknowledges that such
examination of Landlord's relevant records may reveal confidential or
proprietary information. Tenant agrees to protect and maintain the
security and confidentiality of such information and agrees that such
information shall not be disclosed to any third party and shall be used
only for the purposes of establishing charges for Repairs and Common
Area Maintenance, Promotion Costs, Landlord Insurance, and Real Estate
Taxes payable by Tenant under this Lease (such agreement herein
referred to as "Tenant's Confidentiality Agreement"). Provided however,
any such inspection and audit of Landlord's records must be conducted
by (i) employees of Tenant having a minimum of five (5) years of
commercial
9
auditing experience with documentation of such experience to be
provided to Landlord at least thirty (30) days prior to any such
inspection and audit; or (ii) Tenant's accountant who is regularly
responsible for books and records of Tenant and its affiliates. In no
event shall the person(s) conducting the audit be compensated on a
contingency basis. In the event an examination of the records of
Landlord shall disclose that the amounts charged to Tenant were more,
by four percent (4%) or more, than the charges actually incurred by
Landlord during any lease year, Landlord agrees to reimburse Tenant
the reasonable cost of any such audit.
Each rental payment payable hereunder by Tenant to Landlord
shall bear interest at the rate of twelve percent (12%) per annum from
the date same shall become payable under the terms of this Lease until
the same shall be paid.
(ii) For the purpose of this Section 3(d) "floor area" shall
be deemed to mean the actual number of square feet of floor space
within the exterior walls of all floors, without deduction or exclusion
for any space occupied by or used by columns, stairs or other interior
construction or equipment.
(iii) For purposes of this Section 3(d) "Real Estate Taxes"
shall mean the levy assessment or imposition of any tax on or for the
use of the Site and all improvements of a real property nature located
thereon; "Repairs and Common Area Maintenance" shall mean the charges,
costs and expenses which are incurred by the Landlord under Section 13;
"Landlord Insurance" shall mean the insurance carried by Landlord
pursuant to Section 20 and Sub-Section 8(g) of this Agreement.
Tenant shall be responsible only for its proportionate share
of such Real Estate Taxes which would come due during the term of this
Lease calculated as if such assessment had been paid over the longest
period of time permitted by the applicable governmental entity.
(iv) Grand Opening. INTENTIONALLY DELETED.
(v) Landlord will establish a Promotion and Advertising
Service for the Shopping Center. Amounts contributed to the Promotion
and Advertising Service will be expended for Promotions Costs.
"Promotion Costs" shall mean all amounts paid or incurred by Landlord
for advertising and any other
10
marketing, promotional and/or public relations activities, excluding
grand opening costs, engaged in by, or on behalf of Landlord for the
benefit of the tenants of the shopping center located on the Site.
Tenant agrees to pay Landlord the following: during the first calendar
year (i.e. the calendar year in which the Commencement Date occurs)
the sum of $2.25 per square foot of Premises (pro rated in the event
such year is less than twelve (12) calendar months); beginning with
the first January first thereafter and continuing through each
calendar year thereafter the sum of $2.25 per square foot of Premises
increased as set forth below; provided, however, in no event shall
such increase be greater than ten percent (10%) per square foot of
Premises per annum.
The Promotion and Advertising Service charge will be increased
effective January 1 of each calendar year in proportion to the change
in the Consumer Price Index U.S. average for All Urban Consumers
("CPI"), all items: 1982-1984 = 100, published by the Bureau of Labor
Statistics of the United States Department of Labor. The "Current Index
Figure" shall be the CPI for the immediately preceding October; the
"Basic Index Figure" shall be the corresponding CPI for the penultimate
October. (i.e. the increase shall be calculated using the CPI for the
immediately preceding October as the Current Index Figure and using the
CPI for the October two years preceding such January for the Basic
Index Figure).
The Current Index Figure shall be divided by the Basic Index
Figure. From the quotient thereof, there shall be subtracted the
integer 1, and any resulting positive number shall be deemed to be the
percent of increase in the cost of living ("Percent of Increase").
The increase for each calendar year during the lease term
shall be an amount equal to the Percent of Increase as calculated above
multiplied by the Promotion and Advertising Service charge for the
immediately preceding calendar year.
The annual charge for Promotion and Advertising Service as so
determined (the charge for the immediately preceding calendar year plus
any "increases" calculated as set forth
11
above) shall be due and payable in equal monthly installments in
advance on the first day of each calendar month throughout the term of
this Lease. By way of illustration if the Promotion and Advertising
Service charge for the first calendar year is $2.25 per square foot
and the applicable Percent of Increase is 2%, then the Promotion and
Advertising Service charge for the second calendar year would be $2.30
per square foot ($2.25 x 2% + $2.25 = $2.30); if the applicable
Percent of Increase for calculating the Promotion and Advertising
Service charge for the third calendar year is 1.5%, then the Promotion
and Advertising Service charge for the third calendar year is $2.33
per square foot ($2.30 x 1.5% + $2.30 = $2.33).
In the event that the determination of any increase cannot be
made by the first day of January of each calendar year because of the
unavailability of the Current Index Figure, such determination shall be
made as soon thereafter as possible. Until such determination can be
made, the parties agree that Tenant shall pay as Promotion and
Advertising Service charge the Promotion and Advertising Service charge
for the immediately preceding calendar year increased by five percent
(5%) ("Adjusted Charge"); once the Percent of Increase has been
calculated Tenant shall immediately pay to Landlord for each month that
the Percent of Increase could not be determined the difference between
the Adjusted Charge actually paid to Landlord and the Promotion and
Advertising Service charge as increased by the CPI. In the event the
Adjusted Charge exceeds the Promotion and Advertising Service charge as
increased by the CPI the excess paid by Tenant shall be applied to
future payments of Promotion and Advertising Service charges as such
charges become due.
If publication of the Consumer Price Index shall be
discontinued, the parties hereto shall thereafter accept comparable
statistics on the cost of living as shall be computed and published by
an agency of the United States or by a responsible financial periodical
or recognized authority then to be selected by the parties hereto. In
the event the CPI should some time in the future be retroactively
adjusted, such adjustment shall not be considered.
12
4. Construction of Premises.
(a) Construction. Landlord has constructed the building in which the
Premises are located as a one story building. Landlord agrees to prepare the
interior of the Premises for occupancy by Tenant in accordance with EXHIBIT "C"
attached hereto and made a part hereof. If the Tenant desires additional
installations that vary from or are in excess of those indicated on EXHIBIT "C",
Tenant will pay for those items and their installation upon terms agreed upon by
Landlord and Tenant.
(b) Completion Date. Landlord agrees that the Premises shall be
substantially completed on, or prior to, the later of the two following dates,
that is (i) January 1, 1999 or (ii) the expiration of such period after such
date specified in clause (i) as shall equal the aggregate period or periods of
delay (hereinafter referred to as "unavoidable delays"), if any, in construction
of the Premises in consequence of any acts of God, strikes, labor disputes,
inability to obtain material or labor on reasonable terms, governmental laws,
regulations or restrictions, acts of a public enemy, or any cause whatever
beyond the control of Landlord (but in no event prior to January 1, 1999). In
the event that Landlord has reasonable knowledge or belief that the Premises
will not be substantially completed on or before the date specified in clause
(i) above, then Landlord shall give Tenant at least thirty (30) days written
notice of the revised date prior to which the Premises will be substantially
completed, subject to such unavoidable delays. Under no circumstances shall
Landlord be liable to Tenant in damages for any delay in commencing or
completing the Premises or for a total failure to complete same.
If Tenant is to provide Landlord with Tenant's drawings and/or plans
and specifications or any other information pertaining to the interior
design/layout/etc. of the Premises (the "Tenant Plans") in order for Landlord to
perform any work with respect to the Premises ("Work") and Tenant does not
deliver the Tenant Plans to Landlord within ten (10) days of request by
Landlord, then Landlord shall have the right, and is hereby expressly directed
and authorized by Tenant, to proceed with such Work in a manner which Landlord
considers to be commercially reasonable.
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Further, Tenant agrees that it shall provide to Landlord Tenant's
drawings and/or plans and specifications and other information pertaining to the
interior designs/layout/etc. of the Premises for work to be performed by Tenant
in the Premises("Tenant's Work")for review and approval by Landlord and obtain
Landlord's approval to such Tenant's Work, which approval shall not be
unreasonably withheld or delayed, prior to commencing Tenant's Work in the
Premises.
Landlord agrees to use reasonable efforts to deliver possession of the
Premises on or before February 15, 1999.
(c) Ready for Occupancy. The Premises shall be deemed to be "ready for
occupancy" and substantially complete under the terms of this Lease upon
delivery of the Premises to Tenant. The opening by Tenant of the Premises for
business shall be deemed conclusive that the Premises, driveways, parking areas,
and sidewalks were substantially completed and in good order and condition at
the commencement of the lease term, and that Tenant accepted delivery of the
Premises as substantially completed. If Tenant has taken possession of the
Premises as substantially completed, Landlord agrees that it will diligently
carry forward the construction of the Premises to final completion.
