1
EXHIBIT 10.26
ASSIGNMENT AND ASSUMPTION OF
AND AMENDMENT TO LEASE AGREEMENT
This Assignment and Assumption of and Amendment to Lease Agreement
("Agreement"), is made effective this 24th day of May, 2000 ("Effective Date"),
by and among G&R, Inc, a Georgia corporation ("Landlord"), MALG, Inc., a Georgia
corporation ("Assignor") and K&G Men's Center, Inc., a Delaware corporation
("Assignee").
WHEREAS, by lease agreement dated May 1, 1999 between Landlord and
Assignor "Lease"), Landlord leased to Assignor and Assignor leased from Landlord
a premises located at 0000 Xxxxxxxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxx
00000 ("Demised Premises");
WHEREAS, subject to the terms and conditions contained herein, as of
the Effective Date, the parties agree to amend the Lease, Assignor agrees to
assign this Lease to Assignee and Assignee agrees to assume all obligations
under the Lease and Landlord consents to such assignment, assumption and
amendment;
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, as of the Effective Date, the parties
agree as follows:
I. AMENDMENT TO LEASE. The Lease is hereby amended as follows:
A. Paragraph 2. Paragraph 2 of the Lease is amended to add a second
five (5) year option to extend the Term ("Second Extended Term"), which option
shall be exercised by giving written notice of same to Landlord no later than
six (6) months prior to expiration of the Extended Term. Base Rent during the
Second Extended Term shall be at Fair Market Value. The Fair Market Value shall
be determined as follows:
(1) Appraisal Method to Determine Fair Market Value of Base Rent.
(a) Appraisal. If within thirty (30) days after Tenant's
exercise of its option for the Second Extended Term, the parties cannot agree
upon the Base Rent to be paid at the commencement of the Second Extended Term,
then, within thirty (30) days thereafter, each party, at its own cost, and by
giving notice to the other party, shall appoint an M.A.I. real estate appraiser
or licensed real estate broker familiar with similar properties in the market
area of the Demised Premises to determine the Fair Market Value of the Base Rent
for such term. If a party does not appoint an appraiser within such thirty (30)
day period, the single appraiser appointed shall be the sole appraiser and shall
set the Base Rent for the Second Extended Term.
(b) Meeting. If two (2) appraisers are chosen pursuant to
subparagraph (a) above, the appraisers so chosen shall meet within ten (10) days
after the second appraiser is appointed and, if within forty five (45) days
after such first meeting the two (2) appraisers shall be unable to agree, they
shall, as an express condition of their respective employment, appoint a third
appraiser who shall be a competent and impartial person with qualifications
similar to those required of the first two (2) appraisers. If they are unable to
agree upon such appointment within
2
five (5) days after expiration of said forty-five (45) day period, the third
appraiser shall be selected by the parties, if they can agree thereon, within a
further period of five (5) days. If the parties do not so agree, then either
party, on behalf of both, may request appointment of such a qualified person by
a Judge of the Xxxxxx County Superior Court, and the other party shall not raise
any question as to such Judge's full power and jurisdiction to entertain the
application for and make the appointment. The three (3) appraisers shall decide
the dispute if it has not previously been resolved by following the procedure
set forth in subparagraph (c) below.
(c) Procedure. Where an issue cannot be resolved by either
agreement between the two (2) appraisers selected by the parties or settlement
between the parties, the issue shall be resolved by the three (3) appraisers in
accordance with the following procedure. No later than thirty (30) days before
the expiration of the Extended Term, the appraiser selected by each of the
parties shall state in writing his or her determination of the-then fair market
value for the Base Rent for the Demised Premises, supported by the reasons
therefor. The appraisers shall arrange for a simultaneous exchange of such
proposed resolutions. The role of the third appraiser shall be to select, no
later than fifteen (15) days before the expiration of the Extended Term, which
of the two (2) proposed resolutions most closely approximates his or her
determination of the-then Fair Market Value of the Base Rent for the Demised
Premises. The third appraiser shall have no right to propose a middle ground or
any modification of either of the two (2) proposed resolutions. The resolution
he or she chooses as most closely approximating his or her determination shall
constitute the decision of the appraisers and be final and binding upon the
parties.
(d) Failure to Act. Upon a failure, refusal or inability of
any appraiser to act, his or her successor shall be appointed by him or her, but
in the case of the third appraiser, his or her successor shall be appointed in
the same manner as provided for appointment of the third appraiser. The
appraisers shall attempt to decide the issue within ten (10) days after the
appointment of the third appraiser. Each party shall pay the fee and expenses of
its respective appraiser and both shall share the fee and expenses of the third
appraiser, if any. Each party shall bear its own attorneys' fees and expenses.
(e) Determination After Commencement of Second Extended Term.
