EX-10.1






TWO RIVERS CORPORATE CENTRE

OFFICE LEASE AGREEMENT




THIS LEASE is made and entered into on this first day of March, 2007, by and between Two
Rivers Corporate Centre, L.P. a Tennessee Limited Partnership, (“Landlord”), and Kirkland’s, Inc.,
a Tennessee Corporation (“Tenant”).



1. Leased Premises .



Subject to and upon the terms hereinafter set forth, and in consideration of the sum of Ten
Dollars ($10.00) and the mutual covenants set forth herein, the receipt and sufficiency of which
are hereby acknowledged, Landlord does hereby lease and demise to Tenant and Tenant does hereby
lease and take from Landlord those certain premises consisting of Twenty Seven Thousand Five
Hundred Forty Seven (27,547) square feet of Net Rentable Area (the “Premises”) located in Building
Two of the Two Rivers Corporate Centre, Suite 1000 located at 2501 McGavock Pike, in Davidson
County, Tennessee (the “Building”), and more particularly described in Exhibit A, attached
hereto and incorporated herein by this reference. The Building is part of a complex known as Two
Rivers Corporate centre (the “Project”).



a. “Net Rentable Area” as used herein, shall refer to (i) the total square footage of all floor
area measured from the outside of the exterior wall of the Building and to the mid-point of walls
separating the Premises from areas leased to or held for lease to other tenants (the “Usable
Area”). No deductions from Net Rentable Area shall be made for columns or projections.



b. Tenant’s taking possession of the Premises or any portion thereof shall be conclusive evidence
against Tenant that such portion of the Premises was then in good order and satisfactory condition,
excepting those items set forth on a written punch list delivered by Tenant to Landlord within
thirty calendar days next following Tenant’s taking possession. Tenant acknowledges that no
promise by or on behalf of Landlord, any of Landlord’s beneficiaries, the managing agent of the
Building, the leasing agent of the Building or any of their respective agents, partners or
employees to alter, remodel, improve, repair, decorate or clean the Premises has been made to or
relied upon by Tenant, and that no representation respecting the condition of the Premises or the
Building by or on behalf of Landlord, any of Landlord’s beneficiaries, the managing agent of the
Building, the leasing agent of the Building or any of their respective agents, partners or
employees has been made to or relied upon by Tenant, except to the extent expressly set forth in
this Lease.



c. In addition, Tenant shall have the right of first refusal to lease additional space in
contiguous Suites P-7, P-8, and P-9 throughout the term of the Lease, at the same rental rate as
set forth herein, with the Tenant Improvement Allowance of $35.00 per rentable square foot to be
prorated based on the original 84 month term.



2. Term. Subject to and upon the terms and conditions set forth herein, or in any exhibit
hereto, the term of this Lease shall commence on the Commencement Date and shall expire eighty four
(84) months after the Commencement Date at midnight. “Commencement Date” shall mean the earlier of
(i) thirty (30) days next following the date Landlord delivers possession of the Premises to Tenant
with all of Landlord’s Work, as such term is defined in Exhibit B, substantially completed;
or (ii) the date upon which Tenant commences conducting its business from all or any portion of the
Premises. Following the Commencement Date, the parties shall execute Exhibit C, attached
hereto and incorporated herein, which shall contain an acknowledgment of the date upon which the
Commencement Date of this Lease occurred. In addition, Tenant shall have the right to renew the
Lease Term hereof for an additional eighty-four months (the “Option Term”), at the fair market
value for Base Rental. Upon request from Tenant, not less than nine months prior to the expiration
of the Lease Term, Landlord will give Tenant Landlord’s quoted market Base Rental for the Premises
(the “Market Rental Rate”), and thereafter Tenant may exercise its option by giving written notice
to Landlord at least six months prior to the expiration of the Lease Term.



