NET LEASE AGREEMENT
THIS LEASE, made and entered into effective as of the
18th day of December, 1997, by and between AEI Net Lease
Income & Growth Fund XIX Limited Partnership ("Fund XIX"), a
Minnesota limited partnership whose corporate general
partner is AEI Fund Management XIX, Inc., a Minnesota
corporation, whose principal business address is 1300
Minnesota World Trade Center, 00 Xxxx Xxxxxxx Xxxxxx, Xx.
Xxxx, Xxxxxxxxx 00000 ("Lessor"), and Party City of Atlanta,
Inc., a Georgia corporation ("Lessee"), whose principal
business address is Attention: Xxxxx Xxxxxxxxxx, c/o The
Shopping Center Group, 0000 Xxxxxx Xxxxx Xxxx, Xxxxx 000,
Xxxxxxx, XX 00000;
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of
real property and improvements located at SR 53 at Xxxxxxxxx
Circle, Gainesville, Georgia, and legally described in
Exhibit "A", which is attached hereto and incorporated
herein by reference; and
WHEREAS, Lessee has constructed the building and
improvements (together the "Building") on the real property
described in Exhibit "A", which Building is described in the
plans and specifications heretofore submitted to Lessor; and
WHEREAS, Lessee desires to lease said real property and
Building (said real property and Building hereinafter
referred to as the "Leased Premises"), from Lessor upon the
terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the Rents, terms,
covenants, conditions, and agreements hereinafter described
to be paid, kept, and performed by Lessee, Lessor does
hereby grant, demise, lease, and let unto Lessee, and Lessee
does hereby take and hire from Lessor and does hereby
covenant, promise, and agree as follows:
ARTICLE 1. LEASED PREMISES
Lessor hereby leases to Lessee, and Lessee leases and
takes from Lessor, the Leased Premises subject to the
conditions of this Lease.
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Fifteen
(15) consecutive "Lease Years", as hereinafter defined,
commencing on December ,1997 ("Occupancy Date").
(B) The first "Lease Year" of the Term shall be for a
period of twelve (l2) consecutive calendar months from the
Occupancy Date. If the Occupancy Date shall be other than
the first day of a calendar month, the first "Lease Year"
shall be the period from the Occupancy Date to the end of
the calendar month of the Occupancy Date, plus the following
twelve (l2) calendar months. Each Lease Year after the first
Lease Year shall be a successive period of twelve (l2)
calendar months.
(C) The parties agree that once the Occupancy Date has
been established, upon the request of either party, a short
form or memorandum of this Lease will be executed for
recording purposes. That short form or memorandum of this
Lease will set forth the actual occupancy and termination
dates of the Term and optional Renewal Terms, as defined in
Article 28 hereof, and that said Renewal right shall
terminate when the Lessee shall lose right to possession or
this Lease is terminated, whichever occurs first.
ARTICLE 3. CONSTRUCTION OF IMPROVEMENTS
(A) Lessee warrants and agrees that the Building has
been constructed on the Leased Premises, and all other
improvements to the land, including the parking lot,
approaches, and service areas, have been constructed in all
material respects by Lessee substantially in accordance with
the plot, plans, and specifications heretofore submitted to
Lessor.
(B) Lessee warrants that the Building and all other
improvements to the land contemplated do comply with the
laws, ordinances, rules, and regulations of all state and
local governments.
(C) Lessee agrees to pay, if not already paid in full,
for all architectural fees and actual construction costs
relating to the Building and other related improvements on
the Leased Premises, in the past, present or future, which
shall include, but not be limited to, plans and
specifications, general construction, carpentry, electrical,
plumbing, heating, ventilating, air conditioning, decorating,
equipment installation, outside lighting, curbing,
landscaping, blacktopping, electrical sign hookup, conduit
and wiring from building, fencing, and parking curbs,
builder's risk insurance (naming Lessor, Lessee, and
contractor as co-insured), and all construction bonds for
improvements made by or at the direction of Lessee.
(D) Opening for business in the Leased Premises by
Lessee shall constitute an acceptance of the Leased Premises
and an acknowledgment by Lessee that the premises are in the
condition described under this Lease.
ARTICLE 4. RENT PAYMENTS
(A) Annual Rent Payable for the
first and second Lease Years: Lessee shall pay to Lessor
Fund XIX an annual Base Rent of $150,752.25, which amount
shall be payable in advance on the first day of each month
in equal monthly installments of $12,562.69 to Lessor Fund
XIX. If the first day of the Lease Term is not the first
day of a calendar month, then the monthly Rent payable for
that partial month shall be a prorated portion of the equal
monthly installment of Base Rent.
(B) Annual Rent Payable beginning
in the third, fifth, seventh, ninth, eleventh, thirteenth,
fifteenth, and if renewed according to the terms hereof, the
seventeenth, nineteenth, twenty-first, twenty-third, twenty-
fifth, twenty-seventh, and twenty-ninth Lease Year:
1. In the third
and every second Lease Year thereafter, the annual Base Rent
due and payable shall increase by an amount equal to Four
(4.0%) of the Base Rent payable for the immediately prior
Lease Year.
(C) Overdue Payments.
Lessee shall pay interest on all overdue payments of
Rent or other monetary amounts due hereunder at the rate of
fifteen percent (15%) per annum or the highest rate allowed
by law, whichever is less, accruing from the fifth business
day after written notice that such Rent or other monetary
amounts were not paid when properly due and payable.
ARTICLE 5. INSURANCE AND INDEMNITY
(A) Lessee shall, throughout the Term or Renewal
Terms, if any, of this Lease, at its own cost and expense,
procure and maintain insurance which covers the improvements
on the Leased Premises against fire, wind, and storm damage
(including flood insurance if the Leased Premises is in a
federally designated flood prone area) and such other risks
(including earthquake insurance, if the Leased Premises is
located in a federally designated earthquake zone or in an
ISO high risk earthquake zone) as may be included in the
broadest form of all risk, extended coverage insurance as
may, from time to time, be available in amounts sufficient
to prevent Lessor or Lessee from becoming a co-insurer
within the terms of the applicable policies. In any event,
the insurance shall not be less than one hundred percent
(100%) of the then insurable value, less footings and
foundation, with such commercially reasonable deductibles as
Lessor may reasonably require from time to time.
Additionally, replacement cost endorsements, vandalism
endorsement, malicious mischief endorsement, waiver of
subrogation endorsement, waiver of co-insurance or agreed
amount endorsement (if available), and Building Ordinance
Compliance endorsement and Rent loss endorsements (for a
period of 12 months) must be obtained. Notwithstanding the
foregoing, such insurance shall comply with the insurance
requirements set forth on Exhibit B attached hereto and
incorporated herein by reference.
(B) Lessee agrees to place and maintain throughout the
Term or Renewal Terms, if any, of this Lease, at Lessee's
own expense, public liability insurance with respect to
Lessee's use and occupancy of said premises, with initial
limits of at least $2,000,000 per occurrence/$5,000,000
general aggregate (inclusive of umbrella coverage), or such
commercially reasonable additional amounts as Lessor shall
reasonably require from time to time. Notwithstanding the
foregoing, such insurance shall comply with the insurance
requirements set forth on Exhibit B attached hereto and
incorporated herein by reference.
(C) Lessee agrees to notify Lessor in writing if
Lessee is unable to procure all or some part of the
aforesaid insurance. In the event Lessee fails to provide
all insurance required under this Lease, Lessor shall have
the right, but not the obligation, to procure such insurance
on Lessee's behalf, following five (5) business days written
notice to Lessee of Lessor's intent to do so (unless
insurance then in place would during such period, or already
has, lapsed, in which case no notice need be given) and
Lessee may obtain such insurance during said five day period
and not then be in default hereunder. If Lessor shall
obtain such insurance, Lessee will then, within five (5)
business days from receiving written notice, pay Lessor the
amount of the premiums due or paid, together with interest
thereon at the lesser of 15% per annum or the highest rate
allowable by law, which amount shall be considered Rent
payable by Lessee in addition to the Rent defined at Article
4 hereof.
(D) All policies of insurance provided for or
contemplated by this Article can be under Lessee's blanket
insurance coverage and shall name Lessor, Lessor's corporate
general partner, and Xxxxxx X. Xxxxxxx, as the general
partner of Lessor, and Lessee as additional insured and loss
payee, as their respective interests (as landlord and
lessee, respectively) may appear, and shall provide that the
policies cannot be canceled, terminated, changed, or
modified without thirty (30) days written notice to the
parties. In addition, all of such policies shall be in
place on or before the Occupancy Date and contain
endorsements by the respective insurance companies waiving
all rights of subrogation, if any, against Lessor. All
insurance companies providing coverages must be rated "A" or
better by Best's Key Rating Guide (the most current
edition), or similar quality under a successor guide if
Best's Key Rating shall cease to be published. Lessee shall
maintain legible copies of any and all policies and
endorsements required herein, to be made available for
Lessor's review and photocopy upon Lessor's reasonable
request from time to time. On the Occupancy Date and no
less than fifteen (15) business days prior to expiration of
such policies, Lessee shall provide Lessor with legible
copies of any and all renewal Certificates of Insurance
reflecting the above terms of the Policies (including
endorsements). Lessee agrees that it will not settle any
property insurance claims affecting the Leased Premises in
excess of $25,000 without Lessor's prior written consent,
such consent not to be unreasonably withheld or delayed.
