Exhibit 10.3

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT (this “Lease”) is made as of February     , 2006 (the
“Effective Date”), by and between SPIRIT SPE CANTON, LLC, a Delaware limited
liability company (“Lessor”), whose address is 14631 N. Scottsdale Road, Suite
200, Scottsdale, Arizona 85254-2711, and CASUAL MALE RETAIL GROUP, INC., a
Delaware corporation (“Lessee”), whose address is 555 Turnpike Street, Canton,
Massachusetts 02021.

 

In consideration of the mutual covenants and agreements herein contained, Lessor
and Lessee hereby covenant and agree as follows:

 

1. Certain Defined Terms. Capitalized terms not defined herein shall have the
meanings set forth in Exhibit A hereto.

 

2. Lease of Property; Use. In consideration of the Rentals and other Monetary
Obligations to be paid by Lessee and of the other terms, covenants and
conditions on Lessee’s part to be kept and performed, Lessor hereby leases to
Lessee, and Lessee hereby takes and hires, the Property, subject to the
Permitted Encumbrances, all Legal Requirements (including any existing violation
thereof), and subject to Lessee’s rights to assign and/or sublet the Property
and the condition of the Property as of the Effective Date. During the Lease
Term, the Property shall be used for the operation of a Permitted Facility, and
related purposes such as ingress, egress and parking. Lessee shall at all times
during the Lease Term occupy the Property and shall diligently operate its
business on the Property. Lessee shall not convert any of the Property to an
alternative use (other than as a Permitted Facility) during the Lease Term
without Lessor’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed.

 

3. Lease Term; Extension. The initial term of this Lease (“Initial Term”) shall
commence as of the Effective Date and shall expire at midnight on January 31,
2026 (“Expiration Date”), unless terminated sooner as provided in this Lease and
as may be extended as provided herein. The time period during which this Lease
shall actually be in effect, including any Extension Term, is referred to herein
as the “Lease Term.” Unless this Lease has expired or has been sooner
terminated, or an Event of Default has occurred and is continuing at the time
any extension option is exercised, Lessee shall have the right and option (each,
an “Extension Option”) to extend the Initial Term for the Property for six
(6) additional successive periods of five (5) years each (each, an “Extension
Term”), pursuant to the terms and conditions of this Lease then in effect.
Lessee may only exercise the Extension Options by giving written notice thereof
to Lessor of its election to do so first, no later than one hundred twenty
(120) days prior to the Expiration Date and one hundred twenty (120) days prior
to the immediately preceding Extension Term, as the case may be. If written
notice of the exercise of any Extension Option is not received by Lessor by the
applicable dates described above, then this Lease shall terminate on the last
day of the Initial Term or, if applicable, the last day

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of the Extension Term then in effect. Upon the request of Lessor or Lessee, the
parties hereto will, at the expense of Lessee, execute and exchange an
instrument in recordable form setting forth the extension of the Lease Term in
accordance with this Section 3.

 

4. Rental and Other Monetary Obligations.

 

A. Base Monthly Rental. During the Initial Term, on or before the first day of
each calendar month, Lessee shall pay in advance the Base Monthly Rental;
provided, however, if the Effective Date is a date other than the first day of
the month, Lessee shall pay to Lessor (or any other party designated by Lessor)
on the Effective Date the Base Monthly Rental prorated by multiplying the Base
Monthly Rental by a fraction, the numerator of which is the number of days
remaining in the month (including the Effective Date) for which Rental is being
paid, and the denominator of which is the total number of days in such month.
During the Extension Terms, if any, Lessee shall pay the Rental (including the
Base Monthly Rental) in the manner set forth in this Section 4. Unless otherwise
specifically stated to the contrary herein, Lessee shall perform all its
obligations under this Lease at its sole cost and expense and shall pay all
Rental and any other Monetary Obligation due hereunder when due and payable.

 

B. Adjustments.

 

(i) On the first Adjustment Date and on each Adjustment Date thereafter, the
Base Annual Rental shall increase by an amount equal to the Rent Adjustment. The
“Rent Adjustment” shall be an amount equal to the lesser of (1) seven percent
(7.0%) of the Base Annual Rental in effect immediately prior to the applicable
Adjustment Date, or (2) 1.25 times the product of (i) the percentage change
between the Price Index for the month two months prior to the Effective Date or
the Price Index used for the immediately preceding Adjustment Date, as
applicable, and the Price Index for the month two months prior to the applicable
Adjustment Date, and (ii) the then current Base Annual Rental. Notwithstanding
any provision contained herein, in no event shall Base Annual Rental be reduced
as a result of the application of the Rent Adjustment described in this
Section 4.B(i), except as may occur with respect to the third Extension Term in
accordance with Section 4.B(ii). In the event that the Price Index ceases to be
published, its successor index as published by the same Governmental Authority
which published the Price Index shall be substituted and any necessary
reasonable adjustments shall be made by Lessor and Lessee in order to carry out
the intent of this Section. In the event there is no successor index, Lessor
shall reasonably select an alternative price index that will constitute a
reasonable substitute for the Price Index, considering the index, if any, that
is then recognized as the substitute for the old Price Index.

 

(ii) Notwithstanding the foregoing, upon the commencement of the third Extension
Term in the 31st year of this Lease, the Base Annual Rental in lieu of the
calculation in Section 4.B(i), shall be the fair market rent determined in
accordance with Section 19 hereof. The parties shall commence the process for
determining fair market rent upon Lessee’s delivery to Lessor of the written

 

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notice from Lessee requesting such determination; provided, however, such notice
shall not be prior to six (6) months before the applicable date for exercising
the applicable Extension Option. Base Annual Rental for the balance of the
Extension Terms shall be adjusted in accordance with Section 4.B(i).

 

C. Additional Rental. Lessee shall pay and discharge, as additional rental
(“Additional Rental”), all sums of money required to be paid by Lessee to Lessor
under this Lease which are not specifically referred to as Base Monthly Rental.
Lessee shall pay and discharge any Additional Rental when the same shall become
due, provided that amounts which are billed to Lessor or any third party, but
not to Lessee, shall be paid within thirty (30) days after Lessor’s demand for
payment thereof or, if later, when the same are due. In no event shall Lessee be
required to pay to Lessor any item of Additional Rental that Lessee is obligated
to pay and has paid to any third party pursuant to any provision of this Lease.

 

D. Payment of Rental and Other Monetary Obligations. All Rental and other
Monetary Obligations which Lessee is required to pay hereunder shall be the
unconditional obligation of Lessee and shall be payable in full when due without
any setoff, abatement, deferment, deduction or counterclaim whatsoever, except
when otherwise expressly permitted under this Lease or, except with respect to
Base Annual Rental, with regard to third parties in connection with good faith
disputes, provided the Property or Lessor’s interest therein is not subject to a
lien for forfeiture. Upon execution of this Lease, Lessee shall deliver to
Lessor a complete Authorization Agreement-Pre-Arranged Payments in the form of
Exhibit C attached hereto and incorporated herein by this reference, together
with a voided check for account verification, establishing arrangements whereby
payments of the Base Monthly Rental are transferred by Automated Clearing House
Debit initiated by Lessor from an account established by Lessee at a United
States bank or other financial institution to such account as Lessor may
designate. Lessee shall continue to pay all Base Monthly Rental by Automated
Clearing House Debit unless otherwise directed by Lessor. In the event any
payment of Base Monthly Rental is not received by Lessor within two (2) business
days after the due date, any delinquent payment shall, in addition to any other
remedy of Lessor, incur a late charge of three percent (3%) (which late charge
is intended to compensate Lessor for the cost of handling and processing such
delinquent payment and should not be considered interest) and bear interest at
the Default Rate, such interest to be computed from and including the date such
payment was due through and including the date of the payment; provided,
however, in no event shall Lessee be obligated to pay a sum of late charge and
interest higher than the maximum legal rate then in effect.

 

5. Representations and Warranties of Lessor. The representations and warranties
of Lessor contained in this Section are being made to induce Lessee to enter
into this Lease and Lessee has relied and will continue to rely upon such
representations and warranties. Lessor represents and warrants to Lessee as
follows:

 

A. Organization, Authority and Status of Lessor. Lessor has been duly organized
and is validly existing and in good standing under the laws of the State of
Delaware. All necessary corporate action has been taken to authorize the
execution,

 

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delivery and performance by Lessor of this Lease and of the other documents,
instruments and agreements provided for herein. The person who has executed this
Lease on behalf of Lessor is duly authorized to do so.

 

B. Enforceability. This Lease constitutes the legal, valid and binding
obligation of Lessor, enforceable against Lessor in accordance with its terms.

 

C. Litigation. There are no suits, actions, proceedings or investigations
pending, or to the best of its knowledge, threatened against or involving Lessor
before any arbitrator or Governmental Authority which might reasonably result in
any material adverse change in the contemplated business, condition, worth or
operations of Lessor.

 

D. Absence of Breaches or Defaults. Lessor is not in default under any document,
instrument or agreement to which Lessor is a party or by which Lessor or any of
Lessor’s property is subject or bound. The authorization, execution, delivery
and performance of this Lease and the documents, instruments and agreements
provided for herein will not result in any breach of or default under any
document, instrument or agreement to which Lessor is a party or by which Lessor
or any of Lessor’s property is subject or bound.

 

6. Representations and Warranties of Lessee. The representations and warranties
of Lessee contained in this Section are being made to induce Lessor to enter
into this Lease and Lessor has relied, and will continue to rely, upon such
representations and warranties. Lessee represents and warrants to Lessor as
follows:

 

A. Organization, Authority and Status of Lessee. Lessee has been duly organized
or formed, is validly existing and in good standing under the laws of its state
of formation and is qualified as a foreign corporation to do business in any
jurisdiction where such qualification is required. All necessary corporate
action has been taken to authorize the execution, delivery and performance by
Lessee of this Lease and of the other documents, instruments and agreements
provided for herein. Lessee is not a “foreign limited liability company”,
“foreign corporation”, “foreign partnership”, “foreign trust” or “foreign
estate”, as those terms are defined in the Code and the regulations promulgated
thereunder. Lessee’s United States tax identification number is correctly set
forth on the signature page of this Lease. The person who has executed this
Lease on behalf of Lessee is duly authorized to do so. The address of Lessee
stated in Section 24 is the current principal place of business and principal
executive office of Lessee, and Lessee will provide Lessor with written notice
of any change of location of its principal place of business or principal
executive office within ten (10) days thereof.

 

B. Enforceability. This Lease constitutes the legal, valid and binding
obligation of Lessee, enforceable against Lessee in accordance with its terms.

 

C. Litigation. There are no suits, actions, proceedings or investigations
pending or, to the best of Lessee’s knowledge, threatened against or involving
the Property; nor are there any suits, actions, proceedings or investigations
pending or, to the best of Lessee’s knowledge, threatened against or involving
Lessee before any arbitrator or Governmental Authority which could reasonably
have a Material Adverse Effect.

 

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D. Absence of Breaches or Defaults. Lessee is not in material default beyond any
applicable grace period under any document, instrument or agreement relating to
the Property which could reasonably result in a Material Adverse Effect. The
authorization, execution, delivery and performance of this Lease and the
documents, instruments and agreements provided for herein will not result in any
breach of or default under any document, instrument or agreement to which the
Property is subject or bound; nor will the authorization, execution, delivery
and performance of this Lease and the documents, instruments and agreements
provided for herein result in any breach of or default under any document,
instrument or agreement to which Lessee is a party or by which Lessee or any of
Lessee’s property is subject or bound that could reasonably result in a Material
Adverse Effect.

 

E. Licenses and Permits. Lessee has obtained all required licenses and permits,
both governmental and private, to use and operate the Property as a Permitted
Facility and all other licenses and permits, both governmental and private, with
respect to the Property which are necessary to prevent a Material Adverse
Effect.

 

F. Financial Condition; Information Provided to Lessor. The financial
statements, all financial data and all other documents and information
heretofore delivered to Lessor by or with respect to Lessee and/or the Property
in connection with this Lease and/or relating to Lessee and/or the Property are
true, correct and complete in all material respects, there have been no
amendments thereto since the date such items were prepared or delivered to
Lessor, and no change has occurred to any such financial statements, financial
data, documents and other information not disclosed in writing to Lessor, which
could reasonably result in a Material Adverse Effect.

 

G. Compliance with OFAC. Lessee, and to the best of Lessee’s knowledge, each of
Lessee’s Entities is not currently identified on the OFAC List, and is not a
Person with whom a citizen of the United States is prohibited from engaging in
transactions by any trade embargo, economic sanction, or other prohibition of
United States law, regulation, or executive order of the President of the United
States.

 

H. Solvency. There is no contemplated, pending or, to the best of Lessee’s
knowledge, threatened Insolvency Event or similar proceedings, whether voluntary
or involuntary, affecting Lessee. Lessee does not have unreasonably small
capital to conduct its business.

 

7. Rentals To Be Net to Lessor. The Base Annual Rental payable hereunder shall
be net to Lessor, so that this Lease shall yield to Lessor the Base Annual
Rental specified during the Lease Term, with all costs and obligations of every
kind and nature whatsoever relating to the Property to be paid and performed by
Lessee, except as otherwise expressly provided herein.

 

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8. Taxes and Assessments. Lessee shall pay, prior to the earlier of delinquency
or the accrual of interest on the unpaid balance, all taxes and assessments of
every type or nature assessed against or imposed upon the Property or upon
Lessee and specifically relating to the Property, including without limitation,
all taxes or assessments upon the Property or any part thereof and upon any
personal property, trade fixtures and improvements located on the Property,
whether belonging to Lessor or Lessee, or any tax or charge levied in lieu of
such taxes and assessments; all taxes, charges, license fees and or similar fees
imposed by reason of the use of the Property by Lessee; and all excise,
transaction, privilege, license, sales, use and other taxes upon the Rental or
other Monetary Obligations hereunder, the leasehold estate of either party or
the activities of either party pursuant to this Lease. Notwithstanding anything
contained herein to the contrary, Lessee shall not be responsible for Lessor’s
income taxes, mortgage taxes and filing expenses, franchise taxes, value added
taxes (unless in substitution of the current method of taxing the Property) or
transfer taxes.