If Landlord and Tenant are unable to agree on the Market Rental Rate for purposes of the renewal
option granted in this Section 2, the Market Rental Rate shall be determined pursuant to this
Section, and unless Landlord and Tenant mutually agree and instruct the arbitrators otherwise, the
Market Rental Rate shall be determined on the assumption that no refurbishment allowance or other
concession or inducement will be provided by Landlord and that there will be no change to the
Expense Stop for Operating Expenses.  Within ten (10) days following written demand from either
party that the Market Rental Rate be determined pursuant to this Section, each party shall appoint
an MAI appraiser with not less than ten (10) years experience appraising commercial real estate in
the Nashville, Tennessee metropolitan area.   The two appraisers so selected shall choose a third
appraiser with similar qualifications (such third appraiser the “Appointed Arbiter”).  Each of the
Landlord appointed appraiser and the Tenant appointed appraiser shall make their own independent
determination as to the Market Rental Rate within thirty (30) days following the selection of the
third appraiser and shall deliver a detailed report of their conclusions to the Appointed
Arbiter.   The Appointed Arbiter shall review such reports and the Market Rental Rate shall be the
appraised value which the Appointed Arbiter decides is the closest to the actual Market Rental
Rate.  If the appraisers appointed by the parties are unable to agree upon the Appointed Arbiter
within ten (10) days following their appointment, either party shall have the right to apply to the
American Arbitration Association for appointment of the third appraiser.   Each party shall be
responsible for the fees and expenses of its own appraiser and one-half of the fees and expenses of
the third appraiser.



3. Use . The Premises are to be used and occupied solely for the purpose of office space
and for no other purpose. Tenant shall not do or permit anything to be done in or about the
Premises that will in any way obstruct or interfere with the rights of other tenants or occupants
of the Building or injure or annoy them, or use or allow the Premises to be used for any improper,
immoral, disreputable or objectionable purpose, nor shall Tenant cause, maintain or permit any
nuisance in, on or about the Premises. Tenant shall not use or permit the use of any portion of
the Premises as sleeping quarters, lodging rooms, or for any unlawful purposes. Tenant shall not
install any radio or television or other similar device exterior to the Premises. The Premises
will be accessible to Tenant 24 hours a day, 365 days a year.



4. Rent. Commencing on the date next following the Commencement Date and continuing
thereafter throughout the full term of this Lease, Tenant hereby agrees to pay the Base Rental in
accordance with the schedule attached hereto as Exhibit D, and Additional Rental (as
defined below). The Base Rental and Additional Rental shall be due and payable in advance in equal
monthly installments on the first (1st) day of each calendar month at Landlord’s address as
provided herein (or such other address as may be designated by Landlord from time to time). If the
Commencement Date is other than the first day of a calendar month or if this Lease expires on other
than the last day of a calendar month, then the installments of Base Rental and Additional Rental
for such month or months shall be prorated.



5. Additional Rental. Landlord shall absorb and be responsible for paying Operating
Expenses during the first calendar year of the Lease term (the “Expense Stop”). “Additional
Rental” for any succeeding calendar year shall mean Tenant’s Percentage Share of the Operating
Expenses for such calendar year in excess of the Expense Stop. “Tenant’s Percentage Share” shall
mean a fraction, the numerator of which is the total number of square feet of Net Rentable Area
within the Premises and the denominator of which is the greater of (i) ninety-five percent (95%) of
the total square footage of all Net Rentable Area in the Project, or (ii) the total square footage
of all Net Rentable Area in the Project actually leased to rent paying tenants. In no event shall
Operating Expenses increase by more than five percent (5%) over the prior year (provided that this
cap does not apply to Tenant’s Percentage Share of real estate taxes, liability insurance, and
electricity cost per kilowatt hour to Landlord).



a. Landlord shall present to Tenant prior to the beginning of each calendar year (or for the
calendar year in which the Lease term commences, on the Commencement Date) a statement of Tenant’s
estimated Additional Rental. Landlord’s failure to deliver such a statement of Tenant’s estimated
Additional Rental shall not operate to excuse Tenant from the payment of the monthly installment of
Additional Rental. Rather, Tenant shall continue to pay the monthly installment of Additional
Rental based on Landlord’s most recent calculation thereof until such a statement is delivered to
Tenant, with such statement being applied retroactively to the beginning of the calendar year and
Tenant making up any under payments immediately upon its receipt of such statement. Landlord may,
from time to time, recalculate Tenant’s estimated Additional Rental in order to more accurately
reflect Landlord’s good faith estimate of Tenant’s Additional Rental, and Tenant shall commence
paying the recalculated Additional Rental immediately after receiving notice thereof.