Lessor shall consent to any settlement of an insurance claim
wherein Lessee shall confirm in writing with evidence
reasonably satisfactory to Lessor that Lessee has sufficient
funds available to complete the rebuilding of the Premises.
(E) Lessee shall defend, indemnify, and hold Lessor
harmless against any and all claims, damages, and lawsuits
arising after the Occupancy Date of this Lease and any
orders, decrees or judgments which may be entered therein,
brought for damages or alleged damages resulting from any
injury to person or property or from loss of life sustained
in or about the Leased Premises, unless such damage or
injury results from the intentional misconduct or the gross
negligence of Lessor and Lessee agrees to save Lessor
harmless from, and indemnify Lessor against, any and all
injury, loss, or damage, of whatever nature, to any person
or property caused by, or resulting from any act, omission,
or negligence of Lessee or any employee or agent of Lessee.
In addition, Lessee hereby releases Lessor from any and all
liability for any loss or damage caused by fire or any of
the extended coverage casualties, unless such fire or other
casualty shall be brought about by the intentional
misconduct or gross negligence of Lessor. In the event of
any loss, damage, or injury caused by the joint negligence
or willful misconduct of Lessor and Lessee, they shall be
liable therefor in accordance with their respective degrees
of fault.
(F) Lessor hereby waives any and all rights that it
may have to recover from Lessee damages for any loss
occurring to the Leased Premises by reason of any act or
omission of Lessee; provided, however, that this waiver is
limited to those losses for which Lessor is compensated by
its insurers, if the insurance required by this Lease is
maintained. Lessee hereby waives any and all right that it
may have to recover from Lessor damages for any loss
occurring to the Leased Premises by reason of any act or
omission of Lessor; provided, however, that this waiver is
limited to those losses for which Lessee is, or should be if
the insurance required herein is maintained, compensated by
its insurers. Any property insurance carried by Lessor
shall contain a waiver of subrogation in favor of Lessee.
ARTICLE 6. TAXES, ASSESSMENTS AND UTILITIES
(A) Lessee shall be liable and agrees to pay the
charges for all public utility services rendered or
furnished to the Leased Premises, including heat, water,
gas, electricity, sewer, sewage treatment facilities and the
like, all personal property taxes, real estate taxes,
special assessments, and municipal or government charges,
general, ordinary and extraordinary, of every kind and
nature whatsoever, which may be levied, imposed, or assessed
against the Leased Premises, or upon any improvements
thereon, at any time after the Occupancy Date of this Lease
for the period prior to the expiration of the term hereof,
or any Renewal Term, if exercised. Real estate taxes shall
not include income, intangible, franchise, capital stock, or
inheritance taxes or taxes substituted in lieu thereof.
(B) Lessee shall pay all real estate taxes,
assessments for public improvements or benefits, and other
governmental impositions, duties, and charges of every kind
and nature whatsoever which shall or may, during the term of
this Lease, be charged, laid, levied, assessed, or imposed
upon, or become a lien or liens upon the Leased Premises or
any part thereof. Lessee may pay such real estate taxes,
assessments, impositions, duties, and charges in
installments if allowed by law. Such payments shall be
considered as Rent paid by Lessee in addition to the Rent
defined at Article 4 hereof. If due to a change in the
method of taxation, a franchise tax, Rent tax, or income or
profit tax shall be levied against Lessor in substitution
for or in lieu of any tax which would otherwise constitute a
real estate tax, such tax shall be deemed a real estate tax
for the purposes herein and shall be paid by Lessee;
otherwise Lessee shall not be liable for any such tax levied
against Lessor.
(C) All real estate taxes, assessments for public
improvements or benefits, water rates and charges, sewer
rents, and other governmental impositions, duties, and
charges which shall become payable for the first and last
tax years of the term hereof shall be apportioned pro rata
between Lessor and Lessee in accordance with the respective
number of months during which each party shall be in
possession of the Leased Premises (or through the expiration
of the term hereof, if longer) in said respective tax years.
Lessee shall pay within 60 days of the expiration of the
term hereof Lessor's reasonable estimate of Lessee's pro-
rata share of real estate taxes for the last tax year of the
term hereof, based upon the last available tax xxxx. Lessor
shall give Lessee notice of such estimated pro-rata real
estate taxes no later than 75 days from the end of the term
hereof. Upon receipt of the actual statement of real estate
taxes for such prorated period, Lessor shall either refund
to Lessee any over payment of the pro-rata Lessee
obligation, or shall assess and Lessee shall pay promptly
upon notice any remaining portion of the Lessee's pro-rata
obligation for such real estate taxes.
(D) Lessee shall have the right to contest or review
by legal proceedings or in such other manner as may be legal
(which, if instituted, shall be conducted solely at Lessee's
own expense) any tax, assessment for public improvements or
benefits, or other governmental imposition aforementioned,
upon condition that, before instituting such proceeding
Lessee shall pay (under protest) such tax or assessments for
public improvements or benefits, or other governmental
imposition, duties and charges aforementioned, unless such
payment would act as a bar to such contest or interfere
materially with the prosecution thereof and in such event
Lessee shall post with Lessor alternative security
reasonably satisfactory to Lessor. All such proceedings
shall be begun as soon as reasonably possible after the
imposition or assessment of any contested items and shall
be prosecuted to final adjudication with reasonable
dispatch. In the event of any reduction, cancellation, or
discharge, Lessee shall pay the amount that shall be finally
levied or assessed against the Leased Premises or
adjudicated to be due and payable, and, if there shall be
any refund payable by the governmental authority with
respect thereto, if Lessee has paid the expense of Lessor in
such proceedings, Lessee shall be entitled to receive and
retain the refund, subject, however, to apportionment as
provided during the first and last years of the term of this
Lease.
(E) Lessor, within sixty (60) days after notice to
Lessee if Lessee fails to commence such proceedings, may,
but shall not be obligated to, contest or review by legal
proceedings, or in such other manner as may be legal, and at
Lessor's own expense, any tax, assessments for public
improvements and benefits, or other governmental imposition
aforementioned, which shall not be contested or reviewed, as
aforesaid, by Lessee, and unless Lessee shall promptly join
with Lessor in such contest or review, Lessor shall be
entitled to receive and retain any refund payable by the
governmental authority with respect thereto.
(F) Lessor shall not be required to join in any
proceeding referred to in this Article, unless in Lessee's
reasonable opinion, the provisions of any law, rule, or
regulation at the time in effect shall require that such a
proceeding be brought by and/or in the name of Lessor, in
which event Lessor shall upon written request, join in such
proceedings or permit the same to be brought in its name,
all at no cost or expense to Lessor.
(G) Within thirty (30) days after Lessor notifies
Lessee in writing that Lessor has paid such amount, Lessee
shall also pay to Lessor, as additional Rent, the amount of
any sales tax, excise tax, or similar tax on Rents imposed
by the State where the Leased Premises are located. In no
event shall Lessee be liable for any income tax or fees
charged foreign limited partnerships or their general
partners as a requisite for doing business in Georgia. At
Lessor's option, Lessee shall deposit with Lessor on the
first day of each and every month during the term hereof, an
amount equal to one-twelfth (1/12) of any (though none as of
the effective date hereof is presently imposed or assessed)
estimated sales tax payable to the State in which the
property is situated for Rent received by Lessor hereunder
("Deposit"). From time to time out of such Deposit Lessor
will pay the sales tax to the State in which the property is
situated as required by law. In the event the Deposit on
hand shall not be sufficient to pay said tax when the same
shall become due from time to time, or the prior payments
shall be less than the current estimated monthly amounts,
then Lessee shall pay to Lessor on demand any amount
necessary to make up the deficiency. The excess of any such
Deposit shall be credited to subsequent payments to be made
for such items. If a default or an event of default shall
occur under the terms of this Lease, Lessor may, at its
option, without being required so to do, apply any Deposit
on hand to cure such default, in such order and manner as
Lessor may elect.
ARTICLE 7. PROHIBITION ON ASSIGNMENTS AND SUBLETTING;
TAKE-BACK RIGHTS
(A) Except as otherwise expressly provided in this
Article, Lessee shall not, without obtaining the prior
written consent of Lessor (which consent shall not be
unreasonably withheld or delayed provided Lessee and all
Guarantors shall affirm in writing their continued liability
under this Lease or the Guaranty, respectively (if not prior
thereto released from liability according to the terms of
this Lease or their Guarantee, respectively)), in each
instance:
1. assign or otherwise transfer this Lease,
or any part of Lessee's right, title or interest therein;
2. sublet all or any part of the Leased
Premises or allow all or any part of the Leased Premises to
be used or occupied by any other Persons (herein defined as
a Party other than Lessee, be it a corporation, a partnership,
an individual or other entity); or
3. mortgage, pledge or otherwise encumber this
Lease, or the Leased Premises.