 

Within thirty (30) days after each tax and assessment payment is required by
this Section to be paid, Lessee shall, upon prior written request of Lessor,
provide Lessor with evidence reasonably satisfactory to Lessor that such payment
was made in a timely fashion (or if not paid timely setting forth the reason
therefor). Lessee may, at its own expense, contest or cause to be contested, by
appropriate legal proceedings conducted in good faith and with due diligence,
any above-described item or lien with respect thereto, including, without
limitation, the amount or validity or application, in whole or in part, of any
such item, provided that (A) neither the Property nor any interest therein would
be in any danger of being sold, forfeited or lost by reason of such proceedings,
(B) no Event of Default has occurred, and (C) Lessee shall promptly provide
Lessor with copies of all notices received or delivered by Lessee and filings
made by Lessee in connection with such proceeding. Any abatements or credits
issued related to the payments made or required to be made by the Lessee (and
not paid by Lessor on behalf of Lessee) during the Lease Term shall be paid to
the Lessee, which obligation shall survive the termination of this Lease.

 

9. Utilities. Lessee shall contract, in its own name, for and pay when due all
charges for the connection and use of water, gas, electricity, telephone,
garbage collection, sewer use and other utility services supplied to the
Property during the Lease Term, subject to Lessee’s right to contest the same in
good faith, provided neither the Property nor Lessor’s interest therein is
subjected to a lien as a result thereof. Under no circumstances shall Lessor be
responsible for any interruption of any utility service.

 

10. Insurance. Throughout the Lease Term, Lessee shall maintain, with respect to
the Property, at its sole cost and expense, the following types and amounts of
insurance, in addition to such other insurance as Lessor may reasonably require
from time to time:

 

A. Insurance against loss or damage to real property under an “all risk”
insurance policy, which shall include loss by fire, lightning, terrorism (to the
extent that terrorism coverage is available at commercially reasonable rates),
ordinance or law (if the Property is legally non-conforming), and other risks
normally included in the standard ISO special form (which shall include flood
insurance if the Property is located within a

 

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flood hazard area and which shall include earthquake insurance if the Property
is located in an area where earthquake insurance is customarily maintained for
similar commercial properties). Such insurance shall include replacement cost
coverage in an amount not less than 100% of the full insurable replacement cost
(after application of any deductibles) determined from time to time at Lessor’s
request but not more frequently than once in any 24-month period, and not be
subject to a co-insurance clause. Such insurance shall contain an extended
period of indemnity endorsement which provides that after the physical loss to
the Property has been repaired, the continued loss of income shall be insured
until such income either returns to the same level as it was prior to the loss,
or the expiration of thirty (30) days from the date the Property is repaired or
replaced and operations are resumed, whichever first occurs, and notwithstanding
that the policy may expire prior to the end of such period.

 

B. Comprehensive general liability insurance, including products and completed
operation liability, covering Lessor and Lessee against bodily injury liability,
property damage liability and personal and advertising injury including without
limitation any liability arising out of the ownership, maintenance, repair,
conditions or operation of the Property or adjoining ways, streets, parking lots
or sidewalks, if any. Such insurance policy or policies shall contain a broad
form contractual liability endorsement under which the insurer agrees to insure
Lessee’s obligations under Section 15 hereof to the extent insurable, and a
“severability of interest” clause or endorsement. Policy limits shall be in
amounts of not less than $1,000,000 per occurrence for bodily injury and
property damage, and $5,000,000 in the aggregate; plus umbrella coverage in an
amount not less than $50,000,000 or such greater amount which is in accordance
with Lessee’s then current liability policy.

 

C. Workers’ compensation insurance in the statutorily mandated limits covering
all persons employed by Lessee on the Property in connection with any work done
on or about any of the Property for which claims for death or bodily injury
could be asserted against Lessor, Lessee or the Property.

 

D. Rental value insurance, equal to 100% of the Base Annual Rental (as may
adjusted hereunder) for a period of not less than eighteen (18) months; which
insurance shall be carved out of Lessee’s business interruption coverage for a
separate rental value insurance payable to Lessor, or if rental value insurance
is included in Lessee’s business interruption coverage, the insurer shall
provide priority payment to any rent obligations, and such obligations shall be
paid directly to Lessor. Such insurance is to follow the form of real property
“all risk” coverage and is not to contain a co-insurance clause.

 

E. Comprehensive Boiler & Machinery Insurance against loss or damage from
explosion of any steam or pressure boilers or similar apparatus, if any, located
in or about the Property and in an amount equal to the lesser of 25% of the 100%
replacement cost of the Property or $5,000,000.00.

 

F. Such additional and/or other insurance and in such amounts as at the time are
customarily carried by prudent owners or tenants with respect to improvements
similar in character, location and use and occupancy to the Property.

 

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G. The deductibles under the insurance policies required hereunder shall not
exceed (i) $10,000 with respect to boiler and machinery coverage, (ii) $100,000
with respect to flood and earthquake coverage, (iii) $25,000 with respect to all
other perils under property or “all-risk” coverage, and (iv) $100,000 with
respect to general liability coverage; or such other amounts as may be
commercially reasonable for similarly situated buildings and properties.

 

All insurance policies shall:

 

(i) Provide (1) for a waiver of subrogation by the insurer as to claims against
Lessor, its employees and agents, (2) that the insurer shall not deny a claim
against the Lessor and that such insurance cannot be unreasonably cancelled,
invalidated or suspended on account of the conduct of Lessee, its officers,
directors, employees or agents, or anyone acting for Lessee or any subtenant or
other occupant of the Property, and (3) that any losses otherwise payable
thereunder shall be payable notwithstanding any act or omission of Lessor or
Lessee which might, absent such provision, result in a forfeiture of all or a
part of such insurance payment;

 

(ii) Be primary and provide that any “other insurance” clause in the insurance
policy shall exclude any policies of insurance maintained by Lessor and the
insurance policy shall not be brought into contribution with insurance
maintained by Lessor;

 

(iii) Contain a standard non-contributory mortgagee clause or endorsement in
favor of any lender designated by Lessor;

 

(iv) Provide that the policy of insurance shall not be terminated, cancelled or
amended without at least ten (10) days’ prior written notice for non-payment of
premium and thirty (30) days’ notice for all other reasons to Lessor and to any
lender covered by any standard mortgagee clause or endorsement;

 

(v) Provide that the insurer shall not have the option to restore the Property
if Lessor elects to terminate this Lease in accordance with the terms hereof;

 

(vi) Be in amounts sufficient at all times to satisfy any coinsurance
requirements thereof;

 

(vii) Except for workers’ compensation insurance referred to in Section 10.C
above, name Lessor and any Lessor Affiliate or lender requested by Lessor, as an
“additional insured” with respect to general liability insurance, and as an
“additional named insured” with respect to real property and “loss payee” with
respect to all real property and rent value insurance, as appropriate and as
their interests may appear;

 

(viii) Be evidenced by delivery to Lessor and any lender designated by Lessor of
an Acord 27 for property coverage (or any other form reasonably

 

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requested by Lessor) and an Acord Form 25 for liability, workers’ compensation
and umbrella coverage (or any other form reasonably requested by Lessor);
provided that in the event that either such form is no longer available, such
evidence of insurance shall be in a form reasonably satisfactory to Lessor and
any lender designated by Lessor; and

 

(ix) Be issued by insurance companies licensed to do business in the state where
the Property is located and which are rated A-:VIII or better by Best’s
Insurance Guide or are otherwise approved by Lessor.

 

It is expressly understood and agreed that (I) if any insurance required
hereunder, or any part thereof, shall expire, be withdrawn, become void by
breach of any condition thereof by Lessee, or become void or in jeopardy by
reason of the failure or impairment of the capital of any insurer, Lessee shall
immediately obtain new or additional insurance reasonably satisfactory to Lessor
and any lender designated by Lessor; (II) the foregoing minimum limits of
insurance coverage shall not limit the liability of Lessee for its acts or
omissions as provided in this Lease; and (III) Lessee shall procure policies for
all insurance for periods of not less than one year and shall provide to Lessor
and any servicer or lender of Lessor certificates of insurance or, upon Lessor’s
request, duplicate originals of insurance policies evidencing that insurance
satisfying the requirements of this Lease is in effect at all times.

 

Lessee shall pay as they become due all premiums for the insurance required by
this Section 10. In the event that Lessee fails to comply with any of the
foregoing requirements of this Section 10 within ten (10) days of the giving of
written notice by Lessor to Lessee, Lessor shall be entitled to procure such
insurance. Any sums expended by Lessor in procuring such insurance shall be
Additional Rent and shall be repaid by Lessee, together with interest thereon at
the Default Rate, from the time of payment by Lessor until fully paid by Lessee
immediately upon written demand therefor by Lessor.

 

Anything in this Section 10 to the contrary notwithstanding, any insurance which
Lessee is required to obtain pursuant to this Section 10 may be carried under a
“blanket” or “umbrella” policy or policies covering other properties or
liabilities of Lessee provided that such “blanket” or “umbrella” policy or
policies otherwise comply with the provisions of this Section 10.

 

11. Tax and Insurance Impound. Upon the occurrence of each Event of Default, in
addition to any other remedies, Lessor may require Lessee to pay to Lessor sums
which will provide an impound account (which shall not be deemed a trust fund)
for paying up to and only up to the next one year of taxes, assessments and/or
insurance premiums. Upon such requirement, Lessor will estimate the amounts
needed for such purposes and will notify Lessee to pay the same to Lessor in
equal monthly installments, as nearly as practicable, in addition to all other
Monetary Obligations due under this Lease. Should additional funds be required
at any time, Lessee shall pay the same to Lessor within ten (10) days after
Lessee’s receipt of Lessor’s invoice and substantiating documentation with
respect thereto. While such impound provision is in effect, Lessee shall advise
Lessor of all taxes and insurance bills which are due and shall cooperate fully
with Lessor in assuring that the same are paid. Lessor may deposit all impounded
funds in accounts insured by any federal or state agency and may commingle such
funds with

 

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other funds and accounts of Lessor. Interest or other gains from such funds, if
any, shall be the sole property of Lessee. In the event of any Event of Default
by Lessee, Lessor may apply all impounded funds against any sums due from Lessee
to Lessor. Lessor shall give to Lessee an annual accounting showing all credits
and debits to and from such impounded funds received from Lessee and any amounts
in excess of the actual charges paid (or in excess of amounts due from Lessee to
Lessor) shall be refunded or credited to the next Rental payments under the
Lease.

 

12. Compliance With Laws, Restrictions, Covenants and Encumbrances.

 

A. Compliance. Lessee’s use and occupation of the Property, and the condition
thereof, shall, at Lessee’s sole cost and expense, comply with all Legal
Requirements and all restrictions, covenants and encumbrances of record with
respect to the Property consented to by Lessee or mandated by a Governmental
Authority or utility company (to the extent the consent of Lessor or Lessee is
not required by the Governmental Authority or utility company), in any event,
the failure with which to comply could reasonably result in a Material Adverse
Effect.

 

B. ADA. Without limiting the generality of the other provisions of this Section,
Lessee agrees that it shall be responsible for complying in all respects with
the Americans with Disabilities Act of 1990, as such act may be amended from
time to time, and all regulations promulgated thereunder (collectively, the
“ADA”), as it affects the Property. Lessee agrees that it will defend, indemnify
and hold harmless the Indemnified Parties from and against any and all Losses
caused by, incurred or resulting from Lessee’s failure to comply with its
obligations under this Section.

 

C. Environmental.

 

(i) Representations and Warranties. Lessee represents and warrants to Lessor,
which representations and warranties shall survive the execution and delivery of
this Lease, as follows:

 

(1) Except as set forth on Exhibit D attached hereto: neither the Property nor
the Lessee with respect to the Property are in violation of or subject to any
pending or, to the best of Lessee’s knowledge, threatened investigation or
inquiry by any Governmental Authority or to any remedial obligations under any
Environmental Laws, nor has Lessee received any written notice or other
communication from any Governmental Authority or any other Person (who, in the
reasonable judgment of Lessee, is credible on the topic of the subject
communication) with respect to the Property relating to (I) Hazardous Materials
or Remediation thereof; (II) possible liability of any Person pursuant to any
Environmental Law; (III) other environmental conditions; or (IV) any actual or
potential administrative or judicial proceedings in connection with any of the
foregoing.

 

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(2) Except to the extent set forth on Exhibit D attached hereto, and to the best
of Lessee’s knowledge: (I) all uses and operations on or of the Property,
whether by Lessee or any other Person, are and have been in compliance with all
Environmental Laws and environmental permits issued pursuant thereto; (II) there
have been no Releases in, on, under or from any of the Property, or from other
property migrating toward any of the Property, except in Permitted Amounts;
(III) there are no Hazardous Materials in, on, or under any of the Property,
except in Permitted Amounts; (IV) the Property is free and clear of all liens
and other encumbrances imposed pursuant to any Environmental Law (the
“Environmental Liens”); and (V) Lessee has not allowed any other tenant or other
user of the Property to do any act that materially increased the dangers to
human health or the environment, posed an unreasonable risk of harm to any
Person (whether on or off the Property), impaired the value of the Property in
any material respect, constituted a public or private nuisance, constituted
waste, or violated any covenant, condition, agreement or easement applicable to
the Property which violation could reasonably result in a Material Adverse
Effect.

 

    (ii) Covenants.

 

(1) Lessee covenants to Lessor during the Lease Term, subject to the limitations
of subsection (2) below, as follows:

 

(I) The Property and Lessee (with respect to the Property) shall not be: (a) in
violation of any Remediation required by any Governmental Authority or
(b) subject to any Remediation obligations under any Environmental Laws.

 

(II) All uses and operations on or of the Property, whether by Lessee or any
other Person, shall be in compliance with all Environmental Laws and permits
issued pursuant thereto.

 

(III) There shall be no Releases in, on, under or from the Property, except in
Permitted Amounts.

 

(IV) There shall be no Hazardous Materials in, on or under the Property, except
in Permitted Amounts.

 

(V) Lessee shall keep the Property or cause the Property to be kept free and
clear of all Environmental Liens, whether due to any act or omission of Lessee
or any other Person.

 

(VI) Lessee shall not do or allow any other tenant or other user of the Property
to do any act that (a) materially increases the dangers to human health or the
environment, (b) poses an unreasonable risk of harm to any Person (whether on or
off any of the Property), (c) could reasonably have a Material Adverse Effect,

 

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(d) is contrary to any material requirement set forth in the insurance policies
maintained by Lessee, (e) constitutes a public or private nuisance or
constitutes waste, or (f) violates any covenant, condition, agreement or
easement applicable to the Property.