b. Landlord shall provide to Tenant, within ninety (90) days after the end of each calendar year, a
statement detailing the Operating Expenses for each such calendar year (the “Annual Operating
Expense Statement”). In the event that Tenant’s estimated Additional Rental payments exceed
Tenant’s actual Additional Rental for said calendar year, Landlord shall pay Tenant (in the form of
a credit against rentals next due or, should the overage exceed one months base rental or in the
case of the expiration of this Lease, then in the form of Landlord’s check) an amount equal to such
excess. Such payment shall accompany the statement from Landlord. In the event that Tenant’s
actual Additional Rental exceeds Tenant’s estimated Additional Rental payments for said calendar
year, Tenant hereby agrees to pay Landlord, within thirty (30) days of receipt of the statement, an
amount equal to such difference.



c. Tenant, at Tenant’s sole cost and expense, shall have the right, to be exercised by written
notice given to Landlord within ninety (90) days after receipt of the Annual Operating Expense
Statement for any calendar year, to audit Landlord’s books and records pertaining only to the
Operating Expenses for such calendar year, provided such audit must commence within thirty (30)
days after Tenant’s notice to Landlord and thereafter proceed regularly and continuously to
conclusion and, provided, further, that such audit must be conducted in a manner that does not
unreasonably interfere with the conduct of Landlord’s business. Notwithstanding the foregoing,
Tenant shall not have the right to audit Landlord’s books and records regarding the Operating
Expenses for any calendar year if there exists an Event of Default. Tenant (and its agents,
employees and accountants) shall hold the results of such audit in strict confidence and not
disclose the same to any third party, except as is necessary during any dispute between Landlord
and Tenant related thereto or as required by law. A copy of the results of any such audit shall be
promptly provided to Landlord, and Landlord may conduct an independent review of the same. If
there is any disagreement regarding the results of any such audit, the parties shall select a third
party auditor to resolve the dispute.



6. Operating Expenses.



“Operating Expenses”, for each calendar year, shall consist of (i) all Operating Costs for the
Building; plus (ii) the proportionate share of the ownership, management, maintenance, repair,
replacement and operating costs accruing during each such calendar year for the common areas in the
Project allocable to the Building.



a. “Operating Costs” shall mean all expenses, costs and accruals (excluding there from, however,
specific costs billed to or otherwise incurred for the particular benefit of specific tenants of
the Building) of every kind and nature, computed on an accrual basis, incurred or accrued in
connection with, or relating to, the ownership, operation, management, maintenance, repair and
replacement of the Building and interior and exterior common areas serving the Building during each
calendar year, including, but not limited to the following: wages and salaries (including taxes,
insurance and benefits) of all on and off-site employees; supplies; tools; equipment; utilities;
trash removal; snow and ice removal; maintenance, management and service agreements; inspections;
legal and accounting services relating to management and maintenance of the Building; insurance
(including all deductible and co-insurance payments made by Landlord in connection therewith);
maintaining, striping, repairing, replacing, repaving and lighting grounds, streets, parking areas,
sidewalks, curbs and walkways, landscaping, drainage and lighting facilities; and all taxes,
assessments and governmental charges, whether or not directly paid by Landlord, attributable to the
Building or said common areas, together with reasonable consultation, legal fees and costs
resulting from any challenge of tax assessments (but excluding federal and state income taxes,
franchise taxes, and other taxes imposed on the income of Landlord).



b. Notwithstanding any language contained herein to the contrary, the following items
shall not be included in Operating Costs or Operating Expenses: (a) any compensation paid
to clerks, attendants or other persons in commercial for profit concessions operated by Landlord;
(b) repairs or other work occasioned by fire, windstorm or other casualty for which Landlord is
reimbursed by insurance (including any deductible); (c) costs attributable to seeking and obtaining
new tenants as well as retaining existing tenants, such as advertising, brokerage commissions,
architectural, engineering, and attorneys’ fees; (d) costs attributable to enforcing leases against
tenants in the center, such as attorneys’ fees, court costs, and similar expenses; (e) costs that
are reimbursable to Landlord by tenants as a result of provisions contained in their specific
lease; (f) costs incurred due to violations by Landlord of any of the terms and conditions of any
leases in the center; (g) all items and services for which tenants reimburse Landlord or which
Landlord provides selectively to one or more tenants without reimbursement; (h) any costs, fines or
penalties incurred due to violations by Landlord of any governmental rule or authority; (i) the
cost of correcting any code violations (including “ADA” compliance) by Landlord in the Common Areas
of the center; (j) costs attributable to repairing items that are covered by warranties (to the
extent such is recovered); (k) costs attributable to any environmental cleanup not otherwise caused
by Tenant; (l) capital expenses, except to the extent such are amortized over their useful life;
and (m) reserve funds for future repairs. Any impact fees related to the development of the
Shopping Center shall be excluded from Operating Costs and Operating Expenses and shall be the sole
responsibility of Landlord. To the extent that any other tenant in the Project pays its utility
charges or other service charges directly to the provider (and therefore such cost is not included
in Operating Costs and Operating Expenses), then the square footage of such tenant’s premises shall
be excluded from the denominator in determining Tenant’s share of Operating Costs and Operating
Expenses for that particular service or services only. In no event shall Landlord receive from all
tenants of the Building more than one hundred percent (100%) of any Operating Costs.