5. Installations by Tenant. Landlord may, prior to notifying Tenant
that the Premises are ready for occupancy as provided in Section 2(a) hereof,
make the Premises available to Tenant for the installation of its store
equipment, fixtures and merchandise at Tenant's sole risk, so long as such
installation does not interfere with the Landlord's work on the interior of the
Premises, but the Commencement Date shall nevertheless be determined as provided
in Section 2 hereof. Tenant shall observe and perform all of its obligations
under this Lease (except its obligations to pay Fixed Rent, Percentage Rent, or
Additional Rent) from the date that the Premises are so made available to Tenant
for its work and installations until the Commencement Date, as defined in
Section 2 hereof, in the same manner as though the lease began when the Premises
were so made available to Tenant. All work performed by Tenant in the Premises
shall be in accordance with applicable laws and building codes; shall be
performed in a good and workmanlike manner; and shall be performed by a
contractor acceptable to Landlord.
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6. Use of Parking Areas and Walkways.
(a) Common Areas. Landlord covenants and agrees that during the term of
this Lease, and subject to the provisions hereinafter set forth in Sections
6(b), 6(c), 7(g), 8(e) and 8(f) hereof, Tenant and its officers, employees,
agents, customers, business visitors, business guests, licensees and invitees
shall be entitled to the non-exclusive use of the parking areas, driveways and
walkways within the Site (hereinafter referred to as "Common Areas"), but such
use shall be in common with Landlord and all others to whom Landlord has or may
hereafter grant similar nonexclusive rights to use the same, including, but not
limited to, the owners and tenants of the Site and any lands added thereto, and
the officers, employees, agents, customers, business visitors, business guests,
licensees and invitees of such owners and tenants, their successors and assigns;
provided, however, that such use by Tenant shall be subject to such rules and
regulations consistently applied as Landlord may from time to time adopt
governing the same; and provided, further, that Landlord shall at all times have
full control, management and direction of said Common Areas, and that Landlord
shall have the right at any time to change the layout thereof, including the
right to reasonably add to or subtract from their shape and size, as well as to
alter their location.
(b) Changes by Landlord. It is understood that EXHIBIT "A" indicates,
in general, the proposed plan for development of the Site of which the Premises
are a part; that Landlord, in building and operating the improvements on the
Site, may (in addition to any specific rights to amend the same elsewhere
reserved in this Lease) make such other reasonable departures from said plan as
Landlord, in its sole discretion, may from time to time find proper. Landlord
may, in its discretion, change the location of other tenants and the nature of
any occupancy of any store unit at any time, except only as otherwise provided
in this Lease. Tenant understands and agrees that Landlord may from time to time
make, anywhere within the Site, alterations or additions to the building on the
Site or any lands added thereto, construct additional buildings or improvements
and make alterations thereto. It is further understood and agreed that EXHIBIT
"A" indicates only a proposed plan of development for the Site. There is no
obligation upon Landlord to complete the improvements shown on EXHIBIT "A" other
than the improvements necessary to Tenant's use of the
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Premises. In exercising its rights under this subparagraph Landlord shall not
materially adversely interfere with the direct/immediate visibility of, ingress
to or egress from Tenant's Premises.
(c) Right to Close Common Areas. Landlord shall have the right to close
any or all portions of the Common Areas to such extent as may, in the opinion of
Landlord's counsel, be legally sufficient to prevent a dedication thereof or the
accrual of any rights to any person or to the public therein and to close
temporarily, if necessary, any part of the Common Areas in order to discourage
non-customer parking. All space, areas, and facilities within the Site are to be
used and occupied under a license, and if the amount of such space, areas and
facilities are diminished, this Lease shall remain in full force and effect and
Landlord shall not be subject to any liability nor will Tenant be entitled to
any compensation or diminution of rent, nor shall diminution of such space,
areas and facilities be deemed constructive or actual eviction. If, as a result
of Landlord exercising Landlord's rights under this subparagraph, if Tenant
cannot conduct its business in the Premises for a period in excess of three (3)
consecutive business days, then a proportionate abatement of the Fixed Rent,
Additional Rent and an adjustment of the applicable Breakpoint used for
calculating Percentage Rent shall be allowed for such reasonable period during
which Tenant cannot conduct its business in the Premises.
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7. Use and Care of Premises by Tenant.
(a) Tenant's Use of Premises. Tenant shall use the Premises only for
the retail sale of women's clothing and accessories, and home furnishings and
accessories. Tenant shall sell merchandise from the Premises at discount prices,
namely prices that are at least thirty percent (30%) less than the prices
charged by the majority of the other retailers in the metropolitan area in which
the Site is located that sell the same or substantially the same merchandise at
full retail mark-up. Tenant shall operate its business in the Premises as a
factory direct outlet selling its merchandise at discount prices. Tenant agrees
that it will not use, or permit or suffer the use of, the Premises, or any part
thereof, for any other business or purpose. Tenant shall, on the Commencement
Date, open, operate and advertise the Premises under a name of which "J. Jill"
is the primary component. Products manufactured by or bearing the label of any
other tenant in the shopping center located on the Site of which the Premises is
a part shall not be sold in, from or upon the Premises.
Notwithstanding any other provision of this Lease, in the event Tenant
changes the name of all of its other manufacturer outlet stores, then Tenant may
change the name under which it does business in the Premises to be consistent
with all of its other manufacturer outlet stores.
(b) Nature of Use. Tenant shall use and occupy the Premises in a
careful, safe and proper manner and shall keep the Premises in a clean and safe
condition in accordance with applicable laws, regulations and ordinances and the
lawful directions of proper public officers and shall not do, or fail to do,
anything within the Premises to increase the obligations or liabilities of the
Landlord under any applicable laws, regulations and ordinances. Tenant shall use
and maintain the Premises consistent with present reasonable standards of good
shopping center operations, and Tenant shall not permit solicitations,
demonstrations, itinerant vending or any other activities inconsistent with such
standards.
(c) Reputation of the Site. Tenant shall not use, or allow the Premises
to be used, for any purpose other than as specified herein and shall not use nor
permit the Premises to be used for any unlawful, disreputable or immoral purpose
or in any way that will
17
injure the reputation of the building in which the Premises are situated, nor
permit the Premises to be occupied in whole or in part by any other person
except as otherwise provided herein.
(d) Extra Hazardous Activity. Tenant agrees that it will not do or
suffer to be done, or keep or suffer to be kept, anything in, upon or about the
Premises which will contravene Landlord's policies insuring against loss or
damage by fire or other hazards, or which will prevent Landlord from procuring
such policies in companies acceptable to Landlord; and if anything done, omitted
to be done or suffered to be done by Tenant, or kept, or suffered by Tenant to
be kept, in, upon or about the Premises shall cause the rate of fire or other
insurance on the Premises or other property of Landlord to be increased beyond
the rate from time to time applicable to the Premises for use for the purposes
permitted under this Lease or to such other property for the use or uses made
thereof, Tenant will pay the amount of such increase promptly upon Landlord's
demand.
(e) Painting and Decorating. Tenant will not paint or decorate any part
of the exterior of the Premises, or change the architectural treatment thereof,
without first obtaining Landlord's written approval of such painting or
decoration; and Tenant will remove promptly upon order of Landlord any paint or
any such decoration which has been so applied or installed without Landlord's
prior written approval, or take such action with reference thereto as Landlord
may direct.
(f) Snow and Ice. Landlord shall remove snow and ice from areas
contiguous to the Premises and from the roof of the Premises and shall maintain
the same unobstructed. In accordance with Sub-Section 3(d) and as Additional
Rent, Tenant shall reimburse Landlord for a proportionate share of all charges,
costs and expenses incurred by Landlord under this Sub-Section 7(f).
(g) Rubbish and Trash. Tenant shall not permit the accumulation of
rubbish, trash, garbage and other refuse (collectively "Refuse") in and around
the Premises, will remove same at Tenant's expense, and will keep such Refuse in
proper containers on the interior of the Premises until removal by Tenant to the
collection area designated by Landlord. In the event Tenant fails to remove any
accumulation of Refuse within three (3) days after notice by
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Landlord to remove the same, Landlord shall have the right to remove the same in
which event the cost thereof shall be paid by Tenant as additional rent for the
following month except that Landlord shall at no time be obligated to remove the
same but may cancel this Lease if continual violations occur. In the event the
City of Lancaster, Pennsylvania, or other governmental authority or service
provider levies a service fee or other charge for the collection and removal of
Tenant's refuse, Tenant shall pay promptly when due said fee or charge for such
service.
Landlord at its sole option and upon notice to Tenant may provide the
service to remove Refuse from the collection area and in accordance with
sub-section 3(d) hereof and as Additional Rent Tenant shall reimburse Landlord
for a proportionate share of all charges, costs and expenses incurred by
Landlord under this sub-section 7(g). Provided, however, Tenant shall pay to
Landlord the cost of removal of any of Tenant's excessive Refuse or Refuse which
requires special handling out of the ordinary course of waste disposal.
(h) Indemnification by Tenant. Tenant will indemnify Landlord and hold
Landlord harmless against all claims, demands, and judgments for loss, damage,
or injury to property or person, resulting or occurring by reason of the use and
occupancy of the Premises by Tenant. Landlord may recover any and all costs and
expenses incurred by Landlord, including, without limitation, court costs and
reasonable attorneys' fees, in enforcing any of its rights or remedies under
this Lease.
