RETAIL LEASE AGREEMENT

 

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                                                                    EXHIBIT 10.4

 

                            RETAIL LEASE AGREEMENT

                        (MULTIPLE LOCATION MASTER LEASE)

 

LANDLORD:          FRED MEYER STORES, INC. (AS TO LOCATIONS IN OREGON AND IDAHO),

                  ROUNDUP CO. (AS TO LOCATIONS IN WASHINGTON), GRAND CENTRAL,

                  INC. (AS TO ANY FUTURE LOCATIONS IN UTAH), AND FRED MEYER OF

                  ALASKA, INC. (AS TO LOCATIONS IN ALASKA)

 

TENANT:             VISTA EYECARE, INC.

 

                COVERING SPACE IN VARIOUS FRED MEYER DEVELOPMENTS

           IN THE STATES OF OREGON,IDAHO, WASHINGTON, UTAH AND ALASKA

 

                             SUMMARY OF LEASE TERMS

 

1.        LEASED PROPERTY. Approximate gross ground floor area in the property:

VARIES FOR EACH LEASED LOCATION.

 

2.        LEASE TERM. FIVE years (60 months), commencing with the "Commencement

Date," which will be AS OF JANUARY 1, 1999. OPTION(S): ONE FIVE-YEAR (60 MONTH)

renewal term, subject to the conditions stated in this Lease.

 

3.        BASE RENT. The initial base rent is initially set at $ * per square

foot of leased space AT THE LOCATION per year ($ * PSF PER MONTH), payable in

equal monthly installments, subject to periodic adjustment ON THE FIRST DAY OF

THE RENEWAL TERM, as specified in the Lease.

 

4.        PERCENTAGE RENT. * (* %) of Gross Sales, calculated and paid on a

monthly basis.

 

5.        MONTHLY CHARGES. Utility charge of $[SEE PARAGRAPH 5.4], gas charge of

$NONE, sewer and water charge of $NONE, and common expense charge of $NONE,

payable monthly.

 

6.        REAL PROPERTY TAXES. Tenant's responsibility for property taxes and

assessments on the Development is as follows: NONE. In addition, Tenant will pay

any personal property taxes on Tenant's own property.

 

7.        SECURITY DEPOSIT. $NONE, as a security deposit, due on execution of

this Lease.

 

8.        TENANT'S TRADE NAME. The trade name under which Tenant will conduct

business on the Property is as follows: "VISTA OPTICAL" OR OTHER TRADE NAME

PERMITTED OR APPROVED PURSUANT TO PARAGRAPH 3.8.

 

9.        PERMITTED USE. RETAIL SALES OF OPTICAL MERCHANDISE, EYEGLASSES, CONTACT

LENSES, PRESCRIPTION AND NON- PRESCRIPTION SUNGLASSES, AND PROFESSIONAL SERVICES

BY A LICENSED DOCTOR OF OPTOMETRY (THE "PRIMARY Use") AND (AS INCIDENTAL TO SUCH

PRIMARY USE) A PORTION OF THE PROPERTY MAY BE USED AS AN EYEGLASS ASSEMBLY

LABORATORY AND TENANT MAY SELL TELESCOPES AND MICROSCOPES. Tenant's permitted

use is SUBJECT, HOWEVER, to all restrictions contained in this Lease.

 

10.       GUARANTOR(S). NONE. Address of Guarantor(s): N/A.

 

Commencement Date: AS OF JANUARY 1, 1999 Termination Date: DECEMBER 31, 2003

(UNLESS RENEWED)

 

FMI FORM 201 (Jan 1992 - REVISED 4/96) RETAIL LEASE AGREEMENT      March 22, 1999

 

 

* Confidential portion, which has been omitted and filed separately with the

  Commission.

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                                  RETAIL LEASE

 

  (VARIOUS LOCATIONS IN THE STATES OF OREGON, IDAHO, WASHINGTON, UTAH AND ALASKA)

 

DATED:                   MARCH_____, 1999

 

BETWEEN:                 FRED MEYER STORES, INC., A DELAWARE CORPORATION

                        (AS TO LOCATIONS IN OREGON AND IDAHO), ROUNDUP CO.,

                        A WASHINGTON CORPORATION (AS TO LOCATIONS IN

                         WASHINGTON), GRAND CENTRAL, INC., A UTAH CORPORATION (AS

                        TO LOCATIONS IN UTAH), AND FRED MEYER OF ALASKA, INC.,

                        AN ALASKAN CORPORATION (AS TO LOCATIONS IN ALASKA),

                        EACH OF WHICH DOES BUSINESS IN THEIR RESPECTIVE STATES

                        OF OPERATION AS "FRED MEYER" ATTENTION: BEVERLY A.

                        STAUTZ,

                        VICE PRESIDENT, PROPERTY MANAGEMENT

                        3800 SE 22ND AVENUE

                         PO BOX 42121

                        PORTLAND, OREGON 97242-0121                     LANDLORD

 

  AND:                    VISTA EYECARE, INC.,

                        A GEORGIA CORPORATION

                        ATTENTION: BARRY J. FELD

                         296 GRAYSON HIGHWAY

                        LAWRENCEVILLE, GEORGIA 30045                    TENANT

 

                  THE CORPORATE ENTITIES WHO ARE COLLECTIVELY THE LANDLORD OWN

OR LEASE CERTAIN RETAIL DEVELOPMENTS IN THE STATES OF OREGON, IDAHO, WASHINGTON,

UTAH AND ALASKA. TENANT (OR A SUBSIDIARY THEREOF) LEASES SPACE PRESENTLY AT 52

OF THESE RETAIL DEVELOPMENTS UNDER LEASES WITH VARIOUS LEASE DATES AND

EXPIRATION DATES (THE "EXISTING LEASES"). THE PARTIES DESIRE TO ENTER INTO A NEW

MASTER LEASE AGREEMENT, WHICH WILL BE EFFECTIVE AS OF JANUARY 1, 1999, FOR THE

REPLACEMENT OF THE EXISTING LEASES WITH A NEW LEASE COVERING ALL LOCATIONS. SUCH

NEW MASTER LEASE WILL COVER ALL LOCATIONS THAT ARE PRESENTLY LEASED AND THAT MAY

(PURSUANT TO FUTURE AMENDMENTS OR ADDENDA TO THE MASTER LEASE AGREEMENT) BE

ADDED IN THE FUTURE TO THE MASTER LEASE; PROVIDED, THAT THE TERM OF THE LEASE

FOR ANY LOCATIONS ADDED TO THIS LEASE WILL IN EACH CASE BE A FIVE-YEAR (60

MONTH) TERM COMMENCING ON THE "ADDITIONAL LOCATION COMMENCEMENT DATE" SPECIFIED

IN PARAGRAPH 1.1, WITH THE FIVE-YEAR (60 MONTH) RENEWAL OPTION TERM THEREAFTER.

THERE ARE THREE LOCATIONS PRESENTLY LEASED BY TENANT (AT THE FRED MEYER RETAIL

DEVELOPMENTS AT KLAMATH FALLS, OREGON, LACEY, WASHINGTON, AND NAMPA, IDAHO) THAT

HAVE SPECIAL CIRCUMSTANCES AND FOR WHICH THE RENT AND TERMS WILL BE SET FORTH IN

AN ADDENDUM #1 TO LEASE, EXECUTED CONTEMPORANEOUSLY HEREWITH, WHICH AS TO THESE

THREE LOCATIONS MODIFIES THE PROVISIONS OF THIS LEASE WITH RESPECT TO THE

DURATION OF THE LEASE TERM AND RENTAL OBLIGATIONS (THE "SPECIAL LOCATIONS").