7. Security Deposit . Intentionally waived



8. Services . Landlord shall furnish the following services to Tenant during the term of
this Lease (“Building Standard Services”):



a. Hot and cold domestic water and common use rest rooms and toilets at locations provided for
general use, in such amounts as are reasonably determined by Landlord.



b. Subject to curtailment as required by governmental laws, rules or mandatory regulations, central
heat and air conditioning in season, at such temperatures and in such amounts as are reasonably
determined by Tenant.



c. Electric lighting service for all public areas and special service areas of the Building in such
amounts and locations as are reasonably determined by Landlord, including exterior lighting for
security purposes acceptable to Tenant.



d. Janitor service five (5) days per week, exclusive of holidays, in such manner as Landlord
reasonably determines; provided, however, if Tenant’s floor coverings or other improvements are
other than Building standard, Tenant shall pay one hundred and fifteen percent (115%) of the actual
additional cleaning cost, if any, attributable thereto. In addition, Landlord shall provide trash
service for the Premises, at a level of service to properly clear the Premises. Landlord agrees to
provide adequate dumpsters for the clearing of the Premises, to be located as marked on Exhibit
A-2.



e. Access control for the Building to the extent and in the manner reasonably determined by
Landlord; provided, however, Landlord shall have no responsibility to prevent, and shall not be
liable to Tenant for, any liability or loss to Tenant, its agents, employees and visitors arising
out of losses due to theft, burglary, or damage or injury to persons or property caused by persons
gaining access to the Premises, and Tenant hereby releases Landlord from all liability for such
losses, damages or injury.



f. Sufficient electrical capacity to operate (i) incandescent lights, personal computers,
typewriters, calculating machines, photocopying machines and other machines of similar low voltage
electrical consumption (120/208 volts), provided that the total rated electrical design load for
said lighting and machines of low electrical voltage shall not exceed eight (8.00) watts per square
foot of Usable Area; and (ii) lighting and equipment of high voltage electrical consumption
(277/480 volts), provided that the total rated electrical design loan for said lighting and
equipment of high electrical voltage shall not exceed eight (8.00) watts per square foot of Usable
Area. If Tenant’s electrical consumption exceeds the foregoing standards, then Landlord shall
have the right to install a separate meter for the Premises at Tenant’s expense, such that Tenant
shall be billed the costs associated with electricity consumed in excess of Building standard. If
Tenant requires that certain areas within the Premises operate in excess of the normal Building
Operating Hours (as defined in Exhibit E), the electrical service to such areas shall be
separately circuited and metered such that Tenant shall be billed the costs associated with
electricity consumed during hours other than Building Operating Hours.



g. Building standard fluorescent bulb replacement in all areas and all incandescent bulb
replacement in General Common Areas and On-Floor Common Areas.



h. Failure by Landlord to furnish the services described in this Section, or any cessation thereof,
shall not render Landlord liable for damages to either person or property, nor be construed as an
eviction of Tenant, nor relieve Tenant from fulfillment of any covenant or agreement hereof. If
Landlord fails or refuses to carry out any of its repair obligations within 30 days after notice
from Tenant (or, if such repair obligations cannot be completed within 30 days, within such
reasonable time period as required by Landlord’s diligent pursuit thereof), then Tenant may
complete any such repair and offset the cost against Tenant’s Base Rental and Additional Rental.
In addition to the foregoing, should any of the equipment or machinery, for any cause, fail to
operate, or function properly, Tenant shall have no claim for rebate of rent or damages on account
of an interruption in service occasioned thereby or resulting there from; provided, however,
Landlord agrees to use reasonable efforts to repair said equipment or machinery promptly and to
restore said services. Notwithstanding the foregoing, if utility service to the Premises is
interrupted (provided that Tenant is not in default and such interruption is not caused by Tenant
or Tenant’s agents, employees, or contractors), and such interruption continues for a period in
excess of 48 hours, Base Rental, Additional Rental, and all other charges hereunder shall abate
until such interruption is corrected.