(i) Signs. Tenant will place, erect and maintain at its sole expense an
internally illuminated sign on the exterior surface of the Premises in a place
and of a style and size that conforms with any applicable governmental ordinance
and is approved in advance by the Landlord. On and after the Commencement Date,
the sign shall include "J. Jill" as a primary component. The sign shall be
located on the exterior of the Premises in a place approved in advance by
Landlord. The sign shall be of a size and a style including color approved in
advance by Landlord. The sign shall be similar and equivalent in quality to
signs which have been manufactured by Victory Sign Industries, P.O.Box 1047,
Ringgold, Georgia 30736 (Telephone 706-375-6612). Tenant shall maintain any sign
permitted hereunder in a good state of repair and shall save the Landlord
harmless from any loss, cost or damage as a result of the maintenance of or
existence of the same, and shall repair any damage which may have been caused by
the maintenance of same. Landlord may place and erect an under-soffit sign of a
size and a
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style similar and equivalent in quality to under-soffit signs presently being
used in Landlord's shopping centers. The cost expended by Landlord for such
signs shall be additional rent and shall be due and payable with the next
installment of rent thereafter due under this Lease.
(j) Waste. During the term of this Lease, or any renewal or extension
thereof, Tenant shall permit no waste, damage or injury to the Premises and
Tenant shall initiate and carry out a program of regular maintenance and repair
of the Premises so as to impede, to the extent possible, deterioration by
ordinary wear and tear.
8. Operation of Business.
(a) Open for Business. Tenant agrees to occupy the Premises and open
its store for business fully fixtured, stocked and staffed upon the Commencement
Date of the term of this Lease, and thereafter to continuously conduct in one
hundred percent (100%) of the space within the Premises the business permitted
under Section 7 hereof on all business days, except only as otherwise provided
in Sections 8(b) and 8(d) hereof; this covenant by Tenant is a material
consideration to Landlord hereunder in order that Tenant might produce the
maximum gross sales possible from the Premises during the lease term.
(b) Business Hours. Tenant will keep its store in the Premises open for
business with the public in accordance with the following minimum schedule:
Required Store Hours
10:00 A.M. through 9:00 P.M.
Monday through Saturday
1:00 P.M. through 6:00 P.M. Sunday
The hours set forth in the foregoing schedule may be reduced, or changed under
either of the following circumstances:
(a) If the required store hours violate any
applicable statute or ordinance prohibiting
the conduct of retail business during such
times then the hours shall be reduced to
conform to such statute or ordinance; or
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(b) Upon consent of the Landlord.
Except as it may be necessary that the Premises be closed on account of the
order of any duly constituted authority, or for the purpose of making repairs or
improvements, or during the period of strikes, lockouts, emergencies or other
causes beyond Tenant's control, Tenant shall maintain the Required Store Hours.
(c) Landlord Approval of Advertising. Tenant will not place or suffer
to be placed, or maintain on the interior surface of any display windows or
doors of the Premises any sign or advertising matter or other thing of any kind
without first obtaining Landlord's written approval thereof. Tenant will not
place anything or allow anything to be placed near the glass of any door,
partition, wall or window which may be unsightly from outside the Premises.
(d) Use of Space. Tenant agrees to carry sufficient merchandise in the
Premises at all times, but to warehouse, store and/or stock only such quantities
of goods, wares and merchandise as are reasonably required by Tenant for sale at
retail at, in, on or from the Premises. Tenant agrees to fully and adequately
staff the Premises with sufficient employees for the purpose of selling said
merchandise and to use for office, clerical or other non-selling purposes only
such space in the Premises as is reasonably required for Tenant's business
therein, not including any other business of Tenant in locations other than the
Premises.
(e) Character of Operations. Tenant will not conduct any auction, fire,
bankruptcy or closeout sales, provided, however, that this provision shall not
preclude the conduct of periodic seasonal promotional or clearance sales. Tenant
will not utilize any unethical method of business operation. Tenant will not use
or permit the use of any apparatus for sound reproduction or transmission of any
musical instrument in such manner that the sounds so reproduced transmitted or
procured shall be unreasonably audible beyond the interior of the Premises; will
not cause or permit objectionable odors to emanate or be unreasonably dispelled
from the Premises; and will use its best efforts to prevent the parking or
standing, outside of the Premises, of trucks, trailers,
21
or other vehicles or equipment except when actually engaged in loading or
unloading.
Tenant will immediately notify Landlord of the occurrence, or threat,
of any picketing, hand billing, protest, boycott of any kind whatsoever with
respect to the Premises and Tenant will cooperate with Landlord as may be
necessary to prevent, stop or avoid any picketing, hand billing, protest,
boycott within the Premises or in the common areas of the shopping center.
Tenant will immediately notify Landlord of any complaint, charge, petition or
claim filed against Tenant with any federal, state or local court or
governmental authority which under reasonable commercial standards creates any
adverse effect on Landlord's operations.
(f) General Covenants of Tenant. Tenant will keep the inside and
outside of all glass in the doors and windows of the Premises clean and free of
blinds, shades, awnings, draperies or other forms of inside or outside window
and door coverings except to the extent, if any, that the character, shape,
color, material and make thereof is approved by Landlord; will not place or
maintain any merchandise or other thing of any kind in the entry of the Premises
or on the sidewalks adjacent thereto or elsewhere on the exterior of the
Premises, except such signs as are permitted under Section 7(i) hereof; will
maintain the Premises at its own expense in a clean, orderly and sanitary
condition and free of insects, rodents, vermin, and other pests; will, at
Tenant's sole cost and expense, comply with all laws and ordinances and all
valid rules, regulations and requirements of the government of all county,
municipal, state, federal and other governmental authorities, now in force or
which may hereafter be in force, pertaining to the Premises except that Tenant
shall not be required to make any changes to building, systems or structural
changes in connection therewith; and will comply with all recommendations of any
public or private agency having authority over insurance rates with respect to
the use or occupancy of the Premises by Tenant; will not park, and will require
its employees to refrain from parking, any vehicle on Landlord's land except in
such places as may be designated from time to time by Landlord for the use of
Tenant and its employees; and will conduct business in the Premises in all
respects in a dignified manner and in accordance with high standards of store
operation.
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Notwithstanding anything contained in this Lease to the contrary, there
shall be no obligation on the part of Tenant to comply with any of the laws,
directions, rules or regulations which may require structural alterations,
changes, repairs or additions to the Premises or the Common Areas, which
required structural alterations, changes, repairs or additions to the Premises
or the Common Areas are the obligation of Landlord unless made necessary by the
willful negligence or default of Tenant, in which event, Tenant shall comply at
its sole cost and expense.
(g) Insurance. Tenant agrees to carry at its own expense continuously
throughout the term of this Lease comprehensive public liability insurance
covering the Premises and Tenant's use thereof, in companies and in a form
satisfactory to Landlord, with minimums of $1,000,000.00 on account of bodily
injuries to or death of one person and $5,000,000.00 on account of bodily
injuries to or death of more than one person as a result of any one accident or
disaster, and with $100,000.00 coverage for property damage in an accident, and
to deposit said policy or policies (or certificates thereof) with Landlord prior
to the date of any use or occupancy of the Premises by Tenant; said policies
shall name the Landlord as an additional insured and shall protect Tenant and
Landlord, as their interests may appear. Should Tenant fail to carry such public
liability insurance, Landlord may at its option (but shall not be required so to
do) cause public liability insurance as aforesaid to be issued, and in such
event Tenant agrees to pay the premium for such insurance promptly upon
Landlord's demand. Such liability insurance policy or policies shall bear
endorsements to the effect that the insurer agrees to notify Landlord not less
than ten (10) days in advance of modification or cancellation thereof.
Landlord agrees to carry throughout the term of this Lease public
liability insurance with respect to the common areas on the Site with a minimum
combined coverage for bodily injury and property damage of $5,000,000.00. In
accordance with Sub-Section 3(d) and as Additional Rent, Tenant shall reimburse
Landlord for a proportionate share of the costs of such insurance.
(h) Payment of Personal Property Taxes. Tenant further covenants and
agrees to pay promptly when due all taxes assessed against Tenant's fixtures,
furnishings, equipment and stock in trade placed in or on the Premises during
the term of this Lease.
23
9. Utilities.
(a) Installation. Landlord shall provide, or cause to be provided, as
part of the original installations in the Premises, the necessary mains,
conduits and facilities in order that all utility services initially required in
connection with installations to be provided by Landlord, as specified in
EXHIBIT "C" may be furnished to the Premises. Tenant shall provide or cause to
be provided all other mains, conduits and facilities necessary to provide
utility services to the Premises.
(b) Gas, Electricity, Water and Sewer, Lights, Heat, Power and
Telephone Charges. The Tenant shall pay all charges for gas, electricity, water
and sewer, light, heat, power and telephone or other communication service used,
rendered or supplied upon or in connection with the leased property and shall
indemnify the Landlord against any liability or damages on such account.
(c) Advances by Landlord. Any amounts paid by Landlord for Tenant's
account as herein provided and any amounts paid by Landlord to keep the Premises
in a clean, safe and healthy condition, as herein specified, or to make up any
default on Tenant's part, or to fulfill Tenant's covenants herein written, are
hereby agreed and declared to be so much additional rent and shall be due and
payable with the next installment of rent thereafter due under this Lease.
