04001 W Morehead Street Lease Agreements 2002.10.11

EXHIBIT I
To the First Lease Amendment dated
May 15, 2002
Brownfields Agreement between
North Carolina Department of Environment and Natural Resources
And
Addison Investments, LLC

FIRST LEASE AMENDMENT
COUNTY OF MECE LENBURG STATE OF NORTH CAROLINA
THIS LEASE AMENDMENT made and entered into the 15th day of May, 2002 revising or amending that
Lease dated May 4, 2002 (the "Lease") by and between Addison Investments, LLC (hereinafter referred to
as "Lessor" or "Landlord") and Shelton Florist, Inc. (hereinafter referred to as "Lessee" or "Tenant").
WHEREAS, the Landlord has heretofore leased 1306 West Morehead, Mecklenburg County, NC
(hereinafter referred to as "Premises") to the Tenant;
WHEREAS, the parties hereto have agreed to amend the Lease and other provisions as more specifically
set forth hereinafter;
NOW THEREFORE, in consideration of the Premises and other valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree for themselves, their successors and assigns, to
amend the Lease as follows:
Lessee acknowledges that the Premises and the Property constitute a "Brownfields Property" as
evidenced by that certain Brownfield Agreement between Lessor and the North Carolina Department of
Environment and Natural Resources "DENR'; a copy of which is attached as Exhibit A ("Brownfield
Agreement") to that certain "Amended Notice of Brownfields Property" dated March 25, 2002 and
recorded in Book 13403 at Page 392 of the Mecklenburg County Public Registry, a copy of which is
attached and hereto as Exhibit "I". Lessee hereby agrees to be subject to and to comply with the
provisions of the Brownfield Agreement, including but not limited to: (a) complying with the use
restrictions set forth in paragraph 10(a) therein, and (b) providing the DENR reasonable access to the
Demised Premises as set forth and required in paragraph ll therein.
Except as otherwise expressly amended herein, the Lease remains unchanged and is hereby ratified and is
in full force and effect.
IN WITNESS WHEREOF the parties hereunto set their hand and seal and cause this instrument to be duly
executed by their respective authorized officers, as of the day and year first above written.
ATTEST: LANDLORI
�{ 3y:
ATTEST: TENANT:
BY:

October 11, 2002
Lamarr Philllips
Addison Investments, LLC
PO Box 221632
Charlotte, NC 28222-1632
Tony Duque
Brownfields Project Manager
Superfund Branch, DMW
N C Dept of Environmental and Natural Resources
1646 Mail Service Center
Raleigh, NC 27699-1646
Re: 1306 — 1310 West Morehead Street
Charlotte, NC
Dear Tony:
ASS(
0400 (-W -CMG
0 oc'2 z ca- (" p
Pursuant to the Brownfields Agreement dated March 21, 2002, between NCDNER and
Addison Investments, LLC, enclosed please find one copy each of two leases. Both leases
include the required language with respect to the above agreement. The leases are noted
below by Tenant names:
1. Shelton Florist, Inc.
2. Summer Classics Stores, Inc.
Please do not hesitate to contact me at 704-364-1100 or Lawrence Shaw at 704-335-
4445, should you have any questions.
Sincerely,
ISON INVE MENTS, LLC
Lamarr Phillips
Enclosures: 2
CC: Tom Griffin, III
Parker Poe Adams & Bernstein L.L.P.

LEASE AGREEMENT
BY AND BETWEEN
ADDISON INVESTMENTS, LLC,
a North Carolina limited liability company
("LESSOR")
AND
SUMMER CLASSICS STORES, INC.
a Delaware corporation
("LESSEE")
FOR
PREMISES LOCATED AT:
1308 WEST MOREHEAD STREET
CHARLOTTE, NC
NPCHLT1:77393.7-LE-(JHH) NEWFILE-NEWFILF

f ^t
TABLE OF CONTENTS
Page
DEMISEDPREMISES..................................r1:.............................................................................. 1
TERM............................................................ `.................................................................................
1
RENT............................................................................................................................ ..................
2
SECURITYDEPOSIT....................................................................................................................
3
RESPONSIBILITY OF LESSOR AND LESSEE REGARDING TAXES ...................................
3
RESPONSIBILITY OF LESSOR AND LESSEE REGARDING INSURANCE
PREMIUMS..................................................................:........................................................... 3
RESPONSIBILITY OF LESSOR AND LESSEE REGARDING UTILITIES ............................. 4
RESPONSIBILITY OF LESSOR AND LESSEE REGARDING COMMON AREA
MAINTENANCE..................................................................................................................... 5
QUIETPOSSESSION.................................................................................................................... 5
IMPROVEMENTS AND ALTERATIONS TO BE MADE BY LESSOR ................................... 5
IMPROVEMENTS AND ALTERATIONS TO BE MADE BY LESSEE ....................................
5
USE.................................................................................................................................................
7
PARKING............ :..........................................................................................................................
8
CONDITIONOF PREMISES........................................................................................................
6
MAINTENANCE...........................................................................................................................
8
DAMAGEBY FIRE.......................................................................................................................
8
LESSEE'S INSURANCE POLICY.............................................................................................
10
HOLD HARMLESS/WAIVER OF SUBROGATION RIGHTS .................................................
10
CONDEMNATION.............................................................................................................:........
10
ASSIGNMENT AND SUBLETTING.........................................................................................
12
PERSONAL PROPERTY, TRADE FIXTURES, PARTITIONS AND OTHER
IMPROVEMENTS BY LESSEE...........................................................................................
12
SUBORDINATION OF LEASE..................................................................................................
13
DEFAULT BY LESSEE...............................................................................................................
13
CERTAIN RIGHTS RESERVED TO LESSOR..........................................................................
16
ESTOPPEL CERTIFICATE BY LESSEE...................................................................................
16
WAIVER OF CERTAIN CLAIMS BY LESSEE........................................................................
17
MEMORANDUMOF LEASE.....................................................................................................
17
LEGAL FEES OF LESSOR/LESSEE..........................................................................................
17
HOLDOVER.................................................................................................................................
17
NOTICES......................................................................................................................................
17
INVALIDITY OF PARTICULAR PROVISIONS......................................................................
18
PERSONS BOUND BY LEASE..................................................................................................
18
GENDER AND NUMBER...........................................................................................................
18
AUTHORIZATION......................................................................................................................
18
HEADINGS..................................................................................................................................
18
COMPLETE AGREEMENT........................................................................................................
18
EXECUTION................................................................................................................................
18
MISCELLANEOUS........................................................................................................ .........
19
i
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r-,
TABLE OF CONTENTS (Cont'd)
Page
BROKERS.................................................T................................................................................ 19
DEFAULTSBY LESSOR............................................................................................................ 20
RIGHT OF FIRST REFUSAL REGARDING PURCHASE OF BUILDING ............................. 20
ACKNOWLEDGEMENTS.......................................................................................................... 22
EXHIBIT A - DESCRIPTION OF DEMISED PREMISES........................................................ 23
EXHIBIT B - ALTERATION WORK TO BE PERFORMED BY LESSEE .............................. 27
EXHIBIT C - ALTERATION WORK TO BE PERFORMED BY LESSOR ............................. 28
EXHIBIT D - BROWNFIELD AGREEMENT............................................................................ 31
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LEASE
THIS LEASE AGREEMENT ("Lease") made this day of October, 2002, by and
between ADDISON INVESTMENTS, LLC, a North Carolina limited liability company
(hereinafter called "LESSOR") and SUMMER CLASSICS STORES, INC., a Delaware
corporation, (hereinafter called "LESSEE") and SUMMER CLASSICS, INC., an Alabama
corporation (hereinafter the "GUARANTOR") on the terms and conditions set forth below.
WITNESSETH:
1. DEMISED PREMISES: Lessor does hereby lease to Lessee and Lessee does
hereby lease from Lessor that certain space containing approximately 12,000 gross square feet of
rental space in that certain building known as 1308 West Morehead Street. ("Demised
Premises") located in the County of Mecklenburg and State of North Carolina as depicted along
with the land and other improvements on the attached Exhibit "A" (collectively the "Property")
which is incorporated herein by reference
2. TERM:
a. Lessee shall have access to the Demised Premises upon its receipt of
written notice from Lessor acknowledging the issuance of a temporary certificate of occupancy
(the "Commencement Notice") evidencing completion of Lessor's work described on Exhibit
"C" ("Lessor's Work"). Lessee may then commence preparing the Demised Premises for
occupancy and complete the alteration work to be performed by Lessee as set forth on Exhibit
"B" ("Lessee's Work"). The Initial Term of this Lease shall commence on the date set forth on
the Commencement Notice ("Commencement Date") and shall expire, without notice to Lessee
on January 31, 2008 ("Expiration Date") unless extended as set forth herein.
b. As long as Lessee is not in default in the performance of its covenants
under this Lease at the time of exercise of any renewal option herein or at the time of
commencement of any renewal, Lessee is granted the two (2) options to renew the Term of this
Lease for a period of five (5) additional year(s) each (collectively "Renewal Terms"), to
commence at the expiration of the Initial Term or First Renewal Term, as applicable, of this
Lease. Lessee shall exercise its option to renew by delivering written notice of such election to
Lessor at least nine (9) months prior to the expiration of the Initial Term or First Renewal Term
as applicable. The renewal of this Lease shall be upon the same terms and conditions of this
Lease, except (a) the Base Rent, as defined in the Lease, during any Renewal Term shall be as
set forth below, (b) Lessee shall have no option to renew this Lease beyond the expiration of the
Second Renewal Term, (c) Lessee shall not have the right to assign its renewal rights to any
sublessee of the Demised Premises or assignee of the Lease, nor may any such sublessee or
assignee exercise such renewal rights without the prior written consent of Lessor, which shall not
be unreasonably withheld, conditioned or delayed, and (d) leasehold improvements will be
provided in their then existing condition (on an "as is" basis) at the time any Renewal Term
commences.
