Lease

 

 

WARWICK MALL

 

INDEX TO LEASE

 

Article		Caption		Page
I.		BASIC DATA		1
II.		PREMISES		2
III.		TERM OF LEASE		3
IV.		MINIMUM RENT		4
V.		PERCENTAGE RENT		4
VI.		CONDITION OF PREMISES		8
VII.		ADDITIONAL RENT - TAXES		9
VIII.		MAINTENANCE AND OPERATION; TENANT’S CONTRIBUTION		11
IX.		UTILITIES		13
X.		USE OF PREMISES		13
XI.		OTHER STORES		20
XII.		PROMOTIONAL OR MARKETING FUND		20
XIII.		MAINTENANCE OF BUILDING, ETC.		21
XIV.		INDEMNITY AND LIABILITY INSURANCE		23
XV.		LANDLORD’S ACCESS TO PREMISES		25
XVI.		INSURANCE		25
XVII.		DAMAGE CLAUSE		26
XVIII.		EMINENT DOMAIN		28
XIX.		BANKRUPTCY OR INSOLVENCY		29

 

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XX.		LANDLORD’S REMEDIES			30
XXI.		MISCELLANEOUS PROVISIONS			33
		21.1.	Waiver		33
		21.2.	Covenant of Quiet Enjoyment		34
		21.3.	Status Report		34
		21.4.	Notice to Mortgagee and/or Ground Lessor		35
		21.5.	Assignment of Rents		35
		21.6.	Mechanic’s Liens		36
		21.7.	No Brokerage		36
		21.8.	Definition of Additional Rent		36
		21.9.	Landlord’s Fees and Expenses		36
		21.10.	Invalidity of Particular Provisions		37
		21.11.	Provisions Binding, Etc.		37
		21.12.	Governing Law		37
		21.13.	Recording		37
		21.14.	Notices		37
		21.15.	When Lease Becomes Binding		38
		21.16.	Paragraph Headings		38
		21.17.	Lease Superior or Subordinate to Mortgage and Sale-Leaseback		39
		21.18.	Holding-Over		40
		21.19.	Interest		40
		21.20.	Price Index		40
		21.21.	Expansion		41
		21.22.	Other Agreements		44
		21.26.	Intentionally Omitted		44
		21.14.	REIT Financing Provision		44
		21.26.	Intentionally Omitted		44
		21.26.	Intentionally Omitted		44
		21.27.	Intentionally Omitted		44
		21.28.	Tenant’s Identity Representation		44
		21.29.	Intentionally Omitted		45
		21.30.	Special Right of Termination		46
Guarantee
Exhibit A - Plan
Exhibit B - Store Remodeling Regulations

 

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INDENTURE OF LEASE

 

WARWICK MALL

 

THIS INDENTURE OF LEASE made as of the 20th day of August, 2003, by and between WARWICK MALL L.L.C., a Rhode Island limited liability company, having a mailing address c/o Bliss Properties, Inc., P.O. Box 2513, Providence, RI 02906-0513 (hereinafter referred to as “Landlord”), of the one part, and the Tenant named in Section 1.1. below (hereinafter referred to as the “Tenant”) of the other part.

 

W I T N E S S E T H :

 

ARTICLE I

Basic Data

 

Section 1.1 .  The following sets forth basic data hereinafter referred to in this lease, and, where appropriate, constitute definitions of the terms hereinafter listed.

 

Tenant :  Vitamin World, Inc.

 

State of Incorporation :  Delaware.

 

Present Mailing Address of Tenant :  4320 Veterans Memorial Highway, Holbrook, NY 11741.

 

Tenant’s Trade Name : Vitamin World.

 

Lease Term :  Commencing on the date determined in accordance with the provisions of Section 3.2. of this lease and continuing until the expiration of seven (7) years (plus the partial calendar month, if any) from and after said commencement date, unless sooner terminated as provided herein.

 

Minimum Rent Payment : For and with respect to the first (1 st ) and second (2 nd ) twelve (12) full calendar month periods of the term of this lease (plus the partial calendar month, if any, from and after the term commencement date), at the rate of Sixty-seven Thousand Five Hundred and 00/100 DOLLARS ($67,500.00) per annum, payable at the rate of Five Thousand Six Hundred Twenty-five and 00/100 DOLLARS ($5,625.00) per calendar month, and proportionately at such rate for any partial month.

 

For and with respect to the third (3 rd ) through fifth (5 th ) twelve (12) full calendar month periods of the term of this lease, at the rate of Seventy-five Thousand and 00/100 DOLLARS ($75,000.00) per annum, payable at the rate of Six Thousand Two Hundred

 

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Fifty and 00/100 DOLLARS ($6,250.00) per calendar month, and proportionately at such rate for any partial month.

 

For and with respect to the sixth (6 th ) and seventh (7 th ) twelve (12) full calendar month periods (being the balance) of the term of this lease, at the rate of Eighty-two Thousand Five Hundred and 00/100 DOLLARS ($82,500.00) per annum, payable at the rate of Six Thousand Eight Hundred Seventy-five and 00/100 DOLLARS ($6,875.00) per calendar month, and proportionately at such rate for any partial month.

 

Percentage Rent Payment :  An amount equal to eight percent (8%) of the excess of gross sales (as herein defined) over the Base gross sales figure determined as follows:  said figure, with respect to each lease-year, shall be arrived at by dividing the annual minimum rent paid for such lease-year by eight percent (8%).

 

Initial Promotional Charge :  At the rate of $208.33 per calendar month.

 

Sprinkler Charge :  50¢ per square foot of floor area contained within the demised premises (as set forth in Section 2.1 hereof) per annum.

 

Security Deposit :  None.  (See Section 21.28.)

 

Guarantor of Tenant’s Obligations :  None. (See Section 21.28.)

 

Use :  Only as a first-class, high-quality retail store for the display and sale of vitamins, food supplements and sports nutrition products, and as incidental thereto, for the display and sale of health and beauty aids and incidental items such as literature related thereto, provided that in no event shall the area devoted to the sale of such health and beauty items (and incidental items related thereto) exceed fifteen percent (15%) of the sales area of the demised premises.  The demised premises shall be used for no other purpose or purposes.

