EXHIBIT 10.13.1
COMPOSITE LAKEFOREST - SILVER DINER LEASE
November 2, 1999
LAKEFOREST
A Regional Retail Development
CITY OF GAITHERSBURG, MARYLAND
THIS LEASE made as of this 2nd day of November, 1999,m by and between
LAKEFOREST ASSOCIATES LLC, a Delaware limited liability company, the address of
which is 000 Xxxx Xxxx Xxxx Xxxx, P.O. Box 200, Bloomfield Hills, Michigan
48303-0200 (Landlord), and SILVER DINER DEVELOPMENT, INC., the address of which
is11806 Xxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000 (Tenant). All of the provisions of
the Lease, including the Data Sheet, the standard provisions commencing with
Article I and continuing through Article XXVII of the Lease (hereinafter at
times referred to as the "text of the Lease" or the "Standard Form"), the
Addendum, all exhibits, and riders, if any, are incorporated in full in this
preamble as if fully set forth at this point.
ARTICLE X. XXXXX AND TERM
SECTION 1.01. LEASED PREMISES. (a) Landlord, in consideration of the rent
to be paid and the covenants to be performed by Tenant, does hereby demise and
lease unto Tenant, and Tenant hereby rents and hires from Landlord, those
certain premises in the regional retail development shown on Exhibit A, subject
to covenants, restrictions and easements of record, the terms and provisions of
certain reciprocal easement and/or operating agreements now or hereinafter
entered into by Landlord with the owners or lessees of the Department Store
Sites, and the terms and provisions of the underlying lease, if any. Landlord
represents that the foregoing covenants, restrictions and easements of record
and the terms of any such reciprocal easement and/or operating agreements will
not materially adversely interfere (i) with Tenant's use of the leased premises
generally in accordance with the provisions of Section 7.01 hereof nor (ii) with
access to the leased premises. It is agreed that the term "regional retail
development" as used herein shall mean and refer to the Department Store Sites
and the Shopping Center, including the buildings located or to be located
thereon, all as shown on the site plan which is set forth in Exhibit A attached
hereto and made a part hereof, and that the term "Shopping Center" shall, except
as otherwise specifically provided herein, mean and refer to the hatched and the
shaded portions of such site plan which portions from time to time open directly
on the enclosed Mall and which may vary at each level of the regional retail
development, together with the enclosed Mall (whether or not shaded or hatched).
The approximate location of the premises leased to Tenant hereunder is shown in
Exhibit A. The legal description of the regional retail development or of the
Shopping Center is set forth in Exhibit A or referenced in the Addendum attached
hereto and made a part hereof. The leased premises (herein referred to as the
"leased premises" or "premises") are described as set forth in the Data Sheet
attached hereto. As used in this Lease, the term "State" shall mean the state
in which the Shopping Center is located.
(b) The exterior walls and the roof of the leased premises and the area
beneath said premises are not demised hereunder, and the use thereof, together
with the right to locate, both vertically and horizontally, install, maintain,
use, repair and replace pipes, utility lines, ducts, conduits, flues,
refrigerant lines, drains, sprinkler mains and valves, access panels, wires and
structural elements leading through the leased premises serving other parts of
the regional retail development, is hereby reserved unto Landlord. Landlord
reserves an easement in, over and through the area occupied by the storefront of
the leased premises, and an easement above Tenant's finished ceiling to the
roof, or to the bottom of the floor deck above the leased premises, for general
access purposes and in connection with the exercise of Landlord's other rights
under this Lease.
(c) The attached site plan of the regional retail development, Exhibit A,
includes premises identified thereon as Department Store Sites, including the
buildings located or to be
located thereon, which sites are collectively hereinafter referred to as the
"Department Store Sites" and/or "Department Stores," unless otherwise
specifically set forth. It is agreed that, wherever the term "Shopping Center"
is used herein, it shall be deemed to exclude the Department Store Sites (even
if such Sites shall be within the hatched and/or shaded area shown on the site
plan), except as otherwise specifically stated herein. In addition, said site
plan includes other portions of the Shopping Center which Landlord may from time
to time sell or lease for the purpose of construction and/or use by one or more
department stores (as defined in Section 27.12 hereof), which portion(s) may
thereupon, at Landlord's option, be referred to and treated as "Department Store
Site(s)" and/or "Department Stores" upon occupancy thereof by a department
store, and which, at Landlord's option, may be excluded from the Shopping
Center. In the event Landlord elects to enlarge the regional retail development,
any additional area may be included by Landlord in the definition of the
Shopping Center for purposes of this Lease. Landlord shall also have the general
right from time to time to include within and/or to exclude from the defined
Shopp1trg Center any existing or future areas, and the floor area of the
Shopping Center shall be accordingly adjusted.
(1) Section 1.01: Leased Premises: Store Number 149, situated on the
lower level of Building "E," having an irregular shape and consisting of
approximately four thousand four hundred forty (4,440) square feet (inclusive of
four hundred three (403) square feet of `pop out' area).
SECTION 1.02. COMMENCEMENT AND ENDING DAY OF TERM. The term of this Lease
shall commence upon (a) the commencement date set forth in the Data Sheet, or
(b) the date on which Tenant opens its store in the leased premises for business
to the public, whichever of said dates is the first to occur, and shall end on
the final day of the last lease year of the term or other specified date as set
forth in the Data Sheet, unless sooner terminated as hereinafter provided. For
the purpose of this Lease, the first "lease year" shall be a period commencing
on the day the term of this Lease commences and ending on January 31 next
following; after the first lease year, the term "lease year" shall mean a fiscal
year of twelve (12) consecutive calendar months commencing on February 1 of each
calendar year, except that the final lease year of the term shall be a period of
less than twelve (12) consecutive calendar months in the event that an
expiration date other than January 31 is set forth in the Data Sheet. Landlord
shall exercise reasonable efforts to respond to drawings and specifications
submitted by Tenant pursuant to this Lease within ten (10) business days
following receipt of such drawings and specifications from Tenant. In the event
of Landlord's failure to respond within such ten (10) day period, the
commencement date as set forth in this Section 1.02 shall be extended by one (1)
day for each day of additional delay.
In the event Landlord elects to cause a physical expansion of the Shopping
Center or the regional retail development which directly affects all or any
portion of the leased premises, then Landlord upon one hundred eighty (180)
days' prior notice in writing to Tenant may terminate this Lease. During the
one hundred eighty (180) day period Landlord shall offer to Tenant such
alternative and comparable location of approximately the same square footage,
and with comparable access and visibility, as may exist in the Shopping Center
from time to time. In the event there is no such alternative location available
in the existing Shopping Center, then Landlord shall offer Tenant an alternative
location of approximately the same square footage, and with comparable access
and visibility, as may be available in any expansion area of the Shopping
Center, provided such expansion area contains at least several stores of less
than twenty thousand (20,000) square feet of floor area. In the event the
parties agree on a specific location, then this Lease shall be amended by
substituting the new location for the present location and minimum rental, the
percentage breakpoint, and Merchants' Association or promotional charges shall
be proportionately adjusted. Tenant shall complete the Tenant's Work, as
described in Exhibit `B' attached hereto, in the new premises, in accordance
with the plans and drawings originally approved by Landlord with respect to
Tenant's Work in the original leased premises and Tenant shall, within one
hundred fifty (150) days after delivery of the new premises to Tenant, open for
business in the leased premises. Landlord shall reimburse to Tenant all
reasonable costs of Tenant's Work in such new premises in accordance with the
plans for the original leased premises as approved by Landlord, all of which
costs shall be reimbursable as a Tenant reimbursement in the same manner as
Tenant's initial Tenant reimbursement under Section 5.01 of this Lease. In the
event of such relocation during the last five
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(5) years of the then existing lease term Landlord may elect (during the 30 day
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period following the date Tenant is obligated to open in the new premises) to
extend the lease term by a period of Landlord's choosing not to exceed five (5)
years. In the event of such lease term extension, minimum rent and percentage
rent shall be increased to the figures which would be applicable during the
renewal term(s) had Tenant exercised its option(s) to extend the term of this
Lease under section 1.02 of the Data Sheet Special Provisions or if (and to the
extent) the extension period goes beyond such renewal term(s) then minimum rent
shall be increased by Twenty Thousand Dollars ($20,000) per annum with a
proportionate increase in Minimum Gross Sales. In the event Landlord and Tenant
are unable to agree on an alternative location, or no such alternative location
is available, this Lease shall terminate at the end of the said one hundred
eighty (180) day period and Landlord shall be obligated to pay to Tenant an
amount equal to the then unamortized cost of Tenant's leasehold improvements and
restaurant equipment in the leased premises (provided in determining such
unamortized cost there shall be subtracted from the total cost of Tenant's
leasehold improvements and restaurant equipment the amount of any Tenant
reimbursement paid by Landlord to Tenant pursuant to Section 5.01(b) of the Data
Sheet Special Provisions) which amortization shall be determined on the basis
set forth below, plus the sum of Two Hundred Thousand Dollars ($200,000.00), or
alternatively, Five Hundred Thousand and 00/100ths Dollars ($500,000.00) if
Landlord's one hundred eighty (180) day notice of termination is delivered
during the thirty-six (36) months period following full execution and delivery
of this Lease. In determining the unamortized cost of Tenant's leasehold
improvements, the amortization shall be on the straight line basis over the
shorter of the following periods: (i) twenty (20) years or (ii) the period in
Tenant's books over which Tenant had been amortizing such costs. In determining
the unamortized cost of Tenant's restaurant equipment, the amortization shall be
on the straight line basis over the shorter of the following periods: (i) ten
(10) years or (ii) the period in Tenant's books over which Tenant had been
amortizing the cost of the equipment in question. Tenant shall furnish to
Landlord such backup information as Landlord may reasonably require. Tenant
shall deliver possession of the leased premises to Landlord on or before the
termination and/or relocation date in the condition required in this Lease and
subject to all charges which are due and owing or which shall be accrued up to
such date (which charges shall be paid to Landlord within thirty [30] days of
such date), Tenant shall be released from any and all further obligations
pursuant to this Lease with respect to the vacated premises, however, in the
event of relocation, Tenant shall remain liable for such charges accruing under
this Lease after the date of such relocation. Landlord shall make the above-
referenced payment to Tenant upon Tenant's vacating and delivery of possession
of the Leased Premises to Landlord. In the event that Landlord has made a final
determination that Landlord shall construct a building, parking deck or other
improvement in the parking areas cross hatched on Exhibit D attached hereto (the
"improvement") from the ring road or parking areas cross-hatched on Exhibit D
which (a) materially and adversely interferes with access to or visibility of
Tenant's exterior entrance and facade during the lease term or (b) results in
the elimination of more than ten percent (10%) of the surface parking spaces
located within the parking area cross hatched on Exhibit D attached hereto, for
reasons other than compliance with laws, ordinances or regulations, not caused
by Landlord's construction of a building as improvements in such cross-hatched
area, or temporary repair, maintenance, replacement, then Landlord shall forward
the one hundred eighty (180) day notice referenced above to Tenant and the
provisions of this paragraph shall then become applicable as if the leased
premises shall have been affected by an expansion of the Shopping Center.
(2) Section 1.02: Commencement Date of Term: The later of: (i) the date
three hundred (300) days following the date of Landlord's execution of this
Lease or (ii) the date one hundred fifty (150) days following the date the
leased premises are vacant and made available to Tenant.
Length of Term: Ten (10) lease years
SPECIAL PROVISIONS:
Section 1.02: In the event Landlord and Tenant have not, on or before the
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date ten (10) days after full execution of this Lease, agreed in writing upon
Leasehold Mortgage provisions which enable Tenant to obtain the financing it
needs in order to construct its restaurant, then Landlord and Tenant
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shall each have the right to terminate this Lease by providing written notice to
the other party within ten (10) days after the date ten (10) days after full
execution of this Lease. In the event that the "First Conditions" (as
hereinafter defined) are not satisfied on or before the date ten (10) days after
full execution of this Lease, then Landlord and Tenant shall each have the right
to terminate this Lease by providing written notice to the other party within
ten (10) following such date. The First Conditions shall mean: (i) completion of
an exhibit approved by Landlord and Tenant describing the relocation and/or
removal of trees from the vicinity of the exterior building storefront for the
leased premises, (ii) approval by Landlord in writing of an exhibit submitted by
Tenant setting forth Tenant's exterior building design and exterior building
signage, (iii) approval by Landlord in writing of Tenant's Center Court icon
kiosk, (iv) approval by Landlord in writing of an exhibit submitted by Tenant
setting forth Tenant's interior mall storefront signage, (v) approval in writing
of an exhibit setting forth all of the mall signage to be provided by Landlord
pursuant to Section 9.01 of these Data Sheet Special Provision, (vi) consent by
the occupants of the Department Store sites to any of the above items to the
extent their content is required. In the event the 'Second Conditions' (as
hereinafter defined) are not satisfied on or before the date which is five (5)
months following the date of this Lease, then Landlord and Tenant shall each
have the right to terminate this Lease by providing written notice to the other
party within five (5) days following the end of such five (5) month period.
Tenant's receipt of all building permits necessary for Tenant to commence
construction of Tenant's Work and Tenant's receipt of Landlord's approval of
Tenant's Store Design Drawings (with the exception of components of Store Design
Drawings necessary to satisfy the First Conditions) shall constitute the 'Second
Conditions." Tenant agrees to use all reasonable diligent efforts to satisfy the
First Conditions and the Second Conditions, and Tenant shall keep Landlord
apprised of Tenant's general efforts in connection with its attempts to obtain
building permits and governmental approvals by promptly providing Landlord with
copies of all documents and materials submitted by Tenant to local governmental
authorities in connection therewith and by answering any questions from
Landlord. Notwithstanding the foregoing, Tenant shall not have the right to
terminate this Lease if Tenant shall have failed to substantially comply with
Tenant's obligations under this paragraph. Landlord agrees to reasonably
cooperate with Tenant to the extent cooperation is necessary for Tenant to
obtain governmental approvals or Department Store operator consents for
construction or signage which has been approved by Landlord, provided Landlord
shall not be liable to Tenant for indirect or consequential damages resulting
from Landlord's failure to reasonably cooperate. Examples of reasonable
cooperation by Landlord shall include (without limitation) making joint
application to governmental authorities for variances to ordinances (if joint
application is necessary for the matter to be considered), making written
request for consent to Department Store operators, and responding timely to
questions from governmental authorities or Department Store operators which are
directed to Landlord in connection with the approvals and consents being sought.
Tenant's and Landlord's rights to terminate this Lease pursuant to this
paragraph shall be null and void following the expiration of such ten (10) day
periods. Tenant agrees to apply for its building permits within ten (10) days
following its receipt of final approval of its construction plans by Landlord.
The leased premises are presently leased to tenants whose lease terms have
not expired. The commencement of the term hereof is subject to termination of
such lease agreements with such tenants and such tenants in fact vacates the
leased premises.
Tenant's initial payment of minimum rent up to Twenty-Five Thousand Dollars
($25,000) shall be abated if Tenant provides evidence to Landlord that Tenant
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expended at least One Hundred Twenty-Five Thousand Dollars ($125,000) on pre-
opening costs (exclusive of construction costs) for Tenant's operation at the
leased premises. Tenant's audited profit and loss statement including such
expenditures shall be sufficient evidence of such expenditure. Landlord and
Tenant agree that no portion of the minimum rent paid by Tenant after the
expiration of any period during which such rent was abated shall be allocated by
Landlord or Tenant to such abatement period, nor is such rent intended by the
parties to be allocable to any abatement period.
Twenty-Five Thousand Dollars ($25,000) of the minimum rent payable during
months thirteen (13) through fifteen (15) shall be abated if Tenant provides
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evidence to Landlord that Tenant expended at least Forty Thousand Dollars
($40,000) on advertising Tenant's business in the leased premises during the
first twelve (12) months of the lease term (including, without limitation,
direct distribution
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advertising.) Tenant's audited profit and loss statement including such
expenditures shall be sufficient evidence of such expenditure. Landlord and
Tenant agree that no portion of the minimum rent paid by Tenant after the
expiration of any period during which such rent was abated shall be allocated by
Landlord or Tenant to such abatement period, nor is such rent intended by the
parties to be allocable to any abatement period.
At the end of the Section, insert "Provided that Tenant is not in default
hereunder beyond applicable notice and cure periods, Tenant shall have the right
to extend the term of this Lease for two (2) consecutive additional periods of
five (5) years each. All of the covenants, agreements, terms and conditions of
this Lease (except for the increase in minimum rent, as hereinafter provided)
shall prevail and be fully performed by Landlord and Tenant during each extended
term for which the option is exercised by Tenant. Written notice to renew this
Lease must be delivered by Tenant to Landlord at least fifteen (15) months prior
to the termination date hereof (provided if Tenant fails to timely exercise its
option by such date, Tenant shall not lose the right to exercise such option
unless Tenant fails to exercise such option within ten (10) days after Landlord
has forwarded written notice to Tenant indicating to Tenant that Landlord has
not received Tenant's notice of exercise and the period for exercise of Tenant's
renewal option has expired).
In the event that Tenant exercises the option hereinabove contained to
extend the term of this Lease for the renewal term hereof, minimum rent and
percentage rent shall be determined as follows:
(i) During the first renewal term, minimum rent should be, the sum of
One Hundred Seventy Thousand and 00/100ths Dollars ($170,000.00) annually, which
sum shall be payable by Tenant in equal consecutive monthly installments of
Fourteen Thousand One Hundred Sixty-Six and 67/100ths Dollars ($14,166.67);
(ii) During the second renewal term, minimum rent shall be, the sum of
One Hundred Ninety Thousand and 00/100ths Dollars ($190,000.00) annually, which
sum shall be payable by Tenant in equal consecutive monthly installments of
Fifteen Thousand Eight Hundred Thirty-Three and 33/100ths Dollars ($15,833.33)
each.
(i) During the first renewal term, percentage rent shall be, a sum
equal to eight percent (8%) (the 'percentage rent factor') of all 'Gross Sales'
resulting from business conducted in, on or from the leased premises during each
lease year in excess of Three Million Ninety Thousand Nine Hundred Nine and
09/100ths Dollars ($3,090,909.09) ('Minimum Gross Sales');
(ii) During the second renewal term, percentage rent shall be, a sum
equal to eight percent (8%) (the 'percentage rent factor') of all 'Gross Sales'
resulting from business conducted in, on or from the leased premises during each
lease year in excess of Three Million Four Hundred Fifty-Four Thousand Five
Hundred Forty-Five and 46/100ths Dollars ($3,454,545.46) ('Minimum Gross
Sales').
SECTION 1.03. OPENING. Tenant covenants and agrees to complete its
construction within the leased premises in accordance with the provisions of
this Lease and to open its store for business to the public not later than the
date established for commencement of the term of this Lease pursuant to Section
1.02 hereof.
ARTICLE II. RENT
SECTION 2.01. MINIMUM RENT. (a) The minimum rent during the term of this
Lease shall be the amount set forth in the Data Sheet attached hereto as
adjusted pursuant to Section 2.04 or other provisions of this Lease (such as
Articles XVII and XVIII and Section 27.12[a]), which sum shall be payable by
Tenant in equal consecutive monthly installments in the sum set forth in the
Data Sheet attached hereto, on or before the first day of each month, in
advance, payable as set forth, and at the
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address set forth, in the Data Sheet attached hereto under "Name and Address for
Rent Payments," or such other place as the Landlord may designate in writing,
such payments to be without any prior demand therefor and without any deductions
or setoff whatsoever, except as otherwise expressly provided herein.
(b) Should the term of this Lease commence on a day other than the first
day of a calendar month, then the rent for such month shall be prorated on a
daily basis based upon a thirty (30) day calendar month. Should any lease year
contain less than twelve (12) calendar months, said annual rent shall be
prorated.
(3) Section 2.01 and Section 2.02: Name and Address for Rent Payments:
Payments from Tenant shall be made payable to Lakeforest Associates LLC, and
shall be sent to:
Lakeforest Associates LLC
Department 56001
X.X. Xxx 00000
Xxxxxxx, Xxxxxxxx 00000-0000
(4) Section 2.01: Minimum Rent:
(i) From the commencement of the term of this Lease and continuing through
the fifth (5th) lease year of the term hereof, the sum of One Hundred Twenty-
Five Thousand and 00/100ths Dollars ($125,000.00) annually, which sum shall be
payable by Tenant in equal consecutive monthly installments of Ten Thousand Four
Hundred Sixteen and 67/100ths Dollars ($10,416.67);
(ii) Beginning with the sixth (6th) lease year of the term hereof and
continuing throughout the balance of the lease term, the sum of One Hundred
Forty-Five Thousand and 00/100ths Dollars ($145,000.00) annually, which sum
shall be payable by Tenant in equal consecutive monthly installments of Twelve
Thousand Eighty-Three and 33/100ths Dollars ($12,083.33) each.
SECTION 2.02. PERCENTAGE RENT. (a) In addition to the payment of the
minimum rent, as hereinbefore provided, Tenant shall pay to Landlord for each
lease year of the term hereof, as percentage rent, an amount equal to the
percentage rent factor (see Data Sheet) multiplied by all Gross Sales resulting
from business conducted in, on or from the leased premises during such lease
year in excess of the amount of Gross Sales set forth in the Data Sheet
(hereinafter referred to as "Minimum Gross Sales"). Subsequent to the date upon
which Tenant is initially obligated to open for business in the leased premises,
in addition to any and all other remedies afforded to Landlord under this Lease
by reason of default, "Minimum Gross Sales" shall be reduced by 1/360th for each
day or portion thereof that Tenant does not operate its business pursuant to
Section 7.02 hereof. If percentage rent hereunder shall be calculated on the
basis of a split percentage arrangement, as defined in subsection (b) below,
then the reduction required by the preceding sentence shall be applied to the
minimum rent which would otherwise be deductible in the calculation of
percentage rent with respect to all Gross Sales of Tenant (provided that such
reduction shall be made solely for the purpose of the percentage rent
calculation). The percentage rent shall be payable as set forth, and at the
address set forth, in the Data Sheet attached hereto under "Name and Address for
Rent Payments," or such other place as the Landlord may designate in writing,
such payments to be without any prior demand therefor and without any deductions
or setoff whatsoever, except as otherwise expressly provided herein.
Notwithstanding the foregoing, if the commencement date of the lease term is
other than February 1, then the percentage rental covering the first lease year
shall be determined as follows: Tenant's Gross Sales in excess of Minimum Gross
Sales shall be determined for the first twelve (12) calendar months following
the commencement date of the lease term, and percentage rental shall be paid on
such excess prorated as to the number of days which are included in said first
lease year. Such percentage rental shall be payable on or before the last day
of the thirteenth (13th) month next following the commencement date of the lease
term.
(5) Section 2.02(a): Percentage Rent:
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(i) From the commencement of the term of this Lease and continuing through
the fifth (5th) lease year of the term hereof, a sum equal to eight percent (8%)
(the 'percentage rent factor') of all 'Gross Sales' resulting from business
conducted in, on or from the leased premises during each lease year in excess of
Two Million Five Hundred Thousand and 00/100ths Dollars ($2,500,000.00)
('Minimum Gross Sales');
(ii) Beginning with the sixth (6th) lease year of the term hereof and
continuing throughout the balance of the lease term, a sum equal to eight
percent (8%) (the 'percentage rent factor') of all 'Gross Sales' resulting from
business conducted in, on or from the leased premises during each lease year in
excess of Two Million Six Hundred Thirty-Six Thousand Three Hundred Sixty-Three
and 64/100ths Dollars ($2,636,363.64) ('Minimum Gross Sales').
(b) Such percentage rent shall be paid in quarter-annual installments
computed on all Gross Sales during each quarter-annual period of the term hereof
in excess of one quarter (1/4) of annual Minimum Gross Sales provided that
Tenant shall not be obligated to pay a quarter-annual installment of percentage
rent for the fourth (4th) quarter of a lease year unless the sum of all Gross
Sales for such lease year exceeds the applicable Minimum Gross Sales figure as
set forth in Section 2.02(a) hereof, and provided further that Tenant's actual
payment of quarter-annual installments of percentage rental for the first three
(3) quarters of a lease year shall be credited against Tenant's obligation to
pay any remaining balance of annual percentage rental following the fourth (4th)
quarter of each lease year. Such quarter-annual periods during each lease year
shall be measured as follows: February through April, May through July, August
through October, and November through January. Such quarter-annual installments
shall be payable within thirty (30) days after the expiration of each three (3)
month period of each lease year. In the event that the total of the quarter-
annual installments of percentage rent for any lease year does not equal the
percentage rent computed on the total amount of Gross Sales for such lease year,
in accordance with the formula set forth in the Data Sheet, then Tenant, at the
time it submits the annual statement of Gross Sales required under Section 3.02,
shall pay Landlord any deficiency, or Landlord shall credit any overpayment to
the next installment of percentage rent due from Tenant, as the case may be. In
no event, however, shall the aggregate of minimum rent and percentage rent to be
paid by Tenant and retained by Landlord for any lease year be less than the
minimum rent specified herein. If the commencement date of the lease term is
other than February 1, then the percentage rent covering the first lease year
hereunder shall be paid in the following manner: for the quarter-annual period
during which the lease term commences, the percentage rent shall be equal to the
product of the percentage rent factor and the amount of Gross Sales in excess of
a prorated fraction of annual Minimum Gross Sales (with such prorated fraction
to be calculated by taking the number of days remaining in such quarter annual
period as of the date the leased premises are initially opened for business to
the general public, dividing by 360, and multiplying the resulting quotient by
the stated annual Minimum Gross Sales figure); for the balance of the first
lease year, the percentage rent shall be equal to the product of the percentage
rent factor and the amount of Gross Sales in excess of one-quarter (1/4) of
annual Minimum Gross Sales during each subsequent quarter-annual period. If the
expiration date of the lease term is other than January 31, then the percentage
rent covering the final lease year hereunder shall be calculated in a like
manner, with proration to occur in the quarter-annual period during which the
lease term expires.
(3) Section 2.01 and Section 2.02: Name and Address for Rent Payments:
Payments from Tenant shall be made payable to Lakeforest Associates, and shall
be sent to:
Lakeforest Associates
Department 56001
X.X. Xxx 00000
Xxxxxxx, Xxxxxxxx 00000-0000
SECTION 2.03. GROSS SALES. The term "Gross Sales" as used herein shall be
construed to include the entire amount of the actual sales price, whether for
cash or otherwise, of all sales of merchandise or services and all other
receipts whatsoever of all business conducted in or from the leased premises by
Tenant, or by all concessionaires (as defined in Section 3.02 hereof) or
otherwise, including, without limitation, mail, catalogue or telephone orders
received or filled at the leased
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premises, all deposits not refunded to purchasers, and orders taken, although
said orders may be filled elsewhere. A "sale" shall be deemed to have been
consummated for the purposes of this Lease, and the entire amount of the sales
price shall be included in Gross Sales, at such time that (i) the transaction is
initially reflected in the books or records of Tenant or a concessionaire (if a
concessionaire makes the sale), or (ii) Tenant or such concessionaire receives
all or any portion of the sales price, or (iii) the applicable goods or services
are delivered to the customer, whichever first occurs, irrespective of whether
payment is made in installments, the sale is for cash or for credit, or
otherwise, or all or any portion of the sales price has actually been paid at
the time of inclusion in Gross Sales or at any other time. No deduction shall be
allowed for direct or indirect discounts, rebates, or other reductions on sales
to employees or others, unless generally offered to the public on a uniform
basis. In addition, no deduction shall be allowed for uncollected or
uncollectible credit accounts, or for trade-ins or other credits on sales to
employees or others. The term "Gross Sales" shall not include, however, any sums
collected and paid out by Tenant for any sales or excise tax imposed by and
accounted for by Tenant to any duly constituted governmental authority, nor
shall it include the exchange of merchandise between the stores of Tenant, if
any, where such exchange of goods or merchandise is made solely for the
convenient operation of the business of Tenant and not for the purpose of
consummating a sale which has theretofore been made in or from the leased
premises and/or for the purpose of depriving Landlord of the benefit of a sale
which otherwise would be made in or from the leased premises, nor shall the term
include the amount of returns to shippers or manufacturers, nor proceeds from
the sale of trade fixtures. There shall also be excluded from Gross Sales (i)
receipts from public telephones, cigarette vending machines and jukeboxes
approved by Landlord, to the extent such receipts are paid to an unaffiliated
third party owner of such machines; (ii) gift certificates or like vouchers
until such time as the same shall have been redeemed; (iii) tips collected by
employees of Tenant; and (iv) the amount of the discount allowed on employee
meals, provided the same shall not exceed three percent (3%) of Tenant's Gross
Sales during any lease year. There shall be deductible from Gross Sales the
amount of any cash or credit refund made upon any sale in or from the leased
premises, previously included in "Gross Sales" hereunder, not to exceed the sum
so previously included, where the merchandise sold is thereafter returned by the
purchaser and accepted by Tenant. The term "merchandise" as used in this Lease
shall include food and beverages if Tenant is permitted to sell such items in
Section 7.01 hereof.
SECTION 2.04. RENT ADJUSTMENT. (a) Notwithstanding any provisions to the
contrary contained in this Lease, Tenant shall pay to Landlord as minimum rent
for the second lease year of the term of this Lease, and for each subsequent
lease year of said term, but subject to further increase pursuant to this
Section 2.04 and other provisions of this Lease, the greater of the amounts
calculated according to the formulas set forth in Paragraphs (i) and (ii) below.
(i) Minimum rent for the lease year in question shall be increased by
the net percentage of change between the Base Index and the Index published for
the first calendar month of such lease year (as such terms are defined below).
(ii) Minimum rent for the lease year in question shall be increased by
the amount of percentage rent payable for the immediately preceding lease year
pursuant to Section 2.02 hereof.
(b) For purposes of the foregoing calculations, the term "Base Index" shall
be the Index (as defined in Section 27.20), for the month during which the term
of this Lease commences (or, if the Index is not published for such month, then
the Index published for the month closest, but prior, to the lease commencement
date). Following any increase in minimum rent pursuant to Paragraph (a) above,
the "Base Index" for future calculations shall be redefined as the Index
published for the first calendar month of the lease year for which the minimum
rent has last been increased pursuant to said Paragraph (a). The Index for the
first calendar month of any given lease year, if the Index is not published for
such month, shall be the Index published for the month closest, but prior, to
the first calendar month of such lease year. For the purposes of this Section,
the percentage rent payable by Tenant for any lease year consisting of less than
twelve (12) full calendar months shall be calculated by dividing the percentage
rent payable by Tenant for such lease year pursuant to Section 2.02 hereof by
the actual number of days in such lease year, and by multiplying the resulting
quotient by 360. Landlord shall notify Tenant of the increased minimum rent for
each lease year following the determination of same
8
by Landlord, and Tenant shall pay such increased minimum rent for the applicable
lease year in the manner set forth in Section 2.01 hereof. In the event that the
increase in minimum rent results from the calculation set forth above in
subsection (a)(ii), then the Minimum Gross Sales otherwise applicable for such
period shall be increased by a percentage equal to the percentage increase in
minimum rent made by reason of the percentage rent payable in the preceding
lease year. If percentage rent under this Lease shall be calculated on the basis
of a split percentage arrangement, as defined in Section 2.02(b) hereof, then,
in the event of an increase in minimum rent resulting from the calculation set
forth above in subsection (a)(i), only the minimum rent (not including such
increase) which would otherwise be deducted shall be deductible from the
percentage rent calculated with respect to all Gross Sales of Tenant. The
minimum rent for any period as stated in Section 2.01 hereof, if different than
that stated for the immediately preceding period, shall be adjusted by
multiplying such different minimum rent ("Changed Rent") by the cumulative
percentage increase in minimum rent pursuant to this Section from the
commencement of the term of this Lease through and including the first lease
year during which such Changed Rent would have become effective, with the
resulting product to be added to such Changed Rent to yield the effective
minimum rent for such period, subject to further adjustment as provided in this
Section or elsewhere in this Lease.
(c) Upon the opening of any department store within the regional retail
development during the term of this Lease (if such department store was not open
for business to the general public as of the commencement date of this Lease),
the minimum rent and Minimum Gross Sales then in effect shall be immediately and
automatically increased by fifteen percent (15%), subject to further increases
pursuant to this paragraph, this Section and other provisions of this Lease.
Section 2.04: The provisions of Section 2.04 shall not apply to Tenant.
------------
SECTION 2.05. TENANT'S TAX OBLIGATION. Tenant shall pay to Landlord its
proportionate share of all taxes and assessments which may be levied or assessed
by any lawful authority during the term of this Lease, or with respect to each
fiscal tax year falling in whole or in part during the term of this Lease,
against the land, buildings and improvements comprising the Shopping Center, and
of all other taxes which Landlord becomes obligated to pay with respect to the
regional retail development, irrespective of whether such taxes are assessed
against real or personal property. The portion of such taxes and assessments
allocated to the common areas of the Shopping Center, and the portion of such
taxes allocated to the "net-building area" (gross building area less the sum of
gross leasable floor area and common areas) of the Shopping Center, shall be
deducted from the total of such taxes and assessments and charged to Tenant in
accordance with the provisions contained in Section 8.03 of this Lease.