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These options to renew shall terminate if notice is not timely given by Lessee. All
references to the "Term" of this Lease shall, unless the context shall clearly indicate a different
meaning, be deemed to include a reference to the Initial Term of this Lease and any properly
exercised Renewal Term.
3. RENT:
a. Base Rent. Lessee agrees to pay Base Rent for the Demised Premises at
the office of Lessor, c/o Addison Investments, LLC, P.O. Box 2221632, Charlotte, NC 28211 or
such other place as is designated in writing by Lessor beginning on the date thirty (30) days after
the Commencement Date (the "Rent Commencement Date") in the amounts set forth below,
provided however, if the Rent Commencement Date occurs on a day other than the first (1st) day
of a calendar month, Lessee shall pay to Lessor the prorata portion of the monthly rent for that
period from the Rent Commencement Date to the last day of the calendar month:
Initial Term - Base Rent
Period
Annual Rent
Monthly Rent
Rent Commencement Date to January 31, 2004
$78,000.00**
$6,500.00
February 1, 2004 to January 31, 2005
$80,340.00
$6,695.00
February 1, 2005 to January 31, 2006
$82,750.00
$6,896.00
February 1, 2006 to January 31, 2007
$85,233.00
$7,103.00
February 1, 2007 to January 31, 2008
$87,790.00
$7,316.00
First Renewal Term
- Base Rent
Period
Annual Rent
Monthly Rent
February 1, 2008 to January 31, 2009
$
90,424.00
$7,535.00
February 1, 2009 to January
31, 2010
$
93,136.00
$7,761.00
February 1, 2010 to January
31, 2011
$
95,930.00
$7,994.00
February 1, 2011 to Januaa
31, 2012
$
98,808.00
$8,234.0.0
February 1, 2012 to January
31,2013
$101,773.00
$8,481.00
Second Renewal Term - Base Rent
Period
*Annual Rent
*Monthly Rent
February 1, 2013 to January 31, 2014
$104,826.00
$8,736.00
February 1, 2014 to January 31,2015
$107,971.00
$8,998.00
February 1, 2015 to January 31,2016
$111,210.00
$9,268.00
Febru 1, 2016 to January 31,2017
$114,546.Op
$9,546.00
February 1, 2017 to January 31, 2018
$117,983.00
$9,832.00
r
*The rental amounts set forth above for the Second Renewal Term are based on a three percent
(3%) annual increase.
"The Annual Rent of $78,000 assumes a Rent Commencement Date of February 1, 2003,
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however, the actual rental amount may differ depending upon the actual Rent Commencement
Date.
During the Second Renewal Term in the event that the CPI (as hereafter defined) as of
January 1 of the year in question is greater than three percent (3%), the Base Rent for the
particular period shall increase by an amount equal to the said CPI amount up to a maximum
increase of ten percent (10%o) for any particular year.
"CPI" shall mean shall mean the Consumer Price Index for All Urban Consumers (1982-
84=100) published by the United States Department of Labor, Bureau of Labor Statistics. If the
Consumer Price Index is discontinued, calculated in a different manner or is unavailable, Lessor
will substitute a comparable index reflecting changes in the cost of living or purchasing power of
the consumer dollar published by any other governmental agency, bank or other financial
institution, or any recognized authority.
b. Late Fee. All rent shall be paid in advance 'on the first (0) day of each
month. In the event rent is not paid by the fifth (5th) day of the calendar month Lessor may
provide written notice to Lessee of the same and if payment is not received within five (5) days
after said notice, in addition to the nonpayment constituting an Event of Default at Lessor's
election pursuant to paragraph 23(a)(i) herein, a late payment fee in the amount of 5% of the
payment amount shall accrue. Rent shall be paid by Lessee, without demand from Lessor, the
same being hereby waived by Lessee, and without any set-off or deduction whatsoever.
Notwithstanding the above, Lessor shall not be required to provide more than one (1) written
notice in any twelve (12) month period in order for the late fee herein to accrue.
C. Additional Rent. In addition to the Base Rent, Lessor shall pay to Lessee
as Additional Rent all other sums of money as shall become due from Lessee under this Lease,
including but not limited to Lessee's Proportionate Share of the Taxes, Insurance Premiums,
Storm Water Charges, and Common Area Maintenance and its share of the Water/Sewer Charges
(hereinafter collectively referred to as "Lessee's Costs"), each as hereinafter defined. Lessee
agrees to pay to Lessor an amount of $375.00 per month (the "Estimated Payment") which is an
amount estimated to equal 1/12th of Lessee's Costs. The Estimated Payments received by
Lessors and the Lessee's Costs shall be reconciled annually by no later than December 20th of
each calendar year. If Lessee's Costs is greater than the total of the Estimated Payments
received by Lessor, Lessee shall pay to Lessor upon demand the difference; if the Estimated
Payments received by Lessor are greater than Lessee's Costs, Lessor shall retain such excess and
credit it to the following year's Estimated Payments. On or before January 15th of each calendar
year, Lessor shall provide Lessee a new Estimated Payment amount for the upcoming year based
on the actual Lessor's Cost of the prior year.
4. SECURITY DEPOSIT: Lessee shall pay to Lessor, upon execution of this
Lease, the sum of Six Thousand Five Hundred and#00/100 Dollars ($6,500.00) which represents
a security deposit for the performance of Lessee!. obligations hereunder. Lessee's obligations
hereunder include without limitation, the payment of any rent and the payment of the cost of
repairing any damages to the Demised Premises upon the termination of the Lease. In the event
of a default by Lessee, Lessor, may at its option, apply such part (or all) of the deposit as may be
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necessary to cure the default, in which case such portion (or all) of said deposit shall be deemed
forfeited by Lessee as liquidated damages without prejudice to any other rights which Lessor
may have by reason of such default. If Lessor does so apply any portion (or all) of the deposit,
Lessee shall thereupon redeposit with Lessor an amount equal to that so applied so that Lessor
will have the full security deposit on hand at all times during the term of this Lease. Lessor shall
not, unless otherwise required by law, be required to keep this security deposit separate from its
general funds, nor pay interest thereon to Lessee. Upon the termination of this Lease (provided
that Lessee is not in default hereunder and the Demised Premises are in the same condition as on
the Lease Commencement Date, ordinary wear and tear and loss by fire or other casualty
excepted)..-} Lessor shall refund to Lessee all or the then remaining balance of the deposit without
interest. In the event of a sale or lease of the all or any portion of the Property of which the
Demised Premises form a part, Lessor shall have the right to transfer the deposit to the new
owner whereupon owner shall be released by Lessee from all liability for the return of such
deposit and Lessee agrees to look solely to the new Lessor for the return of said deposit. It is
agreed that the provisions hereof shall apply to every transfer orassignmentmade of the deposit
to a new owner.
5. RESPONSIBILITY OF LESSOR AND LESSEE REGARDING TAXES:
a. Lessee shall pay during the Term of this Lease, and any Renewal Term or
any other extensions of the Term, to Lessor as additional rent, its proportionate share, as defined
herein, of all real estate taxes, ad valorem taxes and assessments, general and special
assessments, or any other taxes imposed upon or levied against the Property or owners of the
Property, including taxes imposed on leasehold improvements which are assessed against Lessor,
(collectively "Taxes"). Lessee's proportionate share of Taxes for any "Tax Year", hereinafter
defined, shall be computed by multiplying the amount of such Taxes by a fraction, the numerator
of which shall be the rentable square feet of the Demised Premises which is 12,000 square feet
and the denominator of which shall be 20,400 square feet. Accordingly, Lessee's proportionate
share equals 59% ("Proportionate Share"). For the Tax Year in which the term commences or
terminates, the provisions of this paragraph shall apply, but Lessee's liability for its
proportionate share of any Taxes for such year shall be subject to a prorata adjustment based
upon the number of days of such tax year falling within the Term, provided, however, Lessee's
liability hereunder shall commence on the Rent Commencement Date. The term "Tax Year"
shall mean the calendar year. Lessee agrees to pay its Proportionate Share of Taxes within thirty
(30) days of receipt from Lessor of tax bills for such Tax Year.
b. Lessee agrees to pay all taxes on its own property, including those
measured by income, all excise and sales taxes and all ad valorem taxes on inventory,
merchandise, fixtures, and equipment belonging to Lessee. Lessee's reimbursement to Lessor
for the first and/or last year of Lessee's occupancy shall be apportioned or prorated so that
Lessee will pay the Taxes only for the portion of the Tax Year for which this Lease is in effect.
