RETAIL LEASE
This Lease ("Lease") is entered into as of the date set
forth in Section 1.1 by and between Landlord and Tenant.
ARTICLE 1. - BASIC LEASE PROVISIONS
1.1 Effective Date: _________________, 2001.
1.2 Landlord: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Realty Group, L.P., a Delaware
limited partnership.
1.3 Tenant: Arizona Furniture Corporation, a Nevada
corporation, dba "▇▇▇▇▇▇▇ Furniture".
1.4 Tenant's Trade Name: ▇▇▇▇▇▇▇ Furniture. (Article 9)
1.5 Project: The Summit at Scottsdale, located in the City of
Scottsdale, County of Maricopa, State of Arizona.
1.6 Premises: Building 10, as shown on the Site Plan with an
address of 32331 North Scottsdale Road, Scottsdale, Arizona.
(Article 2)
1.7 Floor Area of Premises: Approximately fifteen thousand
forty-three (15,043) square feet. (Article 2)
1.8 Term: One hundred twenty (120) months, with two (2) Option
Terms of sixty (60) months each. (Article 3)
1.9 Time to Complete Tenant's Work: Sixty (60) days following
"Substantial Completion of the Premises" (as hereinafter
defined). (Article 3)
1.10 Minimum Annual Rent: (Article 5)
Dollars Per Years Following
Square
Foot Per Annum Dollars Per Dollars Per Commencement
Annum Month Date
$15.00 $225,645.00 $18,803.75 1- 5
$17.00 $255,731.00 $21,310.92 6-10
Option Terms, if applicable
$19.00 $285,817.00 $23,818.08 11-15
$21.00 $315,903.00 $26,325.25 16-20
1.11 Percentage Rent: Three percent (3 %). (Article 5)
1.12 Radius Restriction Area: Five (5) miles. (Article 9)
1.13 Use of Premises: The Premises shall be used for the retail
sale of solid wood furniture and related accessories, and for no
other use or purpose whatsoever. (Article 9)
1.14 Initial Promotional Assessment: One Thousand Five Hundred
and 00/100 Dollars ($1,500.00) (Article 13)
1.15 Promotional Charge: Fifteen Thousand Forty-Three and 00/100
Dollars ($15,043.00) per annum, subject to adjustment as provided
in Article 13.
1.16 Insurance Limits: Two Million and 00/100 Dollars
($2,000,000.00). (Article 14)
1.17 Security Deposit: Twenty-Five Thousand and 00/100 Dollars
($25,000.00). (Article 20)
1.18 Guarantor: N/A. (Exhibit E)
1.19 Broker(s): ▇▇▇▇▇▇ Partners (Landlord's Broker) and Staubach
West, Inc. (Tenant's Broker). (Article 20)
1.20 Notices: To Landlord: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Realty Group, L.P.,
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ Road, Suite ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Asset Management;
To Tenant: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Lease Administration. (Article 20)
ARTICLE 2. - PREMISES
2.1 Premises. Landlord leases to Tenant and Tenant leases from
Landlord, for the "Term" (as defined in Article 3) and upon the
covenants and conditions set forth in this Lease, the premises
described in Section 1.6 ("Premises"). Notwithstanding anything
contained in this Lease to the contrary, the Premises shall be
deemed to include the roof, floor slab and foundations, and
structural and exterior walls which are a part of or immediately
adjacent to the Premises.
2.2 Reservation. Landlord reserves the right to use the
exterior walls, floor, roof and plenum in, above and below the
Premises for the repair, maintenance, use and replacement of
pipes, ducts, utility lines and systems, structural elements
serving the Project and for such other purposes as Landlord deems
necessary. In exercising its rights reserved herein, Landlord
shall not unreasonably interfere with the operation of Tenant's
business on the Premises.
2.3 Floor Area. The term "Floor Area", as used in this Lease,
shall mean all areas designated by Landlord for the exclusive use
of a tenant measured from the exterior surface of exterior walls
(and extensions, in the case of openings) and from the center of
interior demising walls, and shall include, but not be limited
to, restrooms, mezzanines, warehouse or storage areas, clerical
or office areas and employee areas. The Premises contain
approximately the number of square feet of Floor Area specified
in Section 1.7. Landlord and Tenant shall have the right during
the first ninety (90) days following the "Commencement Date" (as
hereinafter defined) to cause the Floor Area of the Premises to
be remeasured by a licensed architect. Upon determination of the
actual Floor Area of the Premises in the manner set forth above,
the Minimum Annual Rent and all other charges payable by Tenant
under this Lease which are determined with reference to the Floor
Area of the Premises shall be adjusted accordingly. In the event
the actual Floor Area is less than ninety percent (90%) or
greater than one hundred ten percent (110%) of the number of
square feet specified in Section 1.7, either party shall have the
right to terminate this Lease upon delivery of written notice to
the other party.
ARTICLE 3. - TERM
3.1 Term. This Lease shall be effective from and after the
Effective Date specified in Section 1.1. The term of this Lease
("Term") shall commence on that date (the "Commencement Date")
which is the earliest of: (a) the date Tenant initially opens
for business to the public in the Premises, or (b) the date
immediately following the expiration of the period set forth in
Section 1.9 as the "Time to Complete Tenant's Work" after the
"Substantial Completion of the Premises" (as hereinafter
defined). The Term shall continue, unless sooner terminated in
accordance with the provisions of this Lease, for the number of
months specified in Section 1.8 from the first day of the month
following the Commencement Date.
3.2 Extension Options. Provided that Tenant is not in default
of any monetary or material non-monetary provision of this Lease
at the time of exercise of an option to extend provided herein or
at any time thereafter prior to the commencement of the
applicable "Option Term" (as hereinafter defined), Tenant shall
have the option to extend the Term of this Lease for the
additional periods set forth in Section 1.8 of this Lease (such
periods being referred to herein individually as the "Option
Term" and collectively as the "Option Terms") only by giving
Landlord written notice at least two hundred forty (240) one
hundred eighty (180) days before the expiration of the initial
Term or first Option Term, as appropriate. All of the terms,
covenants, conditions, provisions and agreements applicable to
the initial Term shall be applicable to the Option Terms, except
that the Minimum Annual Rent payable during the Option Terms
shall be as set forth in Section 1.10 above. The options to
extend the Term pursuant hereto by the Option Terms shall be
personal to the original Tenant signatory to this Lease and shall
not be exercisable by or for the benefit of any assignee or
subtenant of Tenant other than an assignee in connection with a
"Permitted Transfer" pursuant to Section 12.4 below. All
references in this Lease to the "Term" shall be deemed to mean
the initial Term as extended by the Option Terms, as applicable.
Tenant shall have no right to exercise an Option Term if Tenant
has not paid Percentage Rent to Landlord for each of the two (2)
years immediately preceding the year in which the Option Term may
be exercised.
ARTICLE 4. - POSSESSION AND CONSTRUCTION
4.1 Substantial Completion. The term "Substantial Completion of
the Premises", as used in this Lease, shall mean the date
Landlord notifies Tenant in writing that "Landlord's Work" (as
specified in Exhibit C) is substantially complete to the point
that Tenant's contractor may commence the construction of
"Tenant's Work" (as specified in Exhibit C) without unreasonable
interference from Landlord's contractor performing Landlord's
Work, if any.
4.2 Delivery of Possession. Tenant shall accept possession of
the Premises from Landlord upon Substantial Completion of the
Premises and shall diligently complete construction of the
Tenant's Work on or before the Commencement Date. Tenant shall
deliver each of the following to Landlord prior to Substantial
Completion of the Premises: (a) executed copies of policies of
insurance or certificates thereof (as required under Article 14);
(b) "Final Plans" (as defined in Exhibit C); and (c) a copy of
Tenant's building permit, if issued by such date. At least
thirty (30) days prior to the Commencement Date, Tenant shall pay
the Security Deposit, first month's Promotional Charge, first
month's Common Area Costs and first month's Minimum Annual Rent
to Landlord on the date Tenant signs this Lease.
4.3 Tenant's Construction. Tenant shall commence construction
of Tenant's Work upon Substantial Completion of the Premises and
delivery of possession of the Premises to Tenant, and shall
diligently prosecute same to completion. Tenant shall deliver to
Landlord a copy of the certificate of occupancy for the Premises
issued by the appropriate governmental agency upon completion of
Tenant's Work.
ARTICLE 5. - RENTAL
5.1 Minimum Annual Rent. Tenant shall pay the sum specified in
Section 1.10 ("Minimum Annual Rent") in the monthly installments
specified, in advance, on or before the first (1st) day of each
month, without prior demand and without offset or deduction
(except as expressly and specifically provided in this Lease),
commencing on the Commencement Date. Should the Commencement
Date be a day other than the first (1st) day of a calendar month,
then the monthly installment of Minimum Annual Rent for the first
partial month shall be equal to one-thirtieth (1/30th) of the
monthly installment of Minimum Annual Rent for each day from the
Commencement Date to the end of the partial month. Subject to
Section 5.2 below, the Minimum Annual Rent payable under Section
1.10 and this Article 5 shall be adjusted on each of the dates
and to the amounts specified in Section 1.10.
5.2 Adjustment to Minimum Annual Rent. The Minimum Annual Rent
payable under Section 1.10 and this Article 5 shall be adjusted
on each of the dates and to the amounts specified in Section
1.10. In addition, commencing with the first anniversary of the
Commencement Date and on each anniversary of the Commencement
Date thereafter (each such anniversary being hereinafter referred
to as an "Adjustment Date"), the Minimum Annual Rent payable for
the month immediately preceding such Adjustment Date shall be
adjusted to reflect the increases only, in the same percentage
that the "Index" (as hereinafter defined) for the calendar month
which is three (3) full months immediately preceding such
Adjustment Date shall increase over the Index for the calendar
month which is fifteen (15) full months immediately preceding
such Adjustment Date. Notwithstanding the foregoing, in no event
shall any adjustment pursuant to this Section 5.2 result in the
Minimum Annual Rent being increased by less than four percent
(4%) of the Minimum Annual Rent in effect immediately preceding
such adjustment. In the event the provisions of this Section 5.2
are partially or totally suspended as a result of governmental
regulation, they shall be reinstituted upon termination or
expiration of such regulation. Furthermore, upon termination or
expiration of such regulation, the Minimum Annual Rent shall be
adjusted, commencing with the next regular monthly installment of
Minimum Annual Rent, to the amount that it would have been had
the governmental regulation not been imposed. All such
adjustments shall be compounded. The Minimum Annual Rent as
adjusted shall be the Minimum Annual Rent until the next
Adjustment Date or the date the Minimum Annual Rent is next
adjusted pursuant to Section 1.10. Notwithstanding anything
contained in this Section 5.2 to the contrary, if the Minimum
Annual Rent adjusts on any anniversary of the Commencement Date
pursuant to the terms of Section 1.10 (as opposed to an
adjustment pursuant to the change in the Index as set forth
above), the Index adjustment shall not occur on such anniversary,
but shall occur on each anniversary thereafter for which an
adjustment is not made to the Minimum Annual Rent pursuant to
Section 1.10 (as opposed to an Index adjustment pursuant to this
Section 5.2).
5.3 Percentage Rent.
(a) During the Term, Tenant shall pay to Landlord, as provided
below, the dollar amount by which the percent specified in
Section 1.11 ("Percentage Rate") of Tenant's "Gross Sales" (as
hereinafter defined) exceeds the Minimum Annual Rent paid by
Tenant to Landlord during each calendar year (or, at Landlord's
election, its fiscal year), or portion thereof, of the Term
("Percentage Rent").
(b) Tenant shall furnish or cause to be furnished to Landlord a
statement of the monthly Gross Sales of Tenant within ten (10)
days after the close of each calendar month and a statement of
the annual Gross Sales of Tenant within thirty (30) days after
the close of each calendar year. Such statements shall be in a
form mutually acceptable to Landlord and Tenant. Such statements
shall be certified as an accurate accounting of Tenant's Gross
Sales by an authorized representative of Tenant. Within ten (10)
days after the end of each calendar month, Tenant shall pay to
Landlord the amount, if any, by which the product of the
Percentage Rate multiplied by the Gross Sales during the
immediately-preceding calendar month exceeds the installment of
Minimum Annual Rent which Tenant shall have paid for such month.
Within ninety (90) days after the close of each calendar year, an
accounting of Tenant's Gross Sales during said calendar year and
the amounts paid to Landlord as Minimum Annual Rent and as
Percentage Rent during such calendar year shall be made by
Landlord and, upon such accounting, an adjustment shall be made
with respect to said Percentage Rent as follows: If Tenant shall
have paid to Landlord an amount greater than Tenant is required
to pay under the terms hereof, Tenant shall be entitled to a
credit against Tenant's next payment of rent or other charge due
to Landlord from Tenant in the amount of such excess rent paid,
or if Tenant shall have paid an amount less than the rent
required to be paid hereunder, Tenant shall pay to Landlord such
difference within five (5) days of such determination. Upon
termination of this Lease, if Tenant is not in default hereunder,
Landlord shall refund to Tenant the amount of any excess,
promptly upon Landlord's receipt of Tenant's request therefor.
(c) The term "Gross Sales", as used in this Lease, shall mean
the gross selling price of all merchandise or services sold or
rented in or from the Premises by Tenant, its subtenants,
licensees and concessionaires (including, but not limited to,
food and beverages; provided, however, this reference to food and
beverages shall not be deemed to permit the sale of food or
beverages from the Premises if not otherwise expressly permitted
by this Lease), whether for cash or on credit and whether made by
store personnel or by machines or whether made by catalogue or
internet sale (from on or off the Premises), excluding therefrom
the following: (i) sales taxes, excise taxes or gross receipts
taxes imposed by governmental entities upon the sale of
merchandise or services, but only if collected from customers
separately from the selling price and paid directly to the
respective governmental entities; and (ii) proceeds from the sale
of fixtures, equipment or property which are not stock in trade;
(iii) merchandise returned to manufacturers or suppliers; and
(iv) bad debts and/or bad checks not to exceed in the aggregate
one percent (1%) of Tenant's Gross Sales per calendar year and,
if subsequently collected, such amounts shall be included in
Gross Sales in the month and year in which they were collected
(the "Exclusions from Gross Sales"). Tenant shall use its
reasonable good faith efforts to maximize Gross Sales from the
Premises.
5.4 Additional Rent. Tenant shall pay, as "Additional Rent",
without offset or deduction, all sums required to be paid by
Tenant to Landlord pursuant to this Lease in addition to Minimum
Annual Rent. Landlord shall have the same rights and remedies
for the nonpayment of Additional Rent as it has with respect to
the nonpayment of Minimum Annual Rent.