10. Alterations or Improvements by Tenant. (a) Tenant shall have the
right during the continuance of this Lease to make such alterations or
improvements in the Premises, excepting structural alterations or improvements,
as may be proper and necessary for the conduct of its business and for the full
beneficial use of the Premises permitted herein, provided Tenant shall pay all
costs, expenses and charges thereof, shall make such alterations and
improvements in accordance with applicable laws and building codes; in a good
and workmanlike manner; and performed by a contractor acceptable to Landlord,
and Tenant shall fully and completely indemnify Landlord against any mechanic's
lien or other liens or claims in connection with the making of such alterations
and improvements. Tenant shall not make, nor permit to be made, any alterations,
additions or improvements of a structural nature to
24
the interior, exterior or store front of the Premises, or to the plumbing,
heating or air conditioning systems. Tenant shall promptly repair any damages to
the Premises, or to the building of which the Premises are a part, caused by any
alterations, additions or improvements of the Premises by Tenant.
(b) With respect to work performed at the Premises and/or Tenant's
obligation under this Lease including its rights under Section 5 hereof and
Section 10(a) hereof , all contractors engaged by Tenant shall be bondable,
licensed contractors, possessing good labor relations, capable of performing
quality workmanship and working in harmony with Landlord's general contractor
and other contractors on the job. All work performed by Tenant during the term
of the Lease shall be performed so as to cause a minimum of interference with
other tenants and the operation for the project.
11. Removal of Improvements. Except as otherwise hereinafter provided,
all alterations, improvements, furnishings and other equipment installed in the
Premises by Tenant and paid for by it shall remain the property of Tenant and
may be removed by Tenant upon the termination of this Lease, provided (a) that
any of such items as are affixed to the Premises and require severance may be
removed only if Tenant shall repair any damage caused by such removal and (b)
that Tenant shall have fully performed all of the covenants and agreements to be
performed by it under the provisions of this Lease. If the Tenant fails to
remove such items from the Premises prior to the date of termination of this
Lease, all such alterations, decorations, additions and improvements shall
become the property of the Landlord unless Landlord elects to require their
removal in which case Tenant shall promptly remove same and restore the Premises
to its prior condition. Notwithstanding anything to the contrary provided
herein, in no event shall Landlord require Tenant to remove alterations and
improvements made to the Premises by Tenant prior to the Commencement Date which
are customary in connection with the fixturing of space for the uses permitted
hereunder.
Notwithstanding the above, within the Sign Removal Period (hereinafter
defined), Tenant shall remove the signage permitted by Section 7(i) hereof, and
shall repair any damage caused by such removal. Such removal and repair shall be
by a Landlord approved certified Exterior Insulated Finishing System (EIFS)
contractor and
25
such contractor shall restore the fascia to substantially the condition at the
time of commencement of this Lease, and such activity shall be at the sole cost
and expense of the Tenant. In the event Tenant fails to remove such signage by
the end of the Sign Removal Period, Landlord may immediately remove the signage
and dispose of it at Landlord's sole discretion, and repair any damage caused by
such removal and the cost of removal and repair plus a 15% service fee shall be
charged to Tenant who shall make payment to Landlord within ten (10) days of
demand. The Sign Removal Period shall be the 24 hour period commencing with the
hour the Premises is permanently closed for business to the public.
12. Access to Premises. Landlord may have free access to the Premises
at all reasonable times for the purpose of examining the same or making any
alterations or repairs to the Premises that Landlord may deem necessary for its
safety or preservation, and also during the last three (3) months of the term of
this Lease for the purpose of exhibiting the Premises and putting up the usual
notice "to Rent", which notice shall not be removed, obliterated or hidden by
Tenant; provided, however, that any such action by Landlord shall cause as
little inconvenience as reasonably practicable. Such action shall not be deemed
an eviction or disturbance of Tenant nor shall Tenant be allowed any abatement
of rent, or damages for any injury or inconvenience occasioned thereby.
13. Repairs by Landlord.
26
(a) Landlord shall provide for the care, maintenance and repair of the
Common Areas on the Site including but not limited to repairing, replacing and
restriping paved parking areas when needed, keeping Common Areas reasonably
clear of litter and snow, maintaining any plantings and landscaped areas and
keeping Common Areas reasonably lighted at times when substantially all of the
stores on the Site are open for business. Repairs and Common Area Maintenance
shall further include expenses actually incurred by Landlord which, in
Landlord's judgment, are necessary, appropriate and/or beneficial generally to
the operation of the shopping center located on the Site, of which the Premises
are a part, including but not limited to the cost of maintaining a business
office and the cost of security, traffic control, maintenance and supervision
personnel, the cost of maintaining and replacing the septic system used in the
operation of the shopping center located on the Site, the cost of providing rest
room facilities for customers of the complex, and the cost of making provisions
for buses and their drivers bringing shoppers to the complex. In addition to
such expenses set forth in this Section 13 an administrative cost equal to
fifteen percent (15%) of all such expenses shall be included as part of Repairs
and Common Area Maintenance.
Repairs and Common Area Maintenances shall not include the following:
(a) brokerage, leasing commissions or fees, advertising or promotional expenses,
legal fees and any other expenses incurred in connection with the leasing of
space in the Shopping Center; (b) the cost of installations, alterations,
changes or repairs of such nature which is required to be capitalized under
generally accepted accounting principles except for the portion calculated based
on a straight line basis over the actual economic life of such installation,
alteration, change or repair; (c) the cost of correcting latent defects in the
initial construction of the shopping center.
(b) Landlord shall keep and maintain the foundation, roof and
structural portions of the walls, floors and the building systems, of the
building in which the Premises are located in good condition and repair, and
such activity shall be included in Common Area Maintenance and reimbursed by
Tenant in accordance with subsection (a) of this Section 13.
In accordance with Sub-Section 3(d) and as Additional Rent, Tenant
shall reimburse Landlord for a proportionate share of all charges, costs and
expenses incurred by Landlord under this Section 13. The provisions of this
Section shall not apply in the case of damage or destruction by fire or other
casualty or by Eminent
27
Domain, in which events the obligations of Landlord shall be controlled by
either Section 20 or Section 22 hereof.
14. Reservation of Landlord. Landlord reserves the right to place,
maintain, repair and replace such utility lines, pipes, tunneling, and the like,
in, under, over and upon the Premises as may be reasonably necessary or
advisable for the servicing of the Premises or of other portions of the Site of
which the Premises are a part. Landlord reserves the right of use of the roof
and exterior walls of the Premises and of the building or buildings of which the
Premises are a part.
Landlord shall use reasonable efforts to place such utility lines,
pipes, etc. above the ceiling or below the floor of the Premises and such
installation shall not unreasonably adversely interfere with the aesthetic
appearance of the Premises.
15. Liability. Landlord shall not be liable for any damage done or
occasioned by or from the electrical system, the heating or air conditioning
system, the plumbing and sewer systems in, upon or about the Premises or the
building of which the Premises are a part, nor for damages occasioned by water,
snow or ice being upon or coming through the roof, trapdoor, walls, windows,
doors or otherwise, nor for any damage arising from acts of negligence of
co-tenants or other occupants of the building or buildings of which the Premises
may be a part, or the acts of any owners or occupants of adjoining or contiguous
property; and furthermore, Landlord shall not be liable for any damage
occasioned by reason of the construction of the Premises or for failure to keep
the Premises in repair, unless Landlord is obligated to make such repairs under
the terms hereof, and unless notice of the need for repairs has been given
Landlord, a reasonable time has elapsed and Landlord has failed to make such
repairs. In any events, Landlord shall not be liable for any damage to Tenant's
leasehold improvements, fixtures, or merchandise resulting from fire or other
insurable hazards, regardless of the cause thereof, and Tenant hereby releases
Landlord from all liability for such damage.
16. Repairs by Tenant / HVAC Contract.
(a) Repairs by Tenant. Tenant shall keep and maintain the Premises and
any fixtures, facilities or equipment contained therein, in good condition and
repair, including, but not limited to, the heating, air conditioning,
electrical, plumbing and sewer systems, the exterior doors and window frames and
shall make any replacements thereof and of all broken and cracked glass as may
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become necessary during the term of this Lease or any renewal or extension
thereof, excepting, however, such repairs and replacements as are the obligation
of Landlord under Section 13 hereof, and excepting any repairs made necessary by
reason of damage due to fire or other casualty covered by standard fire and
extended coverage insurance or by taking by eminent domain. If Tenant refuses or
neglects to commence or complete repairs promptly and adequately, Landlord may,
but shall not be required to do so, make or complete said repairs and Tenant
shall pay the cost thereof to Landlord upon demand.
(b) HVAC Contract. During the term of this Lease, Tenant agrees to
employ, pursuant to written contract running to the benefit of the Landlord, a
contractor acceptable to Landlord to perform Tenant's obligations for the
regular factory recommended maintenance and service of the heating, cooling and
ventilating units serving the Premises. Prior to the Commencement Date, Tenant
shall deliver a fully executed copy of the contract to the Landlord. Such
maintenance program shall include all regular factory recommended maintenance
and service and at least semiannual inspections, filter replacements, and
cleaning of said units and systems, together with such adjustments and servicing
as each inspection discloses to be required or reasonably recommended and, in
addition, all repairs, testing and servicing as shall be necessary or reasonably
required by Landlord or Landlord's insurance underwriter.