6. RESPONSIBILITY OF LESSOR AND LESSEE REGARDING
INSURANCE PREMIUMS: During the Term of this Lease, or any Renewal Term or any other
extensions of the Term, upon receipt of written notice from Lessor, Lessee shall pay as
additional rent an amount equal to Lessee's Proportionate Share, of any amount of premiums
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charged for fire and extended coverage and liability insurance, together with all endorsements
thereto, carried by Lessor on the Property ("Insurance Premiums"). Any partial year during the
Term shall be prorated based upon the number of months falling within the Term, provided,
however, Lessee's liability hereunder shall commence on the Rent Commencement Date. Lessor
shall, at the written request of Lessee, submit copies of actual insurance premium bills to Lessee
after receipt of said insurance premium bills by Lessor.
If Lessor's or Lessee's use of materials used or stored within the Demised
Premises cause an increase in the rate of insurance on said Demised Premises or on the Property,
then Lessor or Lessee, as the case may be, shall be responsible for the full cost of said increase in
insurance costs and Lessee shall reimburse Lessor for the full amount of this increase within
thirty (30) days after receipt from Lessor of copies of the invoices showing the increase in
insurance premiums.
Lessee shall provide for all fire and casualty insurance on its own inventory,
furniture, fixtures and equipment located in the Demised Premises.
7. RESPONSIBILITY OF LESSOR AND LESSEE REGARDING UTILITIES:
During the Term of this Lease or any Renewal Term or any other extensions of the Term, or at
such time Lessee takes possession of the Demised Premises, Lessee shall pay directly to the
utility company for all gas and electricity charges which are separately metered to the Demised
Premises and shall make such payments promptly when they become due. Water and sewer
charges are not separately billed for the Demised Premises but the actual usage of water by the
Lessee is ascertainable. Lessee agrees to pay as additional rent its share of the water and sewer
charges based on Lessee's actual usage (collectively the "Water/Sewer Charges'). Lessee also
agrees to pay its Proportionate Share of storm water charges ("Storm Water Charges") as will be
shown as a separate line item on the monthly invoice received from the City of Charlotte in
conjunction with the water/sewer charges.
8. RESPONSIBILITY OF LESSOR AND LESSEE REGARDING COMMON
AREA MAINTENANCE: Lessee shall also pay each year as additional rent during the Term,
and any Renewal Term, as additional rent, its Proportionate Share of the Common Area
Maintenance Charges as defined herein. "Common Area Maintenance Charges" will include,
but not be limited to, parking lot maintenance, including any painting of the parking lot, but shall
exclude replacement of the parking lot. Lessee shall, at its expense, be responsible for
landscaping, yard maintenance and ice and snow removal and trash removal of the common area
immediately around the building including the parking lot, all as set forth in paragraph 15(c)
herein, however, Lessor may, but shall not be obligated to, perform or cause such maintenance to
be performed if it, in its reasonable discretion, deems it necessary and may seek reimbursement
from Lessee pursuant to paragraph 25(c) herein.
9. QUIET POSSESSION: Lessor covenants that it is the lawful owner of the
Property and has lawful authority to enter into this 'lease with Lessee. Lessor agrees that Lessee
shall enjoy the Demised Premises during the Term, free from the adverse claims of any person or
party including those claiming through Lessor, and enjoy peaceful and quiet possession so long
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as Lessee pays the rent herein provided for and performs the other terms and conditions as herein
agreed upon.
Lessee, at its own expense, shall comply with all rules, regulations and
requirements of the federal, state, county and city governments (and any of the departments or
bureaus thereof) applicable to the Lease or Demised Premises for the prevention and abatement
of nuisances and other grievances arising out of the manner of the occupancy of the Demised
Premises by Lessee during the Term.
10. IMPROVEMENTS AND ALTERATIONS TO BE MADE BY LESSOR:
Lessor shall cause the Lessor's Work be completed no later than January 1, 2003, after which the
parties herein acknowledge that the Demised Premises will be delivered to Lessee in an "as -is"
condition. Lessor represents and warrants to Lessee that the mechanical, electrical and plumbing
system serving servicing the Demised Premises are or shall be in good working order on or
before the Commencement Date.
11. IMPROVEMENTS AND ALTERATIONS TO BE MADE BY LESSEE:
a. Lessee shall make no alterations, installations, additions or improvements
in, on or to the Demised Premises without Lessor's prior written consent, including but not
limited to the installation of drapes, curtains, blinds or any other window treatment. Any such
work shall be designed and made in a manner, and by architects, engineers, workmen and
contractors, reasonably satisfactory to Lessor. All alterations, installations, additions and
improvements (including, without limitation, paneling, partitions, millwork and fixtures), but
excluding Lessee's furniture, trade fixtures and equipment, made by or for Lessee to the
Demised Premises shall remain upon and be surrendered with the Demised Premises and become
the property of Lessor at the expiration or termination of this Lease or the termination of Lessee's
right to possession of the Demised Premises; provided, Lessor may require Lessee to remove any
or all of such items upon the expiration or termination of this Lease or the termination of
Lessee's right to possession of the Demised Premises in order to restore the Demised Premises to
the condition existing at the time Lessee took possession, ordinary wear and tear and loss by fire
or other casualty excepted. Lessee shall bear the costs of removal of Lessee's property from the
Property and of all resulting repairs thereto. All work performed by Lessee with respect to the
Demised Premises shall: (a) not alter the exterior appearance of the building or adversely affect
the structure, safety, systems or services of the building; (b) comply with all building safety, fire
and other codes and governmental and insurance requirements; (c) not result in any usage of
water, electricity, gas, heating, ventilating or air conditioning, (either during or after such work),
in excess of that routinely required for the use of the Demised Premises by Lessee unless prior
written arrangements satisfactory to Lessor are entered into; (d) be completed promptly and in a
good and workmanlike manner; (e) be performed in such a manner that does not cause
interference or disharmony with any labor used by Lessor, Lessor's contractors or mechanics or
by any other lessee or such other lessee's contractors or mechanics; and (f) not cause any
mechanic's, materialman's or other similar liens to attach to Lessee's leasehold estate. Lessee
shall not permit, or be authorized to permit, any liens (valid or alleged) or other claims to be
asserted against Lessor or Lessor's rights, estates and interests with respect to the Property or this
Lease in connection with any work done by or on behalf of Lessee, and Lessee shall indemnify
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and hold Lessor harmless against any such liens. In the event that Lessee shall not, within thirty
(30) days following the imposition of any such lien, cause the same to be released of record by
payment or posting of a proper bond, Lessor shall have, in addition to all other remedies
provided herein and by law, the right, but not the obligation, to cause the same to be released by
such means as it shall deem proper, including payment of the claim giving rise to such lien. All
such sums paid by Lessor and all expenses incurred by it in connection therewith shall be
considered additional rent and shall be payable to it by Lessee on demand and with interest at the
rate of twelve (12%) percent per annum.
b. Notwithstanding the foregoing, Lessee shall be permitted to make the
improvements contemplated by the Lessee's Work, provided, however, Lessor's consent to such
alteration shall not in any way waive Lessor's rights under this Lease with respect to approval of
improvements and alterations nor Lessee's compliance with the provisions of Paragraph. 11 (a).
12. USE:
a. Lessee shall occupy and use the Demised Premises for the retail sale of
patio furniture and ancillary office and other uses associated therewith and such other uses as
shall be approved in writing by Lessor. Changes in usage shall be allowable only by Lessor's
written consent, which shall not be unreasonably withheld, conditioned or delayed. Lessee shall
have the right to erect reasonable signs relating to its business activities subject to approval of
Lessor, which shall not be unreasonably withheld, conditioned or delayed. Provided, however,
that if Lessee erects any sign(s) on the Property of which the Demised Premises is a part, it will
remove them at or prior to the expiration of this Lease or any renewal thereof and repair any
damage to the Property occasioned by the removal of such signs. The care and maintenance of
such signs shall be the sole responsibility of Lessee who will maintain them in good condition at
all times. Such signs shall remain the property of Lessee. Lessee shall have the right to install
an alarm and security system, at Lessee's sole cost and expense.
b. Lessee will not make or permit to be made any use of the Demised
Premises or any part thereof which would violate any provision of this Lease or which is
forbidden by public law, ordinance or governmental regulation or permit the Demised Premises
or any part thereof to be used in any manner or anything to be brought into or kept therein which,
in the reasonable judgment of Lessor, will in any way impair or tend to impair the character or
appearance of the Demised Premises. Lessee shall not do or permit anything to be done upon
said Demised Premises in any way to create a nuisance or tending to disturb any other lessee on
said Property or the occupants of neighboring properties that violates applicable zoning
regulations. Lessee shall not use or permit upon said Demised Premises anything that will
invalidate any policy of insurance now or hereafter covering the Demised Premises or the
Property. Provided further, at no time shall Lessee use the outside of the Demised Premises for
storage, and no outbuildings are to be placed outside of the Demised Premises, without the
written consent of Lessor. Further, Lessee shall be responsible to see that the exterior grounds
are maintained free and clear of any trash or wastd from their operation or from their utilization
of the Demised Premises. Rules and regulations for parking lot and common area use may be
established from time to time by Lessor for the Lessee's and other tenant's benefit and
compliance with these rules is required as a term of this lease.