5.5 Place of Payment. Tenant shall pay Minimum Annual Rent and
Additional Rent to Landlord at the address specified in Section
1.20, or to such other address and/or person as Landlord may from
time to time designate in writing to Tenant.
5.6 Late Payments. If Tenant fails to pay when the same is due
any Minimum Annual Rent or Additional Rent, the unpaid amounts
shall bear interest at the Interest Rate, as defined in Section
20.9(k), from the date the unpaid amount was initially due, to
and including the date of payment. In addition, if any
installment of Minimum Annual Rent or Additional Rent is not
received by Landlord from Tenant within five (5) days after the
date when due, Tenant shall immediately pay to Landlord a late
charge equal to five percent (5%) of the delinquent amount.
Landlord and Tenant agree that this late charge represents a
reasonable estimate of the costs and expenses Landlord will incur
and is fair compensation to Landlord for its loss suffered by
reason of late payment by Tenant.
ARTICLE 6. - TENANT FINANCIAL DATA
6.1 Recordation of Sales. At the time of a sale or other
transaction, Tenant shall record the sale or other transaction in
the presence of the customer, either in a cash register or
computer with sealed continuous tape or by using any other method
of recording sequentially numbered purchases and keeping a
cumulative total.
6.2 Books and Records. For a period of five (5) three (3) years
following the close of each calendar year, Tenant shall keep at
the Premises or at any other location in the County in which the
Premises is located, full and accurate books of account and
records relative to transactions from the Premises in accordance
with generally accepted accounting principles consistently
applied.
6.3 Audits. Landlord, at any time within five (5) three (3)
years after receipt of any statement and upon no less than five
(5) days prior written notice to Tenant, may cause an audit to be
made by a national firm of independent certified public
accountants of Tenant's Gross Sales and Exclusions from Gross
Sales and all of Tenant's records and books. Tenant shall make
available for the audit at the Premises all of these books and
records. If the audit discloses an underpayment of Percentage
Rent, Tenant shall immediately pay to Landlord the amount of the
underpayment, with interest at the Interest Rate from the date
the payment should have been made through and including the date
of payment. If the audit discloses an under-reporting of Gross
Sales in excess of two three percent (2%) (3%) of the reported
Gross Sales, whether or not additional provided that Percentage
Rent is due, then Tenant shall also immediately pay to Landlord
all reasonable costs and expenses incurred in the audit and in
collecting the underpayment, including auditing costs and
attorneys fees.
6.4 Financial Statements. Within fifteen (15) days after
Landlord's written request, Tenant shall furnish Landlord with
financial statements or other reasonable reasonably requested
financial information reflecting Tenant's current financial
condition, certified by Tenant or its financial officer. If
Tenant is a publicly-traded corporation, delivery of Tenant's
last published financial information shall be satisfactory for
purposes of this Section 6.4. Unless an event of default is
continuing, Landlord shall not make more than two (2) requests
for financial information in any single calendar year.
ARTICLE 7. - TAXES
7.1 Real Property Taxes.
(a) As used in this Lease, the term "Taxes" shall include any
form of tax or assessment, license fee, license tax, possessory
interest tax, tax or excise on rental, or any other levy, charge,
expense or imposition imposed by any Federal, state, county or
city authority having jurisdiction, or any political subdivision
thereof, or any school, agricultural, lighting, drainage or other
improvement or special assessment district on any interest of
Landlord or Tenant in the Project. The term "Taxes" shall not
include Landlord's general income taxes, inheritance, estate,
sales, use or gift taxes.
(b) From and after the Commencement Date, Tenant shall pay to
Landlord, as Additional Rent, a share of the Taxes pursuant to
subparagraph (c) below. Taxes for any partial year shall be
prorated. Landlord, at its option, may collect Tenant's payment
of its share of Taxes after the actual amount of Taxes are
ascertained or in advance, monthly or quarterly, based upon
estimated Taxes. If Landlord elects to collect Tenant's share of
Taxes based upon estimates, Tenant shall pay to Landlord from and
after the Commencement Date, and thereafter on the first (1st)
day of each month or quarter during the Term (as determined by
Landlord), an amount reasonably estimated by Landlord to be the
monthly or quarterly Taxes payable by Tenant. Landlord may
periodically adjust the estimated amount. If Landlord collects
Taxes based upon estimated amounts, then within thirty (30) days
following the end of each calendar year or, at Landlord's option,
its fiscal year, Landlord shall furnish Tenant with a statement
covering the year just expired showing the total Taxes for the
Project for such year, the total Taxes payable by Tenant for such
year, and the payments previously made by Tenant with respect to
such year, as set forth above. If the actual Taxes payable for
such year exceed Tenant's prior payments, Tenant shall pay to
Landlord the deficiency within ten (10) days after its receipt of
the statement. If Tenant's payments exceed the actual Taxes
payable for that year, Tenant shall be entitled to offset the
excess against the next payment(s) of Taxes and/or other
Additional Rent that become due to Landlord; provided that
Landlord shall refund to Tenant the amount of any overpayment for
the last year of the Term.
(c) If the Premises and underlying realty are part of a larger
parcel for assessment purposes or are within a multi-level
building ("larger parcel"), Tenant's share of the Taxes shall be
determined by multiplying all of the Taxes on the larger parcel,
excluding Taxes on the "Common Area" (as defined in Section
11.1), by a fraction, the numerator of which shall be the Floor
Area of the Premises and the denominator of which is the number
of square feet of Floor Area in the larger parcel which are
occupied and open for business from time to time as of the
commencement of the applicable calendar or fiscal year (as the
case may be), exclusive of the Floor Area of the "Other Stores"
and exclusive of the "Joint Use Facilities" (as those terms are
hereinafter defined); provided, however, in no event shall such
denominator be less than eighty-five percent (85%) of the Floor
Area located within the larger parcel as of the commencement of
the applicable calendar or fiscal year (as the case may be),
exclusive of the Floor Area of the Other Stores and exclusive of
the Joint Use Facilities. Notwithstanding anything contained in
this Article 7 to the contrary, in the event Landlord reasonably
determines that the improvements comprising the Premises have a
value greater than the value of a majority of the other premises
in the Project or within the land covered by the applicable tax
▇▇▇▇, Landlord shall have the right to make such reasonable
adjustments to Tenant's share of the Taxes so that Tenant pays
Taxes on the value of the improvements comprising the Premises
which is in excess of the value of the majority of other premises
in the Project or within the land covered by the applicable tax
▇▇▇▇.
7.2 Other Property Taxes. Tenant shall pay, prior to
delinquency, all taxes, assessments, license fees and public
charges levied, assessed or imposed upon its business operation,
trade fixtures, merchandise and other personal property in, on or
upon the Premises. If any such items of property are assessed
with property of Landlord, then the assessment shall be equitably
divided between Landlord and Tenant.
7.3 Contesting Taxes. If Landlord elects to contest (either
formally or informally through negotiations) any Taxes levied or
assessed against the Project during the Term, Tenant shall not be
required to pay any portion of the costs or expenses incurred by
Landlord in connection with such contest. However, if Landlord
is successful in such contest (whether by settlement or
otherwise), Landlord may deduct from the portion of any refund
received which is payable to Tenant, Tenant's proportionate share
of the costs and expenses incurred by Landlord in connection with
such contest, determined pursuant to the formula set forth in
Section 7.1(c) for the allocation of Taxes. Landlord shall pay
to Tenant that portion of the total refund remaining, if any,
which is attributable to Tenant's proportionate share of Taxes
prorated in the same manner as set forth in Section 7.1(c).If
Landlord contests any Taxes levied or assessed during the Term,
Tenant shall not be required to pay any portion of the costs or
expenses incurred by Landlord in connection with such contest;
however, if Landlord is successful in such contest, Landlord may
deduct from the portion of any refund received which is payable
to Tenant, Tenant's proportionate share of all such costs and
expenses determined pursuant to the formula set forth in Section
7.1(c) for the allocation of Taxes. Landlord shall pay to Tenant
that portion of the total refund remaining, if any, which is
attributable to Tenant's proportionate share of Taxes prorated in
the same manner as set forth in Section 7.1(c). For the purpose
of this Section, the fees, costs and expenses associated with any
contest shall be considered in determining the success of such
contest.
ARTICLE 8. - UTILITIES
Tenant agrees to pay directly to the appropriate utility
company all charges for utility services supplied to Tenant for
which there is a separate meter and/or submeter to the Premises.
Tenant agrees to pay to Landlord its pro-rata share of all
charges for utility services supplied to the Premises for which
there is no separate meter or submeter upon billing by Landlord
of Tenant's share, as reasonably determined by Landlord based
upon estimated actual usage.
ARTICLE 9. - TENANT'S CONDUCT OF BUSINESS
9.1 Permitted Trade Name and Use. Tenant shall use the Premises
solely under the trade name Arizona Furniture Company or under
the trade name specified in Section 1.4 and shall not use the
Premises under a different trade name without Landlord's prior
written consent, which consent shall not be unreasonably
withheld; provided, however, Tenant may, without seeking
Landlord's prior written consent (but with prior written notice
to Landlord), change the trade name under which its business in
the Premises is operated to any trade name under which Tenant
operates all or substantially all of its stores in state in which
the Project is located (the "Project State"). Tenant shall use
the Premises solely for the use specified in Section 1.13 and for
no other use or purpose. Notwithstanding anything contained in
this Lease to the contrary, Tenant shall not use the Premises for
any use in violation of the use exclusives or the use
restrictions set forth in Exhibit F.
9.2 Covenant to Open and Operate. Tenant covenants to open for
business to the public with the Premises fully fixturized and
stocked with merchandise and inventory on or before the
Commencement Date and thereafter, subject to temporary closures
for casualty, condemnation, remodel, or force majeure (as defined
in Section 20.7) which prevents Tenant from conducting its normal
business operations in the Premises, and Tenant's right to cease
operating in accordance with the further provisions of this
Section 9.2, to operate continuously and uninterruptedly in the
entirety of the Premises throughout the Term the business
described in Section 1.13.
9.3 Hours of Business. From and after the Commencement Date,
Tenant shall keep the entire Premises continuously open for
business during those days and hours as are customary and usual
for the type of business operated by Tenant including, but not
limited to, all holidays except Thanksgiving Day, Christmas Day,
New Year's Day and Easter Day; provided, however, in no event
shall Tenant be open for business less than Monday through Friday
from 10:00 a.m. to 9:00 p.m., Saturday from 10:00 a.m. to 6:00
p.m., and Sunday from 11:00 a.m. to 6:00 p.m. Tenant shall have
its window displays, exterior signs and exterior advertising
displays adequately illuminated continuously during those hours
and days that the Premises are required to be open for business
to the public.
9.4 Hours for Deliveries. Tenant shall use its reasonable
efforts to require all deliveries, (exclusive of United Parcel
Service and U.S. Postal Service), loading, unloading and services
to the Premises to be completed between 7:00 a.m. and 10:00 a.m.
each day. All deliveries, loading, unloading and services to the
Premises shall be accomplished within the service areas of the
Project (or within such other locations as Landlord shall
reasonably designate).
9.5 Tenant's Signs. Tenant shall be permitted to use the
standard interior window signage used from time to time in its
other stores in the Project State, subject to all governmental
requirements, the "Sign Criteria" (as hereinafter defined) and
Landlord's prior written approval, which approval shall not be
unreasonably withheld; provided, however, such signage shall be
professionally prepared and maintained in a neat manner and shall
not, at any time, occupy more than twenty-five percent (25%) of
the storefront windows or doors. Tenant shall not affix upon the
exterior (or interior windows or doors) of the Premises any sign,
advertising placard, name, insignia, trademark, descriptive
material or other like item (collectively, the "Exterior Signs"),
unless the Exterior Signs (i) comply with all governmental
requirements, (ii) comply with the sign criteria (the "Sign
Criteria") for the Project attached hereto as Exhibit D, and such
other sign criteria for the Project as may be reasonably
promulgated by Landlord from time to time, and (iii) are approved
by Landlord, which approval shall not be unreasonably withheld.
All of the Exterior Signs shall be erected by Tenant at its sole
cost and expense, and Tenant shall maintain all of its Exterior
Signs in good condition and repair during the Term.
9.6 Radius Restriction. During the Term, neither Tenant nor any
entity affiliated with Tenant shall own, operate or have any
financial interest in any business similar to the business of
Tenant, as set forth in Section 1.13, if such other business is
opened after the Effective Date and its front door or storefront
opening is located within the Radius Restriction Area set forth
in Section 1.12. Without limiting Landlord's remedies if Tenant
violates this covenant, Landlord, for so long as Tenant is
operating the other business, may include the gross sales (as the
term Gross Sales is defined in this Lease) of the other business
in the Gross Sales made from the Premises for the purpose of
computing Percentage Rent. Landlord or its authorized
representative, at all reasonable times during the Term and for a
period of at least three (3) years after expiration or earlier
termination of this Lease, shall have the right to inspect,
audit, copy and make extracts of the books, records and accounts
pertaining to such other business, in the manner set forth in
Section 6.3, for the purpose of determining and verifying the
additional Percentage Rent due to Landlord pursuant to this
Section 9.6.
ARTICLE 10. - MAINTENANCE, REPAIRS AND ALTERATIONS
10.1 Landlord's Maintenance Obligations. Landlord shall maintain
in good condition and repair the structural components and
foundations, roofs and exterior surfaces of the exterior walls of
all buildings (exclusive of doors, door frames, door checks,
windows, window frames and, unless Landlord elects to include
cleaning of the storefronts and storefront awnings of tenants of
the Project as part of Common Area maintenance pursuant to
Section 11.4 below, storefronts and storefront awnings). It is
acknowledged by Tenant that the cost of some certain of
Landlord's maintenance obligations referenced in the preceding
sentence shall be prorated and paid as Common Area Costs in
accordance with the express provisions of this Lease.
10.2 Landlord's Right of Entry. Landlord, its agents,
contractors, servants and employees may enter the Premises at
reasonable times and following reasonable notice to Tenant and
Landlord's good faith efforts to coordinate such entry with
Tenant's on-site management so as to minimize interference with
Tenant's business operations (except in a case of emergency): (a)
to examine the Premises; (b) to perform any obligation or
exercise any right or remedy of Landlord under this Lease; (c) to
perform work necessary to comply with laws, ordinances, rules or
regulations of any public authority or of any insurance
underwriter; and (d) to perform work that Landlord deems
necessary to prevent waste or deterioration in connection with
the Premises should Tenant fail to commence such work within ten
(10) days after written notice from Landlord of the need for such
work (or if more than ten (10) days shall be required because of
the nature of the work, if Tenant shall fail to diligently
proceed to commence to perform such work after written notice).