 

Subject to and without enlarging upon the foregoing enumerated, permitted use, the Tenant’s operations in the demised premises shall always be of substantially the same type, high quality and character (including, without limitation, types of goods to be sold, pricing and other basic policies) as the other “Vitamin World” shopping center retail store operations presently being conducted in the New England area.

 

ARTICLE II.

Premises

 

Section 2.1 .  The Landlord hereby leases to the Tenant and the Tenant hereby leases from the Landlord, upon and subject to the terms and provisions of this lease, the portion of the building (which portion is sometimes hereinafter referred to as the

 

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“demised premises”) shown on Exhibit “A” hereto annexed and made a part hereof as Vitamin World containing approximately 1,500 square feet of floor area.

 

Excepting and reserving to the Landlord the roof and exterior walls of the building or buildings of which the demised premises are a part; and further reserving to the Landlord the right to place in the demised premises (in such manner as to reduce to a minimum the interference with the Tenant’s use of the demised premises) utility lines, pipes, and the like, to serve premises other than the demised premises, and to replace and maintain and repair such utility lines, pipes and the like in, over and upon the demised premises as may have been installed in the building.

 

Section 2.2 .  The term “Shopping Center” wherever used in this lease is hereby defined to mean only the “Developer’s Tract” portion of the Warwick Mall development (located in Warwick, RI, and comprised of three (3) tracts; namely, the Developer’s Tract, the Macy’s Tract and the Filene’s Tract) as indicated on said Exhibit “A”, including any and all structures, parking facilities, roadways, common facilities and the like built (or to be built) thereon, as the same may from time to time be reduced by eminent domain takings, dedications to public authorities, or exclusions by the Landlord (by written notice to the Tenant) of portions thereof, or increased by the addition of other lands together with structures and the like thereon which may from time to time be designated by the Landlord, by written notice to the Tenant, as constituting a part of the Shopping Center.  Anything in this lease to the contrary notwithstanding, it is expressly understood and agreed that the designation or use from time to time of portions of the Shopping Center as common areas shall not restrict the Landlord’s use, as it determines for its exclusive benefit, of such areas for buildings or structures and/or for retail or such other purposes as the Landlord shall determine, including, without limitation, the expansion or remodeling of the Shopping Center to include one or more converted or new department stores, other Major Stores and small stores (on the present and/or additional levels), the Landlord hereby reserving the unrestricted right to build, add to, subtract from, lease, license, relocate and/or otherwise use (permanently and/or temporarily) any buildings, structures and roadways anywhere upon, and make use of areas within, the Shopping Center, including but without limitation, the right to erect and maintain any number of so-called “kiosks”, etc., anywhere within the enclosed malls or other common areas of the Shopping Center, for retail or such other purposes as Landlord shall determine.

 

ARTICLE III.

Term of Lease

 

Section 3.1 .  TO HAVE AND TO HOLD the demised premises unto the Tenant for the term specified in Section 1.1 hereof unless sooner terminated as provided herein.

 

Section 3.2 .  The term hereof shall commence on the earlier to occur of:  (i) November 1, 2003, or, if later, forty-five (45) days after delivery of possession of the demised premises to the Tenant as herein provided (see Section 21.28); or (ii) the date that the Tenant first opens for business in the demised premises.  The parties hereto agree, upon demand of the other, to execute a supplemental instrument expressing the commencement and termination dates of the term hereof when the commencement date has been determined.

 

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Section 3.3.   The Tenant, subsequent to the delivery of possession and prior to the commencement of the term hereof, shall be permitted to install fixtures and other equipment, and do other work, provided, however, that such activities of the Tenant shall not interfere with construction work of the Landlord or the conduct of business or construction work of other tenants or occupants in the Shopping Center.

 

Section 3.4 .  In the event the Tenant shall have failed to complete the Tenant’s work in accordance with the provisions of Section 6.2 of this lease and to have opened the demised premises for business by the term commencement date determined in Section 3.2 of this lease, then all of Tenant’s charges hereunder nevertheless shall commence on that date at the rates specified or determined in accordance with the provisions of this lease, but if the Tenant still has not so opened for business by the date that is thirty (30) days after said term commencement date, then from and after the end of such 30-day period minimum rent shall accrue hereunder and be payable at the rate of one-fifteenth (1/15th) of the monthly amount of the Tenant’s initial minimum rent per day until the Tenant shall open for business.

 

ARTICLE IV.

Minimum Rent

 

Section 4.1 .  The Tenant covenants and agrees to pay without notice, demand or offset to the Landlord, minimum rent for said premises at the rate(s) specified in Section 1.1 hereof, and proportionately at such rate for any partial month occurring at the commencement of the term hereof, which minimum rent shall be paid monthly, in advance, on the first day of each and every calendar month during the term hereof, the first such payment to be made on the commencement of the term of this lease.  All checks for rent and all other charges payable under this lease shall be made payable to Warwick Mall and shall be sent, until further notice from Landlord, to Warwick Mall, c/o Bliss Properties, P.O. Box 25l3, Providence, R.I. 02906.  For and with respect to each installment of minimum rent that is not received by the Landlord within five (5) days after the date when due, the Tenant shall pay to the Landlord on demand, as additional rent, a late charge in an amount equal to five percent (5%) of the amount of the overdue payment for the purpose of defraying Landlord’s administrative expenses relative to handling such overdue payment.

 

ARTICLE V.

Percentage Rent

 

Section 5.1 .  In addition to the minimum rent specified in ARTICLE IV above, and as part of the total rent to be paid by the Tenant to the Landlord, the Tenant covenants and agrees to pay to the Landlord, as aforesaid, as percentage rent for each lease-year (as hereinafter defined) of the term hereof, a sum equal to the percentage of gross sales specified in Section 1.1 hereof, multiplied by the amount by which gross sales (as hereinafter defined) during such lease-year exceeds the Base gross sales specified in Section 1.1 hereof, if there is any such excess.