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13. PARKING: Lessee shall have the non-exclusive use of all parking spaces on the
Property EXCEPT those spaces marked "Exclusive Parking for 1306 West Morehead" on
Exhibit "A" attached hereto. Lessee shall comply with all reasonable traffic, security, safety and
other rules and regulations promulgated from time to time by Lessor. Lessee shall indemnify
and hold Lessor harmless from and against all claims, losses, liabilities, damages, costs and
expenses (including, without limitation, reasonable attorneys' fees, court costs and expenses)
arising or alleged to arise out of Lessee's use of any parking spaces. The use of the parking,
loading and unloading areas by the Lessee, its employees, agents and customers shall not
unreasonably interfere with the use the parking, loading an unloading areas by the other tenants,
their employees, agents and customers.
14. CONDITION OF PREMISES: Lessee acknowledges that no representations,
except as set out herein, have been made by Lessor respecting the condition of the Demised
Premises and agrees that Lessee's taking possession of said Demised Premises shall be
conclusive evidence that said Demised Premises were in good and satisfactory condition when
possession of the same was so taken; and Lessee agrees, at the termination of this Lease, to
return said Demised Premises to Lessor broom -clean and in as good condition as when Lessee
took possession, ordinary wear and tear and loss by fire or other casualty excepted failing which
Lessor may restore the Demised Premises to such condition and Lessee agrees to pay the cost
thereof on demand.
15. MAINTENANCE:
a. Lessor agrees, at its sole expense, to maintain and keep in good repair all
structural components of the Building including the foundation and footings, the roof of the
building (including gutters and downspouts) and the exterior walls of the building; provided,
however, that Lessee shall pay for all repairs and replacements which are to be made by Lessor
under this Paragraph 15(a), if such repairs are occasioned by or through the activity, fault or
negligence of the Lessee, its employees, agents, contractors or invitees. Notwithstanding the
foregoing, provided a policy of insurance covering the Property or the Demised Premises,
whether procured and maintained by Lessor or by Lessee, insures against the damage caused by
said activity, Lessor shall look solely to the available insurance proceeds to perform said repairs
and replacements except that Lessee shall be liable to Lessor for the amount of any applicable
deductible.
b. Subject to the provision of 15(a) above, Lessee agrees to maintain, replace
and keep in good repair the Demised Premises at its sole cost and expense, including without
limitation, repairs to the heating, air conditioning, ventilation, electrical wiring, plumbing,
appliances, utility lines (the portions of which are located within the Demised Premises), and to
keep the same in good condition and state of repair. Lessee shall also, at its sole cost and
expense, repair or replace any damage or injury done to the Demised Premises or leasehold
improvements or any part thereof, caused by Lessee or Lessee's agents, contractors, employees,
invitees and visitors.
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C. Lessee will, at its sole expense, keep the Demised Premises clear and free
from all dirt and other refuse, keep the Demised Premises and its yard area (PIN #071-241-23)
landscaped in a first class manner, keep the sidewalk and parking lot clean and unobstructed in
any way and free from ice and snow and trash, keep all waste and drain pipes open within said
Demised Premises, keep and replace all plate glass or glass windows broken from any cause
whatsoever, unless such breakage is caused by accidental fire not occurring through the fault or
negligence of Lessee, or its employees, agents, contractors, or invitees.
d. Lessee agrees to procure and maintain an HVAC maintenance contract in
Lessee's name throughout the Term of the Lease and provide a copy of the same to Lessor. The
cost of such contract will be paid by Lessee, within thirty (30) days of receipt of an invoice for
same.
16. DAMAGE BY FIRE:
a. If the building or Demised Premises are rendered partially or wholly
untenantable by fire or other casualty, and if such damage cannot, in Lessor's reasonable
estimation, be materially restored within one hundred eighty (180) days of such damage, then
Lessor may, at its sole option, terminate this Lease as of the date of such fire or casualty. Lessor
shall exercise its option provided herein by written notice to Lessee (the "Casualty Notice")
within eighty (180) days of the occurrence of such damage as to whether the damage is
susceptible of complete repair within one hundred eighty (180) days after the date of the
occurrence. For purposes hereof, the Demised Premises shall be deemed "materially restored" if
they are in such condition as would not prevent or materially interfere with Lessee's use of the
Demised Premises for the purpose for which it was then being used.
b. If this Lease is not terminated pursuant to Paragraph 16(a), then Lessor
shall proceed with all due diligence to repair and restore the Demised Premises, at Lessor's cost,
or the Demised Premises as provided herein, (except that Lessor may elect not to rebuild if such
damage occurs during the last nine (9) months of the initial Term or any Renewal Term and
Lessee has not exercised its option to renew.
C. If this Lease shall be terminated pursuant to this Paragraph 16(a), the
Term of this Lease shall end on the date of such damage as if that date had been originally fixed
in this Lease for the expiration of the Term hereof. If this Lease shall not be terminated by
Lessor pursuant to this Paragraph 16(a) and the Casualty Notice provides that the estimated
repair period will be in excess of one -hundred eighty (180) days, Lessee shall have within twenty
(20) days from the expiration of the above thirty (30) day period referenced in Paragraph 16(a) to
elect to terminate this Lease as of the date of such fire or casualty by providing written notice to
Lessor. In the event the Casualty Notice is not given within thirty (30) days of the occurrence of
such damage, Lessee shall then have the right within twenty (20) days of the expiration of such
thirty (30) day period, to give notice to Lessor to provide such Casualty Notice. If Lessor, within
ten (10) days of receipt of Lessee's twenty (20)` days notice, fails to provide such Casualty
Notice, then Lessee shall have within twenty (20) days from the expiration of said thirty (30) day
period, to elect to terminate this Lease as of the date of such fire casualty by providing written
notice to Lessor of same.
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If this Lease shall not be terminated by Lessor or Lessee pursuant to this
Paragraph 16 and in the event that Lessor should fail to complete such repairs and material
restoration by the end of the one hundred eighty (180) day period, then Lessee may at its option
and as its sole remedy terminate this Lease by delivering written notice to Lessor, whereupon the
Lease shall end on the date of such notice as if the date of such notice were the date originally
fixed in this Lease for the expiration of the Term hereof; provided, however, that if construction
is delayed because of changes, deletions, or additions in construction requested by Lessee,
strikes, lockouts, casualties, Acts of God, war, terrorism, material or labor shortages,
governmental regulation or control or other causes beyond the reasonable control of Lessor, the
period for restoration, repair or rebuilding shall be extended for an additional sixty (60) days.
d. Lessee agrees that during any period of restoration or repair of the
Demised Premises, Lessee shall continue the operation of Lessee's business within the Demised
Premises to the extent practicable. During the period from the date of the damage until the date
that the untenantable portion of the Demised'Premises is materially restored, the Base Rent shall
be reduced to the extent of the proportion of the Demised Premises which is untenantable,
however, there shall be no abatement of other sums to be paid by Lessee to Lessor as required by
this Lease.
e. In no event shall Lessor be required to rebuild, repair or replace any part
of the partitions, fixtures, additions and other improvements which may have been placed in or
about the Demised Premises by Lessee either prior to or after the Commencement Date, however
Lessor has the right but not the obligation to rebuild, repair or replace at Lessee's expense so
much of the partitions, fixtures, additions and other improvements as may be necessary to ensure
that the Demised Premises are materially restored. Any insurance which may be carried by
Lessor or Lessee against loss or damage to the Property or Demised Premises shall be for the
sole benefit of the party carrying such insurance and under its sole control except that Lessor's
insurance may be subject to control by the holder or holders- of any indebtedness secured by a
mortgage or deed of trust covering any interest of Lessor in the Demised Premises or the
Property.
L Notwithstanding anything herein to the contrary, in the event the holder of
any indebtedness secured by a mortgage or deed of trust covering the Demised Premises or
Property requests that any insurance proceeds be paid to it, then Lessor shall have the right to
terminate the Lease by delivering written notice of termination to Lessee within fifteen (15) days
after such requirement is made by any such person, whereupon the Lease shall end on the date of
such damage as if the date of such damage were the date originally fixed in this Lease for the
expiration of the term.