If Landlord makes any repairs which Tenant is obligated to make
pursuant to the terms of this Lease, Tenant shall pay the cost of
such repairs to Landlord, as Additional Rent, promptly upon
receipt of a ▇▇▇▇ from Landlord for same.
10.3 Tenant's Maintenance Obligations. Except for the portions
and components of the Premises to be maintained by Landlord as
set forth in Section 10.1, Tenant, at its expense, shall keep the
Premises and all utility facilities and systems exclusively
serving the Premises ("Tenant Utility Facilities") in first-class
good and proper order, condition and repair and shall make
replacements necessary to keep the Premises and Tenant Utility
Facilities in such condition; provided, however, Tenant shall
have no right to spray paint the exterior or interior of the
windows or doors without Landlord's prior written consent. All
replacements shall be of a quality equal to or exceeding that of
the original. At the option of Landlord, (a) Tenant shall
contract with a service company approved by Landlord for the
regular (but not less frequently than quarterly) maintenance,
repair and/or replacement (when necessary) of the heating,
ventilating and air conditioning equipment serving the Premises
(the "HVAC System") and shall provide Landlord with a copy of any
service contract within ten (10) days following its execution, or
(b) Landlord may contract with a service company of its own
choosing (or provide such service itself) for the maintenance,
repair and/or replacement of the HVAC System and ▇▇▇▇ Tenant
periodically for the cost of same or based upon estimates in a
manner similar to the way in which Common Area Costs are
estimated and billed. Landlord shall be entitled to obtain an
administration fee of fifteen ten percent (15%) (10%) on all of
the HVAC System expense billed to Tenant.
10.4 Alterations. After initially opening the Premises for
business, Tenant shall not make or cause to be made to the
Premises or the Tenant Utility Facilities any addition,
renovation, alteration, reconstruction or change (collectively,
"Alterations") (i) costing in excess of Fifteen Thousand Dollars
($15,000.00), (ii) involving structural changes or additions,
(iii) affecting the exterior storefront, fire sprinkler systems,
exterior walls, floor slab, or roof of the Premises, or (iv)
requiring or resulting in any penetration of the roof, demising
walls or floor slab of the Premises, without first obtaining the
written consent of Landlord, which consent shall not be
unreasonably withheld. Tenant shall provide Landlord with not
less than ten (10) days prior written notice of the commencement
of any Alterations in the Premises and Landlord shall have the
right to enter upon the Premises to post customary notices of non-
responsibility with respect thereto. Subject to Section 20.8,
all improvements to the Premises by Tenant including, but not
limited to, light fixtures, floor coverings and partitions and
other items comprising Tenant's Work pursuant to Exhibit C, but
excluding trade fixtures and signs, shall be deemed to be the
property of Landlord upon installation thereof. Within thirty
(30) days after the completion of any Alterations, Tenant shall
deliver to Landlord a set of "as built" plans depicting the
Alterations as actually constructed or installed. If Tenant
shall make any permitted Alterations, Tenant shall carry
"Builder's All Risk" insurance in an amount reasonably determined
by Landlord covering the construction of such Alterations and
such other insurance as Landlord may reasonably require. Any
Alterations to the Premises which are required by reason of any
present or future law, ordinance, rule, regulation or order of
any governmental authority having jurisdiction over the Premises
or the Project or of any insurance company insuring the Premises,
and regardless of whether or not such Alteration pertains to the
nature, construction or structure of the Premises or to the use
made thereof by Tenant, shall be at the sole cost of Tenant
regardless of whether the work is performed by Landlord or
Tenant. Any Alterations to the Premises or the Tenant Utility
Systems which are required by reason of any present or future
law, ordinance, rule, regulation or order of any governmental
authority having jurisdiction over the Premises or the Project or
of any insurance company insuring the Premises, and regardless of
whether or not such Alteration pertains to the nature,
construction or structure of the Premises or to the use made
thereof by Tenant, shall be at the sole cost of Tenant regardless
of whether the work is performed by Landlord or Tenant.
ARTICLE 11. - COMMON AREA
11.1 Definition of Common Area. The term "Common Area", as used
in this Lease, shall mean all areas within the exterior
boundaries of the Project (or areas immediately adjacent to the
Project such as, but not limited to, landscaped medians), now or
later made available for the general use of Landlord and other
persons entitled to occupy Floor Area in the Project, including
Tenant.
11.2 Use of Common Area. The use and occupancy by Tenant of the
Premises shall include the non-exclusive use of the Common Area
(except those portions of the Common Area on which have been
constructed or placed permanent or temporary kiosks, displays,
carts and stands and except areas used in the maintenance or
operation of the Project) in common with Landlord and the other
tenants of the Project and their customers and invitees.
11.3 Control of and Changes to Common Area. Landlord shall have
the sole and exclusive control of the Common Area, and the right
to make changes to the Common Area. Landlord's rights shall
include, but not be limited to, the right to (a) restrain the use
of the Common Area by unauthorized persons; (b) utilize from time
to time any portion of the Common Area for promotional,
entertainment and related matters; (c) place permanent or
temporary kiosks, displays, carts and stands in the Common Area
and to lease same to tenants; (d) temporarily close any portion
of the Common Area for repairs, improvements or Alterations, to
discourage non-customer use, to prevent dedication or an easement
by prescription or for any other reason deemed sufficient in
Landlord's reasonable judgment; and (e) renovate, upgrade or
change the shape and size of the Common Area or add, eliminate or
change the location of improvements to the Common Area including,
without limitation, buildings, parking areas, roadways and curb
cuts, and to construct buildings on the Common Area; provided,
however, Landlord shall not make any changes to the Common Area
which will materially, adversely affect the operation of Tenant's
business from the Premises or access to the Premises. Landlord,
at any time, may change the shape, size, location, number and
extent of the improvements shown on Exhibit A and eliminate, add
or relocate any improvements to any portion of the Project, and
may add land to and/or withdraw land from the Project.
11.4 Common Area Costs. The term "Common Area Costs", as used in
this Lease, shall mean all costs and expenses incurred by
Landlord in (a) operating, managing, policing, insuring,
repairing and maintaining the Common Area and the on-site
management and/or security offices, nonprofit community buildings
and child care centers as may be located in the Project from time
to time (which offices, buildings and center shall hereinafter be
referred to as the "Joint Use Facilities"), (b) maintaining,
repairing and replacing the exterior surface of exterior walls
(and storefronts and storefront awnings if Landlord has elected
to include the cleaning of same as part of Common Area
maintenance) and maintaining, repairing and replacing roofs of
the buildings from time to time constituting the Project, and (c)
operating, insuring, repairing, replacing and maintaining all
utility facilities and systems including, without limitation,
sanitary sewer lines and systems, fire protection lines and
systems, security lines and systems and storm drainage lines and
systems not exclusively serving the premises of any tenant or
store ("Common Utility Facilities"), mall furniture and
equipment, seasonal and holiday decorations, Common Area lighting
fixtures, Project sign monuments or pylons (but not the tenant
identification signs thereon) and directional signage. Common
Area Costs shall include the actual costs incurred by Landlord
for personnel (whether employees of Landlord or third party
contractors) employed in the management and operation of the
Project. Common Area Costs shall include, without limitation,
the following: Expenses for maintenance, landscaping, repaving,
resurfacing, repairs, replacements, painting, lighting, cleaning,
trash removal, security, management offices, year 2000
compliance, non-refundable contributions toward reserves for
replacements, maintenance and/or repairs such as, but not limited
to, major parking lot repairs and repainting of buildings, fire
protection and similar items; depreciation or rental on
equipment; charges, surcharges and other levies related to the
requirements of any Federal, state or local governmental agency;
expenses related to the Common Utility Facilities; Taxes on the
improvements and land comprising the Common Area; comprehensive
or commercial general liability insurance on the Common Area;
standard "all risks" fire and extended coverage insurance with,
at Landlord's option, an earthquake damage endorsement covering
the Common Areas; costs of management of the Project (whether
such management services are provided by Landlord or a third
party contractor); and a sum (the "Supervision Fee") payable to
Landlord for administration and overhead in an amount equal to
fifteen percent (15%) ten percent (10%) of the Common Area Costs,
Tenant's share of Taxes pursuant to Section 7.1 and Tenant's
share of insurance premiums pursuant to Section 14.4. Common
Area Costs shall specifically include capital expenditures for
the replacement of Common Areas; provided, however, Tenant shall
only be obligated to pay for the cost of capital expenditures for
replacing Common Areas based on the cost of such replacement
amortized over the useful life of the Common Area item being
replaced (with an interest factor reasonably determined by
Landlord, but in no event in excess of the Interest Rate), which
useful life shall be reasonably determined by Landlord (provided,
however, if Tenant's share of the cost of the capital expenditure
would not exceed five percent (5%) of its Minimum Annual Rental,
Landlord shall not be obligated to amortize such capital
expenditure).
11.5 Proration of Common Area Costs. The Common Area Costs shall
be prorated in the following manner:
(a) From and after the Commencement Date, Tenant shall pay to
Landlord, on the first (1st) day of each calendar month, an
amount estimated by Landlord to be the monthly amount of Tenant's
share of the Common Area Costs. The estimated monthly charge may
be adjusted periodically by Landlord on the basis of Landlord's
reasonably anticipated costs.
(b) Following the end of each calendar year or, at Landlord's
option, its fiscal year, Landlord shall furnish to Tenant a
statement covering the calendar or fiscal year (as the case may
be) just expired, showing by cost category the actual Common Area
Costs for that year, the total Floor Area of the Project, the
amount of Tenant's share of the Common Area Costs for that year,
and the monthly payments made by Tenant during that year for the
Common Area Costs. If Tenant's share of the Common Area Costs
exceeds Tenant's prior payments, Tenant shall pay to Landlord the
deficiency within ten (10) days after receipt of such annual
statement. If Tenant's payments for the calendar year exceed
Tenant's actual share of the Common Area Costs, and provided
Tenant is not in arrears as to the payment of any Minimum Annual
Rent or Additional Rent, Tenant may offset the excess against
payments of Minimum Annual Rent and Common Area Costs next due
Landlord. An appropriate proration of Tenant's share of the
Common Area Costs as of the Commencement Date and the expiration
date of the Term shall be made.
(c) Portions of the Project are, or may be, owned or leased from
time to time by various persons or entities occupying
freestanding facilities or other facilities containing in excess
of fifteen thousand (15,000) square feet of Floor Area which
maintain, repair and replace their own facilities and, therefore,
contribute to the Common Area Costs on a basis other than that
described herein (collectively, "Other Stores"). The
contributions received from the Other Stores towards the Common
Area Costs shall be credited against the total Common Area Costs
and the balance thereof shall be prorated in the following
manner: Tenant's share of the Common Area Costs shall be
determined by multiplying the Common Area Costs that remain after
applying the contributions paid by the Other Stores by a
fraction, the numerator of which is the number of square feet of
Floor Area in the Premises and the denominator of which is the
number of square feet of Floor Area in the Project which are
occupied and open for business from time to time as of the
commencement of the applicable calendar or fiscal year (as the
case may be), exclusive of the Floor Area of the Other Stores and
exclusive of the Joint Use Facilities; provided, however, in no
event shall such denominator be less than eighty-five percent
(85%) of the Floor Area of the Project as of the commencement of
the applicable calendar or fiscal year (as the case may be),
exclusive of the Floor Area of the Other Stores and exclusive of
the Joint Use Facilities. Notwithstanding the foregoing, if any
owner or tenant of a portion of the Project separately maintains
its own Common Area, Common Area Costs shall not include costs
relating to the Common Area so maintained by such owner or
tenant, and the Floor Area on such owner's or tenant's parcel
shall not be included in the denominator for purposes of
calculation of Tenant's share of Common Area Costs.
(d) Notwithstanding anything contained in this Section 11.5 to
the contrary, at Landlord's option: (i) Landlord shall have the
right to allocate certain Common Area Costs to less than all of
the occupants in the Project, in which event Tenant's share of
such costs (the "Cost Pool") shall be as follows: (A) in the
event Tenant is one of the occupants participating in such Cost
Pool, its share of such Common Area Costs shall be calculated in
the manner set forth in Section 11.5(c), but the denominator used
to determine such share shall exclude those occupants not
participating in such Cost Pool; or (B) in the event Tenant is
not one of the occupants participating in such Cost Pool, its
share of such Common Area Costs shall be calculated in the manner
set forth in Section 11.5(c), but the denominator used to
determine such share shall exclude those occupants participating
in such Cost Pool.; or (ii) Landlord shall have the right to
cause Tenant to directly pay for any extraordinary expenses
resulting from Tenant's operations from the Premises (e.g., a
restaurant user with an outdoor patio may be directly responsible
for the extraordinary costs incurred by Landlord in cleaning the
Common Area directly adjacent to such outdoor patio area).
ARTICLE 12. - ASSIGNMENT AND SUBLETTING
12.1 Landlord's Consent Required. Tenant shall not assign,
sublet, enter into franchise, license or concession agreements,
change ownership or voting control, mortgage, encumber, pledge,
hypothecate or otherwise transfer (including any transfer by
operation of law) all or any part of this Lease or Tenant's
interest in the Premises (collectively "Transfer") without first
procuring the written consent of Landlord, which consent shall
not be unreasonably withheld, subject to the terms, covenants and
conditions contained in this Lease and to the right of Landlord
to elect to terminate this Lease as provided in Section 12.2.
12.2 Procedures. Should Tenant desire to enter into a Transfer,
other than any Transfer which is expressly stated in this Article
12 not to require the prior written consent of Landlord, Tenant
shall request, in writing, Landlord's consent to the proposed
Transfer at least sixty (60) forty-five (45) days before the
intended effective date of the proposed Transfer (which request
shall be accompanied by a payment of the greater of Five Hundred
Dollars ($500.00) or five percent (5%) of Tenant's then monthly
Minimum Rent to reimburse Landlord for costs incurred in
connection with reviewing such proposed Assignment), which
request shall include any information reasonably requested by
Landlord to evaluate the proposed Transfer. Within thirty (30)
twenty (20) days after receipt of Tenant's request for consent to
the proposed Transfer together with all of the above-required
information, Landlord shall respond and shall have the right
either to: (i) consent to the proposed Transfer; (ii) refuse to
consent to the proposed Transfer; or (iii) terminate this Lease,
such termination to be effective thirty (30) days after Tenant's
receipt of Landlord's notice electing to so terminate. If
Landlord shall exercise its termination right hereunder, Landlord
shall have the right to enter into a lease or other occupancy
agreement directly with the proposed Transferee, and Tenant shall
have no right to any of the rents or other consideration payable
by such proposed Transferee under such other lease or occupancy
agreement. A consent to one (1) Transfer by Landlord shall not
be deemed to be a consent to any subsequent Transfer to any other
party.