 

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For any lease-year with respect to which the minimum rent paid by the Tenant under this lease is, or is abated, refunded or otherwise for any reason reduced to, a sum which is less than the total amount of minimum rent specified in Section 1.1 hereof as payable for such lease-year, the Base gross sales figure shall be reduced proportionately to the same extent as the amount of minimum rent actually paid by the Tenant hereunder for and with respect to such lease-year bears to the minimum rent stated as payable for such lease-year in said Section 1.1.  In addition, to the extent that any lease-year constitutes less than a full twelve (12) calendar month period, the Base gross sales figure shall be reduced proportionately to the same extent as the number of days in such lease-year bears to 365.  In the event the Tenant is not open for business during the days and hours required hereunder, then, in addition to all other remedies available hereunder, the Base gross sales figure shall be proportionately reduced.

 

Section 5.2 .  Lease-years shall be the twelve month periods from February 1 through January 31.  However, the first lease-year shall run from the date Tenant first opens for business in the demised premises through the 31st day of January immediately following; and the last lease-year shall run from the previous February 1 through the date of the expiration or earlier termination of the term of this lease.

 

Section 5.3 .  The phrase “gross sales”, as used in this lease, is hereby defined to mean the dollar aggregate of:

 

(a)           the sales prices of all goods, wares and merchandise sold, and the charges for all services performed by the Tenant in, at, on or from the demised premises, whether made for cash, on credit, or otherwise, without reserve or deduction for inability or failure to collect, including but not limited to such sales and services (i) where the orders therefor originate at and are accepted by the Tenant in the demised premises but delivery or performance thereof is made from or at any place other than the demised premises, (ii) pursuant to mail, telegraph, telephone, video, electronic, computer or other technology-based systems whether existing now or developed in the future, or other similar orders made, received or filled at or from the demised premises, (iii) by means of mechanical and other vending devices in the demised premises, (iv) as a result of transactions originating upon the demised premises, and/or (v) which the Tenant in the normal and customary course of its operations would credit or attribute to its business upon the demised premises, or any part or parts thereof; and

 

(b)           all moneys or other things of value received by the Tenant from its operations at, in, on or from the demised premises which are neither included in nor excluded from gross sales by the other provisions of this definition.

 

“Gross sales” shall not include:  (a) the exchange of merchandise between stores of the Tenant where such exchanges are made solely for the convenient operation of the Tenant’s business and not for the purpose of consummating a sale which has theretofore been made at, in, on or from the demised premises and/or for the purpose of depriving the

 

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Landlord of the benefit of a sale which otherwise would have been made at, in, on or from the demised premises; or (b) returns to shippers or manufacturers; or (c) sales of fixtures after use thereof in the conduct of the Tenant’s business in the demised premises; and there shall be deducted from gross sales:  (i) cash or credit refunds made upon transactions included within gross sales, not exceeding the selling price of merchandise returned by the purchaser and accepted by the Tenant, and (ii) the amount of any city, county, state or federal sales, luxury, or excise tax on such sales which is both (a) added to the selling price or absorbed therein, and (b) paid to the taxing authority by the Tenant.

 

The phrase “gross sales” shall also include such gross sales made by any sublessee, concessionaire, licensee or otherwise at, in, on or from the demised premises; and such gross sales made by sublessees, concessionaires, licensees, or otherwise, shall be included in the reports provided for in this lease (but the foregoing shall not be construed to give the Tenant the right to sublease, concession or license, which right shall be governed by the provisions of ARTICLE X hereof).

 

Section 5.4 .  The Tenant agrees without notice or demand from the Landlord to deliver to the Landlord, within twenty (20) days after the end of each calendar month during the term hereof, a complete statement signed by an executive or other authorized agent of the Tenant, showing gross sales for the preceding month.  The Tenant shall utilize cash registers equipped with sealed continuous and cumulative totals (or computer equipment performing substantially similar functions) to record all gross sales and which shall number consecutive rings.  The Tenant agrees to maintain accounting controls and books of account in form adequate for auditing purposes, in accordance with generally accepted accounting principles to assure the proper recording of all gross sales and the exclusions and deductions therefrom provided in Section 5.3 hereof.

 

For the purposes hereof, the term “Percentage Rent Periods” shall, in light of the fact that lease-years end on January 31, be the quarter-annual periods ending on January 31, April 30, July 31, and October 31 of each year during the term of this lease and any partial such periods occurring at the beginning and the end of the term of this lease.

 

The Tenant agrees without notice or demand from the Landlord, within twenty (20) days after the end of each Percentage Rent Period (accompanied by the monthly statement showing gross sales for the preceding calendar month), to pay to the Landlord on account of percentage rent a sum equal to the percentage of gross sales specified in Section 1.1 hereof, multiplied by the amount by which gross sales during such Percentage Rent Period exceeds one-quarter (1/4) of the applicable Base gross sales.

 

The Tenant agrees, without notice or demand from the Landlord, within forty-five (45) days after the end of each lease-year, to cause a statement of the gross sales of the Tenant made at, in, on and/or from the demised premises for such lease-year to be certified by a financial executive officer of the Tenant (subject to further verification as provided in Section 5.5), and a copy of such statement certified by such officer shall be delivered by the Tenant to the Landlord within such 45-day period, and such statement shall be accompanied by check of the Tenant for the balance of the percentage rent, if any, payable with respect to such prior lease-year.  In the event that the Tenant’s quarterly payments of percentage rent for and with respect to a lease-year shall in the aggregate exceed the percentage rent payable by the Tenant for the entire lease-year, the Landlord agrees to apply any such excess against the minimum rent next due under this lease.

 

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ARTICLE VI.

Condition of the Premises

 

Section 6.1 .  Tenant acknowledges that it is fully aware of the condition of the demised premises and agrees to take the same on a strictly “as is” basis without any warranty, representation or obligation whatsoever on the part of the Landlord with respect thereto.

 

Section 6.2 .  Tenant shall completely remodel the demised premises in the manner to outfit the same for its use; but all such remodeling work shall meet the following requirements:  (i) same shall be done in a good and first-class workmanlike manner; (ii) same shall not adversely affect the structural strength of the demised premises or the building of which they are a part; (iii) Tenant shall abide by all applicable laws, ordinances and insurance requirements, and Tenant shall first provide to Landlord adequate evidence of insurance; (iv) such remodeling shall be done by contractor(s) and in full conformity with plans and specifications, which shall first require Landlord’s written approval; (v) such remodeling shall be done at such times and in such manner so as not to interfere in any manner with the continued conduct of business in the Shopping Center or with any work being performed by Landlord or any other occupants of the Shopping Center and, without limitation, the Tenant shall use every legal effort to prevent work stoppages of any kind attributable to work being performed by or on behalf of the Tenant (and shall require provisions in its contracts permitting it to do so); and (vi) such remodeling shall conform in every respect to the “Store Remodeling Regulations” set forth on Exhibit “B” hereto annexed and hereby made a part hereof.