9. Keys and Locks . Landlord shall furnish Tenant with two (2) keys for each


Building standard lockset on code required doors entering the Premises from public areas.
Additional keys will be furnished by Landlord upon an order signed by Tenant and at Tenant’s
expense. All such keys shall remain the property of Landlord. No additional locks shall be
allowed on any door of the Premises without Landlord’s permission, and Tenant shall not make or
permit to be made any duplicate keys. Upon termination of this Lease, Tenant shall surrender to
Landlord all keys to any locks on doors entering or within the Premises, and give to Landlord the
explanation of the combination of all locks for safes, safe cabinets and vault doors, if any, in
the Premises. Tenant shall have the right to install a card-reader security system at the
Premises, at Tenant’s expense, and Tenant shall have the right to remove such system at any time.




	10.	 	Graphics, Building Directory and Name . Landlord shall provide and install





all graphics, letters, and numerals at the entrance to the Premises and strips (based on the ratio
that the Net Rentable Area of the Premises bears to the total Net Rentable Area of the Building)
containing a listing of Tenant’s name on the Building directory board to be placed at the front
entrance to the Property. All such letters and numerals shall be in the Building standard
graphics. Tenant agrees that Landlord shall not be liable for any inconvenience or damage
occurring as a result of any error or omission in any directory or graphics. No signs, numerals,
letters or other graphics shall be used or permitted on the exterior of, or may be visible from
outside, the Premises, unless approved in writing by Landlord, provided that Tenant may install an
exterior sign on the canopy over the main entrance. Tenant shall have the exclusive use (at
Tenant’s sole cost and expense) of Landlord’s pylon sign on Music Valley Drive that is visible from
Briley Parkway.



11. Parking. Tenant shall have the non-exclusive right to use the parking lot serving the
Building. Landlord may make, modify and enforce reasonable rules and regulations relating to the
parking of vehicles, and Tenant agrees to abide by such rules and regulations. This Lease does not
grant Tenant (or its agents, employees, contractors and visitors) the exclusive right to use any
parking areas serving the Building. Landlord may, from time to time, designate specific portions
of the parking lot as reserved areas, and Tenant shall have no right to park in such reserved
areas. Tenant shall have exclusive loading dock access for the Premises.



12. Entry for Repairs and Inspection . Upon reasonable prior notice to Tenant (provided
that no notice shall be required in the case of an emergency), Tenant shall permit Landlord and its
contractors, agents or representatives to enter into and upon any part of the Premises during
reasonable hours to inspect or clean the same, make repairs, alterations or additions thereto, and,
upon reasonable prior notice to Tenant, for the purpose of showing the same to prospective tenants
or purchasers. Landlord shall use its reasonable efforts not to interfere materially with the
operation of Tenant’s business during any such entry.



13. Laws and Regulations; Encumbrances; Rules of Building. Tenant shall comply with, and
Tenant shall cause its employees, contractors and agents to comply with, and shall use its best
efforts to cause its visitors and invitees to comply with, (i) all laws, ordinances, orders, rules
and regulations of all state, federal, municipal and other governmental or judicial agencies or
bodies relating to the use, condition or occupancy of the Premises, (ii) all recorded easements,
operating agreements, parking agreements, declarations, covenants and instruments encumbering the
Premises, and (iii) the rules of the Building reasonably adopted and altered by Landlord from time
to time for the safety, care and cleanliness of the Premises and Building and for the preservation
of good order therein. The initial rules of the Building are attached hereto and incorporated
herein as Exhibit F. Notwithstanding anything herein to the contrary, Tenant shall have
direct and unrestricted access with its own employees to accept deliveries at the front and rear of
the Premises. Landlord shall not have the right to restrict the time of delivery to the Premises.
There will be no material change to the Project which would affect Tenant’s ability to accept
deliveries at the rear of the Premises without Tenant’s prior written consent. All rules shall be
reasonable and enforced in a non-discriminatory manner. In the event of a conflict between the
provisions of this Lease and any rules or regulations, the provisions of this Lease shall govern.
Landlord shall not have the right to establish any rule or regulation that requires that Tenant pay
any fees or which otherwise affects the economic bargain of Tenant as set forth in the Lease.