Tenant's proportionate share of the remaining taxes and assessments (i.e., those
----
not charged under Section 8.03) shall be equal to the product obtained by
multiplying such taxes and assessments by a fraction, the numerator of which
shall be the number of square feet of floor area in the leased premises and the
denominator of which shall be the total number of square feet of gross leased
and occupied floor area in the Shopping Center. In the event that any present
or future enactment of the State or any political subdivision thereof or any
governmental authority having jurisdiction thereover either: (a) imposes a
direct or indirect tax and/or assessment of any kind or nature upon, against or
with respect to the rents payable by tenants or occupants in the regional retail
development to Landlord derived from the regional retail development or with
respect to the Landlord's (or the individuals' or entities' which constitute the
partners of the partnership which is the Landlord, or which is the beneficiary
of the Trust of which Landlord is Trustee, as applicable) ownership of the land
and buildings comprising the regional retail development, either in addition to
or by way of substitution for all or any part of the taxes and assessments
levied or assessed against such land and such buildings, including, without
limitation, any net profits tax or any comparable tax imposed on any portion of
Landlord's revenues from the regional retail development; and/or (b) imposes a
direct or indirect tax or surcharge of any kind or nature, upon, against or with
respect to the parking areas or the number of parking spaces in the regional
retail development, then in either or both of such events, Tenant shall be
obligated to pay its proportionate share thereof as provided herein. For
purposes of this Section, the term "regional retail development" shall be deemed
to include the land upon which any parking facilities, temporary or permanent
off-site utility systems and any wooded area, lake, shoreline thereof or island
park serving the regional retail development are located with all improvements
situated thereon. Notwithstanding anything to the contrary contained in this
Lease, Tenant's obligation
9
hereunder shall not include the payment of any capital gains tax, corporate
income tax, unincorporated business income tax, or other income tax of general
applicability, any profit or excess profits tax, or any inheritance or gift tax,
provided that Tenant shall be obligated for any such tax to the extent such tax
is assessed in lieu of or in substitution for existing ad valorem taxes on real
property which are hereafter modified, abolished or repealed in whole or in
part. Tenant shall also not be responsible for any fines, penalties, and
interest due by virtue of Landlord's late or non-payment of taxes. To the extent
that real estate taxes and assessments are the obligation of Tenant pursuant to
Section 8.03 hereof, the same shall not be includable in Tenant's proportionate
share pursuant to this Section.
Tenant's proportionate share of all of the aforesaid taxes and assessments
levied or assessed for or during the term hereof, as determined by Landlord,
shall be paid in monthly installments on or before the first day of each
calendar month, in advance, in an amount estimated by Landlord in good faith;
provided that Landlord in good faith shall have the right to initially determine
monthly estimates and to revise the estimates from time to time, and shall have
the right to apply such monthly installments to tax bills according to the
formula being utilized by Landlord from time to time. Upon receipt of all tax
bills and assessment bills attributable to any calendar or fiscal year during
the term hereof, Landlord shall furnish Tenant with a written statement of the
actual amount of Tenant's proportionate share of the taxes and assessments for
such year. In the event no tax xxxx is available, Landlord will compute the
amount of such tax. Upon written request, Landlord shall furnish Tenant with
copies of such tax bills and Landlord's calculations of Tenant's proportionate
share thereof. If the total amount paid by Tenant under this Section for any
calendar or fiscal year during the term of this Lease shall be less than the
actual amount due from Tenant for such year, as shown on such statement, Tenant
shall pay to Landlord the difference between the amount paid by Tenant and the
actual amount due, such deficiency to be paid within twenty (20) days after
demand therefor by Landlord; and if the total amount paid by Tenant hereunder
for any such calendar or fiscal year shall exceed such actual amount due from
Tenant for such year, such excess shall be credited against the next installment
of taxes and assessments due from Tenant to Landlord hereunder. All amounts due
hereunder shall be payable to Landlord at the place where the minimum rent is
payable. In the event Landlord contests any taxes levied or assessed during the
term hereof upon, against or with respect to the Shopping Center or any portion
thereof or interest therein, or in the event of Landlord's negotiation with
respect to assessed valuation for the Shopping Center, Tenant shall pay its
proportionate share of Landlord's costs, expenses and attorneys' fees in
connection therewith calculated on the same basis as set forth above in this
Section. For the calendar or fiscal years in which this Lease commences and
terminates, the provisions of this Section shall apply, and Tenant's liability
for its proportionate share of any taxes and assessments for such years shall be
subject to a pro rata adjustment based on the number of days of said calendar or
fiscal years during which the term of this Lease is in effect. A copy of a tax
xxxx or assessment xxxx submitted by Landlord to Tenant shall at all times be
sufficient evidence of the amount of taxes and/or assessments assessed or levied
against the property to which such xxxx relates. Prior to or at the
commencement of the term of this Lease and from time to time thereafter
throughout the term hereof, Landlord shall notify Tenant in writing of
Landlord's estimate of Tenant's monthly installments due hereunder. In the
event Landlord elects to contest any real estate tax or assessment levied or
assessed against the Shopping Center premises, then there shall be refunded to
Tenant its pro rata share of any net reduction in taxes actually paid by the
Tenant in excess of the finally determined taxes, less its proportionate share
of expenses of Landlord in connection with obtaining such reduction.
SECTION 2.06. PAYMENTS. Rent shall be defined in this Lease as (i)
minimum rent, (ii) percentage rent and (iii) all other charges of whatever
nature required to be paid by Tenant under this Lease, including the Exhibits
hereto. The rent charges described in item (iii) of the preceding sentence
shall, unless otherwise specified, be due and payable ten (10) days after
demand, without any deductions or setoff whatsoever, in the manner and at the
place where minimum rent is payable and Tenant's failure to pay rent shall carry
with it the consequences set forth under Article (IX hereof. Landlord's rights
and remedies pursuant to this Section shall be in addition to any and all other
rights and remedies provided under this Lease or at law. Notwithstanding
anything to the contrary contained in this Lease, Landlord's demand for any and
all rent may be sent to Tenant by regular mail. Rent is specifically agreed by
Tenant to be a minimum reasonable use and occupancy charge for the leased
premises. In the event any sums required hereunder to be paid are not received
on or before the tenth (10th) day after the same are due, then, for each and
every such payment, Tenant shall immediately
10
pay, as additional rent, a service charge of five percent (5%) of the
outstanding amount due, which service charge again shall be imposed for each
month that such amount shall remain unpaid. In the event of Tenant's failure to
pay the foregoing service charge, Landlord may deduct said charge from the
deposit set forth in Section 26.01 hereof. The provisions of this Section shall
not be construed to extend the date for payment of any sums required to be paid
by Tenant under this Lease or to relieve Tenant of its obligation to pay all
such sums at the time or times herein stipulated, and neither the demand for,
nor collection by Landlord of, late payment service charges pursuant to this
Section shall be construed as a cure of any default in payment by Tenant. It is
agreed that the said service charge is a fair and reasonable charge under the
circumstances and shall not be construed as interest on a debt payment. In the
event any charge imposed hereunder or under any other section of this Lease is
either stated to be or construed as interest, then no such interest charge shall
be calculated at a rate which is higher than the maximum rate which is allowed
under the usury laws of the State, which maximum rate of interest shall be
substituted for the rate in excess thereof, if any, computed pursuant to this
Lease.
ARTICLE III. RECORDS AND BOOKS OF ACCOUNT
SECTION 3.01. TENANT'S RECORDS. Tenant shall prepare and keep full,
complete and proper books and source documents, in accordance with generally
accepted accounting principles, of the Gross Sales, whether for cash, credit or
otherwise, of each separate department at any time operated in the leased
premises and of the operations of each subtenant, concessionaire, licensee
and/or assignee, and shall require and cause all such parties to prepare and
keep books, source documents, records and accounts sufficient to substantiate
those kept by Tenant. The books and source documents to be kept by Tenant shall
include, without limitation, true copies of all Federal, State and local tax
returns and reports, records of inventories and receipts of merchandise, daily
receipts from all sales and other pertinent original sales records and records
of any other transactions conducted in or from the leased premises by Tenant and
any other persons conducting business in or from the leased premises. Pertinent
original sales records shall include, without limitation to the extent compiled
by Tenant in the ordinary course of Tenant's business: (i) cash register tapes,
including tapes from temporary registers, (ii) serially pre-numbered sales
slips, (iii) the original records of all mail and telephone orders at and to the
leased premises, (iv) settlement report sheets of transactions with subtenants,
concessionaires, licensees and assignees, (v) original records indicating that
merchandise returned by customers was purchased at the leased premises by such
customers, (vi) memorandum receipts or other records of merchandise taken out on
approval, (vii) detailed original records of any exclusions or deductions from
Gross Sales, (viii) sales tax records, and (ix) such other sales records, if
any, which would normally be examined by an independent accountant pursuant to
accepted auditing standards in performing an audit of Tenant's sales. Tenant
shall record at the time of each sale or other transaction, in the presence of
the customer, all receipts from such sale or other transaction, whether for
cash, credit or otherwise, in a cash register or cash registers having a
cumulative total which shall be sealed in a manner approved by Landlord and
which shall possess such other features as shall be required by Landlord. All
of the foregoing books, source documents and records shall be retained for a
period of at least four (4) years after the expiration of each lease year.
SECTION 3.02. REPORTS BY TENANT. Tenant shall furnish to Landlord within
forty-five (45) days after the expiration of each quarter-annual period of each
lease year a complete statement ("quarterly report"), certified by Tenant, of
the amount of Gross Sales, as defined in Article II, Section 2.03 of this Lease,
made in, on or from the leased premises during said period. Failure of Tenant
to timely submit quarterly reports as aforesaid shall entitle Landlord, after
five (5) business days' written notice to Tenant, and an opportunity to submit
the quarterly report within such five (5) day period, to estimate Gross Sales
based upon available data (with a reconciliation upon receipt of the annual
report), and Tenant shall be obligated to pay percentage rent, as set forth in
Section 2.02, on such estimated Gross Sales. Tenant also agrees that it will
furnish to Landlord within sixty (60) days after the expiration of each full
lease year a complete statement, certified by an independent certified public
accountant, showing in all reasonable detail the amount of such Gross Sales made
by Tenant from the leased premises during the preceding lease year. Tenant
shall in all events furnish to Landlord within five (5) days after the end of
each month of the term of this Lease a written statement of Gross Sales covering
the preceding month, the statement to be in such form and style and contain such
details and
11
breakdown as the Landlord may reasonably require. Tenant shall require and cause
all its concessionaires, if any, to furnish statements at the times and in the
form and content specified in this Section, relating to their operations within
the leased premises. All reports of Gross Sales submitted or caused to be
submitted by Tenant to Landlord shall be conclusive and binding upon Tenant
unless such reports are corrected within two (2) years after the date of
issuance. The term "concessionaire" as used in this Lease shall mean and include
any and all concessionaires, licensees, franchisees, department operators,
subtenants, permittees or others directly or indirectly operating or conducting
a business in or from the leased premises. Tenant utilized a 52/53 week fiscal
year which ends on the Sunday closest to December 31st each year and consists of
13 four week reporting periods. For so long as Tenant remains on such fiscal
year, the monthly and quarterly reporting periods described above shall be
adjusted to coincide with Tenant's own reporting as described in this paragraph.
ARTICLE IV. AUDIT
SECTION 4.01. RIGHT TO EXAMINE BOOKS. Notwithstanding the acceptance by
Landlord of payments of percentage rent, Landlord shall have the right to all
rents and other charges actually due hereunder, and the right to examine, make
extracts from and copy, at the leased premises or (at the option of Landlord) at
the corporate headquarters office of Tenant in the United States, Tenant's and
all concessionaires' books, source documents, accounts, records and sales tax
reports filed with applicable government agencies in order to verify the amount
of Gross Sales in and from the leased premises. Tenant shall make all such
documents and records available at the leased premises (or at Tenant's corporate
headquarters, if elected by Landlord) upon ten (10) business days' prior written
notice from Landlord.
SECTION 4.02. AUDIT. At its option, Landlord may at any time, upon ten
(10) business days' prior written notice to Tenant, arrange for an auditor
selected by Landlord to conduct a complete audit (including a physical
inventory) of the entire records and operations of Tenant and/or any
concessionaire concerning business transacted upon or includable in Gross Sales
from the leased premises during the period covered by any statement issued by
Tenant or a concessionaire as above set forth in Article III, provided no such
audit shall cover periods which are more than three (3) years prior to the date
Tenant receives notice of Landlord's intent to audit Tenant's records. Tenant
shall make available to Landlord's auditor at the leased premises (or at
Tenant's corporate headquarters, if elected by Landlord) within three (3) days
following Landlord's notice requiring such audit, all of the books, source
documents, accounts and records referred to in Section 3.01 of this Lease and
any other materials which such auditor deems necessary or reasonably desirable
for the purpose of making such audit. Tenant shall promptly pay to Landlord the
amount of any deficiency in percentage rent payments disclosed by any such
audit. If such audit shall disclose that Tenant's statement of Gross Sales is
at variance to the extent of two percent (2%) or more, Landlord may xxxx to
Tenant the amount of any deficiency and the cost of such audit, which shall be
paid by Tenant within fifteen (15) days after Tenant's receipt of Landlord's
invoice; in the event Tenant fails to pay such discrepancy and costs, Landlord
may terminate this Lease as set forth below and/or shall have such other rights
and remedies as may be provided herein or at law arising by virtue of Tenant's
failure to pay rent. If such audit shall disclose that Tenant's statement of
Gross Sales is at variance to the extent of four percent (4%) or more, then
Landlord, in addition to the foregoing remedy and other remedies available to
Landlord, shall have the option, upon at least thirty (30) days' notice to
Tenant, to declare this Lease terminated and the term ended, in which event this
Lease shall cease and terminate on the date specified in such notice with the
same force and effect as though the date set forth in such notice were the date
originally set forth herein and fixed for the expiration of the term, and Tenant
shall vacate and surrender the leased premises but shall remain liable for all
obligations arising during the balance of the original stated term as provided
in this Lease. In the event Tenant shall be required to pay any charges to
Landlord as a result of an audit of Tenant's records pursuant to this Section
4.02, Landlord shall provide Tenant with a copy of the auditor's report. In
addition to the foregoing, and in addition to all other remedies available to
Landlord, in the event Landlord or Landlord's auditor shall schedule a date for
an audit of Tenant's records in accordance with this Section, and Tenant shall
fail to be available or shall otherwise fail to comply with the requirements for
such audit, Tenant shall pay all costs and expenses associated with the
scheduled audit.
12
In addition to all other remedies available to Landlord, in the event that
any such audit shall disclose that Tenant's records and other documents as
referred to in Articles In and IV hereof and such other materials provided by
Tenant to Landlord's auditor are inadequate, in the reasonable opinion of
Landlord or Landlord's auditor (which, for the purposes of this paragraph, shall
be an independent certified public accountant), to accurately disclose Tenant's
Gross Sales, and Tenant fails to cure such inadequacy within five (5) business
days after receipt of written notice thereof from Landlord, then Landlord shall
be entitled to collect as additional rent from Tenant an amount equal to fifteen
percent (15%) of the highest Effective Rent (minimum rent plus percentage rent)
payable by Tenant in any of the three (3) preceding lease years. Landlord's
exercise cf the foregoing remedy shall in no way limit or otherwise affect
Landlord's ability to exercise other remedies available to it, nor shall
Tenant's obligations pursuant to the terms, covenants and conditions of this
Lease (including, without limitation, Tenant's obligation with respect to
reporting Gross Sales and payment of percentage rent) be in any manner reduced
or diminished by the exercise of such remedy. In the event that Tenant shall,
following the exercise of such remedy, provide to Landlord all records and
documentation as required to be provided pursuant to the terms of this Lease so
as to permit Landlord's auditor to accurately establish Tenant's Gross Sales for
the period in question, then Tenant shall be permitted a credit with respect to
any amount of additional rent collected by Landlord from Tenant pursuant to this
paragraph, with such credit to be applied first against the installment of
percentage rent due from Tenant for the period in question, with any remaining
credit to be applied against the next installment of percentage rent payable by
Tenant. Neither the provisions of this Section 4.02 nor any other provisions in
this Lease shall restrict Landlord's rights to discovery in any litigation or
arbitration proceeding.
ARTICLE V. CONSTRUCTION OF LEASED PREMISES
SECTION 5.01. CONSTRUCTION OF LEASED PREMISES. (a) The leased premises
shall be constructed substantially as set forth in Exhibit B, which is attached
hereto and made a part hereof. Each of the parties hereto does hereby agree to
perform the obligations imposed upon such party in said Exhibit B at the times
and in the manner therein provided. All references in the text of the Lease to
Exhibit B shall include Exhibit B-1. Minor changes from any plans or
specifications covering Landlord's Work which may be, or which may have been,
necessary or appropriate during construction of the Shopping Center or leased
premises shall not affect or change this Lease or invalidate same. If this
Lease is executed after the opening of the regional retail development or if the
leased premises are in an expansion wing of the regional retail development
which opened prior to the date of this Lease, the parties hereto acknowledge
that the work to be performed by Landlord pursuant to Exhibit B has been fully
performed, except to the extent specifically otherwise set forth in Exhibit B).
Section 5.01 (a): Prior to Tenant's commencement of construction in the
----------------
area of the leased premises to be located outside of the existing building,
Landlord agrees to remove the trees which are currently located in such area,
which removal is identified in Exhibit F (subject to approval of governmental
authorities and the Department Store operators.)
(b) Tenant agrees, prior to the commencement of the term of this Lease, at
Tenant's sole cost and expense, to provide all work of whatsoever nature in
accordance with its obligations set forth in Exhibit B as "Tenant's Work."
Tenant agrees to furnish to Landlord the Working Drawings and Specifications
(and Demolition Drawings, as applicable) with respect to the leased premises
prepared in the manner and within the time periods required in Exhibit B
provided Tenant's Landlord-approved plans shall control in the event of an
express conflict with the requirements of Exhibit B. If such Working Drawings
and Specifications (and Demolition Drawings, as applicable) are not furnished by
Tenant to Landlord within the required time periods in form to permit approval
by Landlord, then Landlord may at its option at any time while Tenant is in
default of this provision, following twenty (20) days' notice and an opportunity
to resubmit drawings during such twenty (20) day period in addition to any and
all other remedies provided in this Lease, by notice to Tenant, following twenty
(20) days' notice and an opportunity to resubmit drawings during such twenty
(20) day period declare
13
this Lease null and void and of no further force or effect, in which event this
Lease shall terminate, but Tenant shall remain liable for all obligations
arising during the original stated term as provided in this Lease, provided that
Tenant shall not remain liable for the obligations arising during the initial
term of this Lease if this Lease is terminated during the first five (5) months
following the date hereof solely as a result of the inability to agree upon
Store Design Drawings or Store Working Drawings and Specifications and not as a
result of Tenant's failure to submit such Store Design Drawings and Working
Drawings and Specifications within the required time periods. In addition, if
Landlord determines that Landlord and Tenant are unable to agree upon Working
Drawings and Specifications (and Demolition Drawings, as applicable), Landlord
shall have the option, upon twenty (20) days notice to Tenant an opportunity for
Tenant to cure during such twenty (20) day period, to declare this Lease null
and void and of no further force or effect, in which event this Lease shall
terminate on the date specified in such notice, in the same manner as provided
in the preceding sentence. No deviation from the final set of plans and
specifications, once approved by the Landlord, shall be made by Tenant without
Landlord's prior written consent, which shall not, as to Tenant's original
design, be arbitrarily withheld solely as to provided Tenant may make immaterial
variances from the approved plans which do not change the overall appearance of
the leased premises as approved by Landlord and which are consistent with the
provisions of this Lease. In no event, however, shall Tenant be permitted to
deviate from the sign or storefront design or any components of the leased
premises visible from the exterior of the leased premises approved by Landlord
without first obtaining Landlord's written approval. Approval of the plans and
specifications by Landlord shall not constitute the assumption of any
responsibility by Landlord or Landlord's architect for their accuracy, efficacy
or sufficiency, and Tenant shall be solely responsible for such items. Unless
Landlord otherwise directs in writing, Tenant shall not open the leased premises
for business until all construction has been completed pursuant to the
provisions of Exhibit B. Until such time as Tenant's final Working Drawings and
Specifications (and Demolition Drawings, as applicable) have been approved in
writing by Landlord, the right of Tenant to enter upon the leased premises shall
be solely for the purpose of inspection, measurement and obtaining information
necessary to prepare architectural drawings and construct its premises. Tenant
shall not be deemed to have taken possession of the leased premises until, and
Landlord shall be deemed to have delivered and Tenant shall be deemed to have
taken such possession when, Tenant actually commences construction of its
leasehold improvements following Landlord's approval of Tenant's final Working
Drawings and Specifications (and Demolition Drawings, as applicable). Until
Tenant is so deemed to have taken possession, in the event of a default by
Tenant under this Article V, Landlord, upon twenty (20) days' notice to Tenant
an opportunity for Tenant to cure during such twenty (20) day period shall have
the right to declare this Lease null and void and of no further force or effect
and thereafter may demise and lease the premises described in Section 1.01 free
from any rights of Tenant. Tenant shall not open its store for business until
Tenant's storefront sign is installed, the store is fully fixtured, lighted,
stocked with merchandise in place and staffed, and Tenant is prepared to engage
in the sale of goods and/or services to the public pursuant to Article VII.
Landlord shall remove the storefront barricade (or Tenant shall remove the same
if so directed in writing by Landlord) when Tenant is so prepared to open for
business, and Tenant shall reimburse Landlord for all costs and expenses in
connection with such removal (or Tenant shall pay for all such costs and
expenses directly (including transportation of the barricade to storage in the
regional retail development), if Tenant shall be directed by Landlord to perform
such removal). If all or any part of the leased premises shall have been
previously occupied, Tenant acknowledges that the Tenant's Work described in
Exhibit B has been initially performed by a tenant previously occupying the
leased premises and that Tenant accepts the leased premises in an "as is"
condition without representation by the Landlord or any person, firm or
corporation on behalf of Landlord as to the condition thereof. Tenant shall
submit Working Drawings and Specifications and Demolition Drawings showing the
work to be performed by Tenant to completely remodel and refurbish the leased
premises and, subject to Landlord's approval, will cause such work to be
performed prior to the commencement of the term of this Lease. All such
additional work and permitted alterations, repairs and improvements shall be in
accordance with the provisions of Exhibit B. In the event of an express conflict
between Tenant's Landlord-approved plans, on the one hand, and the terms of this
Lease, its exhibits and the Standard Project Details and Construction
Information, on the other hand, Tenant's Landlord-approved plans shall control.
Provided Tenant is not in default hereunder, Landlord shall pay to Tenant a
Tenant reimbursement (solely to reimburse Tenant for costs paid by Tenant in
constructing Tenant's leasehold improvements and trade fixtures and equipment)
in the sum of Five Hundred Thousand and 00/100ths Dollars ($500,000.00). Four
Hundred
14
Fifty Thousand and 00/100ths Dollars ($450,000.00) of such Tenant reimbursement
shall be paid by Landlord to Tenant within fifteen (15) days following Tenant's
(a) substantial completion of Tenant's Work in the leased premises (with
punchlist items remaining) and Tenant's opening for business therein following
issuance to Tenant of a Certificate of Occupancy, and (b) delivery to Landlord
of (i) invoices marked paid by contractors, subcontractors and materialmen
(provided materialmen shall be required to be listed only if the materialmen's
contract exceeds Fifteen Thousand Dollars ($15,000.00) which performed work or
provided materials for Tenant's Work, (ii) with contracts aggregating at least
ninety (90%) of the total cost of Tenant's Work, (ii) unconditional waivers of
lien from contractors, subcontractors and materialmen with contracts aggregating
at least ninety percent (90%) of the total cost of Tenant's), and (iii) a sworn
statement from Tenant and Tenant's general contractor listing all contractors,
subcontractors and materialmen which have performed work or supplied materials
with respect to Tenant's Work and certifying the amounts they have been paid.
After payment of Four Hundred Fifty Thousand Dollars ($450,000) of the Tenant
reimbursement the remaining Fifty Thousand and 00/100ths Dollars ($50,000.00)
shall be paid within fifteen (15) days after Tenant's completion of punchlist
items and submittal to Landlord of unconditional waivers of lien covering the
remaining ten percent (10%) of the cost of Tenant's Work. Upon Landlord's
payment of the Tenant reimbursement, title to Tenant's trade fixtures and
restaurant equipment originally installed in the leased premises as part of
Tenant's Work (excluding replacements, and new equipment and trade fixtures
installed later) shall vest in Landlord (provided Tenant shall be obligated to
repair and maintain same during the lease term). For purposes of tax and
accounting treatment only, Tenant shall be deemed to own those leasehold
improvements paid for by Tenant without use of the Tenant reimbursement payment.
Upon written direction from Tenant, Landlord agrees to forward the Tenant
reimbursement payments directly to Tenant's General Contractor, rather than to
Tenant.
In the event Tenant shall have satisfied all conditions to the payment of
the Tenant Inducement and Landlord shall have failed to pay all or any portion
of the same, then Tenant shall have the right to offset against rent and charges
due hereunder the amount actually owed by Landlord to Tenant, provided that any
wrongful offsetting against rent and charges due hereunder shall constitute a
default for which Tenant is not entitled to any notice or cure rights.
(6) Section 5.01(b): Design of Leased Premises: Tenant shall submit
Store Design Drawings (in the manner and in accordance with the requirements set
forth in Exhibit B-2D) containing the design proposed by Tenant for Tenant's
store in the leased premises. The submission of such Store Design Drawings to
Landlord, any resubmissions as may be required by Landlord, and Landlord's
written approval of the Store Design Drawings shall be a precondition to the
preparation of Working Drawings and Specifications by Tenant pursuant to the
provisions of Section 5.01(b) and Exhibits B, B-1 and B-2D (and any further
construction exhibits) of the Lease. The provisions of Section 5.01(b) of the
Lease which are applicable to Working Drawings and Specifications (excluding
provisions relating to "final" Working Drawings and Specifications) shall also
be applicable to Store Design Drawings in the same manner as if separately
recited therein. Store Design Drawings need not be submitted to Landlord sooner
than November 10, 1999 and Working Drawings and Specifications need not be
submitted to Landlord sooner than thirty (30) days after Landlord's approval of
Tenant's Store Design Drawings. Tenant shall not be obligated to commence
demolition or construction sooner than February 1, 2000. Tenant shall not be
obligated to commence construction sooner than thirty (30) days after the leased
premises are vacant and available to Tenant.
(c) Upon execution of this Lease, Tenant shall pay to Landlord, as a
reimbursement to Landlord for costs and expenses with respect to the leased
premises, the sum set forth in the Data Sheet as "Tenant Reimbursement to
Landlord." The payment of such sum by Tenant shall not in any manner reduce or
limit the obligation of Tenant for payment of other charges under this Lease,
including, without limitation, the charges set forth in the Exhibits attached
hereto.
(7) Section 5.01(c): Tenant Reimbursement to Landlord: N/A
15
SECTION 5.02. AVAILABILITY AND POSSESSION OF PRESSES FOR TENANT'S WORK.
(a) The leased premises shall be considered available to Tenant when Landlord
furnishes Tenant with a written notice to such effect (the "Notice of
Availability"). The Notice of Availability shall be deemed given upon the date
of Tenant's receipt of a fully-executed copy of this Lease. Upon receipt of
such Notice of Availability, Tenant shall have only limited access to the
premises for purposes of inspection and measurement verification. The Notice of
Availability shall not constitute delivery of the premises, and Landlord (or a
current occupant of the premises) will retain possession of the premises until
delivery of possession is made to Tenant as provided below. Landlord may
furnish the Notice of Availability at any time subsequent to Landlord's
obtaining possession of the premises. If the leased premises are presently
occupied by another tenant, Landlord will not make the premises available to
Tenant until a date after Landlord regains possession of the leased premises
from the tenant presently occupying the same.
(b) Landlord covenants to deliver possession of the leased premises to
Tenant upon written approval by Landlord of Tenant's Working Drawings, but only
if said approval is subsequent to or simultaneous with a furnishing to Tenant of
a Notice of Availability. Upon receiving actual possession, Tenant shall have
access to the leased premises for all purposes set forth under this Lease.
(c) Upon delivery of possession, Tenant accepts the premises and
acknowledges that the premises are in the condition required by this Lease,
subject to all field conditions existing at the time of delivery of possession.
Failure of Landlord to deliver possession of the leased premises in the manner
and condition as provided for in this Lease will not give rise to any claim for
damages by Tenant against Landlord, or against Landlord's contractor, or permit
Tenant to rescind or terminate this Lease.
SECTION 5.03. LANDLORD'S AND TENANT'S OPTIONAL RIGHT OF CANCELLATION. If
for any reason the leased premises are not ready for Tenant's Work on the date
eighteen (18) months following the date of this Lease, then, for a period of
thirty (30) days thereafter, Tenant shall have the option, and for a period of
forty-five (45) days following such eighteen (18) month period, Landlord shall
have the option, of cancelling and terminating this Lease by not more than sixty
(60) days' written notice, one to the other, and, in the event that either party
shall exercise such option, this Lease shall terminate with neither party being
liable to the other in damages or otherwise, and any money deposited pursuant to
Section 26.01 hereof shall be returned to Tenant. In the event that neither
Tenant nor Landlord gives such written notice of cancellation, then said options
shall be null and void and of no further force or effect, and this Lease shall
be considered as continuing in full force and effect. In addition, if another
tenant is presently in possession of the leased premises, and Landlord shall not
have delivered possession of the leased premises to Tenant by the lease
commencement date (as specifically identified in the Data Sheet), then Landlord
shall have the right to thereafter terminate this Lease at any time prior to
delivery of possession to Tenant by written notice to Tenant, with like result
as set forth in the first sentence of this paragraph. If as of the date of this
Lease the leased premises are (i) in a regional retail development, or in an
expansion wing of a regional retail development, which development or wing, as
applicable, has not initially opened for business to the public, or (ii)
presently occupied by another entity, then the foregoing eighteen (18) month
period under this Section 5.03 (and the four (4) year period set forth in
Section 5.04) shall be modified to commence as of (i) the currently projected
date of such initial opening, or (ii) the currently projected date of Landlord's
repossession of the leased premises from such present entity, as applicable.
Section 5.03: Notwithstanding the provisions of this Section 5.03, Tenant
------------
may (prior to the date the leased premises are vacant and available to Tenant)
terminate this Lease if the leased premises are not vacant and available to
Tenant by April 1, 2000 and Landlord may (prior to the date the leased premises
are vacant and available to Tenant) terminate this Lease if the leased premises
are not vacant and available to Tenant by July 1, 2000 provided Landlord shall
not have such termination right if Landlord shall not have used all reasonable
diligent efforts to cause the existing tenants to vacate the leased premises.
If the leased premises are not vacant and available to Tenant by April 1, 2000,
then Tenant's initial payments of minimum rent shall be abated in an amount
equal to one (1) day's minimum rent for each day beyond March 1, 2000 and prior
to June 1, 2000 that the leased premises are not vacant and available to Tenant.
In the event either party terminates this Lease due to the failure
16
of either of the current occupants of the leased premises to vacate the leased
premises, then Landlord shall promptly (following receipt of reasonable back-up
documentation) reimburse to Tenant the costs paid by Tenant for plan preparation
and other pre-construction obligations, provided such reimbursement shall not
exceed Seventy-Five Thousand Dollars ($75,000.00).
SECTION 5.04. ULTIMATE COMMENCEMENT DATE. Notwithstanding anything to the
contrary contained herein, if for any reason whatsoever (including without
limitation, excusable delay) the term of this Lease shall not have commenced
prior to such date as shall be four (4) years from the date of this Lease
(subject to extension as set forth in Section 5.03), then this Lease shall be
automatically terminated without further act of either party hereto, and the
parties hereto shall be released from all obligations hereunder.
ARTICLE VI. ALTERATIONS, CHANGES AND ADDITIONS
SECTION 6.01. INSTALLATION BY TENANT. Tenant shall not make or cause to
be made any alterations, additions or improvements to the leased premises (for
example, but without limiting the generality of the foregoing, Tenant shall not
install or cause to be installed any signs, floor covering, interior or exterior
lighting, plumbing fixtures, shades, canopies or awnings, electronic detection
devices, antennas, mechanical, electrical or sprinkler systems, or make any
changes to the storefront) without the prior written approval of Landlord in
each instance. Tenant shall present to Landlord plans and specifications for
such work at the time approval is sought, in accordance with criteria and
procedures as provided in Exhibit B. Notwithstanding the foregoing, Tenant
shall be permitted to make minor, nonstructural alterations to the interior of
the leased premises not to exceed Thirty Thousand and 00/100ths Dollars
($30,000.00) during any twelve (12) month period, provided that such alterations
shall not change the original design of the leased premises as originally
approved by Landlord, and further provided, Tenant shall not be permitted to
make any alterations whatsoever to the storefront, signage or configuration or
size of the sales area without Landlord's prior written approval. Tenant shall
give Landlord fifteen (15) days' written notice prior to undertaking any
alterations which Tenant is permitted to make pursuant to this paragraph,
provided no such prior notice shall be required for repairs which Tenant
determines must be undertaken sooner.
Tenant shall also be permitted to replace kitchen fixtures and trade
fixtures not visible from the exterior of the leased premises with kitchen
equipment and trade fixtures of the same character and quality. Landlord shall
not unreasonably withhold its consent to the replacement of trade fixtures which
are visible from the exterior of the leased premises with trade fixtures which
are substantially similar to those being replaced. Tenant shall be permitted to
replace all trade fixtures with identical trade fixtures.
SECTION 6.02. REMOVAL BY TENANT. All alterations, decorations, additions,
trade fixtures and improvements made by Tenant, including those made pursuant to
Exhibit B, shall be deemed to have attached to the leasehold and to have become
the property of Landlord upon such attachment. Upon expiration or earlier
termination of the term of this Lease, Tenant shall not remove any of such
alterations, decorations, additions, trade fixtures or improvements. Landlord
may, however, designate by written notice to Tenant those alterations,
decorations, additions, improvements, or trade fixtures which shall be removed
by Tenant at the expiration or earlier termination of the Lease, and Tenant
shall promptly remove the same and repair any damage to the leased premises
caused by such removal. Landlord shall have the right to padlock or otherwise
secure the leased premises upon the expiration or earlier termination of the
term of the Lease. Landlord shall also have the right, at any time during the
term of this Lease, and upon expiration or earlier termination of the term of
this Lease, to immediately enter the leased premises in order to remove any
items which shall be determined by Landlord to be a violation of existing
health, safety, security or other similar codes or regulations affecting or
applicable to the leased premises or the regional retail development. Landlord
shall attempt to provide prior notification to Tenant of such removal, subject
to the then existing circumstances.