17. (a) Default by Tenant. This Lease is made upon the condition that
the Tenant shall punctually and faithfully perform all of the covenants and
agreements by it to be performed as herein set forth, and if any of the
following events of default shall occur, to-wit: (a) any installment of Fixed
Rent, Percentage Rent, Additional Rent or any other sums required to be paid by
the Tenant hereunder, or any part thereof, shall at any time be in arrears and
unpaid for five (5) business days after written demand therefor, or (b) Tenant
fails to strictly comply with the provisions of Item 8(a), 8(b), 8(d), 8(e) or
8(f) hereof and such failure continues after five (5) business days written
notice thereof and/or such failure, whether or not previously timely cured,
re-occurs more than three (3) times within any lease year; or (c) at the
election of Landlord there be a default by Tenant beyond any applicable cure
period under any other lease between Landlord and Tenant or an affiliate,
subsidiary, parent or other related entity of Tenant; or (d) there be any
default on the part of the Tenant in the observance or performance of any of the
other covenants, agreements, or conditions of this Lease on the part of the
Tenant
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to be kept and performed, and said default shall continue for a period of
fifteen (15) days after written notice thereof from Landlord to Tenant (unless
such default cannot reasonably be cured within fifteen (15) days and Tenant
shall have commenced to cure said default within said fifteen (15) days and
continues diligently to pursue the curing of the same), or (e) the Tenant shall
file a petition in bankruptcy or be adjudicated a bankrupt, or file any petition
or answer seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any present or
future Federal, State or other statute, law or regulation, or make an assignment
for the benefit of creditors, or (f) any trustee, receiver or liquidator of
Tenant or of all or any substantial part of its properties or of the Premises
shall be appointed in any action, suit or proceeding by or against Tenant and
such proceeding or action shall not have been dismissed within thirty (30) days
after such appointment, or (g) the leasehold estate hereby created shall be
taken on execution or by other process of law, or (h) Tenant shall vacate or
abandon the Premises, then and in any of said cases, the Landlord at its option
may terminate this Lease and re-enter upon the Premises and take possession
thereof with full right to sue for and collect all sums or amounts with respect
to which Tenant may then be in default and accrued up to the time of such entry,
including damages to the Landlord by reason of any breach or default on the part
of the Tenant, or the Landlord may, if he elects so to do, bring suit for
collection of such rents and damages without entering into possession of the
Premises or avoiding this Lease.
In addition to, but not in limitation of, any of the remedies set forth
in this Lease or given to the Landlord by law or in equity, the Landlord shall
also have the right and option, in the event of any default by the Tenant under
this Lease and the continuance of such default after the period of notice above
provided, to retake possession of the Premises from the Tenant by summary
proceedings or otherwise, and it is agreed that the commencement and prosecution
of any action by the Landlord in forcible entry and detainer, ejectment or
otherwise, or any execution of any judgment or decree obtained in any action to
recover possession of the Premises, shall not be construed as an election to
terminate this Lease unless the Landlord expressly exercises its option
hereinbefore provided to declare the term hereof ended, whether or not such
entry or re-entry be had or taken under summary proceedings or otherwise, and
shall not be deemed to have absolved or discharged the Tenant from any of its
obligations and liabilities for the remainder of the term of this Lease, and
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the Tenant shall, notwithstanding such entry or re-entry, continue to be liable
for the payment of the rents and the performance of the other covenants and
conditions hereof and shall pay to the Landlord all monthly deficits after any
such re- entry in monthly installments as the amounts of such deficits from time
to time are ascertained and, if in the event of any such ouster, the Landlord
rents or leases the Premises to some other person, firm or corporation (whether
for a term greater, less than or equal to the unexpired portion of the term
created hereunder) for an aggregate rent during the portion of such new lease
co-extensive with the term created hereunder which is less than the rent and
other charges which the Tenant would pay hereunder for such period, Landlord may
immediately upon the making of such new lease or the creation of such new
tenancy sue for and recover the difference between the aggregate rental provided
for in said new lease for the portion of the term co- extensive with the term
created hereunder and the rent which Tenant would pay hereunder for such period,
together with any expense to which the Landlord may be put for brokerage
commission, placing the Premises in tenantable condition or otherwise. In
determining the rent payable by Tenant hereunder a sum equal to the average
amount of annual Percentage Rent (if any) paid by Tenant to the Landlord
pursuant to the provisions of Section 3(b) hereof for the period since the
Commencement Date of this Lease which preceded any such default, prorated, shall
be added to the Fixed Rent as provided in Section 3(a) hereof. If such new lease
or tenancy is made for a shorter term than the balance of the term of this
Lease, any such action brought by the Landlord to collect the deficit for that
period shall not bar the Landlord from thereafter suing for any loss accruing
during the balance of the unexpired term of this Lease. If Tenant at any time
shall fail to pay any taxes, assessments, or liens, to make any payment or
perform any act required by this Lease to be made or performed by it, Landlord,
without waiving or releasing Tenant from any obligation or default under this
Lease, may (but shall be under no obligation to) at any time thereafter make
such payment or perform such act for the account and at the expense of Tenant.
All sums so paid by Landlord and all costs and expenses so incurred, together
with interest thereon at the rate of twelve percent (12%) per annum from the
date of payment or incurring thereof, shall constitute additional rent payable
by Tenant under this Lease and shall be paid by Tenant to Landlord on demand.
All rights and remedies of Landlord herein enumerated shall be cumulative, and
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none shall exclude any other remedies allowed at law or in equity.
Further, in addition to, but not in limitation of any of the remedies otherwise
available to Landlord, in the event (a) Tenant should fail to take possession of
the Premises within ten (10) days of the date possession is tendered by Landlord
to Tenant (such failure herein referred to as the "Failure to Take Possession")
or (b) Tenant should fail to perform its buildout work, fully fixture, stock and
staff the Premises and open the Premises for business to the public on or before
thirty (30) days after the Commencement Date (such failure herein referred to as
the "Failure to Operate"), or (c) Tenant should fail to deliver any required
Security Deposit within the time specified in the Lease or, if such Security
Deposit is made by check and such check is not honored by the bank on which the
check is drawn for any reason (such failure herein referred to
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as the "Failure to Deposit"),or (d) Tenant should fail to comply with the
provisions of Section 10(b) (such failure referred to as "Contractor Failure")
then Landlord shall have the right at its option to treat such Failure to Take
Possession, Failure to Operate, Failure to Deposit and/or Contractor Failure as
a default within the meaning of this Lease the remedy for which default is that
at the option of Landlord the Lease may be forfeited by Tenant and thereby
become null and void, which option shall be exercised by Landlord in writing to
Tenant, and upon delivery of such notice of exercise of option this Lease shall
be forfeited and this Lease shall be void ab initio, and possession of Premises
shall be in Landlord and not in Tenant and Tenant shall immediately vacate the
Premises and upon failure to so vacate may be ousted by Landlord.
18. Rent Demand. Every demand for rent due wherever and whenever made
shall have the same effect as if made at the time it falls due and at the place
of payment, and after the services of any notice or commencement of any suit, or
final judgment therein, Landlord may receive and collect any rent due, and such
collection or receipt shall not operate as a waiver of nor affect such notice,
suit or judgment.
19. Notices / Time.
(a) Notices. Any notice or consent required to be given by or on behalf
of either party to 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 the address hereinabove specified, or by
Federal Express or comparable overnight air courier service - Next Day - Morning
Delivery addressed to Landlord at 1400 West Northwood Street, Greensboro, North
Carolina 27408 (Telephone: 336-274-1666), and to the Tenant at the address
hereinabove specified and to the Premises, or such other address as either party
may from time to time designate as its notice address by notifying the other
party thereof. Notice so sent shall be deemed given (a) when personally
delivered, or (b) on the first business day following deposit with Federal
Express or a comparable overnight air courier service providing written evidence
of next day delivery, such notice or consent not to be included with any other
items being transmitted to Landlord, Tenant, or any other party, or (c) five (5)
business days following deposit in the United States mail, if notice is sent
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by registered or certified mail, with return receipt requested, first class
postage prepaid.
(b) Time. Time is of the essence in performance of all obligations and
exercise of all rights under this Lease.
