Exhibit 10.3
THIS
LEASE, made as of this 17 th
day of July, 1995 by & between DMK Associates,
L.P., a Virginia Limited Partnership, whose address is P O Box
2500, Norfolk, VA 23501-2500
(hereinafter referred to as "LANDLORD") and Dollar Tree
Stores, Inc. a Virginia corporation, whose address is 2555
Ellsmere Avenue, _Norfolk,
Virginia 23513, (hereinafter referred to as
"TENANT").
That
in consideration of the mutual covenants and agreements herein
contained, it is
agreed
by and between Landlord and Tenant as follows:
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A. BASIC
LEASE PROVISIONS: The following constitute
the basic provisions of this Lease:
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Volvo
Parkway & Battlefield
Blvd
The
retail sale of general merchandise including, but not limited
to, home decor and accessories, costume jewelry, bathroom
accessories, toys, stationery, auto
accessories, apparel, kitchen
accessories, novelty candy and
snacks. Tenant agrees that no one
category will become the principal product of the retail
business, and Landlord covenants that Tenant will be permitted
to occupy the Premises for the entire Term for the uses herein
specified.
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4. Delivery
Date for Possession of Premises
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5. Lease
Commencement Date
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7. Option
1 Option 2 Option 3
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8. Address
for notices: Landlord:
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Original
Term 1-Four Years
10. Option 1 1-Four
Years
Sixty
days from dale of delivery of possession as stated in A.4
above or the date Tenant opens for
business, whichever is earlier.
Dollar
Tree Stores, Inc. Real Estate Department 2555 Ellsmere Avenue
Norfolk, VA 23513
. Original
Term 1,333,333.00 3.00%
Option
1 1,500,000.00 3.00%
Option
2 1,666,667.00 3.00%
Option
3 1,833,333.00 3.00%
12. Estimated
Operating Charges for the first year per square
foot
Landlord
represents the first year's charges will not vary more than 5%
from the amount above stated charges.
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13. Annual
increases for Charges for Common Area Maintenance will not exceed
more than Fifteen percent (15.00%) of those charges for the
previous year.
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14. Radius
Restriction: None
15. Security
Deposit: None
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B. DEMISED PREMISES: Landlord hereby Leases to Tenant the demised premises
("Premises") described as follows:
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1. The
space within a one-story unit (without basement, balcony, or
mezzanine) having an approximate total square footage of 5,000.00
square feet as measured from the exterior face of any exterior
walls and to the centerline of common walls, identified as
Unit #16 and outlined in red on the site plan, attached hereto as
Exhibit "A". The "Shopping Center" is more fully described in the
legal description, attached hereto as Exhibit "B".
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2. Landlord
reserves the right to remeasure the Premises to determine the gross
leasable area of the Premises. In the event the remeasurement
discloses that the actual gross leasable area of the Premises as
set forth in the preceding paragraph is incorrect, Landlord and
Tenant shall execute an amendment to the Lease (i) reflecting
the actual gross leasable area of the Premises, (ii) adjusting the
Minimum Rent based on the new square footage, and (iii)
adjusting Additional Rent (as defined in Section Y.12 of this
Lease) and all other charges accruing under the Lease which are
based on the actual gross leasable area of the Premises. In the
event of an adjustment, Tenant will pay any excess rent owed to
Landlord within fifteen (15) days after receipt of a statement, or
Tenant shall take a credit for any overpayment against the next
minimum rent and additional rent payments.
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1. The
term of this Lease shall commence upon the earlier
of:
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(a) The date which is sixty (60) days after the date Landlord delivers the
Premises to Tenant, or
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(b) The
date on which Tenant opens the Premises for business to the
public,
such
date being hereinafter called the Commencement Date and
expiring on the Lease Expiration Date in Section A.6 above,
unless sooner terminated as provided herein. Lease Year shall
consist of twelve (12) full calendar months, and the
first Lease Year shall commence on the Commencement Date
if the Commencement Date shall occur on the first day of a
calendar month. If the Commencement Date does not occur on the
first day of a calendar month, the first Lease Year shall
consist of the partial first month plus the following twelve
(12) full calendar months. Each succeeding Lease Year shall be
twelve (12) consecutive months following the expiration of the
first Lease Year.
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2. At
the time the Commencement Date is established, upon the request of
Landlord, the parties will promptly execute a written instrument
stipulating the Commencement Date and Expiration Date of the term
of this Lease.