 

(2) Notwithstanding any provision of this Lease to the contrary, Lessee shall
not be deemed to be in violation of subsections (I) through (VI) above, and an
Event of Default shall not be deemed to have occurred as a result of the failure
of Lessee to satisfy any one or more of the covenants set forth in subsections
(I) through (VI) above, provided that Lessee shall be in compliance (or in the
process of becoming in compliance, including availing itself of its right under
any Environmental Law or applicable Law to dispute in good faith such
requirements or the applicability of such requirements) with the requirements of
any Governmental Authority with respect to the Remediation of any Release at the
Property.

 

(iii) Notification Requirements. Lessee shall immediately notify Lessor in
writing upon Lessee obtaining actual knowledge of (1) any Releases or Threatened
Releases in, on, under or from the Property other than in Permitted Amounts, or
migrating towards the Property; (2) any non-compliance with any Environmental
Laws related in any way to the Property; (3) any actual or potential
Environmental Lien on the Property; (4) any required or proposed Remediation of
environmental conditions relating to the Property required by applicable
Governmental Authorities; and (5) any written or oral notice or other
communication which Lessee becomes aware from any source whatsoever (including
but not limited to a Governmental Authority) relating in any way to Hazardous
Materials or Remediation thereof at or on the Property, other than in Permitted
Amounts, possible liability of any Person relating to the Property pursuant to
any Environmental Law, other environmental conditions in connection with the
Property, or any actual or potential administrative or judicial proceedings in
connection with anything referred to in this Section.

 

(iv) Remediation. Lessee shall, at its sole cost and expense, and without
limiting any other provision of this Lease, effectuate any Remediation required
by any Governmental Authority of any condition (including, but not limited to, a
Release except for Permitted Amounts) in, on, under or from the Property
(regardless of the sources) and take any other reasonable action deemed
necessary by any Governmental Authority for protection of human health or the
environment. Should Lessee fail to undertake such Remediation in accordance with
the preceding sentence (after exhausting all available due process objections
and legal proceedings, provided that Lessee takes all necessary precautions
during such proceedings to prevent the Property and the rights of Lessor from
being in immediate jeopardy), Lessor, after written notice to Lessee and
Lessee’s failure to immediately undertake such Remediation, shall be permitted
to complete such Remediation, and all reasonable Costs incurred in connection
therewith shall be paid by Lessee.

 

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(v) Indemnification. Lessee shall, at its sole cost and expense, protect,
defend, indemnify, release and hold harmless each of the Indemnified Parties
from and against any and all Losses, including, but not limited to, all Costs of
Remediation (whether or not performed voluntarily), arising out of or in any way
relating to any Environmental Laws, Hazardous Materials or other environmental
matters concerning the Property. It is expressly understood and agreed that
Lessee’s obligations under this Section shall survive the expiration or earlier
termination of this Lease for any reason relative to occurrences prior to the
termination or expiration of this Lease. Notwithstanding anything contained
herein to the contrary, in the event Lessee performs any remediation pertaining
to a Release(s) not caused by Lessee, then in such event Lessee shall have the
right and benefit of (and the right to assert) any remedies available to Lessor,
which rights and benefits shall survive the expiration or termination of this
Lease.

 

D. Encumbrances. Except with respect to any mortgage recorded against the
Property by Lessor, Lessee shall comply with and perform all obligations of
Lessor under all easements, declarations, covenants, restrictions and other
items of record (i) encumbering the Property existing as of the Effective Date,
(ii) consented to by Lessee or (iii) mandated by a Governmental Authority or
utility company (to the extent the consent of Lessor or Lessee is not required
by the Governmental Authority or utility company).

 

13. Condition of Property; Maintenance. Lessee hereby accepts the Property “AS
IS” and “WHERE IS” with no representation or warranty of Lessor as to the
condition thereof. Lessee shall, at its sole cost and expense, be responsible
for (a) keeping all of the building, structures and improvements erected on the
Property in good order and repair, (b) repairing or reconstructing damage or
destruction to any building, structures or improvements erected on the Property
from acts of God or any other catastrophes, and (c) making all necessary
structural, non-structural, exterior and interior repairs and replacements to
any building, structures or improvements erected on the Property, subject,
however, in all of the above, to the provisions of Section 18 hereof and
reasonable wear and tear.

 

14. Waste; Alterations and Improvements. Lessee shall not commit actual or
constructive waste upon the Property. During the Lease Term, Lessee shall not
undertake any structural alteration to the Property individually costing
$1,500,000.00 or more without the prior written consent of Lessor, which consent
shall not be unreasonably withheld, conditioned or delayed, but may be
conditioned on Lessor’s lender’s approval. Lessee may undertake nonstructural
alterations, regardless of amount, and structural alterations individually
costing less than $1,500,000.00. If Lessor’s consent is required hereunder and
Lessor consents to the making of any such alterations, the same shall be made by
Lessee at Lessee’s sole expense by a licensed contractor and according to plans
and specifications approved by Lessor and subject to such other conditions as
Lessor shall reasonably require. Any work at any time commenced by Lessee on the
Property shall be prosecuted diligently to completion, shall be of good
workmanship and materials and shall comply fully with all the terms of this
Lease. Upon completion of any alterations individually costing $500,000.00 or
more, Lessee shall promptly provide Lessor with evidence of full payment to all
laborers and materialmen

 

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contributing to the alterations. Additionally, upon completion of any
alterations, Lessee shall promptly provide Lessor with (A) an architect’s
certificate certifying the alterations to have been completed in conformity with
the plans and specifications (if the alterations are of such a nature as would
require the issuance of such a certificate from the architect), (B) a
certificate of occupancy (if the alterations are of such a nature as would
require the issuance of a certificate of occupancy), and (C) any other documents
or information reasonably requested by Lessor. Lessee shall execute and file or
record, as appropriate, a “Notice of Non-Responsibility,” or any equivalent
notice permitted under applicable law in the state where the Property is
located. Any addition to or alteration of the Property not constituting Lessee’s
Personalty shall be deemed a part of the Property and belong to Lessor, and
Lessee shall execute and deliver to Lessor such instruments as Lessor may
require to evidence the ownership by Lessor of such addition or alteration.

 

15. Indemnification. Lessee agrees to use and occupy the Property at its own
risk and hereby releases Lessor and Lessor’s agents and employees from all
claims for any damage or injury to the full extent permitted by law. Lessee
agrees that any employee or agent to whom the Property or any part thereof shall
be entrusted by or on behalf of Lessee shall be acting as Lessee’s agent with
respect to the Property or any part thereof, and the Indemnified Parties shall
not be liable for any loss of or damage to the Property or any part thereof.
Lessee shall indemnify, protect, defend and hold harmless each of the
Indemnified Parties from and against any and all Losses caused by, incurred or
resulting from Lessee’s use and occupancy of the Property, whether relating to
its original design or construction, latent defects, alteration, maintenance,
use by Lessee or any Person thereon, supervision or otherwise, or from any
breach of, default under, or failure to perform, any term or provision of this
Lease by Lessee, its officers, employees, agents or other Persons. The foregoing
however shall not include Losses incurred by Lessee as a result of the gross
negligence or willful misconduct of Lessor, its agents, employees or contractors
or Indemnified Parties. It is expressly understood and agreed that Lessee’s
obligations under this Section shall survive the expiration or earlier
termination of this Lease for any reason.

 

16. Quiet Enjoyment. So long as Lessee shall pay the Rental and other Monetary
Obligations herein provided and shall keep and perform all of the terms,
covenants and conditions on its part herein contained, after the expiration of
any applicable grace, notice or cure period provided under this Lease, Lessee
shall have the right to the peaceful and quiet occupancy of the Property.

 

17. Inspection. Lessor and its authorized representatives shall have the right,
at all reasonable times and upon giving reasonable prior notice of no less than
two (2) business days (except in the event of an emergency, in which case no
prior notice shall be required), to enter the Property or any part thereof to
inspect the same. Lessee hereby waives any claim for damages for any injury or
inconvenience to or interference with Lessee’s business, any loss of occupancy
or quiet enjoyment of the Property and any other loss occasioned by such entry,
but, subject to Section 37, excluding damages arising as a result of the
negligence or intentional misconduct of Lessor.

 

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18. Condemnation and Casualty.

 

A. Notification.

 

(i) Lessee shall promptly give Lessor and any mortgagee (if required by the
terms of any applicable mortgage or deed of trust and Lessee has received notice
thereof) written notice of (i) any Condemnation of any of the Property, (ii) the
commencement of any proceedings or negotiations which could reasonably result in
a Condemnation of the Property, and (iii) any Casualty to the Property or any
part thereof where the damages are in excess of $25,000. Such notice shall
provide a general description of the nature and extent of such Condemnation,
proceedings, negotiations or Casualty, and shall include copies of any documents
or notices received in connection therewith. Thereafter, Lessee shall promptly
send Lessor copies of all notices, correspondence and pleadings relating to any
such Condemnation, proceedings, negotiations or Casualty.

 

(ii) If it is so notified (by a party other than Lessee), Lessor shall promptly
give Lessee written notice of (i) any Condemnation of any of the Property, and
(ii) the commencement of any proceedings or negotiations which could reasonably
result in a Condemnation of the Property. Such notice shall provide a general
description of the nature and extent of such Condemnation, proceedings, or
negotiations, and shall include copies of any documents or notices received in
connection therewith. Thereafter, Lessor shall promptly send Lessee copies of
all notices, correspondence and pleadings relating to any such Condemnation,
proceedings or negotiations.

 

B. Partial Condemnation or Casualty. Except as otherwise provided in
Section 18.C, in the event of a Condemnation that is not a Total Condemnation
for which the Lessee has exercised its termination right under Section 18.C
(“Partial Condemnation”), or a Casualty that is not a Total Casualty for which
the Lessee has exercised its termination right under Section 18.C (a “Partial
Casualty”), all Net Awards shall be paid to Lessor subject to the provisions
hereinafter with regard to the same, and this Lease shall continue in full force
and effect on the following terms: all Rental and other Monetary Obligations due
under this Lease shall continue unabated (except to the extent Lessor has
received compensation for any lost Rental or Monetary Obligations under any Net
Award ); and, after determination of the Net Award, Lessee shall promptly
commence and diligently prosecute restoration of the Property (which for
purposes hereof shall include, without limitation, permanent restoration,
replacement and or repair) to the same condition, as nearly as practicable, as
prior to such Partial Condemnation or Partial Casualty. Notwithstanding the
forgoing, Lessee shall commence and diligently complete all temporary repairs
necessary for the protection of the Property promptly after the event of Partial
Condemnation or Partial Casualty. As the restoration of the Property progresses,
upon the written request of Lessee (accompanied by evidence reasonably
satisfactory to Lessor that such amount has been paid or is due and payable and
is properly part of such costs and that Lessee has complied with the terms of
Section 14 in connection with the restoration), Lessor shall promptly pay the
Lessee the requested amounts; however, Lessor shall not be required to pay and
or reimburse Lessee in

 

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connection with such restoration an aggregate amount exceeding the amount of any
Net Award received by Lessor with respect to such Partial Condemnation or
Partial Casualty. Prior to the disbursement of any portion of the Net Award with
respect to a Partial Casualty, Lessee shall provide evidence reasonably
satisfactory to Lessor of the payment of restoration expenses by Lessee up to
the amount of the insurance deductible applicable to such Partial Casualty. With
respect to a Partial Casualty, Lessee shall be paid, after completion, any
portion of the Net Award that is in excess of the applicable deductible, and
Lessee shall bear all additional Costs of such restoration in excess of the Net
Award. In the event any portion of the building of which the Property forms a
part is taken under a Partial Condemnation, notwithstanding anything herein to
the contrary, the Base Annual Rental shall be reduced to reasonably reflect the
loss of building space with due regard to the amount and nature of the space so
taken. With respect to a Partial Condemnation, Lessor shall be entitled to keep
any portion of the Net Award which may be in excess of the cost of restoration,
and Lessee shall bear all additional Costs of such restoration in excess of the
Net Award.

 

C. Total Condemnation and Total Casualty. In the event of (a) a Condemnation of
all or a portion of the Property that results in Lessee making a good faith
determination that the restoration and continued use of the remainder of the
Property as a Permitted Facility would be uneconomic or unsuitable for the
continued use and occupancy of Lessee’s business, or (b) a Major Condemnation
(collectively, a “Total Condemnation”), or in the event of (y) a Casualty of all
or a portion of the Property, in either event that results in Lessee making a
good faith determination that the restoration and continued use of the Property
as a Permitted Facility would be uneconomic or unsuitable for the continued use
and occupancy of Lessee’s business or (z) a Major Casualty (collectively, a
“Total Casualty”), then, in such event:

 

(i) Option To Terminate. Lessee shall have the right to terminate this Lease by
written notice (the “Termination Notice”) given to Lessor at any time within one
hundred eighty (180) days after the Total Condemnation or Total Casualty, as
applicable. The Termination Notice must: (1) specify a date on which this Lease
shall terminate, which date shall be (a) not earlier than the effective date of
the Total Condemnation or one hundred twenty (120) days after delivery of such
notice, whichever occurs first, and (b) not later than one hundred fifty
(150) days after the delivery of such notice (the “Early Termination Date”);
(2) contain a certificate executed by an officer of Lessee which (I) describes
the Total Condemnation or Total Casualty, (II) represents and warrants that
either all of the Property has been taken, damaged or destroyed, or that a
portion of the Property has been taken, damaged or destroyed, and Lessee has
determined in good faith that the restoration and continued use of the remainder
of the Property as a Permitted Facility would be uneconomic or unsuitable for
the continued use and occupancy of Lessee’s business, and (III) describes the
conditions giving rise to a Major Condemnation or Major Casualty, if applicable;

 

(ii) Termination. On or before the Early Termination Date, Lessee shall vacate
and surrender the Property, in accordance with the provisions of this Lease, and
all obligations of either party hereunder shall cease as of the Early

 

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Termination Date; provided, however, (a) obligations of either party under any
indemnification provisions of this Lease, (b) Lessee’s obligations to pay Rental
and all other Monetary Obligations accruing under this Lease prior to the date
of termination (whether payable to Lessor or a third party and except to the
extent Lessor has received compensation for any lost Rental or Monetary
Obligations under any Net Award) and (c) any funds or payments due from one
party to the other accruing under this Lease prior to the date of termination,
shall survive such termination. Subject to the foregoing, Lessor may retain all
Net Awards related to the Total Condemnation or Total Casualty for the Property,
and Lessee shall immediately pay Lessor an amount equal to the insurance
deductible applicable to the Property in connection with any Total Casualty;
provided, however, notwithstanding anything contained in this Lease to the
contrary, any monies paid by Lessee for Rent or other Monetary Obligations or
with respect to any restoration that are covered and/or otherwise included as
part of the Net Award shall be paid or reimbursed to Lessee.