20. Damage and Destruction. In the event the Premises are damaged by
fire, explosion or other casualty or occurrence to an extent which is less than
twenty-five percent (25%) of the cost of replacement of the Premises, the damage
shall promptly be repaired by Landlord, at Landlord's expense, provided that
Landlord shall not be obligated to expend for such repairs an amount in excess
of the insurance proceeds recovered or recoverable as a result of such damage
and that in no event shall Landlord be required to repair or replace Tenant's
stock in trade, fixtures, furniture, furnishings, or floor coverings and
equipment. In the event of such damage and (a) Landlord is not required to
repair as hereinabove provided, or (b) the Premises are damaged by fire,
explosion or any other casualty or occurrence to the extent of twenty-five
percent (25%) or more of the cost of replacement of the Premises, or (c) the
building of which the Premises are a part is damaged to the extent of fifty
percent (50%) or more of the cost of replacement, Landlord may elect either to
repair or rebuild the Premises, or the building of which the Premises are a
part, as the case may be, or to terminate this Lease upon giving notice of such
election in writing to Tenant within ninety (90) days after the happening of the
event causing the damage. If the casualty, repairing, or rebuilding shall render
the Premises untenantable, in whole or in part, a proportionate abatement of the
Fixed Rent shall be allowed from the date when the damage occurred until the
date Landlord completes the repairs or rebuilding, said proportion to be
computed on the basis of the relation which the gross square foot floor area of
the space rendered untenantable bears to the gross square foot area of the
Premises. If Landlord is required or elects to repair the Premises as herein
provided, Tenant shall repair or replace its stock in trade, fixtures,
furniture, furnishings, floor coverings and equipment.
Landlord shall procure and maintain "all risks" property insurance on
all buildings and improvements now or hereafter erected on the Site. Such
insurance shall be for the full replacement cost of such improvements. In
accordance with sub-
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Section 3(d) and as Additional Rent, Tenant shall reimburse Landlord for a
proportionate share of the costs of such insurance.
21. Mortgage Subordination. Upon written request or notice by Landlord,
concurred in by any mortgagee or trustee of the Site or by any person, firm or
corporation intending to become such a mortgagee or trustee, Tenant agrees to
subordinate its rights under this Lease to the lien or liens of any mortgages or
deeds of trust that may hereafter be placed upon the Site and the Premises and
to any and all advances to be made thereunder, and to the interest thereon, and
all renewals, replacements and extensions thereof, provided the mortgagee or
trustee named in said mortgages or deeds of trust shall agree to recognize the
lease of Tenant in the event of foreclosure if Tenant is not in default beyond
any applicable grace period. Tenant also agrees that any mortgagee or trustee
may elect to have this Lease a prior lien to its mortgage or deed of trust, and
in the event of such election and upon notification by such mortgagee or trustee
to Tenant to that effect, this Lease shall be deemed prior in lien to the said
mortgage or deed of trust, whether this Lease is dated prior to or subsequent to
the date of said mortgage or trust deed. Tenant agrees that, upon the requests
of Landlord, any mortgagee, or any trustee named in such mortgages or trust
deeds, it shall execute and deliver whatever instruments may be required for
such purposes and to carry out the intent of this Section, and in the event
Tenant fails so to do within ten (10) business days after demand in writing,
Tenant does hereby make, constitute and irrevocably appoint Landlord as its
attorney in fact and in its name, place and stead so to do.
This Lease and all of the rights of Tenant hereunder are and shall be
subject and subordinate to the lien of any mortgage or deed of trust
("Mortgage") now existing, or which hereinafter may be placed, on the Premises
or the Site, or any part thereof, and to any and all renewals, modifications,
consolidations, replacements, extensions, or substitutions of any such Mortgage;
provided, nevertheless, each Mortgage shall contain provisions to the effect
that so long as Tenant is not in default under this Lease, no foreclosure of
lien of any such Mortgage shall impair Tenant's right to quiet possession of the
Premises pursuant to the provisions of this Lease. Such subordination shall be
automatic, without the execution of any further subordination agreement by
Tenant.
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With respect to any lien or liens of any mortgages or deeds of trust
placed upon the Site and the Premises as of the date of this Lease, Landlord
shall request such mortgagee or trustee to enter into a non-disturbance
agreement with Tenant provided Tenant agrees to attorn to the interests of the
mortgagee in the event of a foreclosure.
22. Eminent Domain. In the event 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 competent authority in appropriation proceedings or
by any right of eminent domain, the entire compensation award therefor,
including, but not limited to, all damages as compensation for diminution in
value of the leasehold, reversion, and fee, shall belong to the Landlord without
any deduction therefrom or any present or future estate of Tenant, and Tenant
hereby assigns to Landlord all its right, title and interest to any such award.
Although all damages in the event of any condemnation are to belong to the
Landlord, whether such damages are awarded as compensation for diminution in
value of the leasehold, reversion or to the fee of the Premises, Tenant shall
have the right to claim and recover from the condemning authority, but not from
Landlord, such compensation as may be separately awarded or recoverable by
Tenant in Tenant's own right on account of any and all damage to Tenant's
business by reason of the condemnation and for or on account of any cost or loss
to which Tenant might be put in removing Tenant's merchandise, furniture,
fixtures, leasehold improvements and equipment.
If the whole of the Premises shall be taken by any public authority
under the power of eminent domain, this Lease shall terminate as of the day
possession shall be taken by such public authority, and Tenant shall pay rent up
to that date with an appropriate refund by Landlord of such rent as shall have
been paid in advance for a period subsequent to the date of the taking. If less
than twenty-five percent (25%) of the floor space of the Premises shall be so
taken, this Lease shall terminate only with respect to the parts so taken as of
the day possession shall be taken by such public authority, and Tenant shall pay
rent up to that day with an appropriate refund by Landlord of such rent as may
have been paid in advance for a period subsequent to the date of the taking and,
thereafter, the Fixed Rent shall be equitably
36
adjusted, and Landlord shall at its expense make all necessary repairs or
alterations to the basic building and exterior and interior work so as to
restore the Premises to its condition prior to such taking. If more than
twenty-five percent (25%) of the floor space of the Premises shall be so taken,
then this Lease shall terminate with respect to the part so taken from the day
possession shall be taken by such public authority, and Tenant shall pay rent up
to that day with an appropriate refund by Landlord of such rent as may have been
paid in advance for a period subsequent to the date of the taking, and either
party shall have the right to terminate this Lease upon notice in writing within
thirty (30) days after such taking of possession; in the event that Tenant
remains in possession, and if Landlord does not so terminate, all of the terms
herein provided shall continue in effect except that the rent shall be equitably
abated, and Landlord shall make all necessary repairs or alterations to the
basic building and exterior and interior work so as to restore the Premises to
its condition prior to such taking. If more than fifty percent (50%) of the
floor space of the building in which the Premises are located shall be taken
under the power of eminent domain, Landlord may, by notice in writing to Tenant
delivered on or before the day of surrendering possession to the public
authority, terminate this Lease, and rent shall be paid or refunded as of the
date of termination.
Notwithstanding the above, if so much of the Premises is permanently
taken and Landlord within ninety (90) days of the taking does not commence to
restore the Premises to an architectural unit suitable for the conduct of
Tenant's business, or if the Premises includes less than 2,500 square feet of
floor area, then a proportionate abatement of the Fixed Rent shall be allowed
from the date of such taking until the date Landlord completes the repairs or
rebuilding, said proportionate share to be computed on the basis of the relation
which the gross square foot floor area of the space rendered taken bears to the
gross square foot area of the Premises.
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23. Assignment and Subletting.
(a) Tenant shall not sublet said Premises or any part thereof nor
assign this Lease, without in each case the prior written consent of Landlord,
which shall not be unreasonably withheld or delayed. Any transfer of this Lease
from Tenant by merger, consolidation, liquidation or otherwise by operation of
law shall constitute an assignment for the purpose of this Lease and shall
require the written consent of Landlord. Provided, however, the use occupancy,
assignment or subletting of the Premises to any company, corporation, firm or
entity which is affiliated or related to, or a parent or a subsidiary of Tenant
or into which Tenant may be merged or consolidated or to which substantially all
of Tenant's assets may be transferred (hereinafter referred to as an "Affiliated
Entity") shall not be deemed an assignment or subletting requiring the prior
written consent of Landlord provided that such Affiliated Entity has a net worth
equal to or greater than that of Tenant if such Affiliated Entity is other than
a parent or subsidiary of Tenant resulting from a corporate restructure and
evidence of such is provided Landlord ten (10) days prior to such assignment or
subletting, and provided further that the nature of the operations remain as set
forth in Paragraph 7(a) hereof, and provided further that such Affiliated Entity
has national recognition and name awareness within the industry as a retailer of
comparable or better caliber than Tenant selling products at an outlet price
structure. Any transfer, sale or other disposition of the controlling stock of
the Tenant and/or of substantially all of the assets of Tenant shall be deemed
an assignment of this Lease requiring the Landlord's written consent; provided,
however, that if the stock of such corporation is regularly traded on any
recognized securities market, the transfer of stock will not be prohibited
hereby. Tenant shall not permit any business to be operated in or from the
Premises by any concessionaire or licensee without the prior written consent of
Landlord. Any consent by Landlord to any assignment or subletting, or to the
operation by a concessionaire or licensee, shall not constitute a waiver of the
necessity for such consent to any subsequent assignment or subletting, or
operation by a concessionaire or licensee. In the event that Tenant shall at any
time, during the term of this Lease, sublet all or any part of said Premises or
assign this Lease, either with the consent of Landlord as hereinbefore provided
or without the consent of Landlord, then, and in such event, it is hereby
mutually agreed that Tenant shall nevertheless remain fully liable under all of
the terms, covenants and conditions of this Lease. If this Lease be assigned, or
if the Premises or any part thereof be subleased or occupied by anybody other
than Tenant, Landlord may collect from the assignee, subtenant or occupant any
rent or other charges payable by Tenant under this Lease, and apply the amount
collected to the rent and other charges herein reserved, but such collection by
Landlord shall not be deemed an acceptance of the assignee, subtenant or
occupant as a tenant nor a release of Tenant from the performance by Tenant
under this Lease. Tenant shall not advertise the Lease for assignment nor shall
Tenant advertise the Premises or any part
38
thereof for sublease in any trade magazine, newspaper, or in any other printed
publication or in any audio, video, or magnetic medium.