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1. Landlord shall deliver the Premises to Tenant on 10/01/1995. If Landlord is
unable to deliver the Premises within ten (10) days after the turnover date
specified, the Lease shall be null and void with no further
obligation on the part of the Landlord or the
Tenant. If the Landlord's failure to perform
such terms,
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covenants
and conditions is due to any strike, lockout, labor dispute,
civil commotion, warlike operation, invasion, rebellion,
hostilities, military or usurped power, sabotage, governmental
regulations or controls, Acts of God, fire or other casualty
which is beyond the reasonable control of Landlord, then the
time period for the turnover of the premises shall be extended
for each day of delay. TIME IS OF THE ESSENCE OF
THIS LEASE.
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2. Landlord
warrants that the heating, ventilating and air conditioning system
(HVAC) for the Premises will be in good working order on
the date the Premises are turned over to the Tenant,
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3. Landlord
and Tenant's work are detailed in Exhibit C of this
Lease.
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1. Minimum
Rent. Tenant agrees to pay to Landlord, at its office or other
place as Landlord may from time to time designate, as Minimum
Rent for the Premises during the term of this Lease, without any
deduction or setoff, $8.00 per square foot, $3,333.33 in advance on
the first day of each calendar month. The amounts to be paid by
Tenant for rent and additional rent shall be prorated on a per diem
basis for any partial month in the first Lease Year.
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2. Percentage
Rent. As a further inducement for Landlord's entering into this
Lease, Tenant shall pay to Landlord, in addition to the
Minimum Rent, a percentage rate ("Percentage Rent") equal to the
product obtained when the amount of Tenant's Gross Sales {as herein
defined) for any Lease Year in excess of the Percentage Rent
Breakpoint is multiplied by the Percentage Rent Rate. The
Percentage Rent for each Lease Year shall be due and payable once
Gross Sales exceed the Percentage Rent Breakpoint for such Lease
Year, Tenant shall make estimated monthly payments, on or before
the fifteenth (15th) day of each calendar month, in an amount equal
to the product of the Percentage Rent Rate times the Gross Sales
for the prior month (for the month in which the Gross Sales exceed
the Percentage Rent Breakpoint, such payments shall be made only on
the excess above the Percentage Rent Breakpoint).
Tenant's obligation for the payment of Percentage Rent shall
survive the expiration or earlier termination of this
Lease.
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3. Gross
Sales. The term "Gross Sales" shall mean the aggregate gross amount
of all sales of merchandise made and all charges for services
performed in the Premises (including orders taken in the: Premises
for delivery from places other than the Premises), whether
wholesale or retail, and whether cash or credit, and including the
value of all consideration other than money received for any of the
foregoing, and all amounts received by Tenant from conducting
business on or from the Premises, including without
limitation, all display fees, slotting allowances, promotional
considerations, rebates or other payments received by Tenant to
stock, promote or advertise any product, less (1) cash refunds or
credit for merchandise returned if the price of such merchandise
was originally included in Gross Sales, (2) the amount of sales and
excise taxes to the extent included in sales, and (3) the
amount of sales representing uncollectible bad checks. Merchandise
transferred from the Premises to other stores of Tenant, or
merchandise returned for credit to factories or jobbers shall not
be included in determining Gross Sales. No deduction shall be
allowed for uncollected or uncollectible credit or charge
accounts.
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(a) Reporting
of Gross Sales. Tenant shall submit to Landlord on or before the
fifteenth (15th) day of each calendar month a complete and
accurate record of Tenant's gross sales for the preceding calendar
month. On or before the thirtieth (30th) day of the month
following the end of each Lease Year, Tenant shall furnish to
Landlord a statement certified by Tenant's corporate financial
officer of the Gross Sales for the preceding Lease
Year.
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(b) Books
of Account. Tenant agrees to prepare and maintain at Tenant's
principal office, accurate records of the Gross Sales, which
records shall be kept in accordance with generally accepted
accounting procedures, together with local sales tax returns of
Tenant relating to Tenant's Gross Sales. The foregoing shall be
open at all reasonable times to Landlord or its representatives to
enable Landlord to determine the accuracy of the statements of
Tenant's Gross Sales during and for three (3) years after the end
of the Lease Year to which the same relate. In the event an
examination or audit of records of Tenant discloses that Gross
Sales as reported in the aforesaid statements were less, by two
percent (2%) or more than the actual Gross Sales for any Lease
Year, Tenant agrees to pay Landlord the reasonable cost of any such
examination or audit. If such examination or audit discloses a
discrepancy of three percent (3%) or more, and such under-reporting
of Gross Sales by Tenant shall be deliberate in bad faith, Landlord
shall also have the right to terminate this Lease.
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Landlord
shall have the right to inspect the records of Tenant in
connection with sales made by Tenant from other stores
operated by it, but only in the event such examination becomes
necessary to ascertain the Gross Sales made
by Tenant from the Premises.