 

In any event, however, all such remodeling shall be completed by Tenant, including construction and installation of all leasehold improvements and equipping the demised premises with new trade fixtures and all personal property necessary or proper for the operation of Tenant’s business, and the demised premises shall be officially opened for business to the public, not later than the date determined in accordance with the provisions of Section 3.2. of this lease.

 

Section 6.3 .  As part of Tenant’s said remodeling, Tenant shall install a temporary barricade to be put in front of the demised premises prior to commencing and until Tenant has completed remodeling of the demised premises and is ready to open for business. The exact location and all specifications of said barricade shall be reflected in Tenant’s plans and specifications for its remodeling which as aforesaid shall be subject to Landlord’s prior written approval.

 

Tenant agrees to furnish and install a sign or signet indicating that Tenant is coming to Warwick Mall which will be placed on said barricade.  The exact size, type, location and wording of said sign shall be subject to Landlord’s prior written approval.

 

Section 6.4 .  Certain details of the construction of the Shopping Center may change, including the area, height and number of levels above or below grade, but, subject to other provisions of this lease, the position of the demised premises shall be substantially as shown on Exhibit “A”.  Nothing in Exhibit “A” shall be treated as a representation that any or all of the buildings, or any other improvements or facilities, for which provision is made thereon shall be constructed, or that such buildings, etc. will be or continue to be located, precisely within the areas shown on Exhibit “A”, or that such

 

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buildings, etc. will be or continue to be of the dimensions or shapes (or occupied by any particular retail store) shown, it being the intention of Exhibit “A” only generally to show diagrammatically, rather than precisely, the current status and possible development of the Shopping Center as presently contemplated.

 

ARTICLE VII.

Additional Rent - Taxes

 

Section 7.1 . The Landlord shall pay, or cause to be paid, before the same become delinquent, all general and special taxes, including existing and future assessments for road, sewer, utility and other local improvements and other governmental charges (hereinafter collectively referred to as “real estate taxes”) which may be lawfully charged, assessed, or imposed upon or relating to all or any portion of the Landlord’s Tax Tract (as hereinafter defined) on both land and all structures and other improvements thereon; provided however, that if authorities having jurisdiction assess real estate taxes on any of the same which the Landlord deems excessive, the Landlord may defer compliance therewith to the extent permitted by the laws of the State of Rhode Island so long as the validity or amount thereof is contested by the Landlord in good faith and so long as the Tenant’s occupancy of the demised premises is not disturbed or threatened.  For the purposes hereof, the term “Landlord’s Tax Tract” shall mean the portion(s) of the entire Warwick Mall development owned by (or ground leased to) Landlord from time to time (currently being the Developer’s Tract and the theater tract portion of the Macy’s Tract, all as shown on Exhibit “A”) and any other portions thereof for which Landlord is responsible to pay the real estate taxes.

 

Section 7.2 .  The Tenant shall pay all such taxes which may be lawfully charged, assessed, or imposed upon all fixtures and equipment of every type and also upon all personal property in the demised premises, and the Tenant shall pay all license fees and other charges which may lawfully be imposed upon the business of the Tenant conducted upon the demised premises.

 

Section 7.3 .  Tenant shall, during the term of this lease, pay to Landlord that portion of the taxes and other governmental charges set forth in Section 7.1 above as shall result from multiplying the same by a fraction, the numerator of which is the total square footage of floor area of the demised premises, and the denominator of which is the total square footage of leased floor area of all store premises within the buildings located on the Landlord’s Tax Tract as of the first day of each applicable tax year during the term hereof; provided, however, with respect to any buildings located on the Landlord’s Tax Tract (and any land appurtenant thereto) which are now or hereafter separately owned or assessed, at the Landlord’s option, the taxes and assessments relating thereto shall be deemed not to be real estate taxes hereunder, and in such event, there shall be excluded from the denominator of such fraction the floor area of such separately owned or assessed building(s).  In particular, but without limitation, with respect to the J.C. Penney Department Store located on the westerly side of the Shopping Center, which is now separately assessed directly to said occupant thereof for building taxes, so long as such building remains so occupied and so separately assessed it is agreed that Tenant shall not be required to share in any portion of real estate taxes or assessments attributable to said

 

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J.C. Penney Building; and, in exchange, it is agreed that the square footage of floor area of said Penney Building shall be excluded from the denominator in the determination of Tenant’s share of taxes in accordance with this lease.  Without limiting the generality of the foregoing, in any event there shall also be excluded from the denominator of such fraction the floor area of non-selling mezzanines (if any), malls, passageways, service corridors, common (employee and/or public) bathrooms, governmental offices, management and superintendent and any other mall offices, mall storage areas, mall utility rooms and mall sprinkler rooms, all outside and all above-grade level and below-grade level areas and facilities, all parking and loading areas and facilities and other common areas and facilities (including any such areas where retail modular units may be located or where used periodically for seasonal or other temporary units) and, without limitation, there shall be excluded from the denominator of such fraction the square footage of floor area of the Major Stores on the Landlord’s Tax Tract (and, for the purposes of this lease, a “Major Store” is defined to mean a store containing at least fifteen thousand (15,000) square feet of floor area).  Reference is made to the fact that a Major Store (such as the former Caldor store) on the Landlord’s Tax Tract may be recaptured by the Landlord.  Accordingly, when the floor area formerly contained in any such Major Store actually is leased by Landlord and occupied as non-Major Store space which otherwise pursuant to the foregoing provisions would be included in the denominator on which the calculation of the Tenant’s share of real estate taxes is based, such floor area shall be so included; until such time, such floor area shall continue to be excluded from the denominator in calculating the charges to be shared under the provisions of this Section.