12.3 Standard for Consent. Tenant agrees that Landlord may
refuse its consent to the proposed transfer on any reasonable
grounds, and (by way of example and without limitation) Tenant
agrees that it shall be reasonable for Landlord to withhold its
consent if any of the following situations exist or may exist:
(a) the proposed Assignee proposes to change the use of the
Premises from the permitted use pursuant to Section 9.1, and the
new proposed use of the Premises (i) is a non-retail use; or
(ii) is a use which would breach any exclusive use rights granted
in writing to another tenant in the Project or would breach any
Agreements (as hereinafter defined) affecting the Project; or
(iii) is a use which would duplicate the primary use of any other
tenant or occupant occupying Floor Area substantially equal to or
in excess of the Floor Area of the Premises (unless the proposed
change is (1) to a use for which it is customary for multiple
stores selling the same type of merchandise to be located within
the same shopping center, and (2) such change, if permitted,
would not cause an excessive concentration of such use in the
Project), or (iv) in Landlord's reasonable opinion, is
inconsistent with the tenant mix in the Project at the time of
the request for Landlord's consent (excepting the use specified
in Section 1.13 above); (b) the proposed transferee's financial
condition, net worth or liquidity is less than the financial
condition, net worth or liquidity of Tenant as of the Effective
Date or the date of the request for transfer, whichever is
greater, or is inadequate to support all of the financial and
other obligations of Tenant under this Lease; (c) the business
reputation or character of the proposed transferee is not
reasonably acceptable to Landlord; or (d) the proposed transferee
is not likely to conduct on the Premises a business of a quality
substantially equal to that conducted by Tenant.
12.4 Permitted Transfer. Tenant shall have the right without
Landlord's consent, to enter into a Transfer to any subsidiary
corporation of Tenant, Tenant's parent corporation or to any
corporation succeeding to all or substantially all of the assets
of Tenant as a result of a consolidation or merger, or to a
corporation acquiring all or substantially all of the stock or
assets of Tenant ("Permitted Transfer"), provided that within
fifteen (15) days after the effective date of any such transfer
the assignee or sublessee executes and delivers to Landlord an
instrument reasonably acceptable to Landlord containing an
express assumption of all of Tenant's obligations under this
Lease. In addition, Tenant shall have the right, without
Landlord's consent to license, concession or sublease as
departments up to ten percent (10%) of the total Floor Area of
the Premises, provided that such area is operated under the same
trade name as Tenant and is not separately demised.
12.5 No Release; Form. No Transfer or Permitted Transfer,
whether with or without Landlord's consent, shall relieve Tenant
(hereinafter referred to in this Section 12.5 as "Transferor")
from its covenants and obligations under this Lease. Transferor
shall be bound by the following after any Transfer or Permitted
Transfer: (a) Any act of Landlord, or its successors or assigns,
consisting of a waiver of any of the terms or conditions of this
Lease, the giving of any consent to any matter or thing relating
to the Lease, or the granting of any indulgence or extension of
time to transferee may be done without notice to Transferor and
without releasing Transferor from any of its obligations
hereunder; (b) the obligations of Transferor hereunder shall not
be released by any modification of this Lease, regardless of
whether Transferor consents thereto or receives notice thereof,
and (c) Transferor unconditionally guarantees, without deduction
by reason of setoff, defense or counterclaim, to Landlord and its
successors and assigns the full and punctual payment, performance
and observance by Tenant, of all of the amounts, terms, covenants
and conditions in this Lease contained on Tenant's part to be
paid, kept, performed and observed. Any Transfer shall be
evidenced by an instrument in form and content satisfactory to
Landlord and executed by Tenant and the transferee, assignee,
sublessee, licensee or concessionaire, as the case may be.
12.6 Transfer Rent. Except for a Permitted Transfer, if Tenant
shall enter into a Transfer hereunder, (a) the Minimum Annual
Rent specified in Section 1.10 shall be increased, effective as
of the date of such Transfer, to an amount equal to the total of
the Minimum Annual Rent, plus Percentage Rent, required to be
paid by Tenant pursuant to this Lease during the twelve (12)
month period immediately preceding such Transfer, and (b) Tenant
shall pay to Landlord fifty percent (50%) of any "transfer
premium" (as hereinafter defined). In the event of a subletting,
"transfer premium" shall mean all rent, additional rent or other
consideration payable by such subtenant to Tenant or on behalf of
Tenant in connection with the subletting in excess of the rent,
additional rent and other sums payable by Tenant under this Lease
during the term of the sublease on a per square foot basis if
less than all of the Premises is subleased, less the reasonable
costs actually incurred by Tenant to secure the sublease. In the
event of any Transfer other than a subletting, "transfer premium"
shall mean any consideration paid by the assignee to Tenant in
connection with such Transfer which Landlord reasonably
determines is allocable to the leasehold value of this Lease,
less the reasonable costs actually incurred by Tenant to secure
the Transfer. If part of the transfer premium shall be payable
by the Transferee or subtenant other than in cash, then
Landlord's share of such non-cash consideration shall be in such
form as is reasonably satisfactory to Landlord.
ARTICLE 13. - PROMOTIONAL CHARGE; ADVERTISING
13.1 Initial Promotional Assessment. Tenant shall pay to
Landlord an Initial Promotional Assessment in the amount
specified in Section 1.14 to defray the advertising, promotion,
decoration and public relations expenses related to the Project
and/or related to Tenant's store opening for the fourth (4th)
quarter of calendar year 2001, to be incurred by Landlord and
performed in accordance with a professional promotion schedule.
The Initial Promotional Assessment shall be paid by Tenant when
Tenant first delivers to Landlord at least thirty (30) days prior
to the Commencement Date the Tenant-executed counterparts of this
Lease.
13.2 Promotional Charge. At Landlord's option, Tenant shall
either maintain membership in a merchants' association
("Association") or participate in a promotional service
("Service") to be provided by Landlord. If Landlord has
established the Service during the Term hereof, it may thereafter
cause it to be abolished and establish the Association. In the
alternative, if Landlord has established the Association, it may
at any time during the Term cause it to be abolished and
establish the Service. In either case, Tenant agrees to sign any
documents necessary to accomplish such change. Tenant agrees to
pay to Landlord, as Tenant's share of the Association or Service,
as the case may be, an annual charge ("Promotional Charge") as
set forth in Section 1.15. At Landlord's election, Landlord
shall have the right to become a member of, or participant in,
such Association or Service. If Landlord elects to become a
member of, or participant in, such Association or Service,
Landlord shall pay into such Association or Service, on a non-
cumulative basis, an amount not less than twenty-five percent
(25%) of all monies collected by the Association or Service from
its members, excluding Landlord; provided, however, Landlord
shall receive a credit against its obligation to contribute
monies to the Association or Service for promotional and
administrative services (including the salaries and benefits paid
to any person providing services to the Association or Service,
prorated based upon the percentage of time such person(s) spend
providing services to the Association or Service). On each
Adjustment Date, the Promotional Charge shall be increased to
reflect the greater of (i) an amount equal to the sum payable for
the month immediately preceding such Adjustment Date, adjusted to
reflect the increases only, in the same percentage that the Index
for the calendar month which is three (3) full months immediately
preceding such Adjustment Date shall increase over the Index for
the calendar month which is fifteen (15) full months immediately
preceding such Adjustment Date, and (ii) five cents ($.05) per
square foot of Floor Area in the Premises.
13.3 Advertising. Tenant shall expend each calendar year for
advertising a sum not less than two percent (2%) of its Gross
Sales for the calendar year. Tenant shall designate the location
of the Premises by reference to the Project by name in its
advertising. The advertising shall be in newspapers, tabloids,
direct mailings or other media covering the trade area served by
the Project.
ARTICLE 14. - INSURANCE
14.1 Tenant's Insurance. Tenant, at its sole cost and expense,
commencing on the earlier of the date of Substantial Completion
of the Premises, or the date Tenant is given earlier access to
the Premises, and continuing during the Term, shall procure, pay
for and keep in full force and effect the following types of
insurance, in at least the amounts and in the forms specified
below:
(a) Comprehensive or commercial general liability insurance with
coverage limits of not less than the combined single limit for
bodily injury, personal injury, death and property damage
liability per occurrence specified in Section 1.16 or the limit
carried by Tenant, whichever is greater, insuring against any and
all liability of the insureds with respect to the Premises or
arising out of the maintenance, use or occupancy of the Premises
or related to the exercise of any rights of Tenant pursuant to
this Lease, subject to increases in amount as Landlord may
reasonably require from time to time; provided that the amounts
or limits of insurance required to be carried by Tenant in such
event shall be comparable to the amounts or limits of insurance
customarily maintained by other tenants in first-class regional
shopping centers in Arizona. All such liability insurance shall
specifically insure the performance by Tenant of the indemnity
agreement as to liability for injury to or death of persons and
injury or damage to property set forth in Section 14.5. Further,
all such liability insurance shall include, but not be limited
to, personal injury, blanket contractual, cross-liability and
severability of interest clauses, broad form property damage,
independent contractors, owned, non-owned and hired vehicles and,
if alcoholic beverages are served, sold, consumed or obtained in
the Premises, liquor law liability.
(b) Worker's compensation coverage in an amount adequate to
comply with law, and employer's liability coverage with a limit
of not less than One Million Dollars ($1,000,000.00).
(c) Plate glass insurance covering all plate glass on the
Premises at full replacement value. Tenant shall have the option
either to insure this risk or to self-insure.
(d) Insurance covering all of Tenant's Work, Tenant's leasehold
improvements and Alterations permitted under Article 10, in an
amount not less than their full replacement value from time to
time, including replacement cost endorsement, providing
protection against any peril included within the classification
Fire and Extended Coverage, sprinkler damage, vandalism,
malicious mischief, earthquake and such other additional perils
as covered in an "all risks" standard insurance policy. Any
policy proceeds shall be used for the repair or replacement of
the property damaged or destroyed unless this Lease shall cease
and terminate under the provisions of Article 15.
14.2 Policy Form. All policies of insurance required of Tenant
herein shall be issued by insurance companies with a general
policy holder's rating of not less than "A" and a financial
rating of not less than Class "X", as rated in the most current
available "Best's Key Rating Guide", and which are qualified to
do business in the Project State. All such policies, except for
the Workers' Compensation coverage, shall name and shall be for
the mutual and joint benefit and protection of Landlord, Tenant
and Landlord's agents and mortgagee(s) or beneficiary(ies) as
additional insureds. The policies described in subparagraphs (c)
and (d) of Section 14.1 shall also name Landlord and Landlord's
mortgagee(s) or beneficiary(ies) as loss payees, and Landlord
shall furnish to Tenant the names and addresses of such
mortgagee(s) and beneficiary(ies). Executed copies of the
policies of insurance or certificates thereof shall be delivered
to Landlord prior to Tenant, its agents or employees entering the
Premises for any purpose. Thereafter, executed copies of renewal
policies or certificates thereof shall be delivered to Landlord
within thirty (30) days prior to the expiration of the term of
each policy. All policies of insurance delivered to Landlord
must contain a provision that the company writing the policy will
give to Landlord thirty (30) days' prior written notice of any
cancellation or lapse or the effective date of any reduction in
the amounts of insurance. All policies required of Tenant herein
shall be endorsed to read that such policies are primary policies
and any insurance carried by Landlord or Landlord's property
manager shall be noncontributing with such policies. No policy
required to be maintained by Tenant shall have a deductible
greater than Twenty-Five Thousand Dollars ($25,000.00) unless
approved in writing by Landlord.
14.3 Blanket Policies. Notwithstanding anything to the contrary
contained in this Article 14, Tenant's obligation to carry
insurance may be satisfied by coverage under a so-called blanket
policy or policies of insurance; provided, however, that the
coverage afforded Landlord will not be reduced or diminished and
the requirements set forth in this Lease are otherwise satisfied
by such blanket policy or policies.
14.4 Reimbursement of Insurance Premiums by Tenant. Landlord, at
all times from and after Substantial Completion of the Premises,
shall maintain in effect during the Term a policy or policies of
insurance covering the building of which the Premises are a part
(including boiler and machinery) in an amount not less than
ninety percent (90%) of the full replacement cost (exclusive of
the cost of excavations, foundations and footings) or the amount
of insurance Landlord's mortgagee(s) or beneficiary(ies) may
require Landlord to maintain, whichever is the greater, providing
protection against any peril generally included in the
classification "Fire and Extended Coverage", loss of rental
income insurance and such other additional insurance as covered
in an "all risks" standard insurance policy, with earthquake
coverage insurance if deemed necessary by Landlord in Landlord's
sole judgment or if required by Landlord's mortgagee(s) or
beneficiary(ies) or by any Federal, state, county, city or local
authority. Landlord's obligation to carry this insurance may be
brought within the coverage of any so-called blanket policy or
policies of insurance carried and maintained by Landlord. From
and after the Commencement Date, Tenant agrees to pay to
Landlord, as Additional Rent, its share of the cost to Landlord
of this insurance. The cost of such insurance for any partial
year of the Term shall be prorated. Payment shall be made in the
same manner set forth for payment of Taxes in Section 7.1(b).
Tenant's share of the premiums for this insurance shall be a
fractional portion of the premiums, the numerator of which shall
be the Floor Area of the Premises and the denominator of which is
the number of square feet of Floor Area covered by this insurance
which are occupied and open for business from time to time as of
the commencement of the applicable calendar or fiscal year (as
the case may be), exclusive of the Floor Area of the Other Stores
and exclusive of the Joint Use Facilities; provided, however, in
no event shall such denominator be less than eighty-five percent
(85%) of the Floor Area covered by this insurance as of the
commencement of the applicable calendar or fiscal year (as the
case may be), exclusive of the Floor Area of the Other Stores and
exclusive of the Joint Use Facilities. Tenant acknowledges that
Landlord shall have the right to maintain commercially reasonable
deductibles and/or self-insured retentions in connection with any
insurance carried by Landlord pursuant to this Lease, as
determined by Landlord in its reasonable business judgment. In
the event of an insurance loss covered by the insurance carried
by Landlord pursuant to this Lease, Tenant shall be required to
pay its share of such deductibles or self-insured retentions, as
determined pursuant to this Section 14.4 or Section 11.5, as
applicable.