17
Notwithstanding the provisions of this Section to the contrary, upon
expiration of the lease term Tenant shall be permitted to remove all of the
furniture and restaurant equipment (excluding HVAC and exhaust facilities) which
either were placed within the leased premises after the date of Tenant's initial
opening of its restaurant or are replacements for the furniture and restaurant
equipment located in the leased premises on the date of Tenant's initial
opening, provided Tenant shall repair any damage to the leased premises caused
by removal.
SECTION 6.03. CHANGES AND ADDITIONS. Landlord, for itself and for the
underlying lessor, if any, hereby reserves the right at any time, and from time
to time, to make alterations to, and to build additional stories on the building
in which the leased premises are located, and to construct other buildings and
improvements in the regional retail development, including any modifications of
the common areas in connection therewith, to enlarge or reduce the Shopping
Center or the regional retail development, to add decks or elevated parking
facilities, and to sell or lease any part of the land comprising the regional
retail development, as shown on the site plan attached hereto as Exhibit A, for
the construction thereon of a building(s) to be occupied by a Department
Store(s) which may or may not be part of the regional retail development.
Landlord also reserves for itself and for the underlying lessor, if any, the
right at any time, and from time to time, to change, modify, or abolish any
temporary off-site utility or any storm sewer or retention pond system (if
applicable) serving the regional retail development. The purpose of Exhibit A
is to show the approximate location of the leased premises within the Shopping
Center and Landlord reserves for itself and for the underlying lessor, if any,
the right at any time to relocate, enlarge, or reconfigure the various
buildings, parking areas and other common areas on said site plan. Tenant
hereby consents to the exercise by Landlord of the rights set forth in this
Section 6.03 and agrees that the exercise of such rights by Landlord or by the
underlying lessor, if any, shall not diminish Tenant's obligations under this
Lease. Landlord agrees that in the event Landlord elects to exercise any of the
options available to it pursuant to this Section 6.03, Landlord shall use
reasonable efforts to avoid material adverse interference with access to and
visibility of the leased premises from the interior of the Shopping Center
building. The provisions of this Section 6.03 are subject to the provisions of
the last sentence of Section 1.02 of the Rider.
Section 6.04: Security Interest: In consideration of Landlord's agreement
------------- -----------------
to enter into this Lease, and for other valuable consideration, the receipt and
adequacy of which is hereby acknowledged, and as security for the payment of
rent and other charges becoming due hereunder, Tenant hereby grants to Landlord
a continuing security interest in the following described collateral, which it
now owns or shall hereinafter acquire or create, immediately upon the
acquisition or creation thereof, to the extent that such collateral is Tenant's
property and is not Landlord's property pursuant to Section 6.02 hereof, in
addition to Landlord's ownership of the aforesaid property:
(a) all equipment and other personal property, including (without
limitation) trade fixtures, placed in the leased premises at any time prior to
or during the term of this Lease (whether or not same shall be subsequently
removed from the leased premises and the proceeds thereof and accessions
thereto, provided Landlord agrees from time to time to subordinate its interest
(to that of an equipment lessor or third party lender) in those trade fixtures
or equipment (excluding HVAC and exhaust facilities) which are (i) placed in the
leased premises after Tenant's initial opening in the leased premises and (ii)
are leased from an equipment lessor or are acquired by Tenant as part of a
financing with a third party lender (any such subordination shall be pursuant to
a Landlord subordination of lien agreement prepared in good faith by Landlord);
and
(b) liquor licenses and other licenses or permits issued in connection with
the business at the leased premises and the proceeds thereof and accessions
thereto; provided Landlord agrees from time to time to subordinate its interest
in same to that of a third party lender of Tenant pursuant to a Landlord
subordination of lien agreement prepared in good faith by Landlord.
Tenant agrees within ten (10) days after request therefor by Landlord, to
execute in proper form and deliver to Landlord all necessary and desirable
instruments and financing statements, in writing, evidencing that Landlord
possesses a fully-effective security interest with respect to the foregoing
collateral. Tenant also agrees to make appropriate entries on its books and
records disclosing
18
Landlord's security interest in the collateral. Such security interest shall be
a first and prior security interest as and against the claims of any other
creditors of Tenant and Tenant so warrants to Landlord. Except for the sale of
inventory and goods in the ordinary course of Tenant's business, Tenant shall
not sell, assign, transfer, pledge or otherwise dispose of or encumber any of
the collateral to a party other than Landlord while this Security Agreement is
in effect. Failure of Tenant to execute any such statements or instruments as
may be necessary or desirable to effectuate the provisions of this Section 6.04,
within such ten (10) day period, shall constitute a breach of this Lease. In the
event of such failure, Landlord, in addition to any other rights or remedies it
may have, shall have the right by not less than ten (10) days notice to Tenant
to declare this Lease terminated and the term ended, in which event this Lease
shall cease and terminate on the date specified in such notice with the same
force and effect as though the date set forth in such notice were the date
originally set forth herein and fixed for the termination of the term; upon such
termination, Tenant shall vacate and surrender the leased premises, but Tenant
shall remain liable for the balance of the original stated term as provided in
this Lease by reason of said breach as if the Lease had remained in full force
and effect. Further, Tenant hereby irrevocably appoints Landlord as attorney-in-
fact for Tenant with full power and authority, and as holding a power coupled
with an interest, to execute and deliver in the name of Tenant any such
statements or instruments.
Upon the happening of: (1) default by Tenant in the payment of rent or
other charges or the performance of any of the terms, covenants, conditions or
provisions contained in this Lease, and the continuance of same beyond any
applicable grace or cure period, (2) the making of any levy, seizure or
attachment of the collateral, or (3) the occurrence of any of the events
referred to in Section 20.02 of this Lease, thereupon or at any time thereafter
while such default has not been cured, Landlord shall have all the remedies of a
secured party under the laws of the State, including, without limitation, the
right to take possession of the collateral, and, for that purpose, Landlord may
enter upon the leased premises and remove the same therefrom. Landlord hereby
agrees to give Tenant prior notice of any public sale of the collateral or of
the date after which any private sale or any other intended disposition thereof
is to be made, and, at such sale, Landlord may purchase the collateral. This
Security Agreement, and the security interest created in such collateral hereby,
shall be terminated if all rental due herein is paid in full and Tenant is not
otherwise in default hereof upon the natural expiration of the term hereof;
otherwise, this Security Agreement, and the security interest created in such
collateral hereby, shall survive termination of this Lease.
Tenant agrees, in the event of exercise by Landlord of Landlord's security
interest in Tenant's liquor license issued by the State, that Tenant will
transfer the same to Landlord, subject to the consent and approval of the State.
Tenant hereby consents that Landlord shall have the additional right, without
notice to Tenant, to cause a receiver to be appointed by a court of competent
jurisdiction to take possession of the liquor license until transfer of the said
license has been approved by the State. All expenses for receivership and all
of the costs and expenses incurred by Landlord in enforcing its rights under
this security agreement shall be the obligation of Tenant.
ARTICLE VII. CONDUCT OF BUSINESS BY TENANT
SECTION 7.01. USE OF PREMISES. Tenant shall continuously use and occupy
the entire leased premises during the term of this Lease, which use and
occupancy shall be solely for the purpose of conducting the business
specifically set forth in the Data Sheet and for no other purpose or purposes.
It is agreed that the use specified in the Data Sheet has been, and is, a
material inducement to Landlord in entering into this Lease with Tenant, and
that Landlord would not enter into this Lease without this inducement. If any
governmental license or permit shall be required for the proper and lawful
conduct of Tenant's business or other activity carried on in the leased premises
or if a failure to procure such a license or permit might or would in any way
affect Landlord or the Shopping Center, then Tenant, at Tenant's expense, shall
duly procure and thereafter maintain such license or permit and submit the same
for inspection by Landlord. Tenant, at Tenant's expense, shall, at all times,
comply with the requirements of each such license or permit.
19
(8) Section 7.01: Permitted Use: Waiter and waitress served full service
high quality restaurant offering a wide variety of menu items and serving
breakfast items, lunch and dinner. Tenant may serve beer, wine and liquor once
all licenses and insurances have been obtained. Upon Tenant's initial opening
for business in the leased premise, Tenant shall serve items from a menu which
is substantially similar to the menu attached hereto and made a part hereof. If
Landlord does not notify Tenant of any failure of Tenant to so open with a menu
which is substantially similar to the menu attached hereto, within three (3)
months following Tenant's initial opening for business in the leased premises,
Tenant shall be deemed to have satisfied such requirement. After Tenant
initially opens for business in the leased premises, Tenant shall have the right
to make changes in Tenant's menu which are consistent with those made at a
majority of other Silver Diner Restaurants in the Baltimore-Washington, D.C.
metropolitan areas (and at least six [6] restaurants) (it being understood that
prices and menu items are not required to be identical at all such restaurants)
and which do not change the overall concept of the restaurant operated in the
leased premises. In addition, provided that a majority of the Silver Diners
located in the Baltimore-Washington D.C. metropolitan areas (and at least six
(6) restaurants) are changing simultaneously to the same concept, Tenant may
change the concept of the restaurant to another "American" themed restaurant
without Landlord approval, however, if desired change is to an ethnic use which
would compete with another use in the Shopping Center, it is subject to Landlord
approval.
SECTION 7.02. OPERATION OF BUSINESS. Tenant shall be open for business
and operate continuously, during all days and hours established by Landlord, in
all of the leased premises (provided Tenant shall be entitled to close sections
of the leased premises, but in no event any substantial portion of the leased
premises, during non-peak business hours and Tenant may close the leased
premises to the extent closure is necessary for Tenant to undertake Landlord-
permitted repairs or alterations) during the entire term of this Lease, and
shall conduct its business at all times in a first class and reputable manner,
maintaining at all times an adequate staff of employees and a full and complete
stock of merchandise. Failure by Tenant so to be open for business and to
operate shall entitle Landlord, in addition to other remedies provided in this
Lease, to mandatory injunctive relief, and shall give Landlord the right to
erect a storefront barricade in front of the leased premises at Tenant's
expense, which barricade shall not be removed except upon Landlord's prior
written consent and with Tenant paying the cost of such removal. The erection
of such a barricade by Landlord shall not be construed as a re-entry by Landlord
into the leased premises or as an acceptance by Landlord of any surrender of
possession of the leased premises by Tenant. In the event the maximum hours
during which the Shopping Center (or any separate part thereof) is legally
permitted to be open to the public are regulated by any lawful authority, then
Landlord shall be the sole judge of which days and hours shall be Shopping
Center business days and hours (and the days and hours applicable to any such
separate part). Tenant shall be permitted to open and operate for business, and
the entrance to the Shopping Center nearest to the leased premises shall remain
open, from 6:00 a.m. to midnight on Sundays through Thursdays and from 6:00 a.m.
Fridays and Saturdays to 3:00 a.m. the following mornings. The lights
illuminating the parking area identified on Exhibit E shall remain on for at
least one (1) hour following Tenant's closing for business. Landlord has
entered into an agreement with the Department Store operators which own that
portion of the parking area cross-hatched on Exhibit D which is not identified
on Exhibit E which agreement obligates such Department Store operators to
illuminate such parking; Landlord agrees not to modify such agreement in a
manner which reduces the obligations of such owners to illuminate such parking
area. Tenant shall not be responsible for the costs of lighting or other
additional costs incurred by Landlord solely as a result of Tenant being open
for business during such extended hours. Tenant shall install and maintain at
all times a display of merchandise in the display windows, if any, of the leased
premises and shall keep the same well lighted during such hours as Landlord
shall designate. Tenant, at Tenant's expense, shall promptly comply with all
present and future laws, ordinances, orders, rules, regulations and requirements
of all governmental authorities having jurisdiction, affecting or applicable to
the leased premises or the cleanliness, safety, occupancy and use of the same,
whether or not any such law, ordinance, order, rule, regulation or requirement
is substantial, or foreseen or unforeseen, or ordinary or extraordinary, or
shall necessitate structural changes or improvements or interfere with the use
and enjoyment of the leased premises. Tenant shall not do or permit anything to
be done in or about the leased premises, or bring anything therein, which will
in any way conflict with any such law, ordinance, order, rule, regulation or
requirement affecting the occupancy or use of the leased premises or the
regional retail development
20
which is or may hereafter be enacted or promulgated by governmental authorities,
or in any way obstruct or interfere with the rights of others, nor shall Tenant
use or allow the premises to be used for any improper, immoral or reasonably
objectionable purposes as determined by Landlord. Tenant shall not cause or
permit the use, generation, storage or disposal in or about the leased premises
or the regional retail development of any substances, materials or wastes
subject to regulation under any federal or state or local laws from time to time
in effect concerning hazardous, toxic or radioactive materials unless Tenant
shall have received Landlord's prior written consent, which Landlord may
withhold or at any time revoke in its sole discretion. Tenant shall comply with
all federal, state and local laws in effect from time to time prohibiting
discrimination or segregation by reason of race, color, creed, age, religion,
sex or national origin. No auction, liquidation, going out of business, fire or
bankruptcy sales may be conducted or advertised by sign or otherwise in the
leased premises. The quality of Tenant's operation within the leased premises
shall be in accord with standards and practices generally acceptable in enclosed
first-class, full-retail-price regional shopping centers. Tenant shall be
obligated to permit returns of merchandise and shall allow cash refunds on such
returns, except in connection with special sales and close outs. Tenant shall
not offer any goods or services which Landlord determines, in its sole
discretion, to be inconsistent with the image of a first-class, family-oriented
regional retail development, nor shall Tenant display or sell any goods
containing portrayals which Landlord determines, in its sole discretion, to be
lewd, graphically violent or pornographic. Tenant agrees that it will conduct
its business in good faith, and will not do any act tending to injure the
reputation of the Shopping Center (or any part thereof) as determined by
Landlord. Tenant shall not sell or display any paraphernalia used in the
preparation or consumption of controlled substances. In the event Landlord has
approved Tenant's remaining open for business after hours set forth in the Rider
to this Section 7.02 (and/or any hours applicable to that part of the Shopping
Center containing the leased premises), then such approval shall be conditioned
upon Tenant's paying for all additional costs incurred by Landlord as a result
thereof. Tenant shall not permit noise or odors in the leased premises which are
objected to by Landlord and, upon written notice from Landlord, Tenant shall
immediately cease and desist from causing such noise or odor, and failing of
which Landlord may deem the same a material breach of this Lease.
Notwithstanding the foregoing, odors and noises within the leased premises which
are associated with the normal operation of Tenant's restaurant shall not be
objected to by Landlord if same do not travel within other leased or occupied
spaces in the regional mall development. Tenant shall not permit the operation
of any coin operated or vending machines (provided Tenant may utilize
telephones, juke boxes, cigarette machines and one gum ball machine to the
extent and in the manner currently used at a majority other Silver Diner
restaurants in the Baltimore/Washington metropolitan area as of the date this
Lease is executed) or pay telephones on the leased premises, other than in the
areas reserved solely for the use of Tenant's employees. Tenant shall not sell
or display any merchandise within five feet (5') of the storefront leaseline or
opening unless such sale or display shall be expressly approved on the Store
Design Drawings or otherwise approved by Landlord, in writing, except that
Tenant shall be permitted to display merchandise in the display windows, if any.
Tenant shall not use the areas adjacent to the leased premises for business
purposes. Tenant shall not store anything in service or exit corridors. Tenant
agrees that all receiving and delivery of goods and merchandise, and all removal
of merchandise, supplies, equipment, trash and garbage, and all storage of trash
and garbage, shall be made only by way of or in the areas provided therefor by
Landlord. Tenant shall not use or permit the use of any portion of the leased
premises as sleeping quarters, lodging rooms, or for any unlawful purposes.
Tenant shall not install any radio or television or other similar device
exterior to the leased premises and shall not erect any aerial on the roof or
exterior walls of any building within the regional retail development. Landlord
may direct the use of all pest extermination contractors at the sole cost and
expense of Tenant and at such intervals as Landlord may require. Failure of
Tenant to employ the pest extermination contractor designated by Landlord shall
entitle Landlord to employ such contractor with respect to Tenant's premises and
Tenant shall reimburse Landlord for the cost thereof. Landlord shall have the
option to provide pest extermination services for the Shopping Center or the
regional retail development or-any part thereof, in which event Tenant shall pay
to Landlord Tenant's proportionate share of the cost of such service, with such
proportionate share to be calculated in the manner provided in Section 8.03 of
this Lease. In the event that Tenant is permitted pursuant to this Lease to
engage in the sale of food and beverages from the leased premises, then Tenant
shall: (i) offer such food and beverages only in accordance with the use clause
set forth in Section 7.01 of the Data Sheet to this Lease, (ii) serve its
customers in ceramic containers or dishes, non-disposable glass or heavy plastic
21
drinking glasses, and metal utensils (except Tenant may utilize other containers
for take out), and with utensils to be approved by Landlord, subject to change
by Landlord from time to time, (iii) be solely responsible for prompt disposal
within the premises of all trash, garbage and debris, and (iv) inspect and
maintain all grease traps, pans and hood ventilators in good order, condition
and repair, and shall contract for same if and as required by Landlord. The
covenants of Tenant regarding hazardous, toxic or radioactive materials, as set
forth in this Lease, shall survive the expiration or earlier termination of the
term of this Lease. Without limiting any of the foregoing provisions, Tenant
also shall be required to maintain, at all times, a minimum staff of two (2)
employees for operation of the leased premises, and Tenant shall not permit the
leased premises to be left unattended at any time.
SECTION 7.03. RADIUS. During the term of this Lease, in the event Tenant,
its parent corporation or subsidiary corporation, or its franchisor or
franchisee, or its licensor or licensee, or any person, firm, corporation or
other entity who or which controls or is controlled by Tenant, or by any person,
firm, corporation or other entity which directly or indirectly controls or is
controlled by Tenant, shall, directly or indirectly, either individually or as a
partner or stockholder or otherwise, own, operate or become financially
interested in any business similar to or in competition with the business of
Tenant described in Section 7.01 within a radius of ten (10) miles from the
leased premises, then the Gross Sales (as defined in this Lease) of any such
business or businesses within said radius shall be included in the Gross Sales
made from the leased premises and the percentage rent hereunder shall be
computed upon the aggregate of the Gross Sales made from the leased premises and
by any such other business or businesses then conducted within said radius and
Tenant shall report and maintain records of such sales in the manner provided in
Article III hereof. This Section 7.03 shall not apply to any such business or
businesses open and being operated by Tenant within said radius as of the date
of this Lease as long as such business or businesses shall continue to be
operated in the same location(s) existing as of said date. If Tenant fails to
make payments required pursuant to this Section 7.03, Landlord or Landlord's
authorized representative or agent shall have the right at all reasonable times
during the term hereof and for a period of at least three (3) years after the
expiration of the term of this Lease, to inspect, audit, copy and/or make
extracts of the books, source documents, records and accounts pertaining to such
other business or businesses conducted within said radius, in accordance with
the provisions of Article IV hereof, for the purpose of determining or verifying
the additional rents due to Landlord pursuant to this Section. Moreover, in the
event Tenant fails to supply to Landlord sales records with respect to any such
similar or competing business, Landlord shall have the right to estimate the
sales for such businesses based upon Tenant's Gross Sales in the leased
premises, and the additional percentage rent generated from the inclusion of
such estimated sales and Tenant's Gross Sales shall be deemed additional rent to
be paid by Tenant in accordance with the provisions of Section 2.02 and 2.06 of
this Lease.
(9) Section 7.03: Radius: Seven (7) miles through the sixtieth (60th)
month of the lease term and five (5) miles for the remainder of the lease term.
The provisions of Section 7.03 shall be interpreted as having "seven (7) miles
substituted for the reference to ten (10) miles through the sixtieth (60th)
month if the lease term and "five (5) miles" substituted for the reference to
"ten (10) miles" during the remainder of the lease term.
SECTION 7.04. STORAGE, OFFICE SPACE. Tenant shall warehouse, store and/or
stock in the leased premises only such goods, wares and merchandise as Tenant
intends to offer for sale at retail at, in, from or upon the leased premises.
This shall not preclude occasional emergency transfers of merchandise from the
other stores of Tenant, if any, not located in the Shopping Center. Tenant
shall use for office, clerical or other non-selling purposes only such space in
the leased premises as is from time to time reasonably required for Tenant's
business in the leased premises.
SECTION 7.05. CARE OF PREMISES. Tenant, at Tenant's expense, shall at all
times keep the leased premises (including the service areas adjacent to the
premises, display windows and signs) orderly, neat, safe, clean and free from
rubbish and dirt, and vermin, and shall store all trash, garbage and other solid
waste within the leased premises. Tenant shall not burn any trash or garbage at
any time in or about the regional retail development. Landlord may direct the
use by Tenant at Tenant's expense of all solid waste disposal contractors at
such intervals as Landlord may require. If Landlord shall provide or contract
for any services or facilities for solid waste pickup or sewer cleaning, then
22
Tenant shall be obligated to use the same and shall pay a proportionate share of
the expense thereof within twenty (20) days after being billed therefor. If
Landlord does not provide such services, Tenant shall arrange for the regular
pickup of all solid waste at Tenant's expense.
ARTICLE VIII. COMMON AREAS
SECTION 8.01. OPERATION AND MAIN1ENANCE OF COMMON AREAS. Landlord agrees
to cause to be operated and maintained during the term of this Lease all common
areas within the Shopping Center. The manner in which such areas and facilities
shall be operated and maintained, and the expenditures therefor, shall be at the
sole discretion of Landlord and the use of such areas and facilities shall be
subject to such uniform regulations as Landlord shall make from time to time,
provided that Landlord's regulations may distinguish between tenants engaged in
different uses. Landlord shall use reasonable efforts to maintain the common
areas in a neat, clean and orderly condition.
SECTION 8.02. USE OF COMMON AREAS. The term "common area," as used in
this Lease, shall mean (i) the following areas within the regional retail
development: If Landlord imposes parking charges in the parking area cross-
hatched on Exhibit D, then Tenant shall be entitled to reimbursement from
Landlord for such charges imposed on Tenant's customers (through validation or
otherwise) to the extent and on the same basis that any other restaurant tenant
or Department Store Site operator is entitled to such reimbursement: parking
areas and facilities as determined by Landlord (collectively "parking
facilities"), roadways, pedestrian sidewalks and walkways, pedestrian plazas,
pedestrian passage areas, driveways, public transportation loading and unloading
facilities, truckways, loading docks, delivery areas, landscaped areas,
community rooms, office facilities, the enclosed Mall, berms, elevators and
escalators and stairs and ramps and vertical transportation facilities not
contained within any leased premises, public restrooms and comfort stations,
service areas, service and fire and exit corridors, passageways, retention ponds
(if applicable), and other areas, amenities, facilities and improvements
provided by Landlord, (ii) those areas within the regional retail development
and areas adjacent to the regional retail development which from time to time
may be provided by the owners of such areas for the convenience and use of
Landlord, the tenants of the Shopping Center, the owners and occupants of the
Department Store Sites, and their respective concessionaires, agents, employees,
customers, invitees and all other licensees and others entitled to the use
thereof and (iii) any other facilities or areas, whether within or outside the
regional retail development, as may be designated by Landlord from time to time.
The use and occupancy by Tenant of the leased premises shall include the use of
the common areas in common with Landlord and with all others for whose
convenience and use the common areas have been or may hereafter be provided by
Landlord or by the owners of common areas not within the Shopping Center,
subject, however, to rules and regulations for the use thereof as prescribed
from time to time by Landlord or the owner of such common area, including,
without limitation, the right of Landlord to determine the hours and mode of
operation of the elevators, escalators and vertical transportation facilities
serving the Shopping Center, and including the right of Landlord or such owner
to impose parking charges, whether by meter or otherwise, with respect to any
parking facilities. In no event, however, shall Tenant, its agents or
employees, use the common areas for the display or sale of merchandise. Without
limiting the generality of the foregoing, Landlord may include in common areas
those portions of the Shopping Center presently or hereafter sold or leased to
Department Stores, until the building thereon has been opened for business, at
which time there shall be withdrawn from the common areas those areas not
provided by the owner thereof for common use. Tenant and its employees and
agents shall park their cars and other vehicles only in areas specifically
designated from time to time by Landlord for that purpose, and shall not in any
case park their vehicles in any private or non-public portions of the parking
facilities. Tenant covenants that it will enforce the parking by its employees
and agents in such designated areas and in only public areas. Automobile
license numbers of employees' and agents' vehicles shall be furnished by Tenant
to Landlord upon Landlord's request. In the event any vehicle is parked by
Tenant or by an employee or agent of Tenant in a private or non-public parking
area or in any portion of the parking facilities other than the area of such
parking facilities as shall be designated by Landlord, Tenant shall be obligated
to pay Landlord the sum of One Hundred Dollars ($100) per day for each such
vehicle in order to partially compensate Landlord for the loss of percentage
rent arising from the business lost to Tenant and to other tenants
23
in the Shopping Center due to the lack of available parking space in the said
parking facilities, and Landlord shall have the right to cause the vehicle to be
towed to a location designated by Landlord and Tenant shall be obligated to
reimburse Landlord for all towing charges. Similarly, Landlord shall have the
right to cause any vehicle to be towed if the parking charges, if any, or the
per diem charge or reimbursement due to Landlord hereunder, with respect to such
vehicle have not been paid; with any such vehicle to be towed to a location
designated by Landlord and with Tenant being obligated to pay all parking
charges, fines and towing charges imposed by Landlord with respect to such
vehicles. Tenant further agrees to hold harmless Landlord and defend Landlord,
its agents and employees against any and all claims of the employee, agent
and/or owner of the vehicle towed. Landlord shall have the further option of
prohibiting Tenant and its employees and agents from parking their cars or other
vehicles in the parking facilities, and the violation of such prohibition shall
be subject to the same provisions as set forth above. Landlord may at any time
close temporarily any common area to make repairs or changes, to prevent the
acquisition of public rights in such area, to discourage noncustomer parking, to
use areas for attendant or valet parking, and may do such other acts in and to
the common areas as in its judgment may be desirable to improve the convenience
thereof. Tenant shall not provide, nor shall Tenant authorize any person or
entity to provide, valet or attendant parking for Tenant's customers or others;
Landlord shall have the exclusive right, but shall not be obligated, to provide
valet or attendant parking at the regional retail development. If Landlord
imposes parking charges in the parking area cross-hatched on Exhibit D, then
Tenant shall be entitled to reimbursement from Landlord for such charges imposed
on Tenant's customers (through validation or otherwise) to the extent and on the
same basis that any other restaurant or Department Store Site operator is
entitled to such reimbursement.
SECTION 8.03. TENANT'S PRO RATA SHARE OF EXPENSES. (a) Tenant agrees to
pay to Landlord in the manner hereinafter provided, but not more often than once
each calendar month Tenant's proportionate share of: (1) all costs and expenses
of every kind and nature paid or incurred by Landlord in operating, equipping,
policing and protecting, lighting, heating, air conditioning, providing
sanitation and sewer and other services, providing a music and public address
system, insuring (including self-insurance and the payment of deductible amounts
under insurance policies), repairing, replacing and maintaining (i) the common
areas and (ii) all buildings and roofs within the Shopping Center and (iii) all
other areas, facilities and buildings, including project offices, parking
facilities, vertical transportation facilities, retention ponds (if applicable),
and any and all facilities and improvements connecting the regional retail
development to off-site buildings or areas, which are used in connection with
the maintenance and/or operation of, and whether located within or outside of,
the regional retail development (hereinafter collectively referred to as
"project areas"); such costs and expenses shall include, but shall not be
limited to, the full cost of: illumination and maintenance of regional retail
development signs, whether located on or off the regional retail development;
holiday and seasonal lighting, decorations and displays; refuse disposal, water,
gas, sewage, electricity and other utilities (without limitation), including any
and all usage, service, hook-up, connection, availability and/or standby fees or
charges pertaining to same, and including all costs associated with the
provision, maintenance and operation of any central telephone service for the
regional retail development; the operation, maintenance, repair and replacement
of all or any part of the parking facilities; snow removal; maintenance,
operation, repair and replacement of any and all roads (temporary or otherwise)
servicing the regional retail development, including, without limitation, any
landscaping or other work related to such roads; maintenance and operation of
any temporary or permanent utility, including a sewage disposal system, within
or without the regional retail development, built, operated and/or maintained
for the specific purpose of servicing the regional retail development, together
with hook up or connection fees and service charges; compliance with laws,
rules, regulations and orders of governmental authorities; maintenance for
wooded areas, retention ponds, lakes and shoreline areas (if applicable);
cleaning, lighting, striping and landscaping; curbs, gutters, sidewalks,
drainage and irrigation ditches, conduits, pipes and canals located on or
adjacent to the regional retail development; premiums and all other costs with
respect to liability, casualty, and property insurance, and compliance with
insurance requirements; personal property taxes; licensing fees and taxes; audit
fees and expenses; supplies; the cost and expense of supplying music to the
regional retail development; all costs and expenses of enforcing the rules and
regulations established by Landlord for the Shopping Center and handling of
claims or other matters arising from the operation of the regional retail
development; real estate taxes and assessments and substitutions and
replacements
24
thereof levied or assessed by municipal, county, state, federal or other taxing
or assessing authority upon, against or with respect to the common areas, the
project areas and/or the land thereunder and the land on which the Shopping
Center buildings are located, and all property (including any land upon which
may be located any temporary or permanent utility, including a sewage disposal
system, within or without the regional retail development built, operated and/or
maintained for the purpose of servicing the regional retail development)
provided by Landlord which may at any time comprise or serve the Shopping
Center, whether located on or off the site of the Shopping Center, irrespective
of whether the same is taxed or assessed as real or personal property; cost,
lease payment or depreciation of any equipment, improvements or facilities used
in the operation or maintenance of the common areas or project areas, including,
without limitation, any imputed interest as may be applicable to costs paid or
incurred by Landlord the full amount of which is not included under this Section
8.03 in the year so paid or incurred, and including any interest or other
expense associated with any loans obtained by Landlord with respect to any cost
or expense included or includable hereunder, including any portion of the long-
term debt on the Shopping Center which has been incurred for such purposes;
total compensation and benefits (including premiums for workers' compensation or
any other insurance or other retirement or employee benefits, and including all
costs incurred in providing such benefits) paid to or on behalf of employees
involved in the performance of the work specified in this Section 8.03 or
employees otherwise providing services to tenants or customers of the Shopping
Center; and (2) an amount equal to fifteen percent (15%) of the total of all of
the foregoing costs and expenses for the regional retail development. There
shall be excluded from the foregoing costs and expenses the following: (i)
ground rent or other rental payments made under any ground lease or other
underlying lease; (ii) cost of painting or redecorating individual tenants'
spaces; (iii) leasing commissions, legal expenses, architectural fees, and other
expenses incurred in connection with obtaining tenants for the Shopping Center
or with respect to existing tenants of the Shopping Center, provided that legal
and other expenses shall be included in costs and expenses payable by Tenant
pursuant to this Section 8.03 to the extent they relate to the common areas;
(iv) tenant allowances, concessions, and other costs and expenses incurred in
completing, fixturing, furnishing, renovating or otherwise improving, decorating
or redecorating space for individual tenants (including Tenant), prospective
tenants or other occupants or prospective occupants of the Shopping Center; (v)
salaries, wages, or other compensation paid to employees of Landlord who are not
assigned to the operation, management, maintenance or repair of the regional
retail development (other than the fifteen percent [15%] administrative fee),
provided that such expenses shall be includable in costs and expenses charged to
Tenant under this Section 8.03 to the extent any employees are so assigned to
the operation, management, maintenance or repair of the regional retail
development; (vi) fines or penalties due to the violation by Landlord of any
applicable law; (vii) any cost or expense for which Landlord actually receives
reimbursement from insurance, condemnation awards, other tenants (other than as
reimbursement for operating expenses) or any other source (other than
reimbursement of operating expenses); (viii) costs incurred in connection with
disputes with other tenants or occupants of the regional retail development, or
prospective tenants of the regional retail development, except to the extent
such disputes relate to the common areas; (ix) closing costs incurred in
connection with the sale, financing, refinancing, or mortgaging of the Shopping
Center; and (x) costs, fines, interest, penalties, legal fees or costs of
litigation incurred due to the late payment of taxes and utility bills.
In no event shall Tenant be obligated for the capital costs of initially
constructing the buildings in the regional retail development or the capital
costs of subsequent expansion construction for the regional retail development
(i.e., adding new department stores to the development or expanding the Shopping
-----
Center or the common areas). In addition, Tenant shall not be charged for both
the capital costs of replacing a particular item as well as the depreciation of
such item (i.e., Tenant may be charged either for the replacement cost of such
----
item or for the depreciation of the same item, but not both, and the method of
charging such a particular item to Tenant shall not prejudice Landlord's ability
to charge future costs associated with replacing such item either on the basis
of lump-sum replacement costs or on the basis of depreciation or amortization of
such costs). The proportionate share to be paid by Tenant shall be that portion
of the foregoing costs and expenses which the number of square feet of floor
area in the leased premises bears to the total number of square feet of gross
leased and occupied floor area of all buildings in the Shopping Center abutting
on the enclosed Mall. The gross leased and occupied floor area in effect for
the whole of any lease year shall be the average of the gross leased and
occupied floor area in effect on the first day of each calendar month in such
lease year.