(B) For the purposes of this Article:
1. the transfer of voting control of any class
of capital stock of any corporate Lessee, or the transfer of
voting control of the total interest in any other person which
is a Lessee, however accomplished, whether in a single
transaction or in a series of related or unrelated transactions,
shall be deemed an assignment of this Lease;
2. an agreement by any other Person, directly or
indirectly, to assume Lessee's obligations under this Lease
shall be deemed an assignment;
3. any Person to whom Lessee's interest under
this Lease passes by operation of law, or otherwise, shall be
bound by the provisions of this Article;
4. each material modification, amendment or
extension of any sublease to which Lessor has previously
consented shall be deemed a new sublease; and
5. Lessee shall present the signed consent to
such assignment and/or subletting from any then remaining
guarantors of this Lease, such consent to be in form and
substance reasonably satisfactory to Lessor.
Lessee agrees to furnish to Lessor within five (5)
business days following demand at any time such information
and assurances as Lessor may reasonably request that neither
Lessee, nor any previously permitted sublessee or assignee,
has violated the provisions of this Article.
(C) If Lessee agrees to assign this Lease or to sublet
all or any portion of the Leased Premises, Lessee shall,
prior to the effective date thereof (the "Effective Date"),
deliver to Lessor executed counterparts of any such
agreement and of all ancillary agreements with the proposed
assignee or sublessee, as applicable, including Lessee and
all Guarantors affirming in writing their continued
liability under this Lease or the Guaranty, respectively (if
not prior thereto released from liability according to the
terms of this Lease or their Guarantee, respectively)). If
Lessee shall fail to do so, and shall have surrendered
possession of the Leased Premises in violation of its duty
of prior notice and failed to obtain Lessor's prior consent
(if and where required herein), and, if in such event,
Lessor in its sole discretion (except as otherwise
specifically limited herein) shall not consent to a proposed
sublease or assignment, Lessee's failure to obtain Lessor's
consent shall be an event of default under this Lease.
If Lessor desire to enter into a direct Lease with such
assignee or sublessee (instead of pursuing any other
available remedy for Lessee's default), Lessor shall then
have all of the following rights, any of which Lessor may
exercise by written notice to Lessee given within thirty
(30) days after Lessor receives notice of the aforementioned
assignment or sublease in violation of the prior notice and
documentation requirements:
1. with respect to a proposed assignment of this
Lease, the right to terminate this Lease on the Effective Date
as if it were the Expiration Date of this Lease;
2. with respect to a proposed subletting of the
entire Leased Premises, the right to terminate this Lease on
the Effective Date as if it were the Expiration Date; or
3. with respect to a proposed subletting of less
than the entire Leased Premises, the right to terminate this
Lease as to the portion of the Leased Premises affected by such
subletting on the Effective Date, as if it were the Expiration
Date, in which case Lessee shall promptly execute and deliver
to Lessor an appropriate modification of this Lease in form
satisfactory to Lessor in all respects.
(D) If Lessor exercises any of its options under
Article 7(C) above to enter into a new and direct Lease with
such assignee or sublessee (instead of exercising any
available remedy for Lessee's breach), Lessor may then lease
the Leased Premises or any portion thereof with respect to
which this Lease has been terminated to Lessee's proposed
assignee or sublessee, as the case may be, without liability
whatsoever to Lessee (except to the extent Lessee's
obligations hereunder are thereby mitigated), and if Lessor
shall terminate this Lease in its entirety pursuant to
Article 7(C), Lessee shall be fully released from its
obligations hereunder arising after the date of such
termination.
(E) Notwithstanding anything above to the contrary,
Lessor agrees that its consent to any other proposed
assignment or sublet shall not be unreasonably withheld or
delayed, provided Lessor is given prior written notice of
such sublease or assignment, accompanied by a copy of such
sublease or assignment, and the consents of Lessee and
Guarantors (such consent to be in form and substance
satisfactory to Lessor) to such assignment or sublet,
affirming their continued liability hereunder (or under
their guaranty, respectively, unless the stated requirements
in the guaranty for release thereof have been met).
(F) Notwithstanding anything in this Lease to the
contrary, there shall be no prohibition against any
assignment:
(a) With respect to the transfer of the capital stock
or other ownership interests in Lessee to a member of the
immediate family (spouse, child, grandchild or parent or a
trust for any of the foregoing), as long as the family
member (or trust) is a guarantor of this Lease, any such
transfer shall not be deemed to be a transfer of shares
hereunder for the purpose of determining voting control.
(b) In the event of a merger or consolidation with a
hereinafter defined "Equivalent Entity".
(c) With respect to an assignment of this Lease to an
Equivalent Entity in connection with the said Equivalent
Entity's acquisition of all or substantially all of Lessee's
assets.
For the purposes o f this Lease, an Equivalent Entity
shall be an entity that has a net worth at least equal to
Lessee's net worth and, in Lessor's sole but reasonable
opinion, taking into consideration such factors as years of
experience, business reputation, and other factors
reasonably related to the assignee to operate the Leased
Premises is otherwise equivalent to Lessee as a tenant of
the Leased Premises.
ARTICLE 8. REPAIRS AND MAINTENANCE
(A) Lessee covenants and agrees to keep and maintain
in good order, condition and repair the interior and
exterior of the Leased Premises during the term of the
Lease, or any renewal terms, subject to ordinary wear and
tear, and further agrees that Lessor shall be under no
obligation to make any repairs or perform any maintenance to
the Leased Premises. Lessee covenants and agrees that it
shall be responsible for all repairs, alterations,
replacements, or maintenance of, including but without
limitation to or of: The interior and exterior portions of
all doors; door checks and operators; windows; plate glass;
plumbing; water and sewage facilities; fixtures; electrical
equipment; interior walls; ceilings; signs; roof; structure;
interior building appliances and similar equipment; heating
and air conditioning equipment; and any equipment owned by
Lessor and leased to Lessee hereunder, as itemized on
Exhibit C, if any, attached hereto and incorporated herein
by reference; and further agrees to replace any of said
equipment when necessary. Lessee further agrees to be
responsible for, at its own expense, snow removal, lawn
maintenance, landscaping, maintenance of the parking lot
(including parking lines, seal coating, and blacktop
surfacing), and other similar items.
(B) If Lessee refuses or neglects to commence or
complete repairs promptly and adequately, after prior
written notice as required under Article 16(B) (except in
cases of emergency to prevent waste or preserve the safety
and integrity of the Leased Premises, in which case no
notice need be given), Lessor may cause such repairs to be
made, but shall not be required to do so, and Lessee shall
pay the cost thereof to Lessor within five (5) business days
following demand. It is understood that Lessee shall pay
all expenses and maintenance and repair during the term of
this Lease. If Lessee is not then in default hereunder,
Lessee shall have the right to make repairs and improvements
to the Leased Premises without the consent of Lessor if such
repairs and improvements do not exceed Ten Thousand Dollars
($10,000.00), provided such repairs or improvements do not
affect the structural integrity of the Leased Premises. Any
repairs or improvements in excess of Ten Thousand Dollars
($10,000.00) or affecting the structural integrity of the
Leased Premises may be done only with the prior written
consent of Lessor, such consent not to be unreasonably
withheld or delayed. All alterations and additions to the
Leased Premises shall be made in accordance with all
applicable laws and shall remain for the benefit of Lessor,
except for Lessee's moveable trade fixtures. In the event
of making such alterations as herein provided, Lessee
further agrees to indemnify and save harmless Lessor from
all expense, liens, claims or damages to either persons or
property or the Leased Premises which may arise out of or
result from the undertaking or making of said repairs,
improvements, alterations or additions, or Lessee's failure
to make said repairs, improvements, alterations or
additions.
ARTICLE 9. COMPLIANCE WITH LAWS AND REGULATIONS
Lessee will comply with all statutes, ordinances,
rules, orders, regulations and requirements of all federal,
state, city and local governments, and with all rules,
orders and regulations of the applicable Board of Fire
Underwriters which affect the use of the improvements.
Lessee will comply with all easements, restrictions, and
covenants of record against or affecting the Leased Premises
and any franchise or license agreements required for
operation of the Leased Premises in accordance with Article
14 hereof.
ARTICLE 10. SIGNS
Lessee shall have the right to install and maintain a
sign or signs advertising Lessee's business, provided that
the signs conform to law, and further provided that the sign
or signs conform specifically to the written requirements of
the appropriate governmental authorities.
ARTICLE 11. SUBORDINATION
(A) Lessor reserves the right and privilege to subject
and subordinate this Lease at all times to the lien of any
mortgage or mortgages now or hereafter placed upon Lessor's
interest in the Leased Premises and on the land and
buildings of which said premises are a part, or upon any
buildings hereafter placed upon the land of which the Leased
Premises are a part, provided such mortgagee shall execute
its standard form, commercially reasonable subordination,
attornment and non-disturbance agreement and to any and all
advances to be made under such mortgages, and all renewals,
modifications, extensions, consolidations, and replacements
thereof, provided such mortgagee shall execute its standard
form, commercially reasonable subordination, attornment and
non-disturbance agreement, agreeing not to disturb Lessee's
rights hereunder by exercise of its rights under its
mortgage (including that insurance proceeds and condemnation
awards shall be applied to the repair and restoration of the
Leased Premises in accordance herewith) provided such
proceeds and awards are subject to the commercially
reasonable escrow requirements set forth herein.