14.5 Indemnity. "Landlord" for the purposes of this Section 14.5
shall mean and include Landlord and Landlord's directors,
officers, shareholders, agents and employees. To the fullest
extent permitted by law, Tenant covenants with Landlord that
Landlord shall not be liable for any damage or liability of any
kind or for any injury to or death of persons or damage to
property of Tenant or any other person occurring from and after
Substantial Completion of the Premises (or such earlier date if
Tenant is given earlier access to the Premises) from any cause
whatsoever related to the use, occupancy or enjoyment of the
Premises by Tenant or any person thereon or holding under Tenant.
Tenant shall pay for, defend (with an attorney approved by
Landlord), indemnify, and save Landlord harmless against and from
any real or alleged damage or injury and from all claims,
judgments, liabilities, costs and expenses, including attorney's
fees and costs, arising out of or connected with Tenant's use of
the Premises and its facilities, or any repairs, Alterations or
improvements (including original improvements and fixtures
specified as Tenant's Work) which Tenant may make or cause to be
made upon the Premises, any breach of this Lease by Tenant and
any loss or interruption of business or loss of rental income
resulting from any of the foregoing; provided, however (and
though Tenant shall in all cases accept any tender of defense of
any action or proceeding in which Landlord is named or made a
party and shall, notwithstanding any allegations of negligence or
misconduct on the part of Landlord, defend Landlord as provided
herein), Tenant shall not be liable for such damage or injury to
the extent and in the proportion that the same is ultimately
determined to be attributable to the negligence or misconduct of
Landlord, and Landlord shall pay for, defend, indemnify, and save
Tenant harmless against and from any and all claims, judgments,
liabilities, costs and expenses, including attorneys fees and
costs, resulting from any such damage or injury. The obligations
to indemnify set forth in this Section 14.5 shall include all
attorneys' fees, litigation costs, investigation costs and court
costs and all other costs, expenses and liabilities incurred by
the indemnified party from the first notice that any claim or
demand is to be made or may be made. All indemnity obligations
under this Section 14.5 shall survive the expiration or
termination of this Lease.
14.6 Waiver of Subrogation. Landlord and Tenant each waive any
rights each may have against the other on account of any loss or
damage occasioned to Landlord or Tenant, as the case may be,
their respective property, the Premises or its contents, or to
other portions of the Project arising from any liability, loss,
damage or injury caused by fire or other casualty for which
property insurance is carried or required to be carried pursuant
to this Lease. The insurance policies obtained by Landlord and
Tenant pursuant to this Lease shall contain endorsements waiving
any right of subrogation which the insurer may otherwise have
against the non-insuring party. If Landlord has contracted with
a third party for the management of the Project, the waiver of
subrogation by Tenant herein shall also run in favor of such
third party.
14.7 Failure by Tenant to Maintain Insurance. If Tenant refuses
or neglects to secure and maintain insurance policies complying
with the provisions of this Article 14, or to provide copies of
policies or certificates or copies of renewal policies or
certificates within the time provided in Section 14.2, Landlord
may, after providing written notice to Tenant of its intention to
do so, secure the appropriate insurance policies and Tenant shall
pay, upon thirty (30) days following demand, the cost of same to
Landlord, as Additional Rent.
ARTICLE 15. - DAMAGE
15.1 Insured Casualty. In the case of damage by fire or other
perils covered by the insurance specified in Section 14.4, the
following provisions shall apply:
(a) Within a period of sixty (60) forty-five (45) days after all
applicable permits have been obtained (which permits Landlord
shall promptly apply for and diligently seek), Landlord shall
commence such repair, reconstruction and restoration of the
Premises as Landlord, in its reasonable business judgment, deems
necessary, and shall diligently prosecute the same to completion;
provided, however, that Tenant, at its cost, shall repair and
restore all items of Tenant's Work and replace its stock in
trade, trade fixtures, furniture, furnishings and equipment.
Tenant shall commence this work promptly upon delivery of
possession of the Premises to Tenant and shall diligently
prosecute same to completion.
(b) Notwithstanding the foregoing, if the Premises is totally
destroyed, or if the Project is destroyed to an extent of at
least fifty thirty-five percent (50%) (35%) of the then full
replacement cost thereof as of the date of destruction, then (i)
if the destruction occurs during the last two (2) years of the
Term, or at any time if it is reasonably estimated that repair or
restoration after a casualty which Landlord is obligated under
the Lease to undertake will take more than two hundred seventy
(270) two hundred ten (210) days after the issuance of the
building permit for such work to complete, Landlord and Tenant
shall each have the right to terminate this Lease, and (ii) if
the destruction occurs prior to the last two (2) years of the
Term, regardless of the estimated repair or restoration time,
Landlord shall have the right to terminate this Lease. In each
case, the termination right shall be exercised by the terminating
party giving written notice to the other party within thirty (30)
days after the date of destruction. If Landlord terminates this
Lease pursuant to (ii) above, then Landlord shall be entitled to
retain any insurance proceeds payable by reason of such
destruction.
15.2 Uninsured Casualty. If the Premises or the Project are
damaged as a result of any casualty not covered by the insurance
specified in Section 14.4, Landlord, within ninety (90) sixty
(60) days following the date of such damage, shall commence
repair, reconstruction or restoration of the Premises to the
extent provided herein and shall diligently prosecute the same to
completion, or Landlord may elect within said ninety (90) sixty
(60) days not to so repair, reconstruct or restore the damaged
property, in which event, at Landlord's option, this Lease shall
cease and terminate upon the expiration of such ninety (90) sixty
(60) day period. In the event Landlord elects to restore the
Premises, Tenant shall have the same repair, restoration and
replacement obligations it has pursuant to Section 15.1(a).
15.3 Distribution of Proceeds. In the event of the termination of
this Lease pursuant to this Article 15, all proceeds from the
Fire and Extended Coverage insurance carried pursuant to Article
14 and all insurance covering Tenant's Work and Tenant's
leasehold improvements, but excluding proceeds for trade
fixtures, merchandise, signs and other personal property, shall
be disbursed and paid to Landlord.
15.4 Abatement. In the event of repair, reconstruction and
restoration, as provided in this Article 15, the Minimum Annual
Rent and Additional Rent payable hereunder shall be thereafter
abated proportionately with the degree to which Tenant's use of
the Premises is impaired during the remainder of the period of
repair, reconstruction and restoration; provided, however, the
amount of Minimum Annual Rent and Additional Rent abated pursuant
to this Section 15.4 shall in no event exceed the amount of loss
of rental income insurance proceeds actually received by
Landlord. Tenant shall continue the operation of its business on
the Premises during any such period to the extent reasonably
practicable from the standpoint of prudent business management.
Tenant shall not be entitled to any compensation or damages from
Landlord for loss of use of the whole or any part of the Premises
or the building of which the Premises are a part, Tenant's
personal property or any inconvenience or annoyance occasioned by
such damage, repair, reconstruction or restoration.
15.5 Waiver of Termination. Tenant waives any statutory rights
of termination which may arise by reason of any partial or total
destruction of the Premises.
ARTICLE 16. - EMINENT DOMAIN
16.1 Taking. The term "Taking", as used in this Article 16,
shall mean an appropriation or taking under the power of eminent
domain by any public or quasi-public authority or a voluntary
sale or conveyance in lieu of condemnation but under threat of
condemnation.
16.2 Total Taking. In the event of a Taking of the entire
Premises or the entire Common Area, this Lease shall terminate
and expire as of the date possession is delivered to the
condemning authority and Landlord and Tenant shall each be
released from any liability accruing pursuant to this Lease after
the date of such termination.
16.3 Partial Taking. If there is a Taking of a material portion
of the Premises or the Common Area and, regardless of the amount
taken, the Premises is not, in Tenant's sole but reasonable
business judgment, suitable for the continued operation of
Tenant's business, either Landlord or Tenant may terminate this
Lease, upon giving notice in writing of such election to the
other party within thirty (30) days after receipt by Tenant from
Landlord of written notice that a portion of the Premises and/or
the Common Area has been so appropriated or taken. In each case,
the termination of this Lease shall be effective as of the date
Tenant is required to vacate vacates all or a portion of the
Premises and/or the Common Area.
16.4 Award. The entire award or compensation in any such
condemnation proceeding, whether for a total or partial Taking,
or for diminution in the value of the leasehold or for the fee,
shall belong to and be the property of Landlord. Without
derogating the rights of Landlord under the preceding sentence,
Tenant shall be entitled to recover from the condemning authority
such compensation as may be separately awarded by the condemning
authority to Tenant or recoverable from the condemning authority
by Tenant in its own right for the taking of trade fixtures and
equipment owned by Tenant and for the expense of removing and
relocating its trade fixtures and equipment.
16.5 Continuation of Lease. In the event of a Taking, if
Landlord and Tenant elect not to terminate this Lease as provided
above (or have no right to so terminate), Landlord agrees, at
Landlord's cost and expense as soon as reasonably possible after
the Taking, to restore the Premises and/or the Common Area
necessary for Tenant to reasonably operate from the Premises (to
the extent of the condemnation proceeds) on the land remaining to
a complete unit of like quality and character as existed prior to
the Taking and, thereafter, Minimum Annual Rent and Additional
Rent payable by Tenant hereunder shall be reduced on an equitable
basis, taking into account the relative value of the portion
taken as compared to the portion remaining, and Landlord shall be
entitled to receive the total award or compensation in such
proceedings.
ARTICLE 17. - DEFAULTS BY TENANT
17.1 Events of Default. Should Tenant at any time be in default
with respect to any payment of Minimum Annual Rent, Additional
Rent or any other charge payable by Tenant pursuant to this Lease
for a period of ten (10) days after written notice from Landlord
to Tenant, or should Tenant be in default in the prompt and full
performance of any other of its promises, covenants or agreements
herein contained for more than thirty (30) days (provided,
however, if the default cannot be rectified or cured within such
thirty (30) day period, the default shall be deemed to be
rectified or cured if Tenant, within such thirty (30) day period,
shall have commenced to rectify or cure the default and shall
thereafter diligently and continuously prosecute same to
completion) after written notice thereof from Landlord to Tenant
specifying the particulars of the default, then Landlord may
treat the occurrence of any one (1) or more of the foregoing
events as a breach of this Lease and, in addition to any or all
other rights or remedies of Landlord by law provided, Landlord
shall have the right, at Landlord's option, without further
notice or demand of any kind to Tenant or any other person, (a)
to declare the Term ended and to re-enter and take possession of
the Premises and remove all persons therefrom, or (b) without
declaring this Lease terminated and without terminating Tenant's
right to possession, to re-enter the Premises and occupy the
whole or any part for and on account of Tenant and to collect any
unpaid rentals and other charges which have become payable or
which may thereafter become payable, or (c) even though it may
have re-entered the Premises as provided in clause (b) above, to
thereafter elect to terminate this Lease and all of the rights of
Tenant in or to the Premises. Any notice required to be given by
Landlord above shall be in lieu of, and not in addition to, any
notice required under the laws of the Project State.
17.2 Landlord Remedies. Should Landlord elect to terminate this
Lease pursuant to the provisions of Sections 17.1(a) or (c)
above, Landlord may recover from Tenant, as damages, the
following: (a) The worth at the time of award of any unpaid
rental which had been earned at the time of the termination, plus
(b) the worth at the time of award of the amount by which the
unpaid rental which would have been earned after termination
until the time of award exceeds the amount of rental loss Tenant
proves that could have been reasonably avoided, plus (c) the
worth at the time of award of the amount by which the unpaid
rental for the balance of the Term after the time of award
exceeds the amount of rental loss that Tenant proves could be
reasonably avoided, plus (d) any other amounts necessary to
compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease or
which, in the ordinary course of things, would be likely to
result therefrom plus, at Landlord's election, any other amounts
in addition to or in lieu of the foregoing as may be permitted
from time to time by the laws of the Project State. As used in
subparagraphs (a) and (b) above, the "worth at the time of award"
is computed by allowing interest at the Interest Rate. As used
in subparagraph (c) above, the "worth at the time of award" is
computed by discounting such amount at the discount rate of the
Federal Reserve Bank situated nearest to the location of the
Project at the time of award plus one percent (1%).
17.3 Definition of Rental. For purposes of this Article 17 only,
the term "rental" shall be deemed to be Minimum Annual Rent,
Additional Rent and all other sums required to be paid by Tenant
pursuant to the terms of this Lease. All sums, other than
Minimum Annual Rent, shall, for the purpose of calculating any
amount due under the provisions of Section 17.2(c) above, be
computed on the basis of the average monthly amount accruing
during the immediately preceding sixty (60) month period, except
that if it becomes necessary to compute these sums before the
sixty (60) month period has occurred, then these sums shall be
computed on the basis of the average monthly amount accruing
during the shorter period.
ARTICLE 18. - SUBORDINATION, ATTORNMENT AND TENANT'S
CERTIFICATE
18.1 Subordination. Upon written request of Landlord, Landlord's
mortgagee, the beneficiary of a deed of trust of Landlord or a
lessor of Landlord, Tenant will subordinate its rights pursuant
to this Lease in writing to the lien of any mortgage, deed of
trust or the interest of any lease in which Landlord is the
lessee (or, at Landlord's option, cause the lien of said
mortgage, deed of trust or the interest of any lease in which
Landlord is the lessee to be subordinated to this Lease) and to
all advances made or hereafter to be made upon the security
thereof.
18.2 Attornment. In the event any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale
under any mortgage or deed of trust made by Landlord encumbering
the Premises, or should a lease in which Landlord is the lessee
be terminated, Tenant shall attorn to the purchaser or lessor
under such lease upon any foreclosure, sale or lease termination
and recognize the purchaser or lessor as Landlord under this
Lease, provided that the purchaser or lessor shall acquire and
accept the Premises subject to this Lease.
18.3 Estoppel Certificates. Tenant agrees, upon not less than
ten (10) days prior written notice by Landlord, to execute,
acknowledge and deliver to Landlord, a statement in writing in
such form as may reasonably be required by Landlord or Landlord's
beneficiary or transferee with such reasonable modifications as
are required by Tenant ("Tenant's Certificate").
ARTICLE 19. - MATTERS OF RECORD
Tenant agrees that (a) as to its leasehold estate, it and
all persons in possession or holding under it will conform to and
will not violate the terms of any covenants, conditions,
restrictions, easements, ground leases, mortgages or deeds of
trust currently of record, including, but not limited to, that
certain document entitled "Operation and Easement Agreement"
between ▇▇▇▇▇▇ ▇▇▇▇▇▇ Corporation, a Minnesota corporation, and
Landlord, dated and recorded August 26, 1999, as Instrument No.