25
(b) Tenant's proportionate share of such costs and expenses for each lease
year shall be paid in monthly installments on the first day of each calendar
month, in advance, in an amount estimated in good faith by Landlord from time to
time. Subsequent to the end of each calendar or fiscal lease year (at
Landlord's option), Landlord shall furnish Tenant with a statement, such
statement to show the method of Landlord's computation, of the actual amount of
Tenant's proportionate share of such cost and expenses for such period. If the
total amount paid by Tenant under this Section for any such year shall be less
than the actual amount due from Tenant for such year as shown on such statement,
Tenant shall pay to Landlord the difference between the amount paid by Tenant
and the actual amount due, such deficiency to be paid within ten (10) days after
the furnishing of each such statement, and if the total amount paid by Tenant
hereunder for any such year shall exceed such actual amount due from Tenant for
such year, such excess shall be credited against the next installment due from
Tenant to Landlord under this Section. Landlord may estimate the annual budget
and charge the estimated share to the Tenant on a monthly basis subject to
revision by Landlord of the budget from time to time and final annual adjustment
based upon actual expenses. Neither the provisions of this Section, nor any of
the other requirements or restrictions imposed upon Tenant under this Lease,
shall excuse Tenant from its obligation to comply with laws and ordinances and
other governmental requirements as set forth in Section 7.02 hereof.
ARTICLE IX. SIGNS
SECTION 9.01. SIGNS. Tenant shall affix a sign to the exterior surface of
the storefront of the leased premises fronting on the enclosed Mall and shall
maintain said sign in good condition and repair during the entire term of this
Lease. Said sign shall conform to the criteria for signs contained in Exhibit
B, and the size, content, design and location thereof shall be subject to the
prior written approval of Landlord. Landlord agrees that in the event Tenant
shall change the trade name under which the leased premises are operated in
accordance with Tenant's rights as expressly set forth in this Lease, then
Landlord shall not withhold approval of a new storefront sign reflecting such
change of trade name solely as a result of such new trade name. Furthermore, if
the design of Tenant's interior mall storefront signage changes and the design
change is being implemented at all of Tenant's restaurants with the trade name
permitted under Section 16.01, then Landlord shall not unreasonably withhold its
approval of such design changes provided the requirements of Exhibit 'B' are
satisfied and the sign is no larger than the prior sign approved by Landlord.
Except as hereinabove mentioned, Tenant shall not place or cause to be placed,
erected or maintained on any exterior door, wall, window or the roof of the
leased premises, or on the glass of any window or door of the leased premises,
or on any sidewalk or other location outside the leased premises, or within any
display window space in the leased premises, or within five (5) feet of the
front of the storefront leaseline or opening, whether or not there is a display
window space in the leased premises, or within any entrance to the leased
premises, or otherwise visible from the Mall, any sign (flashing, moving,
hanging, handwritten, or otherwise), decal, placard, decoration, flashing,
moving or hanging lights, lettering, or any other advertising matter of any kind
or description. Moreover, Tenant is prohibited from utilizing any displays
which are not part of the fixture plan approved in writing by Landlord for the
leased premises. If Tenant places or causes to be placed or maintained any of
the foregoing, the same may be removed by Landlord or Landlord's representative
without notice and without such removal constituting a breach of this Lease or
entitling Tenant to claim damages on account thereof. No symbol, design, name,
xxxx or insignia adopted by Landlord for the Shopping Center shall be used
without the prior written consent of Landlord. No illuminated sign located in
the interior of the leased premises and which is visible from the outside
thereof shall be permitted without the prior written approval of Landlord
provided illuminated signs not to exceed two (2) square feet in area may be
utilized to the extent and in the manner same are utilized in a majority of the
other Silver Diner restaurants in the Baltimore/Washington Metropolitan area.
All signs located in the interior of the leased premises shall be in good taste
and professionally printed so as not to detract from the general appearance of
the leased premises and the Shopping Center.
Section 9.01: Landlord shall arrange for the mall directory located in
------------
Tenant's wing of the Shopping Center to contain Tenant's logo and Tenant's trade
name with double sized lettering; the cost of installation incurred by Landlord
shall be paid for by Tenant. Tenant shall also be permitted to
26
install a Silver Diner icon kiosk at Center Court indicating Tenant's trade name
and the direction of the leased premises, which sign should be subject to the
approval of Landlord in all respects. Tenant may maintain such kiosk in the
Center Court during the entire lease term (as same may be extended) subject to
Landlord's right to cause Tenant to relocate same within the Center Court from
time to time. Also, during the ninety (90) day period following the commencement
date, Tenant's trade name shall be included on all interior mall advertising
sign holders (with Tenant to pay Landlord for production costs).
ARTICLE X. MAINTENANCE
SECTION 10.01. LANDLORD'S OBLIGATIONS FOR MAINTENANCE. Landlord shall
keep and maintain the roof, structural portions of the leased premises and
exterior surfaces of the exterior walls of the building in which the leased
premises are located (exclusive of doors, door frames, door checks, other
entrances, windows and window frames which are not part of common areas, and
storefronts) and the common area utility, plumbing and sewer facilities serving
the leased premises but located outside the leased premises (to the extent such
utility lines and sewer facilities are Landlord's, as opposed to the utility
provider's, responsibility) in good repair, except that Landlord shall not be
called upon to make any such repairs occasioned by the act or negligence of
Tenant, its agents, employees, invitees, licensees or contractors. Landlord
shall not be called upon to make any other improvements or repairs of any kind
upon the leased premises and appurtenances, except as may be required under
Articles XVII and XVIII hereof, and nothing contained in this Section 10.01
shall limit Landlord's right to reimbursement from Tenant for maintenance,
repair costs and replacement costs conferred elsewhere in this Lease.
SECTION 10.02. TENANT'S OBLIGATIONS FOR MAINTENANCE. (a) Except as
provided in Section 10.01 of this Lease, Tenant, at Tenant's expense, shall keep
and maintain in first-class appearance, in a condition at least equal to that
which existed when Tenant initially opened the leased premises for business,
some reasonable wear excepted, and in good order, condition and repair as
determined by Landlord (including replacement of parts and equipment, if
necessary) the leased premises and every part thereof and any and all
appurtenances thereto wherever located, including, but without limitation, the
interior surfaces of the exterior walls, the exterior and interior portion of
all doors, door frames, door checks, other entrances, windows, window frames,
plate glass, storefronts, all plumbing and sewage facilities within the leased
premises, including free flow up to the main sewer line, fixtures, ventilation,
heating and air conditioning and electrical systems exclusively serving the
leased premises (whether or not located in the leased premises), sprinkler
systems, walls, floors and ceilings, and all other repairs, replacements,
renewals and restorations, interior and exterior, ordinary and extraordinary,
foreseen and unforeseen, and all other work performed by or on behalf of Tenant
pursuant to the exhibits attached hereto or Articles V or VI hereof or otherwise
in accordance with the provisions of this Lease. Tenant shall remodel the
leased premises as required in Exhibit B.
(b) Tenant shall keep and maintain the leased premises in a clean, sanitary
and safe condition in accordance with the laws of the State and in accordance
with all directions, rules and regulations of the health officer, fire xxxxxxxx,
building inspector, or other proper officials of the governmental agencies
having jurisdiction, and Tenant shall comply with all requirements of law,
ordinances and otherwise, affecting the leased premises, all at the sole cost
and expense of Tenant. At the time of t le expiration or sooner termination of
the tenancy created herein, Tenant shall surrender the leased premises in good
order, condition and repair, ordinary wear and tear excepted.
(c) Tenant shall keep the leased premises and all other parts of the
regional retail development free from any and all liens arising out of any work
performed, materials furnished or obligations incurred by or for Tenant, and
agrees to bond against or discharge any such lien (including, without
limitation, any construction, mechanic's or materialman's lien) within twenty
(20) days after written request therefor by Landlord. Tenant shall give
Landlord at least fifteen (15) days' notice (except in an emergency, or when
repairs are required to be made promptly, in which event Tenant shall provide
Landlord with such prior written notice as is practicable) prior to commencing
or causing to be commenced any work on the leased premises the cost of which
shall exceed Five Thousand and
27
00/100ths Dollars ($5,000.00) (whether prior or subsequent to the commencement
of the lease term), so that Landlord shall have reasonable opportunity to file
and post notices of non-responsibility for Tenant's work. In addition, prior to
commencing or causing to be commenced any work on the leased premises, Tenant
shall file a Notice of Commencement (or other similar instrument limiting lien
rights related to Tenant's Work) as provided by applicable statutory provisions
and shall deliver a copy of such Notice of Commencement (or similar instrument)
to Landlord. Tenant shall reimburse Landlord for any and all costs and expenses
which may be incurred by Landlord by reason of the filing of any such liens
and/or the removal of same, such reimbursement to be made within fifteen (15)
days after written notice from Landlord to Tenant setting forth the amount of
such costs and expenses.
(d) Tenant, at its own expense, shall install and maintain fire
extinguishers, other fire protection devices as may be required from time to
time by any agency having jurisdiction thereof. Should Landlord's insurance
carrier require that Tenant's fire protection system be modified, Tenant shall
commence making such modification at its sole expense within thirty (30) days
after notice in writing by Landlord and complete the same within sixty (60) days
after such notice from Landlord. Failure of Tenant to do so shall entitle
Landlord to enter the leased premises and make such modification at the expense
of Tenant. Tenant shall pay all charges billed by Landlord within fifteen (15)
days after invoice. Tenant shall also be liable for any additional insurance
premiums assessed to Landlord relating to the leased premises.
(e) (1) Tenant agrees to operate its heating and its ventilating and air
conditioning system(s) serving the leased premises during regular Shopping
Center business hours so as to maintain comfort conditions. Temperatures in the
leased premises shall be compatible with temperatures in the enclosed Mall.
Tenant's installation of its heating and ventilating and air conditioning system
shall be as set forth in Exhibit B, attached hereto and made a part hereof.
Tenant shall be fully obligated for its maintenance and repair. Tenant shall
not drain heat or ventilation or air conditioning from the enclosed Mall into
the leased premises and Tenant shall at all times maintain adequate temperatures
within the leased premises to prevent any such drainage; likewise, Tenant shall
not discharge air from the leased premises into the enclosed Mall or other
interior areas. Landlord shall not be obligated to Tenant for any damages or
cost or expense resulting, directly or indirectly, from any failure or
malfunction of any air conditioning supply system or condenser water system
serving the Shopping Center or any component parts of any such system.
(2) To the extent the leased premises shall be serviced by a central
air conditioning or condenser water system, Tenant's obligation for connecting
to, and all charges for, the central system, as well as Tenant's installation,
operation and maintenance of its heating and ventilating and air conditioning
portion of the system shall be as set forth in Exhibit B (and any separate
exhibit relating to such central system) attached hereto and made a part hereof.
Landlord shall not be obligated to Tenant for any damages or cost or expense
resulting, directly or indirectly, from any failure or malfunction of the
central air conditioning supply system (or central condenser water system, as
applicable) or any component parts thereof. Tenants approved by Landlord for
the installation of a separate heating, ventilating and air conditioning system,
serving the leased premises, shall construct the same in accordance with
Landlord's criteria. If Tenant shall install such a system, Tenant shall be
fully obligated for its maintenance and repair.
Section 10.02(e): The leased premises shall not be serviced by Landlord's
----------------
central ventilation and air conditioning supply system.
(f) Tenant expressly waives all rights to make repairs at the expense of
Landlord as provided for in any statute or law in effect during the term of this
Lease.
(g) In the event that Tenant fails, refuses or neglects to commence and
complete repairs promptly and adequately, to remove any lien, to pay any cost or
expense, to reimburse Landlord, or otherwise to perform any act or fulfill any
obligation required of Tenant pursuant to this Section 10.02, Landlord may, but
shall not be required to following ten (10) days' notice to Tenant (except in an
emergency, in which event no notice shall be required), make or complete any
such repairs, remove such lien (without inquiring into the validity thereof),
pay such cost or perform such act or the like
28
without prior notice to, but at the sole cost and expense of, Tenant, and Tenant
shall reimburse Landlord for all costs and expenses of Landlord thereby incurred
within fifteen (15) days after receipt by Tenant from Landlord of a statement
setting forth the amount of such costs and expenses. The failure by Tenant so to
make repairs, to remove any lien, to pay any such cost or expense, or to so
reimburse Landlord (in the case of reimbursement, within such fifteen-day
period) shall constitute a default by Tenant under this Lease and shall carry
with it the same consequences as failure to pay any installment of rent.
Landlord's rights and remedies pursuant to this subsection (g) shall be in
addition to any and all other rights and remedies provided under this Lease or
at law.
ARTICLE XI. INSURANCE AND INDEMNITY
SECTION 11.01. TENANT'S INSURANCE. (a) Tenant, at its sole cost and
expense, shall, at all times, commencing with the date upon which the leased
premises shall be made available for Tenant's Work, procure, pay for and keep in
full force and effect: (i) a commercial general liability policy (ISO form or
equivalent), including insurance against assumed or contractual liability under
this Lease with respect to the leased premises and the operations of Tenant and
any subtenants of Tenant in, on or about the leased premises in which the limits
with respect to personal liability and property damage shall be not less than
Two Million Dollars ($2,000,000) per occurrence; (ii) all risk property
insurance, including theft and, if applicable, boiler and machinery coverage,
written at replacement cost value in an adequate amount to avoid coinsurance and
a replacement cost endorsement insuring Tenant's merchandise, trade fixtures,
furnishings, equipment and all items of personal property of Tenant and
including property of Tenant's customers located on or in the leased premises;
(iii) workers' compensation coverage as required by law; (iv) with respect to
alterations, improvements and the like required or permitted to be made by
Tenant hereunder, contingent liability and builder's risk insurance, in amounts
satisfactory to Landlord; (v) product liability coverage, including, without
limitation (if this Lease covers leased premises in which food and/or beverages
are sold and/or consumed), liquor liability coverage (if applicable to Tenant's
business) and coverage for liability arising out of the consumption of food
and/or alcoholic beverages on or obtained at the leased premises, of not less
than Two Million Dollars ($2,000,000) per occurrence for personal injury and
death and property damage; (vi) the insurance required under Exhibit B; and
(vii) such insurance as may from time to time be required by city, county, state
or federal laws, codes, regulations or authorities, together with such other
insurance as is reasonably necessary or appropriate under the circumstances.
The minimum limits of coverage as set forth in this paragraph may from time to
time, at Landlord's option, be increased by not more than five percent (5%) per
annum, on a cumulative basis, with such increase to occur not more often than
once during each lease year during the term hereof and with no individual annual
increase in coverage being greater than ten percent (10%). The deductibles
under any of such insurance policies to be carried by Tenant shall not exceed
Five Thousand Dollars ($5,000).
(b) All policies of insurance required to be carried by Tenant pursuant to
this Section 11.01 shall be written by responsible insurance companies
authorized to do business in the State rated AXII or better by A.M. Best (or an
equivalent rating by an equivalent rating service in the event A.M. Best shall
cease to operate as a rating service) and reasonably acceptable to Landlord.
Any such insurance required of Tenant hereunder may be furnished by Tenant under
any blanket policy carried by it or under a separate policy therefor; provided,
however, that: (1) any such blanket policy carried with respect to the
insurance required under subparagraphs (i), (iv), (v), (vi) and (vii) of Section
11.01(a) shall contain a "per location" endorsement assuring that any aggregate
limit under such blanket policy shall apply separately to the leased premises
and that the insurer thereunder shall provide written notice to Landlord if the
available portion of such aggregate is reduced to less than the minimum amounts
required under Section 11.01(a) by either payment of claims or the establishment
of reserves for claims (whereupon Tenant shall be obligated to take immediate
steps to increase the amount of its insurance coverage in order to satisfy the
minimum requirements set forth above), and (2) any such blanket policy carried
with respect to the property insurance required under subparagraph (ii) of
Section 11.01(a) shall contain an "agreed value" endorsement with respect to all
of the items of property identified in such subparagraph. A copy of each paid-
up policy evidencing such insurance (appropriately authenticated by the insurer)
or a certificate of the insurer, certifying that such policy has been issued,
providing the coverage required by this Section and containing provisions
specified herein, shall be delivered to
29
Landlord prior to the commencement of the term of this Lease and, upon renewals,
not less than thirty (30) days prior to the expiration of such coverage.
Landlord may, at any time, and from time to time, inspect and/or copy any and
all insurance policies required to be procured by Tenant hereunder.
(c) Each policy evidencing insurance required to be carried by Tenant
pursuant to this Section 11.01 shall provide coverage on an occurrence basis
(and not on a "claims-made" basis) and shall contain the following provisions
and/or clauses: (i) a cross-liability clause; (ii) a provision that such policy
and the coverage evidenced thereby shall be primary and non-contributing with
respect to any policies carried by Landlord, and that any coverage carried by
Landlord shall be excess insurance; (iii) a provision including Landlord, the
beneficial ownership entity of the Shopping Center (if any), the managing agent
of the Shopping Center and any other parties in interest designated by Landlord
or such beneficial ownership entity (if any), as additional insureds (except
with respect to workers' compensation insurance); (iv) a waiver by the insurer
of any right of subrogation against Landlord, the underlying lessor, if any, and
their respective agents, employees and representatives which arises or might
arise by reason of any payment under such policy or by reason of any act or
omission of Landlord, its agents, employees or representatives; (v) a
severability clause; (vi) a provision that the insurer will not cancel,
materially change or fail to renew the coverage provided by such policy without
first giving Landlord and the underlying lessor, if any, thirty (30) days' prior
written notice; and (vii) a provision (to the extent available) that no act or
omission of Landlord shall affect or limit the obligation of the insurer to pay
the amount of any loss sustained.
(d) In the event that Tenant fails to procure, maintain and/or pay for, at
the times and for the durations specified in this Section 11.01, any insurance
required by this Section, or fails to carry insurance required by law or
governmental regulation, Landlord may (but without obligation to do so) at any
time or from time to time, and without notice, procure such insurance and pay
the premiums therefor, in which event Tenant shall repay to Landlord all sums so
paid by Landlord together with interest thereon as provided elsewhere herein and
any costs or expenses incurred by Landlord in connection therewith, within
fifteen (15) days following Landlord's written demand to Tenant for such
payment.
(e) Tenant shall not carry any stock of goods or do anything in or about
the leased premises which will in any way tend to increase the insurance rates
on the Shopping Center, the regional retail development, the leased premises
and/or the building of which they are a part and/or the contents thereof. If
Tenant installs any electrical equipment that overloads the lines in the leased
premises, Tenant shall at its own expense make whatever changes are necessary to
comply with the requirements of the insurance underwriters and governmental
authorities having jurisdiction.
SECTION 11.02. LANDLORD'S INSURANCE. (a) Landlord agrees, during the term
hereof, to provide, to the extent the same is available from Landlord's
insurance carrier, in amounts and coverages determined by Landlord, with or
without deductibles, insurance coverage against such risks as are from time to
time included in a standard extended coverage endorsement, insuring the
improvements to the leased premises provided by Tenant pursuant to this Lease
(exclusive of Tenant's merchandise, trade fixtures, furnishings, equipment,
plate glass, signs and personal property of Tenant). Landlord may also carry at
its option special extended coverage endorsements and other special insurance
coverage (including, without limitation, earthquake coverage). Tenant shall
submit to Landlord an itemized statement setting forth the cost of such
improvements promptly after completion thereof and Tenant shall provide to
Landlord, within thirty (30) days after the end of each lease year of the term
hereof, a written appraisal of the then current replacement value of the
leasehold improvements to the leased premises, which appraisal shall be
certified by an independent insurance appraiser. In the event Tenant fails to
provide such itemized statement or any such appraisal, Landlord shall have the
right to estimate the value of said improvements, which estimate shall be
binding upon Tenant. Tenant agrees to pay Landlord for the total cost of so
insuring such improvements, including, without limitation, the payment of all
applicable deductible amounts, such payments (other than deductible amounts) to
be made in equal monthly installments on the first day of each calendar month,
in advance, in an amount estimated in good faith by Landlord; provided, however,
that Landlord may elect to xxxx Tenant for such costs on a basis less frequent
than monthly. Deductible amounts shall be paid by Tenant upon notice from
Landlord. Subsequent to the receipt by Landlord of an invoice for
30
such insurance premium, Landlord shall furnish Tenant with a written statement
setting forth such cost. If the total amount paid by Tenant under this Section
for any calendar, lease or fiscal year (at Landlord's option) shall be less than
the actual amount due from Tenant for such year as shown on such statement,
Tenant shall pay to Landlord the difference between the amount paid by Tenant
and the actual amount due, such deficiency to be paid within thirty (30) days
after the furnishing of each such statement, and if the total amount paid by
Tenant hereunder for any such calendar year shall exceed such actual amount due
from Tenant for such calendar year, such excess shall be credited against the
next installment due from Tenant to Landlord under this Section 11.02.
(b) Landlord agrees, during the term hereof, to carry rent interruption
insurance, which insurance may be carried in amounts equal to Tenant's total
minimum rent obligation for twelve (12) full months (or such other period as
Landlord may elect) under this Lease plus the total of the estimated costs to
Tenant of taxes, assessments, insurance premiums and common area maintenance
costs for such twelve (12) month period (or such other period as Landlord may
elect). Tenant agrees from time to time, to reimburse Landlord for the total
cost of such insurance, such reimbursement to be made within twenty (20) days
after receipt of a written statement from Landlord setting forth such cost.
(c) Any insurance required of Landlord hereunder may be furnished by or for
Landlord under any blanket policy carried by or for Landlord or under a separate
policy therefor. The cost of the foregoing insurance under this Section 11.02
is a part of the cost of the property insurance which may be included in the
costs and expenses set forth in Section 8.03 hereof. To the extent that the
foregoing insurance costs shall be so included under Section 8.03 and Tenant
shall pay its proportionate share of costs and expenses pursuant to said Section
8.03, such insurance costs shall not be separately charged to Tenant under this
Section 11.02.
SECTION 11.03. COVENANT TO HOLD HARMLESS. Tenant covenants to indemnify
Landlord, the underlying lessor, if any, and their respective officers,
directors, stockholders, beneficiaries, partners, representatives, agents and
employees, and save them harmless (except for loss or damage resulting from the
negligence of Landlord and not required to be insured against by Tenant pursuant
to this Article XI) from and against any and all claims, actions, damages,
liability, cost and expense, including reasonable attorneys' fees, in connection
with all losses, including loss of life, personal injury and/or damage to
property, arising from or out of any occurrence in, upon or at the leased
premises or the occupancy or use by Tenant of the leased premises or any part
thereof, or arising from or out of Tenant's failure to comply with any provision
of this Lease or occasioned wholly or in part by any act or omission of Tenant,
its concessionaires, agents, contractors, suppliers, employees, servants,
customers or licensees. For the purpose of this Section 11.03, the leased
premises shall include the service areas adjoining the same and the loading
platform area allocated to the use of Tenant and the parking facilities
servicing the Shopping Center. In case Landlord or any other party so
indemnified shall, without fault, be made a party to any litigation commenced by
or against Tenant, or if Landlord or any such party shall, in its sole
discretion, determine that it must intervene in such litigation to protect its
interest hereunder, including, without limitation, the incurring of costs,
expenses, and attorneys' fees in connection with relief of Tenant ordered
pursuant to the Bankruptcy Code (11 USC (S) 101 et. seq), then Tenant shall
--- ---
protect and hold them harmless by attorneys satisfactory to Landlord and shall
pay all costs, expenses and reasonable attorneys' fees incurred or paid by such
party in connection with such litigation. Landlord shall have the right to
engage its own attorneys in connection with any of the provisions of this
Section 11.03 or any other provision of this Lease, including, without
limitation, any defense of Landlord or intervention by Landlord, notwithstanding
any contrary provisions or court decisions of the State. The foregoing
provisions of this Section shall survive the expiration or earlier termination
of the term of this Lease. Landlord covenants to indemnify Tenant, and save it
harmless (except for loss or damage resulting from the negligence of Tenant, its
agents or employees) from and against any and all claims, actions, damages,
liability and expense, including attorneys' fees, in connection with loss of
life, personal injury and/or damage to property arising from or out of any
occurrence (other than any occurrence caused by Tenant, its agents or employees
or arising in connection with Tenant's business operations) in the common areas
of the Shopping Center.
31
ARTICLE XII. UTILITY CHARGES
SECTION 12.01. UTILITY CHARGES. (a) Tenant shall be solely responsible
for and shall promptly pay all necessary fees, deposits and charges, including
use and/or connection fees, hook-up fees, standby fees, and/or penalties for
discontinued or interrupted service, and the like, for water, gas, heat,
electricity, centrally conditioned cold air supply, sewer and sanitation, solid
waste disposal and any other service or utility used in or upon or furnished to
the leased premises, irrespective of whether Landlord has paid for these
services in advance, or otherwise. Landlord, at its sole option, may elect to
furnish any or all of the above services on a "rent inclusion basis" without
separate charge therefor to Tenant, by metering or otherwise, such charge to be
included in the minimum rent payable hereunder, in which event the minimum rent
specified in Section 2.01 shall be increased to reflect the value of such
service(s) as provided in paragraph (h) below. Alternatively, Landlord, at its
sole option, may provide for any or all of such services on a separate-charge
basis, and in such event Tenant shall purchase such service(s) from Landlord,
and within ten (10) days after Landlord bills Tenant for any such service Tenant
shall pay Landlord such rates, charges and fees, upon terms and conditions as
Landlord may establish; provided that, if the rates, charges or fees for any
such service are regulated by a public agency, the rates, charges and/or fees to
Tenant shall be computed using the rate schedules which would be applicable if
Tenant were at the time a direct customer of the applicable public utility
corporation without taking into account any discounts such as volume consumption
or energy conservation discounts. If the cost of any such service for any month
has not been made known to Landlord at the time of billing, Landlord shall have
the right to estimate the amount thereof, and to base its billing to Tenant upon
said estimated amount, and Landlord may 0adjust such billing when the actual
amount is made known to Landlord. Landlord shall also have the right to
periodically estimate the monthly amount required to be paid by Tenant to
Landlord with respect to any or all of such services provided by Landlord and
such estimated monthly amount or amounts shall be paid by Tenant on the first
day of each calendar month, in advance, at the place and in the manner specified
for payments of minimum rent hereunder. Landlord shall have the right to change
such estimated amount or amounts at any time and from time to time, by notice to
Tenant. If the total of the estimated monthly payments made by Tenant for any
lease year or calendar year shall be less than the actual amount due from Tenant
pursuant to the provisions of this Section, Tenant shall pay to Landlord the
difference between the amount paid by Tenant and the actual amount due within
ten (10) days after submission to Tenant of Landlord's statement and invoice
therefor; and if the total of the estimated payments made by Tenant for any such
year shall exceed the actual amount due from Tenant, the excess amount paid
shall be credited against the next payment due from Tenant to Landlord under
this Section. Landlord, at its sole option, may require Tenant to install
separate, appropriate meters for measuring Tenant's consumption of water,
electricity or the like, and may require Tenant to remove any or all such meters
upon Landlord's discontinuing the service in question to Tenant. The failure by
Tenant to pay when due any amount payable to Landlord under this Section 12.01
shall carry with it the same consequences as failure to pay any installment of
rent when due. Notwithstanding the foregoing, if a separate exhibit describing
applicable rates for a utility service is attached to this Lease, Tenant shall
pay for such service pursuant to such exhibit. Notwithstanding the foregoing,
Landlord and Tenant acknowledge that the leased premises are currently
separately metered for electricity and Tenant's electrical charges shall be
computed based upon such separate metering.
Tenant shall be entitled to employ an electrical engineer to survey its
actual consumption of electricity in the leased premises. In the event Tenant's
electrical engineer does not agree with the electrical consumption component of
the charge set forth by Landlord pursuant to this Section 12.01, then upon
notice from Tenant's engineer in writing to Landlord, which such notice shall
set forth the engineer's findings with respect to Tenant's consumption of
electrical service, Landlord shall be entitled either to accept such findings
and adjust its charge prospectively or within thirty (30) days thereafter to
advise Tenant in writing that it disagrees with such findings. Upon receipt of
such notice from Landlord, Tenant shall be entitled either to accept Landlord's
conclusion or both Landlord's and Tenant's electrical engineers shall within
fifteen (15) days thereafter select a third electrical engineer who shall have
access to both the leased premises and the Shopping Center for purposes of
computation of Tenant's consumption of electrical service. Such independent
electrical
32
engineer shall render a decision within thirty (30) days after his appointment,
which such decision shall be final and binding upon both Landlord and Tenant. It
is understood and agreed, however, that Tenant shall be obligated to pay all
charges billed by Landlord pursuant to this Section prior to and during the
period of arbitration and until the independent electrical engineer's findings
have been rendered in writing. It is further understood and agreed that, in the
event Landlord shall furnish a check meter to compute actual usage, the results
of such metering shall be final and conclusive with respect to charges billed
pursuant to this Section." This paragraph shall not apply if the leased premises
is located in Sunvalley.
(b) In the event Landlord furnishes electricity on a rent inclusion basis
as provided above, at such time as Tenant's lighting and electrical equipment
has been completely installed, Landlord may, at Landlord's sole option (and to
the extent permitted by applicable regulations), cause a survey of Tenant's
usage of electricity to be made by an independent electrical consultant selected
by Landlord. The consultant shall render a report to Landlord and Tenant
showing the estimated amount of electricity which Tenant will consume, the value
thereof, and the minimum rent reserved hereunder shall thereupon be increased to
reflect such value. Tenant shall promptly pay to Landlord the difference
between the minimum rent hereunder and the increased minimum rent as so
determined for all months of the term of this Lease which have therefore
elapsed, and each monthly installment of rent thereafter paid by Tenant shall be
based upon such increased rent. Subject to applicable utility regulations, each
party to this Lease shall thereafter have the right whenever such party believes
there has been a material increase or decrease in Tenant's regular usage of
electric current (that is, a change therein other than on a temporary basis) to
request, by notice to the other party, a redetermination of the fair rent value
of the electric service then furnished by Landlord. When any such request
occurs, the redetermination shall be made as promptly as possible by an
independent electrical consultant selected by Landlord, and, based upon its
report, the minimum rent theretofore required to be paid hereunder shall
thereafter be adjusted to reflect such new fair rent value. Any change or
adjustment in such report shall be binding on both Landlord and Tenant. It is
agreed that the cost of conducting the redetermination shall be borne solely by
the party requesting same. Tenant agrees, on request of Landlord, to execute
and deliver from time to time a supplement to this Lease, setting forth the new
minimum rent, as then determined as above provided. After the making of the
initial survey referred to above, Tenant shall not without prior written notice
to Landlord make any alterations in or additions to the electrical equipment
and/or appliances in the leased premises. Tenant shall promptly execute a
separate utility letter or utility agreement if requested by Landlord or by the
applicable utility company.
(c) Any furnishing by Landlord of electric current to the leased premises
shall be limited to the extent of the capacity of Landlord's existing feeders,
switches, risers, wiring installations and other electrical system serving the
leased premises (the "electric distribution system"). Tenant agrees that
Tenant's use of electrical current will at no time exceed the capacity of the
electric distribution system, and that Tenant will not make any alteration or
addition to the electric distribution system without Landlord's prior written
consent in each instance.
(d) In the event that, at any time during the term of this Lease, Tenant
desires to connect or install any additional electric fixtures, equipment or
appliances to the electric distribution system and such fixtures, equipment or
appliances require additional electric current which, in combination with
Tenant's existing electrical requirements exceeds the capacity of the electric
distribution system, then, provided that Landlord shall have consented in
writing to such connections or installations, Landlord, upon the written request
of Tenant and at the sole cost and expense of Tenant, will install any
additional riser or risers (and all other equipment necessary and proper in
connection therewith) to supply Tenant's electric requirements, but only if such
riser or risers (and such other equipment) are necessary to supply Tenant with
the electric current required by it and will not cause permanent damage or
injury to the leased premises or the regional retail development of which the
leased premises form a part or cause or create a dangerous or hazardous
condition or entail excessive or unreasonable alterations, repairs, expense or
interference with or disturbance of other tenants or occupants of the regional
retail development. Notwithstanding any provisions contained in this Section
12.01, Landlord shall not be obligated to provide any new
33
utility services or increased utility capacities to the leased premises to the
extent that the leased premises shall have been previously occupied by another
tenant, and, if the leased premises have not been previously occupied, Landlord
shall not be obligated to provide any utility services or utility capacities
other than as specifically set forth in Exhibit B. Tenant shall promptly advise
Landlord of any increase in Tenant's connected load to the electric distribution
system. Any additional utility services or any increase in utility capacities
beyond that in existence if the leased premises shall have been previously
occupied (or beyond the specifications set forth in Exhibit B if the leased
premises have not been previously occupied) shall be subject to the prior
written approval of Landlord, and such additional services or capacities shall
be provided at the sole cost and expense of Tenant.
(e) Tenant agrees further to provide and install, at Tenant's sole cost and
expense, all lamps, tubes, bulbs, stainers, ballasts, transformers and the like
items used or required in the leased premises.
(f) At any time during the term hereof, Landlord may, upon the thirty (30)
days' prior written notice to Tenant, discontinue furnishing electric current
(or such other utility being furnished by Landlord) to the leased premises
without thereby affecting this Lease in any manner or otherwise incurring any
liability to Tenant, except that the minimum rent reserved herein shall be
reduced by the amount then being paid by Tenant on account of Landlord's service
of electricity (or such other utility) to the leased premises, determined as
provided above (as the same may have been adjusted from time to time pursuant to
other provisions of this Article), and Landlord shall no longer be obligated to
furnish electric current (or such other utility) to the leased premises. If
Landlord shall give Tenant notice of intention to cease furnishing electric
current (or other utility) to the leased premises, Tenant may contract for and
receive such electric current (or such other utility) directly from the public
utility corporation then serving the Shopping Center, and if Tenant does so,
Landlord shall permit Tenant, at Tenant's sole cost, to use Landlord's risers,
wiring and electric installations (or other utility conduits, as applicable)
then serving the leased premises for such purpose to the extent that the same
are available, suitable and may be safely so used consistent with concurrent and
anticipated future use by Landlord and other tenants.
(g) If at any time after the date hereof, the electrical energy rates (or
other utility; step) as filed by the public utility corporation then serving the
Shopping Center shall be reduced or increased, or any tax shall be imposed
thereon (or subsequently increased or decreased), then the minimum rent reserved
herein shall be equitably adjusted as of the first day of the month next
following the effective date of such rate change to reflect the resulting
reduction or increase in the value of Landlord's service of providing Tenant
with electric current (or other utility service) on a rent inclusion basis, but
in no event shall the minimum rent be reduced below the amount stated in Article
11 hereof.