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1. Real Estate Taxes and Assessments.
Tenant agrees to pay Tenant's proportionate share of all real
estate taxes and assessments, together with any and all expenses
incurred by Landlord in negotiating, appealing or contesting such
taxes and assessments, both general and special, levied and
assessed against the land, buildings, and all other
improvements which may be added thereto, or constructed with the
Shopping Center. Tenant's proportionate share shall be the total
amount of such taxes and assessments multiplied by a fraction, the
numerator of which shall be the number of square feet of floor area
within the Premises, and the denominator of which shall be the
gross leasable area of the existing buildings within the Shopping
Center at the time such taxes were levied or assessed, but
excluding the floor area of any
buildings within the Shopping Center which are separately assessed
for tax purposes and billed to an entity other than Landlord or
paid directly by an entity other than Landlord, even though billed
to Landlord.
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During
the term of this Lease, or any renewals thereof, Tenant shall
pay to Landlord, monthly in advance, an amount equal to
one-twelfth (l/12th) of Tenant's proportionate share of real
estate taxes and assessments for the current tax year, as
reasonably estimated by Landlord. If Tenant's proportionate
share of real estate taxes and assessments with respect to any
tax year is less than the total amount theretofore paid by
Tenant for such period, the excess shall be credited against
the payments next becoming due. If Tenant's proportionate
share of real estate taxes and assessments for any tax year
exceeds the total amount theretofore paid by Tenant for such
period, Tenant shall, upon receipt of invoices from Landlord,
pay the difference between the actual amount paid by Tenant
and Tenant's proportionate share of real estate taxes and
assessments.
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2. Municipal, County, State or Federal Taxes. Tenant shall pay, before
delinquent, all municipal, county and state
or federal taxes assessed against any
Leasehold interest of Tenant or any fixtures, furnishings, equipment,
stock-in-trade or other personal property of any kind
owned, installed or used in or on the
Premises.
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3.
Should any governmental taxing authority levy, assess, or impose
any tax, excise or assessment (other than income, inheritance, gift
or franchise tax) upon or against the rentals payable by
Tenant to Landlord, by way of substitution for any
existing tax on land and buildings, Tenant shall be
responsible for and shall pay any such tax, excise or assessment,
or shall reimburse Landlord for the amount hereof, as the case may
be.
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1. Common
Areas. Landlord grants to Tenant and Tenant's customers and
invitees the right to use, in common with all others to whom
Landlord has or may hereafter grant rights to use same, the Common
Areas located within the Shopping Center. The term "Common Areas",
as used in this Lease, shad mean the parking areas, roadways,
pedestrian sidewalks, loading docks, delivery areas, landscaped
areas, service courts, open and enclosed courts and malls, fire
corridors, meeting areas and public restrooms, and all other areas
or improvements which may be provided by Landlord for the common
use of the tenants of the Shopping Center. Landlord hereby reserves
the following rights with respect to the Common Areas:
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(a) To
establish reasonable rules and regulations for the use
thereof;
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(b) To
use or permit the use by others to whom Landlord may have granted
such rights for promotional activities!;
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(c) To
close all or any portion thereof as may deemed necessary by
Landlord's counsel to prevent a dedication thereof or the accrual
of any rights to any person or
the public therein;
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(d) To change the layout of such Common Areas, including the right to
reasonably add to or subtract from
their shape
and size, whether by the
addition of building improvements or otherwise, and may make
installations^ and/or construct or erect
buildings, structures, booths therein
or thereon and move or remove the same and shall have the right to
retain revenue, ''
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. from income producing events whether
or not conducted for promotional
purposes or by or through the Merchant's Association, if any;
and
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(e) Landlord
shall operate, manage, equip, light, repair and maintain said
Common Areas for their intended purposes in an efficient and
economical manner and may from time to time change the size,
location, elevation, nature and/or use of any Common
Areas.
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2.