 

                  THE PARTIES HAVE ATTACHED, AS PART OF THE ATTACHED EXHIBIT A

(LABELED EXHIBIT A-3), A SCHEDULE (THE "LOCATION SCHEDULE") OF ALL LOCATIONS

THAT ARE PRESENTLY LEASED BY TENANT AND THAT WILL BE COVERED BY THIS LEASE

(OTHER THAN THE SPECIAL LOCATIONS, WHICH ARE BEING ADDED TO THIS LEASE PURSUANT

TO THE TERMS SET FORTH IN THE ADDENDUM #1 TO LEASE REFERENCED ABOVE). THE

LOCATION SCHEDULE SHOWS THE MUTUALLY AGREED UPON SQUARE FOOTAGE OF THE SPACE

LEASED AT EACH LOCATION (EACH LOCATION WHICH AT ANY TIME IS MADE SUBJECT TO THIS

LEASE WILL BE REFERRED TO, INDIVIDUALLY AND COLLECTIVELY, AS THE "PROPERTY").

The location of the Property at EACH Fred Meyer development (EACH DEVELOPMENT AT

WHICH TENANT AT ANY TIME LEASES PROPERTY IS REFERRED TO, INDIVIDUALLY AND

COLLECTIVELY, AS the "DEVELOPMENT") is THE SAME AS CURRENTLY LEASED AND OCCUPIED

BY TENANT. The building in which EACH Property is located is referred to,

INDIVIDUALLY AND COLLECTIVELY, as the "BUILDING."

 

                  NOW, THEREFORE, Landlord hereby leases the Property to Tenant

on the following terms:

 

1.        TERM; POSSESSION.

 

FMI FORM 201 (Jan 1992 - REVISED 4/96) RETAIL LEASE AGREEMENT       March 22,1999

 

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         1.1     TERM. The term of this Lease ("Lease TERM") shall be for a

period of FIVE YEARS (sixty CALENDAR months) (plus any partial month in which

the Lease commences), beginning on the commencement date referenced below

("EXISTING LEASES COMMENCEMENT DATE") and ending at the end of the SIXTIETH full

calendar month of the Lease Term ("EXISTING LOCATIONS TERMINATION DATE"). THE

"EXISTING LEASES COMMENCEMENT DATE" will be as of JANUARY 1,1999. UNTIL THE

EXISTING LEASES COMMENCEMENT DATE, THE LEASE OF THE PROPERTY WILL CONTINUE UNDER

THE TERMS AND CONDITIONS AS SET FORTH IN THE EXISTING LEASES BETWEEN THE

PARTIES.

 

                  AS TO ADDITIONAL LOCATIONS WHICH ARE SUBSEQUENTLY ADDED TO

THIS LEASE (REFERRED TO AS AN "ADDITIONAL LOCATION" OR COLLECTIVELY AS THE

"ADDITIONAL LOCATIONS") BY EXECUTION OF A LEASE SUPPLEMENT, ADDENDUM OR

AMENDMENT, THE PARTIES WILL SPECIFY THE COMMENCEMENT DATE FOR THE TERM OF

TENANT'S LEASES OF THE ADDITIONAL LOCATION OR THE FORMULA FOR DETERMINING THE

COMMENCEMENT DATE, IN SUCH LEASE SUPPLEMENT, ADDENDUM OR AMENDMENT. UNLESS

OTHERWISE AGREED TO, THE Commencement Date for the Additional Location (the

"ADDITIONAL LOCATION COMMENCEMENT DATE") will be the first to occur of the

following: (i) NINETY (90) days after Landlord has delivered possession OF THE

ADDITIONAL LOCATION to Tenant for purposes of commencement of "Tenant's Work"

(as defined below), with any Landlord's Work substantially completed (as defined

below); (ii) 90 days after Tenant has obtained Landlord's approval of plans for

Tenant's Work pursuant to this Lease and has all necessary governmental permits

and approvals for Tenant's Work AND ANY LANDLORD'S WORK IS SUBSTANTIALLY

COMPLETED (AS DEFINED BELOW); or (iii) when Tenant opens for business to the

public at the ADDITIONAL LOCATION; PROVIDED, THAT IN THE EVENT THE LOCATION IS

AT A NEW STORE WITH A PLANNED GRAND OPENING DATE, THEN LANDLORD MAY REQUIRE THAT

TENANT CO-ORDINATE THE SCHEDULE WITH LANDLORD'S SCHEDULE FOR OPENING OF

LANDLORD'S BUILDING AND OPEN ON THE GRAND OPENING DATE FOR THE STORE.

 

                  THE TERM OF THIS LEASE AS TO THE ADDITIONAL LOCATION SHALL BE

A PERIOD OF FIVE YEARS (SIXTY CALENDAR MONTHS) (PLUS ANY PARTIAL MONTH IN WHICH

THE LEASE TERM COMMENCES AS TO THE ADDITIONAL LOCATION), BEGINNING ON THE

ADDITIONAL LOCATION COMMENCEMENT DATE AND ENDING AT THE END OF THE SIXTIETH FULL

CALENDAR MONTH OF THE TERM OF THIS LEASE AS TO SUCH ADDITIONAL LOCATION (THE

"ADDITIONAL LOCATION TERMINATION DATE"). Upon Landlord's request, Tenant will

execute a supplemental memorandum at the start of the lease term stating the

actual ADDITIONAL LOCATION Commencement Date and the ADDITIONAL LOCATION

Termination Date. ATTACHED HERETO AS PART OF EXHIBIT A ARE SOME PROVISIONS

RELATING TO ANY SUCH ADDITIONAL LOCATIONS.

 

                  For purposes of this Lease, the term "COMMENCEMENT DATE" will

mean the Existing Location Commencement Date or the Additional Location

Commencement Date, as applicable to the location in question, and the

"TERMINATION DATE" will mean Existing Location Termination Date or the

Additional Location Termination Date, as applicable to the location in question.

 

                  NOTWITHSTANDING ANY OTHER PROVISION OF THIS LEASE, IN THE

EVENT LANDLORD'S LEASE OF THE BUILDING IN WHICH A PROPERTY IS SITUATED IS NOT

RENEWED OR EXTENDED IN THE YEAR IN WHICH ITS CURRENT TERM EXPIRES, THEN THE

LEASE BY TENANT OF THE PARTICULAR PROPERTY PURSUANT TO THIS LEASE WILL

AUTOMATICALLY TERMINATE ON THE DATE OF TERMINATION OF LANDLORD'S LEASE OR

TENANCY OF THE BUILDING (WITHOUT AFFECTING TENANT'S LEASE AS TO OTHER LOCATIONS

LEASED PURSUANT TO THIS LEASE). THIS LEASE SHALL BIND AND INURE TO THE BENEFIT

OF THE PARTIES, THEIR RESPECTIVE HEIRS, SUCCESSORS AND ASSIGNS, INCLUDING ANY

NAME CHANGE OR SALE OF THE COMPANY THAT IS A PARTY TO THIS LEASE, SUBJECT TO THE

LIMITATIONS ON TRANSFER OF TENANT'S INTEREST CONTAINED IN PARAGRAPH 9 BELOW.

 

         1.2     LANDLORD'S WORK AND TENANT'S WORK. AS TO ALL PROPERTY THAT IS

INITIALLY MADE A PART OF THIS LEASE AND THE SPECIAL LOCATIONS (WHICH ARE

PRESENTLY LEASED BY THE PARTIES UNDER THE EXISTING LEASES), THERE IS NO

LANDLORD'S WORK OR TENANT'S WORK REQUIRED IN CONNECTION WITH THE EXECUTION OF

THIS LEASE. TENANT IS PRESENTLY OCCUPYING ALL SUCH PROPERTY AND SPECIAL

LOCATIONS AND ACCEPTS THE CONDITION OF THE PROPERTY AND SPECIAL LOCATIONS, AS

IS, WITH NO WORK REQUIRED TO BE DONE.