 

(iii) Awards. In the event Lessee terminates this Lease in accordance with this
Section 18.C and subject to the provisions of Section 18, Lessor shall be
entitled to receive the entire Net Award in connection therewith without
deduction for any estate vested in Lessee by this Lease, and Lessee hereby
expressly assigns to Lessor all of its right, title and interest in and to every
such Net Award and agrees that Lessee shall not be entitled to any Net Award or
other payment for the value of Lessee’s leasehold interest in this Lease.
Notwithstanding the forgoing, Lessee shall be entitled to claim and receive any
award or payment from the condemning authority expressly granted for the taking
of the Lessee’s Personalty, any insurance proceeds with respect to the Lessee’s
Personalty, any awards or proceeds covering the interruption of Lessee’s
business, rent payments (to the extent paid by Lessee to Lessor for the period
from and after the Condemnation or Casualty), “good will”, depreciation or
injury to and cost of removal of stock-in-trade, equipment, furniture, fixtures,
furnishings and moving expenses, but only if such award or payment does not
adversely affect or interfere with the prosecution of Lessor’s claim for the
Total Condemnation or Total Casualty or otherwise reduce the amount recoverable
by Lessor for the Total Condemnation or Total Casualty.

 

D. Insurance. Any loss under any property damage insurance required to be
maintained by Lessee covering the Property shall be adjusted by Lessor and
Lessee. Any award relating to a Total Condemnation or a Partial Condemnation
shall be adjusted by Lessor and Lessee or, at Lessor’s election, Lessee.
Notwithstanding the foregoing or any other provisions of this Section 18 to the
contrary, if, at the time of any Condemnation or any Casualty or, at any time
thereafter, an Event of Default shall have occurred and be continuing, Lessor is
hereby authorized and empowered but shall not be obligated, in the name and on
behalf of Lessee, to file and prosecute Lessee’s claim, if any, for a Net Award
on account of such Condemnation or such Casualty and to collect such Net Award
and apply the same to the curing of such Event of Default and any other then
existing Event of Default under this Lease and/or to the payment of any amounts
owed by Lessee to Lessor under this Lease, in such order, priority and
proportions as Lessor, in its discretion shall deem proper, with any balance to
be paid to Lessee.

 

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E. Lessee Obligation in Event of Casualty. During all periods of time following
a Casualty, Lessee shall take reasonable steps to ensure that the Property is
secure and does not pose any risk of harm to any adjoining property and Persons
(including owners or occupants of such adjoining property) and shall be entitled
to reimbursement for the same out of the Net Award to the extent provided in,
and in accordance with the provisions of, this Section 18.

 

F. Net Awards. All Net Awards shall be held by Lessor in accordance with any
mortgage on the Property. In the event that Lessor has not encumbered the
Property with a mortgage and to the extent any Net Awards are to be made
available to Lessee under this Section 18, the Net Awards shall be held by
Lessor in trust.

 

19. Fair Market Rent. With respect to the determination of fair market rent, if
the parties are unable to agree upon the fair market rent, then an independent
MAI appraiser selected by agreement of the parties within ten (10) days of said
request shall prepare an appraisal of the fair market rent of the Property,
including any additions or renovations thereto. In determining the fair market
rent of the Property, the appraiser shall consider rentals received in the
general market area in which the Property is located for similar buildings of
comparable characteristics, including, but not limited to, comparable lease
terms, age, condition and classification. If within ten (10) business days after
being notified of the results of such appraisal, Lessee elects to reject that
appraisal, then each of the parties shall name an additional independent MAI
appraiser within ten (10) days after Lessee’s rejection (failing which the right
to do so shall be waived). In the event the appraisers so named together with
the originally named appraiser are unable to agree on the fair market rent of
the Property, within twenty (20) days, then the determination of said fair
market rent shall be the amount agreed upon by the majority of said appraisers
and reported to the parties within ten (10) days thereafter. In the event the
parties are unable to select the appraiser in the first instance, each shall
select one appraiser within ten (10) days after the period for having agreed,
and those two appraisers shall select a third appraiser (in absence of agreement
as to the selection of said third independent appraiser, such selection shall be
made by a mediation process reasonably agreed upon by the parties or in absence
of the same, by a court of competent jurisdiction). Lessee shall pay all costs
and expenses incurred by Lessee and Lessor in connection with the determination
of fair market rent under this Section 19.

 

20. Default, Conditional Limitations, Remedies and Measure of Damages.

 

A. Each of the following shall be an event of default by Lessee under this Lease
(each, an “Event of Default”):

 

(i) if any representation or warranty of Lessee set forth in this Lease is false
in any material respect that could reasonably result in a Material Adverse
Effect;

 

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(ii) (a) if any Base Monthly Rental due under this Lease is not paid when due
and such failure continues for two (2) business days after written notice of
such failure from Lessor; provided, however, Lessor shall only be obligated to
provide such written notice and the two (2) business day cure period shall only
be available once every twelve (12) month period; and

 

      (b) if any Monetary Obligation, other than Base Monthly Rental, due under
this Lease is not paid when due and such failure continues for thirty (30) days
after written notice of such failure from Lessor; provided, however, Lessor
shall only be obligated to provide such written notice and the thirty (30) day
cure period shall only be available once every twelve (12) month period;

 

(iii) if there is an Insolvency Event;

 

(iv) if Lessee vacates or abandons the Property;

 

(v) if Lessee fails to observe or perform any of the other covenants, conditions
or obligations of Lessee in this Lease; provided, however, if any such failure
does not involve the payment of any Monetary Obligation, does not place any
rights or property of Lessor in immediate jeopardy, and is within the reasonable
power of Lessee to cure, then such failure shall not constitute an Event of
Default hereunder, unless and until Lessor shall have given Lessee notice
thereof and a period of sixty (60) days shall have elapsed, during which period
Lessee may correct or cure such failure, upon failure of which an Event of
Default shall be deemed to have occurred hereunder without further notice or
demand of any kind being required; provided however, if such failure cannot
reasonably be cured within such sixty (60) day period, and Lessee is diligently
pursuing a cure of such failure, then Lessee shall have a reasonable period to
cure such failure beyond such sixty (60) day period, provided Lessee has
commenced to cure the same and is thereafter diligently pursuing the curing of
the same. If Lessee shall fail to correct or cure such failure within a
reasonable time, as determined by Lessor in its reasonable discretion, an Event
of Default shall be deemed to have occurred hereunder upon five (5) days prior
written notice to Lessee from Lessor without further notice or demand of any
kind being required;

 

(vi) if a final, nonappealable judgment is rendered by a court against Lessee
that could reasonably have a Material Adverse Effect and is not discharged or
provision made for such discharge within ninety (90) days from the date of entry
thereof;

 

(vii) if Lessee shall be liquidated or dissolved or shall begin proceedings
towards its liquidation or dissolution; or

 

(viii) if the estate or interest of Lessee in the Property shall be levied upon
or attached in any proceeding and such estate or interest is about to be sold or
transferred or such process shall not be vacated or discharged within ninety
(90) days after it is made.

 

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B. Upon the occurrence of an Event of Default, with or without notice or demand,
except as otherwise expressly provided herein or such other notice as may be
required by statute and cannot be waived by Lessee, Lessor, following five
(5) business days written notice of its intention to do so (during which time
Lessee may cure the Event of Default), shall be entitled to exercise, at its
option, concurrently, successively, or in any combination, all remedies
available at law or in equity, including without limitation, any one or more of
the following:

 

(i) To terminate this Lease, whereupon Lessee’s right to possession of the
Property shall cease and this Lease, except as to Lessee’s liability to the
extent provided herein, shall be terminated.

 

(ii) To the extent not prohibited by and in conformance with applicable Law, to
reenter and take possession of the Property (or any part thereof) and, to the
extent permissible, all franchises, licenses, area development agreements,
permits and other rights or privileges of Lessee pertaining to the use and
operation of the Property, and to expel Lessee and those claiming under or
through Lessee, without being deemed guilty in any manner of trespass or
becoming liable for any loss or damage resulting therefrom, without resort to
legal or judicial process, procedure or action. No notice from Lessor hereunder
or under a forcible entry and detainer statute or similar law shall constitute
an election by Lessor to terminate this Lease unless such notice specifically so
states. If Lessee shall, after default, voluntarily give up possession of the
Property to Lessor, deliver to Lessor or its agents the keys to the Property, or
both, such actions shall be deemed to be in compliance with Lessor’s rights and
the acceptance thereof by Lessor or its agents shall not be deemed to constitute
a termination of the Lease. Lessor reserves the right following any reentry
and/or reletting to exercise its right to terminate this Lease by giving Lessee
written notice thereof, in which event this Lease will terminate.

 

(iii) To bring an action against Lessee for any damages sustained by Lessor or
any equitable relief available to Lessor.

 

(iv) To relet the Property or any part thereof for such term or terms (including
a term which extends beyond the original Lease Term), at such rentals and upon
such other terms as Lessor, in its sole discretion, may determine, with all
proceeds received from such reletting being applied to the Rental and other
Monetary Obligations due from Lessee in such order as Lessor may, in it sole
discretion, determine, which other Monetary Obligations include, without
limitation, all repossession costs, brokerage commissions, attorneys’ fees and
expenses, alteration, remodeling and repair costs and expenses of preparing for
such reletting. Except to the extent required by applicable Law, Lessor shall
have no obligation to relet the Property or any part thereof and shall in no
event be liable for refusal or failure to relet the Property or any part
thereof, or, in the event of any such reletting, for refusal or failure to
collect any rent due upon such reletting, and no such refusal or failure shall
operate to relieve Lessee of any liability under this Lease or otherwise to
affect any such liability. Lessor reserves

 

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the right following any reentry and/or reletting to exercise its right to
terminate this Lease by giving Lessee written notice thereof, in which event
this Lease will terminate as specified in said notice.

 

(v) To accelerate and recover from Lessee all Rental and other Monetary
Obligations due and owing and scheduled to become due and owing under this Lease
both before and after the date of such breach for the entire original scheduled
Lease Term, unless sooner terminated by Lessor.

 

(vi) To recover from Lessee all Losses paid or incurred by Lessor as a result of
such breach, regardless of whether or not legal proceedings are actually
commenced.

 

(vii) To immediately or at any time thereafter, and with or without notice, at
Lessor’s sole option but without any obligation to do so, correct such breach or
default and charge Lessee all Costs incurred by Lessor therein. Any sum or sums
so paid by Lessor, together with interest at the Default Rate, shall be deemed
to be Additional Rental hereunder and shall be immediately due from Lessee to
Lessor. Any such acts by Lessor in correcting Lessee’s breaches or defaults
hereunder shall not be deemed to cure said breaches or defaults or constitute
any waiver of Lessor’s right to exercise any or all remedies set forth herein.

 

(viii) To immediately or at any time thereafter, and with or without notice,
except as required herein, set off any money of Lessee held by Lessor under this
Lease against any sum owing by Lessee hereunder.

 

(ix) To seek any equitable relief available to Lessor, including, without
limitation, the right of specific performance.

 

All powers and remedies given by this Section to Lessor, subject to applicable
Law, shall be cumulative and not exclusive of one another or of any other right
or remedy or of any other powers and remedies available to Lessor under this
Lease, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements of Lessee contained in this Lease,
and no delay or omission of Lessor to exercise any right or power accruing upon
the occurrence of any Event of Default shall impair any other or subsequent
Event of Default or impair any rights or remedies consequent thereto. Every
power and remedy given by this Section or by Law to Lessor may be exercised from
time to time, and as often as may be deemed expedient, by Lessor, subject at all
times to Lessor’s right in its sole judgment to discontinue any work commenced
by Lessor or change any course of action undertaken by Lessor.

 

21. Mortgage, Subordination and Attornment. Except as otherwise provided in this
Lease, Lessor’s interest in this Lease and/or the Property shall not be
subordinate to any liens or encumbrances placed upon the Property by or
resulting from any act of Lessee, and nothing herein contained shall be
construed to require such subordination by Lessor. Lessee shall keep the
Property free from any liens for work

 

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performed, materials furnished or obligations incurred by Lessee. NOTICE IS
HEREBY GIVEN THAT LESSEE IS NOT AUTHORIZED TO PLACE OR ALLOW TO BE PLACED ANY
LIEN, MORTGAGE, DEED OF TRUST, SECURITY INTEREST OR ENCUMBRANCE OF ANY KIND UPON
ALL OR ANY PART OF THE PROPERTY OR LESSEE’S LEASEHOLD INTEREST THEREIN, AND ANY
SUCH PURPORTED TRANSACTION SHALL BE VOID.

 

Notwithstanding the foregoing, Lessee may finance furniture, fixtures, equipment
and merchandise/inventory within the Property and Lessor will subordinate and/or
waive any landlord/Lessor lien to the same from time to time, provided the
lender with respect to such financing agrees to remove the same within a
commercially reasonable time after notice following the early termination of
this Lease following an Event of Default. Lessor further covenants and agrees to
execute and deliver, upon twenty (20) days written request, an instrument (in
form and substance reasonably acceptable to Lessor) evidencing or establishing
such subordinating or waiving of Lessor’s interest in the Property to the lien
of any such lender as shall be reasonably requested by such lender.

 

This Lease at all times shall automatically be subordinate to the lien of any
and all ground leases, mortgages and trust deeds now or hereafter placed upon
the Property by Lessor, provided that any such ground lessor, mortgagee, or
trustee, as an express condition to such subordination, recognizes this Lease,
and the Lessee’s rights hereunder. Lessee covenants and agrees to execute and
deliver, upon ten (10) days written request, an instrument further evidencing or
establishing such subordinating of this Lease to the lien of any or all such
ground leases, mortgages or trust deeds as shall be reasonably requested by
Lessor, or any present or proposed mortgagees under trust deeds, provided that
in doing so such instrument shall include provisions for the recognition and
non-disturbance of this Lease and the Lessee’s interest.

 

If any mortgagee, receiver or other secured party elects to have this Lease and
the interest of Lessee hereunder be superior to any such ground lease, mortgage
or trust deed and evidences such election by notice given to Lessee, then this
Lease and the interest of Lessee hereunder shall be deemed superior to any such
ground lease, mortgage or trust deed, whether this Lease was executed before or
after such ground lease, mortgage or trust deed and in that event such
mortgagee, receiver or other secured party shall have the same rights with
respect to this Lease as if it had been executed and delivered prior to the
execution and delivery of such ground lease, mortgage or trust deed and had been
assigned to such mortgagee, receiver or other secured party.