(B) Lessee covenants and agrees to execute and
deliver, upon demand, such further instrument or instruments
subordinating this Lease on the foregoing basis to the lien
of any such mortgage or mortgages as shall be desired by
Lessor and any proposed mortgagee or proposed mortgagees,
provided such mortgagee shall execute its standard form,
commercially reasonable subordination, attornment and non-
disturbance agreement as described in Article 11A above.
ARTICLE l2. CONDEMNATION OR EMINENT DOMAIN
(A) If the whole of the Leased Premises are taken by
any public authority under the power of eminent domain, or
by private purchase in lieu thereof, then this Lease shall
automatically terminate upon the date possession is
surrendered, and Rent shall be paid up to that day. If any
part of the Leased Premises shall be so taken as to render
the remainder thereof materially unusable in the opinion of
a licensed third party arbitrator reasonably approved by
Lessor and Lessee, for the purposes for which the Leased
Premises were leased, then Lessor and Lessee shall each have
the right to terminate this Lease on thirty (30) days notice
to the other given within ninety (90) days after the date of
such taking. In the event that this Lease shall terminate
or be terminated, the Rent shall, if and as necessary, be
paid up to the day that possession was surrendered.
(B) If any part of the Leased Premises shall be so
taken such that it does not materially interfere with the
business of Lessee (as determined pursuant to paragraph (A)
above), then Lessee shall, with the use of the condemnation
proceeds which shall be made available by Lessor, but
otherwise at Lessee's own cost and expense, restore the
remaining portion of the Leased Premises to the extent
necessary to render it reasonably suitable for the purposes
for which it was leased. Lessee at Lessor's expense
(subject to limitation as set forth below) shall make all
repairs to the building in which the Leased Premises is
located to the extent necessary to constitute the building
at least a complete architectural unit and substantially
similar to the condition prior to such taking. Provided,
however, that such work shall not exceed the scope of the
work required to be done by Lessee in originally
constructing such building unless Lessee shall demonstrate
to Lessor's reasonable satisfaction the availability of
funds to complete such work. Provided, further, the cost
thereof to Lessor shall not exceed the proceeds of its
condemnation award, all to be done without any adjustments
in Rent to be paid by Lessee. This lease shall be deemed
amended to reflect the taking in the legal description of
the Leased Premises.
(C) All compensation awarded or paid upon such total
or partial taking of the Leased Premises shall belong to and
be the property of Lessor (subject to paragraph (B) above)
without any participation by Lessee, whether such damages
shall be awarded as compensation for diminution in value to
the leasehold or to the fee of the premises herein leased,
provided all such award shall be made available for
restoration as provided in Article 12 (B) above. Nothing
contained herein shall be construed to preclude Lessee from
prosecuting any claim directly against the condemning
authority in such proceedings for: Loss of business; damage
to or loss of value or cost of removal of inventory, trade
fixtures, furniture, and other personal property belonging
to Lessee; provided, however, that no such claim shall
diminish or otherwise adversely affect Lessor's award or the
award of any fee mortgagee subject to paragraph 12(B) and
Article 11 above.
ARTICLE 13. RIGHT TO INSPECT
Lessor reserves the right to enter upon, inspect and
examine the Leased Premises at any time during business
hours, after reasonable notice to Lessee, and Lessee agrees
to allow Lessor free access to the Leased Premises to show
the premises. Upon default by Lessee after the expiration
of applicable cure periods or at any time within ninety (90)
days of the expiration or termination of the Lease, Lessee
agrees to allow Lessor to then place "For Sale" or "For
Rent" signs on the Leased Premises at such location upon the
Leased Premises determined by Lessee in its reasonable
discretion. Lessor and Lessor's representatives shall at
all times while upon or about the Leased Premises observe
and comply with Lessee's reasonable health and safety rules,
regulations, policies and procedures. Lessor agrees to
indemnify and hold Lessee, its successors, assigns, agents
and employees from and against any liability, claims,
demands, cause of action, suits and other litigation or
judgements of every kind and character, including injury to
or death of any person or persons, or trespass to, or damage
to, or loss or destruction of, any property, whether real or
personal, to the extent resulting from the negligence or
willful misconduct or Lessor or Lessor's representatives
while upon or about the Leased Premises.
ARTICLE 14. EXCLUSIVE USE
(A) After the Occupancy Date, Lessee expressly agrees
and warrants that the Leased Premises will be used
exclusively as a Party City store. In any other such case,
after obtaining Lessor's prior written consent, such consent
not to be unreasonably withheld or delayed, Lessee may
conduct any lawful business from the Leased Premises.
Lessee acknowledges and agrees that any other use without
the prior written consent of Lessor will constitute a
default under and a violation and breach of this Lease.
(B) If the Leased Premises are not operated as a Party
City store or other permitted use hereunder, or remain
closed for thirty (30) consecutive days (unless such closure
results from reasons beyond Lessee's reasonable control) and
Lessee fails to pay Rent when due or fulfill any other
obligation hereunder (including procuring and maintaining
appropriate endorsement to insurance coverage occasioned by
the vacancy of the Leased Premises to maintain the coverage
otherwise required herein), then after the expiration of the
cure periods set forth in Article 16, Lessee shall be in
default hereunder and Lessor may, at its option, cancel this
Lease by giving written notice to Lessee or exercise any
other right or remedy that Lessor may have; provided,
however, that closings shall be reasonably permitted for
replacement of trade fixtures or during periods of repair
after destruction or due to remodeling.
ARTICLE 15. DESTRUCTION OF PREMISES
If, during the term of this Lease, the Leased Premises
are totally or partially destroyed by fire or other
elements, within a reasonable time (but in no event longer
than one hundred eighty (180) days and subject to the
provisions herein below), Lessee shall repair and restore
the improvements so damaged or destroyed as nearly as may be
practical to their condition immediately prior to such
casualty, and shall be entitled to use of insurance proceeds
in accordance with the provisions hereof. All rents
payable by Lessee shall be abated during the period of
repair and restoration to the extent that Lessor shall be
compensated by the proceeds of the rent loss insurance
required to be maintained by Lessee hereunder.
Provided Lessee is not in default hereunder (and
retains according to the terms hereof the right to rebuild)
with the Lessor's prior written consent, which consent shall
not be unreasonably withheld or delayed, Lessee shall have
the right to promptly and in good xxxxx xxxxxx and adjust
any claim under $50,000 under such insurance policies with
the insurance company or companies on the amounts to be paid
upon the loss. The insurance proceeds shall be used to
reimburse Lessee for the cost of rebuilding or restoration
of the Leased Premises. Risk that the insurance company
shall be insolvent or shall refuse to make insurance
proceeds available shall be with Lessee. The Leased Premises
shall be so restored or rebuilt so as to be of at least
equal value and substantially the same character as prior to
such damage or destruction. If the insurance proceeds are
less than Fifty Thousand Dollars ($50,000), they shall be
paid to Lessee for such repair and restoration. If the
insurance proceeds are greater than or equal to Fifty
Thousand Dollars ($50,000), they shall be deposited by
Lessee and Lessor into a customary construction escrow at a
nationally recognized title insurance company, or at
Lessee's option, with Lessor ("Escrowee") and shall be made
available from time to time to Lessee for such repair and
restoration. Such proceeds shall be disbursed in conformity
with the terms and conditions of a commercially reasonable
construction loan agreement. Lessee shall, in either
instance, deliver to Lessor or Escrowee (as the case may be)
satisfactory evidence of the estimated cost of completion
together with such architect's certificates, waivers of
lien, contractor's sworn statements and other evidence of
cost and of payments as the Lessor or Escrowee may
reasonably require and approve. If the estimated cost of
the work exceeds One Hundred Thousand Dollars ($100,000),
all plans and specifications for such rebuilding or
restoration shall be subject to the reasonable approval of
Lessor.
Any insurance proceeds remaining with Escrowee, if any,
after the completion of the repair or restoration shall be
paid to Lessor to reduce the sum of monies expended by
Lessor to acquire its interest in the Lease Premises and
rent hereunder shall be reduced by 11% of such amount.
If the proceeds from the insurance are insufficient,
after review of the bids for completion of such
improvements, or should become insufficient during the
course of construction, to pay for the total cost of repair
or restoration, Lessee shall, prior to commencement of work,
demonstrate to Escrowee and Lessor's reasonable
satisfaction, the availability of such funds necessary to
completion construction and Lessee shall deposit the same
with Escrowee for disbursement under the construction escrow
agreement.