 

                  AS TO ADDITIONAL LOCATIONS WHICH ARE SUBSEQUENTLY ADDED TO

THIS LEASE (OTHER THAN THE SPECIAL LOCATIONS, WHICH ARE LEASED AS IS), THE LEASE

ADDENDUM, AMENDMENT OR SUPPLEMENT EXECUTED BY THE PARTIES TO ADD THE ADDITIONAL

LOCATION TO THIS LEASE WILL SPECIFY WHICH OF THE EXHIBITS C THROUGH D THAT ARE

ATTACHED

 

FMI FORM 201 (Jan 1992 - REVISED 4/96) RETAIL LEASE AGREEMENT      March 22, 1999

 

                                        2

 

<PAGE>

 

TO THIS LEASE WILL APPLY AS TO THE ADDITIONAL LOCATION, WILL STATE ANY

DIFFERENCES IN THE GENERIC DESCRIPTION OF LANDLORD'S WORK AND TENANT'S WORK THAT

WILL BE APPLICABLE TO THE ADDITIONAL LOCATION, AND WILL REFERENCE THE APPLICABLE

EXHIBITS CONCERNING SIGNAGE.

 

                  As TO ADDITIONAL LOCATIONS, Landlord will notify Tenant when

Landlord has substantially completed the items of "Landlord's Work" (if any)

described on the attached Exhibit C and when the Property is ready for the

installation of Tenant's personal property and performance of the items of

"Tenant's Work" described on the attached Exhibit C. Tenant will promptly

perform the Tenant's Work, in accordance with the terms attached as Exhibit C.

No examination, inspection or approval of work by Landlord will be construed to

place upon Landlord any responsibility or liability for Tenant's Work or for any

noncompliance of Tenant's Work with applicable Legal Requirements (as defined in

paragraph 3.2 below) or otherwise waive or affect the requirements of this Lease

or the attached exhibits.

 

         1.3     DELIVERY OF POSSESSION. AS TO THE PROPERTY AND THE SPECIAL

LOCATIONS, TENANT HAS POSSESSION OF THE PROPERTY AND SPECIAL LOCATIONS UNDER THE

EXISTING LEASES. TENANT COVENANTS TO CONTINUE TO PERFORM ITS OBLIGATIONS UNDER

SUCH EXISTING LEASES UNTIL THE EXISTING LOCATIONS COMMENCEMENT DATE.

 

         1.4     CHANGES TO SITE PLAN AND DEVELOPMENT. No aspect of any site

plan or layout drawing attached to this Lease or any supplement, addendum or

amendment to this Lease or otherwise approved by the parties will be construed

as a representation, warranty or commitment by Landlord as to the location,

dimensions, placement, or continuation of common areas, parking areas,

buildings, improvements or other matters shown thereon. SUBJECT TO THE

LIMITATIONS STATED BELOW, Landlord reserves the right at any time to change the

location of, remove, alter or add to and build additional improvements within

the Development and to modify the Building and/or any other portion of the

Development. Upon Landlord's request at any time, the parties will amend any

site plan or layout drawing attached to this Lease or any supplement, addendum

or amendment to this Lease to reflect any change, removal, alteration or

addition which affects the Property or Tenant's right of use under this Lease.

NOTWITHSTANDING THE FOREGOING, ANY SUCH CHANGE, REMOVAL, ALTERATION, ADDITION OR

CONSTRUCTION WORK BY LANDLORD PURSUANT TO THIS PARAGRAPH 1.4 WILL BE SUBJECT TO

THE FOLLOWING LIMITATIONS: (i) ANY CHANGE IN THE LOCATION OF THE PROPERTY WITHIN

A PARTICULAR BUILDING WILL BE MADE IN ACCORDANCE WITH, AND SUBJECT TO THE TERMS

AND PROVISIONS OF, PARAGRAPH 14.8 OF THIS LEASE; (ii) ANY SUCH WORK BY LANDLORD

WILL BE PERFORMED IN A MANNER THAT DOES NOT UNREASONABLY INTERFERE WITH THE

CONDUCT OF TENANT'S BUSINESS; AND (iii) AS TO THE SPECIAL LOCATIONS WHICH HAVE

EXTERIOR ENTRANCES, ANY SUCH CHANGES, REMOVALS, ALTERATIONS, ADDITIONS OR

CONSTRUCTION WORK BY LANDLORD PURSUANT TO THIS PARAGRAPH 1.4 WILL NOT

UNREASONABLY DETRIMENT THE ACCESS TO AND FROM THE PROPERTY (OTHER THAN FOR

TEMPORARY INTERFERENCE DURING MAJOR REMODELINGS OR OTHER CONSTRUCTION, WHICH

WORK WILL NEVERTHELESS BE PERFORMED IN A MANNER DESIGNED TO REASONABLY MINIMIZE

ANY INTERFERENCE WITH TENANT'S BUSINESS) OR THE VISIBILITY OF THE PROPERTY FROM

THE ADJOINING COMMON AREAS.

 

         1.5     CONTINGENCIES CONCERNING TENANT'S OBLIGATIONS. AS TO

ADDITIONAL LOCATIONS AT WHICH TENANT IS NOT CURRENTLY THE LESSEE OF THE PROPERTY

UNDER AN EXISTING LEASE, Tenant will have an initial contingency period, IF ANY,

OF THE DURATION SPECIFIED IN THE ADDENDUM, AMENDMENT OR SUPPLEMENT ADDING THE

ADDITIONAL LOCATION TO THIS LEASE, in order to satisfy itself as to the

availability of governmental permits or licenses required for the construction

of Tenant's Work ("BUILDING PERMIT(S)") and as to the presence or absence of any

hazardous substances (as defined below). Before commencing Tenant's Work, Tenant

will provide to Landlord a copy of Tenant's building permit(s) and any

environmental assessment obtained by Tenant and waive the foregoing

contingencies. Tenant will provide periodic updates on the status of its efforts

and will respond to request for information as Landlord may reasonably require

about the status of such matters. Tenant will diligently pursue satisfaction of

such contingencies and will notify Landlord as soon as Tenant obtains (or is

denied) the building permit(s) and receives any such environmental assessment.

If Tenant is unable to satisfy such contingencies by the deadline date stated

above, Tenant may, not later than 5:00 p.m (Pacific Time) on the next business

day after such deadline date, terminate its obligation to lease the Additional

Location by written notice to Landlord. Thereafter, neither party shall have any

rights or liabilities under this Lease, and Landlord shall return any prepaid

rent and security deposit to Tenant, if any.

 

FMI FORM 201 (Jan 1992 - REVISED 4/96) RETAIL LEASE AGREEMENT       March 22, 1999

 

                                       3

 

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2.        RENTAL.

 

         2.1   BASE RENTAL. During the lease term (including any renewal

terms), commencing on the Commencement Date, Tenant will pay to Landlord on a

monthly basis a base rent for the Property, determined on a per square foot of

agreed area of the Property for each Property covered by this Lease (other than

the Special Locations), initially of $ * per square foot per year $ * PSF

PER MONTH), payable in equal monthly installments, subject to adjustment as

provided in this Lease. The monthly base rent will be paid in advance on the

FIFTEENTH (15TH) day of each month, AND WILL BE DEEMED TO BE PAST DUE AND IN

DEFAULT IF NOT RECEIVED BY LANDLORD BY THE TWENTY-FIFTH (25TH) DAY OF THE MONTH.

Tenant has paid, upon execution of this Lease, the sum of $NONE which shall be

applied to the first month's rent and has paid a security deposit of $NONE as

referenced in the attached Exhibit A.