 

In the event any purchaser or assignee of any mortgagee at a foreclosure sale
acquires title to the Property, or in the event that any mortgagee or any
assignee otherwise succeeds to the rights of Lessor as landlord under this
Lease, Lessee shall attorn to mortgagee or such purchaser or assignee, as the
case may be (a “Successor Lessor”), and recognize the Successor Lessor as lessor
under this Lease; the Successor Lessor shall recognize Lessee’s tenancy under
this Lease; and this Lease shall continue in full force and effect as a direct
lease between the Successor Lessor and Lessee, provided that the Successor
Lessor shall only be liable for any obligations of the Lessor under this Lease
which accrue after the date that such Successor Lessor acquires title, that such
Successor Lessor shall only be entitled to the rights of Lessor for that same
period, and that the predecessor Lessor(s) shall remain liable for the period
during which they owned the Property to the extent expressly so provided herein.
The foregoing provision shall be self-operative and effective without the
execution of any further instruments.

 

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Lessee shall give written notice to any lender or mortgagee of Lessor having a
recorded lien upon the Property or any part thereof of which Lessee has been
notified of any breach or default by Lessor of any of its obligations under this
Lease and give such lender or mortgagee at least sixty (60) days to cure such
default before Lessee may exercise any remedy with respect thereto.

 

22. Estoppel Certificate.

 

A. At any time, and from time to time, Lessee shall, promptly and in no event
later than ten (10) days after a request from Lessor or any lender or mortgagee
of Lessor, execute, acknowledge and deliver to Lessor or such lender or
mortgagee, as the case may be, a certificate stating: (A) that Lessee has
accepted the Property; (B) that this Lease is in full force and effect and has
not been modified (or if modified, setting forth all modifications), or, if this
Lease is not in full force and effect, the certificate shall so specify the
reasons therefor; (C) the commencement and expiration dates of the Lease Term;
(D) the date to which the Rentals have been paid under this Lease and the amount
thereof then payable; (E) whether there are then any existing defaults by Lessor
in the performance of its obligations under this Lease, and, if there are any
such defaults, specifying the nature and extent thereof; (F) that no notice has
been received by Lessee of any default under this Lease which has not been
cured, except as to defaults specified in the certificate; (G) the capacity of
the person executing such certificate, and that such person is duly authorized
to execute the same on behalf of Lessee; (H) that neither Lessor nor any lender
or mortgagee has actual involvement in the management or control of decision
making related to the operational aspects or the day-to-day operation of the
Property, including any handling or disposal of Hazardous Materials; and (I) any
other information pertaining to this Lease and or the status of the same
reasonably requested by Lessor or any lender or mortgagee, as the case may be.

 

B. At any time, and from time to time, Lessor shall, promptly and in no event
later than twenty (20) days after a request from Lessee or any lender or
leasehold mortgagee of Lessee, execute, acknowledge and deliver to Lessee or
such lender or mortgagee, as the case may be, a certificate, stating: (A) that
this Lease is in full force and effect and has not been modified (or if
modified, setting forth all modifications), or, if this Lease is not in full
force and effect, the certificate shall so specify the reasons therefor; (B) the
commencement and expiration dates of the Lease Term; (C) the date to which the
Rentals have been paid under this Lease and the amount thereof then payable;
(D) whether there are then any existing outstanding uncured defaults by Lessee
in the performance of its obligations under this Lease, and, if there are any
such defaults, specifying the nature and extent thereof; (E) the capacity of the
person executing such certificate, and that such person is duly authorized to
execute the same on behalf of Lessor; and (F) any other information pertaining
to this Lease and or the status of the same reasonably requested by Lessee or
any lender or mortgagee, as the case may be.

 

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23. Assignment.

 

A. As a material inducement to Lessor’s willingness to complete the transactions
contemplated by the Lease, Lessee hereby agrees that Lessor may, from time to
time and at any time and without the consent of Lessee, engage in all or any
combination of the following, or enter into agreements in connection with any of
the following or in accordance with requirements that may be imposed by
applicable securities, tax or other Laws: (i) the sale, assignment, grant,
conveyance, transfer, financing, re-financing, purchase or re-acquisition of the
Property, this Lease, Lessor’s right, title and interest in this Lease the
servicing rights with respect to any of the foregoing, or participations in any
of the foregoing, or (ii) a Securitization and related transactions; provided,
however, so long as no Event of Default has occurred and is continuing at the
time of sale, assignment, transfer or conveyance, Lessor agrees that: (1) it
shall not to sell, assign, transfer or otherwise convey the Property or its
interest in this Lease to any one of the following entities known as of the
Effective Date as Men’s Warehouse, J.C. Penney, Federated Department Stores,
Wal-Mart Stores, Inc., Charming Shops, or any parent, subsidiary, or affiliate
of any of the foregoing entities; and (2) without the prior consent of Lessee,
which consent shall not be unreasonably withheld, conditioned or delayed, Lessor
agrees not to sell, assign, transfer or otherwise convey the Property or its
interest in this Lease to any other entity primarily engaged in the retail sale
of men’s or women’s clothing. Without in any way limiting the foregoing, the
parties acknowledge and agree that Lessor, in its sole discretion, may assign
this Lease or any interest herein to another Person (including without
limitation, a taxable REIT subsidiary but subject to the limitations on transfer
or sale to a named competitor, as described above) in order to maintain Lessor’s
status as a REIT. In the event of any such sale or assignment other than a
security assignment, Lessee shall attorn to such purchaser or assignee (so long
as Lessor and such purchaser or assignee notify Lessee in writing of such
transfer and such purchaser or assignee expressly assumes in writing the
obligations of the Lessor hereunder). At the request of Lessor, Lessee will
execute such documents confirming the sale, assignment or other transfer (and
such other agreements as Lessor may reasonably request), provided that the same
do not increase the liabilities and obligations of Lessee hereunder. Lessee
shall not bear any Costs in connection with any sale or transfer of any of the
Property. Lessor shall be relieved, from and after the date of such transfer or
conveyance, of liability for the performance of any obligation of Lessor
contained herein, except for obligations or liabilities accrued prior to such
assignment or sale.

 

B. Except as otherwise provided in Section 23.C below, Lessee shall not assign,
transfer, convey, pledge or mortgage this Lease or any interest therein, whether
by operation of law or otherwise without the prior written consent of Lessor,
which consent will not be unreasonably withheld, conditioned or delayed,
considering such matters as the experience of any assignee, the assumption by
any assignee of all of Lessee’s obligations hereunder by undertakings
enforceable by Lessor, and the transfer to or procurement of all necessary
licenses and franchises to an assignee in order to continue operating the
Property for the purposes herein provided. At the time of any assignment of this
Lease which is approved by Lessor or pursuant to 23.C of this Lease, the
assignee shall unconditionally and irrevocably assume all of the obligations of
Lessee under this

 

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Lease (by written agreement in form and substance reasonably satisfactory to
Lessor) from and after the date of such assignment. Such assignment of the
Property shall not relieve Lessee of its obligations respecting this Lease
unless otherwise agreed to by Lessor or otherwise provided in Section 23.C of
this Lease.

 

C. Notwithstanding anything contained herein to the contrary, the Lessee may,
with prior notice to Lessor, sublease the Property or any part thereof to any
other party, provided no such sublease will have a term longer than the
remaining term of the Lease, as it may be extended, and provided such sublease
does not, in Lessor’s reasonable discretion, have a material adverse effect on
the value of the Property. Any such subletting of the Property shall not relieve
Lessee of its obligations respecting this Lease. Notwithstanding any provision
contained herein to the contrary, Lessee may assign this Lease to any one of the
following with prior notice to the Lessor (each, a “Permitted Person”): (i) any
parent, subsidiary or other affiliated company in Lessee’s own consolidated tax
group; (ii) any entity with which Lessee shall have become merged or
consolidated; (iii) any entity which shall have acquired all or substantially
all of Lessee’s assets (a “Sale”); or (iv) any other party the Lessee chooses;
provided, that, in each case: such Permitted Person shall have duly assumed the
obligations of the Lessee under this Lease; such assignment does not, in
Lessor’s reasonable discretion, have a material adverse effect on the value of
the Property; and such assignment would not cause Lessor to be in default to its
lender under any mortgage on the Property. In the event that a Permitted Person
is not a publicly traded entity, the Permitted Person shall make a written
representation to Lessor that no Person, actually or constructively, owns both
(a) ten percent (10%) or more of the total combined voting power of all classes
of voting capital stock of the Permitted Person or ten percent (10%) or more of
the total value of all classes of capital stock of the Permitted Person, and
(b) ten percent (10%) or more of the outstanding capital stock of Lessor or
Spirit Finance Corporation. For purposes of the foregoing, in the event the
proposed Permitted Person is not a corporation, any owner of an equity interest
in the Permitted Person shall not own ten percent (10%) or more of the net
assets or profits of Lessor or Spirit Finance Corporation. Lessee shall provide
Lessor with notice of the assignment or subletting permitted by this
Section 23.C within ten (10) days prior to such event. Any such assignment of
the Property shall not relieve Lessee of its obligations respecting this Lease
unless otherwise expressly agreed to in writing by Lessor. Notwithstanding the
foregoing, any such assignment or subletting shall not be effective until
(x) Lessee and the Permitted Person have provided written certification to
Lessor that (a) the Permitted Person or any Person who owns directly or
indirectly any interest in the Permitted Person is not currently identified on
the OFAC List and is not a Person with whom a citizen of the United States is
prohibited from engaging in transactions by any trade embargo, economic
sanction, or other prohibition of United States law, regulation, or executive
order of the President of the United States, and (b) the Permitted Person has
implemented procedures and will consistently apply those procedures throughout
the Lease Term, to ensure that the foregoing remains true and correct during the
Lease Term; and (y) the Permitted Person shall have assumed all of the
obligations of Lessee under this Lease; it being understood that such assignment
to a Permitted Person shall not relieve Lessee of its obligations respecting
this Lease, unless, at the time the assignment is consummated (i) no Event of
Default has occurred and is continuing, (ii) the Permitted Person has a net
worth greater

 

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than the net worth of Lessee, but in no event less than $75,000,000.00, and
(iii) the Permitted Person has an investment grade rating issued by Moody’s
Investors Service or Standard & Poor’s.

 

D. Any assignment, transfer, conveyance, pledge or mortgage in violation of this
Section 23 shall be voidable at the sole option of Lessor. Any consent to an
assignment or subletting given by Lessor hereunder shall not be deemed a consent
to any subsequent assignment or subletting.

 

24. Notices. All notices, demands, designations, certificates, requests, offers,
consents, approvals, appointments and other instruments given pursuant to this
Lease (collectively called “Notices”) shall be in writing and given by any one
of the following: (A) hand delivery, (B) express overnight delivery service,
(C) certified or registered mail, return receipt requested and shall be deemed
to have been delivered upon (i) receipt, if hand delivered, (ii) the next
Business Day, if delivered by a reputable express overnight delivery service, or
(iii) the third Business Day following the day of deposit of such notice with
the United States Postal Service, if sent by certified or registered mail,
return receipt requested. Notices shall be provided to the parties and addresses
specified below:

 

If to Lessee:    Casual Male Retail Group, Inc.      555 Turnpike Street     
Canton, MA 02021      Attn: Dennis R. Hernreich and                Legal
Department      Telephone: (781) 828-9300      Telecopy: (781) 821-5174     
E-mail: dhernreich@cmal.com With a copy to:    Greenberg Traurig, LLP      One
International Place      Boston, MA 02110      Attn: Jonathan Bell, Esq.     
Telephone: (617) 310-6038      Telecopy: (617) 279-8438      E-mail:
bellj@gtlaw.com If to Lessor:    Spirit SPE Canton, LLC      14631 N. Scottsdale
Road, Suite 200      Scottsdale, Arizona 85254-2711      Attention: Michael T.
Bennett                       Senior Vice President, Operations      Telephone:
(480) 606-0820      Telecopy: (480) 606-0826      E-Mail:
mbennett@spiritfinance.com

 

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With a copy to:    Kutak Rock LLP      1801 California Street, Suite 3100     
Denver, Colorado 80202      Attention: Peggy A. Richter, Esq.      Telephone:
(303) 297-2400      Telecopy: (303) 292-7799      E-Mail:
peggy.richter@kutakrock.com

 

or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above.

 

25. Holdover. If Lessee remains in possession of the Property after the
expiration of the term hereof, Lessee shall be deemed a tenant on a
month-to-month basis (with no automatic trigger of an Extension Term) and shall
continue to pay Rentals and other Monetary Obligations in the amounts herein
provided, except that the Base Monthly Rental shall be automatically increased
to one hundred fifty percent (150%) of the last Base Monthly Rent payable under
this Lease, and Lessee shall comply with all the terms of this Lease; provided
that nothing herein nor the acceptance of Rental by Lessor shall be deemed a
consent to such holding over. Lessee shall defend, indemnify, protect and hold
the Indemnified Parties harmless from and against any and all Losses resulting
from Lessee’s failure to surrender possession upon the expiration of the Lease
Term, including, without limitation, any claims made by any succeeding lessee.

 

26. Intentionally Deleted.

 

27. Removal of Personalty. At the expiration of the Lease Term and any
month-to-month tenancy under Section 25, Lessee may remove from the Property all
Personalty belonging to Lessee. Lessee shall repair any damage caused by such
removal and shall leave the Property broom clean and in good and working
condition and repair inside and out, reasonable wear and tear and damages under
Section 18 excepted. After Lessee has vacated the Property, any property of
Lessee left on the Property on the tenth day following the expiration of the
Lease Term and any month-to-month tenancy under Section 25 shall automatically
and immediately become the property of Lessor, subject to the rights of any
lienholder. In connection with the acquisition, financing or leasing by Lessee
of Lessee’s Personalty, Lessor agrees to enter into a Lessor’s Lien Waiver
substantially in the form of Exhibit E attached hereto or as otherwise
reasonably requested by Lessee.