(b) If Landlord should sell or otherwise transfer its interest in the
Premises upon an undertaking by the purchaser or transferee to be responsible
for all of the covenants and undertakings of Landlord, Tenant agrees that
Landlord shall thereafter have no liability to Tenant under this Lease or any
modification or amendments 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.
24. Accord and Satisfaction. No payment by Tenant or receipt by
Landlord of a lesser amount than the rental herein stipulated shall be deemed to
be other than on account of the earliest stipulated rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such rent or pursue any other remedy provided for in this Lease or
available at law or in equity.
25. Estoppel Certificates. At any time and from time to time, Tenant
agrees, upon request in writing from Landlord, to promptly without delay
execute, acknowledge and deliver to Landlord a statement in writing certifying
that this Lease is unmodified and in full force and effect (or if there have
been modifications, that the same is in full force and effect as modified and
stating the modifications) and the dates to which the Fixed Rent, Percentage
Rent, Additional Rent, and other charges hereunder have been paid. In addition,
Tenant agrees to furnish Landlord, upon request and after Tenant has opened its
doors for business in the Premises, a letter addressed to Landlord's mortgagee
or financial institution, giving the following information or any part thereof
requested by Landlord: (i) that the Premises have been completed on or before
the date of such letter and that all conditions precedent to the lease taking
effect have been carried out; (ii) that Tenant has accepted possession, that the
lease term has commenced, that Tenant is occupying the Premises and that Tenant
knows of no default under the lease by the Landlord; (iii) the actual
commencement date of the lease and the expiration date of the lease; and (iv)
that the
39
Tenant's store is open for business. In the event the Tenant fails to provide
such letter as above-described within ten (10) business days after Landlord's
written request therefor, Tenant does hereby make, constitute and irrevocably
appoint Landlord as its attorney-in-fact and in its name, place and stead so to
do. At any time and from time to time, Landlord agrees, upon ten (10) days
request in writing from Tenant, to execute, acknowledge and deliver to Tenant a
statement in writing certifying that this Lease is unmodified and in full force
and effect (or if there has been modification, that the same is in full force
and effect as modified and stating the modifications) and the dates to which the
Fixed Rent, Percentage Rent, Additional Rent and other charges hereunder have
been paid, and stating whether Tenant is in default hereunder, and if so the
nature of such defaults.
26. Waiver. No waiver of any condition or legal right or remedy shall
be implied by the failure of Landlord to declare a forfeiture, or for any other
reason, and no waiver of any condition or covenant shall be valid unless it be
in writing signed by Landlord. No waiver by Landlord in respect to one tenant of
the building in which the Premises are located shall constitute a waiver in
favor of any other tenant, nor shall the waiver of a breach of any condition be
claimed or pleaded to excuse a future breach of the same condition or covenant.
The mention in this Lease of any specific right or remedy shall not preclude
Landlord from exercising any other right or from having any other remedy or from
maintaining any action to which it may be otherwise entitled either at law or in
equity; and for the purpose of any suit by Landlord brought or based on this
Lease, this Lease shall be construed to be a divisible contract, to the end that
successive actions may be maintained as successive periodic sums shall mature
under this Lease and it is further agreed that failure to include in any suit or
action any sum or sums then matured shall not be a bar to the maintenance of any
suit or action for the recovering of said sum or sums so omitted.
27. Quiet Enjoyment. Landlord hereby covenants and agrees that if
Tenant shall perform all the covenants and agreements herein stipulated to be
performed on Tenant's part, Tenant shall at all times during the continuance
hereof have the peaceable and quiet enjoyment and possession of the Premises
without any manner
40
of hindrance from Landlord or any person or persons lawfully claiming the
Premises.
28. Interpretation. Wherever either the word "Landlord" or "Tenant" is
used in this Lease, it shall be considered as meaning "Landlords" or "Tenants",
respectively, wherever the context permits or requires, and when the singular
and/or neuter pronouns are used herein, the same shall be construed as including
all persons and corporations designated respectively as Landlord or Tenant in
the heading of this instrument wherever the context requires.
29. No Partnership. Landlord does not, in any way or for any purpose,
become a partner of Tenant in the conduct of its business, or otherwise, or
joint venturer or a member of a joint enterprise with Tenant.
30. Exceptions to Demise. Notwithstanding anything to the contrary
herein contained, this Lease is subject to utility easements, both recorded and
unrecorded.
31. Paragraph Headings. The paragraph headings are inserted only as a
matter of convenience and for reference and in no way define, limit or describe
the scope or intent of this Lease nor in any way affect this Lease.
32. Lease Inures to Benefit of Assignees. This Lease and all the
covenants, provisions and conditions herein contained shall inure to the benefit
of and be binding upon the heirs, personal representatives, successors and
assigns, respectively, of the parties hereto, provided, however, that no
assignment by, from, through or under Tenant in violation of the provisions
hereof shall vest in the assigns any right, title or interest whatever.
33. Entire Agreement / Severability.
(a) Entire Agreement. This Lease and the exhibits attached hereto, and
any Rider attached hereto and forming a part hereof, set forth all the
covenants, promises, agreements, conditions and understandings between Landlord
and Tenant concerning the Premises and there are no covenants, promises,
agreements, conditions or understandings, either oral or written, between them
other than are herein set forth. This Lease shall not be orally amended,
modified
41
or terminated, nor shall any obligation hereunder be waived orally. No
subsequent alteration, amendment, change or addition to this Lease shall be
binding upon Landlord or Tenant unless and until reduced to writing and signed
by them and by any lender to Landlord if such consent is required as a condition
of financing to Landlord. Tenant agrees that Landlord and its agents have made
no representations or promises with respect to the Premises or the building or
property of which the same are a part except as herein expressly set forth.
(b) Severability. If any provisions of this Lease, or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such provision
or provisions to persons or circumstances other than those as to whom or which
it is held invalid or unenforceable, shall not be affected thereby and every
provision of this lease shall be valid and enforceable to the fullest extent
permitted by law.
34. Surrender and Holding Over. Tenant shall deliver up and surrender
to Landlord possession of the Premises upon the expiration of the Lease, or its
termination in any way, in as good condition and repair as the same shall be on
the date on which the Premises are delivered to Tenant by Landlord (damage by
fire and other casualty, taking by eminent domain and ordinary wear and decay
only excepted), and shall deliver the keys at the office of Landlord or
Landlord's agent. As provided in Section 11 of this Lease Tenant shall remove
all signage and shall repair any damage caused by the removal of such signage.
Should Tenant or any party claiming under Tenant remain in possession of the
Premises, or any part thereof, after any termination of this Lease, no tenancy
or interest in the Premises shall result therefrom but such holding over shall
be an unlawful detainer and all such parties shall be subject to immediate
eviction and removal, and Tenant shall upon demand pay to Landlord, as
liquidated damages, a sum equal to Additional Rent plus double the Fixed Rent as
specified herein for any period during which Tenant shall hold the Premises
after the stipulated term of this Lease may have terminated.
35. Liability of Landlord. 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
42
recover a money judgment against Landlord, such judgment shall be satisfied only
out of the proceeds of sale received upon execution of such judgment and levy
thereon against the right, title and interest of Landlord in the Site and out of
rents or other income from such property receivable by Landlord or out of the
consideration received by Landlord from the sale or other disposition of all or
any part of Landlord's right, title and interest in the Site, and neither the
Landlord nor any partner or employee of the partnership designated herein as
Landlord shall be liable for any deficiency.
This Agreement and all documents, agreements, understandings and
arrangements relating to this transaction have been negotiated, executed and
delivered on behalf of Tanger Properties Limited Partnership by its Authorized
Agent or by Tanger Factory Outlet Centers, Inc., its sole general partner or
officers thereof in their representative capacity and not individually, and bind
only Tanger Properties Limited Partnership and no employee, agent, officer,
partner or shareholder of Tanger Properties Limited Partnership or Tanger
Factory Outlet Centers, Inc. shall be bound or held to any personal liability in
connection with the obligations of Tanger Properties Limited Partnership
thereunder, and any person or entity dealing with Tanger Properties Limited
Partnership in connection therewith shall look solely to Tanger Properties
Limited Partnership for the payment of any claim or for the performance of any
obligation thereunder. The foregoing shall also apply to any future documents,
agreements, understandings, and arrangements which may relate to this
transaction.
36. Waiver of Subrogation. Landlord and Tenant hereby release the other
from any and all liability or responsibility to the other or anyone claiming
through or under them by way of subrogation or otherwise for any loss or damage
to property caused by fire or any of the extended coverage or supplementary
contract casualties, even if such fire or other casualty shall have been caused
by the fault or negligence of the other party, or any one for whom such party
may be responsible, provided, however, that this release shall be applicable and
in force and effect only with respect to loss or damage occurring during such
time as the releasor's policies shall contain a clause or endorsement to the
effect that any such release shall not adversely affect or impair
43
said policies or prejudice the right of the releasor to recover thereunder.