17. LESSEE'S INSURANCE POLICY: Lessee shall from the Commencement
Date, at its expense, maintain (1) standard fire and extended coverage insurance on all of its
personal property, including removable trade fixtures, located in the Demised Premises and on
its leasehold improvements and all other additions and improvements (including fixtures) made
by Lessee; (2) a policy or policies of comprehensive general liability insurance, such insurance
to afford minimum protection (which may be effected by primary and/or excess coverage) of not
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less than $2,000,000 for personal injury or death in any one occurrence and of not less than
$1,000,000.00 for property damage (including exterior glass of improvements) in any one
occurrence, provided, Lessee shall carry such greater limits of liability coverage as Lessor may
reasonably request from time to time; (3) workers' compensation at statutory limits and (4)
employers' liability coverage not less than $500,000.00 for bodily injury by accident and
coverage not less than $100,000.00 for bodily injury by disease. All insurance policies required
to be maintained by Lessee shall (a) be issued by and binding upon solvent insurance companies
licensed to conduct business in the jurisdiction where the Demised Premises are situated, (b)
have all premiums fully paid on or before the due dates, (c) name Lessor as additional insured,
and (d) provide that they shall not be cancelable and/or the coverage thereunder shall not be
reduced without at least thirty (30) days advance written notice to Lessor. Lessee shall deliver to
Lessor certified copies of all policies or certificates of insurance in a form satisfactory to Lessor
not less than fifteen (15) days prior to the Commencement Date or the expiration of current
policies. In the event that Lessee shall fail to maintain any of the insurance required hereunder,
Lessor may obtain such insurance and pay the premium therefor, and such premium and other
costs incurred in obtaining the insurance shall be deemed to be additional rent hereunder and
shall be paid by Lessee to Lessor within ten (10) days after demand is made therefor.
18. HOLD HARMLESS/WAIVER OF SUBROGATION RIGHTS:
a. Lessor shall not be liable to Lessee, its agents, servants, employees,
contractors, customers or invitees, for any damage to person or property arising out of Lessee's
occupancy of the Demised Premises and/or caused by any act, omission or neglect of Lessee, its
agents, servants, employees, contractors, customers or invitees, and Lessee agrees to indemnify
and hold harmless Lessor and its partners, agents, directors, officers, and employees from all
liability and claims for any such damage, including, without limitation, court costs, reasonable
attorneys' fees and costs of investigation. Lessee shall not be liable to Lessor, its agents,
servants, employees, contractors, or invitees, for any damage to person or property arising out of
or caused by any act, omission or neglect of Lessor, its agents, servants, employees, contractors
or invitees, and Lessor agrees to indemnify and hold harmless Lessee, its parents, principals,
directors, officers and employees from all liability and claims for any such damage, including,
without limitation, court costs, reasonable attorney's fees and costs of investigation.
b. Anything in this Lease to the contrary notwithstanding, Lessor and Lessee
each hereby waive to the extent that such waiver will not invalidate any insurance policy
maintained by Lessor or Lessee nor increase any premiums thereon, any and all rights of
recovery, claims, actions or causes of action, against the other, its agents, servants, partners,
shareholders, officers and employees, for any loss or damage that may occur to the Demised
Premises or the Property, or any improvements thereto, or any personal property of such party
therein, by reason of fire, the elements, and any other cause which is insured against under the
terms of the standard fire and extended coverage insurance 'policies referred to herein, to the
extent that such loss or damage is recovered under the aforesaid insurance policies, regardless of
cause or origin, including negligence of the other party hereto, its agents, officers, partners,
shareholders, servants or employees, and covenants that no insurer shall hold any right of
subrogation against such other party. If the respective insurers of Lessor and Lessee do not
permit such a waiver without an appropriate endorsement to such parry's insurance policy,
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Lessor and Lessee covenant and agree to notify the insurers of the waiver set forth herein and to
secure from each such insurer an appropriate endorsement to its respective insurance policy
concerning such waiver.
C. Lessee agrees to look solely to Lessor's interest in the Property for the
recovery of any judgment against Lessor, and Lessor, its partners, officers, directors and
employees, shall never be personally liable for any such judgment.
d. Lessor agrees to maintain insurance in an amount equal to the replacement
value of the building on the Property and liability insurance with respect to the common areas in
amounts at least equal to that required of Lessee herein. Lessor's obligation to insure the
Building shall not obligate Lessor to insure fixtures or other property of Lessee.
19. CONDEMNATION: If the whole or part of the Demised Premises shall be
taken by any governmental agency or corporation vested with the power of eminent domain, or
shall be conveyed to such a governmental agency or corporation to avoid such taking, and such
taking shall cause the remaining portion of the Demised Premises to be inadequate for use by
Lessee, as determined in Lessee's reasonable judgment, for the purposes for which the same are
leased, or if the whole or part of the Property shall be taken such that access to the Demised
Premises is materially adversely effected and/or 50% of the existing parking is no longer
available and cannot be replaced, Lessee shall have the option, exercisable within 60 days after
the date on which possession is yielded, to terminate this Lease as of the date Lessee is required
to yield possession. If a part of the Demised Premises shall be so taken that the remaining part of
the Demised Premises shall be adequate for use by Lessee as determined in Lessee's reasonable
judgment, then this Lease shall terminate as to the part so taken or conveyed on the day when
Lessee is required to yield possession thereof and Lessor shall make such repairs and alterations
as may be necessary in order to restore the part not taken to useable condition and the Base Rent
and Lessee's Proportionate Share of additional rent and expenses hereunder shall be reduced in
proportion to the part of the Demised Premises so taken. All compensation awarded for such
taking of the fee and the leasehold shall belong to and be the property of Lessor, and the same is
hereby assigned to Lessor and Lessee shall have no interest or claim to such award or any part
thereof, provided, however, that Lessor shall not be entitled to any portion of the award made to
Lessee for loss of business and for the cost of removal of stock and fixtures.
20. ASSIGNMENT AND SUBLETTING: Without the prior written consent of
Lessor, Lessee shall not assign, convey, mortgage, pledge, encumber or otherwise transfer
(whether voluntarily, by operation of law or otherwise) this Lease or any interest herein or
hereunder or sublet any portion or all of the Demised Premises or permit the use of any portion
of all of the Demised Premises by any party other than Lessee, its employees and agents. In the
event that Lessor consents to such subletting, transfer or encumbrance, Lessee shall remain
bound by all of the provisions hereof and the following conditions shall apply:
a. That the said assignee or; sublessee, by an instrument in writing, in
recordable form, shall assume and agree to keep, observe and perform all of the agreements,
conditions, covenants and terms of this Lease on the part of Lessee to be kept, observed and
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performed, and shall be and become jointly and severally liable with Lessee for the performance
thereof;
b. That, at Lessor's option, all amounts payable pursuant to such assignment
or sublease by the assignee or sublessee shall be owed to and paid directly to Lessor by the
assignee or sublessee.
C. That a duplicate original of such instrument of assignment or sublease and
assumption shall be delivered to Lessor as soon as such assignment or sublease and assumption
shall have been executed and delivered; and
d. That no further or additional assignment of this Lease or such sublease
shall be made, except upon compliance with the provisions of this Paragraph 20.
e. No such assignment or subletting by Lessee shall relieve Lessee of any
obligations under this Lease, and Lessee shall remain fully liable hereunder.
f. Lessee shall pay to Lessor an amount equal to $500.00 for administrative
costs, including attorneys' fees, associated within the proposed assignment of subletting,
including attorneys' fees. or subletting.
21. PERSONAL PROPERTY, TRADE FIXTURES, PARTITIONS AND
OTHER IMPROVEMENTS BY LESSEE: All personal property placed on the Demised
Premises, or any part thereof, shall be at the risk of Lessee or owners of such personal property,
and Lessor, its agents and employees shall not be liable for any loss or damage to, or caused by,
said personal property or for the theft or misappropriation thereof. Lessee shall have the right
and privilege upon the termination of this Lease to remove from the Demised Premises all trade
fixtures installed by it, provided it be not in default hereunder (after any applicable cure period),
and in so doing, Lessee shall repair all damage to the Demised Premises which may have been
caused by the installation or removal thereof. Any partitions or other additions or improvements
in the Demised Premises at Lessor's option shall be and remain the property of Lessor.
22. SUBORDINATION OF LEASE: This Lease, its terms and conditions, and all
leasehold interests and rights hereunder, are expressly made, given and granted subject and
subordinate to the lien of any mortgage or deed of trust now or hereafter in force against this
lease and/or all or any part of the Demised Premises, and to all advances made or hereafter to be
made upon the security thereof, and to all renewals, modifications, consolidations, replacements
and extensions thereof. This Paragraph 22 is self -operative and no further instrument of
subordination shall be required. In confirmation of such subordination Lessee agrees to execute
and deliver to Lessor, its successors or assigns, or to any other person or corporation designated
by Lessor, any instrument(s) requested by Lessor hereunder. In the event of subordination, all
rights of Lessee under this Lease shall be fully preserved and protected so long as Lessee
complies with all of the terms and conditions of thi's Lease.