 

         2.2   BASE RENTAL ADJUSTMENT. On THE Adjustment Date described

below, the base rental for the Property, determined on a per square foot of

agreed area of the Property FOR EACH PROPERTY COVERED BY THIS LEASE (OTHER THAN

THE SPECIAL LOCATIONS), shall be adjusted as follows: on the adjustment date

shown below, the base rent will be adjusted as follows:

 

<TABLE>

<CAPTION>

                                 Monthly                       Annual

Adjustment Date            Base Rental (Minimum)         Base Rental (Minimum)

---------------            ---------------------         ---------------------

<S>                        <C>                           <C>

JANUARY 1, 2004            $ * per square foot           $ * per square foot

</TABLE>

 

         AS TO ANY ADDITIONAL LOCATION LEASED BY TENANT, THE LEASE SUPPLEMENT,

ADDENDUM OR AMENDMENT ADDING THE ADDITIONAL LOCATION TO THE LEASE WILL STATE THE

RENT AMOUNTS TO BE PAID FOR THE ADDITIONAL LOCATION. THE RENT FOR THE INITIAL

5-YEAR TERM FOR AN ADDITIONAL LOCATION WILL BE $ * PER SQUARE FOOT PER YEAR

($ * PER SQUARE FOOT PER MONTH) FOR ANY PORTION OF THE TERM UP TO JANUARY 1,

2004 AND $ * PER SQUARE FOOT PER YEAR ($ * PER SQUARE FOOT PER MONTH)

THEREAFTER. AS TO ANY PORTION OF THE TERM FOR THE ADDITIONAL LOCATION THAT IS ON

AND AFTER JANUARY 1, 2009, THE BASE RENT WILL BE AS MAY BE AGREED TO BY THE

PARTIES AND STATED IN THE LEASE SUPPLEMENT, ADDENDUM OR AMENDMENT ADDING THE

ADDITIONAL LOCATION TO THE LEASE.

 

         2.3   TIME AND PLACE OF BASE RENT PAYMENTS. The base rent will be

paid in advance on the DATE AND at the address for Landlord set forth in this

Lease. Base rent for any partial month will be calculated on the basis of a

30-day month. Base rent for the partial month (if any) in which the Lease

commences shall be prorated and paid at commencement of the lease term.

 

         2.4   INTEREST AND LATE CHARGES. All rent and other charges not paid

when due shall bear interest from the due date until fully paid at the same rate

as specified in paragraph 11.3 below. In addition, if Tenant fails to make any

rent or other charge required by this Lease to be paid to Landlord within ten

days after it is due, Landlord may elect to impose a late charge of 5 cents per

dollar of the overdue payment, to reimburse Landlord for the costs of collecting

the overdue payment. Tenant shall pay the late charge upon demand by Landlord,

and will reimburse Landlord upon demand for reasonable attorneys' fees incurred

by Landlord in connection with the overdue payment. Landlord may levy and

collect a late charge in addition to all other remedies available for Tenant's

default, and collection of a late charge shall not waive the breach caused by

the late payment. If two or more checks are returned by Tenant's bank for

insufficient funds ("NSF") in any calendar year, then Tenant agrees that future

payments of rent and other charges to Landlord will (at Landlord's option) be

made by bank certified or cashier's checks. All bank service charges resulting

from NSF checks will be promptly paid by Tenant.

 

         2.5   PARTIAL OR DELINQUENT PAYMENTS. Payment by Tenant or receipt

by Landlord of any amount less than the full monthly rental or other charges due

from Tenant, or any endorsement or statement on any check or letter accompanying

any check or rent payment, shall not in any event be deemed an accord and

satisfaction. Landlord may accept such check or payment without prejudice to

Landlord's right to recover the balance of such rental or pursue any other

remedy provided in this Lease. Any payments required under this Lease which are

not paid on

 

FMI FORM 201 (Jan 1992 - REVISED 4/96) RETAIL LEASE AGREEMENT       March 22,1999

 

 

* Confidential portion, which has been omitted and filed separately with the

  Commission.

 

 

                                       4

 

<PAGE>

 

or before the date for payment in this Lease (subject to any permitted grace

period or notice requirement specified in this Lease) shall be considered

delinquent and in default.

 

         2.6       ADDITIONAL RENT, No OFFSETS. All charges required to be paid

by Tenant under this Lease, other than base rent and percentage rent, will

constitute additional rent. All rent (including base, percentage and additional

rent) shall be received by Landlord without set-off, offset, abatement, or

deduction of any kind.

 

         2.7       PERCENTAGE RENT. In addition to base rent, Tenant will pay to

Landlord a percentage rent equal to * percent ( * %) of Gross Sales (as

defined below) for the prior calendar month or partial calendar month, less a

credit against such percentage rent amount for the base rent paid for the same

period AND SUBJECT TO THE ANNUAL RECONCILIATION AND ADJUSTMENT PROVIDED BELOW.

Tenant will also provide monthly reports of Gross Sales, as set forth below. THE

CALCULATION OF GROSS SALES AND PERCENTAGE RENT, IF ANY, THAT IS DUE FOR A

PROPERTY WILL BE DETERMINED ON A PROPERTY-BY-PROPERTY BASIS, BASED ON THE GROSS

SALES AND BASE RENT PAID FOR EACH PROPERTY.

 

         2.8       DEFINITION OF GROSS SALES. As used in this Lease, "GROSS

SALES" will mean all sales of merchandise and services, whether for cash or

credit, including all gift and merchandise certificates, all credit charges and

carrying charges, and all other receipts of business conducted in or from the

Property, whether by Tenant, any licensee, subtenant or franchisee of Tenant or

other occupant of the Property, SUBJECT NEVERTHELESS TO THE EXCLUSIONS STATED

BELOW. Gross Sales will include (without limitation) all sales to employees, all

mail or telephone orders received or filled at or from the Property, all

deposits not refunded to the customer, and all orders taken in and from the

Property (whether or not such orders are filled elsewhere). Without limiting the

foregoing, sales of merchandise through orders received through the Internet or

other computer-to-computer system of communication will be treated as part of

the Gross Sales from the Property if the order is received or filled at or from

the Property (whether or not the merchandise is mailed or filled elsewhere).

However, Gross Sales shall exclude THE FOLLOWING: (i) THE AMOUNT OF any CASH OR

CREDIT refund made upon any sale where the merchandise sold from the Property

covered by this Lease is thereafter returned BY THE CUSTOMER AND ACCEPTED BY

TENANT; (ii) INTEREST OR OTHER CHARGES PAID BY CUSTOMERS FOR THE EXTENSION OF

CREDIT WHERE SUCH CHARGES ARE NOT INCLUDED IN THE SALES PRICE OF THE

MERCHANDISE; (iii) sums received by Tenant from sales of trade fixtures,

equipment or other personal property provided that such property is not Tenant's

inventory or stock in trade; (iv) SUBLEASE RENTALS RECEIVED BY TENANT FROM

DOCTORS OF OPTOMETRY (OR OTHER OPTOMETRIST PERFORMING SIMILAR SERVICES AS

REFERRED TO ABOVE) AND THE GROSS SALES FROM EXAMINATIONS OR FEES CHARGED TO THE

CUSTOMER BY DOCTORS OF OPTOMETRY WHO ARE PROVIDING EYE EXAMINATIONS OR SERVICES

AT THE PROPERTY (BUT WILL NOT EXCLUDE ANY SALES OF MERCHANDISE BY SUCH DOCTORS

OF OPTOMETRY); and (v) sales taxes paid by Tenant for sales made from the

Property and collected from its customers at the time of sale. No DEDUCTION

SHALL BE MADE FROM GROSS SALES FOR ANY FRANCHISE, INCOME OR GROSS RECEIPT TAXES,

OR FOR ANY OTHER TAXES BASED UPON THE INCOME OF TENANT. IN THE PAPER OR CREDIT

ACCOUNTS WITH ITS CUSTOMERS FOR INSTALLMENT OR CREDIT SALES, THE SALES PRICE OF

THE MERCHANDISE WILL NOT BE INCLUDED IN GROSS SALES ON THE DATE OF SALE, BUT

WILL BE TREATED AND INCLUDED AS A "SALE" FOR THE FULL PRICE IN THE MONTH IN

WHICH TENANT RECEIVES THE FIRST INSTALLMENT PAYMENT FROM ITS CUSTOMER AFTER THE

DATE OF SALE (REGARDLESS OF THE TIME FOR PAYMENT OF THE BALANCE OF THE ACCOUNT).