Provided, further, that should the Leased Premises
be damaged or destroyed to the extent of fifty (50%) percent
of its value or such that Lessee cannot carry on business as
conducted immediately prior to such casualty without (in the
opinion of a licensed third party architect reasonably
approved by Lessor and Lessee) being closed for more than
ninety (90) days (which duration of closure may be
established by Lessee by the affidavit of the approved
independent third party architect as to the estimated time
of repair) during the last two (2) years of the remaining
term of this Lease or any of the option terms of this Lease,
if any further options to renew remain, Lessee may elect
within 30 days of such damage, to then exercise at least one
(1) option to renew this Lease so that the remaining term of
the Lease is not less than five (5) years in order to be
entitled to such insurance proceeds for restoration or
rebuilding. Absent such election, this Lease shall
terminate upon Lessor's receipt of funds at least equal to
the estimated cost of such repair or restoration.
ARTICLE 16. ACTS OF DEFAULT
Each of the following shall be deemed a default by
Lessee and a breach of this Lease:
(A) Failure to pay
the Rent or any monetary obligation herein reserved, or any
part thereof when the same shall be due and payable.
Provided, however, Lessee shall have five (5) business days
after written notice from Lessor within which to cure the
failure to pay the Rent or any monetary obligation herein
reserved.
(B) Failure to do,
observe, keep and perform any of the other terms, covenants,
conditions, agreements and provisions in this Lease to be
done, observed, kept and performed by Lessee; provided,
however, that Lessee shall have Thirty (30) days after
written notice from Lessor within which to cure such
default, or such longer time as may be reasonably necessary
if such default cannot reasonably be cured within Thirty
(30) days, if Lessee is diligently pursuing a course of
conduct that in Lessor's reasonable opinion is capable of
curing such default, but in any event such longer time shall
not exceed 120 days after written notice from Lessor of the
default hereunder.
(C) The abandonment
of the premises by Lessee, the adjudication of Lessee as a
bankrupt, the making by Lessee of a general assignment for
the benefit of creditors, the taking by Lessee of the
benefit of any insolvency act or law, the appointment of a
permanent receiver or trustee in bankruptcy for Lessee
property, or the appointment of a temporary receiver which
is not vacated or set aside within sixty (60) days from the
date of such appointment; provided, however, that the
foregoing shall not constitute events of default so long as
Lessee continues to otherwise satisfy its obligations
(including but not limited to the payment of Rent)
hereunder.
ARTICLE 17. TERMINATION FOR DEFAULT
In the event of any uncured default by Lessee and at
any time thereafter, Lessor may serve a written notice upon
Lessee that Lessor elects to terminate this Lease. This
Lease shall then terminate on the date so specified as if
that date had been originally fixed as the expiration date
of the term herein granted, provided, however, that Lessee
shall have continuing liability for future rents for the
remainder of the original term and any exercised renewal
term as set forth in Article 19, notwithstanding any earlier
termination of Lessee's rights to possession of the Lease
Premises hereunder (except where Lessee has exercised a
right to terminate where granted herein), preserving unto
Lessor the benefit of its bargained-for rental payments.
ARTICLE 18. LESSOR'S RIGHT OF RE-ENTRY
In the event that this Lease shall be terminated as
hereinbefore provided, or by summary proceedings or
otherwise, or in the event of an uncured default hereunder
by Lessee, or in the event that the premises or any part
thereof, shall be abandoned by Lessee and Rent shall not be
paid or other obligations (including but not limited to
repair and maintenance obligations) of Lessee hereunder
shall not be met, then Lessor or its agents, servants or
representatives, may immediately or at any time thereafter,
re-enter and resume possession of the premises or any part
thereof, and remove all persons and property therefrom,
either by summary dispossess proceedings or by a suitable
action or proceeding at law, or by force or otherwise
without being liable for any damages therefor, except for
damages resulting from Lessor's negligence or willful
misconduct. Notwithstanding anything above to the contrary,
if Lessee is still in possession of the Leased Premises,
Lessor agrees to use such legal proceedings (summary or
otherwise) prescribed by law to regain possession of the
Leased Premises.
ARTICLE 19. LESSEE'S CONTINUING LIABILITY
(A) Should Lessor elect to re-enter as provided in
this Lease or should it take possession pursuant to legal
proceedings or pursuant to any notice provided for by law,
Lessor shall undertake the following efforts to mitigate
Lessee's continuing liability hereunder (which efforts shall
include listing the Leased Premises with a licensed
commercial real estate broker (such broker to have
commercially reasonable experience in selling or reletting
retail properties of like kind to the Leased Premises) and
securing the property against waste, but shall not otherwise
include the expenditure of Lessor's funds, unless the same
be required by law or statute), and in addition, Lessor may
either (i) terminate this Lease or (ii) it may from time to
time, without terminating the contractual obligation of
Lessee to pay Rent under this Lease, make such alterations
and repairs as may be necessary to relet the Leased Premises
or any part thereof for the remainder of the original Term
or any exercised Renewal Terms, at such Rent or Rents, and
upon such other terms and conditions as Lessor in its sole
discretion may deem advisable. Termination of Lessee's
right to possession by Court Order shall be sufficient
evidence of the termination of Lessee's possessory rights
under this Lease, and the filing of such an Order shall be
notice of the termination of Lessee's Renewal Rights
hereunder or as set forth in any Memorandum of Lease of
record.
(B) Upon each such reletting, without termination of
the contractual obligation of Lessee to pay Rent under this
Lease, all Rents received by Lessor shall be applied as
follows:
1. First, to the
payment of any indebtedness other than Rent due hereunder
from Lessee to Lessor;
2. Second, to the
payment of any costs and expenses of such reletting,
including brokerage fees and attorney's fees and of costs of
such alterations and repairs;
3. Third, to the
payment of Rent and other monetary obligations due and
unpaid hereunder;
4. Finally, the
residue, if any, shall be held by Lessor and applied in
payment of future Rent as the same may become due and
payable hereunder.
If such Rents received from such reletting during any month
are less than that to be paid during that month by Lessee
hereunder, Lessee shall pay any such deficiency to Lessor.
Such deficiency shall be calculated and paid monthly. No
such re-entry or taking possession of such Leased Premises
by Lessor shall be construed as an election on its part to
terminate Lessee's contractual obligations under this Lease
respecting the payment of rent and obligations for the costs
of repair and maintenance unless a written notice of such
intention be given to Lessee.
(C) Notwithstanding any such reletting without
termination, Lessor may at any time thereafter elect to
terminate this Lease for any uncured breach.
(D) In addition to any other remedies Lessor may have
with this Article 19, Lessor may recover from Lessee all
damages it may incur by reason of any uncured breach,
including: The cost of recovering and reletting the Leased
Premises; reasonable attorney's fees; and, the present value
(discounted at a rate of 8% per annum) of the excess of the
amount of Rent and charges equivalent to Rent reserved in
this Lease for the remainder of the Term over the then
reasonable Rent value of the Leased Premises (or the actual
Rents receivable by Lessor, if relet), (the Lessee bearing
the burden of proof to demonstrate the amount of rental loss
for the same period, that through reasonable efforts to
mitigate damages, could have been avoided) for the remainder
of the Term, all of which amounts shall be immediately due
and payable from Lessee to Lessor in full. In the event
that the Rent obtained from such alternative or substitute
tenant is more than the Rent which Lessee is obligated to
pay under this Lease, then such excess shall be paid to
Lessor provided that Lessor shall credit such excess against
the outstanding obligations of Lessee due pursuant hereto,
if any.
(E) It is the object and purpose of this Article 19
that Lessor shall be kept whole and shall suffer no damage
by way of non-payment of Rent or by way of diminution in
Rent. Lessee waives and will waive all rights to trial by
jury in any summary proceedings or in any action brought to
recover Rent herein if such waiver shall be enforceable
under the law, which may hereafter be instituted by Lessor
against Lessee in respect to the Leased Premises. Lessee
hereby waives any rights of re-entry it may have or any
rights of redemption or rights to redeem this Lease upon a
termination of this Lease.
ARTICLE 20. PERSONALTY, FIXTURES AND EQUIPMENT
(A) All building fixtures, building machinery, and
building equipment used in connection with the operation of
the Leased Premises including, but not limited to, heating,
electrical wiring, lighting, ventilating, plumbing, walk-in
refrigerators/coolers, walk-in freezers, air conditioning
systems, and the equipment, if any, owned by Lessor and
leased to Lessee hereunder as specifically set forth on
Exhibit C attached hereto and incorporated herein by
reference shall be the property of Lessor. All other trade
fixtures and all other articles of personal property owned
by Lessee shall remain the property of Lessee.
(B) Lessee shall furnish and pay for any and all
equipment, furniture, trade fixtures, and signs, except for
such items, if any, described in Article 20(A) above, as
owned by Lessor. Lessee agrees that Lessor shall have a
lien on all Lessee's removable equipment, furniture, trade
fixtures, furnishings, and signs as security for the
performance of and compliance with this Lease, subject to
the rights of any bona fide third party's security interest
in such property. Provided Lessee is not in default
hereunder beyond the expiration of applicable notice and
cure periods, Lessor will agree that its interest in such
personal property of Lessee (such personal property
including but not limited to all removable equipment,
inventory, removable trade fixtures, and other personal
property, including but not limited to such items as display
cases, counters, and shelving, (but not including ceilings,
lighting, HVAC, plumbing fixtures, or other items normally
considered part of the real property) will be subordinated
to financing which may exist or which Lessee may cause to
exist in the future on that same personal property,
including the present security interest as of the effective
date hereof of Xxxxxxx Xxxxx. Lessor agrees to execute the
document attached hereto as Exhibit C in favor of Xxxxxxx
Xxxxx.