23. DEFAULT BY LESSEE:
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a. The following events shall be deemed to be Events of Default by Lessee
under this Lease:
(1) The failure by Lessee to pay any rental or other sum of money payable
under this Lease, whether such sum be any installment of the rent herein reserved, any other
amount treated as additional rent hereunder, or any other payment or reimbursement to Lessor
required herein, whether or not treated as additional rent hereunder, within five (5) days after
written notice from Lessor; provided, however, if Lessee shall fail to pay any such rent or other
sum of money payable under this Lease within five (5) days after the same is due hereunder on
more than one occasion during any twelve (12) month period, then Lessor shall not be required
to give written notice and, notwithstanding the fact that such failures may have been cured by
Lessee, any further failure to pay within five (5) days after the same is due shall be an Event of
Default.
(2) Lessee shall fail to comply with any term, provision or covenant of
this Lease (other than by failing to comply with the provisions of subparagraphs 23(a)(1),(3)(4)
and (5) herein), and shall not cure such failure within fifteen (15) days (forthwith, if the default
involves a hazardous condition) after written notice thereof to Lessee; provided, however, that if
the nature of Lessee's obligation is such that more than fifteen (15) days are reasonably required
for its performance, then Lessee shall not be in default if Lessee commences performance within
such fifteen (15) day period and thereafter diligently prosecutes the same to completion. Said
fifteen (15) day period shall be extended by the period of time during which Lessee is actually
prevented from performing such obligation as a result of Lessor delays or Force Majeure delays,
as defined herein, provided that Lessee is at all times diligently prosecuting such performance to
completion. "Force Majeure" shall mean any delays due to strikes, riots, acts of God, shortage of
labor or materials, or war, governmental laws, regulations, restrictions or any other cause of any
kind whatsoever which are beyond the reasonable control of Lessee; or
(3) Lessee shall fail to vacate the Demised Premises immediately upon
termination of this Lease, by lapse of time or otherwise, or upon termination of Lessee's right to
possession only; or
(4) The leasehold interest of Lessee shall be levied upon under execution
or be attached by process of law or Lessee shall fail to contest diligently the validity of any lien
or claimed lien and give sufficient security to Lessor to insure payment thereof or shall fail to
satisfy any judgment rendered thereon and have the same released within ten (10) days after the
same was entered or docketed; or
(5) Lessee or Guarantor under this Lease shall become insolvent, or shall
make a transfer in fraud of creditors, or shall make an assignment for the benefit of creditors.
Lessee or any guarantor of Lessee's obligations under this Lease shall file a petition under any
section or chapter of the Bankruptcy Code of 197.8, as amended, or under any similar law or
statute of the United States or any State thereof; or Lessee or any guarantor of Lessee's
obligations under this Lease shall be adjudged bankrupt or insolvent in proceedings filed against
Lessee or any guarantor of Lessee's obligations under this Lease.
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(6) Lessee shall vacate and/or abandon the Demised Premises.
b. Upon the occurrence of any such Events of Default described in this
Paragraph or elsewhere in this Lease and after the expiration of any applicable periods of grace,
Lessor shall have the option to pursue any one or more of the following remedies without any
notice or demand whatsoever:
(1) Lessor may, at its election, terminate this Lease or terminate Lessee's
right to possession only, without terminating the Lease;
(2) Upon any termination of this Lease, whether by lapse of time or
otherwise, or upon any termination of Lessee's right to possession without termination of the
Lease, Lessee shall surrender possession and vacate the Demised Premises immediately, and
deliver possession thereof to Lessor, whereupon the Lessee shall peacefully surrender the
Demised Premises to the Lessor, and the Lessor may reenter the Demised Premises and
repossess them by any means permitted by law, and may dispossess the Lessee and all other
persons and property from the Demised Premises without being liable for any loss or damages
therefor and with Lessee waiving any right of redemption, and may have, hold, and enjoy the
Demised Premises and the right to receive all rental income therefrom. Lessee hereby grants to
Lessor full and free license to enter into and upon the Demised Premises and to repossess Lessor
of the Demised Premises as of Lessor's former estate and to expel or remove Lessee and any
others who may be occupying or within the Demised Premises and to remove any and all
property therefrom, without being deemed in any manner guilty of trespass, eviction or forcible
entry or detainer, and without incurring any liability for any damage resulting therefrom, Lessee
hereby waiving any right to claim damage for such re-entry and expulsion, and without
relinquishing Lessor's rent or any other right given to Lessor hereunder or.by operation of law.
At any time after any such termination or termination of right of possession, the Lessor may relet
the Demised Premises or any part thereof, in the name of the Lessor or otherwise, for such term
(which may be greater or less than the period which would otherwise have constituted the
balance of the term of this Lease) and on such conditions (which may include concessions or free
rent) as the Lessor, in .its reasonable discretion, may determine, and may collect and receive the
rent therefor. The Lessor shall in no way be responsible or liable for any failure to relet the
Demised Premises or any part thereof, or for any failure to collect any rent due upon any such
reletting, except in connection with Lessor's common law obligation to mitigate damages. No
such termination or termination of right of possession shall relieve the Lessee of its liability and
obligations under this Lease, and such liability and obligations shall survive any such
termination. Whether or not the Demised Premises or any part thereof shall have been relet, the
Lessee shall pay to the Lessor the Base Rent, including adjustments, and additional rent required
to be paid by the Lessee up to the time of such termination of possession or termination of Lease,
and thereafter the Lessee, until the end of the Term of this Lease, Lessee shall be liable to the
Lessor for and shall pay to the Lessor on the days on which the Base Rent and additional rent
would have been payable under this Lease as if itl were still in effect, and for liquidated and
agreed current damages for the Lessee's default, the equivalent of the amount of the Base Rent
and additional rent which would be payable under this Lease by the Lessee if this Lease were
still in effect less the net proceeds of any reletting effected as set out hereinabove, if any, after
deducting all the Lessor's expenses in connection with such reletting, including, without
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limitation, all repossession costs, commissions, legal expenses, reasonable attorney's fees,
alteration costs, and expenses of preparation for such reletting;
(3) Lessor may, at Lessor's option, enter into and upon the Demised
Premises, in accordance with legal and procedural requirements, if Lessee is not acting within a
commercially reasonable time to maintain, repair or replace anything for which Lessee is
responsible hereunder and correct the same, without being deemed in any manner guilty of
trespass, eviction or forcible entry and detainer and without incurring any liability for any
damage resulting therefrom and Lessee agrees to reimburse Lessor, on demand, as additional
rent, for any expenses which Lessor may incur in thus effecting compliance with Lessee's
obligations under this Lease;
(4) Any and all property which may be removed from the .Demised
Premises by Lessor pursuant to the authority of the Lease or by law, to which Lessee is or may
be entitled, may be handled, removed and stored, as the case may be, by or at the direction of
Lessor at the risk, cost and expense of Lessee, and Lessor shall in no event be responsible for the
value, preservation or safekeeping thereof. Lessee shall pay to Lessor, upon demand, any and all
expenses incurred in such removal and all storage charges against such property so long as the
same shall be in Lessor's possession or under Lessor's control. Any such property of Lessee not
retaken by Lessee from storage within thirty (30) days after removal from the Demised Premises
shall, at Lessor's option, be deemed conveyed by Lessee to Lessor under this Lease as by a bill
of sale without further payment or credit by Lessor to Lessee.
C. Pursuit of any of the foregoing remedies shall not preclude pursuit of any
of the other remedies herein provided or any other remedies provided by law (all such remedies
being cumulative,) nor shall pursuit of any remedy herein provided constitute a forfeiture or
waiver of any rent due to Lessor hereunder or any damages accruing to Lessor by reason of the
violation of any of the terms, provisions and covenants herein contained. No act or thing done
by Lessor or its agents during the term hereby granted shall be deemed a termination of this
Lease or an acceptance of the surrender of, the Demised Premises, and no agreement to terminate
this Lease or accept a surrender of the Demised Premises shall be valid unless in writing signed
by Lessor. Lessor's acceptance of the payment of rental or other payments hereunder after the
occurrence of an event of default shall not be construed as a waiver of such default, unless
Lessor so notifies Lessee in writing. Forbearance by Lessor in enforcing one or more of the
remedies herein provided upon an event of default shall not be deemed or construed to constitute
a waiver of such default or of Lessor's right to enforce any such remedies with respect to such
default or any subsequent default. If, on account of any breach or default by Lessee in Lessee's
obligations under the terms and conditions of this Lease, it shall become necessary or appropriate
for Lessor to employ or consult with an attorney concerning or to enforce or defend any of
Lessor's rights or remedies hereunder, Lessee agrees to pay any attorney's fees so incurred.
24. DEFAULTS BY LESSOR: Breach of any covenant or agreement or
undertaking to be performed by Lessor under this Lease shall constitute a default by Lessor
hereunder. Notwithstanding the foregoing, Lessor shall not be in default hereunder with respect
to: (i) any obligation of Lessor to pay money to Lessee hereunder unless Lessor has failed to pay
such money to Lessee within the applicable time period specified herein, and such failure
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continues for a period of fifteen (15) days after written notice from Lessee to Lessor; and (ii) any
other obligation of Lessor under this Lease, unless Lessor fails to perform the obligation within
thirty (30) days after Lessee has delivered written notice thereof to Lessor; provided, however,
that if the nature of Lessor's obligation is such that more than thirty (30) days are reasonably
required for its performance, then Lessor shall not be in default if Lessor commences
performance within such thirty (30) day period and thereafter diligently prosecutes the same to
completion. Said thirty (30) day period shall be extended by the period of time during which
Lessor is actually prevented from performing such obligation as a result of Lessee delays or
Force Maj eure delays, as defined herein, provided that Lessor is at all times diligently
prosecuting such performance to completion. "Force Majeure" shall mean any delays due to
strikes, riots, acts of God, shortage of labor or materials, or war, governmental laws, regulations,
restrictions or any other cause of any kind whatsoever which are beyond the reasonable control
of Lessor.