Common Area Charge, Tenant shall pay to Landlord as a "Common Area
Charge" a proportionate share of all costs and expenses of every
kind and nature paid or incurred by Landlord in operating,
maintaining, and repairing the Common Areas. Such costs and
expenses shall include but not be limited to cleaning, lighting,
repairing, maintaining, and replacing all common area improvements
(provided, however, that any replacement of a common area
improvement which is deemed a capital improvement by generally
accepted accounting principles shall be amortized over its useful
life); including without limitation, paving, roadways, sprinkler
equipment (including standby charges), driveways, sidewalks, curbs,
culverts and drainage facilities, barriers, retaining walls,
fences, directional and Shopping Center signage (other than signs
to be maintained by individual tenants), sewer and water supply
lines and related facilities; snow removal, parking lot striping,
painting, and painting of exterior walls, landscaping,
providing security, providing public liability, property damage,
fire and extended coverage and such other insurance as Landlord
deems appropriate; including, but not limited to, the cost of
Landlord's insurance provided for in Section L; total compensation
and benefits (including premiums for Workmen's Compensation and
other insurance) paid to or on behalf of employees; personal
property taxes, supplies, fire protection and fire hydrant charges,
water and sewer charges, utility charges, licenses and permit fees,
reasonable depreciation of equipment used in operating and
maintaining the Common Areas and rent paid for leasing such
equipment, and administrative costs equal to fifteen (15%) per cent
of the total cost of all the foregoing items (excluding insurance
premiums paid by Landlord pursuant to Section L hereof). Tenant's
Common Area Charge shall be determined by multiplying the total
cost incurred by Landlord by the ratio of the square feet within
the Premises to the gross leasable area within all of the existing
buildings in the Shopping Center as of the date of the
billing.
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Tenant's
Common Area Charge shall be paid in monthly installments on
the first day of each month in an amount to be estimated by
Landlord. Within ninety (90) days following the end of the
period used by Landlord in estimating Landlord's cost,
Landlord shall furnish to Tenant a detailed statement of the
actual amount of Tenant's proportionate share of such Common
Area Charge for such period. Within fifteen (15) days
thereafter, Tenant shall pay to Landlord or Landlord shall
remit to Tenant, as the case may be, the difference between
the estimated amounts paid by Tenant and the actual amount of
Tenant's Common Area Charge for such period as shown by such
statement, subject to Section A. 12 and A. 13.
The
Common Area Charges described in this Section G shall be
subject to audit
by
a certified public accounting firm of Tenant's choice, at the
address Landlord
set
forth in this Lease, at Tenant's expense during regular
business hours for
one
(1) year following the end of the period used by Landlord
in estimating
. Landlord's
cost. Landlord shall use its best efforts to operate the
center
economically
and efficiently.
H. UTILITIES
AND RUBBISH DISPOSAL
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1.
Gas and Electric Charges. Commencing with the date on which
Landlord delivers the Premises to Tenant, Tenant shall pay for gas,
if the same is available to the Premises, electric current and all
other utilities required for the proper operation of Tenant's
business, together with all taxes levied or other charges on
such utilities, and governmental charges based on utility
consumption. In the event Tenant's utilities shall be
separately metered from all other tenants of the Shopping
Center, Tenant shall, at its sole cost arid expense, pay for the
cost of installation of such meters and any and all related costs
and expenses, unless such costs and expenses are the express
responsibility of Landlord pursuant to Exhibit "C" of this
Lease.
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2. Water
and Sewer Charges. Commencing on the date on which Landlord
delivers the Premises to Tenant, Tenant shall pay all water rents,
all charges resulting from any sprinkler system and sewer charges
charged against the Premises.
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If
any such utilities are not separately metered or assessed or
are only partly separately metered or assessed and are used in
common with other tenants of the Shopping Center, Tenant shall
pay to Landlord an apportionment of such charges for utilities
used in common, computed by multiplying such charges
by
; • ' the
ratio of square feet within the Premises to the square feet of
all tenants
! using
such common facilities, in addition to Tenant's
payments of the separately
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Rubbish Disposal. In the event Landlord shall acquire and
install facilities in
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the Shopping Center for the consolidation of accumulated
rubbish, Tenant shall
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be permitted to use said facilities at the rates reasonably
determined by
Landlord,
provided that the rates charged by Landlord are competitive
with
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other rubbish removal companies in the area.
f In no event shall Landlord be liable for the quality, quantity, failure, or
I interruption of the foregoing utility and rubbish disposal services to the
' Premises
unless caused by Landlord's negligence or willful
acts.
j I. USE
OF PREMISES BY TENANT
1. Tenant's
Use of Premises will be for the permitted use
set forth in Section A.3
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2. Trade
Name. Tenant agrees to conduct its business in the Premises under
the name of DOLLAR TREE.
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3. Operation
of Business. Tenant agrees to open its store for business, fully
fixtured, stocked and staffed and to continuously operate in 100%
of the Premises during the hours set by Landlord for all
Tenants of the Shopping Center, on all business days the Shopping
Center is open for business, except where Tenant is prevented from
doing so by strikes, casualty or other causes beyond Tenant's
control. In no event, however, will Tenant be open for business
after 10:00 PM or before 9:00 AM on any day without Landlord's
prior written consent. Tenant shall be permitted to close the
Premises for a period not to exceed three (3) days per year to
conduct inventory or due to the death of a store
manager.