 

Tenant’s fractional share of such taxes shall be equitably adjusted for and with respect to the first and last partial tax years (if any) of the term of this lease.  Where the applicable tax bills and computations are not available prior to the end of the term hereof, then a tentative computation shall be made on the basis of the previous year’s taxes payable by Tenant, with a final adjustment to be made between Landlord and Tenant promptly after all bills and computations are available for such period.

 

Tenant’s pro rata share of said taxes shall be due and payable within ten (10) days after receipt by Tenant of Landlord’s invoice plus a copy of the tax bills involved.  However, Tenant shall make monthly tax deposits with Landlord (along with payments of minimum rent) in an amount equal to one-twelfth (1/12th) of Tenant’s annual pro rata share of such taxes as reasonably estimated by Landlord (taking into account relevant factors including the prior year’s taxes), with a final adjustment to be made between the parties as soon as said pro rata share has been determined.

 

In every case, real estate taxes shall be adjusted to take into account any abatement or refund thereof paid to the Landlord by the taxing authorities, less all of the Landlord’s costs of securing such abatement or refund (the Landlord having the sole right to contest real estate taxes).  If Landlord shall elect to contest such real estate taxes, Landlord shall be entitled to bill Tenant for its said pro rata share of the costs and expenses thus incurred by Landlord as and when the same are incurred, and the same shall constitute part of such real estate taxes (in which event, to the extent that Landlord has so billed and received from Tenant payment of such costs and expenses, the same

 

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shall not be deducted as aforesaid from the abatement or refund, if any, ultimately received with respect thereto).

 

Section 7.4 .  In an attempt to reduce the potential tax burden on the Shopping Center by controlling costs for off-site improvements which are or may hereafter be required by governmental authorities in connection with the present or future development of the Shopping Center (for example: highway improvements, sewer and water facilities, park improvements), Landlord may agree with such governmental authorities to be responsible for the construction of such off-site improvements.  In such case upon notice from Landlord, Tenant shall pay to Landlord, as additional rent and in substitution, in whole or in part, for any special district real estate taxes or betterment assessment relating to such improvements which could otherwise be imposed against the Shopping Center if such improvements were constructed under governmental responsibility, an annual charge representing Tenant’s pro rata share of the amortized cost of such facilities.  Tenant’s pro rata share of such costs shall be computed in the same manner as used to compute Tenant’s pro rata share of real property taxes as provided in Section 7.3 above.  This annual charge shall be paid by Tenant in equal monthly installments, in advance, on the first day of each calendar month during the term of this lease.

 

Section 7.5 .  The foregoing provisions of this ARTICLE VII are predicated upon the present system of taxation in the State of Rhode Island.  Should any governmental authority having jurisdiction over all or any portion of the Shopping Center impose a tax and/or assessment of any kind or nature upon, against, measured by or with respect to the rentals payable by tenants on Landlord’s Tax Tract to the Landlord or with respect to the ownership of the land and buildings comprising the Landlord’s Tax Tract by the Landlord (or any individual or entity forming the Landlord), either by way of substitution for all or any part of the present ad valorem real estate taxes or in addition thereto, then such tax and/or assessment shall be deemed to constitute real estate taxes for the purposes of this lease and the Tenant shall be obligated to pay its proportionate share thereof as set forth in Section 7.3 hereof.   Further, if there is any other change in the system of taxation (other than as set out immediately above) which is in substitution of the present system, Tenant shall be responsible for its fair and equitable share thereof, taking into account the prorations provided for in this ARTICLE VII.

 

ARTICLE VIII.

Maintenance and Operation;

and the Tenant’s Contribution

 

Section 8.1 .  The Landlord shall cause all parking facilities of the Shopping Center, including lighting thereof, to be maintained in reasonably good repair and in reasonably clean condition at all times during the term of this lease.  Plowing of snow from the parking areas will be provided by Landlord, but reasonable stockpiling thereof shall be permitted.

 

The Landlord agrees that the Tenant may during the term hereof, with others, have the non-exclusive right to use, subject to other provisions hereof, the parking facilities of the Shopping Center for the accommodation and parking of such automobiles of the

 

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Tenant, its officers, agents and employees, and its customers while shopping in the Shopping Center.

 

The Tenant agrees to cause its officers, agents, employees, contractors, licensees and concessionaires to park their cars only on such areas as the Landlord may from time to time designate as employee parking areas, and such employee parking areas may be located outside of the entire Shopping Center development, provided the same shall be within a reasonable distance of the Shopping Center.  The Tenant shall furnish to the Landlord, within five (5) days following the request of the Landlord therefor, the automobile license numbers of the vehicles customarily used by the Tenant and the Tenant’s officers, agents, employees, contractors, licensees and concessionaires.  If any officer, employee, agent, contractor, licensee or concessionaire of the Tenant shall park his or her car other than in designated employee parking areas, the Landlord shall have the right and privilege to have any such car towed away at the Tenant’s expense.

 

With respect to the enclosed malls, the same shall be maintained (including lighting) by Landlord in a reasonably neat and clean condition throughout the term of this lease, reasonably heated when required, and reasonably air conditioned when required.  Landlord may at any time close temporarily the common areas (including, without limitation, the parking facilities and roadways) or any portion thereof to make repairs or changes to prevent the acquisition of public rights therein, or to discourage noncustomer parking, and may do such other acts in and to the common areas as in its judgment may be desirable to improve the convenience thereof.