25. CERTAIN RIGHTS RESERVED TO LESSOR: Lessor reserves the following
rights:
a. During the last ninety (90) days of the Term, if during or prior to that time
Lessee vacates the Demised Premises, to decorate, remodel, repair, alter or otherwise prepare
said premises for reoccupancy, without affecting Lessee's obligation to pay rental hereunder.
b. On reasonable prior notice to Lessee, to enter the Demised Premises to
examine the same at any time during the Lease Term, to exhibit the Demised. Premises to
prospective Lessees and to place a "For Lease" sign upon said premises during the last six (6)
months of the Term and to exhibit the Demised Premises to any prospective purchaser,
mortgagee, or assignee of any mortgage on said premises and to others having a legitimate
interest at any time during the Term.
C. At any time in the event of an emergency, and otherwise at reasonable
times, to take any and all measure, including entering the Demised Premises in order to make
inspections, repairs, alterations, additions and improvements to the Demised Premises, as may be
necessary or desirable for the safety, protection or preservation of the said premises or as may be
necessary or desirable in order to comply with all laws, orders and requirements of governmental
or other authority.
d. All covenants and agreements to be performed by the Lessee under any of
the terms of this Lease shall be performed by Lessee at Lessee's sole cost and expense and
without any abatement of rent, except as otherwise provided herein. If the Lessee shall fail to
pay any sum of money, other than rent, required to be paid by it hereunder or shall fail to
perform any other act on its part to be performed hereunder, and such failure shall continue for
fifteen (15) days after notice thereof by the Lessor, the Lessor (may, but shall not be obligated to
do so, and without waiving or releasing the Lessee from any obligations of the Lessee, make any
such payment or perform any such act on the Les'see's part to be made or performed as in this
Lease provided. All sums so paid by the Lessor and all necessary incidental costs, together with
interest thereon at the rate of twelve percent (12%) per annum from the date of such payments by
the Lessor shall be payable as additional rent to the Lessor within twenty (20) days of demand,
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and the Lessee covenants to pay any such sums, and the Lessor shall have, in addition to any
other right or remedy of the Lessor, the same rights and remedies in the event of nonpayment
thereof by the Lessee as in the case of default by the Lessee in the payment of the rent.
26. ESTOPPEL CERTIFICATE BY LESSEE: Lessor and Lessee agree that from
time to time upon not less than ten (10) days prior request by the other, each will deliver to the
other a statement in writing certifying (a) that this Lease is unmodified and in full force and
effect (or if there have been modifications that the same is in full force and effect as modified
and identifying the modifications), (b) the dates to which the rent and other charges have been
paid, and (c) that, so far as the person making the certificate knows, the Lessor or Lessee,
whichever the case maybe, is not in default under any provision of this Lease, and if the other
party is in default, specifying each such default of which the person making the certificate may
have knowledge, it being understood that any such statement so delivered may be relied upon by
any prospective purchaser, mortgagee, or any assignee of any mortgage on the Demised
Premises.
27. WAIVER OF CERTAIN CLAIMS BY LESSEE: Lessee, to the extent
permitted by law, waives all claims it may have against Lessor, and against Lessor's agents and
employees for damage to person or property sustained by Lessee or by any occupant of the
Demised Premises, or by any other person, resulting from any part of said premises or property
of which they are a part or any equipment or appurtenances becoming out of repair, or resulting
from any accident in or about said premises or such property or resulting directly or indirectly
from any act or neglect of any Lessee or occupant of any part of said premises or property or of
any other person, unless such damage is a result of the gross negligence or willful misconduct of
Lessor, or Lessor's agents or employees. This provision shall apply especially (but .not
exclusively) to damage caused by water, ice, snow, frost, steam, sewerage, illuminating gas,
sewer gas or odors, or by the bursting or leaking of pipes and shall apply equally whether such
damage be caused by the act or neglect of the other Lessees or of any other person. If any
damage results from any act or neglect of the Lessee, Lessor may, at Lessor's option, repair such
damage and Lessee shall thereupon pay to Lessor the total cost of such repair. Lessor shall not
be liable for the stoppage or interruption of water, light or heat caused by riot, strike, accident or
by any cause over which Lessor has no control.
28. MEMORANDUM OF LEASE: The parties hereto will, simultaneously with the
execution and delivery of this Lease, execute and deliver a Memorandum of Lease in recordable
form for the purpose of recording and both parties agree that only such Memorandum of Lease
shall be recorded.
29. LEGAL FEES OF LESSOR/LESSEE: Lessee shall pay all reasonable attorney
fees and expenses which Lessor incurs in enforcing any of the obligations of Lessee under this
Lease or in any litigation or negotiations in which Lessor shall become involved through or on
account of this Lease, excluding negotiations between Lessor and Lessee covering the initial
execution of this Lease. Lessor shall pay all reasonable attorney fees and expenses which Lessee
incurs in enforcing any of the obligations of Lessor under this Lease or in any litigation or
negotiations in which Lessee shall become involved through or on account of this Lease,
excluding negotiations between Lessor and Lessee covering the initial execution of this Lease.
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30. HOLDOVER: If Lessee shall remain in possession of the Demised Premises
after the expiration or earlier termination of this Lease, Lessee shall be deemed a month -to -
month Lessee and shall pay daily rent at two (2) times the per day Base Rent payable with
respect to the last full calendar month immediately prior to the end of the Term, Renewal Terms
or termination of this Lease, but otherwise shall be subject to all of the obligations of Lessee
under this Lease. Additionally, Lessee shall pay to Lessor all damages (including consequential
damages) sustained by Lessor as a result of the holding over by Lessee.
31. NOTICES: Any notice required hereunder shall be deemed sufficient notice and
service thereof if same shall be in writing addressed to the addressee at the last known post office
address thereof, mailed by either Certified or Registered Mail, Postage Prepaid or via national
overnight courier (FedEx, UPS, Airborne Express). At the time of execution of this Lease the
last known post office address of each of the parties herein concerned is:
LESSOR: Addison Investments, LLC
P.O. Box 221632
Charlotte, NC 28222-1632
LESSEE: Summer Classics Stores, Inc.
1 Summer Classics Way
Columbiana, AL 35051
GUARANTOR: Summer Classics Stores, Inc.
1 Summer Classics Way
Columbiana, AL 35051
32. INVALIDITY OF PARTICULAR PROVISIONS: If any clause or provision
of this Lease is or becomes illegal, invalid, or unenforceable because of present or future laws or
any rule or regulation of any governmental body or entity, effective during its term, the intention
of the parties hereto is that the remaining parts of this Lease shall not be affected thereby unless
such invalidity is, in the reasonable determination of Lessor, essential to the rights of both parties
in which event Lessor has the right to terminate this Lease on written notice to Lessee.
33. PERSONS BOUND BY LEASE: This Lease shall be binding upon and shall
inure to the benefit of the parties hereto, their heirs, personal representatives, successors and
permitted assigns.
34. GENDER AND NUMBER: The use of one gender in this Lease shall include
any gender and the singular shall include the plural or the plural the singular, as the context
hereof may require.
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35. AUTHORIZATION: If Lessee is a corporation, it represents and warrants that it
has been duly authorized by its Board of Directors to enter into this Lease and that the officers
executing this Lease on its behalf have been duly authorized to do so.
36. HEADINGS: The headings in this Lease are included only for convenience and
in the case of any inconsistency between a heading and the body of the Lease, the heading shall
be ignored.
37. COMPLETE AGREEMENT: This Lease contains the entire agreement
between the parties as to its subject matter and it shall not be altered or modified except in
writing signed by the parties hereto.
38. EXECUTION: It is understood and agreed that this Lease shall not be binding
until and unless all parties have executed it. y
39. LIEN FOR RENT: Subject to the terms herein, Lessee hereby grants to Lessor a
contractual lien and security interest on all property of Lessee now or hereafter placed in or upon
the Demised Premises and also upon all insurance proceeds that may accrue to Lessee by reason
of the destruction or damage of that property, and such property or insurance proceeds shall be
and remain subject to such lien and security interest of Lessor for payment of all Rent and other
sums agreed to be paid by Lessee herein. Lessee agrees to execute as debtor such financing
statement or statements as Lessor may now or hereafter reasonably request from time to time in
order that such security interest or interests may be perfected pursuant to the Uniform
Commercial Code. Notwithstanding the foregoing, Lessor agrees to subordinate its liens under
this paragraph 39 to any commercial lender, banks or finance companies of Lessee, provided,
however, any such subordination shall be evidenced by a Subordination Agreement that is
reasonably satisfactory to Lessor, and does not waive Lessor's liens. This lien is granted in
addition to all statutory lien rights under North Carolina law.