 

28. Financial Statements. In the event Lessee is not a company whose stock is
traded on a national exchange, then in such event, within forty five (45) days
after the end of each fiscal quarter and within ninety (90) days after the end
of each fiscal year of Lessee, Lessee shall deliver to Lessor complete financial
statements of Lessee, including a balance sheet, profit and loss statement,
statement of changes in financial condition and all other related schedules for
the fiscal period then ended. All such financial statements shall be prepared in
accordance with generally accepted accounting principles, consistently applied
from period to period, and shall be certified to be accurate and complete by an
officer or director of the Lessee. The financial statements delivered to

 

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Lessor need not be audited, but Lessee shall deliver to Lessor copies of any
audited financial statements of Lessee which may be prepared, as soon as they
are available. If the Lessee is a corporation whose stock is publicly traded,
the requirements under this section shall be satisfied by financial statements
made available to the public.

 

29. Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts,
acts of God, enemy or hostile governmental action, civil commotion, fire or
other casualty or other circumstance beyond the control of the party obligated
to perform (each, a “Force Majeure Event”) shall excuse the performance by such
party for a period equal to any such prevention, delay or stoppage, expressly
excluding, however, the obligations imposed upon Lessee or Lessor with respect
to Rental and other Monetary Obligations or other monies, and/or charges, and/or
costs to be paid hereunder.

 

30. No Merger. There shall be no merger of this Lease nor of the leasehold
estate created by this Lease with the fee estate in or ownership of the Property
by reason of the fact that the same person, corporation, firm or other entity
may acquire or hold or own, directly or indirectly, (A) this Lease or the
leasehold estate created by this Lease or any interest in this Lease or in such
leasehold estate, and (B) the fee estate or ownership of the Property or any
interest in such fee estate or ownership. No such merger shall occur unless and
until all persons, corporations, firms and other entities having any interest in
(i) this Lease or the leasehold estate created by this Lease, and (ii) the fee
estate in or ownership of the Property or any part thereof sought to be merged
shall join in a written instrument effecting such merger and shall duly record
the same.

 

31. Characterization.

 

A. Lessor and Lessee acknowledge and warrant to each other that each has been
represented by independent counsel and has executed this Lease after being fully
advised by said counsel as to its effect and significance. This Lease shall be
interpreted and construed in a fair and impartial manner without regard to such
factors as the party which prepared the instrument, the relative bargaining
powers of the parties or the domicile of any party. Whenever in this Lease any
words of obligation or duty are used, such words or expressions shall have the
same force and effect as though made in the form of a covenant.

 

B. The following expressions of intent, representations, warranties, covenants,
agreements, stipulations and waivers are a material inducement to Lessor
entering into this Lease:

 

(i) It is the intent of the parties hereto, and the parties acknowledge and
agree that they have executed and delivered this Lease with the understanding
that (1) this Lease is a “true lease,” is not a financing lease, capital lease,
mortgage, equitable mortgage, deed of trust, trust agreement, security agreement
or other financing or trust arrangement, and the economic realities of this
Lease are those of a true lease; and (2) the business relationship created by
this Lease and any related documents is solely that of a long-term commercial
lease between Lessor and Lessee, the Lease has been entered into by both parties
in reliance

 

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upon the economic and legal bargains contained herein, and none of the
agreements contained herein is intended, nor shall the same be deemed or
construed, to create a partnership between Lessor and Lessee, to make them joint
venturers, to make Lessee an agent, legal representative, partner, subsidiary or
employee of Lessor, nor to make Lessor in any way responsible for the debts,
obligations or losses of Lessee.

 

(ii) Each of the parties hereto covenants and agrees to the following: (1) each
will treat this Lease (I) as an operating lease pursuant to Statement of
Financial Accounting Standards No. 13, as amended; and (II) as a true lease for
state law reporting purposes and for federal income tax purposes. For federal
income tax purposes, each party shall report this Lease as a true lease with
Lessor as the owner of the Property and Lessee as the lessee of the Property
including: (a) treating Lessor as the owner of the property eligible to claim
depreciation deductions under Section 167 or 168 of the Code with respect to the
Property; (b) Lessee reporting its Rental payments as rent expense under
Section 162 of the Code; and (c) Lessor reporting the Rental payments as rental
income under Section 61 of the Code; (2) each party will not, nor will it permit
any Affiliate to, at any time, take any action or fail to take any action with
respect to the preparation or filing of any statement or disclosure to
Governmental Authority, including without limitation, any income tax return
(including an amended income tax return), to the extent that such action or such
failure to take action would be inconsistent with the intention of the parties
expressed in this Section 31.B; (3) the Lease Term (including any Extension
Term) is less than eighty percent (80%) of the estimated remaining economic life
of the Property; and (4) the Base Annual Rental is the fair market value for the
use of the Property and was agreed to by Lessor and Lessee on that basis, and
the execution and delivery of, and the performance by Lessee of its obligations
under, this Lease do not constitute a transfer of the Property.

 

(iii) Lessee waives any claim or defense based upon the characterization of this
Lease as anything other than a true lease of the Property. Lessee stipulates and
agrees (1) not to challenge the validity, enforceability or characterization of
the lease of the Property as a true lease, and (2) not to assert or take or omit
to take any action inconsistent with the agreements and understandings set forth
in this Section 31.B.

 

(iv) The parties agree that, notwithstanding any provision contained in this
Lease, any party (and each employee, representative or other agent of any party)
may disclose to any and all persons, without limitation of any kind, any matter
required under the Securities Act of 1933, as amended (the “Securities Act”), or
the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

32. Easements. During the Lease Term, Lessor shall have the right to grant
easements on, over, under and above the Property (x) without the prior consent
of Lessee to the extent such easements are required by Governmental Authorities
or a utility company; and (y) only with the prior consent of Lessee, which
consent shall not be unreasonably withheld, conditioned or delayed, to the
extent such easements are not of the type described in clause (x) above.

 

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33. Bankruptcy. As a material inducement to Lessor executing this Lease, Lessee
acknowledges and agrees that Lessor is relying upon (A) the financial condition
and specific operating experience of Lessee and Lessee’s obligation to use the
Property as a Permitted Facility, (B) Lessee’s timely performance of all of its
obligations under this Lease, and (C) all defaults under this Lease being cured
promptly within any applicable grace period. Accordingly, in consideration of
the mutual covenants contained in this Lease and for other good and valuable
consideration, Lessee hereby agrees that: (i) subject to applicable Law, all
obligations that accrue under this Lease (including the obligation to pay
Rentals), from and after an Insolvency Event shall be timely performed exactly
as provided in this Lease and any failure to so perform shall be harmful and
prejudicial to Lessor; (ii) any and all Rentals that accrue from and after an
Insolvency Event and that are not paid as required by this Lease shall, in the
amount of such Rentals, constitute administrative expense claims allowable under
the Bankruptcy Code; (iii) any extension of the time period within which the
Lessee may assume or reject this Lease without an obligation to cause all
obligations under this Lease to be performed as and when required under this
Lease shall be harmful and prejudicial to Lessor; (iv) any time period
designated as the period within which the Lessee must cure all defaults and
compensate Lessor for all pecuniary losses which extends beyond the date of
assumption of this Lease shall be harmful and prejudicial to Lessor; and
(v) upon the rejection (or deemed rejection) of this Lease for any reason
whatsoever Lessee stipulates that possession of the Property will be delivered
to Lessor immediately without the necessity of any further action by Lessor. No
provision of this Lease shall be deemed a waiver of Lessor’s rights or remedies
under the Bankruptcy Code or applicable Law to oppose any assumption and/or
assignment of this Lease, to require timely performance of Lessee’s obligations
under this Lease, or to regain possession of the Property as a result of the
failure of Lessee to comply with the terms and conditions of this Lease or the
Bankruptcy Code. Notwithstanding anything in this Lease to the contrary, all
Rentals payable by Lessee to or on behalf of Lessor under this Lease, whether or
not expressly denominated as such, shall constitute “rent” for the purposes of
the Bankruptcy Code. For purposes of this Section addressing the rights and
obligations of Lessor and Lessee upon an Insolvency Event, the term “Lessee”
shall include Lessee’s successor in bankruptcy, whether a trustee, Lessee as
debtor in possession or other responsible person.

 

34. Attorneys’ Fees. In the event of any judicial or other adversarial
proceeding concerning this Lease, to the extent permitted by Law, the prevailing
party shall be entitled to recover all of its reasonable attorneys’ fees and
other Costs in addition to any other relief to which it may be entitled. In
addition, Lessor and Lessee shall, upon demand, be entitled to all attorneys’
fees and all other Costs incurred by a party in the preparation and service of
any justifiable notice under Section 20 or demand hereunder, whether or not a
legal action is subsequently commenced.

 

35. Memorandum of Lease. Concurrently with the execution of this Lease, Lessor
and Lessee are executing Lessor’s standard form memorandum of lease in
recordable form, indicating the names and addresses of Lessor and Lessee, a
description

 

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of the Property, the Lease Term, but omitting Rentals and such other terms of
this Lease as Lessor or Lessee may reasonably not desire to disclose to the
public. Further, upon Lessor’s request, Lessee agrees to execute and acknowledge
a termination of lease and/or quit claim deed in recordable form to be held in
escrow by Lessor’s counsel until the expiration or sooner termination of the
Lease Term and no less than 10 (ten) days prior to notice to Lessee before the
recording of the same.

 

36. No Brokerage. Lessor and Lessee represent and warrant to each other that
they have had no conversation or negotiations with any broker concerning the
leasing of the Property. other than Banc of America Securities LLC. Each of
Lessor and Lessee agrees to protect, indemnify, save and keep harmless the
other, against and from all Losses arising out of, resulting from or in
connection with their breach of the foregoing warranty and representation.

 

37. Waiver of Jury Trial and Punitive, Consequential, Special and Indirect
Damages. Lessor and Lessee hereby knowingly, voluntarily and intentionally waive
the right either may have to a trial by jury with respect to any and all issues
presented in any action, proceeding, claim or counterclaim brought by either of
the parties hereto against the other or its successors with respect to any
matter arising out of or in connection with this Lease, the relationship of
Lessor and Lessee, Lessee’s use or occupancy of the Property, and/or any claim
for injury or damage, or any emergency or statutory remedy. This waiver by the
parties hereto of any right either may have to a trial by jury has been
negotiated and is an essential aspect of their bargain. Furthermore, Lessor and
Lessee hereby knowingly, voluntarily and intentionally waive the right they may
have to seek punitive, consequential, special and indirect damages from the
other party and any of the affiliates, officers, directors, members, managers or
employees of the other party or any of their successors with respect to any and
all issues presented in any action, proceeding, claim or counterclaim brought by
either of them against the other party or any of the affiliates, officers,
directors, members, managers or employees of the other party or any of their
successors with respect to any matter arising out of or in connection with this
Lease or any document contemplated herein or related hereto. The waiver by
Lessor and Lessee of any right they may have to seek punitive, consequential,
special and indirect damages has been negotiated by the parties hereto and is an
essential aspect of their bargain.

 

38. Securitizations and Other Transactions. As a material inducement to Lessor’s
willingness to complete the transactions contemplated by this Lease, Lessee
hereby acknowledges and agrees that Lessor may, from time to time and at any
time (A) advertise, issue press releases, send direct mail or otherwise disclose
information regarding the Transaction for marketing purposes; and (B) (i) act or
permit another Person to act as sponsor, settler, transferor or depositor of, or
a holder of interests in, one or more Persons or other arrangements formed
pursuant to a trust agreement, indenture, pooling agreement, participation
agreement, sale and servicing agreement, limited liability company agreement,
partnership agreement, articles of incorporation or similar agreement or
document; and (ii) permit one or more of such Persons or arrangements to offer
and sell stock, certificates, bonds, notes, other evidences of indebtedness or
securities that are directly or indirectly secured, collateralized or otherwise
backed by or

 

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represent a direct or indirect interest in whole or in part in any of the
assets, rights or properties described in Section 23.A of this Lease, in one or
more Persons or arrangements holding such assets, rights or properties, or any
of them (collectively, the “Securities”), whether any such Securities are
privately or publicly offered and sold, or rated or unrated (any combination of
which actions and transactions described in both clauses (i) and (ii) in this
paragraph, whether proposed or completed, are referred to in this Lease as a
“Securitization”). Lessee shall cooperate fully with Lessor and any Affected
Party with respect to all reasonable requests and due diligence procedures and
to use reasonable efforts to facilitate such Securitization, including without
limitation, providing for inclusion in any prospectus or other Securities
offering material such documents, financial and other data, and other
information and materials which would customarily be required with respect to
Lessee by a purchaser, transferee, assignee, servicer, participant, investor or
rating agency involved with respect to such Securitization, and Lessee shall
indemnify and hold harmless Lessor from any and all liabilities, losses and
expenses arising under the Securities Act, or the Exchange Act, in connection
with any material misstatement (or alleged misstatement) contained in such
information provided in writing (including, without limitation, electronically)
by Lessee or its officers, managers, members, employees, or agents, or any
omission (or alleged omission) of a material fact by Lessee or its officers,
managers, members, employees, or agents, the inclusion of which was necessary to
make such written information not misleading, unless such material misstatement
or alleged misstatement or omission or alleged omission is caused by Lessor or
its directors, officers, managers, members, shareholders, employees, or agents.
Lessee shall deliver to Lessor, any Affected Party and to any Person designated
by Lessor, such statements and audit letters of reputable, independent certified
public accountants pertaining to the written information provided by Lessee
pursuant to this Section as shall be requested by Lessor or such Affected Party,
as the case may be. Any documented third party Costs incurred by Lessee with
respect to, or in connection with any actions required to be taken by Lessee (or
on Lessee’s behalf) pursuant to this Section 38, shall be paid to or reimbursed,
as the case may be, by Lessor to Lessee within twenty (20) days after Lessee’s
request and invoice therefor, provided Lessee notified Lessor in writing of such
Costs prior to their incurrence.

 

39. Intentionally Deleted.

 

40. Performance at Lessee’s Expense. Lessee acknowledges and confirms that
Lessor may recover from Lessee all out-of-pocket Costs incurred by Lessor in
connection with (a) the procurement of consents, waivers and approvals with
respect to the Property, (b) the review of any assignment or sublease or
proposed assignment or sublease or the preparation or review of any
subordination, non-disturbance agreement, (c) the collection, maintenance and/or
disbursement of reserves created under this Lease, and (d) inspections required
to make certain determinations under this Lease. Lessee hereby acknowledges and
agrees to pay all such Costs within twenty (20) days after Lessor’s delivery of
an invoice.

 

32

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41. Miscellaneous.