Each party shall request its insurance carriers to include a waiver of
subrogation clause in all insurance policies which relate to the Leased Premises
or use of the Leased Premises so long as such clause is obtainable without extra
cost, or, if extra cost shall be charged therefor, so long as the other party
pays such entire cost. If extra cost shall be charged therefor, each party shall
advise the other thereof and of the amount of the extra cost, and the other
party, at its election, may pay the same, but shall not be obligated to do so.
37. Retail Restriction Limit. Except for the store currently leased in
Redding, Pennsylvania during the term of this Lease (including any extension or
renewal thereof) and for a period of one year thereafter, Tenant shall not
directly or indirectly own, operate or be financially interested in, either by
itself or with others within a radius of fifty (50) miles of the perimeter of
the shopping center located on the Site, of which the Premises are a part, a
business like or similar to the business permitted to be conducted in the
Premises. This provision shall apply to any principal or partner of Tenant, if
Tenant is a partnership or joint venture, and to any officer, director or
shareholder owning more than ten percent (10%) of the capital stock of Tenant,
if Tenant be a corporation other than a corporation whose shares are regularly
traded on a nationally recognized exchange including but not limited to NASDQ.
Landlord, for breach of this covenant and in addition to any other remedy
otherwise available, may require that all sales from any such competing business
be included within the gross sales as defined in Section 3(b)(iii) hereof as
though such sales had actually been made from the Premises.
38. Financial Statements. At the request of Landlord, Tenant shall, not
later than ninety (90) days following the close of each fiscal year of Tenant
during the term of this Lease, furnish to Landlord a balance sheet of Tenant as
of the end of such fiscal year and a statement of income and expense for the
fiscal year then ended together with an opinion of an independent certified
public accountant of recognized standing to the effect that said financial
statements have been prepared in conformity with generally accepted accounting
principles consistently applied and fairly present the
44
financial condition and results of operations of Tenant as of and for the period
covered.
IN TESTIMONY WHEREOF, the Landlord and Tenant have caused this Lease to
be signed in triplicate as of the day and year first above written.
LANDLORD: TANGER PROPERTIES LIMITED PARTNERSHIP, a
North Carolina limited partnership
By: Tanger Factory Outlet Centers, Inc.,
its sole general partner
(Corporate
Seal)
BY: /s/ Rochelle G. Simpson
------------------------------------
Rochelle G. Simpson
Senior Vice President-Administration
ATTEST:
/s/ Virginia R. Summerell
- -------------------------
Virginia R. Summerell
Assistant Secretary
TENANT: DM MANAGEMENT COMPANY
(Corporate
Seal)
BY: /s/ Patricia C. Selander
------------------------
President/Vice President
ATTEST:
/s/ Olga L. Conley
- -----------------------------
Secretary/Assistant Secretary
LANDLORD
NOTARY PROVISION
45
STATE OF North Carolina
--------------
COUNTY OF
--------------
I, Betty E. Massey, a Notary Public for the above State and County do
hereby certify that Virginia R. Summerell personally appeared before me this day
and acknowledged that she is Assistant Secretary of TANGER FACTORY OUTLET
CENTERS, INC., a Corporation, which is the General Partner of Tanger Properties
Limited Partnership, a North Carolina Limited Partnership and that by authority
duly given and as the act of the corporation the foregoing Lease Agreement was
signed in its name by its Senior Vice President of Administration, sealed with
its corporate seal and attested by herself as its Assistant Secretary.
Witness my hand and notarial seal this the 29 day of October, 1998.
/s/ Betty E. Massey
-------------------
Notary Public
My commission expires:
6/14/99
- ----------------------
(Notary
Seal)
46
TENANT
NOTARY PROVISION
STATE OF Massachusetts
COUNTY OF Norfolk
I, Nancy B. Marse, a Notary Public for the above State and County, do
hereby certify that Olga L. Conley
---------------------------------------
(NAME OF SECRETARY/ASSISTANT SECRETARY)
personally appeared before me this day and acknowledged that he/she is
Secretary/Assistant Secretary of DM MANAGEMENT COMPANY, a Corporation and that
by authority duly given and as the act of the corporation the foregoing Lease
Agreement was signed in its name by its President/Vice President, sealed with
its corporate seal and attested by himself/herself as its Secretary/Assistant
Secretary.
Witness my hand and notarial seal this the 23rd day of October, 1998.
/s/ Nancy B. Marse
------------------
Notary Public
My commission expires:
7/2/04
- ---------------------
(Notary
Seal)
47
Exhibit "A"
Drawing of Site
Omitted
EXHIBIT "B"
LEGAL DESCRIPTION
ALL THAT CERTAIN lot or tract or land SITUATE on the South Side of U.S. Route
30, the Lincoln Highway East, Legislative Route 215, east of Millstream Road,
T-539, in East Lampeter Township, Lancaster County, Pennsylvania, as shown on a
Plan prepared by Huth Engineers Inc., dated September 4, 1987, Drawing No.
LA-1565-8, said tract being more fully bounded and described as follows:
BEGINNING at an iron pin on the Southern right of way line of the Lincoln
Highway East, 50 feet wide, said pin being a corner of land of Hugh D. Summers;
thence along land of Hugh D. Summers the following two courses and distances:
(1) South 22 degrees 44 minutes 20 seconds West, a distance of 250.00 feet to an
iron pin; (2) South 66 degrees 15 minutes 40 seconds East, a distance of 400.04
feet to a concrete monument, a corner of land of the Host of America, Inc.;
thence along the same the following fourteen (14) courses and distances: (1)
South 13 degrees 03 minutes 55 seconds East, a distance of 346.81 feet to a
concrete monument; (2) South 13 degrees 59 minutes 45 seconds East, a distance
of 99.94 feet to an iron pin; (3) South 76 degrees 05 minutes 40 seconds West, a
distance of 10.87 feet to an iron pin; (4) South 10 degrees 16 minutes 15
seconds East, a distance of 107.52 feet to an iron pin; (5) South 04 degrees 44
minutes 30 seconds East, a distance of 100.62 feet to an iron pin; (6) South 05
degrees 39 minutes 15 seconds West, a distance of 101.83 feet to an iron pin;
(7) South 14 degrees 21 minutes 10 seconds West, a distance of 101.52 feet to an
iron pin; (8) South 21 degrees 36 minutes 15 seconds West, a distance of 101.97
feet to an iron pin; (9) South 33 degrees 21 minutes 05 seconds West, a distance
of 100.24 feet to an iron pin; (10) South 39 degrees 01 minutes 50 seconds West,
a distance of 97.75 feet to an iron pin; (11) South 48 degrees 20 minutes 30
seconds West, a distance of 97.33 feet to an iron pin; (12) South 56 degrees 00
minutes 30 seconds West, a distance of 97.29 feet to an iron pin; (13) South 64
degrees 11 minutes 00 seconds West, a distance of 100.98 feet to an iron pin;
(14) South 76 degrees 16 minutes 20 seconds West, a distance of 185.07 feet to
an iron pin, a corner of land of Benuel H. and Sylvia K. King; thence along the
same North 14 degrees 53 minutes 35 seconds West, a distance of 522.06 feet to
an iron pin; thence in and along the centerline of Millstream Road, the
following two (2) courses and distances: (1) North 14 degrees O7 minutes 35
seconds West, a distance of 894.80 feet to a point; (2) North 14 degrees 06
minutes 50 seconds West, a distance of 390.37 feet to a point; thence crossing
Millstream Road North 75 degrees 46 minutes 50 seconds East, a distance of 15.89
feet to an iron pin on the eastern right of way line of Millstream Road, 33 feet
wide, said iron pin also being a corner of land of Audrey Brodsky; thence along
the same North 40 degrees 38 minutes 20 seconds East, a distance of 224.86 feet
to an iron pin on the southern right of way line of the Lincoln Highway East;
thence along the same the two following (2) courses and distances; (1) in a line
curving to the left in a southeasterly direction having a radius of 2,653.36
feet an arc distance of 150.65 feet, the chord of said arc being South 64
degrees 30 minutes 05 seconds East, a distance of 150.63 feet to a point; and
(2) South 66 degrees 15 minutes 40 seconds East, a distance of 413.17 feet to an
iron pin, the place of beginning.
or so much of the site as may be used by Landlord for the Shopping Center.
TANGER PROPERTIES LIMITED PARTNERSHIP
LANCASTER, PENNSYLVANIA
EXHIBIT "C"
Page 1 of 1
DM MANAGEMENT COMPANY
TERMS AND SPECIFICATIONS:
FLOORS: AS IS.
WALLS: AS IS.
DOORS: AS IS.
CEILING: AS IS.
PLUMBING: AS IS.
HVAC: AS IS.
FIRE
PROTECTION
SYSTEM: AS IS.
ELECTRICAL: AS IS.
PHONE: AS IS.
SIGNAGE: AS IS.
All exterior signs must conform to the
Landlord's sign criteria and be approved by
Landlord before installation.
UTILITIES: AS IS.
50