(C) At the end of the term of this Lease, the property
described at Article 20(B) above, after written notice to
Lessor given at least five (5) business days prior to any
proposed removal, may be removed from the Leased Premises by
Lessee regardless of whether or not such property is
attached to the Leased Premises so as to constitute a
"fixture" within the meaning of the law; however, all
damages and repairs to the Leased Premises which may be
caused by the removal of such property shall be paid for by
Lessee.
ARTICLE 21. LIENS
Lessee shall not do or cause anything to be done
whereby the Leased Premises may be encumbered by any
mechanic's or other liens. Whenever and as often as any
mechanic's or other lien is filed against said Leased
Premises purporting to be for labor or materials furnished
or to be furnished to Lessee, Lessee shall remove the lien
of record by payment or by bonding with a surety company
authorized to do business in the state in which the property
is located, within forty-five (45) days from the date of the
filing of said mechanic's or other lien and delivery of
notice thereof to Lessee. Should Lessee fail to take the
foregoing steps within said forty-five (45) day period (or
in any event, prior to the expiration of the time within
which Lessee may bond over such lien to remove it as a lien
upon the Leased Premises), Lessor shall have the right,
among other things, to pay said lien without inquiring into
the validity thereof, and Lessee shall forthwith reimburse
Lessor for the total expense incurred by it in discharging
said lien as additional Rent hereunder.
ARTICLE 22. NO WAIVER BY LESSOR EXCEPT IN WRITING
No agreement to accept a surrender of the Leased
Premises or termination of this Lease shall be valid unless
in writing signed by Lessor. The delivery of keys to any
employee of Lessor or Lessor's agents shall not operate as a
termination of the Lease or a surrender of the premises.
The failure of Lessor to seek redress for violation of any
rule or regulation, shall not prevent a subsequent act,
which would have originally constituted a violation, from
having all the force and effect of an original violation.
Neither payment by Lessee or receipt by Lessor of a lesser
amount than the Rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated Rent. Nor
shall any endorsement or statement on any check nor any
letter accompanying any check or payment as Rent be deemed
an accord and satisfaction. Lessor may accept such check or
payment without prejudice to Lessor's right to recover the
balance of such Rent or pursue any other remedy provided in
this Lease. This Lease contains the entire agreement
between the parties, and any executory agreement hereafter
made shall be ineffective to change it, modify it or
discharge it, in whole or in part, unless such executory
agreement is in writing and signed by the party against whom
enforcement of the change, modification or discharge is
sought.
ARTICLE 23. QUIET ENJOYMENT
Lessor covenants that Lessee, upon paying the Rent set
forth in Article 4 and all other sums herein reserved as
Rent and upon the due performance of all the terms,
covenants, conditions and agreements herein contained on
Lessee's part to be kept and performed, shall have, hold and
enjoy the Leased Premises free from molestation, eviction,
or disturbance by Lessor, or by any other person or persons
lawfully claiming the same, and that Lessor has good right
to make this Lease for the full term granted, including
renewal periods.
ARTICLE 24. BREACH - PAYMENT OF COSTS AND ATTORNEYS' FEES
Each party agrees to pay and discharge all reasonable
costs, and actual attorneys' fees, including but not limited
to attorney's fees incurred at the trial level and in any
appellate or bankruptcy proceeding, and expenses that shall
be incurred by the prevailing party in enforcing the
covenants, conditions and terms of this Lease or defending
against an alleged breach, including the costs of reletting.
Such costs, attorneys fees, and expenses if incurred by
Lessor and it is the prevailing party shall be considered as
Rent as due and owing in addition to any Rent defined in
Article 4 hereof.
ARTICLE 25. ESTOPPEL CERTIFICATES
Either party to this Lease will, at any time, upon not
less than ten (10) business days prior request by the other
party, execute, acknowledge and deliver to the requesting
party a statement in writing, executed by an executive
officer of such party, certifying: (a) whether this Lease is
unmodified (or if modified then disclosure of such
modification shall be made); (b) whether this Lease is in
full force and effect; (c) the date to which the Rent and
other charges have been paid; and (d) to the knowledge of
the signer of such certificate that the other party is not
in default in the performance of any covenant, agreement or
condition contained in this Lease, or if a default does
exist, specifying each such default of which the signer may
have knowledge. It is intended that any such statement
delivered pursuant to this Article may be relied upon by any
prospective purchaser or mortgagee of the Leased Premises or
any assignee of such mortgagee or a purchaser of the
leasehold estate.
ARTICLE 26. FINANCIAL STATEMENTS
During the term of this Lease, Lessee will, within
ninety (90) days after the end of Lessee's fiscal year,
furnish its financial statements to Lessor. Lessee's
financial statements shall include, at a minimum, a
consolidated balance sheet and statement of operations, and
do not need to be prepared by, but commencing with fiscal
1996, and thereafter, shall be reviewed by an independent
certified public accountant, but in any event shall be
prepared in conformity with generally accepted accounting
principles (hereafter "GAAP") and be represented and
warranted in writing as true and correct by the chief
financial officer or other authorized officer of Lessee.
Additionally, during the term of the Lease, Lessee will
within ninety (90) days from the end of each quarter of each
fiscal year after written request from Lessor, furnish
Lessor with Lessee's financial statements and operating
statements of the Leased Premises for such quarter. Lessor
shall have the right to require such financial statements
and operating statements on a monthly basis after the
occurrence of a default. Said quarterly (or monthly, if the
same may be requested by Lessor) statements do not need to
be prepared by an independent certified public accountant,
but shall be represented and warranted in writing as true
and correct by the chief financial officer or other
authorized officer of Lessee. The financial statements
shall conform to GAAP, and include, at a minimum, a balance
sheet and statement of operations.
ARTICLE 27. MORTGAGE
Lessee does hereby agree to clarify any provisions of
this Lease requested by any Mortgagee of record from time to
time, provided such clarifications are not substantial and
do not increase any of the Rents or obligations of Lessee
under this Lease or substantially modify any of the business
elements of this Lease.
ARTICLE 28. OPTION TO RENEW
If this Lease is not previously canceled or terminated
and if Lessee has materially complied with and performed all
of the covenants and conditions in this Lease after
applicable cure periods and is not currently in default,
then Lessee shall have the option to renew this Lease upon
the same conditions and covenants contained in this Lease
for Three (3) consecutive periods of Five (5) years each
(singularly "Renewal Term"). Rent during the Renewal Term
shall increase as defined in Article 4 hereof.
The first Renewal Term will commence on the day
following the date the original Term expires and successive
Renewal Terms would commence on the day following the last
day of the then expiring Renewal Term. Except as otherwise
provided in Article 15 hereof, Lessee must give ninety (90)
days written notice to Lessor of its intent to exercise this
option prior to the expiration of the original Term of this
Lease or any Renewal Term, as the case may be.
ARTICLE 29. MISCELLANEOUS PROVISIONS
(A) Any notice which any party hereto may desire or
may be required to give to any of the parties shall be in
writing and the mailing thereof by personal delivery
(including courier) or by certified mail return receipt
requested, to the respective parties' addresses set forth
hereinabove, with a copy to Xxxxx Xxxxxxxxxx, 0000 Xxxxxx
Xxxx Xxxxx, Xxxxxxxx, Xx. 00000, or to such other place
such party may by notice in writing designate as its address
shall constitute service of notice hereunder. Notices shall
be deemed delivered by the date on the return receipt, if
sent by certified mail, or on the date of delivery if sent
by personal delivery (as evidenced by the date of the
courier's receipt, if sent by courier). Any notice that is
rejected by any party shall be deemed delivered on the date
that it is rejected.
(B) The terms, conditions and covenants contained in
this Lease and any riders and plans attached hereto shall
bind and inure to the benefit of Lessor and Lessee and their
respective successors, heirs, legal representatives, and
assigns.
(C) This Lease shall be governed by and construed
under the laws of the State where the Leased Premises are
situate.
(D) In the event that any provision of this Lease
shall be held invalid or unenforceable, no other provisions
of this Lease shall be affected by such holding, and all of
the remaining provisions of this Lease shall continue in
full force and effect pursuant to the terms hereof.
(E) The Article captions are inserted only for
convenience and reference, and are not intended, in any way,
to define, limit, describe the scope, intent, and language
of this Lease or its provisions.
(F) In the event Lessee remains in possession of the
premises herein leased after the expiration of this Lease
and without the execution of a new lease and without
Lessor's written permission, Lessee shall be deemed to be
occupying said premises as a tenant from month-to-month,
subject to all the conditions, provisions, and obligations
of this Lease insofar as the same can be applicable to a
month-to-month tenancy except that the monthly installment
of Rent shall be One Hundred Fifty percent (150%) the amount
due on the last month prior to such expiration.