In the event that the Fair Market Value of the Base Rent for the Second Extended
Term is not established prior to the first day of the Second Extended Term, then
Tenant shall continue to pay as Base Rent the Base Rent in effect during the
last month of the Extended Term until such time as a determination of Fair
Market Value of such Base Rent has been made. Within fifteen (15) days following
such determination, Tenant shall pay to Landlord, or Landlord shall refund to
Tenant, the difference, if any, between Base Rent paid during such period and
Base Rent determined for the Second Extended Term, plus interest, at LIBOR plus
one percent (1%), calculated from the first day of the Second Extended Term
until the date of such payment or repayment.
B. Paragraph 4. Paragraph 4 of the Lease is amended to provide that
neither a late charge nor interest shall be assessed unless a delinquent payment
is not received within five (5) days after receipt of written notice of
non-payment; provided, however, that Landlord shall not be required to provide
more than two (2) such notices in any calendar year during the Term, including
extensions.
3
C. Paragraph 5. Paragraph 5 of the Lease is amended to provide that the
Demised Premises may be used for any legal retail use.
D. Paragraph 7. Paragraph 7 of the Lease is hereby amended to insert
the following:
"Notwithstanding the foregoing (or anything contained elsewhere in the
Lease to the contrary), Tenant's obligation to repair, replace and/or
otherwise maintain the parking lot, structural walls (interior and
exterior), foundation, roof, and HVAC system and to comply with
governmental codes, regulations or statutes relating to the Demised
Premises [collectively, "Structural Maintenance"] shall not exceed Two
Hundred Thousand Dollars ($200,000.00) during each five (5) year period
of the Term, including extensions (i.e., May 1, 1999-April 30, 2004
(prorated from the Effective Date through the end of the Term); May 1,
2004-April 30, 2009; May 1, 2009-April 30, 2014) ["Tenant's Maintenance
Cap"]. Only those costs incurred by Tenant for Structural Maintenance
shall be included in the calculation of Tenant's Maintenance Cap. Any
Structural Maintenance required for the Demised Premises in excess of
Tenant's Maintenance Cap shall be performed and paid for by Landlord.
Tenant shall provide to Landlord an annual accounting of Structural
Maintenance costs incurred during each lease year, or partial lease
year. Additionally, Tenant agrees that it shall obtain no fewer than
two (2) bids for any Structural Maintenance cost item in excess of Ten
Thousand Dollars ($10,000.00)."
E. Paragraph 9(a). Paragraph 9(a) of the Lease is amended to delete
Landlord's right to approve Tenant's insurance carrier; provided, however, that
such carrier maintain a Best's Insurance Guide Rating of at least A-:IX.
F. Paragraph 9(b). Paragraph 9(b) of the Lease is deleted in its
entirety and the following inserted in its stead:
"(b) Tenant shall carry fire and extended coverage insurance in the
amount of the full replacement value of its tenant improvements and
personal property on or in the Demised Premises."
G. Paragraph 9.A. Paragraph 9.A. is inserted into the Lease, as
follows:
"9.A. Landlord's Property Damage Insurance. Landlord shall at all times
during the Term, including extensions, carry fire and extended coverage
insurance covering the Demised Premises against (i) loss or damage by
fire, lightning, vandalism, malicious mischief and flood, (ii) such
other hazards as are presently included in so-called "all risk"
replacement cost insurance, and (iii) any other insurance hazards as,
under good insurance practices, from time to time, are insured against
for properties of similar character and location. The amount of such
insurance shall not be less than the full replacement cost of
4
the building and improvements on the Demised Premises without deduction
for depreciation. Tenant shall reimburse Landlord the cost of the
premium for such insurance within thirty (30) days following receipt of
a copy of the premium statement and a certificate of insurance."
H. Paragraph 11. Paragraph 11 of the Lease is deleted in its entirety
and the following inserted in its stead:
"If the Demised Premises, or any portion thereof, are damaged or
destroyed by fire, flood, tornado or other casualty, Landlord shall
promptly commence and thereafter diligently proceed to repair the
Demised Premises. During such period of repair, this Lease shall remain
in full force and effect; provided, however, that Base Rent shall be
abated to the extent that the Demised Premises is untenantable.
Following Landlord's repair work, Tenant shall repair and/or replace
all trade fixtures, furniture and equipment in the Demised Premises
which are damaged by such casualty. In the event that such casualty
occurs during the last two (2) years of the Term and the period
required to repair the Demised Premises exceeds six (6) months, Tenant
may elect to terminate this Lease upon written notice, which notice
shall be given within twenty (20) days following the expiration of said
six (6) month period."
I. Paragraph 15(a)(iv). Paragraph 15(a)(iv) of the Lease is deleted in
its entirety and the following inserted in its stead:
"(iv) If Tenant fails to pay an installment of Rent when same shall
become due and payment and such failure continues for a period of ten
(10) days following receipt of written notice from Landlord; provided,
however, that Landlord shall only be obligated to provide three (3)
such notices in any calendar year of the Term, including extensions."