40. LESSEE'S TERMINATION RIGHT: Notwithstanding anything herein to the
contrary, Lessee shall have the one (1) time right to terminate this lease by providing Lessor
written notice of the same at any time prior to the last day of the twenty-fourth (24t) month of
the Initial Term (January 31, 2005) along with a cancellation fee of $50,000.00. In the event
Lessee exercises the right to terminate set forth herein, Lessee shall, in addition to the
cancellation fee, continue to pay Lessor the Base Rent on a monthly basis through and including
the thirtieth (301h) month (April 30, 2005) of the Term.
41. MISCELLANEOUS:
a. All rights and remedies of Lessor under this Lease shall be cumulative and
none shall exclude any other rights or remedies allowed by law. All of the terms of this Lease
shall be construed according to the laws of the jurisdiction where the Demised Premises are
situated.
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b. The terms and provisions of Exhibits "A" through "D", and, if relevant
and evidenced by the execution of Lessor and Lessee are hereby made a part hereof for all
purposes; provided, however, that, unless otherwise expressly stated, in the event of a conflict
between the terms of this Lease and the terms of any Exhibit.
C. Whenever in this Lease there is imposed upon Lessor the obligation to use
its best efforts, reasonable efforts or diligence, Lessor shall be required to do so only to the
extent the same is economically feasible and will not impose upon Lessor financial or other
business burdens, the aforesaid standards to be determined on the basis of the application of a
test of reasonableness; provided, however, that such obligation shall never require Lessor to
initiate or otherwise pursue litigation or other such action.
d. Lessee covenants and agrees for itself, its agents, contractors and
employees that it will not introduce or discharge Hazardous Substances on, in or under the
Property. Lessee further covenants and agrees that it will remove immediately any Hazardous
Substance which has been introduced to the Property by Lessee, its agents, contractors or
employees. Lessee shall indemnify and hold harmless the Lessor from any claim, demand,
liability, damage, loss or expense that Lessor might suffer from the breach of this covenant by
Lessee, its agents, contractors or employees. "Hazardous Substances" means and includes any of
the substances, materials, elements or compounds that are contained in the list of hazardous
substances adopted by the United States Environmental Protection Agency (the "EPA") and the
list of toxic pollutants designated by the United States Congress or the EPA and substances,
materials, elements or compounds affected by any other federal, state or local statute, law
ordinance, code, rule regulation, order or decree now or at any time hereafter in effect regulating,
relating to or imposing liability or standards of conduct concerning any hazardous, toxic,
dangerous, restricted or otherwise regulated waste, substance or material, as now or at any time
hereafter in effect.
42. BROKERS: Lessor and Lessee agree that Lessor did not engage a broker that
Lessee's broker is Ken Summercamp with Heiliger Shield. Lessor and Lessee each hereby
represent and warrant to the other that they have not employed any other agents, brokers or other
parties in connection with this Lease, and each agrees that it shall hold the other harmless from
and against any and all claims of all other agents, brokers or other parties claiming by, through or
under the respective indemnifying party. Lessor is responsible for paying any fees or
commissions to said brokers.
43. MERGER/CONSOLIDATION: Any transfer of this Lease by merger,
consolidation or liquidation shall constitute and be deemed an assignment and shall be subject to
Lessor's approval under Paragraph 20 herein. A change of ownership of or power of more than
seventy-five (75%) percent of the outstanding stock of Lessee, whether the result of a single or
series of transactions, shall constitute and be deemed an assignment and shall be subject to
Lessor's approval under paragraph 20 herein. ,
44. RIGHT OF FIRST OFFER: In the event that Lessor decides to market the
Property for sale, Lessor shall provide Lessee with a letter of intent specifying the general terms
upon which Lessor desires to sell the Property, including without limitation the purchase price,
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r-.
earnest money, due diligence period and other material terms (the "Offer Notice"). Lessee shall
then have a period of five (5) days after the receipt of the Offer Notice in which to accept or
reject the same. If Lessee accepts the same, both parties agree to diligently proceed toward the
execution of a contract and closing. If Lessee rejects the Offer Notice, Lessor may then sell the
Property to any third party under any terms and conditions it desires notwithstanding the terms
set forth in the Offer Notice. If Lessor receives any unsolicited offers to purchase the Property
from third parties prior to marketing the Property for sale, Lessor agrees to provide a copy of the
same to Lessee upon Lessor's receipt of the same and Lessee shall have five (5) days in which to
accept or reject the same.
If Lessee accepts the same, both parties agree to diligently proceed toward the execution
of a contract and closing. If Lessee rejects the same, Lessor may then sell the Property to the
third party under the terms and conditions set forth therein.
45. BROWNFIELD AGREEMENT. Lessee acknowledges that Demised Premises
and the Property constitute a "Brownfields Property" as evidenced by that certain Brownfield
Agreement between Lessor and the North Carolina Department of Environment `and Natural
Resources "DENR", a copy of which is attached as Exhibit A (`Brownfield Agreement") to that
certain "Amended Notice of Brownfields Property" dated March 25, 2002 and recorded in Book
13403 at Page 392 of the Mecklenburg County Public Registry, a copy of which is attached and
hereto as Exhibit "D". Lessee hereby agrees to be subject to and to comply with the provisions
of the Brownfield Agreement, including but not limited to: (a) complying with the use
restrictions set forth in paragraph 10(a) therein; and (b) providing the DENR reasonable access to
the Demised Premises as set forth and required in paragraph 11 therein.
46. GUARANTY. In consideration of the execution and delivery of this Lease
Guarantor hereby guarantees to Lessor, its successors and assigns, the payment of all rent
(including Additional Rent) reserved in this Lease and the performance by Lessee of all its
covenants and agreements contained herein. Guarantor hereby expressly waives notice of all
defaults, and hereby waives all suretyship defenses. Guarantor agrees that the waiver of any
rights by Lessor against Lessee arising out of defaults by Lessee shall not in any way modify or
release the obligations of Guarantor.
The Guarantor hereby covenants and agrees to and with the Lessor its successors
and assigns, the Guarantor will forthwith pay to the Lessor all damages that may arise in
consequence of any event of default by the Lessee, its successors and assigns under the Lease,
including, without limitation, all court costs and reasonable attorneys' fees incurred by the
Lessor and caused by any such event of default or by the enforcement of this Guaranty.
The guaranty is an absolute and unconditional guaranty of payment and of
performance. It shall be enforceable against the Guarantor, its successors and assigns, without
the necessity for any suit or proceedings by Lessor of any kind of nature whatsoever against the
Lessee, its successors and assigns, and without the necessity of any notice of non-payment, non-
performance or non -observance, or of any notice of acceptance of this Guaranty, or of any other
notice or demand to which the Guarantor might otherwise be entitled, all of which the Guarantor
hereby expressly waives. In addition, Guarantor expressly waives any rights available to it under
22
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North Carolina General Statutes Sections 26-7 through 26-9. The Guarantors hereby expressly
agrees that the validity of this Guaranty and the obligations of the Guarantor hereunder shall not
in any way be terminated or diminished, affected or impaired by reason of the assertion or the
failure to assert by the Lessor against the Lessee, or the Lessee's successors and assigns, of any
of the rights or remedies reserved to the Lessor pursuant to the provisions of the Lease, by reason
of the termination of the Lease so long as the Lessee continues to be liable, or by reason of the
invalidity of the Lease or its unenforceability against the Lessee for any reason.
The Guaranty shall be a continuing Guaranty, and the liability of the Guarantor hereunder
shall in no way be affected, modified or diminished by reason of any assignment, renewal,
modification or extension of the Lease, by reason of any modification or waiver of or change in
any of the terms, covenants, conditions or provisions of the Lease, by reason of any extension of
time that may be granted by the Lessor to the Lessee, its successors or assigns, or by reason of
any dealings, transactions, matters or things occurring between the Lessor and Lessee, its
successors or assigns, whether or not notice thereof is given to the Guarantor.
This Guaranty shall inure to the benefit of the Lessor and its successors and assigns; and
shall be binding on the Guarantor and its successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this lease the day and year first
above written.
LESSOR:
ADDISON INVESTMENTS, LLC
in"By:
Name:
Title:
LESSEE:
SUMMER CLASSICS STORES, INC.
By:
Name: A
Title:�,����
GUARANTOR:
SUMMER CLASSICS, INC.
I �
Name:
Title: l?:
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DESCRIPTION OF DEMISED PREMISES
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Lessee is hereby authorized to perform the following work described herein, at its sole
cost and expense, and, except for obtaining Lessor's prior consent which is hereby granted,
subject to the terms and provisions of Paragraph 11 herein:
26
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1WNI,,I10.31IWWAi
WORK TO BE PERFORMED BY LESSOR
Lessor shall cause the following alterations to be made to the Demised Premises prior to
the Commencement Date: The parties herein acknowledge that these are the only alteration
obligations of Lessor herein.
27
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