 

A. Time Is of the Essence. Time is of the essence with respect to each and every
provision of this Lease.

 

B. Waiver and Amendment. No provision of this Lease shall be deemed waived or
amended except by a written instrument setting forth the matter waived or
amended and signed by the party against which enforcement of such waiver or
amendment is sought. Waiver of any matter shall not be deemed a waiver of the
same or any other matter on any future occasion. No acceptance by Lessor of an
amount less than the Rental and other Monetary Obligations stipulated to be due
under this Lease shall be deemed to be other than a payment on account of the
earliest such Rental or other Monetary Obligations then due or in arrears nor
shall any endorsement or statement on any check or letter accompanying any such
payment be deemed a waiver of Lessor’s right to collect any unpaid amounts or an
accord and satisfaction. No acceptance or payment by Lessee shall be deemed to
waive any claim by Lessee or defaults that may exist on the part of the Lessor
at the time of such payment whether or not such payment is made under declared
reservation of rights.

 

C. Successors Bound. Except as otherwise specifically provided herein, the
terms, covenants and conditions contained in this Lease shall bind and inure to
the benefit of the respective heirs, successors, executors, administrators and
assigns of each of the parties hereto.

 

D. Captions. Captions are used throughout this Lease for convenience of
reference only and shall not be considered in any manner in the construction or
interpretation hereof.

 

E. Severability. The provisions of this Lease shall be deemed severable. If any
part of this Lease shall be held unenforceable by any court of competent
jurisdiction, the remainder shall remain in full force and effect, and such
unenforceable provision shall be reformed by such court so as to give maximum
legal effect to the intention of the parties as expressed therein.

 

F. Other Documents. Each of the parties agrees to sign such other and further
documents as may be reasonably necessary or appropriate to carry out the
intentions expressed in this Lease.

 

G. Entire Agreement. This Lease and any other instruments or agreements referred
to herein, constitute the entire agreement between the parties with respect to
the subject matter hereof, and there are no other representations, warranties or
agreements except as herein provided.

 

H. Forum Selection; Jurisdiction; Venue; Choice of Law. For purposes of any
action or proceeding arising out of this Lease, the parties hereto expressly
submit to the jurisdiction of all federal and state courts located in the State
of Arizona. Lessee consents that it may be served with any process or paper by
registered mail or by personal service within or without the State of Arizona in
accordance with applicable law.

 

33

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Furthermore, Lessee waives and agrees not to assert in any such action, suit or
proceeding that it is not personally subject to the jurisdiction of such courts,
that the action, suit or proceeding is brought in an inconvenient forum or that
venue of the action, suit or proceeding is improper. Nothing contained in this
Section shall limit or restrict the right of Lessor to commence any proceeding
in the federal or state courts located in the state where the Property is
located to the extent Lessor deems such proceeding necessary or advisable to
exercise remedies available under this Lease. This lease shall be governed by
and interpreted in accordance with the laws of the Commonwealth of Massachusetts
without regard to its provisions on conflict of laws.

 

I. Counterparts. This Lease may be executed in one or more counterparts, each of
which shall be deemed an original.

 

42. Right of First Refusal/Third Party Offer.

 

A. Offer. Subject to the terms and conditions set forth in this Section 42, if
Lessor desires to sell the Property and receives a bona fide written offer from
a third party which offer is in all respects acceptable to Lessor, Lessor shall
deliver a complete copy of such bona fide third party offer to Lessee (“Third
Party Offer”). Upon Lessee’s receipt of such Third Party Offer from Lessor, and
a written statement of Lessor’s desire to sell the Property in accordance with
such Third Party Offer, Lessee shall have the right to deliver an offer to
Lessor (“Purchase Offer”) to purchase Lessor’s interest in the Property for the
amount of the bona fide third party offer to purchase the Property (the “Subject
Purchase Price”). Lessee shall complete such purchase, subject to the
satisfaction of each of the terms and conditions set forth in Section 42.B
below.

 

B. Conditions Precedent.

 

(i) Lessee’s purchase of the Property pursuant to Section 42.A shall be subject
to the fulfillment of all of the following terms and conditions: (1) no Event of
Default shall have occurred and be continuing under this Lease; (2) Lessee shall
have paid to Lessor the Subject Purchase Price, together with all Rental and
other Monetary Obligations then due and payable under this Lease as of the date
of the closing of the purchase; and (3) the date of the closing of such purchase
shall occur on the later of the next scheduled Base Monthly Rental payment date
following Lessor’s receipt of the Purchase Offer or the date fixed for the same
in the Third Party Offer.

 

(ii) On the date of the closing of the purchase of the Property pursuant to this
Section (the “Purchase Closing Date”), subject to satisfaction of the foregoing
conditions: (1) this Lease shall be deemed terminated; provided, however, such
termination shall not limit Lessee’s obligations to Lessor under any
indemnification provisions of this Lease (including, without limitation,
Sections 12.C(v) and 15 of this Lease) and Lessee’s obligations to pay any
Monetary Obligations (whether payable to Lessor or a third party) accruing under
this Lease prior to the Purchase Closing Date shall survive the termination of
this Lease; and (2) Lessor shall convey such Property to Lessee “as is” by
special warranty deed, subject to all matters of record (other than monetary
encumbrances created by or attributable to Lessor) and without representation or
warranty.

 

34

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C. Costs. To the extent the same is included in the Third Party Offer, Lessee
shall be solely responsible for the payment of all Costs resulting from any
proposed purchase pursuant to this Section 42, regardless of whether the
purchase is consummated, including, without limitation, to the extent
applicable, the cost of title insurance and endorsements, including, survey
charges, stamp taxes, transfer taxes and fees, escrow and recording fees, the
attorneys’ fees of Lessee and the reasonable attorneys’ fees and expenses of
counsel to Lessor.

 

D. Termination of Right. NOTWITHSTANDING ANYTHING TO THE CONTRARY, LESSEE’S
RIGHTS UNDER THIS SECTION 42 SHALL TERMINATE AND BE NULL AND VOID AND OF NO
FURTHER FORCE AND EFFECT (A) WITH RESPECT TO ANY SINGLE SPECIFIC TRANSACTION IF
(i) LESSEE FAILS TO EXERCISE THE RIGHT GRANTED PURSUANT TO THIS SECTION 42, AND
THE SALE TO THE THIRD PARTY PURCHASER IS CONSUMMATED; (ii) THE PROPERTY IS SOLD
OR TRANSFERRED PURSUANT TO THE EXERCISE OF A PRIVATE POWER OF SALE OR JUDICIAL
FORECLOSURE OR ACCEPTANCE OF A DEED IN LIEU THEREOF OR (B) THIS LEASE TERMINATES
OR THE LEASE TERM, AS MAY BE EXTENDED, EXPIRES. IN ANY SUCH EVENT, LESSEE SHALL
EXECUTE A QUITCLAIM DEED AND SUCH OTHER DOCUMENTS AS LESSOR SHALL REASONABLY
REQUEST EVIDENCING THE TERMINATION OF ITS RIGHT UNDER THIS SECTION 42.

 

E. Attornment. If Lessee does not deliver its Purchase Offer to purchase the
Property and the Property is transferred to a third party purchaser, Lessee will
attorn to the third party purchaser as lessor so long as such third party
purchaser and Lessor notify Lessee in writing of such transfer and purchaser
assumes (in writing) the obligations of Lessor under the Lease.

 

F. Exclusions. The provisions of this Section 42 shall not apply to or prohibit
(i) any mortgages or other hypothecation of Lessor’s interest in the Property;
(ii) any sale of the Property pursuant to a private power of sale under or
judicial foreclosure of any mortgage or other security instrument or device to
which Lessor’s interest in the Property is now or hereafter subject; (iii) any
transfer of Lessor’s interest in the Property to a mortgagee or other holder of
a security interest therein or their designees by deed in lieu of foreclosure;
(iv) any transfer of the Property to any governmental or quasi governmental
agency with power of Condemnation; (v) any transfer of the Property to any
Affiliate of Lessor; (vi) any transfers of interests in Lessor by any member,
shareholder, partner or other owner to any other member, shareholder, partner or
other owner; or (vii) any transfer of the Properties to any of the successors or
assigns of any of the Persons referred to in this Section 42.F; provided,
however, the provisions of this Section 42 shall thereafter apply to the
subsequent sale or transfer of the Property by the Person acquiring Lessor’s
interest in this Lease.

 

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IN WITNESS WHEREOF, Lessor and Lessee have entered into this Lease as of the
date first above written.

 

LESSOR: SPIRIT SPE CANTON, LLC, a Delaware limited liability company By:  

/s/ MICHAEL T. BENNETT

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

Name:   Michael T. Bennett Title:   Senior Vice President Tax Identification
No.                                                LESSEE: CASUAL MALE RETAIL
GROUP, INC., a Delaware corporation By:  

/s/ DAVID A. LEVIN

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

Name:   David A. Levin Title:   President By:  

/s/ DENNIS R. HERNREICH

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

Name:   Dennis R. Hernreich Title:   Treasurer Tax Identification
No.                                                   

 

36

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STATE OF                                            )        
                                         )   ss. COUNTY OF  
                                         )    

 

The foregoing instrument was acknowledged before Me On                     
    , 2006 by                         ,                          of SPIRIT SPE
CANTON, LLC, a Delaware limited liability company, on behalf of the company.

 

        

 

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

         Notary Public My Commission Expires:  

 

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

    

 

COMMONWEALTH OF MASSACHUSETTS

COUNTY OF NORFOLK

 

On this 1 day of February, 2006, before me, Cynthia A. Linsky, the undersigned
notary public, personally appeared David A. Levin proved to me through
satisfactory evidence of identity, which was his driver’s license, to be the
person whose name is signed on the attached document, and acknowledged to me
that he signed it voluntarily for its stated purpose as President for Casual
Male Retail Group, Inc., a Delaware corporation.

 

Cynthia A. Linsky

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

Signature of Notary Public

Cynthia A. Linsky

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

Printed Name of Notary My Commission Expires: June 26, 2009

 

COMMONWEALTH OF MASSACHUSETTS

COUNTY OF NORFOLK

 

On this 1 day of February, 2006, before me, Cynthia A. Linsky, the undersigned
notary public, personally appeared Dennis R. Hernreich proved to me through
satisfactory evidence of identity, which was his driver’s license, to be the
person whose name is signed on the attached document, and acknowledged to me
that he signed it voluntarily for its stated purpose as Treasurer for Casual
Male Retail Group, Inc., a Delaware corporation.

 

Cynthia A. Linsky

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

Signature of Notary Public

Cynthia A. Linsky

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

Printed Name of Notary MY COMMISSION EXPIRES: June 26, 2009

 

37

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EXHIBIT A

 

DEFINED TERMS

 

The following terms shall have the following meanings for all purposes of this
Lease:

 

“ADA” has the meaning set forth in Section 12.C.

 

“Additional Rental” has the meaning set forth in Section 4.C.

 

“Adjustment Date” means February 1, 2011, and every fifth anniversary thereafter
during the Lease Term (including any Extension Term).

 

“Affected Party” means each direct or indirect participant or investor in a
proposed or completed Securitization, including, without limitation, any
prospective owner, any rating agency or any party to any agreement executed in
connection with the Securitization.

 

“Affiliate” means any Person which directly or indirectly controls, is under
common control with or is controlled by any other Person. For purposes of this
definition, “controls”, “under common control with”, and “controlled by” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.

 

“Alterations” has the meaning set forth in Section 14.

 

“Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. Sec. 101
et seq., as amended.

 

“Base Annual Rental” means $4,560,000.00.

 

“Base Monthly Rental” means an amount equal to 1/12 of the applicable Base
Annual Rental.

 

“Business Day” means a day on which banks located in Scottsdale, Arizona are not
required or authorized to remain closed.

 

“Casualty” means any loss of or damage to the Property or any portion thereof
caused by fire, flood or other casualty.

 

“Code” means the Internal Revenue Code of 1986, as the same may be amended from
time to time.

 

“Condemnation” means a Taking and/or a Requisition.

 

“Costs” means all reasonable costs and expenses incurred by a Person, including
without limitation, attorneys’ fees and expenses, court costs, expert witness
fees, costs of tests and analyses, travel and accommodation expenses, deposition
and trial transcripts, copies and other

 

A-1

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similar costs and fees, brokerage fees, escrow fees, title insurance premiums,
appraisal fees, stamp taxes, recording fees and transfer taxes or fees, as the
circumstances require.

 

“Default Rate” means 12% per annum or the highest rate permitted by law,
whichever is less.

 

“Early Termination Date” has the meaning set forth in Section 18.C(ii)(1).

 

“Effective Date” has the meaning set forth in the introductory paragraph of this
Lease.

 

“Environmental Laws” means all federal, state and local laws, ordinances, common
law requirements and regulations and standards, rules, policies and other
governmental requirements, administrative rulings and court judgments and
decrees having the effect of law in effect now or in the future and including
all amendments, that relate to Hazardous Materials and/or the protection of
human health or the environment and apply to Lessee and/or the Property.

 

“Environmental Liens” has the meaning set forth in Section 12.D(i)(2).

 

“Event of Default” has the meaning set forth in Section 20.A.

 

“Exchange Act” has the meaning set forth in Section 31.B(iv).

 

“Expiration Date” has the meaning set forth in Section 3.

 

“Extension Option” has the meaning set forth in Section 3.

 

“Extension Term” has the meaning set forth in Section 3.

 

“Force Majeure Event” has the meaning set forth in Section 29.

 

“Governmental Authority” means any governmental authority, agency, department,
commission, bureau, board, instrumentality, court or quasi-governmental
authority of the United States, any state or any political subdivision thereof
with authority to adopt, modify, amend, interpret, give effect to or enforce any
federal, state and local laws, statutes, ordinances, rules or regulations,
including common law, or to issue court orders.

 

“Hazardous Materials” includes: (a) oil, petroleum products, flammable
substances, explosives, radioactive materials, hazardous wastes or substances,
toxic wastes or substances or any other materials, contaminants or pollutants
which pose a hazard to the Property or to Persons on or about the Property,
cause the Property to be in violation of any local, state or federal law or
regulation, (including without limitation, any Environmental Law), or are
defined as or included in the definition of “hazardous substances”, “hazardous
wastes”, “hazardous materials”, “toxic substances”, “contaminants”,
“pollutants”, or words of similar import under any applicable local, state or
federal law or under the regulations adopted, orders issued, or publications
promulgated pursuant thereto, including, but not limited to: (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. §9601, et seq.; (ii) the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. §1801, et seq.; (iii) the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. §6901, et seq.; and

 

A-2

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(iv) regulations adopted and publications promulgated pursuant to the aforesaid
laws; (b) asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment which contain
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty (50) parts per million; (c) underground storage tanks; and (d) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority or which may or could pose a hazard to
the health and safety of the occupants of the Property or the owners and/or
occupants of any adjoining property.