M. Paragraph 15.A. Paragraph 15.A. is inserted into the Lease, as
follows:
"15.A. Landlord Defaults. Except in the case of an emergency, in which
event immediate action shall be required by Landlord, Landlord shall
not be in default unless Landlord fails to perform obligations required
of Landlord within thirty (30) days after written notice by Tenant to
Landlord and to the holder of any mortgage or deed of trust covering
the Demised Premises whose name and address shall have theretofore been
furnished to Tenant in writing; provided, however, that if the nature
of Landlord's obligation is such that more than thirty (30) days are
required for performance, then Landlord shall not be in default if
Landlord commences performance within such thirty (30) day period and
thereafter diligently prosecutes the same to completion. If the default
by Landlord has not been cured within the time limits prescribed
herein, Tenant may, along with any other remedies available at law or
in equity, terminate the Lease as a result of Landlord's default, or
offset any claimed amount against any minimum or additional Rent as it
becomes due."
5
N. Paragraph 17. Paragraph 17 of the Lease is hereby amended as
follows:
(1) To provide that upon notice to, but without Landlord's consent,
Tenant may assign or sublet this Lease to a parent, subsidiary or affiliated
entity; and
(2) To provide that a transfer of this Lease in the event of a sale or
other transfer of all or substantially all of the stock and/or assets of Tenant
shall not be deemed an assignment or sublet.
O. Paragraph 20. Paragraph 20 of the Lease is amended to insert the
following at the end of the provision:
"Notwithstanding the above, claims arising from the gross negligence or
willful misconduct of or breach of this Lease by Landlord, its agents
or employees shall be excluded from Tenant's indemnification of
Landlord."
P. Paragraph 23. Paragraph 23 of the Lease is amended as follows:
(1) To increase the seven (7) day period to ten (10) days; and
(2) To provide that upon written request of Tenant, Landlord shall
provide a similar estoppel certificate to Tenant.
Q. Paragraph 24. Paragraph 24 of the Lease is hereby amended to provide
for notices to Assignee as follows: K&G Men's Center, Inc., 0000 Xxxxxxxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000, Attn: Lease Administration, with copies to: K&G
Men's Center, Inc., 00000 Xxxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, attn:
Xxxxxx X. Xxxxxxxx.
R. Paragraph 29. Paragraph 29 is inserted into the Lease, as follows:
"29. Tenant Alterations. Tenant may make non-structural alterations to
the Demised Premises without Landlord's consent. Any alterations to the
Demised Premises which affect the structure of the Demised Premises
shall be subject to Landlord's approval, which approval shall not be
unreasonably withheld or delayed."
S. Paragraph 30. Paragraph 30 is inserted into the Lease, as follows:
"30. Tenant Signage. Tenant may install the maximum size and number of
signs on the Demised Premises allowed by local ordinance. Tenant shall
first submit Tenant's sign plans to Landlord for approval, which
approval shall not be unreasonably withheld or delayed."
T. GENERAL. All other terms, covenants and conditions of the Lease
remain unchanged and in full force and effect, except as modified by this
Agreement. It is understood
6
and agreed that all terms and expressions when used in this Agreement, unless a
contrary intention is expressed herein, have the same meaning as they have in
the Lease.
II. ASSIGNMENT AND ASSUMPTION OF LEASE.
A. Assignor hereby assigns, transfers and conveys to Assignee all of
Assignor's right, title and interest in and to the Lease.
B. Assignee hereby (a) accepts such assignment; and (b) assumes from
Assignor and agrees to pay and perform, from and after the date hereof, as a
direct obligation to Landlord, all of the obligations and liabilities of the
Tenant under the Lease.
C. Landlord hereby consents to such assignment and assumption of and
amendment to Lease.
D. The parties hereto agree that if Landlord now holds any sums of
money to be applied on behalf of Assignor subject to the provisions of the
Lease, Assignor hereby releases all claims to any such sums and agrees that such
sums shall be held by Landlord for the benefit of Assignee, subject to the
provisions of the Lease.
E. Assignee shall be entitled to exercise any option to extend the term
of the Lease granted to Assignor in the Lease.
F. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
G. This Agreement may be executed in any number of counterparts, each
of which may be deemed an original but all of which together shall constitute
one and the same instrument.
H. This Agreement shall be governed and construed in accordance with
the laws of the State of Georgia.
I. If any party hereto commences any action or proceeding against any
other party hereto arising out of or in connection with this Agreement, the
prevailing party or parties shall be entitled to recover from the unsuccessful
party or parties reasonable attorneys' fees and costs of suit.
LANDLORD
G&R, Inc.
a Georgia corporation
By: /s/ XXXXXXX X. XXXXXXXXX
-----------------------------
Xxxxxxx X. Xxxxxxxxx
President
7
ASSIGNOR ASSIGNEE
MALG, Inc. K&G Men's Center, Inc.
a Georgia corporation a Delaware corporation
By: /s/ XXXXXXX X. XXXXXXXXX By: /s/ XXXXXXX X. XXXX
--------------------------- ---------------------------
Xxxxxxx X. Xxxxxxxxx Xxxxxxx X. Xxxx
Vice President Vice President, Finance