(h) Notwithstanding any other provisions of this Lease, the value of, or
(as applicable) the rate for, each utility furnished by Landlord, which utility
shall be subject to regulation by a public agency, shall be computed for the
purposes of this Lease in accordance with the rate schedules which would be
applicable if Tenant were at the time a direct customer of the applicable public
utility company serving the Shopping Center without taking into account any
discounts such as volume consumption or energy conservation discounts (subject
to any separate rate schedules for utility services as may be included in the
exhibits to this Lease). The value of, or (as applicable) the rate for, any
nonregulated utility service provided by Landlord shall be computed at the
prevailing rates which would be paid by Tenant for direct comparable service
from contractors in the local area, except to the extent that specific rates are
otherwise set forth in this Lease. The public utility corporation referred to
in this Section 12.01 shall be the utility company named in Exhibit C attached
hereto (if any), or the successor to such company or such other company
designated by Landlord.
(i) Landlord shall not be liable to Tenant for any loss, damage or expense
which Tenant may sustain if the quality or character of utilities used upon or
furnished to the leased premises are no longer available or suitable for
Tenant's requirements, or if said utilities are interrupted as a
34
result of actions by the public utility companies or any other cause and no such
change, interruption, or cessation of service shall constitute an eviction of
Tenant. In the event the supply of electricity to the leased premises is
continuously interrupted for a period of over seventy-two (72) hours and such
interruption in service is caused solely by the negligence of Landlord and, in
fact forces Tenant to cease operations within the leased premises, then, from
and after such seventy-two (72) hour period, and as Tenant's sole remedy, Tenant
shall be entitled to an abatement of minimum rent due under this Lease until the
date upon which electrical service to the leased premises is restored.
(j) Any obligation of Landlord to furnish light, heat, conditioned air, or
power or any utility service shall be conditioned upon the availability of
adequate energy sources. Landlord shall have the right to reduce heat,
lighting, air conditioning or other utility services within the regional retail
development, including without limitation, the leased premises and the common
areas, as required by any mandatory or voluntary fuel or energy saving
allocation, or any similar statute, regulation, order or program without such
action diminishing Tenant's obligations hereunder.
ARTICLE XIII. ESTOPPEL STATEMENT, ATTORNMENT
AND SUBORDINATION
SECTION 13.01 ESTOPPEL STATEMENT. Tenant shall, without charge, at any
time and from time to time, within ten (10) business days after receipt by
Tenant of written request therefor from Landlord or from any mortgagee under any
mortgage or any beneficiary under any deed of trust on the real property on
which the building containing the leased premises is located or of which the
leased premises are a part, deliver, in recordable form, a duly executed and
acknowledged certificate or statement to the party requesting said certificate
or statement or to any other person, firm or corporation designated by Landlord,
certifying: (a) that this Lease is unmodified and in full force and effect, or,
if there has been any modification, that the same is in full force and effect as
modified, and stating any such modification; (b) the date of commencement of the
term of this Lease; (c) that rent is paid currently without any off-set or
defense thereto; (d) the dates to which the rent and other charges payable
hereunder by Tenant have been paid, and the amount of rent and other charges, if
any, paid in advance; (e) whether or not there is then existing any claim of
Landlord's default hereunder and, if so, specifying the nature thereof; and (f)
any other matters relating to the status of such Lease as shall be requested by
Landlord or any such mortgagee or beneficiary from time to time; provided that,
in fact, such facts are accurate and ascertainable. Any such certificate or
statement by Tenant may, at the election of the requesting party, include
Tenant's undertaking not to pay rents or other charges for more than a specified
period in advance of the due dates therefor set forth herein. Landlord agrees
that Landlord will execute a similar estoppel certificate upon Tenant's request
(but in no event on more than one [1] occasion during any twelve [12] month
period).
SECTION 13.02. ATTORNMENT. In the event any proceedings are brought for
the foreclosure of, or in the event of the conveyance by deed in lieu of
foreclosure of, or in the event of exercise of the power of sale under, any
mortgage and/or deed of trust made by Landlord covering the leased premises, or
in the event Landlord sells, conveys or otherwise transfers its interest in the
Shopping Center or any portion thereof containing the leased premises, this
Lease shall remain in full force and effect and Tenant hereby attorns to, and
covenants and agrees to execute an instrument in writing reasonably satisfactory
to the new owner whereby Tenant attorns to such successor in interest and
recognizes such successor as the Landlord under this Lease. Payment by or
performance of this Lease by any person, firm or corporation claiming an
interest in this Lease or the leased premises by, through or under Tenant
without Landlord's consent in writing shall not constitute an attornment or
create any interest in this Lease or the leased premises.
SECTION 13.03. SUBORDINATION. Tenant agrees that this Lease shall, at the
request of Landlord, be subordinate to any underlying lease and to any mortgages
or deeds of trust that are now, or may hereafter be, placed upon the leased
premises and to any and all advances to be made thereunder, and to the interest
thereon, and all renewals, replacements and extensions thereof,
35
provided that the lessor under any such underlying lease or the mortgagees or
beneficiaries named in said mortgages or trust deeds shall agree to recognize
the interest of Tenant under this Lease in the event of foreclosure, if Tenant
is not then in default beyond applicable notice and cure periods. Tenant also
agrees that any underlying lessor or mortgagee or beneficiary may elect to have
this Lease constitute a prior lien to its underlying lease or mortgage or deed
of trust, and in the event of such election and upon notification by such
underlying lessor or such mortgagee or beneficiary to Tenant to that effect,
this Lease shall be deemed prior in lien to such underlying lease or mortgage or
deed of trust, whether this Lease is dated prior to or subsequent to the date of
said underlying lease or mortgage or deed of trust. Tenant agrees that upon the
request of Landlord, or any mortgagee or beneficiary, Tenant shall execute
whatever instruments may be required by Landlord or by any mortgagee or
beneficiary to carry out the intent of this Section.
SECTION 13.04. REMEDIES. Failure of Tenant to execute any statements or
instruments necessary or desirable to effectuate the foregoing provisions of
this Article, within ten (10) business days after written request so to do by
Landlord, shall constitute a breach of this Lease. In the event that Tenant
shall fail to execute said statements or instruments within five (5) business
days after Tenant's receipt of a second notice from Landlord stating that Tenant
has failed to execute such statements or instruments, Tenant shall pay to
Landlord Five Hundred and 00/l00ths Dollars ($500.00) in order to partially
compensate Landlord for the administrative costs and other damages arising from
Tenant's failure. Such per diem amount shall be immediately due and payable as
additional rent under this Lease.
ARTICLE XIV. ASSIGNMENT AND SUBLETTING
SECTION 14.01. NO ASSIGNMENT OR SUBLETTING. Notwithstanding any provision
herein to the contrary or reference herein to concessionaires or subtenants or
otherwise, Tenant agrees not to assign or in any manner transfer this Lease or
any estate or interest therein, and not to lease or sublet the leased premises
or any part or parts thereof or any right or privilege appurtenant thereto, and
not to allow anyone to conduct business at, upon or front the leased premises
(whether as concessionaire, franchisee, licensee, permitted subtenant,
department operator or otherwise), or to come in, by, through or under it, in
all cases either by voluntary or involuntary act of Tenant or by operation of
law or otherwise. Without limiting any of the other provisions contained in
this Section 14.01, the restrictions of this Section shall apply to any merger,
consolidation or other reorganization of Tenant or of Tenant's Guarantor or of
any corporate entity which directly or indirectly controls Tenant, and any such
merger, consolidation or other reorganization shall be deemed to be an
assignment of this Lease within the meaning of this Section 14.01. The sale,
issuance or transfer of any voting capital stock of Tenant or Tenant's Guarantor
or any voting capital stock of any corporate entity which directly or indirectly
controls Tenant (if any one of such entities, Tenant or Tenant's Guarantor or
any such controlling corporate entity, is a corporation the stock of which is
not traded on the New York Stock Exchange, the NASDAQ over the counter markets,
or the American Stock Exchange or any successor market thereto), or any
interests in any noncorporate entity which directly or indirectly controls
Tenant or Tenant's Guarantor which results in a change in the direct or indirect
voting control (or a change in the identity of any person, persons, entity or
entities with the power to vote or control at least fifty percent (50%) of the
voting shares of any class of stock) of Tenant, or Tenant's Guarantor, or any
corporate or noncorporate entity which directly or indirectly controls Tenant or
Tenant's Guarantor shall be deemed to be an assignment of this Lease within the
meaning of this Section 14.01. If Tenant is a partnership, trust or an
unincorporated association, then the sale, issuance or transfer of a controlling
interest therein, or the transfer of a majority interest in or a change in the
rioting control of any partnership, trust, unincorporated association, or
corporation which directly or indirectly controls Tenant, or the transfer of any
portion of any general partnership or managing interest in Tenant or in any such
entity, or any change or conversion of Tenant or of any such entity to a limited
liability company, a limited liability partnership, or any other entity which
possesses the characteristics of limited liability, shall be deemed to be a
prohibited assignment of this Lease within the meaning of this Section 14.01.
Any such prohibited act by Tenant or Tenant's Guarantor (or any attempt at
same), either voluntarily or involuntarily or by operation of law or otherwise,
36
shall, at Landlord's option, terminate this Lease without relieving Tenant of
any of its obligations hereunder for the balance of the stated term, and any
such act shall be null and void. The voluntary or other surrender of this Lease
by Tenant, or a mutual cancellation thereof, or the termination thereof by
Landlord pursuant to any provision contained herein, shall not work a merger and
shall, at the option of Landlord, terminate all or any existing franchises,
concessions, licenses, permits, subleases, subtenancies, departmental operating
arrangements or the like, or may, at the option of Landlord, operate as an
assignment to Landlord of the same. Nothing contained elsewhere in this Lease
shall authorize Tenant to enter into any franchise, concession, license, permit,
subtenancy, departmental operating arrangement or the like, except pursuant to
the provisions of this Section. Landlord has entered into this Lease with Tenant
in order to obtain for the benefit of the entire regional retail development the
unique attraction of Tenant's trade name set forth in Section 16.01 and the
unique merchandising mix and product line associated with Tenant's business as
described in Section 7.01, and Landlord has specifically relied on the identity
and special skill of the Tenant in its ability to conduct the specific business
identified in Section 7.01, and the foregoing prohibition on assignment or
subletting or the like is expressly agreed to by Tenant as an inducement to
Landlord to lease to Tenant. Tenant hereby acknowledges that the foregoing
provisions of this Section 14.01 constitute a freely negotiated restraint on
alienation.
Without limiting any of the foregoing provisions, neither Tenant nor any
other person having an interest in the possession, use, occupancy or utilization
of the leased premises shall enter into any lease, sublease, license, concession
or other agreement for use, occupancy or utilization of space in the leased
premises which provides for rent or other payment for such use, occupancy or
utilization based in whole or in part on the net income or profits derived by
any person from the property leased, used, occupied or utilized (other than an
amount based on a fixed percentage or percentages of receipts or sales), and any
such purported lease, sublease, license, concession or other agreement shall be
absolutely void and ineffective as a conveyance of any right or interest in the
possession, use, occupancy or utilization of any part of the leased premises.
Notwithstanding the foregoing, Tenant shall have the right to assign this Lease
to any entity which controls, is controlled by or is under common control with
Tenant, or to an entity with which Tenant merges or is consolidated, or to an
entity to which substantially all of the assets of Tenant are sold, provided
that (i) the assignee or successor entity shall continue to own and operate the
entire chain of restaurants operated under the trade name herein set forth, and
(ii) Xxxxxx Xxxxxx and his wife collectively (a) continues to beneficially own
at least twenty percent (20%) of the voting stock or general partnership
interests in the assignee or successor entity, (b) is and continues to be the
chief operating officer of such assignee or successor entity and (c) remains
actively engaged in the operation of the assignee's or successor entity's
business and at such time intends to continue future performance in such
capacity, and (iii) the assignee or successor entity shall agree in writing for
the benefit of Landlord to be bound by and to perform all of the terms and
conditions of this Lease, and (iv) Tenant shall remain primarily liable, not
merely as a surety, for the performance of all of the terms and conditions of
this Lease.
The sale, issuance or transfer of stock or partnership interests in Tenant,
whether in one transaction or a series of transactions, which results in a
change in control of Tenant shall not be deemed an assignment of the Lease if
following such transaction Xxxxxx Xxxxxx and his wife collectively (i) continues
to beneficially own at least twenty percent (20%) of the voting stock or general
partnership interests in Tenant, (ii) is and continues to be the chief executive
officer of Tenant and (iii) remains actively engaged in the operation of
Tenant's business and at such time intends to continue future performance in
such capacity.
A transfer of stock or partnership interests in Tenant by (i) bequest, (ii)
inheritance, or (iii) sale or assignment in the event of the total permanent
disability of Xxxxxx Xxxxxx shall not constitute an assignment of this Lease,
provided that such bequest, inheritance, sale or assignment of stock or
partnership interests is to the immediate family of Xxxxxx Xxxxxx (i.e., his
spouse, parents, brothers, sisters, children, or grandchildren, or their
spouses) or Tenant's officers, directors, shareholders or partners, and,
provided further, that the resulting managing officers, directors, shareholders
or partners, or in the case of a minor, the trustee, shall have proven expertise
in the operation of restaurant chains of similar size and nature.
37
In the event that the sale, issuance or transfer of stock or partnership
interests in Tenant will result in a change in control of Tenant and Xxxxxx
Xxxxxx shall not, following such sale, issuance or transfer of stock or
partnership interests, continue to (i) own at least twenty percent (20%) of the
voting stock or general partnership interests in Tenant and (ii) be the chief
executive officer of Tenant and (iii) be actively engaged in the operation of
Tenant's business and at such time intend to continue future performance in such
capacity, or in the event that Tenant desires to assign or transfer this Lease
other than as expressly permitted above, then Landlord shall not withhold its
consent thereto provided that the following prior conditions are met:
(a) a majority of the Silver Diner restaurants (but in no event less than
six (6) restaurants) in the Baltimore-Washington D.C. metropolitan areas shall
be assigned or transferred to the same assignee as part of the same transaction,
or in the event of a change of control of Tenant, all such restaurants shall
continue to be owned by Tenant;
(b) On the date following the date of the transfer, the assignee shall have
a net worth equal to or greater than the greater of (i) Eighteen Million and
00/100ths Dollars ($18,000,000.00) or (ii) Tenant's net worth on the date of
this Lease;
(c) Tenant's unexercised options to extend the term of this Lease, as set
forth in Section 1.02 hereof, shall be null and void and of no further force and
effect;
(d) the assignee or successor entity shall agree in writing for the benefit
of Landlord to be bound by and to perform all of the terms and conditions of
this Lease; and
(e) Tenant shall remain primarily liable, not merely as a surety, for the
performance of all of the terms and conditions of this Lease.
ARTICLE XV. WASTE
SECTION 15.01. WASTE OR NUISANCE. Tenant shall not commit or suffer to be
committed any waste upon the leased premises and shall not place a load upon any
floor of the leased premises which exceeds the floor load per square foot which
such floor was designed to carry. Tenant shall not commit or suffer to be
committed any nuisance or other act or thing which may disturb the quiet
enjoyment of any other occupant or tenant of the regional retail development.
Tenant agrees that business machines and mechanical equipment used by Tenant
which cause vibration or noise that may be transmitted to the building or
buildings comprising the regional retail development or to the leased premises,
to such a degree as to be reasonably objectionable to Landlord or to any
occupant, shall be placed and maintained by Tenant at its expense in settings of
cork, rubber or spring-type vibrato: isolators sufficient to eliminate such
vibrations or noise. Tenant shall take such action as Landlord reasonably deems
necessary to prevent or terminate any such nuisance or waste arising out of
Tenant's business, including, without limitation, any nuisance created by
employees, agents, contractors, invitees or licensees of Tenant.
ARTICLE XVI. TRADE NAME, PROMOTIONAL CHARGE
SECTION 16.01. TRADE NAME. Tenant agrees (a) to operate its business in
the leased premises under the name specifically set forth in the attached Data
Sheet; (b) not to change the advertised name or character of the business
operated in the leased premises; and (c) to refer to the Shopping Center by the
name set forth in Section 1.01 for the regional retail development in
designating the location of the leased premises in all advertising and in all
other references to the location of the leased premises. Landlord shall have
the right to include Tenant's trade name in any public relations, promotional or
advertising materials or information. By its execution of this Lease, Tenant
authorizes Landlord to utilize Tenant's trade name in the foregoing manner.
Notwithstanding the foregoing, Tenant shall be entitled to change the name of
its restaurant in the leased premises to the same trade name as Tenant is
operating all of its other restaurants, including,
38
in any event, at least five (5) such restaurants. Tenant shall also be permitted
to change the trade name under which the leased premises is operated following a
permitted assignment under Section 14.01, provided that a majority of the other
restaurants in the Washington, D.C.-Baltimore metropolitan areas which were
formerly operated under the 'Silver Diner' trade name are changed to the same
new trade name, and, provided that the trade name of at least six (6) other
restaurants is being changed to such trade name.
Section 16.01: Trade Name: "THE SILVER DINER"
SECTION 16.02. SOLICITATION OF BUSINESS. Tenant and Tenant's employees
and/or agents shall not solicit business in the parking areas or other common
areas, or any part of the regional retail development other than in the leased
premises, nor shall Tenant distribute any handbills or other advertising matter
in the parking area, other common areas, or any part of the regional retail
development other than in the leased premises. Tenant shall not give samples or
approach customers outside the leased premises for purposes of soliciting sales.
Moreover, and generally, Tenant shall not give away any promotional items which
could create a nuisance or require Landlord to incur additional common area
expenses.
SECTION 16.03. PROMOTIONAL CHARGE. (a) Landlord shall provide or cause to
be provided a program of advertising or promotional events which, in Landlord's
sole judgment, will serve to promote the regional retail development. Landlord
shall be compensated, out of promotional charges collected by Landlord during
each year for promotional services provided, in an amount equal to twenty-five
percent (25%) of the promotional charges so collected, on a non-cumulative
basis. Landlord shall not be obligated to expend more than is actually
collected. Any promotional services and personnel so provided shall be under
the exclusive control and supervision of Landlord, who shall have the sole
authority to employ and discharge personnel and to establish a budget. Tenant
agrees to pay to Landlord, as Tenant's share of the cost of said advertising and
promotional program, an annual promotional charge which originally shall equal
the amount as shown in the Data Sheet for this Lease, which annual promotional
charge shall, at Landlord's option, be payable by Tenant in equal monthly
installments at the time and in the manner set forth for rent payments in this
Lease. However, such annual promotional charge payable by Tenant will be
adjusted commencing January 1st immediately succeeding the commencement date of
the term of this Lease and annually thereafter, by a percentage equal to the
percentage increase from the base period of the Index (as defined in Section
27.20) to the respective January 1st or the closest month thereto that the Index
is published (but in no event shall Tenant pay less than the original
promotional charge as specified above). The term "base period" shall refer to
the month of adjustment in such annual promotional charge closest to and prior
to the date of commencement of the term of this Lease (i.e., the most recent
month prior to the commencement date during which such promotional charge has
been adjusted), or the date of the opening of the Shopping Center, whichever of
such dates shall be the later to occur. In addition to this cost of living
adjustment, such annual promotional charge may be increased from time to time by
Landlord to the extent required by increases in the costs of promotional, public
relations or advertising services provided pursuant to this Section (including,
without limitation, changes in costs arising from variations in the type, nature
or extent of such services). Tenant also agrees to pay to Landlord, within ten
(10) days after demand therefor, an initial promotional charge in the amount set
forth in the Data Sheet in addition to the foregoing promotional charges. The
various promotional charges set forth in this Section 16.03 and in the Data
Sheet shall be increased as of the commencement date of the Lease to reflect the
then current 0charges per square foot for Shopping Center tenants.
(b) Landlord reserves the right at any time to cease providing promotional
services and to cause a Merchants' Association to be formed. Upon the formation
of the Association, Landlord will turn over to the Association any funds in its
possession, collected from tenants as promotional charges, not spent or required
to discharge indebtedness, and less Landlord's compensation due under Section
16.03(a). Thereupon, Landlord shall be relieved of any and all liability to
Tenant in connection with such advertising and promotional services. Upon
formation of the Association, Tenant shall become a member thereof and will
maintain membership in good standing and will
39
abide by the regulations and cooperate in the activities of such Association
throughout the term of this Lease and any extensions or renewals thereof. The
purpose of the Merchants' Association shall be to encourage its members to deal
fairly and courteously with their customers, to follow ethical business
practices, and to assist the business of its members by sales promotions and
centerwide advertising. If Landlord shall elect to provide promotional services
and personnel to formulate and effect an advertising, promotional and public
relations program for the Shopping Center, Landlord shall be reimbursed by the
Merchants' Association for Landlord's cost of providing such promotional
services and personnel, in an amount equal to twenty-five percent (25%) of the
annual dues payable to the Merchants' Association. Any promotional services and
personnel so provided shall be under the exclusive control and supervision of
Landlord, who shall have the sole authority to employ and discharge such
personnel. The provisions of this Section 16.03 shall be deemed to be covenants
for the benefit of Landlord and said Association as and when formed, and may be
enforced by either of them as binding obligations of Tenant. Tenant's obligation
for payment of dues to the Association shall be the same sum per month as Tenant
was obligated to pay for promotional service prior to the formation of the
Association, subject, however, to annual adjustments approved by the Board of
Directors of the Association increasing said dues to the extent required by
increases in the costs of promotional, public relations and advertising services
(including, without limitation, changes in costs arising from variations in the
type, nature or extent of such services). In addition, the cost of living
adjustment referred to in Section 16.03(a) above with respect to Tenant's
monthly payment to Landlord for promotion services shall also apply in the same
manner to the Merchants' Association dues. In the event that such a Merchants'
Association shall be in operation as of the date of this Lease, the parties
hereby acknowledge the present application of this Section 16.03(b).
Sections 16.03 (a) & (b): In lieu of payment of the charge imported by
------------------------
these Sections, Tenant may elect to advertise the restaurant located in the
leased premises in Washington/Baltimore SMSA media (including, without
limitation, direct distribution advertising) using the name Lakeforest to
designate the location of such restaurant provided Tenant shall expend at least
Seventeen Thousand One Hundred Eighty-Two Dollars ($17,182.00) per lease year on
such advertising. If Tenant fails to provide to Landlord, within thirty (30)
days following the expiration of each lease year, copies of Tenant's books and
records showing such Seventeen Thousand One Hundred Eighty-Two Dollars
($17,182.00) expenditure for the lease year in question; then Tenant shall be
obligated to pay to Landlord an amount equal to the charges which Tenant would
have otherwise been obligated to pay to Landlord for such lease year under
Sections 16.03 (a) & (b).
(c) Landlord reserves the right, at any time, to dissolve any Merchants'
Association which may exist and to provide, or cause to be provided, a program
of advertising and promotional events which, in Landlord's sole judgment, will
serve to promote the regional retail development. In the event any such program
is so established, it shall be governed by the provisions of Section 16.03(a)
hereof.
(d) All recurring payments, charges, dues and assessments (other than the
initial assessment) payable under this Section 16.03 shall be due in monthly
installments on the first day of each month during the term of this Lease, and
all such items, and the initial assessment, shall be paid without deduction or
offset. Failure by Tenant to pay all amounts when due shall carry with it the
same consequences under Article XIX hereof as Tenant's failure to pay rent.
(11) Section 16.03: Original Annual Promotional Charge: N/A
ARTICLE XVII. DESTRUCTION OF LEASED PREMISES
SECTION 17.01. RECONSTRUCTION OF DAMAGED PREMISES. In the event the
leased premises shall be partially or totally destroyed by fire or other
casualty insured under the insurance carried by Landlord pursuant to Section
11.02 of this Lease so as to become partially or totally untenantable, then the
damage to the leased premises shall be promptly repaired (unless Landlord shall
elect not to rebuild as hereinafter provided), and the minimum rent and (to the
extent
40
covered by the insurance carried by Landlord under Section 11.02(b)) other
charges payable by Tenant to Landlord shall be abated in proportion to the floor
area of the leased premises rendered untenantable, and the Minimum Gross Sales
above which percentage rent is computed and payable shall likewise be
proportionately reduced. Payment of full rent and all other charges so abated
shall commence and Tenant shall be obligated to reopen for business on the
thirtieth (30th) day following the date that Landlord advises Tenant that the
premises are tenantable, unless Tenant opens at an earlier time in the damaged
area or remains open in such area following destruction or damage, in which
event there shall be no abatement or any such abatement shall terminate as of
the date of Tenant's earlier reopening. If Landlord shall elect to cause Tenant
to make the necessary repairs to the leased premises, as provided below, payment
of full rent and all other charges so abated shall commence and Tenant shall be
obligated to reopen for business on the one hundred twentieth (120th) day
following the date that Landlord advises Tenant of Landlord's election for
Tenant to perform such work. Landlord shall be obligated to cause such repairs
to be made unless Landlord, at its sole option, elects to cause Tenant to make
such repairs, in which event Tenant shall promptly complete the same and
Landlord will make available to Tenant for the sole purpose of reconstruction of
Tenant's improvements such portion of any insurance proceeds received by
Landlord from its insurance carrier, under a policy carried pursuant to Section
11.02 of this Lease, allocated to the leased premises by Landlord. In the event
of any such reconstruction by Tenant, an architect duly registered in the State
shall be selected by Landlord and shall direct the payment of such insurance
proceeds. Such insurance proceeds shall be payable to Tenant only upon receipt
by Landlord of certificates of said architect stating that the payments
specified therein are properly payable for the purpose of reimbursing Tenant for
expenditures actually made by Tenant in connection with such work. At the
election of Landlord or Landlord's mortgagee, direct payments may be made to
material suppliers and laborers upon written certification by said architect
that such payments are due and payable. Any such insurance proceeds in excess of
Tenant's actual expenditures in restoring the damage or destruction shall belong
to Landlord. In making repairs, restoration or reconstruction, Tenant, at its
expense, (subject to application of any insurance proceeds allocable to the
leased premises, as determined hereunder) shall comply with all laws,
ordinances, and governmental rules or regulations, and shall perform all work or
cause such work to be performed with due diligence and in a first-class manner.
All permits required in connection with said repairs, restoration and
reconstruction shall be obtained by Tenant at Tenant's sole cost and expense.
Any amount expended by Tenant in excess of such insurance proceeds received by
Landlord and made available to Tenant shall be the sole obligation of Tenant. In
the event of reconstruction or repair by Landlord, any amount expended by
Landlord in repairing the leased premises in excess of the proceeds of insurance
received by Landlord pursuant to Section 11.02 of this Lease allocated to the
leased premises shall be repayable by Tenant to Landlord within ten (10) days
after receipt by Tenant from Landlord of a statement setting forth the amount of
such excess. The party required hereunder to repair the damage to the leased
premises shall reconstruct such leased premises in accordance with the working
drawings originally approved by Landlord or with (at Landlord's sole election)
new drawings prepared by Tenant and acceptable to Landlord and Tenant. In no
event shall Landlord be required to repair or replace Tenant's merchandise,
trade fixtures, furnishings or equipment. If (i) more than thirty-five percent
(35%) of the floor area of the building in which the leased premises are located
or of the Shopping Center shall be damaged or destroyed by fire or other
casualty, or (ii) during the last two (2) years of the initial term hereof or
the last three (3) years of any renewal term hereof more than twenty-five
percent (25%) of the floor area of the leased premises or of the building in
which the leased premises are located or of the Shopping Center shall be damaged
or destroyed by fire or other casualty, or (iii) all or any part of the Shopping
Center or said building or the leased premises are damaged or destroyed at any
time by the occurrence of any risk not insured under the insurance carried by
Landlord pursuant to Sections 8.03 or 11.02(a), then Landlord, at its sole
option, may terminate this Lease by giving written notice to Tenant of
Landlord's election so to terminate, such notice to be given within ninety (90)
days after the occurrence of such damage or destruction. If Landlord repairs or
rebuilds, or requires Tenant to repair or rebuild the leased premises as herein
provided, Tenant, at Tenant's sole cost, shall repair or replace Tenant's
merchandise, trade fixtures, furnishings and equipment in a manner and to at
least a condition equal to that prior to the damage or destruction thereof.
41
SECTION 17.02. WAIVER OF SUBROGATION. Each party hereto does hereby
waive, remise, release and discharge the other party hereto and any officer,
director, shareholder, beneficiary, partner, agent, employee or representative
of such other party, of and from any liability whatsoever hereafter arising from
loss, damage or injury caused by fire or other casualty to the extent of any
recovery by the injured party under such insurance which is covered by fire,
extended coverage 'all-risk' or similar policies maintained by such party or
required to be maintained by such party under this Lease (or is within the
deductible limitations of such insurance). Both parties agree to procure a
waiver of rights of subrogation against each other on the part of their
insurance carriers in connection with insurance policies covering losses arising
out of destruction or damage to the leased premises, or the contents thereof, or
to other portions of the Shopping Center."
ARTICLE XVIII. EMINENT DOMAIN
SECTION 18.01. TOTAL CONDEMNATION OF LEASED PREMISES. If the whole of the
leased premises shall be taken by any public authority under the power of
eminent domain or sold to public authority under threat or in lieu of such a
taking, then the term of this Lease shall cease as of the day possession shall
be taken by such public authority, and the rent shall be paid up to that day
with a proportionate refund by Landlord of such rent and other charges as may
have been paid in advance for a period subsequent to the date of the taking.
SECTION 18.02. PARTIAL CONDEMNATION. (a)(i) If less than the whole but
more than five percent (5%) of the leased premises or more than fifty percent
(50%) of the common areas shall be so taken under eminent domain, or sold to
public authority under threat or in lieu of such a taking, Tenant shall have the
right either to terminate this Lease and declare the same null and void as of
the day possession is taken by public authority, or, subject to Landlord's right
of termination as set forth in Section 18.02(b) of this Article, to continue in
the possession of the remainder of the leased premises, upon notifying Landlord
in writing within twenty (20) days after such taking of Tenant's intention. In
the event Tenant elects to remain in possession, all of the terms herein
provided shall continue in effect, except that, as of the day possession of such
percentage of the leased premises is taken by public authority, the minimum rent
and other charges payable by Tenant to Landlord (to the extent that such charges
are based upon the square foot area of the leased premises) shall be reduced in
proportion to the floor area of the leased premises taken and the Minimum Gross
Sales above which percentage rent is computed and payable shall likewise be
proportionately reduced; thereafter, Landlord shall, at its own cost and
expense, make all necessary repairs or alterations to the basic building, so as
to constitute the remaining leased premises a complete architectural unit, and
Tenant, at Tenant's sole cost, shall similarly act with respect to Tenant's
improvements, trade fixtures, furnishings and equipment.
(ii) If five percent (5%) or less of the leased premises shall be so
taken, the lease term shall cease only on the part so taken, as of the day
possession shall be taken by such public authority, and Tenant shall pay rent
and other charges up to that day, with appropriate credit by Landlord (toward
the next installment of such rent or charges due from Tenant) of such rent or
charges as may have been paid in advance for a period subsequent to the date of
the taking; thereafter, the minimum rent and other charges payable to Landlord
(to the extent that such charges are based upon the square foot area of the
leased premises) shall be reduced in proportion to the amount of the leased
premises taken and the Minimum Gross Sales above which percentage rent is
computed and payable shall likewise be proportionately reduced. Landlord shall,
at its expense, make all necessary repairs or alterations to the basic building,
so as to constitute the remaining leased premises a complete architectural unit,
and Tenant, at Tenant's sole cost, shall similarly act with respect to Tenant's
improvements, trade fixtures, furnishings and equipment.
(b) If more than fifty percent (50%) of the building in which the leased
premises are located, or more than fifty percent (50%) of the leased premises,
or more than fifty percent (50%) of the Shopping Center or of the common areas,
shall be taken under power of eminent domain, or sold to public authority under
the threat or in lieu of such a taking, Landlord may, by written notice to
Tenant delivered on or before the tenth (both) day following the date of
surrendering possession
42
to the public authority, terminate this Lease as of the day possession is taken
by public authority. The rent and other charges shall be paid up to the day
possession is taken by public authority, with an appropriate refund by Landlord
of such rent as may have been paid in advance for a period subsequent to that
date.
SECTION 18.03. LANDLORD'S AND TENANT'S DAMAGES. All damages awarded for
such taking under the power of eminent domain or sale under threat or in lieu of
such a taking, whether for the whole or a part of the leased premises, shall
belong to and be the property of Landlord, irrespective of whether such damages
shall be awarded as compensation for diminution in value to the leasehold or to
the fee of the leased premises, and Tenant shall have no claim against either
Landlord or the condemning authority with respect thereto; provided, however,
that Landlord shall not be entitled to any award specifically designated as
compensation for, depreciation to, and cost of removal of, Tenant's stock and
trade fixtures.