 

“Indemnified Parties” means Lessor, and its directors, officers, shareholders,
partners, members, employees, agents, servants, representatives, contractors,
subcontractors, affiliates, subsidiaries, participants, successors and assigns,
including, but not limited to, any successors by merger, consolidation or
acquisition of all or a substantial portion of the assets and business of
Lessor.

 

“Initial Term” has the meaning set forth in Section 3.

 

“Insolvency Event” means (a) a Lessee’s (i) failure to generally pay its debts
as such debts become due; (ii) admitting in writing its inability to pay its
debts generally; or (iii) making a general assignment for the benefit of
creditors; (b) any proceeding being instituted by or against Lessee (i) seeking
to adjudicate it a bankrupt or insolvent; (ii) seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency, or
reorganization or relief of debtors; or (iii) seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official for
it or for any substantial part of its property, and in the case of any such
proceeding instituted against a Lessee, either such proceeding shall remain
undismissed for a period of one hundred twenty (120) days or any of the actions
sought in such proceeding shall occur; or (c) Lessee taking any corporate or
other action to authorize any of the actions set forth above in this definition.

 

“Law(s)” means any constitution, statute, rule of law, code, ordinance, order,
judgment, decree, injunction, rule, regulation, policy, requirement or
administrative or judicial determination, even if unforeseen or extraordinary,
of every duly constituted Governmental Authority, court or agency, now or
hereafter enacted or in effect.

 

“Lease Term” shall have the meaning described in Section 3.

 

“Legal Requirements” means the requirements of all present and future Laws
(including without limitation, Environmental Laws and Laws relating to
accessibility to, usability by, and discrimination against, disabled
individuals), all judicial and administrative interpretations thereof, by way of
any judicial order, consent, decree or judgment, binding upon, or applicable to,
the Property or the Lessee with respect to the Property and all covenants,
restrictions and conditions now or hereafter of record which may be applicable
to Lessee or to the Property, or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration, repair or restoration of the
Property, even if compliance therewith necessitates structural changes or
improvements or results in interference with the use or enjoyment of the
Property.

 

“Lessee Entities” means, collectively, Lessee and all Affiliates of Lessee.

 

A-3

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“Lessor” has the meaning set forth in the introductory paragraph of this Lease.

 

“Lessor Entities” means, collectively, Lessor and all Affiliates of Lessor.

 

“Lessor’s Total Investment” means the sum of (a) the gross purchase price paid
for the Property by Lessor (or Lessor’s predecessor-in-interest) (including,
without limitation, any mortgage debt incurred or assumed in connection
therewith), plus (b) the closing costs and expenses incurred by Lessor (or
Lessor’s predecessor-in-interest) with respect to the purchase of the Property.

 

“Loss Value” has the meaning set forth in Section 18.C(ii).

 

“Losses” means any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts,
damages, losses, Costs, diminutions in value, fines, penalties, interest,
charges, fees, judgments, awards, amounts paid in settlement and damages of
whatever kind or nature, inclusive of bodily injury and property damage to third
parties (including, without limitation, attorneys’ fees and other Costs of
defense).

 

“Material Adverse Effect” means a material adverse effect on (i) the Property,
including, without limitation, the operation of the Property as a Permitted
Facility and/or the value of the Property, (ii) Lessee’s ability to perform its
obligations under this Lease, or (iii) Lessor’s interests in the Property or
this Lease.

 

“Major Casualty” means (a) a “total loss” for insurance purposes, or (b) loss or
damage as a result of a Casualty to the extent that a reasonable conclusion
would be that the Property is not likely to be completely restored or rebuilt
within one hundred eighty (180) days after such Casualty; or (c) a Casualty
occurring during the last three (3) years of the then current Lease Term and the
reasonable estimated cost of restoration is more than 50% of the full insurable
value of the Property.

 

“Major Condemnation” means (a) more than 25% of the building which forms a part
of the Property is taken by Condemnation, or (b) a Condemnation (other than
temporary taking) to the extent that a reasonable conclusion would be that the
Property is unsuitable for restoration for continued use and occupancy of
Lessee’s business; or (c) the parking area is taken reducing the ratio or
parking spaces to below that required by then current code, or (d) a
Condemnation occurring during the last three (3) years of the then current Lease
Term if more than 10% of the building which forms a part of the Property is
taken by Condemnation, or (e) access to Turnpike Street is denied for a period
in excess of 90 days.

 

“Monetary Obligations” means all Rental and all other sums payable or
reimbursable by Lessee under this Lease to Lessor, to any third party on behalf
of Lessor, or to any Indemnified Party.

 

“Net Award” means (a) the entire award payable by reason of a Condemnation
whether pursuant to a judgment or by agreement or otherwise, or (b) the entire
proceeds of any insurance required under Section 10 payable with respect to the
Property, as the case may be, and in either case, less any Costs incurred by
Lessor or Lessee, as the case may be, in collecting such award or proceeds.

 

A-4

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“Notices” has the meaning set forth in Section 24.

 

“OFAC List” means the list of specially designated nationals and blocked persons
subject to financial sanctions that is maintained by the U.S. Treasury
Department, Office of Foreign Assets Control and any other similar list
maintained by the U.S. Treasury Department, Office of Foreign Assets Control
pursuant to any Legal Requirements, including, without limitation, trade
embargo, economic sanctions, or other prohibitions imposed by Executive Order of
the President of the United States. The OFAC List currently is accessible
through the internet website www.treas.gov/ofac/t11sdn.pdf.

 

“Partial Casualty” has the meaning set forth in Section 18.B.

 

“Partial Condemnation” has the meaning set forth in Section 18.B.

 

“Permitted Amounts” shall mean, with respect to any given level of Hazardous
Materials, that level or quantity of Hazardous Materials in any form or
combination of forms which does not constitute a violation of any Environmental
Laws and is customarily employed in, or associated with, similar businesses
located in the state where the Property is located.

 

“Permitted Encumbrances” shall mean those covenants, restrictions, reservations,
liens, conditions, encroachments, easements and other matters of title that
affect the Property as of the date of Lessor’s acquisition thereof and those
items which hereafter affect title as permitted under this Lease, exclusive of
mortgages or other monetary encumbrances created by or attributable to the
Lessor.

 

“Permitted Facility” means the headquarters and/or a distribution facility for
Lessee’s retail clothing stores or such other use in connection with the
operation of Lessor’s business, and any uses incidental thereto, and for any
other use permitted by law upon the prior written consent of Lessor, which
consent shall not be unreasonably withheld, conditioned or delayed.

 

“Permitted Person” has the meaning set forth in Section 23.C.

 

“Person” means any individual, partnership, corporation, limited liability
company, trust, unincorporated organization, Governmental Authority or any other
form of entity.

 

“Personalty” shall mean all inventory, merchandise, appliances, furniture,
fixtures, equipment and other personal property from time to time situated on or
in the Property, together with appliances, furniture, fixtures and equipment
from time to time affixed to Property used or useful in the operation of the
business on the Property, including without limitation the warehouse
distribution and sortation equipment and systems and any replacements thereof,
provided Lessee shall repair any damage with respect to the removal of the same,
and provided any such affixed fixtures or equipment shall not be required solely
for the operation of the Property (exclusive of the business conducted therein).

 

A-5

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“Price Index” shall mean the Consumer Price Index which is designated for the
applicable month of determination as the United States City Average for All
Urban Consumers, All Items, Not Seasonally Adjusted, with a base period equaling
100 in 1982—1984, as published by the United States Department of Labor’s Bureau
of Labor Statistics or any successor agency.

 

“Property” means, that parcel of real estate legally described on Exhibit B
attached hereto, all rights, privileges, and appurtenances associated therewith,
all buildings, fixtures and other improvements now or hereafter located on such
real estate (whether or not affixed to such real estate).

 

“Purchase Closing Date” has the meaning set forth in Section 42.C(ii).

 

“Purchase Offer” has the meaning set forth in Section 42.A.

 

“REIT” means a real estate investment trust as defined under Section 856 of the
Code.

 

“Rejectable Offer” has the meaning set forth in Section 18.C(ii)(3).

 

“Release” means any presence, release, deposit, discharge, emission, leaking,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Materials.

 

“Remediation” means any response, remedial, removal, or corrective action, any
activity to cleanup, detoxify, decontaminate, contain or otherwise remediate any
Hazardous Material, any actions to prevent, cure or mitigate any Release, any
action to comply with any Environmental Laws or with any permits issued pursuant
thereto, any inspection, investigation, study, monitoring, assessment, audit,
sampling and testing, laboratory or other analysis, or any evaluation relating
to any Hazardous Materials.

 

“Rental” means, collectively, the Base Annual Rental and the Additional Rental.

 

“Rent Adjustment” has the meaning in Section 4.B(i).

 

“Requisition” means any temporary requisition or confiscation of the use or
occupancy of any of the Property by any Governmental Authority, civil or
military, whether pursuant to an agreement with such Governmental Authority in
settlement of or under threat of any such requisition or confiscation, or
otherwise.

 

“Sale” has the meaning set forth in Section 23.C.

 

“Securities” has the meaning set forth in Section 38.

 

“Securities Act” has the meaning set forth in Section 31.B(iv).

 

“Securitization” has the meaning set forth in Section 38.A.

 

“Subject Purchase Price” has the meaning set forth in Section 42.A.

 

A-6

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“Successor Lessor” has the meaning set forth in Section 21.

 

“Taking” means (a) any taking or damaging of all or a portion of the Property
(i) in or by condemnation or other eminent domain proceedings pursuant to any
Law, general or special, or (ii) by reason of any agreement with any condemnor
in settlement of or under threat of any such condemnation or other eminent
domain proceeding, or (iii) by any other means, or (b) any de facto
condemnation. The Taking shall be considered to have taken place as of the later
of the date actual physical possession is taken by the condemnor, or the date on
which the right to compensation and damages accrues under the law applicable to
the Property.

 

“Termination Notice” has the meaning set forth in Section 18.C(ii).

 

“Third Party Offer” has the meaning set forth in Section 42.A.

 

“Threatened Release” means a substantial likelihood of a Release which requires
action to prevent or mitigate damage to the soil, surface waters, groundwaters,
land, stream sediments, surface or subsurface strata, ambient air or any other
environmental medium comprising or surrounding the Property which may result
from such Release.

 

“Total Casualty” has the meaning set forth in Section 18.C.

 

“Total Condemnation” has the meaning set forth in Section 18.C.

 

A-7

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EXHIBIT B

 

LEGAL DESCRIPTION OF PROPERTY

 

Parcel I

Lot 2 shown on Land Court Plan 18675E, dated June 14, 1962, a copy of which is
filed with said Registry District with Certificate of Title No. 71138;

 

Parcel II

Lot 5 shown on Land Court Plan 18675G, dated March 17, 1971, a copy of which is
filed with said Registry District with Certificate of Title No. 90699;

 

Parcel III

Unnumbered lot shown on Land Court Plan 31525A, dated April 30, 1962, a copy of
which is filed with said Registry District with Certificate of Title No. 74298;
and

 

There is appurtenant to said parcel shown on plan filed with Certificate
No. 74298 certain drainage rights as set forth in a grant from the Wampatuck
Country Club to Bertha N. Allen dated April 23, 1963 and recorded at Book 4068,
Page 203, so far as applicable.

 

Parcel IV

A recorded parcel of land shown on Land Court Confirmation Plan 36613A, recorded
as Plan 70 of 1971 in Book 4714, Page 352.

 

B-1

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EXHIBIT C

 

ACH AUTHORIZATION

 

C-1

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EXHIBIT D

 

ENVIRONMENTAL DISCLOSURES

 

None.

 

D-1

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EXHIBIT E

 

LANDLORD’S WAIVER

 

Fleet Retail Group, LLC

Agent                                 

 

 

                                 , 2006

 

                                    , (the “Landlord”) owns real property
located at                                      (the “Leased Premises”), which
real property the Landlord leases to                                 , with
office located at 555 Turnpike Street, Canton, Massachusetts 02021 (the
“Tenant”). The Tenant has established a credit facility with Fleet Retail Group,
LLC (in such capacity and with any successor, the “Agent”), a Delaware limited
liability company with, offices at 40 Broad Street Boston, Massachusetts 02109,
as agent for the benefit of a syndicate of lenders (the “Lenders”), which loan
arrangement is secured by all of the Tenant’s present and after acquired
personal property, including, among other things, the Tenant’s inventory and
equipment (the “Collateral”) located and to be located upon the Leased Premises.
The Landlord hereby represents, warrants, covenants and agrees as follows:

 

1. The Tenant is not in default under the terms of its lease of the Leased
Premises.

 

2. The Landlord hereby waives any statutory or other lien of the Landlord
against the Collateral.

 

3. In the event the Tenant defaults under any of the Tenant’s obligations to the
Agent, the Agent shall have a reasonable time in which to repossess the
Collateral from the Leased Premises. The Landlord will cooperate with the Agent
in gaining access to the Leased Premises for the purpose of repossessing said
Collateral or, if requested by the Agent, the Landlord shall permit the Agent,
or its agent or nominee, to dispose of the Collateral on the Leased Premises in
a manner reasonably designed to minimize any interference with any other of
Landlord’s tenants.

 

4. To the extent not paid or prepaid by the Tenant, the Agent shall pay the
Landlord a reasonable sum for the use and occupancy of the Leased Premises from
the date on which the Agent shall have taken possession of the Collateral on the
Leased Premises until the date of the Agent’s vacating the Leased Premises, it
being understood, however, that the Agent shall not, thereby, have assumed any
of the obligations of the Tenant to the Landlord.

 

5. The within Agreement shall inure to the benefit of the Agent, its successors
and assigns, and shall be binding upon the Landlord and its successors and
assigns.

 

Dated this the      day of                     , 2006.

 

E-1

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[Name of Landlord]

LANDLORD

By:

 

 

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Title:

 

 

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

Date:

 

 

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State of

  _________________         

County of

  _________________     

 

The foregoing Agreement was subscribed, sworn to and acknowledged before me this
             day of             , 2006 by                                     .

 

 

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Print Name

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Notary Public

My Commission Expires:

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E-2