OTHER SALES PURSUANT TO BANK CREDIT OR DEBIT CARDS OR OTHER CREDIT SALES WILL BE

TREATED AS A SALE FOR THE FULL PRICE AT THE TIME TENANT DEPOSITS THE CHARGE

SLIPS FOR REMITTANCE. HOWEVER, WHERE TENANT RECEIVES A DEPOSIT AT THE TIME OF AN

ORDER AND THE BALANCE IS PAID BY THE CUSTOMER ON DELIVERY OF THE MERCHANDISE,

THE DEPOSIT WILL BE TREATED AS A RECEIPT WHEN RECEIVED, BUT THE BALANCE WILL BE

TREATED AS A SALE AND RECEIPT BY TENANT WHEN TENANT ACTUALLY RECEIVES PAYMENT ON

DELIVERY OF THE MERCHANDISE TO THE CUSTOMER (NOT ON THE ORIGINAL DATE ON WHICH

THE CUSTOMER MADE THE DEPOSIT).

 

         2.9       CALCULATION AND PAYMENT OF PERCENTAGE RENT. Percentage rent

will be calculated as of the last day of the month and will be paid by Tenant

within TWENTY-FIVE (25) days after the end of the calendar month, less a credit

for the base rent for the same period previously paid by Tenant. SUCH MONTHLY

PAYMENTS OF PERCENTAGE RENT WILL BE SUBJECT TO THE ANNUAL RECONCILIATION AND

ADJUSTMENT PROVIDED IN PARAGRAPH 2.11. Whether or not any percentage rent is

owed or payable, Tenant shall submit to Landlord a written statement of Gross

Sales for each month during the lease term, within TWENTY-FIVE (25) days after

the end of each month for the prior month.

 

FMI FORM 201 (Jan 1992 - REVISED 4/96) RETAIL LEASE AGREEMENT       March 22,1999

 

* Confidential portion, which has been omitted and filed separately with the

  Commission.

 

 

                                       5

 

<PAGE>

 

         2.10      RECORDS CONCERNING GROSS SALES. Tenant shall maintain accurate

records showing Gross Sales from the Property on a monthly basis, in accordance

with industry standards for comparable businesses. Such records, consisting of

ledgers, bank deposit slips, and any other similar accounts, AND RECORDS FROM

TENANT'S POINT OF SALE DEVICES (OR DAILY SUMMARY EQUIVALENTS OR OTHER RECORDS OF

GROSS SALES OF THE TYPE RETAINED IN THE ORDINARY COURSE OF TENANT'S BUSINESS

OPERATIONS) shall be preserved for a period of 3 years after the date on which

Tenant provides its annual statement of Gross Sales to Landlord (however, if an

audit is begun or if there is a dispute regarding Gross Sales, Tenant's records

for the year being audited or that are in dispute will in any event be retained

until a final resolution of the audit or dispute). Such records shall be

available for examination or audit by Landlord following reasonable advance

notice. HOWEVER, IN NO EVENT WILL LANDLORD CONDUCT SUCH AUDITS OR EXAMINATIONS

MORE FREQUENTLY THAN ANNUALLY.

 

         2.11      REPORTING BY TENANT; ANNUAL RECONCILIATION AND ADJUSTMENT.

Tenant shall submit to Landlord a monthly statement of Gross Sales for each

calendar month within TWENTY-FIVE (25) days after the end of the month and an

annual statement of Gross Sales for each calendar year and partial calendar year

during the lease term within SIXTY (60) days after the end of the year. Each

monthly statement will show Gross Sales FOR EACH LOCATION (CALCULATED

SEPARATELY) and any percentage rent payable during the prior calendar month FOR

EACH LOCATION (CALCULATED SEPARATELY) . Each annual statement will show Gross

Sales and percentage rent during the prior calendar year or partial calendar

year FOR EACH PROPERTY (CALCULATED SEPARATELY), recapitulated on a monthly

basis. All statements will be deemed a certificate by Tenant as to Gross Sales

for the period in question. EACH MONTHLY AND ANNUAL STATEMENT WILL SHOW GROSS

SALES AND PERCENTAGE RENT ON A PROPERTY-BY-PROPERTY BASIS.

 

         AFTER LANDLORD'S RECEIPT OF TENANT'S ANNUAL STATEMENT, THERE WILL BE A

PERCENTAGE RENT RECONCILIATION AND ADJUSTMENT BETWEEN THE PARTIES. IF THE

PERCENTAGE RENT PAYMENTS MADE BY TENANT FOR EACH LOCATION (CALCULATED

SEPARATELY) ARE LESS THAN THE ACTUAL AMOUNT PAYABLE FOR THE PRIOR CALENDAR YEAR

FOR EACH LOCATION (CALCULATED SEPARATELY), TENANT WILL PAY THE DEFICIENCY IN

PERCENTAGE RENT PAYMENTS TO LANDLORD AT THE TIME TENANT SUBMITS THE ANNUAL

STATEMENT. IF TENANT'S PAYMENTS FOR THE PRIOR CALENDAR YEAR EXCEED THE ACTUAL

AMOUNT PAYABLE, LANDLORD WILL CREDIT THE DIFFERENCE AGAINST THE NEXT RENT

PAYMENTS DUE FROM TENANT, OR, AT THE END OF THE LEASE, LANDLORD WILL REFUND SUCH

EXCESS WITHIN THIRTY (30) DAYS AFTER TENANT'S REQUEST.

 

         2.12      LANDLORD'S RIGHT TO AUDIT; CONFIDENTIALITY. Landlord may

examine or audit any or all of the records of Tenant, and any licensee,

subtenant or franchise of Tenant or other occupant of the Property, which relate

in any manner to Gross Sales and Tenant's percentage rent computation. LANDLORD

WILL NOT EXAMINE OR AUDIT RECORDS THAT PERTAIN SOLELY TO ANY GROSS SALES FROM

EXAMINATIONS OR FEES CHARGED TO THE CUSTOMER BY DOCTORS OF OPTOMETRY WHO ARE

PROVIDING EYE EXAMINATIONS OR SERVICES AT THE PROPERTY (BUT MAY AUDIT OR EXAMINE

RECORDS OF ANY SALES OF MERCHANDISE BY SUCH DOCTORS OF OPTOMETRY). If such

examination or audit discloses that the percentage rent was understated, Tenant

shall immediately pay the percentage rent to Landlord together with interest on

the shortage of percentage rent from the dates such rent should have been paid

by Tenant. If the percentage rent was understated by more than THREE percent

(3%) AND THE CAUSE OF THE UNDERSTATEMENT OF PERCENTAGE RENT WAS TENANT'S FAILURE

TO REPORT SALES OR TENANT'S KNOWING, WILLFUL OR GROSSLY NEGLIGENT PREPARATION OR

CALCULATION OF THE GROSS SALES AND PERCENTAGE RENT AMOUNTS, EXCLUDING ROUTINE

CLERICAL ERRORS MADE BY TENANT'S ACCOUNTANTS OR EMPLOYEES, Tenant shall pay for

the costs of the audit, and if the percentage rent was understated by more than

six percent (6%), Tenant shall pay to Landlord (in addition to the percentage

rent and interest owed) an amount equal to TEN percent (10%) of the percentage

rent owed, as AN additional rent SURCHARGE. PAYMENT OF SUCH COSTS OR SURCHARGE

WILL BE in addition to any other right or remedy available under this Lease or

applicable law.