ARTICLE XIX. DEFAULT
SECTION 19.01. RIGHT TO RE-ENTER. (a) In the event of (1) any failure of
Tenant to pay any rent or other charges due hereunder within five (5) business
days following notice from Landlord that the same is past due, or (2) if Tenant
shall fail to move into the premises and to commence the conduct of its business
on the date specified in Section 1.02 hereof (provided that if Tenant shall have
paid all rent, and shall also have paid the liquidated damages amounts payable
under Section 1.03 of this Lease as a result of Tenant's failure to initially
open for business in the leased premises on the commencement date of the term of
this Lease, then such failure to commence operations shall not be a default
permitting Landlord to exercise the rights under this Article XIX until the
expiration of ninety (90) days following the commencement date of the term of
this Lease), or fail to continuously operate its business pursuant to Section
7.02 for the purpose specified in Section 7.01 hereof, or fail to operate under
the name specified in Section 16.01 hereof, or if Tenant shall abandon said
premises, or permit this Lease to be taken under any writ of execution, or if
Tenant shall wrongfully offset against rents any amounts purported to be due by
Landlord to Tenant, or if there shall be any default by Tenant (or by any person
or entity which, directly or indirectly, controls, is controlled by, or is under
common control with Tenant) under any other lease with Landlord (or with any
person or entity which is affiliated with Landlord or which, directly or
indirectly, controls, is controlled by, or is under common control with
Landlord, or which is managed by the managing agent utilized by Landlord for the
Shopping Center) which shall not be remedied within the applicable grace period,
if any, provided therefor under such other lease, or if there shall be any
default by Tenant or any entity affiliated with Tenant with respect to any
financing instrument or arrangement, if any, relating to any items used in, or
the operation of business upon, the leased premises, or (3) any failure to
perform any other of the terms, conditions or covenants of this Lease to be
observed or performed by Tenant for more than thirty (30) days after written
notice of such default shall have been received or refused by Tenant (provided,
however, such period shall be extended for an additional, reasonable period if
Tenant has diligently commenced the curing of such default and is diligently
pursuing the same to completion, but in no event shall either the thirty (30)
day period or any extension thereof apply to Tenant's covenant to operate
pursuant to Section 7.02 of this Lease, unless the same is excused pursuant to
Section 17.01 or Article XVIII of this Lease); then Landlord, besides other
rights or remedies it may have, shall have the right to declare this Lease
terminated and the term ended (in which event, this Lease and the term hereof
shall expire, cease and terminate with the same force and effect as though the
date set forth in any required notice were the date originally set forth herein
and fixed for the expiration of the term and Tenant shall vacate and surrender
the premises but shall remain liable for all obligations arising during the
balance of the original stated term as hereafter provided as if this Lease had
remained in full force and effect) and Landlord shall have the right to bring a
special proceeding to recover possession from Tenant holding over and/or
Landlord may, in any of such events, without notice, re-enter the leased
premises either by force or otherwise, and dispossess, by summary proceedings or
otherwise, Tenant and the legal representative of Tenant or other occupant of
the leased premises and remove their effects and hold the premises as if this
Lease had not been made, and Tenant hereby waives the service of notice of
intention to re-enter or to institute legal
43
proceedings to that end. Notwithstanding the foregoing, if Tenant has closed its
business for repairs or alterations, and landlord believes that such closure
violates the continuous operation provisions of Section 7.02, then Landlord
shall not have the right to terminate this Lease or exercise its re-entry rights
unless Landlord shall first provide at least twenty-four (24) hours written
notice to Tenant of such violation and opportunity for Tenant to cure during
such 24-hour period."
(b) In addition to the remedies set forth herein for such failure by
Tenant, Landlord shall have the further remedy of erecting a barricade at the
storefront of the leased premises at such time as possession of the leased
premises is deemed vested in Landlord, which barricade may be erected, at
Tenant's expense, and without notice to Tenant or resort to legal process, and
without Landlord in any manner becoming liable for an; loss or damage which may
be occasioned thereby. Notwithstanding the foregoing provisions of this
Section, in the event Tenant shall fail to perform or shall default in the
performance of any term, covenant or condition of this Lease on three (3) or
more separate occasions during any twelve-month period, then, even though such
failures or defaults may have been cured by Tenant, any further failure or
default by Tenant during the following twelve (12) month period shall be deemed
a default without the ability for cure by Tenant. During the continuance of any
failure of performance or any default by Tenant in the performance of any term,
covenant or condition of this Lease, Tenant shall not be entitled to exercise
any rights or options, or to receive any funds or proceeds being held under or
pursuant to this Lease, notwithstanding any contrary provisions contained
herein. In the event of re-entry by Landlord, Landlord may remove all persons
and property from the leased premises and such property may be stored in a
public warehouse or elsewhere at the cost of, and for the account of Tenant,
without notice or resort to legal process and without Landlord being deemed
guilty of trespass, or becoming liable for any loss or damage which may be
occasioned thereby. In addition, and to the extent permitted by law, in the
event of re-entry by Landlord, Landlord may, but shall not be required to,
padlock or otherwise secure the entrances to the leased premises without prior
notice or resort to legal process and without being deemed guilty of trespass or
becoming liable for any loss or damage; all costs and expenses incurred by
Landlord in securing the entrances to the leased premises shall be borne by
Tenant and shall be payable to Landlord on ten (10) days' written notice; and
any such padlocking or securing of the premises shall not constitute or be
deemed as an election on Landlord's part to terminate this Lease unless a
written notice of such intention shall be given to Tenant or unless the
termination of this Lease is decreed by a court of competent jurisdiction. In
the event Tenant shall not remove its property from the leased premises within
ten (10) days after Tenant has vacated the premises, then such property shall be
deemed abandoned by Tenant and Landlord may dispose of the same without
liability to Tenant. To the extent that this Lease specifically provides for
any abatement of rent otherwise payable by Tenant under this Lease, or any
payment by Landlord to Tenant, such abatement shall not be effective, nor shall
such payment be required to be made, if Tenant shall be in default hereunder,
and in the event Landlord shall elect to exercise its remedies as set forth in
Section 19.02 of this Lease, then Tenant shall be obligated to immediately repay
to Landlord the amount of any rent previously abated or the amount of any
payment previously made by Landlord to Tenant hereunder, notwithstanding
anything contained in this Lease to the contrary.
Section 19.01: In the event that this Lease is terminated as a result of
-------------
Tenant's default prior to expiration of the stated lease term, then, in addition
to the rights and remedies which are available to Landlord, to compensate
Landlord for certain costs and expenses which the parties agree are difficult to
identify in total, Tenant shall owe Landlord, as additional rent, the sum of
Five Hundred Thousand and 00/100ths Dollars ($500,000.00) provided such Five
Hundred Thousand and 00/100ths Dollars ($500,000.00) figure shall be reduced by
Fifty Thousand and 00/100ths Dollars ($50,000.00) on each anniversary of the
commencement date of the lease term.
SECTION 19.02. RIGHT TO RELET. Should Landlord elect to re-enter, as
herein provided, or should it take possession pursuant to legal proceedings or
pursuant to any notice provided for by law, it may either terminate this Lease
or it may from time to time, without terminating this Lease, make such
alterations and repairs as may be necessary in order to relet the premises, and
relet said premises or any part thereof for such term or terms (which may be for
a term extending beyond the term of this Lease) and at such rent and upon such
other terms and
44
conditions as Landlord in its sole discretion may deem advisable. Upon each such
reletting all rents and other sums received by Landlord from such reletting
shall be applied, thirst, to the payment of any indebtedness other than rent due
hereunder from Tenant to Landlord; second, to the payment of any costs and
expenses of such reletting, including reasonable brokerage fees and attorneys'
fees and the costs of any alterations and repairs; third, to the payment of rent
and other charges due and unpaid hereunder; and the residue, if any, shall be
held by Landlord and applied in payment of future rent as the same may become
due and payable hereunder. If such rents and other sums received from such
reletting during any month be less than that to be paid during that month by
Tenant hereunder, Tenant shall pay such deficiency to Landlord; if such rents
and the sums shall be more, Tenant shall have no right to, and shall receive no
credit for, the excess. Such deficiency shall be calculated and paid monthly. No
re-entry or taking possession of the leased premises by Landlord shall be
construed as an election on its part to terminate this Lease unless a written
notice of such intention is given to Tenant or unless the termination thereof is
decreed by a court of competent jurisdiction. Notwithstanding any such reletting
without termination, Landlord may at any time elect to terminate this Lease for
such previous breach. Should Landlord at any time terminate this Lease for any
breach, in addition to any other remedies it may have, it may recover from
Tenant all damages it may incur by reason of such breach, including the cost of
recovering the leased premises, reasonable attorneys' fees, and including the
worth at the time of such termination of the excess, if any, of the amount of
rent and charges equivalent to rent reserved in this Lease for the remainder of
the stated term over the then reasonable rental value of the leased premises for
the remainder of the stated term, all of which amounts shall be immediately due
and payable from Tenant to Landlord. In determining the rent which would be
payable under this Lease by Tenant subsequent to default, the percentage rent
for each year of the unexpired portion of the term shall be equal to the average
percentage rent payable by Tenant from the commencement of the term to the time
of default, or during the preceding three (3) full lease years, whichever period
is shorter. The failure or refusal of Landlord to relet the premises shall not
affect Tenant's liability. Notwithstanding the foregoing, Landlord agrees to use
reasonable efforts to relet the leased premises; provided, however, that in no
event shall Landlord be obligated to give preference to leasing the leased
premises over other available space in the Shopping Center; and, provided
further, that Landlord shall have the absolute right to take the then existing
tenant-mix into account in connection with any such attempt to relet the leased
premises. The terms "entry" and "re-entry" are not limited to their technical
meanings. Nothing contained in this Lease shall be construed to limit or
prejudice the right of Landlord to prove for and obtain as damages by reason of
the termination of this Lease or re-entry of the leased premises for the default
of Tenant under this Lease an amount equal to the maximum allowed by any statute
or rule of law in effect at the time when, and governing the proceedings in
which, such damages are to be proved, whether or not such amount shall be
greater than any of the sums referred to in this Section.
SECTION 19.03. EXPENSES. In case suit shall be brought for recovery of
possession of the leased premises, for the recovery of rent or any other amount
due under the provisions of this Lease, or because of the breach of any other
covenant herein contained on the part of Tenant to be kept and performed, and a
breach shall be established, Tenant shall pay to Landlord all expenses incurred
therefor, including reasonable attorneys' fees. In addition, in the event
Landlord shall incur expenses, including reasonable attorneys' fees, as a result
of Tenant's failure to perform or comply with any term, covenant or condition
set forth in this Lease, Tenant shall pay to Landlord all such expenses. Any
amounts payable by Tenant to Landlord pursuant to this Section 19.03 or Section
11.03 of this Lease may be included in any subsequent monthly rent xxxx to
Tenant, and the failure of Tenant to promptly pay same shall entitle Landlord to
all remedies for failure to pay rent as available under this Lease or at law or
in equity.
SECTION 19.04. WAIVER OF COUNTERCLAIMS AND TRIAL BY JURY. Landlord and
Tenant waive their right to trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other (except
for personal injury or property damage) on any matters whatsoever arising out of
or in any way connected with this Lease, the relationship of Landlord and
Tenant, Tenant's use of or occupancy of said premises, and any emergency
statutory or any other statutory remedy. Tenant shall not interpose any
counterclaim or counterclaims or claims for set-off, recoupment or deduction of
rent in a summary proceeding for
45
nonpayment of rent or other action or summary proceeding based on termination,
holdover or other default in which Landlord seeks repossession of the leased
premises from Tenant.
ARTICLE XX. BANKRUPTCY OR INSOLVENCY
SECTION 20.01. TENANT'S INTEREST NOT TRANSFERABLE. Neither Tenant's
interest in this Lease, nor any estate hereby created in Tenant nor any interest
herein or therein, shall pass to any trustee, except as may specifically be
provided pursuant to the Bankruptcy Code (11 USC (S) 101 et. seq.), or to any
--- ---
receiver or assignee for the benefit of creditors or otherwise by operation of
law.
SECTION 20.02. TERMINATION. In the event the interest or estate created
in Tenant hereby shall be taken in execution or by other process of law, or if
Tenant or Tenant's Guarantor, if any, or Tenant's executors, administrators, or
assigns, if any, shall be adjudicated insolvent or bankrupt pursuant to the
provisions of any state law or an order for the relief of such entity shall be
entered pursuant to the Bankruptcy Code, or if a receiver or trustee of the
property of Tenant or Tenant's Guarantor, if any, shall be appointed by reason
of the insolvency or inability of Tenant or Tenant's Guarantor, if any, to pay
its debts, or if any assignment shall be made of the property of Tenant or
Tenant's Guarantor, if any, for the benefit of creditors, then and in any such
events, this Lease and all rights of Tenant hereunder shall automatically cease
and terminate with the same force and effect as though the date of such event
were the date originally established herein and fixed for the expiration of the
term, and Tenant shall vacate and surrender the leased premises but shall remain
liable as herein provided. Notwithstanding the foregoing provisions of this
Section, in the event that such termination shall result solely from the
bankruptcy or insolvency of, or such other described event relating to, Tenant's
Guarantor, Landlord shall have the option to reinstate all of the provisions of
this Lease (including, without limitation, the obligation of Tenant to
continuously operate pursuant to Article VII hereof) upon written notice to
Tenant.
SECTION 20.03. TENANT'S OBLIGATION TO AVOID CREDITOR'S PROCEEDINGS.
Tenant or Tenant's Guarantor, if any, shall not cause or give cause for the
appointment of a trustee or receiver of the assets of Tenant or Tenant's
Guarantor, if any, and shall not make any assignment for the benefit of
creditors, or become or be adjudicated insolvent. The allowance of any petition
under any insolvency law except under the Bankruptcy Code or the appointment of
a trustee or receiver of Tenant or Tenant's Guarantor, if any, or of the assets
of either of them, shall be conclusive evidence that Tenant caused, or gave
cause, therefor, unless such allowance of the petition, or the appoints lent of
a trustee or receiver, is vacated within thirty (30) days after such allowance
or appointment. Any act described in this Section 20.03 shall be deemed a
material breach of Tenant's obligations hereunder, and this Lease shall
thereupon automatically terminate in the same manner and with the same force and
effect as set forth in Section 20.02 hereof. Landlord does, in addition,
reserve any and all other remedies provided in this Lease or in law.
Notwithstanding the foregoing provisions of this Section, in the event that such
termination shall result solely from the bankruptcy or insolvency of, or such
other described event relating to, Tenant's Guarantor, Landlord shall have the
option to reinstate all of the provisions of this Lease (including, without
limitation, the obligation of Tenant to continuously operate pursuant to Article
VII hereof) upon written notice to Tenant.
SECTION 20.04 RIGHTS AND OBLIGATIONS UNDER THE BANKRUPTCY CODE. (a) Upon
the filing of a petition by or against Tenant under the Bankruptcy Code, Tenant,
as debtor and as debtor in possession, and any trustee who may be appointed
agree as follows: (i) to perform each and every obligation of Tenant under this
Lease including, but not limited to, the manner of "operation" as provided in
Section 7.02 of this Lease until such time as this Lease is either rejected or
assumed by order of the United States Bankruptcy Court; (ii) to pay monthly in
advance on the first day of each month, as reasonable compensation for use and
occupancy of the leased premises, an amount equal to all minimum rent and other
charges otherwise due pursuant to this Lease and to pay percentage rent monthly
at the percentage set forth in this Lease for the lease year in which such month
falls on all sales during such month in excess of one twelfth (1/12th) of
46
the Minimum Gross Sales for such lease year, with payment of all such percentage
rent to be made by the tenth (both) day of the succeeding month; (iii) to reject
or assume this Lease within sixty (60) days of the appointment of such trustee
under Chapter 7 of the Bankruptcy Code or within sixty (60) days (or such
shorter term as Landlord, in its sole discretion, may deem reasonable, so long
as notice of such period is given) of the filing of a petition under any other
Chapter; provided that no extension of either of the foregoing periods by or on
behalf of Tenant shall be permitted; (iv) to give Landlord at least forty-five
(45) days' prior written notice of any proceeding relating to any assumption of
this Lease; (v) to give at least thirty (30) days' prior written notice of any
abandonment of the leased premises, with any such abandonment to be deemed a
rejection of this Lease and an abandonment of any property not previously
removed from the leased premises; (vi) to do all other things of benefit to
Landlord otherwise required under the Bankruptcy Code; (vii) to be deemed to
have rejected this Lease in the event of the failure to comply with any of the
above; and (viii) to have consented to the entry of an order by an appropriate
United States Bankruptcy Court providing all of the above, waiving notice and
hearing of the entry of same.
(b) No default of this Lease by Tenant, either prior to or subsequent to
the filing of such a petition, shall be deemed to have been waived unless
expressly done so in writing by Landlord.
(c) It is understood and agreed that this is a Lease of real property in a
shopping center and that, therefore, Section 365(b)(3) of the Bankruptcy Code is
applicable to any proposed assumption of this Lease in a bankruptcy case.
(d) Included within and in addition to any other conditions or obligations
imposed upon Tenant or its successor in the event of assumption and/or
assignment are the following: (i) the cure of any monetary defaults and the
reimbursement of pecuniary loss immediately upon entry of a court order
providing for assumption and/or assignment; (ii) the deposit of an additional
sum equal to three (3) months' rent to be held pursuant to the terms of Section
26.01 of this Lease (notwithstanding any alteration or modification of the terms
of said Section); (iii) the use of the leased premises as set forth in Section
7.01 of this Lease and the quality, quantity and/or lines of merchandise of any
goods or services required to be offered for sale are unchanged; (iv) the
payment of any sums which may then be due or which may thereafter become due
pursuant to the provisions of Section 2.04 of this Lease; (v) the debtor, debtor
in possession, trustee, or assignee of such entity demonstrates in writing that
it has sufficient background including, but not limited to, substantial
retailing experience in shopping centers of comparable size and financial
ability to operate a retail establishment out of the leased premises in the
manner contemplated in this Lease, and meets all other reasonable criteria of
Landlord as did Tenant upon execution of this Lease; (vi) the prior written
consent of any mortgagee to which this Lease has been assigned as collateral
security; and (vii) the premises, at all times, remains a single store and no
physical changes of any kind may be made to the premises unless in compliance
with the applicable provisions of this Lease.
(e) Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code shall be deemed without further act or deed to
have assumed all of the obligations arising under this Lease on and after the
date of such assignment. Any such assignee shall, upon demand, execute and
deliver to Landlord an instrument confirming such assumption.
ARTICLE XXI. ACCESS BY LANDLORD
SECTION 21.01. RIGHT OF ENTRY. Landlord or Landlord's agents shall have
the right to enter the leased premises at all reasonable times, upon reasonable
advance notice to Tenant's store manager, which notice may be given orally, to
examine the same and to show them to prospective purchasers or mortgagees or
prospective tenants. Landlord or Landlord's agents shall have the further right
to enter the leased premises to make such repairs, alterations, improvements or
additions as Landlord may deem necessary or desirable, irrespective of whether
the work shall be for the leased premises or for other premises or facilities,
and Landlord shall be allowed to take all material into and upon the leased
premises that may be required therefor without
47
the same constituting an eviction of Tenant in whole or in part, and the rent
and other charges resented shall in no wise xxxxx while said repairs,
alterations, improvements, or additions are being made, by reason of loss or
interruption of business of Tenant, or otherwise provided, however, that
Landlord, in the absence of an emergency, shall make such repairs in a manner
which will not unduly interfere with the conduct of business on said premises,
having due regard for all circumstances then existing. Prior to entering the
leased premises to perform work which is Tenant's obligation, Landlord agrees to
provide Tenant with written notice if required under Section 10.02(g) of this
Lease." If an excavation shall be made upon land adjacent to the leased
premises, or shall be authorized to be made, Tenant shall afford to the person
causing or authorized to cause such excavation, license to enter upon the leased
premises for the purpose of doing such work as said person shall deem necessary
to preserve the wall or the building of which leased premises form a part from
injury or damage and to support the same by proper foundations without any claim
for damages or indemnity against Landlord, or diminution or abatement of rent.
ARTICLE XXII. TENANT'S PROPERTY
SECTION 22.01. TAXES ON TENANT'S PROPERTY. Tenant shall be responsible
for, and shall pay, prior to delinquency, any and all taxes, assessments,
levies, fees and other governmental charges of every kind or nature (for all
purposes under this Lease, collectively called "taxes") levied or assessed by
municipal, county, state, federal or other taxing or assessing authority upon,
against or with respect to (i) the leased premises or any leasehold interest,
(ii) all furniture, fixtures, equipment and any personal property of any kind
owned by Tenant or any previous tenant and occupant, and placed, installed or
located in, within, upon or about the leased premises, (iii) all alterations,
additions or improvements of whatsoever kind or nature, if any, made to the
leased premises, by Tenant or any previous tenant or occupant, and (iv) rents or
other charges payable by Tenant to Landlord, irrespective of whether any of the
terms described in clauses (i) through (iv) above are assessed against real or
personal property, and irrespective of whether any of such items are assessed to
or against Landlord or Tenant. If at any time during the term of this Lease any
of such taxes are not levied and assessed separately and directly to Tenant (for
example, if the same are levied or assessed to Landlord, or upon or against the
building containing the leased premises and/or the land underlying said
building), Tenant shall pay to Landlord Tenant's share thereof as determined by
Landlord.
SECTION 22.02. LOSS AND DAMAGE. Landlord shall not be responsible or
liable to Tenant for any loss or damage that may be occasioned by or through the
acts or omissions of persons occupying adjoining premises or any part of the
premises adjacent to or connected with the premises hereby leased or any part of
the building of which the leased premises are a part, or any other area in the
regional retail development, or for any loss or damage resulting to Tenant or
its property from bursting, stoppage or leaking of water, gas, sewer or steam
pipes, or (without limiting the foregoing) for any damages or loss of property
within the leased premises from any cause whatsoever except to the extent of
damage to Tenant's tangible personal property caused by Landlord's negligence
(provided in no event shall Landlord be liable for indirect or consequential
damages including, without limitation, lost profits and in no event shall
Landlord be liable to the extent the damage is covered by Tenant's insurance or
is required to be covered by the insurance which Tenant is obligated to maintain
under this Lease inclusive of self insurance and deductibles which are Tenant's
risk).
SECTION 22.03. NOTICE BY TENANT. Tenant shall give immediate notice to
Landlord in case of any damage to or destruction of all or any part of, or
accidents in, the leased premises or of defects therein or in alterations,
decorations, additions or improvements, including, without limitation, any
fixtures or equipment.
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ARTICLE XXIII. HOLDING OVER
SECTION 23.01. HOLDING OVER. Any holding over after the expiration of the
term hereof with the consent of the Landlord, shall be construed to be a tenancy
from month to month at a monthly minimum rent of not less than one-sixth (1/6)
the annual minimum rent effective for the final lease year or partial lease year
preceding expiration of the term (subject to further adjustment pursuant to the
various provisions of this Lease, including, without limitation, Section 2.04),
together with an amount estimated by Landlord for the monthly additional charges
payable pursuant to this Lease, and shall otherwise be on the same terms and
conditions (including, without limitation, payment of percentage rent) as herein
specified so far as applicable, subject to any changes in any of the foregoing
terms or conditions as may be submitted by Landlord to Tenant. Any holding over
without Landlord's consent shall entitle Landlord to re-enter the leased
premises as provided in Section 19.01 of this Lease.
SECTION 23.02. SUCCESSORS. All rights and liabilities herein given to, or
imposed upon, the respective parties hereto shall extend to and bind the several
respective heirs, executors, administrators, successors, and assigns of :the
said parties; and if there shall be more than one person or entity comprising
Tenant, they shall all be bound jointly and severally by the terms, covenants
and agreements herein. No rights, however, shall inure to the benefit of any
assignee of Tenant other than an assignee expressly permitted under the terms of
this Lease.
ARTICLE XXIV. RULES AND REGULATIONS
SECTION 24.01. RULES AND REGULATIONS. Tenant agrees to comply with and
observe all rules and regulations established by Landlord from time to time,
provided the same shall apply uniformly to all tenants of the Shopping Center.
Tenant's failure to keep and observe said rules and regulations shall constitute
a breach of the terms of this Lease in the same manner as if the rules and
regulations were contained herein as covenants. In the case of any conflict
between said rules and regulations and this Lease, this Lease shall be
controlling. The rules and regulations established by Landlord shall not
increase Tenant's monetary obligations to Landlord under the Lease nor
materially and adversely affect the right of Tenant to engage in its permitted
use as set forth in Section 7.01 of this Lease.
ARTICLE XXV. QUIET ENJOYMENT SECTION
25.01. LANDLORD'S COVENANT. Upon payment by Tenant of the rents herein
provided, and upon the observance and performance of all covenants, terms and
conditions on Tenant's part to be observed and performed, Tenant shall peaceably
and quietly hold and enjoy the leased premises for the term hereby demised
without hindrance or interruption by Landlord or any other person or persons
lawfully or equitably claiming by, through or under Landlord, subject,
nevertheless, to the terms and conditions of this Lease and any mortgage, deed
of trust or underlying lease to which this Lease is subordinate.
SECTION 25.02. TENANT'S COVENANT. Tenant hereby acknowledges and agrees
that Landlord has specifically relied upon the identity, skill, product line,
and trade name of Tenant in entering into this Lease with Tenant. Tenant
recognizes that its use of the leased premises in accordance with the use clause
set forth in the Data Sheet and its compliance with the particular provisions of
Article VII hereof, regarding the conduct and continuous operation of Tenant's
business in the leased premises throughout the term of this Lease, forms a
material inducement to Landlord, and Tenant specifically covenants that it will
strictly adhere to these provisions. Any ambiguities in Article VII or in the
use clause set forth in the Data Sheet shall be construed neither against Tenant
nor in favor of Landlord.
ARTICLE XXVI. SECURITY PROVISION
SECTION 26.01. SECURITY. The amount set forth in the Data Sheet as a
security deposit is payable by Tenant, upon the execution of this Lease by
Tenant, in the manner and at the
49
place where minimum rent is payable. Landlord is to retain said amount as
security for the faithful performance of all covenants, conditions and
agreements of this Lease. Such amount is occasionally referred to herein as the
"security." Landlord may, at its option, apply the security to remedy defaults
in the payment of any rent or other charge hereunder, to repair damages to the
leased premises caused by Tenant, or to clean the leased premises upon the
expiration or termination of this Lease; in no event however, shall Landlord be
obligated so to apply the security. Landlord's right to bring a special
proceeding to recover or otherwise to obtain possession of the leased premises
before or after Landlord's declaration of the termination of this Lease for
nonpayment of rent or for any other reason shall not in any event be affected by
reason of the fact that Landlord holds such security. Such security, if not
applied toward the payment of rent in arrears or toward the payment of damages
suffered by Landlord by reason of Tenant's breach of the covenants, conditions
and agreements of this Lease, is to be returned to Tenant without interest,
except as provided by law, when this Lease is terminated according to its terms,
but in no event is such security to be returned until Tenant has vacated the
leased premises and delivered possession thereof to Landlord. In the event that
Landlord repossesses itself of the leased premises, whether by special
proceeding or re-entry or otherwise, because of Tenant's default or failure to
carry out the covenants, conditions and agreements of this Lease, Landlord may
apply such security upon all damages suffered to the date of said repossession
and may retain the security to apply upon such damages as may be suffered or
shall accrue thereafter by reason of Tenant's default or breach. In the event
any bankruptcy, insolvency, reorganization or other creditor-debtor proceedings
shall be instituted by or against Tenant, or its successors or assigns, or any
guarantor of Tenant hereunder, such security shall be deemed to be applied first
to the payment of any rents and/or other charges due Landlord for all periods
prior to the institution of such proceedings, and the balance, if any, of such
security may be retained by Landlord in partial liquidation of Landlord's
damages. Landlord shall not be obligated to keep such security as a separate
fund but may commingle the security with its own funds. In the event Landlord
applies the security in whole or in part, Tenant shall, upon demand by Landlord,
deposit sufficient funds to maintain the security in the initial amount. Failure
of Tenant to deposit such additional security shall entitle Landlord to avail
itself of the remedies provided in this Lease for nonpayment of rent by Tenant.
The acceptance by Landlord of the security deposit submitted by Tenant shall not
render this Lease effective unless and until Landlord shall have executed and
actually delivered to Tenant a fully-executed copy of this Lease.
(12) Section 26.01: Security Deposit: N/A
Additional Security: N/A
(13) Guarantor(s): N/A
Address(es): N/A
ARTICLE XXVII. MISCELLANEOUS
SECTION 27.01. WAIVER; ELECTION OF REMEDIES. The subsequent acceptance of
rent hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, other than
the failure of Tenant to pay the particular rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent. In particular, but without limitation, if Tenant assigns or transfers its
interest in this Lease contrary to the terms of this Lease, any acceptance by
Landlord of such assignee's or transferee's payment shall not be deemed to be a
waiver of the restrictions set forth in Section 14.01 hereof. In the event that
Tenant shall be at any time in default of both monetary and nonmonetary terms,
covenants or conditions of this Lease, any acceptance by Landlord of any payment
rendered by Tenant shall not have the effect of curing Tenant's nonmonetary
defaults and shall not have the effect of curing any monetary default other than
the particular amount owing for which such payment is specifically accepted by
Landlord. Following notice of termination or any other remedy exercised by
Landlord with respect to any monetary default of Tenant, such default
50
shall not be deemed cured by the payment of rent owing by Tenant for the current
period only, and Landlord may apply such payments to current rent only without
any effect upon Tenant's existing indebtedness and continuing monetary default,
notwithstanding any contrary instructions by or on behalf of Tenant, which
instructions shall be null and void and of no effect. In addition, after the
service of notice or. the commencement of a suit, or after final judgment for
the possession of the leased premises, Landlord may receive and collect rent due
from Tenant, and the payment of rent by Tenant shall not waive or affect said
notice or suit or judgment. One or more waivers of any covenant or condition by
Landlord shall not be construed as a waiver of a subsequent breach of the same
covenant or condition, and the consent or approval by Landlord to or of any act
by Tenant requiring Landlord's consent or approval shall not be deemed to render
unnecessary Landlord's consent or approval to or of any subsequent similar act
by Tenant. The failure of Landlord to insist upon a strict performance of any
term, condition or covenant contained in this Lease shall not be deemed a waiver
of any rights or remedies that Landlord may have and shall not be deemed a
waiver of any subsequent breach or default in the terms, conditions or covenants
herein contained, and any such failure shall not be construed as creating a
custom of Landlord's accepting other than strict performance or as modifying in
any way the terms, covenants or conditions of this Lease. No breach by Tenant of
a covenant or condition of this Lease shall be deemed to have been waived by
Landlord unless such waiver is in writing signed by Landlord. No act or thing
done by Landlord or Landlord's agents shall be deemed an acceptance of surrender
of the leased premises and no agreement to accept such surrender shall be valid
unless in writing signed by Landlord. In addition to any and all other remedies
available to Landlord, Landlord may obtain an injunction to restrain any breach
or threatened breach of any term, covenant or condition of this Lease. The
rights and remedies of Landlord under this Lease or under any specific section,
subsection or clause hereof shall be cumulative and in addition to any and all
other rights and remedies which Landlord has or may have elsewhere under this
Lease or at law or equity, whether or not such section, subsection or clause
expressly so states. Nothing contained in this Lease shall be construed to
confer upon any person or entity other than Landlord or Tenant any rights,
benefits or causes of action, except to the extent specifically otherwise
provided in this Lease and except to the extent provided for the benefit of any
mortgagee, deed-of-trust beneficiary, ground lessor or trustee for the Shopping
Center.
SECTION 27.02. ENTIRE AGREEMENT. The Addendum, and all exhibits, and
riders, if any, attached hereto form a part of this Lease and shall be given
full force and effect, as fully as if set forth at length herein. This Lease
and said Addendum, exhibits, and riders, if any, so attached hereto and forming
a part hereof, set forth all the covenants, promises, agreements, conditions and
understandings between Landlord and Tenant concerning the leased premises, and
there are no covenants, promises, agreements, conditions or understandings,
either oral or written, between them other than as are herein set forth. Tenant
has not relied upon any representation of Landlord or its agents, other than any
items contained in this Lease, as an inducement to enter into this Lease. No
alteration, amendment, change or addition to this Lease shall be binding upon
Landlord or Tenant unless reduced to writing and signed by each party.
SECTION 27.03. INTERPRETATION AND USE OF PRONOUNS. Nothing contained
herein shall be deemed or construed by the parties hereto, nor by any third
party, as creating the relationship of principal and agent or of partnership or
of joint venture between the parties hereto, it being understood and agreed that
neither the method of computation of rent, nor any other provision contained
herein, nor any acts of the parties herein shall be deemed to create any
relationship between the parties hereto other than the relationship of Landlord
and Tenant. Whenever herein the singular number is used the same shall include
the plural, and the masculine gender shall include the feminine and neuter
genders.
SECTION 27.04. DELAYS. In the event that either party hereto shall be
delayed in the performance of its initial construction or maintenance dnd/or
repair obligations by reason of strikes, lockouts, labor troubles, inability to
procure materials or shall at any time be so delayed by reason of failure of
power, restrictive governmental laws or reasons of a similar nature not the
fault of the party delayed in performing work or doing acts required under the
terms of this Lease, then performance of such act shall be excused for the
period of the delay and the period for the performance of any such act shall be
extended for a period equivalent to the period of such delay.
51
Nothing contained in this Section shall excuse Tenant from the continuous
operation of its business in the leased premises in accordance with the
provisions of Sections 7.01 and 7.02 hereof; provided, however that Tenant shall
be excused from such continuous operation in the event of a power failure for
more than forty-eight (48) consecutive hours or a natural catastrophe (e.g.,
----
earthquake, hurricane, tornado) which shall prevent the operation of Tenant's
business and all other businesses within the Shopping Center, provided that
Tenant shall immediately reopen for business upon the cessation of such power
failure or natural catastrophe.. The provisions of this Section 27.04 shall not
excuse Tenant from payment of minimum rent, percentage rent or any other
payments required by the terms of this Lease; provided, however, that the
commencement date under Section 1.02 hereof and the obligation of Tenant to open
for business pursuant to Section 1.03 hereof may be delayed pursuant to the
provisions of this Section 27.04. Further, Landlord's reduction of heat, light,
air conditioning, or any other services whatsoever to the Shopping Center
because of any similar or dissimilar event constituting a cause for excusable
delay hereunder shall not relieve Tenant from its obligations under Article VII
of this Lease.