(G) If any installment of Rent (whether lump sum,
monthly installments, or any other monetary amounts required
by this Lease to be paid by Lessee and deemed to constitute
Rent hereunder) shall not be paid when due, or non-monetary
default shall remain uncured after the expiration of any
applicable cure period, Lessor shall have the right to
charge Lessee a late charge of $250.00 per occurrence if any
amount of Rent installment remains unpaid after the
expiration of applicable notice and cure periods or, with
respect to non-monetary default, if the same shall go
uncured after the first such occurrence in any 12 month
period. Said late charge shall commence after such
installment is due or non-monetary default goes uncured
after the expiration of any applicable cure period and
continue until said installment, interest and all accrued
late charges are paid in full or such non-monetary default
is cured.
(H) Any part of the Leased Premises may be conveyed by
Lessor for private or public non-exclusive easement purposes
at any time, provided such easement does not and shall not
interfere with the access to the Leased Premises,
visibility, or operations of the business of Lessee and
Lessee's use of the Leased Premises and Lessee consents
thereto in writing, such consent not to be unreasonably
withheld or delayed. All proceeds from any conveyance of an
easement shall belong solely to Lessor. Lessor agrees to
consent, such consent not to be unreasonably withheld or
delayed, and to join (at no cost or expense to Lessor) in
easements desired by Lessee for Lessee's use and enjoyment
of the Leased Premises.
(I) For the purpose of this Lease, the term "Rent"
shall be defined as Rent under Article 4, and any other
monetary amounts required by this Lease to be paid by
Lessee.
(J) Lessee agrees to cooperate with Lessor to allow
Lessor to obtain and use at Lessor's expense promotional
photographs of the Leased Premises, to the extent permitted
by Lessee's franchisor or licensor.
ARTICLE 30. REMEDIES
NON-EXCLUSIVITY. Notwithstanding anything contained
herein it is the intent of the parties that the rights and
remedies contained herein shall not be exclusive but rather
shall be cumulative along with all of the rights and
remedies of the parties which they may have at law or
equity.
ARTICLE 31. HAZARDOUS MATERIALS INDEMNITY
Except as may have been heretofore disclosed to Lessor
in writing prior to the effective date hereof, Lessee
covenants, represents and warrants to Lessor, its successors
and assigns, (i) that it has not used or permitted and will
not use or permit the Leased Premises to be used, whether
directly or through contractors, agents or tenants, and to
the best of Lessee's knowledge and except as disclosed to
Lessor in writing (Lessor acknowledges receipt and review of
the original Phase I Environmental Site Assessment, done for
Xxxxxxxx Properties, Inc. dated October 9, 1996 performed by
Sailors Engineering Associates, Inc., 0000 Xxxxxxxx Xxxxx,
Xxxxxxxxxxxxx, XX 00000 (Job # 962-182) and a reliance
letter, dated March 7, 1997 sent by Xxx X. Xxxxxxx whereby
Lessee and Lessor were given the right to rely on said
report), the Leased Premises has not at any time been used
for the generating, transporting, treating, storage,
manufacture, emission of, or disposal of any dangerous,
toxic or hazardous pollutants, chemicals, wastes or
substances as defined in the Federal Comprehensive
Environmental Response Compensation and Liability Act of
1980 ("CERCLA"), the Federal Resource Conservation and
Recovery Act of 1976 ("RCRA"), or any other federal, state
or local environmental laws, statutes, regulations,
requirements and ordinances in violation thereof ("Hazardous
Materials"); (ii) that there have been no investigations or
reports involving Lessee, or the Leased Premises by any
governmental authority which in any way pertain to Hazardous
Materials (iii) that the operation of the Leased Premises by
Lessee has not violated and is not currently violating any
federal, state or local law, regulation, ordinance or
requirement governing Hazardous Materials; (iv) that the
Leased Premises is not listed in the United States
Environmental Protection Agency's National Priorities List
of Hazardous Waste Sites nor any other list, schedule, log,
inventory or record of Hazardous Materials or hazardous
waste sites, whether maintained by the United States
Government or any state or local agency; and (v) that the
Leased Premises will not contain any formaldehyde, urea or
asbestos, except as may have been disclosed in writing to
Lessor by Lessee at the time of execution and delivery of
this Lease (including the report referenced above). Lessee
agrees to indemnify and reimburse Lessor, its successors and
assigns, for:
(a) any breach of these representations and
warranties, and
(b) any loss, damage, expense or
cost arising out of or incurred by Lessor which is the
result of a breach of, misstatement of or misrepresentation
of the above covenants, representations and warranties, and
(c) any and all liability of any
kind whatsoever which Lessor may, for any cause and at any
time, sustain or incur by reason of Hazardous Materials
discovered on the Leased Premises during the term hereof or
placed or released on the Leased Premises by Lessee, except
as may have been caused by Lessor;
together with all attorneys' fees, costs and disbursements
incurred in connection with the defense of any action
against Lessor arising out of the above. These covenants,
representations and warranties shall be deemed continuing
covenants, representations and warranties for the benefit of
Lessor, and any successors and assigns of Lessor and shall
survive expiration or sooner termination of this Lease. The
amount of all such indemnified loss, damage, expense or
cost, shall bear interest thereon at the lesser of 15% or
the highest rate of interest allowed by law and shall become
immediately due and payable in full on demand of Lessor, its
successors and assigns.
ARTICLE 32. ESCROWS
Upon a default by Lessee which is uncured after the
expiration of any applicable notice and cure period, or upon
the request of Lessor's Mortgagee, if any, Lessee shall
deposit with Lessor on the first day of each and every
month, an amount equal to one-twelfth (1/12th) of the
estimated annual real estate taxes, assessments and
insurance (if the insurance is to be purchased by Lessor)
("Charges") due on the Leased Premises, or such higher
amounts reasonably determined by Lessor as necessary to
accumulate such amounts to enable Lessor to pay all charges
due and owing at least thirty (30) days prior to the date
such amounts are due and payable. From time to time out of
such deposits Lessor will, upon the presentation to Lessor
by Lessee of the bills therefor, pay the Charges or at
Lessee's option, will upon presentation of receipted bills
therefor, reimburse Lessee for such payments made by Lessee.
In the event the deposits on hand shall not be sufficient to
pay all of the estimated Charges when the same shall become
due from time to time or the prior payments shall be less
than the currently estimated monthly amounts, then Lessee
shall pay to Lessor on demand any amount necessary to make
up the deficiency. The excess of any such deposits shall be
credited to subsequent payments to be made for such items.
If a default or an event of default shall occur under the
terms of this Lease, Lessor may, at its option, without
being required so to do, apply any Deposit on hand to cure
the default, in such order and manner as Lessor may elect.
ARTICLE 33. NET LEASE
Notwithstanding anything contained herein to the
contrary it is the intent of the parties hereto that this
Lease shall be a net lease and that the Rent defined
pursuant to Article 4 should be a net Rent paid to Lessor.
Any and all other expenses including but not limited to,
maintenance, repair, insurance, taxes, and assessments,
shall be paid by Lessee.
ARTICLE 34. COUNTERPART EXECUTION
This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and
all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, Lessor and Lessee have respectively
signed and sealed this Lease as of the day and year first
above written.
LESSEE: PARTY CITY OF ATLANTA, INC.
By: /s/ Xxxxx Xxxxxxxxxx
Its: CEO
Lessor's signature appears on the following
page
LESSOR: AEI NET LEASE INCOME & GROWTH
FUND
XIX LIMITED
PARTNERSHIP, a Minnesota limited partnership
By: AEI FUND MANAGEMENT XIX, INC., a
Minnesota corporation
By:/s/ Xxxxxx X Xxxxxxx
Xxxxxx X. Xxxxxxx, President
EXHIBIT "A"
All that tract or parcel of land lying and being in Land Xxx
000, 0xx Xxxxxxxx, Xxxx of Gainesville, Hall County,
Georgia, and being more particularly described as follows:
To find the Point of Beginning Commence at the
intersection of the southerly right-of-way line of Georgia
State Route 53 (r/w varies) and the easterly right-of-way
line of Relocated Green Hill Circle (r/w varies), if said
right-of-way lines were extended to form a point instead of
a miter.
THENCE South 48 degrees 54 minutes 00 seconds East for
a distance of 23.86 feet along the extension of the
southerly right-of-way line of Georgia State Route 53 to an
iron pin set at the intersection of the southerly right-of-
way line of Georgia Highway 53 and the easterly right-of-way
line of Relocated Green Hill Circle, said iron pin set being
the Point of Beginning.
THENCE South 48 degrees 54 minutes 00 seconds East for
a distance of 223.00 feet along the southerly right-of-way
line of Georgia State Route 53 to an iron pin set at the
northwesterly corner of Lot 2.
THENCE South 41 degrees 06 minutes 00 seconds West for
a distance of 60.00 feet leaving the southerly right right-
of-way line of Georgia State Route 53 and along the westerly
line of Lot 2 to a "V" cut in a curb line.