 

         Landlord will hold the financial and sales information obtained from

the records of Tenant in confidence, except that: (i) Landlord may submit such

reports and information in confidence (but Landlord will not be liable for any

breach of confidentiality by the recipient) to any of Landlord's mortgagees or

master lessors or to any potential or actual mortgagee or purchaser of

Landlord's interest, or to employees, directors, officers and partners of

Landlord, or to Landlord's accountants, legal counsel and professional advisors;

(ii) such reports and information may be disclosed or submitted as may be

required in connection with any litigation, arbitration or other proceeding

 

FMI FORM 201 (Jan 1992 - REVISED 4/96) RETAIL LEASE AGREEMENT       March 22,1999

 

                                       6

 

<PAGE>

 

between the parties; and/or (iii) such information may be disclosed or submitted

as may be legally required by any governmental or court order or law or

regulation.

 

3.        USE OF PROPERTY.

 

         3.1       PERMITTED USE. Tenant shall use the Property only for

conducting the following business and for no other purpose without Landlord's

written consent: RETAIL SALES OF OPTICAL MERCHANDISE, EYEGLASSES, CONTACT

LENSES, PRESCRIPTION AND NON-PRESCRIPTION SUNGLASSES, AND PROFESSIONAL SERVICES

BY A LICENSED DOCTOR OF OPTOMETRY (THE "PRIMARY Use") AND (AS INCIDENTAL TO SUCH

PRIMARY USE) A PORTION OF THE PROPERTY MAY BE USED AS AN EYEGLASS ASSEMBLY

LABORATORY AND TENANT MAY SELL TELESCOPES AND MICROSCOPES. FABRICATION OF LENSES

AND FRAMES AT THE PROPERTY IS NOT A PERMITTED USE. Any proposed change of such

permitted use or other material change to the retail marketing orientation or

quality of operation of the business within the Property (whether by Tenant or

by any proposed assignee, subtenant or transferee, subject nevertheless to the

restrictions on transfer stated in paragraph 9 below) are subject to the advance

written approval of Landlord in its sole BUT COMMERCIALLY REASONABLE discretion.

Landlord may withhold its approval if Tenant has not demonstrated to Landlord's

COMMERCIALLY REASONABLE satisfaction that the proposed use, retail marketing

orientation and/or quality of operation is compatible (in Landlord's sole BUT

COMMERCIALLY REASONABLE judgment) with other business operations (including

Landlord's) conducted or permitted within the Development.

 

         3.2       COMPLIANCE WITH LEGAL REQUIREMENTS. In connection with its

use, Tenant shall comply at its expense with all applicable laws, rules,

regulations and ordinances of all federal, state, county, municipal and other

public authorities having or claiming jurisdiction, and all recorded covenants,

conditions and restrictions affecting the Development and Building

(collectively, the "LEGAL REQUIREMENTS"), including those regarding maintenance,

operation, and use of the Property and appliances on the Property (including

signs).

 

         Notwithstanding the foregoing, in the event any present or future law,

ordinance, governmental rule or other Legal Requirement applicable to the

Development, including, without limitation, the American with Disabilities Act

of 1990, all amendments and supplements thereto and all applicable rules and

regulations issued thereunder (collectively referred to as the "ADA"), mandates

changes to the leased Property or Development, then Landlord will be responsible

for causing such changes to be made to the common areas and other portions of

the Development under Landlord's control, and Tenant will be responsible for

causing such changes to be made to the leased Property under Tenant's control.

If the installation of Tenant's leasehold improvements, furniture, fixtures and

equipment ("FF&E") or any subsequent work or alteration by Tenant within the

Property may require changes to the Building or common areas or other portions

of the Development in order to comply with the ADA or other governmental

requirement, then the parties will, in good faith, cooperate with each other and

resolve any dispute as to the commercial reasonableness of the proposed action

or alteration, as part of Landlord's review and decision as to whether to

consent to the action or alteration.

 

         3.3       HAZARDOUS SUBSTANCES. Tenant shall comply fully with all

applicable Legal Requirements pertaining to the protection of human health and

the environment, including (but not limited to) employee and community right-

to-know laws, occupational safety and health regulations, and all Legal

Requirements regarding the use, generation, storage, transportation, treatment,

disposal or other handling of hazardous substances ("ENVIRONMENTAL

REQUIREMENTS"). Tenant shall promptly advise Landlord in writing of any

hazardous substances regulated by such laws that are used, generated,

manufactured, stored, transported or otherwise handled on the Property. Tenant

shall exercise extreme care in handling any hazardous substances and shall not

cause or permit hazardous substances to be spilled, leaked, disposed of or

otherwise released on the or from the Property or on, under or into the

remainder of the Development. The only hazardous substances permitted on the

Property are cleaning products and other materials in ordinary quantities which

are used in the ordinary course of business and necessary for the conduct of

Tenant's business and which Tenant uses in strict compliance with all applicable

Environmental Requirements. The term "HAZARDOUS SUBSTANCES" is used in its very

broadest sense, and refers to materials which because of their quantity,

concentration, or physical, chemical, or infectious characteristics may cause or

pose a present or potential hazard to human health or the environment when

improperly handled, treated, stored, transported, disposed of, or otherwise

managed. The term shall include, but is not limited to, all hazardous

substances, hazardous materials and

 

FMI FORM 201 (Jan 1992 - REVISED 4/96) RETAIL LEASE AGREEMENT       March 22,1999

 

                                       7

 

<PAGE>

 

hazardous wastes listed by the U.S. Environmental Protection Agency and the

state in which the Property is located under the Comprehensive Environmental

Response, Compensation and Liability Act (CERCLA), the Resource Conservation and

Recovery Act (RCRA), the Toxic Substances Control Act (TSCA), and the Federal

Water Pollution Control Act (FWPCA), and comparable State statutes and other

Environmental Requirements, and specifically includes asbestos-containing

materials and petroleum products.

 

          3.4       INFECTIOUS WASTES. Subject to the limitations stated in

paragraphs 3.1 and 3.3, Tenant shall cause any infectious wastes to be stored,

discarded, treated, transported and disposed of in strict compliance with all

applicable Legal Requirements and Environmental Requirements.

 

         3.5       NO OFFENSIVE ACTIVITIES. Tenant shall not conduct or permit

any activities on the Property that create a nuisance or damage the reputation

of the Property or Development, or are offensive to Landlord or other owners or

users of adjoining property.

 

         3.6       SUPERVISION. Tenant shall keep the Property clean and orderly

and will cause its employees on the Property to be well-groomed and dressed in

accordance with a first-class, professional operation of Tenant's business.

Tenant will supervise its employees and cause Tenant's agents, independent

contractors, employees, customers, suppliers and invitees to conduct their

activities in such a manner as to comply with the requirements of this Lease and

the rules and regulations referenced below.

 

         3.7       COMMON AREAS. SUBJECT TO THE LIMITATIONS STATED IN PARAGRAPH

1.4, Landlord reserves the right at any time to change the location of, remove,

alter or add to and build on any portion of the Building, other improvements and

common areas within the Development. All access, customer parking, employee

parking and common areas within the Development shall be used in strict

compliance with Landlord's rules, regulations and requirements for such areas.

 

          3.8       NAME OF BUSINESS. The advertised name of the business operated

at the Property shall be as follows: "VISTA OPTICAL" (OR ANY OTHER TRADE NAME

USED FROM TIME TO TIME BY A MAJORITY OF TENANT'S STORES IN THE STATE IN WHICH

THE PARTICULAR PROPERTY IS SITUATED) . OR AS OTHERWISE APPROVED FROM TIME TO

TIME BY LANDLORD IN ITS COMMERCIALLY REASONABLE DISCRETION. Tenant may change

its advertised name at the Property TO ANY OTHER TRADE NAME APPROVED BY LANDLORD

OR OTHERWISE PERMITTED PURSUANT TO THIS PARAGRAPH, AFTER GIVING LANDLORD WRITTEN

NOTICE OF THE CHANGE IN TRADE NAME. AS TO ANY PROPERTY, TENANT'S ADVERTISING MAY

IDENTIFY TENANT'S BUSINESS AS A BUSINESS CONDUCTED "AT FRED MEYER," "IN FRED

Meyer," "AT FRED MEYER SHOPPING CENTERS," OR "IN FRED MEYER SHOPPING CENTERS,"

BUT TENANT WILL NOT OTHERWISE USE THE NAME OF FRED MEYER IN CONNECTION WITH ANY

ADVERTISING UNLESS SPECIFICALLY APPROVED IN WRITING BY LANDLORD, WHICH APPROVAL

WILL NOT BE UNREASONABLY WITHHELD IN LANDLORD'S SOLE BUT COMMERCIALLY REASONABLE

JUDGMENT.