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J. TENANT'S
COVENANTS WITH RESPECT TO OCCUPANCY
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1. To
occupy the Premises in a safe and careful manner in compliance with
all laws, ordinances, rules, regulations and orders of any
governmental bodies having jurisdiction over the Premises, and
without committing or permitting waste;
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2. To
neither do nor suffer anything to be done or kept in or about the
Premises
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which
contravenes Landlord's insurance policies or increases the
premiums
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3. To
keep its show or display windows, canopy and electric signs lighted
until at least 9:30 PM local time of each day or until a time which
is thirty (30) minutes after the close of each business day,
whichever is later;
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4. To
permit no reproduction of sound which is audible outside the
Premises nor permit odors to be dispelled from the
Premises;
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5. To place no sign on the exterior
of the Premises or on the interior surface of any windows of
the Premises (except for Tenant's standard window decal
treatment which in no event shall occupy more than fifteen percent
(15%) of said window) unless it meets the standards as set forth in
Exhibit D attached hereto and made a part hereof and without also
obtaining Landlord's prior written consent, and to maintain in good
repair and promptly remove and repair any damage caused by such
permitted sign;;. Tenant agrees not to display any pennants, search
lights, window signs, balloons, or similar temporary
advertising media. Tenant may display banners inside the premises
within two (2) feet from the front of the store as long as they are
professionally prepared. Tenant agrees to maintain its signs in
good states of repair and save Landlord-harmless from any
loss, cost, or damage as a result of their condition and
shall-'
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repair
any damage which may have been caused by the erection,
existence, maintenance or removal of such signs, Upon
vacating the storeroom. Tenant agrees to remove all signs and
repair all damages caused by such removal.
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6. To
place no merchandise, sign or other thing of any kind in the
vestibule or entry outside of the Premises or on the sidewalks or
other Common Areas adjacent thereto or elsewhere on the exterior of
the Premises;
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7. To
park Tenant's vehicles and to require all employees to park only in
such places as may be designated from time to time by Landlord for
the use of Tenant and its employees, and specifically not to permit
parking by any of them in any service court area (Landlord reserves
the right to have towed, at the owner's cost and expense, any
automobile parked in violation of this clause);
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8. To
keep any refuse in proper containers in the interior of the
Premises until the same is removed from the Shopping Center and to
permit no refuse to accumulate around the exterior of the
Premises;
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9. To
neither load nor unload or permit the loading or unloading of
merchandise, equipment or other property from any doors of the
Premises that open onto the front sidewalk areas, nor from any
other doors except from the rear of the Premises and to
use its best efforts to prevent the parking or standing
of vehicles and equipment upon Shopping Center land except when
actually engaged in loading or unloading;
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10.
To conduct no auction, fire or going-out-of-business sale without
the prior written consent of Landlord;
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11. To
permit Landlord free access to the Premises at all reasonable times
after notice to Tenant (except in the event
of an emergency when no prior notice shall be required) for the
purpose of examining the same or making alterations or repairs to
the Premises that Landlord may deem necessary for the safety or
preservation thereof;
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12. To
adequately heat and cool the Premises;
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13. To
permit no Hen, notice of intention to file lien or other charges
(whether arising out of work of any contractor, mechanic, laborer
or material man or any mortgage, condition sale,
security agreement or chattel mortgage otherwise) which might
be or become a lien or encumbrance or charge upon the Premises or
any part thereof or the income therefrom, and to suffer no other
matter or thing whereby the estate, right and interest of Landlord
in the Premises or any part thereof might be impaired;
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14. To
solicit no business in the Common Areas, nor distribute handbills
or other advertising matter to customers, nor place the same in or
on automobiles in the Common Areas;
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15. To
comply with all reasonable rules and regulations which Landlord may
from time to time establish and uniformly enforce for all tenants
of the Shopping Center for the use and care of the Premises, the
Common Areas, and other facilities and buildings on the Shopping
Center;
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16. To
cooperate fully with Landlord and other tenants of the
Shopping Center in promoting the use of trade names and
slogans as may be adopted for the Shopping Center and in all
promotional and advertising campaigns;
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17. To
shut off all exhaust fans, if any servicing the Premises, at all
times when Premises are closed; if Tenant's Premises front on an
enclosed mall Tenant shall maintain positive air pressure so as to
prevent the drawing of heated or cooled air from the enclosed mall
and shall keep the Premises heated or air conditioned, as the case
may be, to at least the same minimum temperature (in the case of
heat) or at the same maximum temperature (in the case
of
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