SECTION 27.05. NOTICES. Unless specifically stated to the contrary in
this Lease, any notice, demand, request or other instrument which may be or is
required to be given by Tenant or Landlord under this Lease or by law shall be
sent by United States certified mail, return receipt requested, postage prepaid,
and shall be deemed to have been given as of the date of receipt (or refusal to
accept receipt) following receipt of same by the other party, whichever of such
dates shall be the first to occur; and shall be addressed (a) if to Landlord at
the address set forth for Landlord on Page D I of this Lease or at such other
address as Landlord may designate by written notice, Attention Lease
Administration, together with copies thereof to such other parties designated by
Landlord, and (b) if to Tenant, at the leased premises or the address set forth
for Tenant on Page D1 of this Lease, or such other address as Tenant shall
designate by written notice. All notices given from Landlord to Tenant,
including, without limitation, notices of default and/or termination of Tenant's
interests under this Lease, may be given by Landlord's attorney acting as agent
on behalf of Landlord.
SECTION 27.06. CAPTIONS AND SECTION NUMBERS. The captions, section
numbers, article numbers, and index appearing in this Lease are inserted only as
a matter of convenience and in no way define, limit, construe, or describe the
scope or intent of such sections or articles of this Lease, nor in any way
affect this Lease.
SECTION 27.07. BROKER'S COMMISSION. Each party represents and warrants to
the other party that the warrantor has dealt with no brokers and that there are
no claims for brokerage commissions or finder's fees, nor will there be any such
claim, arising from any act or omission of the warrantor in connection with this
Lease, and the warrantor agrees to indemnify the other party and hold it
harmless from all liabilities arising from any such claim, including, without
limitation, the cost of attorneys' fees in connection therewith. Such agreement
shall survive the termination of this Lease.
SECTION 27.08. RECORDING. Tenant shall not record this Lease or any
memorandum, affidavit or other notice of this Lease. If Landlord records this
Lease, such recording shall be at Landlord's sole cost and expense
SECTION 27.09. FURNISHING OF FINANCIAL STATEMENTS. Upon the execution of
this Lease by Tenant and upon each succeeding anniversary date of the date of
this Lease, or at any earlier time upon Landlord's written request (but in no
event more than one [1] time in any lease year, unless Tenant is in default),
Tenant shall promptly furnish Landlord, from time to time, with financial
statements (including, without limitation, operating statements including an
annual profit and loss statement for the individual store unit covered by this
Lease) reflecting Tenant's current financial condition, and written evidence of
then current ownership of managing and controlling interests in Tenant and in
any entities which directly or indirectly control or manage Tenant (which
written evidence shall include, without limitation, the names of all existing
managers, shareholders and partners, as applicable, of record holding (directly
or indirectly) greater than a five percent (5%) interest in Tenant and their
respective
52
management/ownership interests as of the date of such writing), which financial
statements and written evidence shall be certified as being true and correct by
the chief financial officer or partner and by the chief executive officer or
partner of Tenant.
SECTION 27.10. LANDLORD'S USE OF COMMON AREAS. Landlord reserves the
right, from time to time, to utilize portions of the common areas for carnival
type shows, rides and entertainment, outdoor shows, displays, automobile and
other product shows, the leasing of permanent and temporary kiosks, or such
other uses which in Landlord's judgment tend to attract the public. Further,
Landlord reserves the right to utilize the lighting standards and other areas in
the parking facilities for advertising purposes. Any revenues derived by
Landlord from the use of the common areas, whether from usage fees or otherwise,
shall not be applied as a deduction against any cost or expense required to be
paid by Tenant under this Lease.
SECTION 27.11. TRANSFER OF LANDLORD'S INTEREST. In the event of any
transfer or transfers of Landlord's interest in the premises, including a so-
called sale-leaseback, the transferor shall be automatically relieved of any and
all obligations on the part of Landlord accruing from and after the date of such
transfer, provided that (a) the interest of the transferor, as Landlord, in any
funds then in the hands of Landlord in which Tenant has an interest shall be
turned over, subject to such interest, to the then transferee; and (b) notice of
such sale, transfer or lease shall be delivered to Tenant as required by law;
and (c) subject to the rights of Landlord's mortgagee, the said transferee
(other than a mortgagee of the Shopping Center) shall assume all of the
unperformed terms, covenants and conditions of this Lease arising after the date
of such transfer. Upon the termination of any such lease in a sale-leaseback
transaction prior to termination of this Lease, the former lessee thereunder
shall become and remain liable as Landlord hereunder until a further transfer.
No holder of a mortgage or deed of trust, or underlying lessor on an underlying
lease, to which this Lease is or may be subordinate, and no lessor under a so-
called sale-leaseback shall be responsible in connection with the security
deposited hereunder, unless such mortgagee, holder of such deed of trust,
underlying lessor or lessor shall have actually received the security deposited
hereunder.
SECTION 27.12. FLOOR AREA. (a) The term "floor area" as used in this
Lease means, with respect to any leasable area in the Shopping Center or in the
regional retail development, the aggregate number of square feet of floor space
of all floor levels therein, including any mezzanine space (to the extent
reflected as floor area in the applicable leases), measured from (i) the outside
faces of all perimeter walls thereof other than any party wall separating such
premises from other leasable premises, (ii) the center line of any such party
wall, (iii) the outside face of any interior wall, and (iv) the building and/or
leaseline adjacent to any entrance to such premises. In the event Landlord
determines that the square foot area of the leased premises is at variance with
the square foot area stated in this Lease, Landlord may, at its option, adjust
the floor area of the leased premises and make proportional adjustments in
minimum rent, percentage rent, and promotional/Merchants' Association charges,
and other charges to Tenant under this Lease.
Section 27.12(a): Notwithstanding the provisions of this Section 27.12(a),
----------------
Landlord shall have no right to remeasure the floor area of the leased premises
with the exception of the unconstructed popout portion. Tenant shall have the
right to employ an architect to measure the floor area of the popout portion of
the leased premises only in accordance with this Section. In the event Tenant's
architect does not agree with the measurement of this portion of the leased
premises as reflected in this Lease (or as separately determined by Landlord
pursuant to the foregoing provisions), then, upon notice from Tenant's architect
in writing to Landlord, which notice shall set forth in detail the architect's
findings, Landlord shall be entitled either to accept such findings (and to
prospectively make the floor area adjustments as set forth above) or to advise
Tenant in writing that it disagrees with such findings and will remeasure the
popout portion of the leased premises. Upon such remeasurement by Landlord,
Tenant shall be entitled to either accept Landlord's determination of the popout
portion of the floor area or to request an independent measurement of the popout
portion of the leased premises by a third party to be mutually selected within
thirty (30) days following Tenant's notice to Landlord of its election to
require such independent additional measurement. The party selected by Landlord
and Tenant to conduct such independent
53
measurement shall measure the leased premises within thirty (30) days after
selection, and the results of such measurement shall be final and binding upon
both Landlord and Tenant absent manifest error. Notwithstanding the foregoing,
Tenant shall be obligated to pay all rent and charges under this Lease prior to
and during the period of the determination of the square footage of the leased
premises (pursuant to the foregoing) on the basis of the floor area set forth in
the Lease (or as previously determined by Landlord) until such measurement of
the leased premises shall be so finally determined. Notwithstanding the
provisions of this Section, minimum rent and Minimum Gross Sales shall not be
adjusted as a result of any redetermination of the square foot floor area of the
popout portion of the leased premises.
(b) For the purpose of this Lease, in determining the gross leasable floor
area or the gross leased and occupied floor area of the Shopping Center, there
shall be excluded therefrom, at the sole option of Landlord, the leasable area
of 20,000 square feet or more occupied by a single entity (which, for purposes
of this Lease, shall be defined as a department store), the floor area of any
premises leased for the operation of a post-office type or packaging or delivery
facility or other public/consumer-service or governmental facility, the floor
area of any space without direct customer access from the enclosed Mall, and the
total floor area utilized by Landlord for the operation of a skating rink or
other recreational area, child care center, community room, library, project
offices, and related rooms, common areas and project areas, which shall be
deemed amenities to the Shopping Center. The term "gross leased and occupied
floor area" shall include only such areas as are leased and occupied by tenants
subsequent to the dates of commencement of the terms of their respective leases.
Areas shall not be considered occupied to the extent that Landlord shall not be
receiving full proportionate share contributions for the same. No deduction or
exclusion from floor area shall be made by reason of columns, ducts, stairs,
elevators, escalators, shafts, or other interior construction or equipment.
SECTION 27.13. INTEREST ON PAST DUE OBLIGATIONS. Any amount due from
Tenant to Landlord hereunder which is not paid when due (including, without
limitation, amounts due as reimbursement to Landlord for costs incurred by
Landlord in performing obligations of Tenant hereunder upon Tenant's failure to
so perform) shall bear interest at the prime rate of interest then in effect at
the majority of commercial banks located in the City of New York, New York, plus
three percent (3%), but in no event more than the highest rate then allowed
under the usury laws of the State from the date due until paid, unless otherwise
specifically provided herein, but the payment of such interest shall not excuse
or cure any default by Tenant under this Lease.
SECTION 27.14. LIABILITY OF LANDLORD. If Landlord shall fail to perform
any covenant, tern or condition of this Lease upon Landlord's part to be
performed, and if as a consequence of such default Tenant shall recover a money
judgment against Landlord, such judgment shall be satisfied only out of the
proceeds of sale received upon execution of such judgment and levied thereon
against the right, title and interest of Landlord in the Shopping Center and out
of net income from such property received by Landlord, or out of the
consideration received by Landlord from the sale or other disposition of all or
any part of Landlord's right, title and interest in the Shopping Center,
subject, nevertheless, to the rights of Landlord's mortgagee, and neither
Landlord, nor the individuals or entities which constitute the partners of the
partnership which is Landlord, nor the individuals or entities which constitute
the partners of the partnership which is the beneficiary of the Trust of which
Landlord is Trustee (if applicable), shall be liable for any deficiency. If
Landlord is identified in this Lease as a Trustee, Tenant hereby recognizes that
Landlord is executing this Lease as Trustee under an express trust, and it is
expressly understood and agreed by and between the parties hereto, anything
herein to the contrary notwithstanding, that each and all of the
representations, covenants, undertakings and agreements herein made on the part
of the Landlord while in form purporting (except as herein otherwise expressed)
to be the representations, covenants, undertakings, and agreements of the
Landlord are nevertheless each and every one of them, made and intended not as
personal representations, covenants, undertakings and agreements by the Landlord
or for the purpose or with the intention of binding said Landlord personally but
are made and intended for the purpose of binding only that portion of the trust
property specifically leased hereunder, and this Lease is executed and delivered
by said Landlord
54
not in its own right, but solely in the exercise of the powers conferred upon it
as such Trustee; that no duty shall rest upon Landlord to sequester the trust
estate or the rents, issues and profits arising therefrom, or the proceeds
arising from any sale or other disposition thereof; and that no personal
liability or personal responsibility is assumed by nor shall at any time be
asserted or enforceable against Trustee, or any successor trustee or any of the
beneficiaries under said trust, on account of this Lease or on account of any
representation, covenant, undertaking or agreement of the said Landlord in this
Lease contained, either expressed or implied, all such personal liability, if
any, being expressly waived and released by the Tenant herein and by all persons
claiming by, through or under said Tenant.
SECTION 27.15. ACCORD AND SATISFACTION. Payment by Tenant or receipt by
Landlord of a lesser amount than the rent or other charges herein stipulated may
be, at Landlord's sole option, deemed to be on account of the earliest due
stipulated rent or other charges, or deemed to be on account of rent owing for
the current period only, notwithstanding any instructions by or on behalf of
Tenant to the contrary, which instructions shall be null and void, and no
endorsement or statement on any check or any letter accompanying any check
payment as rent or other charges shall be deemed an accord and satisfaction, and
Landlord shall accept such check or payment without prejudice to Landlord's
right to recover the balance of such rent or other charges or pursue any other
remedy in this Lease or in law or in equity against Tenant.
SECTION 27.16. EXECUTION OF LEASE; NO OPTION. The submission of this
Lease to Tenant shall be for examination purposes only, and does not and shall
not constitute a reservation of or option for Tenant to lease, or otherwise
create any interest of Tenant in the leased premises or any other premises
situated in the Shopping Center Execution of this Lease by Tenant shall be
irrevocable for a period of thirty (30) days. The return to Landlord of Tenant-
executed copies of this Lease shall not be binding upon Landlord,
notwithstanding any preparation or anticipatory reliance or expenditures by
Tenant or any time interval, until Landlord has in fact executed and actually
delivered a fully-executed copy of this Lease to Tenant.
SECTION 27.17. GOVERNING LAW. This Lease shall be governed by and
construed in accordance with the laws of the State. If any provision of this
Lease or the application thereof to any person or circumstances shall, to any
extent, be invalid or unenforceable, the remainder of this Lease shall not be
affected thereby and each remaining provision of the Lease shall be valid and
enforceable to the full extent permitted by the law. Tenant appoints the
following persons at the following locations as agent to receive service of
process, writs, notices, summonses, or other legal documents in any suit, action
or proceeding which Landlord may commence against Tenant: (a) the person in
charge at the leased premises, or (b) any officer, partner or other principal of
Tenant, or any person in charge, at the Tenant's address as set forth on Page Dl
of this Lease. Where permitted by law or local court rule, Tenant consents to
service of such process by United States mail, in the manner specified in the
applicable law or court rule.
SECTION 27.18. SPECIFIC PERFORMANCE. Landlord and Tenant shall have the
right to obtain specific performance of any and all of the covenants or
obligations under this Lease, and nothing contained in this Lease shall be
construed as or shall have the effect of abridging such right.
SECTION 27.19. CERTAIN RULES OF CONSTRUCTION. Time is of the essence in
this Lease. Notwithstanding the fact that certain references elsewhere in this
Lease to acts required to be performed by Tenant hereunder omit to state that
such acts shall be performed at Tenant's sole cost and expense, unless the
context clearly implies to the contrary, each and every act to be performed or
obligations to be fulfilled by Tenant pursuant to this Lease shall be performed
or fulfilled at Tenant's sole cost and expense. Any breach or default by Tenant
of its obligations under this Lease shall be deemed material. Tenant shall be
fully responsible and liable for the observance and compliance by
concessionaires with all the terms and conditions of this Lease, which terms and
conditions shall be applicable to concessionaires as fully as if such
concessionaires were the Tenant hereunder; any failure by a concessionaire fully
to observe and comply with the terms mad conditions of this Lease shall
constitute a default hereunder by Tenant. Nothing contained in the
55
preceding sentence shall constitute a consent by Landlord to any concession,
subletting or other arrangement proscribed by Section 14.01. All provisions of
this Lease have been freely negotiated by and between the parties.
SECTION 27.20. INDEX. The term "Index" as used in this Lease shall be the
"Consumer Price Index for All Urban Consumers (1982-84 = l00), U.S. City
Average, All Items," as published by the Bureau of Labor Statistics of the
United States Department of Labor. If the Index is not published by the Bureau
of Labor Statistics or another governmental agency at any time during the term
of this Lease, or if the Index is otherwise re-named, discontinued or
superseded, then the calculations based on the Index shall be made using the
most closely comparable statistics on the purchasing power of the consumer
dollar as published by a responsible financial authority and selected by
Landlord.
SECTION 27.21. SURVIVAL; NONDISCLOSURE; FREE ACT. The obligations of
Tenant for payment of rent and charges under this Lease shall survive the
expiration or earlier termination of the term of this Lease. Tenant covenants
that neither Tenant nor any attorney or other representative for Tenant shall
disclose the contents of this Lease to any other person or entity. Tenant shall
be fully responsible for the actions of its attorneys and representatives. By
its execution of this Lease, Tenant acknowledges and agrees that it has read
this Lease, understands the contents hereof, and is signing this Lease as its
own free act and deed, and as the free act and deed of the representatives
signing on Tenant's behalf without any persuasion or coercion by any person or
entity, and with full advice of counsel.
SECTION 27.23. ATTORNEYS' FEES. If either party shall bring an action
against the other to enforce or interpret the terms of this Lease or otherwise
arising out of this Lease, the prevailing party in such action shall be entitled
to recover its costs of suit and reasonable attorneys' fees. 'Prevailing party'
shall be the party whose position is substantially upheld in the final judgment
rendered in such action.
SECTION 27.24. LANDLORD'S REPRESENTATIONS. Landlord represents to Tenant
that (i) the individuals executing this Lease on behalf of Landlord have the
authority to do so and (ii) the Shopping Center is not currently (as of the date
of this Lease) subject to any ground lease."
(14) Rider: The Rider attached and made a part of this Lease is the
"Standard Silver Diner Rider" containing the pre-negotiated revisions to the
Standard Form and Exhibit B, which revisions are accepted by Landlord and Tenant
by their execution of this Lease.
--------------------------------------------------------
[End of Standard Form; signature and acknowledgment pages for the Lease appear
after the Data Sheet on the pages immediately preceding the Addendum.]
56
EXECUTION/ACKNOWLEDGMENT
In confirmation of their agreement to enter into this Lease (including the
Preamble, Data Sheet, Addendum, Standard Form, all exhibits, and the Rider (if
any) attached hereto), and intending to be bound hereby, Landlord and Tenant
have signed and sealed this Lease as of the day and year first above written on
page D1 of this Lease.
In the Presence of: LAKEFOREST ASSOCIATES LLC,
a Delaware limited liability company
[_____signed____________________] By: ____________________________________
[_____signed____________________]
LANDLORD
SILVER DINER DEVELOPMENT, INC.
[_____signed____________________] By: ____________________________________
Print Name:_________________________
Its: ____________________________________
Print Title: _______________________
And: ____________________________________
Print Name:_________________________
Its: ____________________________________
Print Title: _______________________
TENANT
Tenant's Federal Tax Identification Number:
00-0000000
----------
Tenant's corporate seal _________________
57
EXHIBIT B
CONSTRUCTION
Notwithstanding anything contained in this Lease to the contrary, Tenant
may submit plans and specifications for Landlord's approval which are
inconsistent with the requirements of the exhibits to this Lease without such
submittal constituting a default. Certain deletions have been made to Exhibit B
to insure that Tenant may submit plans and specifications for Landlord's
approval which may be inconsistent with those deleted provisions.
Notwithstanding deletion of such provisions, Landlord shall have the right to
not approve Tenant's plans and specifications based upon an inconsistency with
the deleted provisions. However, notwithstanding anything contained in this
Lease or its exhibits to the contrary, once Landlord approves Tenant's plans and
specifications, such approved plans and specifications shall control in the
event of any conflict with Exhibit B or B-1 or with the Standard Project Details
and Construction Information referenced in Section IV of Exhibit B.
This Exhibit B shall be deemed to include Exhibit B-1 and any additional
construction exhibits as may be attached to this Lease. Such additional
exhibits may have the effect of providing further specifications or criteria or
may serve to amplify or adjust certain of the provisions contained in this
Exhibit B.
SECTION I. EXISTING IMPROVEMENTS
---------------------------------
The reuse by Tenant of existing improvements, if any, within the leased premises
shall be as dictated by practicality and Landlord's existing design criteria and
shall be subject to Landlord's written approval.
SECTION II. LANDLORD'S WORK
---------------------------
A. A complex of building shells and common area improvements of exterior and
interior design and materials as determined by Landlord substantially as
shown in Exhibit A.
B. If any partitions are required to separate the leased premises from
adjacent spaces, Landlord shall install metal stud framing only, after
Tenant has performed any demolition necessary to accommodate installation
of said framing. Such stud framing shall extend from the floor slab of the
leased premises to the underside of the floor or roof structure. Tenant
shall reimburse Landlord as Tenant's share of the cost of such work, $20.00
per lineal foot of said stud framing. Tenant shall install gypsum board on
Tenant's side of stud framing to underside of structure as required for a
one-hour fire resistant separation.
Exhibit B. Section II.B.: The $20.00 per lineal foot charge shall not apply to
-------------------------
Tenant.
C. In the event that the leased premises are located in a retail development,
or in an expansion wing of a retail development, which development or
expansion wing shall not yet have opened for business to the public, and
Tenant shall be able to complete its construction within the leased
premises prior to such opening, Landlord shall not provide a temporary
barricade at the storefront lease line, except to the extent that Landlord
shall determine that such barricade is necessary or desirable. If the
leased premises are not located in such a development or in such an
expansion wing, or if Tenant shall be unable to complete the construction
of the leased premises and to open for business at the time that such
development or expansion wing, as applicable, first opens for business to
the public, Landlord shall provide, for Tenant's use during construction
and demolition, a temporary barricade at the storefront lease line. Tenant
shall reimburse Landlord $45.00 per lineal foot of storefront lease line
for any such temporary barricade provided by Landlord. Landlord shall
remove the storefront barricade upon completion of Tenant's Work and when
Tenant
58
is prepared to open for business. Landlord shall have the option, by
written notice to Tenant, to require Tenant to remove the storefront
barricade and to store the same at a location specified by Landlord within
the regional retail development. In the event of such removal by Tenant,
Tenant shall be responsible for any damage (except as a result of normal
use) caused to the barricade by such removal and storage. In either case,
Tenant shall immediately repair any damage caused to the leased premises by
the removal of the barricade.
D. If the entire leased premises shall not have been previously occupied by
another tenant or occupant, the provision of utility connections by
Landlord shall be as set forth under Section II of Exhibit B-1. If the
entire leased premises shall have been previously occupied, and the
following utilities or utility stubs are not contained within the premises,
Landlord shall cause said utilities to be extended to within the leased
premises at a point which is closest to Landlord's pickup point. Such
utilities shall include: sanitary, domestic cold water, plumbing vent
(where applicable), fire protection, and air conditioning supply duct stub
(where applicable). Refer to Exhibit B-1 (and/or to other construction
exhibits, if any, attached to this Lease) for additional information on
certain utilities.
SECTION III. TENANT'S WORK
--------------------------
Tenant at its sole cost and expense shall perform all work required to complete
the leased premises to a finished condition ready for the conduct of business
therein. Tenant's Work shall conform to criteria, procedures, and schedules as
set forth in Sections IV, V, and VI respectively, of this Exhibit, and shall
include, but not be limited to, the following:
A. Field Conditions: Prior to the preparation of its working drawings and the
----------------
commencement of its construction Tenant shall survey the site to inspect,
verify and coordinate all existing conditions within the leased premises.
Such survey shall include the location of existing mall utilities which are
to remain, placement of wall stud framing defining the leased premises, and
identification of various improvements made by previous occupant(s), if
any, which are to remain, be relocated or removed and the determination of
the extent of demolition or repair to be performed by Tenant. Tenant shall
advise Landlord immediately of any discrepancies with respect to Landlord's
Space Layout drawings.
The results of such survey shall be incorporated into Tenant's working
drawings and specifications. Tenant shall verify conditions pertaining to
the leased premises from time to time after commencement of construction of
its leased premises. Any material adjustments to the work arising from
field conditions not apparent on drawings and other building documents
shall receive the prior written approval of Landlord.
Immediately following the installation by Landlord of wall stud framing
defining the leased premises, Tenant shall verify the accuracy of said
installation and shall immediately advise Landlord of any discrepancies.
Failure to so notify Landlord shall be deemed as acceptance by Tenant of
said installation and layout.
Tenant shall reasonably coordinate its work with the work of others or with
existing conditions occurring above or below the leased premises and shall
make reasonable changes from time to time as required to accommodate such
work or conditions.
B. Working Drawings and Specifications: Working Drawings and Specifications
-----------------------------------
as set forth in Section V of this Exhibit.
C. Demolition
----------
59
1. All demolition required to facilitate Tenant's construction shall be
performed by Tenant at Tenant's expense, and shall be as approved by
Landlord on Tenant's demolition plans, prior to commencing such work.
a. Floors: Tenant shall repair or replace any part of the existing
concrete slab which may have been removed by Landlord or Tenant to
allow for extension of underground utilities. Backfill and compaction
shall be provided by Tenant.
b. Interior Finishes: Tenant shall demolish any existing improvements
made by previous occupant(s) within the leased premises which Tenant
has indicated on the survey referred to in Section III (A) above are
not to remain. Such work shall include but not be limited to:
storefront and storefront enclosure, abandoned party walls, interior
partitions and finishes, floor coverings, ceilings and miscellaneous
improvements. Removal of demolition debris shall be performed by
Tenant. In no event shall removal of debris take place through the
malls during the hours in which the Shopping Center is open for
business.
c. Mechanical and Electrical Equipment: Tenant shall remove all
mechanical and electrical systems existing on the leased premises
which are no longer functional or designated to be reused. Such work
shall include but not be limited to: roof top and interior HVAC
equipment and supports, duct work, wire and conduits, electrical
distribution equipment, plumbing fixtures, sprinkler lines, telephone
equipment and any specialty equipment as may exist in the leased
premises.
d. Barricades and Screening: Tenant shall install construction
barricades approved by Landlord which screen the areas in which Tenant
is performing work visible from the outside of the Shopping Center
building. Such barricades shall be between 8' and 10' in height,
shall not display any contractor's names or any advertising, shall be
painted, and shall be located within 3' of the periphery of Tenant's
work area.
2. Repairs:
Tenant shall make all repairs to the premises necessitated by the
removal of the improvements made by previous occupant(s). Such work
shall include but not be limited to: concrete slab, roof, structural
members, mechanical and electrical equipment, telephone equipment,
party walls and interior finishes.
D. Architectural and Finishing Work
--------------------------------
1. Storefront work.
2. Partitions.
a. To the extent that new corridor-partitions are required, Landlord
will erect stud framing and one (1) layer of 5/8" firecode gypsum
wallboard on the corridor side of one-hour fire resistant
partitions separating the leased premises from adjacent
service/exit corridors. Such stud framing shall extend from the
floor slab of the leased premises to the underside of the floor
or roof structure. Tenant shall reimburse Landlord as Tenant's
share of the cost of such work $45.00 per lineal foot of said
stud framing, and gypsum wallboard. Tenant shall install one (1)
layer of 5/8" firecode gypsum wallboard on Tenant's side of stud
framing to underside of structure as required for a one-hour fire
resistant separation.
Note: Service/exit corridors where a two-hour fire resistant
----
partitions separating the leased premises from the adjacent
service/exit corridor is required, Landlord will erect stud
framing and two (2) layers of 5/8"
60
firecode gypsum wallboard on the corridor side of two-hour fire
resistant partitions separating the leased premises from adjacent
service/exit corridors. Tenant shall reimburse Landlord as
Tenant's share of the cost of such work $66.00 per lineal foot of
said stud framing and gypsum wallboard. Tenant shall install two
(2) layers of 5/8" firecode gypsum wallboard on Tenant's side of
stud framing to underside of structure as required for a two-hour
fire resistant separation.
Exhibit B. Section III.D.2.a.: Neither the $45.00 per lineal foot charge nor
------------------------------
the $66.00 per lineal foot charge shall apply to Tenant.
3. All required interior partitioning, fire separations and doors,
service exit door, ceiling work, floor coverings, commercial grade
finish hardware, and painting and finishing work.
4. Covering and finishing of columns to achieve a one-hour fire resistant
rating.
5. Toilet facilities.
6 Sign(s) and sign panel backgrounds.
7. Floors:
a. In upper level Tenant spaces with a depressed structural concrete
floor, concrete topping to achieve a finished floor elevation at
the same elevation as the mall.
b. Repairs as may be required to accommodate extension of
underground utilities.
c. All slabs on grade. Tenant shall provide sand fill and/or remove
excess as required and compact same to 95% modified xxxxxxx and
install a vapor barrier (minimum .004 mill visqueen) and a
concrete minimum strength of 3,000 pounds with 6 x 6 No. 10
woven wire mesh (minimum thickness 4") in accordance with
Standard Project Details, finished as required to receive floor
finishes.
d. Finished floor elevation at all store entrances shall be at the
same elevation as adjacent areas. All carpet areas are to be
depressed.
E. Structural
----------
1. Any alterations and/or additions and reinforcements to Landlord's
structure required to accommodate Tenant's Work, all of which must be
designed by a certified structural engineer at Tenant's expense.
Performance of such work is subject to prior written approval of
Landlord.
F. Mechanical
----------
1. All plumbing, heating, ventilating, and air conditioning systems
within or directly related to Tenant's leased premises, proceeding
from the points of connection to utilities as listed in Exhibit B-1,
or modifications to existing mechanical systems, all in accordance
with Landlord's design criteria.
G. Electrical
----------
61
1. All electrical and telephone systems within or directly related to the
leased premises proceeding from points of connection to utilities as
listed in Exhibit B-1 (or in other construction exhibits, if any,
attached to this Lease), or modifications to existing systems, all in
accordance with Landlord's design criteria.
H. Fire Protection
---------------
1. A complete, hydraulically calculated fire protection sprinkler system,
proceeding from the point of connection to Landlord's system or
modifications or removal of existing fire protection sprinkler system
and existing fire retardant materials in accordance with Landlord's
design criteria. All such work shall be performed, at Tenant's sole
cost and expense, by a qualified sprinkler contractor acceptable to
Landlord, provided such contractor shall charge reasonably competitive
rates (i.e., within ten percent [10%] of the bid by any contractors
which have been approved by Landlord, such approval not to be
unreasonably withheld). Landlord's approval of the foregoing shall
not constitute the assumption of any responsibility by Landlord for
the accuracy or sufficiency thereof, and Tenant shall be solely
responsible therefor.
Tenant shall be responsible for the cost of the complete removal of
all existing fire-retardant materials and all demolition associated
with this removal. All work will be done in strict compliance with
all local, state, and federal codes and requirements. All demolition
and removal work will be performed by contractors under contract with
the Landlord.
All of the work performed pursuant to this Section III shall, for the purpose of
the Lease to which this Exhibit is attached and made a part, be deemed to be
improvements made to the leased premises by Tenant.
SECTION IV. CRITERIA -- TENANT'S WORK.
--------------------------------------
The requirements, criteria and/or outline specifications as set forth herein
represent minimum standards for the preparation of working drawings,
construction and finish of the leased premises by Tenant:
A. Standard Project Details and Construction Information
-----------------------------------------------------
1. Standard Project Details and Construction Information, issued by
Landlord, as they pertain to Tenant's Work, shall govern with respect
to such work. Such details shall be reviewed by Tenant and
incorporated as required in Tenant's Working Drawings and
Specifications for the leased premises.
B. Design Loads
------------
1. Structural loading imposed by any of Tenant's Work on a temporary or
permanent basis shall not exceed the following allowable live loads:
a. Stores located on supported slabs (levels other than on-grade):
75 lbs. per square foot.
b. Common areas, mall courts, and galleries: 75 lbs. per square
foot.
c. On-grade slabs: 125 lbs. per square foot.
d. Roof: 20 lbs. per square foot.
62
C. Architectural Structural
------------------------
1. Storefront work:
a. The configuration of the storefront line, as established by
Landlord, shall be considered the leaseline, beyond which no
element of the storefront may extend.
b. All storefront components, including head tracks for sliding
doors, grille roller supports, guide, and supports for side
rolling grilles, etc., shall be structurally fastened and braced
to the building structure. All aluminum storefront components
which remain visible during business hours, such as sliding doors
and other glazing sections, rolling grilles or ornamental metal
shall have an anodized finish.
c. Electronic surveillance or other shoplifting detection devices
and security systems shall be incorporated and integrated within
Tenant's storefront. Free-standing "boxes" or "columns" or other
exposed equipment or decals shall be prohibited.
2. Ceilings:
Non-combustible ceilings on a concealed metal suspension system shall
be used throughout all Tenant's public areas. An exposed metal
suspension system may be permitted only if the system consists of 2' x
2' tee grid with regressed lay-in acoustical tile in horizontal planes
only; vertical or sloped use of exposed tees is prohibited. Taped,
painted and/or plaster sprayed gypsum board ceilings shall be used in
conjunction with all storefront soffits. The use of exposed wood or
other combustible material above ceilings or in any other attic spaces
is prohibited.
3. Walls:
5/8" Firecode (UL listed) gypsum board shall be used on all party
walls where a one-hour fire resistant separation is required. All
interior partitions shall have gypsum board finish on all sides. A
one-hour tire resistant rating is required for all steel columns.
4. Floors:
a. Carpeting and/or other quality floors, such as glazed or unglazed
tiles or hardwood flooring shall be used in Tenant's public
areas. The reuse of flooring materials not in compliance with the
foregoing is prohibited.
b. Toilet rooms and kitchens shall have waterproofed floors (if a
level exists below the Leased Premises) and toilet rooms shall
have door thresholds.
5. Service Exit Door:
One hinged 3'-0" x 7'-0" x 1-3/4" prime coated, one-hour fire labeled,
hollow metal service exit door, frame, and commercial grade hardware
unless otherwise required by code. The service door shall be installed
in a vestibule, by Tenant at its expense, if required by code.
6. Rubbish Storage:
a. Food and beverage service Tenants shall provide adequate storage
areas for rubbish and solid waste storage room(s) within leased
premises as shown on Tenant's plans.
63
b. Floor area of kitchens, bathrooms and other wet areas to be
waterproofed with membrane approved in writing by Landlord.
7. General:
a. Landlord shall have the right to locate, both vertically and
horizontally, utility lines, air ducts, pipes, refrigerant lines,
drains, sprinkler mains and valves, and such other facilities,
including access panels for same, within the leased premises, as
deemed necessary by engineering design and/or code requirements.
Landlord's right to locate facilities within the leased premises
shall include the facilities required by other tenants. Landlord
shall also have the right to locate mechanical and other
equipment on the roof over the leased premises. In exercising its
rights under this paragraph, Landlord agrees to use reasonable
efforts to minimize interference with Tenant's business
operations within the leased premises, in light of the then
existing circumstances.
b. Notwithstanding anything to the contrary contained in this Lease
or in any of the exhibits attached thereto, all flashing,
counter-flashing, roof penetrations, and roofing repairs shall
conform to the project roofing specifications. Roof repairs or
penetrations required by removal or relocation of existing
equipment or installation of new equipment (cutting of roof and
deck material and/or repair of same) shall be performed by
Landlord's roofing contractor at Tenant's expense, provided such
contractor shall charge reasonably competitive rates (i.e.,
within ten percent [10%] of the amount Landlord would have been
charged for similar work).