 

Section 8.2 . The Landlord shall, as aforesaid, maintain and repair the Shopping Center common areas and parking facilities intended to service the demised premises; and Tenant agrees to pay to the Landlord, on account of the Tenant’s share of the costs and expenses relating thereto, as additional rent, an amount initially equal to $31,050.00 (calculated, as agreed upon, by multiplying the 1,500 sq. ft. floor area of the demised premises set forth in Section 2.1 above by $18, and then adding to that product 15% thereof as an administrative charge) per annum payable in twelve equal, monthly installments on the first day of each and every month, in advance, included within the term hereof, the first such payment to be made on the term commencement date.  For any fraction of a calendar month at the beginning or end of the term, the monthly payment hereunder shall be prorated.  The Tenant’s charge under this Section (the “Tenant’s Maintenance Charge”) shall be subject to increase during each calendar year contained within the term of this lease.  In that regard, on the first January 1 included within the term of this lease (such date and each ensuing anniversary thereof being referred to hereinafter, for the purposes hereof, as a “Maintenance Charge Adjustment Date”), and on each Maintenance Charge Adjustment Date thereafter during the term of this lease, the Tenant’s Maintenance Charge shall be increased to an amount equal to one hundred two percent (104%) of the annual (and corresponding monthly) amount thereof then in effect immediately before the Maintenance Charge Adjustment Date in question (for example, the annual Tenant’s Maintenance Charge for 2004 shall be ($31,050.00) (104%) = $32,292.00; the annual Tenant’s Maintenance Charge for calendar year 2005 shall be ($32,292.00) (104%) = $33,583.68, etc., and each such increased figure shall then become the Tenant’s Maintenance Charge and shall remain in effect until the next such Maintenance Charge Adjustment Date.

 

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Except for the aforesaid Tenant’s Maintenance Charge, the Tenant shall not be required hereunder to pay any charge to the Landlord on account of common area maintenance.

 

ARTICLE IX.

Utilities

 

Section 9.1 .  The Tenant shall pay for all utilities consumed in the demised premises from the date of delivery of possession thereof by the Landlord to the Tenant through the end of the term of this lease, including, but not limited to, gas, steam, water, electricity, sewer charges, and the like, including all utilities necessary for heating and air conditioning the demised premises.  In the event that from time to time the Landlord shall elect to, or contract to, supply any of such utilities (including, for the purposes hereof, internet access, or other technology or communication services) to the demised premises, the Tenant agrees to purchase the same from the Landlord or the Landlord’s designees, provided the rate does not exceed the rate which the Tenant would be required to pay to purchase the same from the provider furnishing the same to the Shopping Center; and, in the event that from time to time utility service(s) are available to the Shopping Center in whole or in part from various or multiple providers, the Landlord shall have the right to choose the provider(s) which from time to time shall furnish such utility service(s) to the Shopping Center.

 

Section 9.2 .  The Landlord has provided and installed a sprinkler main to the demised premises.  The Tenant agrees to pay monthly, in advance on the first day of each calendar month, as additional rental, an amount equal to one-twelfth (1/12) of the product of the per-square-foot charge specified in Section 1.1 hereof and the square footage of floor area of the demised premises specified in Section 2.1 hereof, and proportionately at such rate for any partial month.  Any modifications or additions required to the portion of the existing sprinkler system serving the demised premises will be at the Tenant’s sole cost and expense.

 

ARTICLE X.

Use of Premises

 

Section 10.1 .  It is understood, and the Tenant so agrees, that the demised premises during the term of this lease shall be used and occupied by the Tenant only for the purposes specified as the use thereof in Section 1.1 of this lease, and for no other purpose or purposes.  Moreover, the Tenant always shall conduct its business operations in the demised premises in a fashion consistent in all respects with the image of a first-class retail operation located in a first-class regional enclosed mall shopping center.  Further, without in any manner enlarging upon (and notwithstanding) the permitted use specified in Section 1.1, the Tenant agrees to comply with the use restrictions and all provisions set forth in Exhibit “C” hereto annexed and made a part hereof.

 

Section 10.2 .  The Tenant further agrees to conform to the following provisions during the entire term of this lease:

 

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(a)           The Tenant shall always conduct its operations in the demised premises under its present trade name set forth in Section 1.1, or such other trade name to which all or substantially all then existing “Vitamin World” retail operations are changed provided that such trade name will not conflict with the trade name of any other tenant of the Shopping Center;

 

(b)           No sales or promotions may be conducted within the demised premises other than in the normal course of the Tenant’s continuing business operations therein. Without limiting the generality of the foregoing, no auction, fire, bankruptcy, “lost our lease” or “going out of business sales” (or the like, however denominated) may be conducted within the demised premises.  The Tenant shall display, sell and advertise only first-quality merchandise and not any seconds or damaged goods, and shall never conduct any “outlet”, warehouse or like discount operations, in or from the demised premises;

 

(c)           The Tenant shall not use any area outside of the demised premises, including, without limitation, the malls or sidewalks adjacent to the demised premises or the recessed vestibules, if any, of the demised premises for business purposes (including, without limitation, the sale or display of merchandise or the distribution of handbills or advertising of any type).  Without limitation, the Tenant shall conduct business in the demised premises in such manner that the Tenant’s customers and invitees shall not collect, line up or linger outside of the demised premises;

 

(d)           The Tenant shall keep the display windows of the demised premises clean and shall keep the same electrically lighted during such periods of time as windows throughout a major portion of the Shopping Center development are kept lighted, and for this purpose shall install and maintain a mechanical time-clock.  In no event shall Tenant place advertisements relating to internet shopping in the display windows of the demised premises or redirect sales from the demised premises to an internet website;

 

(e)           The Tenant shall receive and deliver goods and merchandise only in the manner, at such times, and in such areas, as may be designated by the Landlord; and all trash, refuse, and the like, shall be kept in covered metal cans (or other customary, suitable and adequate containers), which metal cans (or other such containers) shall be kept within the demised premises at all times, and in no event stored outside of the same.  All trash, refuse and the like shall be separated and otherwise be disposed of as required by applicable law.  The Tenant agrees to fully cooperate with the Landlord in any recycling programs instituted by the Landlord.  If provision is made by the Landlord for trash removal by a contractor

 

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(and/or the purchase or rental of compactors or dumpsters, or both), the Tenant agrees to use said contractor, etc., for its trash removal and to pay when due all charges at the rates established therefor from time to time provided such rates are reasonably competitive for similar services in the area.  If the Tenant fails so to pay for trash removal, the Landlord shall have the same remedies (even if such payment is due to such contractor and not to the Landlord) as the Landlord has for nonpayment of rent hereunder;

 

(f)            The Tenant shall not place on the exterior of the demised premises any signs (including, but without limitation, any signage on interior and exterior surfaces of windows, doors, and entrance lobbies, and storefront area signs facing and visible from the enclosed mall – all of which are considered exterior signage for the purposes of this clause), including replacements thereof, other than those which shall first have been approved by the Landlord.  The aforesaid signs initially desired by the Tenant shall be indicated in the Tenant’s plans and specifications to be submitted to the Landlord for approval and no signs not so approved shall ever be placed as aforesaid.  All interior signs must be professionally prepared and shall be reasonably limited in number;