 

         IN ANY STATE IN WHICH TENANT OPERATES AT LEAST ONE (1) PROPERTY UNDER

THIS LEASE (ANY SUCH STATE, A "COVERED STATE"). TENANT, ANY FRANCHISEE OF TENANT

OR ANY OTHER PERSON WITH TENANT'S AUTHORIZATION AND APPROVAL SHALL NOT, IN SUCH

COVERED STATE, OPERATE A RESTRICTED OPERATION (AS DEFINED BELOW) WITH THE

RESTRICTED TRADE NAME (AS DEFINED BELOW) DURING SUCH TIME AS THERE IS AT LEAST

ONE (1) PROPERTY OPERATED PURSUANT TO THIS LEASE (WHETHER OR NOT CURRENTLY

LEASED OR SUBSEQUENTLY ADDED TO THIS LEASE) IN THE COVERED STATE. FOR PURPOSES

OF THE FOREGOING, A "RESTRICTED OPERATION" SHALL MEAN A RETAIL VISION CENTER

LOCATED IN A HOSTED ENVIRONMENT (AS DEFINED BELOW), SUCH AS THE OPERATION OF A

RETAIL VISION CENTER AT A WALMART, ALBERTSON'S, SAFEWAY OR OTHER RETAIL CHAIN

STORE. A "HOSTED ENVIRONMENT" MEANS THE OPERATION OF A RETAIL LOCATION INSIDE

ANOTHER RETAIL STORE OR WITH AN INTERIOR ACCESS BETWEEN THE RESTRICTED OPERATION

AND THE ADJOINING RETAIL STORE. THE "RESTRICTED TRADE NAME" SHALL MEAN THE SAME,

OR SUBSTANTIALLY THE SAME, TRADE NAME AS THEN USED BY TENANT AT ANY OF THE

PROPERTIES LEASED FROM LANDLORD IN THE COVERED STATE.

 

         3.9       STORAGE. TRASH. Tenant shall not store anything outside except

in areas approved by Landlord. Tenant will use only trash and garbage

receptacles approved by Landlord. Tenant shall dispose of trash and other matter

in a manner acceptable to Landlord, at Tenant's expense.

 

FMI FORM 201 (Jan 1992 - REVISED 4/96) RETAIL LEASE AGREEMENT       March 22,1999

 

                                       8

 

<PAGE>

 

         3.10      SIGNAGE. Tenant must install and maintain its own signage on

the Property at all times and in a manner acceptable to Landlord IN ITS SOLE BUT

COMMERCIALLY REASONABLE JUDGMENT. Tenant will be required to obtain Landlord's

prior approval (IN LANDLORD'S SOLE BUT COMMERCIALLY REASONABLE JUDGMENT) of the

design, size, color, materials and other details of the signage, including

(without limitation) any window signage that can be seen from the exterior. Any

sign on the Property will be designed and constructed in compliance with

applicable sign codes and the requirements of the attached Exhibit D. If

Landlord performs a major remodeling at the Development, Tenant will be

responsible for modifying or remodeling its sign consistent with the style used

in the major remodeling and in accordance with the attached Exhibit D.

 

         3.11      REGULATIONS. Landlord shall have the right to make and enforce

rules and regulations consistent with this Lease for the purpose of regulating

access, parking, and the use of common areas, establishing standards and

requirements concerning the conduct and operation of business, and promoting

safety, order, cleanliness, and good service to the Property, Development and

adjacent property. Tenant will promptly comply with all such rules and

regulations. Tenant acknowledges receipt of the rules and regulations attached

as Exhibit B and agrees to comply with the same.

 

         3.12      COVENANT OF CONTINUOUS OPERATION AND FULL MERCHANDISING.

Tenant shall continuously use and conduct its merchandising business on the

Property AT LEAST FOR THE MINIMUM HOURS STATED BELOW. Tenant shall carry and

offer for sale at all times a full and complete stock of merchandise, and shall

maintain adequate personnel for the efficient serving of its customers. Tenant

shall not lower the quality of its merchandise or change the quality of its

business without Landlord's consent. Tenant shall use best efforts to operate

the business conducted on the Property in a diligent manner that will produce

the maximum volume of Gross Sales, consistent with prudent business practices.

 

         3.13      HOURS OF OPERATION. Tenant agrees to keep open and operate its

business at the Property the following hours: AT LEAST EIGHT HOURS PER DAY AND

SIX DAYS PER WEEK WITHIN BUSINESS HOURS AND DAYS AS LANDLORD'S RETAIL OPERATION

IN THE BUILDING IS OPEN FOR BUSINESS (THE "MINIMUM HOURS"). TENANT MAY ALTER ITS

DAILY HOURS OF OPENING OR CLOSING, AT TENANT'S OPTION, AND MAY KEEP ITS BUSINESS

OPEN FOR ADDITIONAL HOURS DURING THE NORMAL HOURS OF OPERATION OF BUSINESS IN

THE BUILDING. AS TO ANY SPECIAL LOCATION, IF TENANT DESIRES TO BE OPEN DURING

HOURS OTHER THAN THE NORMAL BUSINESS HOURS OF THE DEVELOPMENT, Landlord may

charge Tenant for any after hours service requirements. Tenant will not,

however, be required to be open on Christmas Day or on Thanksgiving, New Year's

Eve, New Year's Day or during any hours on any other recognized state or

national holiday on which the Fred Meyer retail operation at the Development is

not open or is closed before 11:00 p.m. Tenant will keep its hours of business

posted at the Property at all times. NOTWITHSTANDING ANYTHING TO THE CONTRARY

CONTAINED HEREIN, TENANT MAY CLOSE ITS OPERATION AT A PROPERTY UP TO 4 HOURS

EARLY ON ONE DAY IN EACH CALENDAR QUARTER FOR THE PURPOSES OF CONDUCTING

INVENTORY. IF TENANT'S OPERATION AT A PROPERTY IS TO BE CLOSED FOR BUSINESS

DURING PART OR ALL OF A DAY ON WHICH TENANT IS TYPICALLY OPEN FOR BUSINESS (FOR

PURPOSES OF CONDUCTING INVENTORY OR OTHER REASONS, OTHER THAN "FORCE MAJEURE"

EVENTS THAT TENANT COULD NOT REASONABLY ANTICIPATE), TENANT WILL POST AND

MAINTAIN IN A LOCATION LIKELY TO BE SEEN BY TENANT'S CUSTOMERS A SIGN STATING

THE DATE AND TIME OF THE INTENDED CLOSURE DURING THE PERIOD OF AT LEAST TEN (10)

CALENDAR DAYS) BEFORE THE CLOSURE.