▇▇-▇▇▇▇▇▇▇ in the Official Records of the Maricopa County
Recorder, State of Arizona (hereinafter, the "OEA"),
(collectively, the "Agreements"), and (b) this Lease is
subordinate to the Agreements and any amendments or modifications
thereto and Landlord agrees that the foregoing requirements of
Tenant in connection with the Agreements will not materially
interfere with or prevent Tenant from using the Premises for the
use set forth in Section 1.13, and will not materially diminish
the rights or materially increase the obligations of Tenant under
this Lease; provided, however, if the Agreements are not of
record as of the date of this Lease, then this Lease shall
automatically become subordinate to the Agreements upon
recordation so long as the Agreements do not materially interfere
with or prevent Tenant from using the Premises for the use set
forth in Section 1.13, and do not materially diminish the rights
or materially increase the obligations of Tenant under this
Lease. Tenant further agrees to execute and return to Landlord,
within twenty (20) days of written demand by Landlord, an
agreement in recordable form subordinating this Lease to the
Agreements.
ARTICLE 20. - MISCELLANEOUS
20.1 Notices. Every notice, demand or request (collectively
"Notice") required hereunder or by law to be given by either
party to the other shall be in writing. Notices shall be given
by personal service or by United States certified or registered
mail, postage prepaid, return receipt requested, or by telegram,
mailgram or same-day or overnight private courier, addressed to
the party to be served at the address indicated in Section 1.20
or such other address as the party to be served may from time to
time designate in a Notice to the other party. Copies of any
Notice shall be sent to the addresses, if any, designated for
service of copies of Notices in Section 1.20.
20.2 Security Deposit. The Security Deposit shall be held by
Landlord as security for the faithful performance by Tenant of
all of the terms, covenants and conditions of this Lease to be
kept and performed by Tenant during the Lease Term. If Tenant
defaults with respect to any provision of this Lease, including
but not limited to the provisions relating to the payment of
rent, Landlord may (but shall not be required to) use, apply or
retain all or any part of the Security Deposit for the payment of
any rent or any other sum in default or for the payment of any
amount which Landlord may spend or become obligated to spend by
reason of Tenant's default, or to compensate Landlord for any
other loss or damage which Landlord may suffer by reason of
Tenant's default. If any portion of the Security Deposit is so
used or applied, Tenant shall, within five (5) days after written
demand therefor, deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to its original
amount. Landlord shall not be required to keep the Security
Deposit separate from its general funds, and Tenant shall not be
entitled to interest on the Security Deposit. If Tenant shall
fully and faithfully perform every provision of this Lease to be
performed by it, the Security Deposit, or any balance thereof,
shall be returned to Tenant (or, at Landlord's option, to the
last assignee of Tenant's interest hereunder) within thirty (30)
days following the expiration of the Lease Term.
20.3 Relocation. Landlord shall have the right to relocate the
Premises to another part of the Project in accordance with the
following: (a) The new Premises shall be substantially the same
in size, decor and nature as the Premises described in this Lease
and shall be placed in that condition by Landlord at its cost,
(b) the physical relocation of the Premises shall be accomplished
by Landlord at its cost, (c) Landlord shall give Tenant at least
thirty (30) days' notice of Landlord's intention to relocate the
Premises, (d) Landlord shall diligently pursue the relocation of
the Premises and Minimum Annual Rent and all other sums and
charges payable under this Lease shall ▇▇▇▇▇ during the period of
such relocation, (e) all incidental costs incurred by Tenant as a
result of the relocation including, without limitation, costs
incurred in changing addresses on stationery, business cards,
directories, advertising and other such items shall be paid by
Landlord in a sum not to exceed One Thousand Dollars ($1,000.00),
and (f) Landlord shall not have the right to relocate the
Premises more than two times during the Lease Term.
20.4 Hazardous Materials. Tenant, at its sole cost and expense,
shall comply with all federal, state and local laws and
regulations relating to the storage, use, handling and disposal
of hazardous, toxic or radioactive matter (collectively,
"Hazardous Materials") brought onto the Premises by Tenant or any
of Tenant's agents, employees, contractors or invitees. Tenant
shall notify Landlord and provide to Landlord a copy or copies of
any environmental entitlements or inquiries related to the
Premises. The clean-up and disposal of any Hazardous Materials
located or released onto or about the Project by Tenant or its
agents, contractors or employees shall be performed by Tenant at
Tenant's sole cost and expense and shall be performed in
accordance with all applicable laws, rules, regulations and
ordinances, pursuant to a site assessment and removal/remediation
plan prepared by a licensed and qualified geotechnical engineer
and submitted to and approved in writing by Landlord prior to the
commencement of any work. The foregoing notwithstanding,
Landlord in Landlord's sole and absolute discretion may elect, by
written notice to Tenant, to perform the clean-up and disposal of
such Hazardous Materials from the Premises and/or the Project.
In such event, Tenant shall pay to Landlord the actual cost of
same upon receipt from Landlord of Landlord's written invoice
therefor. Notwithstanding any other term or provision of this
Lease, Tenant shall permit Landlord or Landlord's agents or
employees to enter the Premises at any time, upon reasonable
notice, to inspect, monitor and/or take emergency or long-term
remedial action with respect to Hazardous Materials on or
affecting the Premises or to discharge Tenant's obligations
hereunder with respect to such Hazardous Materials when Tenant
has failed, after demand by Landlord, to do so. All costs and
expenses incurred by Landlord in connection with performing
Tenant's obligations hereunder shall be reimbursed by Tenant to
Landlord within thirty (30) days of Tenant's receipt of written
request therefor.
20.5 Project Remodeling. Landlord shall have the right, at any
time and from time to time during the Term, upon not less than
sixty (60) days' prior written notice to Tenant, to remodel,
renovate or expand the Project or a portion thereof. If such
remodel, renovation or expansion will materially and adversely
affect Tenant's operations from the Premises, as reasonably
determined by Landlord, or if Landlord shall need to utilize the
Premises in connection with the remodel, renovation or expansion,
Landlord shall have the following options: (a) cause Tenant to
vacate the Premises during the period necessary for Landlord to
effect the remodel, renovation or expansion, or during the period
during which Tenant will be unable to reasonably operate from the
Premises, during which period Tenant shall have no obligation to
pay Fixed Minimum Rent or Additional Rent, or (b) terminate this
Lease, in which event Landlord shall pay to Tenant, within sixty
(60) days following the date Tenant vacates the Premises, the
unamortized cost of all permanently affixed leasehold
improvements installed in the Premises by Tenant (and paid for by
Tenant without any contribution from Landlord), which
amortization shall be determined on a straight line basis over
the initial Term, the cost of which shall be evidenced by
invoices and proofs of payment of same); upon payment by
Landlord, Tenant shall provide Landlord with a ▇▇▇▇ of sale for
said permanently affixed leasehold improvements.
20.6 Failure to Substantially Complete Premises. Notwithstanding
anything to the contrary contained herein, (a) if for any reason
whatsoever Substantial Completion of the Premises has not
occurred on or before the last day of the twenty-fourth (24th)
twelfth (12) month following the Effective Date, or (b) if
Landlord should at any time postpone or abandon the development
or construction of the Project or that portion of the Project in
which the Premises are located, then either party may elect to
terminate this Lease by giving thirty (30) days' notice of such
election to the other party. If such notice is given, this Lease
and the rights and obligations of the parties pursuant to this
Lease shall cease and terminate. If this Lease is terminated
pursuant to this Section 20.6, neither party shall have any
further or additional rights, remedies, claims or liability
obligations arising out of this Lease or the termination of this
Lease.
20.7 Force Majeure. Any prevention, delay or stoppage due to
strikes, lockouts, labor disputes, acts of God, inability to
obtain labor or materials or reasonable substitutes therefor,
governmental restrictions, governmental regulations, governmental
controls, judicial orders, enemy or hostile governmental action,
civil commotion, fire or other casualty, and other causes (except
financial) beyond the reasonable control of the party obligated
to perform, shall excuse the performance by that party for a
period equal to the prevention, delay or stoppage, except the
obligations imposed with regard to Minimum Annual Rent and
Additional Rent to be paid by Tenant pursuant to this Lease.
20.8 Termination and Holding Over. Upon the expiration or
earlier termination of the Term, Tenant shall peaceably and
quietly surrender the Premises broom-clean and in the same
condition (including, at Landlord's option, the demolition and
removal of any Alterations made by Tenant to the Premises, unless
at the time Landlord gave its consent to such Alterations
Landlord agreed in writing that Tenant would not have to demolish
and remove such Alterations upon the termination of this Lease)
as the Premises were in upon delivery of possession of same to
Tenant by Landlord, reasonable wear and tear and any damage to
the Premises which Tenant is not required to repair pursuant to
Article 15 or Article 16 excepted. Subject to the foregoing,
Tenant shall remove from the Premises all of Tenant's trade
fixtures, furniture, equipment, signs, improvements, additions
and Alterations to the extent such items are not permanently
affixed to the Premises, and immediately repair any damage
occasioned to the Premises by reason of such removal so as to
leave the Premises in a neat and clean condition. Should Tenant
hold over in the Premises beyond the expiration or earlier
termination of this Lease, the holding over shall not constitute
a renewal or extension of this Lease or give Tenant any rights
under this Lease. In such event, Landlord may, in its sole
discretion, treat Tenant as a month-to-month tenant at will,
subject to all of the terms and conditions in this Lease, except
that Minimum Annual Rent shall be an amount equal to one and
one-half (1-1/2) times the sum of Minimum Annual Rent which was
payable by Tenant for the twelve (12) month period immediately
preceding the expiration or earlier termination of this Lease.
20.9 Miscellaneous Provisions.
(a) Any waiver by either party of a breach by the other party of
a covenant of this Lease shall not be construed as a waiver of a
subsequent breach of the same covenant.
(b) It is understood that there are no oral or written
agreements or representations between the parties hereto
affecting this Lease and this Lease supersedes and cancels any
and all previous negotiations, arrangements, representations,
brochures, agreements and understandings, if any, between
Landlord and Tenant. No provision of this Lease may be amended
except by an agreement in writing signed by Landlord and Tenant.
(c) This Lease shall be governed by and construed in accordance
with the laws of the Project State without giving effect to the
choice of law provisions thereof.
(d) Subject to the terms of this Lease, all rights and
obligations of Landlord and Tenant under this Lease shall extend
to and bind the respective heirs, executors, administrators and
the permitted concessionaires, successors, subtenants and
assignees of the parties. If there is more than one (1) Tenant
hereunder, each shall be bound jointly and severally by the
terms, covenants and agreements contained in this Lease.
(e) If Tenant or Landlord is a corporation, partnership or
limited liability company, each individual executing this Lease
on behalf of the corporation, partnership or limited liability
company (in his/her representative capacity only) represents and
warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of the corporation, partnership or limited
liability company and that this Lease is binding upon the
corporation, partnership or limited liability company.
(f) Tenant shall observe faithfully and comply with, and shall
cause its employees and invitees to observe faithfully and comply
with, commercially reasonable and nondiscriminatory rules and
regulations governing the Project as may from time to time be
promulgated by Landlord.
(g) Tenant waives any and all rights of redemption granted under
any present and future laws in the event Landlord obtains the
right to possession of the Premises by reason of the violation by
Tenant of any of the covenants and conditions of this Lease or
otherwise.
(h) Tenant represents and warrants that it has not had any
dealings with any realtors, brokers or agents in connection with
the negotiation of this Lease, except as may be specifically set
forth in Section 1.19, and agrees to pay any realtors, brokers or
agents not referenced in Section 1.19 and to hold Landlord
harmless from the failure to pay any realtors, brokers or agents
and from any cost, expense or liability for any compensation,
commission or charges claimed by any other realtors, brokers or
agents claiming by, through or on behalf of Tenant with respect
to this Lease and/or the negotiation hereof.
(i) Neither this Lease nor any memorandum hereof shall be
recorded by either party hereto.
(j) Should Landlord sell, exchange or assign this Lease (other
than a conditional assignment as security for a loan), then
Landlord, as transferor, shall be relieved of any and all
obligations on the part of Landlord accruing under this Lease
from and after the date of such transfer provided that Landlord's
successor in interest shall assume such obligations from and
after such date. Written notice of any such transfer shall be
given to Tenant.
(k) Except where another rate of interest is specifically
provided for in this Lease, any amount due from either party to
the other under this Lease which is not paid when due, shall bear
interest at the rate per annum ("Interest Rate") equal to the
prime interest rate published from time to time by the Wall
Street Journal plus two (2) percentage points (but in no event to
exceed the maximum lawful rate) from the date such amount was
originally due to and including the date of payment.
(l) Notwithstanding anything contained in this Lease to the
contrary, it is expressly understood and agreed that any judgment
against Landlord resulting from any default or other claim under
this Lease shall be satisfied only out of the net rents, issues,
profits and other income actually received from the operation of
the Project, and Tenant shall have no claim against Landlord (as
Landlord is defined in Section 14.5) or any of Landlord's
personal assets for satisfaction of any judgment with respect to
this Lease.
(m) If any part of the Premises is at any time subject to a
first mortgage or a first deed of trust, and this Lease or the
rentals due from Tenant hereunder are assigned by Landlord to a
mortgagee, trustee or beneficiary ("Assignee" for purposes of
this clause (m) only) and Tenant is given written notice of the
assignment including the post office address of Assignee, then
Tenant shall also give written notice of any default by Landlord
to Assignee, specifying the default in reasonable detail and
affording Assignee a reasonable opportunity to make performance
for and on behalf of Landlord. If and when Assignee has made
performance on behalf of Landlord, the default shall be deemed
cured.
(n) Tenant shall pay all costs for work performed by or on
account of it and shall keep the Premises and the Project free
and clear of mechanics' liens or any other liens. Tenant shall
give Landlord immediate notice of any lien filed against the
Premises or the Project as a result of any work of improvement
performed by or on behalf of Tenant. Tenant shall immediately
promptly cause any lien to be discharged or removed of record by
either paying the amount thereof or recording a statutory lien
release bond in an amount equal to one hundred fifty percent
(150%) of the amount of said lien, or such other amount as may be
adequate to cause the lien to be released as an encumbrance
against the Premises and the Project.
(o) Landlord and Tenant desire and intend that any disputes
arising between them with respect to or in connection with this
Lease be subject to expeditious resolution in a court trial
without a jury. Therefore, Landlord and Tenant each hereby waive
the right to trial by jury of any cause of action, claim,
counterclaim or cross-complaint in any action, proceeding or
other hearing brought by either Landlord against Tenant or Tenant
against Landlord on any matter whatsoever arising out of, or in
any way connected with, this Lease, the relationship of Landlord
and Tenant, Tenant's use or occupancy of the Premises or any
claim of injury or damage, or the enforcement of any remedy under
any law, statute, or regulation, emergency or otherwise, now or
hereafter in effect.