THENCE North 48 degrees 54 minutes 00 seconds West for
a distance of 20.50 feet along the westerly line of Lot 2 to
an iron pin set.
THENCE South 41 degrees 06 minutes 00 seconds West for
a distance of 136.48 feet along the westerly line of Lot 2
to an iron pin set.
THENCE North 48 degrees 54 minutes 00 seconds West for
a distance of 166.20 feet along the northerly line of a
Detention Pond to an iron pin set.
THENCE South 86 degrees 55 minutes 03 seconds West for
a distance of 40.85 feet along the northerly line of a
Detention Pond to an iron pin set on the easterly right-of-
way line of Relocated Green Hill Circle.
THENCE the following course and distances along the
easterly right-of-way line of Relocated Green Hill Circle to
the Point of Beginning.
Along a curve to the right having a radius of 260.00
feet and an arc length of 127.79 feet being subtended by a
chord of North 27 degrees 01 minutes 13 seconds East for a
distance of 126.51 feet to a hub and tac found
THENCE North 41 degrees 03 minutes 05 seconds East for
a distance of 83.16 feet to a hub and tac found.
THENCE South 87 degrees 34 minutes 02 seconds East for
a distance of 30.54 feet to an iron pin set at the
intersection of the southerly right-of-way line of Georgia
State Route 53, said iron pin set being the Point of
Beginning.
Said tract contains 1.045 acres and is depicted as "Lot 1"
on the Final Plat Phase 1, Gainesville Marker, recorded at
Plat Slide 595, Page 39A, Hall County, Georgia records.
TOGETHER WITH easements appurtenant to the subject property
contained in that certain Declaration of Restrictive
Covenants and Grant of Easements by Xxxxxxxx Properties
Inc., dated February 14, 1997, recorded in Deed Book 2806,
Page 218-239, aforesaid records, as amended by Amended
Declaration of Restrictive Covenants and Grant of Easements
dated September 4, 1997, recorded in Deed Book 2962, Page
237, aforesaid records.
Exhibit B
INSURANCE REQUIREMENTS
The following instructions shall be followed with respect to
requesting insurance policies and certificates of insurance
on the Leased Premises:
1. An original property insurance policy for "All Risk" or
"Special Cause of Loss Form" perils including all exclusions
and endorsements will be required. The policy (s) shall be
written with a coverage amount of full Replacement Cost of
the improvements on the property. The insured property
shall be described by street address. In the event that it
is impossible to furnish the original policy in time for the
closing on AEI's purchase of the property, an Insurance
Certificate, form XXXXX 27, detailing the policy coverage
forms, shall be acceptable. The original policy shall be
forwarded to AEI without delay.
2. If the coverage referred to in Item 1 above is written
via a blanket insurance policy, a Certificate of Insurance,
form XXXXX 27, with a Statement of Values, attached will be
acceptable.
3. All property insurance policies shall include a
Building Ordinance Compliance Endorsement.
4. All property insurance policies shall be written with
no coinsurance.
5. The maximum deductible for any property insurance
policy shall be $ 1,000.
6. Property insurance shall include Loss of Rents
insurance in an amount to cover at least a 12 month period
with the loss proceeds payable to AEI.
7. Flood insurance shall be required, in amounts
reasonably acceptable to AEI, unless evidence is provided
that the property is not located in a designated flood area
or storm surge area. Satisfactory evidence to determine if
coverage is necessary shall be a Base Flood Elevation
Certificate and/or a National Geodetic Vertical Datum (NGVD)-
National standard reference datum for elevations, formerly
referred to as mean Sea Level (MSL) of 1929. If the
coverage is necessary, it shall be in the following amount:
$517,600. The deductible shall not exceed $10,000 per
occurrence.
8. Earthquake insurance shall be required, in the amounts
acceptable to AEI, unless evidence is provided that the
Leased Premises is not located in a federally designated
earthquake prone area or is not an ISO High Risk Earthquake
Zone. The deductible shall not exceed $25,000 per
occurrence.
9. Comprehensive general liability coverage shall be
written, with limits of $2,000,000 per occurrence and
$5,000,000 general aggregate. These limits can be
accomplished either by underlying liability policies or by
the sum of the underlying policy plus an excess or umbrella
policy. The coverage shall include an endorsement in favor
of AEI which is ISO form CG 20 11 11 85 Additional Insured -
Managers Or Lessors Of Premises", or an equivalent
endorsement. The coverage shall be written on an Occurrence
Form Basis and shall include Broad Form Contractual
Liability coverage. The Claims Made form of coverage is not
acceptable. The maximum deductible for any liability
insurance policy shall be $10,000.
10. If liquor is sold on the premises of the property,
Liquor Liability coverage (also known as Dram Shop coverage)
shall be required. If the state in which the property is
located has a maximum recovery statute, the coverage shall
be written in that amount. Otherwise the coverage shall be
written with limits of $2,000,000 per occurrence and
$5,000,000 general aggregate.
11. N/A
12. "The additional Requirements For All Insurance
Policies" are as follows:
a. The following will be used for the definition of
"AEI"-. AEI Net Lease Income & Growth Fund XIX Limited
Partnership, AEI Fund Management XIX, Inc., Xxxxxx X.
Xxxxxxx, its Individual General Partner, its successors and
assigns, and any other owners as their interests may appear.
b. All property policies shall name AEI as Loss Payee
and as an Additional Insured.
c. All liability policies shall name AEI as an
Additional Insured.
d. All property and liability policies shall contain
Waiver of Subrogation Endorsements waiving all rights of
subrogation, if any, against AEI as defined above.
e. AEI shall receive a thirty (30) day written notice
in the event of cancellation, material amendment, or
expiration without renewal of the policies. The following
words will be crossed out: "will endeavor to mail" and "but
failure to mail such notice shall impose no obligation or
liability of any kind upon the company, its agents or
representatives".
f. All insurance companies shall be approved in
writing by AEI, such approval not to be unreasonably
withheld or delayed subject to the terms of hereof.
g. All property and liability insurance policies
maybe reviewed no more frequently than quarterly regarding
their coverages and adjusted to commercially reasonable
limited and deductibles at the option of AEI.
13. These requirements are the minimum of AEI and no way
prohibits the tenant of purchasing additional coverages to
meet the needs of the Lessee.
Xxxxxxx Xxxxx
LANDLORD'S SUBORDINATION AGREEMENT
The undersigned Landlord is the record owner and lessor to
PARY CITY OF ATLANTA, INC. ("Tenant") of the real property
commonly known as 000 Xxxxxxxxxxx Xxx, Xxxxxxxxxxx, XX
00000 (the "Premises").
Landlord has been advised that XXXXXXX XXXXX BUSINESS
FINANCIAL SERVICES INC. ("MLBFS") has or is about to extend
or continue to extend credit to or for the benefit of
Tenant, or for the benefit of a third party based upon the
credit and/or collateral of Tenant, and in connection
therewith that Tenant has granted or is about to grant to
MLBFS a security interest in, among other collateral, the
following property of Tenant: to wit *, whether now owned or
hereafter acquired by Tenant ("MLBFS' Collateral") Among
other conditions thereof, MLBFS has required that Landlord
executed and deliver this Agreement.
Accordingly, and for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged. Landlord
hereby agrees as follows:
1. Landlord hereby subordinates for the benefit of MLBFS,
and with respect to all present and future obligations of or
secured by Tenant to MLBFS, any right or interest in MLBFS'
Collateral which, but for this Agreement, would or might be
prior to the security interests of MLBFS, as aforesaid; and
Landlord agrees so long as Tenant shall be obligated to
MLBFS, it will not, without the prior consent of MLBFS,
exercise any right under local law to levy or distrain upon
any of MLBFS' Collateral.
2. Landlord further agrees that in the event that MLBFS
shall at any time seek to take possession of or remove all
or any part of MLBFS' Collateral from the Premises, Landlord
will not hinder the same or interfere or object thereto, and
Landlord hereby consents to MLBFS' entry upon the Premises
for such purposes; provided, however, that: (I) any such
removal shall be made during reasonable business
hours,**(ii) MLBFS shall not, without the prior written
consent of Landlord, conduct any public or auction sale on
the Premises; and (iii) MLBFS shall promptly at its expense
repair any damage to the Premises directly caused by any
such removal by MLBFS or its agents of MLBFS' Collateral
from the Premises.
This agreement shall be binding upon and shall inure to the
benefit of Landlord and it successors, assigns, heirs and/or
personal representatives, as applicable, and MLBFS and its
successors and assigns.
Dated as of
Landlord: see next page
By:
Addendum to Landlord's Subordination
Agreement
* all removable equipment, inventory, removable
trade fixtures, and other personal property, including but
not limited to such items as display cases, counters, and
shelving, (but not including ceilings, lighting, HVAC,
plumbing fixtures, or other items normally considered part
of the real property)
** after five business days written notice to
Landlord.
Dated as of June 12, 1997
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
By: AEI FUND MANAGEMENT XIX, INC.
By: /s/ Xxxx X Xxxxxx
Xxxx X Xxxxxx, Secretary, Treasurer