 

(g)           The Tenant shall not perform any act or carry on any practice which may injure the demised premises or any other part of the Shopping Center, or cause any offensive odors or vibrations or loud noises (including, but without limitation, the use of loudspeakers), or constitute a nuisance or menace to any other occupant or other persons in the Shopping Center, and in no event shall any such noises, vibrations or odors be emitted from the demised premises;

 

(h)           The demised premises (as well as all doors and entryways thereto) shall be kept open for business at least during the following:  (i) twelve (12) hours per day six days a week as designated by the Landlord (and on Sundays and holidays, and seasonal sales periods, for the number of hours designated by the Landlord) provided (and to the extent) that at least 50% of the non-Major Store tenants in the mall building of the Shopping Center are likewise required to keep open or do in fact keep open for such days and hours, but in no event a greater number of hours than that permitted by then applicable law; and (ii) such other periods of time that at least one (1) of the so-called “anchor” stores is open for business;

 

(i)            The Tenant shall at all times keep the demised premises fully and adequately stocked and fixtured, so as to promote and facilitate maximum sales.  The Tenant shall devote the maximum possible floor area of the demised premises (and in any event not less than eighty percent (80%) of such floor area) to selling space, and shall not use any portion of the

 

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demised premises for storage or other services, except for its operations in the demised premises;

 

(j)            The Tenant shall at all times fully and adequately heat and/or air-condition (as the circumstances require) the demised premises and shall at all times abide by all so-called “energy” rules and regulations prescribed by public authorities from time to time.  In no event shall the Tenant in any manner “bleed” from the heating or air-conditioning provided for the enclosed malls;

 

(k)           The Tenant and its employees of the demised premises will participate as reasonably requested from time to time by the Landlord or its mall manager in fire/safety evacuation drills;

 

(l)            The Tenant shall at all times provide handicap access to and through the demised premises in accordance with all applicable laws (including the Americans With Disabilities Act) and ordinances, and in accordance with all directions, rules and regulations of the building inspector and other proper officials of governmental agencies having jurisdiction thereof;

 

(m)          The Tenant shall employ throughout the term of this lease a full staff in the demised premises in order properly to conduct business, including a qualified store manager to manage and control the operations of the demised premises.  The Tenant shall furnish the Landlord’s mall manager with the name, address and telephone number of such store manager of the demised premises, so that the Landlord will, at all times, be able to contact the store manager of the demised premises;

 

(n)           The Tenant shall not use, transport, handle, store, release, discharge or otherwise dispose of any oil, hazardous or toxic materials or hazardous or toxic wastes in or about the Shopping Center.  The foregoing shall constitute a continuing warranty and covenant which shall survive the expiration of the term of this lease; and

 

(o)           The Tenant agrees that it and its employees and others connected with the Tenant’s operations at the demised premises will abide by all reasonable rules and regulations from time to time established by the Landlord by written notice to the Tenant with respect to such Shopping Center.

 

The Tenant acknowledges that the foregoing obligations are material inducements to the Landlord to enter into this lease, and in the event the Tenant defaults therein the Landlord shall have all remedies available at law or in equity including, without limitation, the right to terminate this lease as provided in ARTICLE XX hereof.

 

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percentage as would result in a change in the voting control, of the voting stock of the Tenant (if the Tenant is a corporation), the voting stock of any corporate general partner of the Tenant (if the Tenant is a partnership), the voting stock of any corporate guarantor of the Tenant (whether or not specified in Section 1.1 hereof), or the voting stock of any immediate or remote controlling corporation of the Tenant (whether such sale or transfer occurs at one time or at intervals so that, in the aggregate, over the term of this lease, such transfer shall have occurred), or any other transaction(s) overall having the effect of a change in voting control or substantially the same effect if the entity in question is not a corporation (such as, without limitation, a change in the number or the identity of partners of a partnership or of beneficiaries of a trust), shall be treated as if such sale or transfer or transaction(s) were, for all purposes, an assignment of this lease and shall be governed by the provisions of this Section 10.3.

 

In the event the Tenant assigns this lease (which term shall include the entering into of any management or similar control transferring agreement, and also shall include the sale or transfer of stock or a change in control, as aforesaid) or sublets the whole or any part of the demised premises (other than as expressly hereinabove permitted to its wholly owned subsidiary or its immediate controlling corporation or with the Landlord’s prior written consent), in addition to and without limiting any of the Landlord’s rights and remedies on account of the resulting default hereunder by the Tenant, the Landlord shall have the right, without regard to whether the Landlord’s withholding its consent to such assignment or subletting would be construed to be unreasonable, to terminate this lease by giving the Tenant notice of the Landlord’s desire so to do, in which event this lease shall terminate on the date specified by the Landlord in such notice all as if such date were the natural expiration date of the term.  In the event of any assignment or subletting (other than as expressly hereinabove permitted to a wholly owned subsidiary or immediate controlling corporation of the Tenant), the minimum rent shall be adjusted for the balance of the term of this lease such that the minimum rent payable hereunder shall thereafter be equal to the sum of (i) the greater of (a) the annual minimum rent specified in Section 1.1 of this lease and (b) the annual minimum rent payable pursuant to such assignment or sublease, plus (ii) the highest of the amounts of the annual percentage rent payable hereunder for and with respect to any of the then last three (3) full lease-years preceding the assignment or subletting; and, in addition, any lump sum or installment payments for the leasehold payable by such assignee or sublessee shall be payable directly to the Landlord and not to the Tenant.  As aforesaid, the fact that Landlord shall consent to any such assignment or subletting shall not be deemed to waive the requirement of Landlord’s consent to any future assignment or subletting.