(p) Tenant shall be required to utilize Landlord's roofing
contractor in the event Tenant or Tenant's Agents desire to
penetrate the roof of the Premises for any repairs, alterations
or improvements permitted to be made to the Premises by Tenant
pursuant to the terms of this Lease; provided, however, if
Landlord and Tenant reasonably determine that Landlord's roofing
contractor's rates are not reasonably competitive, Tenant shall
have the right to utilize any other licensed and reputable
roofing contractor reasonably acceptable to Landlord.
(q) In the event that, at any time after the date of this Lease,
either Landlord or Tenant shall institute any action or
proceeding against the other relating to the provisions of this
Lease or any default hereunder, the party not prevailing in such
action or proceeding shall reimburse the prevailing party for its
actual attorneys' fees, and all fees, costs and expenses
reasonably incurred in connection with such action or proceeding,
including, without limitation, any post-judgment fees, costs or
expenses incurred on any appeal or in collection of any judgment.
(r) Tenant acknowledges that Tenant's failure to submit any
required document, certificate, report, statement of Gross Sales,
insurance policy or certificate as and when required in this
Lease will cause Landlord to incur additional costs of
administration, and agrees that in the event Tenant fails to
submit any required document, certificate, report, statement of
Gross Sales, insurance policy or certificate as and when required
in this Lease, Tenant shall pay to Landlord, as Additional
Rental, a "Service Charge" in the amount of One Hundred Dollars
($100.00) for each week or portion thereof that said failure
continues. Tenant agrees that such Service Charge shall not
constitute damages, and that neither Tenant's payment of such
Service Charge nor Landlord's acceptance of such payment shall
result in a cure of any default under this Lease, or waiver of
any default under this Lease by Landlord.
(s) Tenant agrees to cooperate to the extent reasonably possible
with all present or future programs intended to manage parking,
transportation or traffic in and around the Project or Premises
(but, shall fully comply with all such parking, transportation
and traffic programs which are non-voluntary obligations of the
Premises or Project as imposed by any governmental entity or
authority) and in connection therewith, Tenant shall use
reasonable efforts and take responsible action for the
transportation planning and management of all employees located
at the Premises by working directly with Landlord, any
governmental transportation management organization or any other
transportation-related committees or entities. Such programs may
include, without limitation: (i) restrictions on the number of
peak-hour vehicle trips generated by Tenant or its employees;
(ii) increased vehicle occupancy; (iii) implementation of an in-
house ridesharing program and an employee transportation
coordinator; (iv) working with employees and any Project or area-
wide ridesharing program manager; (v) instituting employer-
sponsored incentives (financial or in-kind) to encourage
employees to rideshare; (vi) the requirement that Tenant supply
Landlord annually with an employee survey, in the form required
by the applicable governing authority, (vii) the requirement that
Tenant provide information to its employees on carpooling, bus
routes and schedules, and bicycling information, and (viii)
utilizing flexible work shifts for employees. Tenant agrees to
pay its proportionate share of the costs of any transportation
management program adopted by the Project pursuant to the
requirements of any governmental entity or authority (including,
but not limited to, any transportation management fees), which
proportionate share shall be reasonably determined by Landlord
for each category of costs incurred in connection with such
program based on either (a) the Floor Area of the Premises in
relation to the Floor Area of the Premises of all tenants or
occupants participating in the transportation management program
or (b) the number of employees of Tenant in relation to the
number of employees of all tenants or occupants participating in
the transportation management program. In the event Landlord
requires Tenant's employees to park their vehicles off the
Project, Landlord shall provide such employees with
transportation both to and from their vehicles at no charge to
Tenant.
(t) Landlord shall have the right to design and install "Coming
Soon" signs for Tenant to be displayed in or about the Project
prior to Tenant's opening for business from the Premises. In the
event Landlord displays "Coming Soon" signs on Tenant's behalf,
Tenant agrees to reimburse Landlord the reasonable cost of such
sign(s) within thirty (30) days following receipt of reasonable
evidence thereof; provided, however, in no event shall Tenant be
required to pay for more than two (2) signs or more than Two
Hundred Dollars ($200.00) per sign.
(u) As used in this Lease, the term "Index" shall mean the
Consumer Price Index published by the United States Department of
Labor, Bureau of Labor Statistics (the "Bureau") "All Items" for
All Urban Consumers, U.S. City Average, (1982-84=100) . Should
the Bureau discontinue the publication of the Index, publish the
same less frequently or alter the same in some other manner, the
most nearly comparable index or procedure as determined by
Landlord shall be substituted therefor.
(v) All of the exhibits referenced in this Lease are
incorporated herein by this reference.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed
this Lease on the day and year first above written.
LANDLORD: TENANT:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ REALTY GROUP, L.P.,
ARIZONA FURNITURE CORPORATION, a
a Delaware limited partnership Nevada
corporation, dba "▇▇▇▇▇▇▇ Furniture"
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ REALTY By:
_______________________________
GROUP, INC., a Maryland corporation,
as General Partner Print Name:
________________________
By: Its:
_______________________________
Print Name:
Its: By:
_______________________________
By: Print Name:
________________________
Print Name:
Its: Its:
_______________________________
EXHIBIT A
SITE PLAN
EXHIBIT B
PREMISES
EXHIBIT C
CONSTRUCTION PROVISIONS
THE SUMMIT AT SCOTTSDALE, SCOTTSDALE, ARIZONA
(Vanilla Shell)
I. PLANS.
Concurrently with the execution of the Lease, Landlord shall
deliver a floor plan of the Premises to Tenant showing the
columns and other structural work. Within thirty (30) days from
delivery of such floor plan, Tenant, at its expense, shall submit
to Landlord for its approval two (2) sets of fully dimensioned
scaled drawings, plans and specifications prepared by a licensed
architect and if applicable, engineer. The drawings shall
indicate the specific requirements of Tenant's space, clearly
outlining the Premises in such detail as Landlord may require,
including types of materials and colors, interior partitions,
reflected ceiling plan, roof plan showing locations of proposed
equipment and penetrations, if applicable, and plumbing, fire
sprinkler, mechanical and electrical plans prepared by licensed
engineers setting forth all requirements of Tenant, all in
conformity with the description of Landlord's Work and of
Tenant's Work herein and in strict compliance with applicable
codes. Landlord shall have thirty (30) days from receipt of
these drawings to approve or disapprove them. If Landlord has not
notified Tenant in writing of its approval or disapproval within
the thirty (30) day period, these drawings shall be deemed
disapproved by Landlord. If Landlord disapproves such plans,
Tenant shall, within ten (10) days of receipt of Landlord's
notice of disapproval, revise and resubmit such plans to
Landlord, correcting or altering such disapproved items.
II. LANDLORD'S WORK.
Landlord agrees to deliver possession of the Premises as
designed by Landlord's architect in the configuration shown in
Exhibit B in the following manner:
A. STRUCTURE
1. Partitioning: Standard exterior demising
walls consisting of (a) unpainted masonry or
(b) drywall over studs, taped and finished,
ready to receive paint.
2. Doors: One (1) single or double front entry
door as specified on Landlord's plans,
manually operated and one (1) single rear
personnel/service door manually operated if
feasible and necessary, with cylinder lock
key sets.
3. Storefront: In accordance with Landlord's
design. Any alterations and/or deviations to
the storefront must be requested by Tenant,
in writing, and be approved by Landlord. All
excess costs for design and construction
above the standard storefront shall be borne
by Tenant.
4. Floor: Standard natural colored concrete
slab in accordance with Landlord's
structural/soils engineer's requirements.
Notwithstanding anything to the contrary
contained herein, Tenant shall be allowed to
change the flooring to a stained and
patterned concrete, at Tenant's sole cost and
expense, and as part of Tenant's Work.
5. Roof Platforms and Penetrations: Roof
platforms/curbs for heating and air
conditioning equipment and roof penetrations
for ducts, vents, plumbing, and conduits
shall be provided in accordance with
Landlord's drawings. Any additions,
deletions, relocations or changes to the roof
platforms/curbs or roof penetrations must be
requested by Tenant in writing, and be
approved by Landlord. All costs for the
design and construction of these additions,
deletions, relocations or changes from that
on Landlord's drawings and any repair
required to the roof itself, shall be borne
by tenant.
6. Loading Area: Rear double doors or garage-
type rolling door at grade level for Tenant's
deliveries.
B. UTILITIES
1. Heating/Air Conditioning: One or more
heating and air conditioning units tons will
be furnished consistent with sound
engineering practices and per state energy
requirements. (Not less than one (1) ton per
400 square feet.) Unit(s) will be located on
platforms/curbs constructed on the roof
structure.
Heating and air conditioning equipment,
distribution, and control devices will be
furnished and installed in accordance with
Landlord's design.
2. Electrical Service: One (1) 600amp 120/208
volts, 3 phase, 4 wire, circuit electric
service with panel(s). Meter will not be
supplied.
3. Gas Service: If provided, gas service shall
be brought to locations designated on
Landlord's drawing only.
4. Telephone Service: Telephone service shall
be brought to Building Main Telephone
Terminal and one (1) 1" empty conduit for
same shall be provided to the Premises by
Landlord. Tenant shall arrange for further
interior distribution.
5. Electrical Outlets: 110V wall duplex outlets
to be provided at exterior walls up to a
maximum of five (5) outlets one (1) outlet
for every fifteen feet (15'). Floor outlets
are not furnished.
6. Light Fixtures: A minimum of one (1) 2' x 4'
lay-in fluorescent fixture with cool white
lamps for every 100 square feet including
necessary conduit and wiring per Landlord's
drawings.
7. Sprinkler System: If required, a monitored
fire sprinkler system based on a standard
grid and store space. System will be sized
to permit the addition of heads to
accommodate space configuration changes.
Such changes, if required, shall be supplied
by Landlord at Tenant's expense or, at
Landlord's option, shall be completed by
Tenant in accordance with Landlord's and
governing agencies' criteria. Tenant shall
be responsible to drop sprinkler heads, if
necessary.
8. Restroom: One (1) Two (2) standard restrooms
each to code and ADA compliant, consisting of
one (1) water closet, one (1) cold water
lavatory, one (1) light fixture and one (1)
wall outlet per Landlord's drawings and
specifications. Water heater shall not be
supplied by Landlord.
C. SIGNS
1. Signage: One (1) conduit and "J" box with
wire from Landlord's house panel to
designated sign location per Landlord's
drawings for sign lighting.
2. Address Numerals: Address numerals shall be
provided and installed by Landlord.
D. CEILINGS
1. Ceiling: 2' x 4' acoustical tile ceiling with
suspended T-bar system at a height of at
least twelve feet (12') above finished floor
as designated on Landlord's drawing.
Landlord shall not be deemed to be in default with respect
to the performance of any of its construction obligations herein
if such default is due to any strike, lockout, civil commotion or
invasion, rebellion, hostilities, sabotage, government
regulations or controls, inability to obtain materials, or
services or financing, inclement weather, acts of God, delay on
the part of Tenant or other causes beyond the control of
Landlord.
III. TENANT'S WORK.
A. GENERAL REQUIREMENTS:
1. Tenant shall submit to Landlord, by certified
or registered mail at least five (5) days
prior to the commencement of construction,
the following information:
a. The names, addresses and license class
and number of all contractors and
subcontractors Tenant intends to engage
in the construction of the Premises.
b. The date on which Tenant's construction
work will commence, together with the
estimated date of completion of Tenant's
construction work and fixturization, and
the date on which Tenant expects to be
ready to open for business in the
Premises.
c. Evidence of builder's all risk, general
liability and worker's compensation
insurance for Tenant's contractor in
accordance with Article 14 hereof, or as
Landlord may reasonably require.
d. An itemized statement of estimated
construction costs, including
architectural, engineering and
contractors' fees.
e. Tenant's contractors' performance and/or
labor and material bonds, if so required
by Landlord, or any other bond to be
furnished by Tenant as may be required
by Landlord to insure the faithful
performance of the work in accordance
with the approved plans.
f. Copies of all required building and
other permits.
2. 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 contractors and other
contractors on the job. All work shall be
coordinated with the general project work of
the Shopping Center.
3. Construction shall comply in all respect with
applicable Federal, State, County and City
statutes, ordinances, regulations, laws and
codes. All required building and other
permits in connection with the construction
and completion of the Premises shall be
obtained and paid for by Tenant.
4. Tenant shall apply and pay for all utility
meters and services; and hook-up fees for
work done by Tenant.
5. Tenant shall cause its contractor to provide
warranties for not less than one (1) year
against defects in workmanship, materials and
equipment.
6. Tenant's Work shall be subject to the
inspection of Landlord and its supervisory
personnel.
B. DESCRIPTION OF TENANT'S WORK
The work to be done by Landlord in satisfying its
obligation to construct the Premises shall be limited
to only that described in the foregoing paragraph II as
"Landlord's Work." All other items of work not therein
specified shall be performed by tenant at Tenant's
expense in accordance with Tenant's final plans and
specifications as approved by Landlord and shall be
deemed "Tenant's Work." Tenant's Work shall include,
but shall not be limited to, the purchase and/or
installation and/or performance of the following
(including all architectural and engineering fees,
permits and special assessments, taxes or fees relating
to tenant's Work):
1. All interior partitions and curtain walls
within the Premises.
2. Such extra or special work that may be
required for the installation of Tenant's
fixtures and furnishings.
3. Light coves and hung or furred ceilings. Any
changes to the ceiling system shall be
subject to Landlord's prior written approval.
4. Furring of masonry walls, columns and other
construction to provide finished store space.
5. All interior painting, decorating, wall
covering, paneling and any other furnishing
material and application.
6. All floor coverings and floor finishes
including base and preparation of surface to
receive the same.
7. All store fixtures, furnishings and
accessories.
8. Water heater, water treatment systems and
drinking fountains with plumbing thereto
connected to facilities provided by Landlord,
if required.
9. All water and sewer connections if required
in excess of Landlord's Work including all
related governmental or other fees related to
said connections and meters.
10. All required adjustments and additions to the
fire sprinkler system, if any, and fire
protection work required as a result of
Tenant's improvements including dry chemical
fire protection system if required by code,
portable extinguishers per the Fire
▇▇▇▇▇▇▇▇'▇ requirement or ADT service if
required by insurance underwriters. Tenant
shall notify Landlord in writing three (3)
days prior to commencing any modification to
monitored fire sprinkler system. Tenant
shall be responsible for any interruptions to
fire sprinkler system.
11. Internal communications and security/alarm
systems.