Tenant shall enter into a direct contract with Landlord's roofing
contractor.
D. Mechanical
----------
l. Plumbing:
a. Plumbing fixtures and accessories shall be of commercial quality
and shall be of water conserving type.
b. Tenant shall provide a water meter (calibrated in gallons) in an
easily accessible location (or, at Landlord's direction, Tenant
will install a remote reader device).
c. Floor drains shall be provided in toilet rooms and kitchens
and/or food service areas.
Refer to Exhibit X-x for additional criteria.
2. Heating, Ventilating and Air Conditioning:
a. If Tenant elects to utilize existing HVAC system, said system
shall be completely upgraded and repaired to like new condition
at Tenant's sole cost and expense.
b. If Tenant elects to install a new HVAC system or a supplement to
an existing system, (which system shall be separate from the Mall
HVAC system) said systems, shall be approved by Landlord.
Refer to Exhibit X-x for additional criteria.
64
3. Fire Protection:
Hydraulically calculated fire protection sprinkler system, fire hose
cabinets, fire extinguishers and other equipment within the leased
premises in accordance with Landlord's insurance underwriters' Fire
Rating Inspection Bureau, and Code requirements. Since the entire
fire protection system for the project is required to be an inter-
related, centrally controlled installation, Tenant shall cause to be
designed and installed, by a qualified sprinkler contractor acceptable
to Landlord, said system within the leased premises in accordance with
Landlord's requirements and shall submit shop drawings, specifications
and hydraulic calculations for the sprinkler system to the Landlord's
Insurance Underwriters' Fire Rating Inspection Bureau for approval.
Landlord's approval of the foregoing shall not constitute the
assumption of any responsibility by Landlord for the accuracy of
sufficiency thereof, and Tenant shall be solely responsible therefor.
Said work shall be accomplished without interrupting fire service to
remainder of Shopping Center during occupied hours.
E. Electrical
----------
l. Tenant, at its expense, shall furnish and install and/or modify the
existing to provide a complete electrical service proceeding from the
Landlord's point of connection as defined in Exhibit X-x to a point
within the leased premises. This work shall include, but not be
limited to, furnishing and installing a fusible disconnect switch at
Landlord's/utility company's distribution equipment and conduit and
conductors of sufficient capacity for Tenant's requirements. All
conductors shall be insulated copper wire type THW or THWN.
2. All fluorescent or incandescent lighting fixtures in Tenant's public
areas, other than track type and decorative fixtures, shall be
recessed. Connections to all devices in Tenant's public areas shall
be concealed.
3. Emergency lighting shall be provided by Tenant per code to illuminate
stock and/or sales areas and rear exitway during power outage, which
lighting shall be battery-operated, twin-head light pack(s) and/or
fluorescent fixtures. In public areas battery assembly for emergency
lights shall be concealed.
4. Circuits serving signs shall be controlled by a time switch.
5. Audio systems installed by Tenant shall be designed such that sound
shall be contained within the leased premises. Except for table
speakers connected to a jukebox system, no speaker or sound emitting
device shall be installed or employed within ten feet (10') of
Tenant's storefront lease line and all such speakers shall be directed
toward the interior of the space.
Refer to Exhibit X-x for additional criteria.
F. Tenant's Permanent Sign
-----------------------
1. General:
Tenant shall submit quadruplicate copies of its sign drawings and
specifications, including samples of materials and colors, for
Landlord's approval, prior to fabrication of Tenant's sign. Such
drawings shall show location of sign on storefront elevation drawing
and shall clearly indicate color, materials, attachment devices,
dimensions and construction details.
2. Criteria:
65
Only the storefront of the leased premises facing malls and/or courts
shall be identified by a sign except as expressly provided in this
Lease or permitted by Landlord. Tenant's sign shall be subject to the
following requirements and limitations except as expressly provided in
this Lease or permitted by Landlord:
a. The average height of sign letters or components shall not exceed
twelve inches (12").
b. No part of the sign letters shall hang free of the background.
c. Sign shall not project beyond the leaseline of the leased
premises more than two inches (2") if less than eight feet (8')
above finished floor line, or more than six inches (6") if above
eight feet (8').
d. Signs shall be limited to the store name only as set forth in
Section 16.01 of this Lease; reference to merchandise or activity
is prohibited.
e. Surface brightness of translucent material shall be consistent in
all letters and components of the sign. All edges and the backs
shall be fully encased in metal.
f. The storefront sign shall not employ the name of the Shopping
Center as part of Tenant's store identification.
g. The outer limits of sign letters, components or insignia shall
fall within a rectangle, the two short sides of which must be at
least twenty-four inches (24") from the side leaselines of the
leased premises, the top side of which must be at least twelve
inches (12") from the soffit of the mall fascia element.
h. All electrical sign components must bear U.L. Label. Such U.L.
Label must be inconspicuously placed.
3. The following types of signs or sign components are prohibited:
a. Signs employing moving or flashing lights or any audible or
moving components.
b. Signs employing exposed raceways, transformers.
c. Signs exhibiting manufacturer's name, stamps or decals.
d. Signs employing painted and/or non-illuminated letters.
e. Signs employing luminous-vacuum formed plastic letters.
f. Signs of box or cabinet type, employing transparent, translucent
or luminous plastic background panels.
g. Shadow-box type signs.
h. Signs employing unedged or uncapped plastic letters with no
returns.
i.
j. Cloth, paper, plastic or cardboard signs, stickers, decals, or
painted signs of any kind, hung around, on or behind storefront
glass or within storefront space.
k. Back-illuminated signs.
l. Free-standing signs.
66
4. The service door of the leased premises shall be identified with a
plastic sign, uniform to all Tenants, in accordance with Center
Management criteria.
SECTION V. PROCEDURE, SCHEDULES AND OBLIGATIONS FOR THE
--------------------------------------------------------
COMPLETION OF PLANS AND SPECIFICATIONS BY TENANT.
------------------------------------------------
All prints, drawing information and other material to be furnished by Tenant to
Landlord for approval as required in this Exhibit shall be addressed to Landlord
at 000 Xxxx Xxxx Xxxx Xxxx, X.X. Xxx 000, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000.
Approvals of such documents shall be deemed invalid unless given by Landlord in
writing. Any approval given by Landlord with respect to Tenant's Work or any
subsequent alterations by Tenant shall be effective only for a period of one
hundred twenty (120) days following Landlord's notice to Tenant of such approval
subject to Section 27.04 delays. If Tenant shall not have commenced
construction with respect to such work or alterations within such one hundred
twenty (120) day period, subject to Section 27.04 delays (or shall not be
diligently pursuing such work or alterations to completion), Tenant shall be
required to resubmit the applicable plans and specifications to Landlord for re-
approval prior to commencement or continuation of such work or alterations. All
notices, drawing information and other material furnished by Landlord to Tenant
under this Exhibit or pursuant to Sections 5.01 or 5.02 of the Lease may be
effectively submitted to Tenant by mailing the same to Tenant at the address set
forth on the Data Sheet on page 1 of the Lease or to Tenant's architect if
Tenant has provided Landlord with such an address, notwithstanding any contrary
or additional requirement contained in any other section of the Lease.
A. Space Layout Drawings
---------------------
1. Following the execution of this Lease, Landlord shall furnish Tenant
with one (l) set of prints of Space Layout Drawings giving technical
and design information for the leased premises; provided that Landlord
shall not be responsible for the accuracy, efficacy or sufficiency of
said Space Layout Drawings and Tenant shall be solely responsible for
all technical and other examinations of the leased premises and shall
be exclusively responsible with respect to verification of actual
field conditions and actual field measurements and a full review of
all technical and engineering requirements with respect to the leased
premises and Tenant's construction thereon.
B. Working Drawings and Specifications
-----------------------------------
l. Within sixty (60) days from either of the following dates, whichever
shall be the later to occur (a) receipt by tenant of Space Layout
Drawings or (b) execution of this Lease by the parties hereto, Tenant
shall engage an Architect registered in the state in which the
Shopping Center is located for the purpose of preparing Working
Drawings and Specifications for the leased premises. Working Drawings
and Specifications shall be prepared in strict compliance with the
Construction Criteria and requirements as set forth in Section IV of
this Exhibit and shall adhere to the design as indicated in Section
5.01(b) of the Data Sheet of the Lease to which this exhibit is
attached.
2. All Working Drawings and Specifications prepared by Tenant's Architect
shall be submitted by Tenant, in the form of one (l) set of
reproducible prints (i.e., sepias) and one (l) set of prints, along
with a Letter of Certification by Tenant's Architect that such
drawings and specifications comply with Section 5.01(b) of the Data
Sheet and Landlord's Construction Criteria. Any required revisions to
such Working
67
Drawings and Specifications shall be prepared and resubmitted by
Tenant to Landlord within ten (10) days of receipt of notice from
Landlord.
3. Tenant shall pay all fees of its Architect, and shall pay to Landlord
for Coordination and Administrative Services a fee based on the floor
area of the leased premises in accordance with the following schedule:
Floor Area of Lease Premises Applicable Amount in $
---------------------------- ----------------------
1 to 500 sq. ft. 900.00
501 to 750 sq. ft. 975.00
751 to 1,500 sq. ft. 1,150.00
1,501 to 3,500 sq. ft. 1,700.00
3,501 to 6,000 sq. ft. 2,150.00
6,001 to 10,000 sq. ft. 2,750.00
10,001 sq. ft. and over 3,300.00 + 30c/sq. ft. in
excess of 10,000 sq. ft.
Tenant's payment of the foregoing fee shall be payment to Landlord in
connection with Landlord's review of the various plans and
specifications submitted by Tenant and in connection with Landlord's
facilitation and coordination of Tenant's actual construction in the
leased premises; however, Landlord shall not be in any way responsible
or liable with respect to the accuracy, sufficiency, or feasibility of
Tenant's plans, and Tenant shall be totally responsible for same.
Exhibit B. Section V.B.3. and
-----------------------------
Exhibit B-2D. Section V.C.3. The fee for Coordination and Administrative
----------------------------
Services shall not apply to this Lease.
C. Completion Schedule:
--------------------
1. The following information regarding Tenant's completion schedule shall
be completed by Tenant and delivered to Landlord upon Tenant's
execution of this Lease:
a. Working Drawings and Specifications submittal date (thirty (30)
days after receipt of fully-executed Lease)
b. Submission of Working Drawings and Specifications to the local
building department for building permit concurrent with submittal
to Landlord (allow four (4) weeks for approval)
c. Construction start date
d. Merchandise date
e. Store opening date
f. Commencement date
Notification may be sent by Landlord to Tenant, at Landlord's option,
for completion of any of the preceding dates not listed on the
Completion Schedule submitted by Tenant. Any such notification shall
be returned completed to Landlord no later than twenty-one (21) days
following Tenant's receipt thereof.
68
SECTION VI. PROCEDURE, SCHEDULES AND OBLIGATIONS FOR THE CONSTRUCTION OF THE
-----------------------------------------------------------------------------
LEASED PREMISES BY TENANT.
-------------------------
A. Commencement of Construction
----------------------------
1. Tenant shall commence demolition and/or construction of its leased
premises in time to open by the commencement date of the lease term
and shall carry such construction to completion with all due
diligence. The failure of Tenant to comply with procedures and
schedules set forth in this Exhibit, or to commence or complete the
construction of the leased premises prior to the date of commencement
of the term of the Lease to which this Exhibit is attached and made a
part shall have no effect whatsoever upon the commencement of said
term, which shall in any event commence at the time provided for in
Section 1.02 of said Lease.
B. General Requirements
--------------------
1. Tenant shall submit to Landlord via Certified or Registered Mail, at
least five (5) days prior to the commencement of construction, the
following information:
a. The names and addresses of the General, Mechanical and Electrical
Contractors Tenant intends to engage in the construction of its
leased 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 fixturing work, and date of Tenant's
projected opening for business in the leased premises.
c. Evidence of insurance as called for hereinbelow.
d. Statement of estimated construction costs, including
architectural, engineering and contractor's fees.
2. Tenant shall engage the services of such bondable, licensed
contractors who will work in harmony with Landlord's contractors and
the contractors employed by the other tenants so that there shall be
no labor disputes which would interfere with the operation,
construction and completion of the Shopping Center or with any work
being carried out therein.
3. Construction shall comply in all respects with applicable Federal,
State, County and/or City statutes, ordinances, regulations, laws and
codes. All required building and other permits in connection with the
construction and completion of the leased premises shall be obtained
and paid for by Tenant. Landlord's review of Tenant's Working
Drawings and Specifications shall be for the purpose of ascertaining
compliance with the requirements of this Lease and Landlord's
requirements, and shall in no event extend to any confirmation or
authorization, express or implied, that Tenant's Working Drawings and
Specifications have been prepared in accordance with the requirements
of applicable laws, codes, ordinances and regulations, including,
without limitation, the Americans with Disabilities Act, and Tenant
shall be solely responsible with respect to all necessary compliance
with such laws, codes, ordinances and regulations.
Tenant shall provide temporary heat if required.
Tenant shall provide temporary electrical if required.
Tenant shall apply and pay for all utility services.
69
Tenant shall cause its Contractor to provide warranties for not less
than one year against defects in workmanship, materials and equipment.
4. Tenant's Work shall be subject to the inspection of Landlord, its
consultants, and its supervisory personnel.
5. Upon the expiration of one half (1/2) of the lease term, Tenant
shall, within thirty (30) days after direction from Landlord, submit
Working Drawings and Specifications as set forth in Section V of this
Exhibit showing the work to be performed by Tenant to completely
remodel and refurbish the leased premises. Tenant will cause such work
to be performed not later than ninety (90) days following the date of
Landlord's direction in accordance with Working Drawings and
Specifications approved by Landlord specifying the remodeling work to
be done by Tenant.
All such work shall be subject to and shall be carried out in
accordance with the provisions of this Lease, including, without
limitation, the provisions of Section 5.01(b) governing construction
of the leased premises and the remedies of Landlord in the event of
noncompliance by Tenant, including, but not limited to, termination of
this Lease as therein set forth. Without limiting the foregoing, in
the event that Tenant shall fail to perform such remodeling work, or
if Tenant shall fail to operate the leased premises as required in the
Lease or shall fail to surrender possession of the leased premises to
Landlord as required in the Lease or under law, Landlord shall have
the right to erect, at Tenant's expense, a storefront barricade in
front of the leased premises, which barricade shall not be removed
except upon Landlord's prior written consent and with Tenant paying
the cost of such removal.
Exhibit B. Section VI.B.5.: Notwithstanding the provisions of this Section to
--------------------------
the contrary, the remodeling and refurbishing required by this Section shall be
limited to cosmetic refinishing of surfaces to bring same to a `like new'
condition.
Conflict: In the event of an express conflict between the provisions of this
Lease, then any such conflict shall be resolved by referring to the portions of
this Lease in which the conflicting provisions are located and resolving the
conflict by using the following order of priority to determine which portion of
the Lease controls over the other: (i) the Special Provisions of the Data Sheet;
(ii) the other provisions of the Data Sheet; (iii) the Addendum; (iv) the Rider;
(v) Exhibit B-2D (if applicable), Exhibit B-1 and Exhibit C (if applicable);
(vi) the Standard Form and Exhibit B.
C. Landlord's Right to Perform Work
--------------------------------
1. Landlord shall have the right to perform, on behalf of and for the
account of Tenant, subject to reimbursement of the cost thereof by
Tenant, any and all of Tenant's Work which Landlord determines in its
reasonable discretion should be performed immediately and on an
emergency basis for the best interest of the project, 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 pay for all temporary utility facilities, and the removal
of debris, as necessary and required in connection with the demolition
and/or construction of the leased premises. Storage of Tenant's
Contractors' construction material, tools, equipment and debris shall
be confined to the leased premises and in areas which may be
designated for such purposes by Landlord. In no event shall any
material or debris be stored in the mall or in service or exit
corridors.
70
2. During construction, Landlord may provide temporary electrical service
in an area designated by Landlord. Tenant shall request, in writing,
permission to connect temporary lines to the power source for service
to its premises. The cost to Tenant for this service will be $450.00
per month or twenty-five cents (25c) per square foot of leased area
per month, whichever is greater. Payment is to be remitted to
Landlord by the first of each month after service is initiated. In
the event that the leased premises presently contain a metered
electrical service, Tenant shall utilize the existing service and
reimburse Landlord on the metered basis.
3. During initial construction, Tenant fixturing and merchandise
stocking, Landlord may require Tenant to utilize trash removal service
from designated truck courts. Tenant is responsible for breaking down
boxes and placing trash in containers in the designated truck court
areas.
The cost to Tenant for this service will be on a monthly basis and
payment is to be remitted by the first of each month after service is
initiated on the following basis:
Floor Area of Leased Premises Monthly Charge in $
----------------------------- -------------------
30,001 sq. ft. to 50,000 sq. ft. 460.00
20,001 sq. ft. to 30,000 sq. ft. 410.00
15,001 sq. ft. to 20,000 sq. ft. 360.00
10,001 sq. ft. to 15,000 sq. ft. 320.00
5,001 sq. ft. to 10,000 sq. ft. 280.00
2,001 sq. ft. to 5,000 sq. ft. 240.00
2,000 sq. ft or less 200.00
At any time, as determined by Landlord, Landlord may discontinue trash
removal service and Tenant shall assume responsibility therefor. All
such work shall be performed by contractors approved by Landlord.
E. Construction Completion
-----------------------
1. A Letter of Certification by Tenant's Architect stating that the store
has been satisfactorily completed in compliance with the Landlord
Approved Working Drawings. Any deficiencies should be outlined and
sent to Tenant's contractor for correction within thirty (30) days.
F. Landlord's Letter of Acceptance
-------------------------------
1. Upon the completion of Tenant's construction and fixturing work, and
upon written request to Landlord from Tenant, Landlord shall issue a
Landlord's Letter of Acceptance of said premises. The issuing of such
a Letter shall be contingent upon Tenant satisfying all of the
following conditions (which conditions shall, in any event, be
satisfied by Tenant as a obligation hereunder):
a. The satisfactory completion by Tenant of the work to be performed
by Tenant under Section III of this Exhibit including correction
of deficiencies and inconsistencies with approved Working
Drawings and Specifications.
b. Furnishing by Tenant to Landlord of all waivers of liens and
sworn statements from all persons performing labor and/or
supplying materials in connection with such work showing that all
of said persons have been compensated in full.
c. Submittal by Tenant to Landlord of Tenant's final and total
construction costs.
71
d. Submittal by Tenant to Landlord of warranties for not less than
one (1) year against defects in workmanship, materials and
equipment, if so required by Landlord.
e. Full payment by Tenant of all sums due Landlord for items of work
performed by Landlord on behalf of Tenant, as outlined in this
Exhibit.
f. The issuance of a Certificate of Occupancy by the Building and
Safety Department of the local unit of government.
g. Tenant shall have provided Landlord with 'as-built' drawings
depicting the leased premises and all mechanical, electrical and
architectural changes thereto.
2. Within fifteen (15) days following written request from Tenant,
Landlord shall also inspect that portion of Tenant's Work which shall
have been completed up to the date of such request, and upon
satisfaction of all of the foregoing conditions set forth in paragraph
1 above (other than issuance of a Certificate of Occupancy) with
respect to the portion of Tenant's Work so completed, Landlord shall
issue a Landlord's Letter of Acceptance with respect to such completed
work. No payments, if any, required to be made by Landlord to Tenant
shall be made unless and until Tenant shall have obtained a current
Letter of Acceptance with respect to all of Tenant's Work completed as
of the date of such required payment.
G. Payments by Tenant
------------------
1. Tenant shall pay Landlord all sums due Landlord for items of work
performed or expenses incurred by Landlord on behalf of Tenant within
twenty (20) days after receipt by Tenant of a statement therefor
September 23, 1999 from Landlord. Such items of work and expenses
incurred include, but are not necessarily limited to, the following:
a. All items called for as Tenant's cost obligations in this
Exhibit.
b. In the event that the leased premises are located in a retail
development, or in an expansion wing of a retail development,
which development or expansion wing shall not yet have opened for
business to the public at the time of the commencement by Tenant
of its construction hereunder, Tenant shall be obligated to pay
to Landlord Tenant's pro rata share of costs and expenses
incurred by Landlord in arranging for a final cleaning of and
debris removal from the common areas and vacant premises in
preparation for the grand opening of the retail development or of
such expansion wing. Tenant's pro rata share shall be computed
on the basis that the square footage of the leased premises bears
to the square footage of gross leased and occupied area in the
Shopping Center (or in the expansion wing of the Shopping Center,
as applicable) as of the earlier of: the date of the opening of
the Shopping Center (or the expansion wing, as applicable), or
the date that Tenant is notified of its pro rata share of such
costs and expenses.
H. Insurance
---------
1. Tenant shall secure, pay for and maintain, or cause its Contractor(s)
to secure, pay for and maintain during construction and fixturing work
within the leased premises, all of the insurance policies required
herein, in the amounts as set forth below, and such insurance as may
from time to time be required from city, county, state or federal
laws, codes, regulations or authorities, together with such other
insurance as is reasonably necessary or appropriate under the
circumstances. Tenant shall not
72
permit its Contractor(s) to commence any work until all required
insurance has been obtained and certificates of such insurance have
been delivered to Landlord.
2. Tenant's General Contractor's and Subcontractors' Required Minimum
Coverages and Limits of Liability.
a. Worker's Compensation, as required by state law, and including
Employer's Liability Insurance with a limit of not less than
$2,000,000, and any insurance required by any Employee Benefit
Acts or other statutes applicable where the work is to be
performed as will protect the Contractor and Subcontractors from
any and all liability under the aforementioned acts.
b. Commercial General Liability Insurance (including Contractor's
Protective Liability) in an amount not less than $2,000,000 for
any one occurrence whether involving personal injury liability
(or death resulting therefrom) or property damage liability or a
combination thereof with an aggregate limit of $2,000,000. Such
insurance shall provide for explosion, collapse and underground
coverage.
Such insurance shall insure Tenant's General Contractor against
any and all claims for personal injury, including death resulting
therefrom and damage to or destruction of property of any kind
whatsoever and to whomsoever belonging and arising from his
operations under the Contract and whether such operations are
performed by Tenant's General Contractor, Subcontractors, or any
of their Subcontractors, or by any one directly or indirectly
employed by any of them.
c. Comprehensive Automobile Liability Insurance, including the
ownership, maintenance, and operation of any automotive
equipment, owned, hired, and non-owned, in the following amounts:
(1) Bodily injury, per occurrence for personal
injury and/or death........................... $2,000,000
(2) Property Damage Liability..................... $2,000,000
Such insurance shall insure the General Contractor and/or
Subcontractors against any and all claims for personal injury,
including death resulting therefrom and damage to the property of
others caused by accident and arising from its operations under
the Contract and whether such operations are performed by the
General Contractor, Subcontractors, or by anyone directly or
indirectly employed by any of them.
3. Tenant's Protective Liability Insurance.
Tenant shall provide Owner's Protective Liability Insurance as will
insure Tenant against any and all liability to third parties for
damages because of personal injury liability (or death resulting
therefrom) and property damage liability of others or a combination
thereof which may arise from work in connection with the leased
premises, and any other liability for damages which Tenant's General
Contractor and/or Subcontractors are required to insure against under
any provisions herein. Said insurance shall be provided in minimum
amounts as follows:
(1) Bodily injury, per occurrence for personal
injury and/or death ............................. $2,000,000
(2) Property Damage Liability........................ $2,000,000
4. Tenant's Builder's Risk Insurance -- Completed Value Builder's Risk
Material Damage Insurance.
73
Coverage:
Tenant shall provide an "All Physical Loss" Builder's Risk insurance
policy on the work to be performed for Tenant in the leased premises
as it relates to the building within which the leased premises is
located. The policy shall include Tenant, its Contractor and
Subcontractors, Landlord, and the partners and agents of Landlord, as
insureds as their interests may appear. The amount of insurance to be
provided shall be 100% of the replacement cost.
5. All such insurance policies required under this Exhibit, except as
noted above, shall include Landlord, its Managing Agent, its
Architect, its General Contractor, and the partners and agents of
Landlord, and the partners of such partners, and any other parties in
interest designated by Landlord, as additional insureds; except
Worker's Compensation Insurance, which shall contain an endorsement
waiving all rights of subrogation against Landlord, its Managing
Agent, its Architect, General Contractor, partners and agents, and the
partners of such partners, and any other parties in interest
designated by Landlord.
Certificates of Insurance shall provide that no reduction in the
amounts or limits of liability or cancellation of such insurance
coverage shall be undertaken without prior thirty (30) day written
notice to Landlord.
The insurance required under this Exhibit shall be in addition to any and all
insurance required to be procured by Tenant pursuant to Section 11.01 of the
Lease to which this Exhibit is attached.
[End of text of Standard Construction Exhibit]
74
LAKEFOREST
EXHIBIT B-1
UTILITIES
(Attached to and forming a part of Exhibit B;
Section references correspond to the Section numbers set forth in Exhibit B.)
SECTION II: LANDLORD'S WORK.
----------------------------
A. Building Utilities and Services
-------------------------------
1. Points of connection, for Tenant's use, to the following utilities in
location and sizes determined by Landlord.
a. Sanitary sewer stub.
b. Domestic cold water stub.
c. Plumbing vent stub.
d. Fire protection sprinkler system stub.
e. Air conditioning supply duct stub.
f. Toilet exhaust duct stub.
g. Central electric utility company distribution centers (227/480V, 3PH,
4W, 60C).
h. Central telephone distribution boards.
i. Kitchen waste system sewer stub.
j. Central gas utility company meeting manifolds.
SECTION IV: CRITERIA - TENANT'S WORK.
-------------------------------------
The requirements, criteria, and/or outline specifications as set forth herein
represent minimum standards for the design, construction, and finish of the
mechanical and electrical systems installed by Tenant.
A. Mechanical
----------
1. Plumbing:
a. Plumbing fixtures and accessories shall be of commercial quality and
(if required by governmental code) shall be of a water-conserving
type.
b. Water heaters shall be electric, except Food and Beverage Service
tenants where gas units may be permitted if gas is available.
c. Floor drains shall be provided in toilet rooms, kitchens, and/or food
service areas.
d. Food and Beverage Service Tenants shall further provide cast-iron
grease traps located within the leased premises, or shall connect to
Landlord's "Kitchen Waste System," where provided, in accordance with
code. Tenants permitted or required by Landlord to connect to the
Kitchen Waste System will be obligated to pay their proportionate
share of all costs involved in service, maintenance, repairs and/or
replacement of the Kitchen Waste System. Tenant's proportionate share
of such costs and expenses shall be computed on the basis that the
total number of square feet of floor area in the leased premises bears
to the total number of square feet of gross leased and occupied floor
area being served by the Kitchen Waste System. Grease traps will not
be permitted within the premises of tenants connected to the Kitchen
Waste System, notwithstanding any provisions of Exhibit B to the
contrary.
75
2. Heating, Ventilating, and Air Conditioning:
a. The leased premises is served from a centrally conditioned cold air
supply system installed by Landlord, which will deliver, during
regular Shopping Center business hours, filtered, cooled air at a
fixed temperature and variable volume. They system is designed to
maintain the leased premises at 76(degrees)F. (plusminus) 2(degrees)F.
DB and 50% RH, when outdoor temperature is 94(degrees)F. DB and
78(degrees) F. WB, and Tenant's total internal sensible and latent
heat gain does not exceed 27 BTU/hour per square foot of leased
premises.
b. The Common area air conditioning system is designed to provide initial
"warm-up" to 65(degrees) F., when outdoor temperature is 10(degrees)
F. DB. Tenant shall provide its own supplementary electrical heating
equipment, should additional heating be required by it for its leased
premises.
c. Landlord will furnish, for installation by Tenant within its leased
premises, Variable Air Volume Control Device(s), with pneumatic
operator(s) and thermostat(s) for same (collectively, VAV Device
Sets). Tenant shall design and install the air distribution system for
its leased premises, using the VAV Device Set(s), in accordance with
Standard Project Details.
d. Tenant shall provide openings in the partitions defining Tenant's
leased premises (party walls) for the transfer of the return air to
its respective central system unit where applicable. Refer to Standard
Project Details for location in attic space, detail, height and sizing
of return air openings.
e. Tenant shall provide exhaust fans to satisfy exhaust requirements for
toilet rooms and removal of heat generated within the show windows.
Exhaust fans shall be located within the leased premises. Exhaust air
discharge shall be restricted to exhaust duct locations designated by
Landlord.
f. Duct work in Tenant's public areas shall be concealed. Standards for
construction and design shall be in accordance with ASHRAE and SMACNA
Guides.
B. Electrical
----------
1. Power available to the leased premises is 277/480 volt, 3-phase, 4-wire.
2. Installation or modification of the existing system shall conform to the
following:
a. Dry-type transformer shall be used for all 120/208-volt requirements.
b. Panelboards shall be designed for 20% minimum spare ampacity (based on
connected load) and 20% spare breaker space.
c. All electrical wiring systems shall be in conduit. The use of "BX" or
"Romex" is not permitted except BX shall be permitted for runs between
Tenant's junction boxes and Tenant's electrical fixtures.
76
Exhibit B-2D
STORE DESIGN DRAWINGS
(Attached to and forming a part of Exhibit B and showing certain modifications
thereof; Section references correspond to the Sections of Exhibit B)
SECTION III. TENANT'S WORK.
---------------------------
Tenant, at its sole cost and expense, shall perform all work required to
complete the leased premises to a finished condition ready for the conduct of
business therein. Tenant's Work shall conform to criteria, procedures, and
schedules as set forth in Sections IV, V and VI, respectively, of Exhibit B,
except as herein modified, and shall further include the preparation of Store
Design Drawings and related matters as set below.
SECTION V. PROCEDURE, SCHEDULES AND OBLIGATIONS FOR THE COMPLETION OF PLANS AND
--------------------------------------------------------------------------------
SPECIFICATIONS BY TENANT.
------------------------
B. Store Design Drawings
---------------------
1. Within thirty (30) days from either of the following dates, whichever
shall be later to occur: (a) receipt by Tenant of Space Layout
Drawings, or (b) execution of this Lease by the parties hereto, Tenant
shall submit to Landlord one (1) set of reproducible prints of Store
Design Drawings prepared by a qualified architect specializing in
retail design, showing intended design character and finishing of the
leased premises. The Store Design Drawings shall comply with the
design criteria of the development and shall set forth the
requirements of Tenant within the leased premises. Said drawings shall
include but not be limited to the following:
a. Merchandising layout of the space: merchandise allocations and
fixture locations, both permanent and movable.
b. Architectural design of the space, including storefront: floor
plans, reflected ceiling plans and elevations including sign(s),
sections and complete fixturing information, material selections
and finishes, including color and material sample boards.
c. Mechanical system: basic equipment to be used and its position and
capacity, duct distribution system and diffuser locations.
d. Electrical system: floor and reflected ceiling plans showing
outlets, type of lighting fixtures, other electrical equipment
contemplated and location of panelboard(s), switchboard(s) and
projected electrical loads.
e. General demolition plan.
The parties acknowledge that Tenant's floor plans and exterior
elevations have already been approved by Landlord (subject to receipt
of approvals from governmental authorities and Department Store Site
occupants.
2. After review of Store Design Drawings, Landlord shall return to Tenant
one (1) set of prints of Store Design Drawings with Landlord's
modifications and/or approval.
3. If Store Design Drawings are returned to Tenant with modifications,
but not bearing Landlord's approval, said Store Design Drawings shall
be immediately revised by Tenant and resubmitted to landlord for
approval within fifteen (15) days of their receipt by Tenant.
C. Working Drawings and Specifications.
-----------------------------------
1. Immediately following the date on which Store Design Drawings bearing
Landlord's approval are returned to Tenant, Tenant shall engage an
Architect registered in the state in which the Shopping Center is
located for the purpose of preparing Working Drawings and
Specifications for Tenant's leased premises. Working Drawings and
Specifications shall be prepared in strict compliance with the Design
Criteria and requirements as set forth in Section IV of this Exhibit
and shall adhere to the Store Design Drawings as approved by Landlord.
2. All Working Drawings and Specifications prepared by Tenant's Architect
shall be submitted by Tenant, in the form of one (1) set of
reproducible prints (i.e., sepias) and one (1) set of prints, to
Landlord within twenty-one (21) days from receipt by Tenant of
Landlord's approved Store Design Drawings. Any required revisions to
such Working Drawings and Specifications shall be prepared and
resubmitted by Tenant to Landlord within fifteen (15) days of receipt
of notice.
3. Tenant shall pay all fees of its Architect. Landlord shall not be in
any way responsible or liable with respect to the accuracy,
sufficiency or feasibility of Tenant's plans, and Tenant shall be
totally responsible for same.
D. Completion Schedule.
-------------------
The submittal dates for Store Design Drawings and for Working Drawings and
Specifications shall be included and shall be consistent with the requirements
of paragraphs B and C above.
[End of text of Standard Design Exhibit]
77
List of Miscellaneous Exhibits to Be Incorporated into The LAKEFOREST ASSOCIATES
LLC., a Delaware limited liability company, as Landlord and SILVER DINER
DEVELOPMENT, INC., as Tenant, dated ________________, 1999.
The parties agree that the exhibits listed below and attached hereto shall be
incorporated into the Lease in addition to the exhibits already contained
therein:
1.) Exhibit "D" attached hereto.
2.) Exhibit "E" attached hereto.
3.) Exhibit "F" attached hereto.
4.) The Center Court icon/kiosk exhibit is attached hereto as Exhibit "G":.
5.) The Auxiliary Signage and Kiosk Operation Lease Exhibit is attached
hereto as Exhibit "H".
In addition, the parties acknowledge and agree that Tenant's design drawings
submitted by Tenant to Landlord on October 6, 1999 as approved by Landlord
inclusive of notations by Landlord are acceptable to Landlord and Tenant.
Agreed:
Silver Diner Development Inc.
By: __________________________________
Lakeforest Associates LLC
By: __________________________________
78