 

Without limiting or otherwise derogating from the foregoing or any other provisions herein contained, in the event that the Tenant (or any guarantor of the obligations of the Tenant under this lease) consolidates or merges into any other firm or corporation, or if the Tenant (or any such guarantor) sells a majority of its assets or the division (subsidiary, company or entity) occupying the demised premises or otherwise holding the interest of the Tenant under this lease, to any person, firm or corporation, then and in any such event the Tenant (and any such guarantor) hereby agrees timely to notify the Landlord thereof and, at the Landlord’s election, promptly to deliver to the Landlord an assumption agreement or guaranty (or both, as the case may be) duly executed by and

 

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on behalf of each of the merged or consolidated or acquiring successor or purchasing entity or entities, agreeing to assume performance and be bound by all of the obligations of the Tenant (and any such guarantor) under the terms, conditions and provisions of this lease, together with appropriate corporate or like certificates or resolutions confirming the authority and incumbency of the signatories.  As aforesaid, any such transaction and the validity thereof shall be governed by the foregoing provisions of this Section 10.3 and, without limitation, notwithstanding any such transaction and any such assumption, the Tenant (and any such guarantor of its obligations under this lease) shall continue and remain fully liable hereunder.

 

Notwithstanding the foregoing provisions of this Section 10.3:

 

(a)           whenever the Tenant is a corporation, the foregoing provisions treating a transfer of a controlling interest in the Tenant’s voting stock as an assignment for the purposes of this lease shall not apply to the transaction by which the Tenant becomes, or to the public trading in the marketplace of the Tenant’s voting stock while the Tenant remains, a so-called reporting public corporation under the provisions of the Securities Exchange Act of 1934, as amended, the outstanding voting stock of which is registered in accordance with the provisions of the Securities Act of 1933, as amended, and actively traded on the New York Stock Exchange or another recognized, national securities exchange (and for the purposes hereof, the term “voting stock” shall refer to shares of stock regularly entitled to vote for the election of directors of the corporation); and

 

(b)           in the event that all of the Vitamin World operations (then including at least 100 retail stores) are being sold at arm’s-length and tranferred to another entity by way of merger, consolidation or sale of all or substantially all of the stock therein or assets thereof, then the Landlord will not unreasonably withhold consent to an assignment of this lease to such resulting or acquiring entity, provided (and it shall be a condition of the validity of any such assignment), without limitation, that:  (i) such entity shall first agree directly with Landlord to be bound by all of the obligations of Tenant hereunder, including, without limitation, the obligations to pay the rent and other charges provided for under this lease, and the covenant against further assignment; (ii) such assignment shall not relieve the Tenant herein named of any of its obligations hereunder, and the Tenant shall remain fully liable therefor; and (iii) Tenant shall furnish Landlord with such information regarding such entity as Landlord may reasonably require confirming to Landlord’s reasonable satisfaction that such entity then (x) has the financial strength and capacity, including good creditworthiness and sufficient net worth, necessary in order successfully to carry on such business and, without limitation, to pay all rent and charges hereunder, (y) is acquiring said operations as part of a combined and going business operation, and (z) has a management team with the successful retail business experience and good reputation necessary to and will conduct the business permitted hereunder in a manner consistent in all material respects with the high quality of the Tenant herein named and executing this lease and all provisions of this lease.

 

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ARTICLE XI.

Other Stores

 

Section 11.1 .  In recognition of the facts that several leases (including this lease) of space in the Shopping Center provide for a percentage rent based upon sales made and that it is anticipated that the Tenant’s operations in the demised premises will contribute to attracting shoppers, the Tenant covenants and agrees (insofar as and to the extent that it is lawful so to agree) that for the period commencing with the execution of this lease and continuing for the full term of this lease, none of the Tenant, any guarantor or principal of or partner in the Tenant, any of their affiliated, parent, or subsidiary companies, or any franchisor (or licensor) or franchisee (or licensee) of any of them, will operate, either directly or indirectly, another store (including a department or concession in another store) of any kind, nature or description (other than stores, departments, or concessions presently being operated by it or them) within a reasonable area of the demised premises, without the prior written consent of the Landlord, the Tenant acknowledging that the area within a circle having as its center the demised premises and having a radius of one (1) mile is a reasonable area for this purpose.  In addition to any other remedy otherwise available to the Landlord for breach of this covenant, it is specifically agreed that the Landlord may at the Landlord’s election require that any and all sales made in or from any such other store be included in the computation of the percentage rent due hereunder, with the same force and effect as though such sales had actually been made in or from the demised premises.

 

ARTICLE XII.

Promotional or Marketing Fund

 

Section 12.1 .  [Intentionally Omitted.]

 

Section 12.2 .  The Tenant shall fully cooperate with the other tenants and occupants of the Shopping Center in promoting the use of such trade names and slogans as may, from time to time, be adopted for the Shopping Center and in all marketing and advertising campaigns.  The Tenant agrees that it shall pay to the Landlord, as the Tenant’s contribution to the Landlord’s promotional or marketing fund (the “Promotional Fund”) as additional rent, a sum (the “Promotional Charge”) initially equal to the Promotional Charge specified in Section 1.1 hereof, payable on the first day of each and every month, in advance, included within the term hereof, the first such payment to be made on the commencement of the term hereof.  For any fraction of a month at the commencement or expiration of the term, the monthly payment of the Tenant’s Promotional Charge shall be prorated.  The Landlord agrees that the Promotional Fund will be used for advertising, promotion, public relations and administrative expenses (including, without limitation, the salaries of any marketing personnel) relating to the promotion of the Shopping Center, as the Landlord determines; but the Landlord shall not be responsible to account therefor to the Tenant.  Without limiting the generality of the foregoing, the Landlord shall have the right to utilize the Promotional Fund for the costs of circulars and other publications, as well as electronic or other advertising media, and the Tenant agrees, upon request from the Landlord, to furnish suitable advertising material for such purposes.  Any advertisements, circulars or other promotions need not make specific reference to any one or more occupants of the Shopping Center, but may advertise the Shopping Center generally or specific portions therein or occupants of such

 

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portions. It is understood and agreed that the Tenant’s Promotional Charge shall be subject to increase for each lease-year after the first lease-year included within the term of this lease. In that regard, on the first February 1 included within the term of this lease (such date and each ensuing anniversary thereof being referred to hereinafter as a “Promotional Adjustment Date”), and on each Promotional Adjustment Date thereafter during the term of this lease, the Tenant’s Pr