 

         3.14      COMPETITIVE BUSINESS. EXCEPT FOR THE EXCLUDED LOCATIONS STATED

BELOW, while this Lease is in effect, Tenant shall not directly or indirectly

own, operate, manage or engage in any business PROVIDING ANY OPTICAL SERVICES

within a ONE (1) mile radius of the Development. In case of violation by Tenant

of this paragraph, Landlord shall have all the rights provided in this Lease for

default, and in addition, at Landlord's option, Tenant's Gross Sales (as defined

in this Lease) on or from the similar or competing business shall be added to

and deemed a part of Tenant's Gross Sales under this Lease. In such event, such

Gross Sales from the similar or competing business within such radius are will

be treated as Tenant's Gross Sales for all purposes of this Lease, and the same

shall be computed and reported to Landlord in the same manner provided above for

the computation and accounting of Tenant's Gross Sales from the Property. Tenant

acknowledges this provision is an essential part of Landlord's agreement to

lease the Property to Tenant at the rental and on the terms contained in this

Lease and, further, that the period of time and area set forth in this paragraph

are fair and reasonable to assure Landlord of its expected

 

FMI FORM 201 (Jan 1992 - REVISED 4/96) RETAIL LEASE AGREEMENT      March 22, 1999

 

                                       9

 

<PAGE>

 

rental income, but not to control competition. HOWEVER, THIS PARAGRAPH 3.14

SHALL NOT APPLY TO ANY OF THE FOLLOWING (THE "EXCLUDED LOCATIONS"): ANY

COMPETING BUSINESS DIRECTLY OR INDIRECTLY OWNED, OPERATED OR LEASED BY TENANT AS

OF THE DATE OF THIS LEASE, OR THAT IS NOW OR HEREAFTER LOCATED WITHIN A WAL-MART

STORE, OR THAT IS ACQUIRED AS PART OF A MERGER OR ASSET ACQUISITION BY TENANT

WITH ANOTHER BUSINESS OR THAT THE OTHER PARTY IN SUCH MERGER OR ASSET

ACQUISITION MAY THEN OWN, OPERATE OR LEASE IF SUCH PARTY ACQUIRES TENANT OR

TENANT'S ASSETS IN THE MERGER OR ASSET ACQUISITION (SUBJECT TO ANY REQUIREMENTS

FOR LANDLORD'S APPROVAL UNDER PARAGRAPH 9), OR THAT IS LOCATED IN A MAJOR MALL

WITH AT LEAST TWO MAJOR DEPARTMENT STORES. ANY SUCH OPERATION IN AN EXCLUDED

LOCATION WILL NEVERTHELESS BE SUBJECT TO THE LIMITATION IN PARAGRAPH 3.8 (IF THE

EXCLUDED LOCATION IS NOT IN AN ENCLOSED MALL). A WAL-MART OR SAM'S CLUB STORE IS

NOT CONSIDERED TO BE AN "ENCLOSED MALL" EVEN IF THERE IS MORE THAN ONE INTERIOR

TENANT.

 

4.        MAINTENANCE AND ALTERATIONS.

 

         4.1       LANDLORD'S OBLIGATIONS. Landlord shall be under no obligation

to make any repairs, alterations or improvements on the Property at any time,

except as otherwise expressly required in this Lease. Subject to the terms of

paragraph 4.3 below, Landlord shall be responsible for: (i) providing water and

sewer to the Property; (ii) the repair and maintenance of the roof and structure

of the Building; AND (iii) THE ELECTRICAL, LIGHTING (BUT NOT THE LIGHT BALLASTS

AND LIGHT BULBS), PLUMBING AND SPRINKLER SYSTEMS IN THE BUILDING AND

UNDERGROUND, AND THE HEATING, VENTILATION AND AIR CONDITIONING SYSTEM ("HVAC")

SERVING THE PROPERTY; provided, however, that if Landlord is required to make

any repairs to the water or sewer system or the roof or structure OR OTHER

PORTION OF THE BUILDING OR BUILDING SYSTEMS OR HVAC REFERENCED ABOVE THAT ARE TO

BE MAINTAINED BY LANDLORD by reason of any act, neglect or omission to act of

Tenant or its employees, agents, invitees, licensees, contractors or subtenants

(SUBJECT TO THE WAIVER IN PARAGRAPH 7.4, IF APPLICABLE), Landlord shall have the

right to recover from Tenant the REASONABLE cost of the repairs, as provided in

paragraph 4.3, plus interest as provided in paragraph 11.3 below.

 

         4.2       WORK BY LANDLORD. Landlord shall have the right to erect

scaffolding and apparatus for the purpose of making repairs, installations,

alterations or modifications to the Building or common areas or to any portion

of the Development. Landlord shall have no liability for failure to perform

required maintenance and repair on or about the Property for which Landlord may

be responsible under this Lease, unless written notice of the needed maintenance

or repair is given by Tenant, and Landlord fails to remedy the problem within a

reasonable time after receipt of such notice. Landlord shall have no liability

for interference with Tenant's use by repairs, installations, alterations or

modifications, provided the work is performed in a manner designed to cause a

reasonable minimum of interference to Tenant.

 

         4.3       TENANT'S OBLIGATIONS. Tenant, at its sole cost and expense,

shall put, keep and maintain at all times all portions of the Property not

required to be maintained by Landlord under paragraph 4.1 (including, without

limitation, all tenant improvements, drains, displays, all exterior and interior

plate glass, show cases, storefront parts and moldings, doors, door jams, door

closers, door hardware, fixtures, equipment and appurtenances thereof, floors,

partitions, fixtures and equipment, and the exterior sign cabinet (if any),

including lights, LIGHT BULBS and LIGHT ballasts, and interior and any exterior

signs) in first class repair, operating condition, working order and appearance,

and in accordance with all applicable Legal Requirements, including (without

limitation) those requiring any alteration of the Property (structural or

nonstructural), subject to requirements in paragraph 4.6 below concerning

Landlord's consent to such alterations.

 

         The interior of the Property and Tenant's signs shall be repainted,

redecorated and refurbished by Tenant ONCE EVERY FIVE YEARS DURING THE LEASE

TERM TO THE EXTENT NECESSARY FOR TENANT TO MAINTAIN THEM IN A FIRST-CLASS

APPEARANCE AND CONDITION.

 

         Tenant shall also be responsible for the repair of any and all damage

caused to the Property, Building and/or Development by any act, neglect or

omission of Tenant or its employees, agents, invitees, licensees, contractors or

subtenants (SUBJECT TO THE WAIVER IN PARAGRAPH 7.4, IF APPLICABLE). The repair

of any such damage shall, at Landlord's option, either be performed by Tenant at

its expense or will be made by Landlord at Tenant's

 

FMI FORM 201 (Jan 1992 - REVISED 4/96) RETAIL LEASE AGREEMENT       March 22,1999

 

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<PAGE>

 

cost and expense. Tenant shall reimburse to Landlord ALL REASONABLE costs and

expenses incurred by Landlord IN CONNECTION WITH ANY SUCH REPAIR, within THIRTY

(30) days after submission by Landlord to Tenant of a statement of the amount

thereof. If not so paid within such 30-day period, the total amount will bear

interest as provided in paragraph 11.3 below from the date such costs were

incurred.

 

         4.4       ADDITIONAL EQUIPMENT. EXCEPT FOR EQUIPMENT AND MACHINERY

APPROVED BY LANDLORD WHICH TENANT WILL BE USING TO ENGAGE IN THE PERMITTED USES

DESCRIBED IN PARAGRAPH 3.1 OF THIS LEASE, Tenant shall not, without Landlord's

prior written consent (WHICH WILL NOT BE UNREASONABLY WITHHELD OR DELAYED), use

heat- generating machines or equipment or lighting other than standard lights

provided to the Property that affect the temperature otherwise maintained by the

air-conditioning system. If such consent is given, Landlord shall have the right

to install supplementary air-conditioning units in the Property and the ACTUAL,

REASONABLE cost thereof, including the ACTUAL, REASONABLE costs of installation,

operation and maintenance of such units, shall be paid by Tenant to Landlord

upon billing by Landlord. Tenant shall not install lighting or other electrical

equipment or devices requiring power in excess of the standard amounts (load and

usage) as determined from time to time by Landlord for normal office/retail use

of the Property and other premises in the Building.

 

         4.5       BUILDING OVERLOADS. Tenant will refrain from doing anything on

or about the Property that will cause an overload. If Landlord believes there is

an overload or a material risk of an overload, Landlord may select a qualified

electrician wh