12. Elevators, dumbwaiters, chutes, conveyors and
pneumatic tubes and their shafts, doors and
other components, including electrical hookup
and service, if any.
13. All show window finishes including window
display furring, fixturing, or special
requirements.
14. Any special reinforcing, raised areas or
depressions in concrete floor.
15. In addition to the HVAC equipment to be
provided by Landlord as set forth above,
special heating, cooling or ventilating
equipment, including that required by local
codes or otherwise for show windows, dressing
rooms, toilet rooms and stock rooms, provided
that all duct work shall be concealed or
treated in a manner which receives prior
approval of Landlord. Relocations,
adjustments to, additions or deletions of
roof platforms and roof penetrations from
those provided by Landlord shall be performed
by Landlord at Tenant's expense. No
condensates or gas lines shall be run on
roof.
16. Telephone conduit, cabinets and outlets
within the Premises as required by the
telephone company including wiring from the
terminal board. All telephone service and
equipment shall be installed and thereafter
maintained and used at the expense of Tenant
within Tenants' premises.
17. Gas connection and distribution from point of
connection designated at Landlord's drawings,
if any. (No exposed piping will be allowed.)
18. All electrical work and equipment, including
lighting, not expressly stated herein as
being provided by Landlord, including meters,
separate circuits and time clocks for
interior show window and/or ceiling lighting,
special lighting fixtures, additional
electrical or power outlets, or increased
electrical service due to Tenant's use and
operations
19. Installation, wiring and connection of power
of tenant sign(s), both exterior and
interior. All exterior signs shall be
designed, constructed and located pursuant to
the requirements and specifications set forth
in Landlord's sign criteria Exhibit F
attached to this Lease.
20. Tenant to make application for all utility
services and pay for water, gas and/or
electrical meter including any installation;
or hookup fees for work done by Tenant.
21. Tenant to make application for and obtain
sign and construction permits and pay any
fees related thereto.
22. All other items and requirements not
specifically included under Landlord's Work
and any work directly or indirectly referred
to as Tenant's Work herein.
23. The following work items, if required, shall
be done by Landlord at Landlord's option for
Tenant at Tenant's expense:
a. Design and construction of any
additions, deletions, relocations or
changes to the roof platforms for
heating and air conditioning equipment.
b. Design and construction of any
additions, deletions, relocations or
changes to roof penetrations for ducts,
vents, plumbing and conduits.
c. Design and construction of any changes
to the fire sprinkler system, if any, to
accommodate Tenant's space configuration
or, at Landlord's option, shall be
completed by Tenant in accordance with
Landlord's and governing agencies'
criteria.
C. LANDLORD'S RIGHT TO PERFORM WORK
Landlord shall have the right but not the
obligation to perform, on behalf of and for the account
of Tenant, subject to reimbursement of the cost thereof
the Tenant, any and all of the Tenant's Work which
Landlord determines, in its sole reasonable discretion,
should be performed immediately and on an emergency
basis for the best interest of the Shopping Center,
including without limitation, work which pertains to
structural components, mechanical, sprinkler and
general utility systems, roofing and removal of unduly
accumulated construction material and debris.
D. TEMPORARY FACILITIES DURING CONSTRUCTION
1. Tenant shall provide and pay for all
temporary utility facilities, and the removal
of debris, as necessary and required in
connection with the construction of Tenant's
Work. Storage of Tenant's contractors'
construction material, tools, equipment and
debris shall be confined to the Premises and
in areas which may be designated for such
purposes by Landlord. In no event shall any
material or debris be stored on the sidewalks
or service and exit corridors or in the
parking lot.
2. During construction, Tenant shall maintain
such barricades, fences or other measures as
may be necessary to insure the security of
the Premises and to prevent unauthorized
persons from entering the Premises or any
persons suffering any injury.
E. AS-BUILT DRAWINGS
Tenant shall cause reproducible "As-Built
Drawings" to be delivered to Landlord and/or Landlord's
representative no later than thirty (30) days after the
completion of the Tenant's Work or any alterations,
additions or improvements permitted by Landlord in
accordance with the terms of this Lease. In the event
these drawings are not received by such date, Landlord
may, at its election, cause said drawings to be
obtained and Tenant shall pay to Landlord, as
additional rental, the costs of producing these
drawings.
IV. TENANT IMPROVEMENT ALLOWANCE
Tenant shall be entitled to a one-time allowance (the
"Tenant Improvement Allowance") in the amount of Eight and 00/100
Dollars ($8.00) per square foot of Floor Area in the Premises for
the costs relating to the design, permitting and construction of
the Tenant's Work (with the exception of the costs of any
furniture, trade fixtures, equipment, personal property, signs or
architect's fees) (the "Permitted Tenant's Work Items").
Provided that Tenant is not in default under this Lease (beyond
written notice and the expiration of the applicable cure period),
the Tenant Improvement Allowance shall be disbursed to Tenant
within thirty (30) after completion of all of the following: upon
Tenant's (a) delivery to Landlord of a copy of all invoices
evidencing cost of Permitted Tenant's Work Items paid by Tenant
totaling, or in excess of, the amount of the Tenant Improvement
Allowance, (b) delivery to Landlord of a properly executed
unconditional mechanic's lien releases in compliance with
applicable Arizona statutes, (c) delivery to Landlord a copy of
the Certificate of Occupancy for the Premises, (d) delivery to
Landlord of a conformed copy of Tenant's recorded Notice of
Completion, prepared and recorded in accordance with statutory
requirements, (e) delivery to Landlord of a copy of all building
permits with all sign-offs executed, and (f) substantial
completion of Tenant's Work and opening for business to the
public in the Premises. Landlord shall only be obligated to make
disbursements from the Tenant Improvement Allowance to the extent
costs are incurred by Tenant for Permitted Tenant's Work Items.
All Permitted Tenant's Work Items for which the Tenant
Improvement Allowance has been made available shall be deemed
Landlord's property under the terms of the Lease. Tenant shall
not be entitled to the payment of, use, or offset against rental
in the amount of, any unused portion of the Tenant Improvement
Allowance remaining following the completion of the Tenant's
work. The cost of any work performed by Landlord for the benefit
of Tenant, if any, shall be deducted from the Tenant Improvement
Allowance before the Tenant Improvement Allowance is paid to
Tenant.
EXHIBIT D
SIGN CRITERIA
EXHIBIT E
GUARANTY OF LEASE
[INTENTIONALLY OMITTED]
EXHIBIT F
USE RESTRICTIONS AND EXCLUSIVES
(The term "Tenant" as used below shall mean and refer to the
tenant under the referenced Lease.)
SAFEWAY
12. COMPETITIVE BUSINESS.
12.1. Competitive Business Expectation. Landlord
recognizes that Tenant is entering into this Lease and is
foregoing other opportunities to locate its business in other
locations based on the expectation (the "Expectation") that,
except as set forth in Section 12.2. below, Tenant will be the
sole seller in the Shopping Center of food for off-premises
consumption, prescription pharmacy merchandise and pet food.
Landlord further recognizes that (i) Tenant is making,
considerable investments in building improvements, fixtures,
equipment, merchandise, personnel and advertising, (ii) Tenant is
investing its business reputation in the Leased Premises which
reputation will be adversely affected if Tenant's sales volume is
significantly less than the level planned by Tenant (it being
understood that neither Landlord nor Tenant has represented that
Tenant will achieve any particular sales volume), (iii) except as
permitted in Section 12.2., the addition of other businesses to
the Shopping Center which sell food for off-premises consumption,
prescription pharmacy merchandise and pet food, will result in a
reduction in Tenant's sales volume and thus impair the benefit of
the bargain for which Tenant negotiated in entering, into this
Lease, and (iv) Tenant's agreement to pay the Minimum Rent and
Additional Rent and to assume all other economic obligations of
this Lease are predicated upon Tenant's Expectation.
12.2. Landlord's Competitive Business Covenant. In
recognition and consideration of Tenant's Expectation, Landlord
covenants that, except as provided in this Section 12.2. below:
(i) Tenant shall have the sole and exclusive right in
the Shopping, Center to sell food for off-premises
consumption, and no store other than Tenant's store shall
sell, or be permitted by Landlord to sell, food for off-
premises consumption, except that one (1) store in the
Shopping Center located south of the wash depicted on the
Site Plan, and containing not more than 3,600 square feet of
building area, may be permitted to sell country baked hams
and meats for off-premises consumption;
(ii) except with respect to the stores labeled
"Building 9" and "Building 11" on the Site Plan, so long as
each such store sells prescription pharmacy merchandise on a
continual basis, excluding temporary closures due to a
casualty or, remodeling being diligently pursued and subject
to reasonable rights of tolling of not less than three (3)
months prior to loss of such shared exclusive, Tenant shall
have the sole and exclusive right in the Shopping Center to
sell merchandise which under the laws of the State of
Arizona is required to be dispensed by a licensed pharmacist
("prescription pharmacy merchandise"), and no other store
other than Tenant's store, except the stores labeled
"Building 9" and "Building 11" on the Site Plan, so long as
each such store sells prescription pharmacy merchandise on a
continual basis, excluding temporary closures due to a
casualty or remodeling being diligently pursued and subject
to reasonable rights of tolling of not less than three (3)
months prior to the loss of such shared exclusive, shall
sell, or be permitted by Landlord to sell, prescription
pharmacy merchandise;
(iii) Tenant shall have the sole and exclusive right
within the area north of the wash depicted on the Site Plan
to sell pet food, and, no store other than Tenant's store
within the area north of the wash depicted on the Site Plan
shall sell, or be permitted by Landlord to sell, pet food;
and
(iv) to the extent that, and so long as, Landlord
controls, by virtue of an option to purchase, a contract of
purchase and sale, an option to lease, a lease, fee title,
leasehold title, or otherwise, the parcel of land located
between the northern property boundary of the Leased
Premises and Dove Valley Road, as shown on Exhibit A (the
"North Parcel"), Landlord covenants and agrees that it shall
not permit the use or operation of the North Parcel for the
sale of food for off-premises consumption, and that no store
located on the North Parcel shall sell, or be permitted by
Landlord to sell, food for off-premises consumption.
Notwithstanding the preceding sentence, stores other than
Tenant's store may devote up to, but not more than, the less of
(a) one thousand five hundred (1,500) square feet of sales area
(including aisle space adjacent thereto), or (b) sales area
(including aisle space adjacent thereto) of up to ten percent
(10%) of the total square footage of the store, to the sale of
food for off-premises consumption, prescription pharmacy
merchandise and pet food, provided, however, that the store
operated from Building 11 may devote up to two thousand five
hundred (2,500) square feet of sales area (including aisle space
adjacent thereto) to the sale of food for off-premises
consumption, except that candy, soda and seasonal promotional
food items shall not be subject to the 2,500 square foot
limitation set forth herein. Furthermore, the provisions of this
Section 12.2. shall not be deemed to prohibit a restaurant (as
permitted and defined in Section 11.2.) from selling food
prepared on premises for off-premises consumption, subject,
however, to the provisions of Section 12.1 and Landlord may
permit not more than three (3) shop spaces within Building 6 and
not more than three (3) shop spaces within the eastern portion of
Building 3, containing not more than one thousand two hundred
square feet (1,200) of building area each, to incidental food
uses such as, by way of example only, a donut shop, bagel shop,
ice cream shop, yogurt shop, smoothie shop, candy shop, cookie
shop or coffee shop. In addition to the provisions of Section
12.3., Tenant shall have the right to enforce its rights under
the provisions of this Section 12.2. against (x) the owner,
tenant, or occupant of any other store located in the Shopping
Center if the store violates Tenant's exclusive right under this
Section 12.2. against the sale of food for off-premises
consumption (y) the owner, tenant or occupant of any other store
located in the Shopping Center if the store violates Tenant's
exclusive right under this Section 12.2. against the sale of
prescription pharmacy merchandise, and (c) the owner, tenant or
occupant of any other store located in the Shopping Center if the
store violates Tenant's exclusive right under this Section 12.2.
against the sale of pet food."
For purposes of the Safeway Lease, the "single-hatched area"
located on Exhibit C includes the premises designated as Safeway,
Building 6 and the eastern portion of Building 3 (which portion
contains 7,492 square feet of Floor Area) and the "dotted area"
located on Exhibit C includes Pad 3, Pad 2, Building 1, Building
2 and the western portion of Building 3 (which portion contains
9,030 square feet of Floor Area).
VALLEY VITAMINS
Section 9.1(b): Landlord shall not execute any lease for
premises within the Project to any other tenant whose primary use
is the retail sale of health related products and vitamins.
COLD STONE CREAMERY
Section 9.1(b): Landlord shall not execute any lease for
premises within the Project to any other tenant whose primary use
is the retail sale of ice cream and frozen yogurt.
LEASE
BETWEEN
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Realty Group, L.P.,
a Delaware limited partnership
Landlord
and
Arizona Furniture Corporation, a Nevada corporation,
dba "▇▇▇▇▇▇▇ Furniture"
Tenant
The Summit at Scottsdale
Project
_______________________
Date
LEASE
TABLE OF CONTENTS PAGE
ARTICLE 1. - BASIC LEASE PROVISIONS 1
ARTICLE 2. - PREMISES 2
ARTICLE 3. - TERM 2
ARTICLE 4. - POSSESSION AND CONSTRUCTION 2
ARTICLE 5. - RENTAL 3
ARTICLE 6. - TENANT FINANCIAL DATA 4
ARTICLE 7. - TAXES 4
ARTICLE 8. - UTILITIES 5
ARTICLE 9. - TENANT'S CONDUCT OF BUSINESS 5
ARTICLE 10. - MAINTENANCE, REPAIRS AND ALTERATIONS 6
ARTICLE 11. - COMMON AREA 7
ARTICLE 12. - ASSIGNMENT AND SUBLETTING 9
ARTICLE 13. - PROMOTIONAL CHARGE; ADVERTISING 10
ARTICLE 14. - INSURANCE 10
ARTICLE 15. - DAMAGE 12
ARTICLE 16. - EMINENT DOMAIN 13
ARTICLE 17. - DEFAULTS BY TENANT 13
ARTICLE 18. - SUBORDINATION, ATTORNMENT AND TENANT'S CERTIFICATE14
ARTICLE 19. - MATTERS OF RECORD 14
ARTICLE 20. - MISCELLANEOUS 14
EXHIBIT A - GENERAL SITE PLAN
EXHIBIT B - PREMISES
EXHIBIT C - CONSTRUCTION PROVISIONS
EXHIBIT D - SIGN CRITERIA
EXHIBIT E - INTENTIONALLY OMITTED
EXHIBIT F - USE RESTRICTIONS AND EXCLUSIVES