14. Hazardous Substances . Tenant shall comply, at its sole expense, with all laws,
ordinances, orders, rules and regulations of all state, federal, municipal and other governmental
or judicial agencies or bodies relating to the protection of public health, safety, welfare or the
environment (collectively, “Environmental Laws”) in the use, occupancy and operation of the
Premises. Tenant agrees that no Hazardous Substances shall be used, located, stored or processed
on the Premises or be brought onto any other portion of the Building by Tenant or any of its
agents, employees, contractors, assigns, or subtenants, and no Hazardous Substances will be
released or discharged from the Premises by Tenant or its agents, employees, contractors, assigns,
or subtenants. The term “Hazardous Substances” shall mean and include all hazardous and toxic
substances, waste or materials, any pollutant or contaminant, including, without limitation, PCB’s,
asbestos and raw materials that include hazardous constituents or any other similar substances or
materials that are now or hereafter included under or regulated by any Environmental Laws or that
would pose a health, safety or environmental hazard. Tenant hereby agrees to indemnify, defend and
hold harmless Landlord from and against any and all losses, liabilities (including, but not limited
to, strict liability), damages, injuries, expenses (including, but not limited to, court costs,
litigation expenses, reasonable attorneys’ fees and costs of settlement or judgment), suits and
claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against,
Landlord by any person, entity or governmental agency for, with respect to, or as a direct or
indirect result of, the presence in or the escape, leakage, spillage, discharge, emission or
release from the Premises of any Hazardous Substances or the presence of any Hazardous Substances
placed on or discharged from the Building by Tenant or any of its agents, employees, contractors,
assigns, or subtenants. Notwithstanding anything else to the contrary herein, Tenant shall not be
responsible for any Hazardous Substances in the Premises or the Project unless Tenant or its
agents, employees, or contractors brought such Hazardous Substances into the Premises or the
Project. In the event that any environmental survey or inspection is required for any permit,
Landlord shall be solely responsible for the cost of such survey or inspection. Landlord shall
remove any existing known Hazardous Substances from the Premises prior to delivery of possession
thereof to Tenant. Landlord shall protect, defend, indemnify and hold Tenant harmless of, from and
against all claims, actions, liens, demands, costs, damages, punitive damages, expenses, fines and
judgments (including legal costs and attorneys fees) incurred by reason of any actual or asserted
presence of hazardous materials in the Premises or the Project and/or spills or other contamination
of air, soil, or water by or resulting from any hazardous materials not installed by Tenant or its
agents, employees, or contractors, or resulting from removal thereof. The terms of this paragraph
shall survive the termination of the Lease.



15. Tenant Taxes . Tenant shall pay promptly when due all taxes directly or indirectly
imposed or assessed upon Tenant’s gross sales, business operations, machinery, equipment, trade
fixtures and other personal property or assets, whether such taxes are assessed against Tenant,
Landlord or the Building. In the event that such taxes are imposed or assessed against Landlord or
the Building, Landlord shall furnish Tenant with all applicable tax bills, public charges and other
assessments or impositions and Tenant shall forthwith pay the same directly to the taxing
authority.



16. Leasehold Improvements.



a. Landlord shall build the premises as indicated on Exhibit B in accordance with the approved
floor plan and the approved construction documents at Landlord’s sole cost and expense. Landlord
will prepare the Premises in accordance with Tenant’s approved plans; provided, however, Landlord
shall not be required (nor shall Tenant be allowed) to install any improvements that are not
compatible with Landlord’s plans and specifications for the Building or which are not approved by
Landlord or Landlord’s architect. Tenant and Landlord agree that any such construction services
will be competitively bid to not less than three Tennessee-licensed general contractors, not less
than two of which shall be selected by Tenant. Tenant consents to the use of Landlord’s space
planners, architect and engineers at Landlord’s cost to develop engineered drawings for all such
construction. Tenant shall have the right to review and approve all bids from all contractors.



b. If for any reason the Premises should not be ready for occupancy by the Commencement Date,
Landlord shall not be liable or responsible for any claims, damages or liabilities in connection
therewith or by reason thereof; however, Tenant shall not be responsible for Base Rental and
Additional Rental until the Premises are ready for occupancy.



c. Tenant shall not make or allow to be made any alterations or physical additions in or to the
Premises, or place safes, vaults or other heavy furniture or equipment within the Premises, without
first obtaining the written consent of Landlord which consent shall not be unreasonably withheld so
long as said alterations do not impact on Building systems or structure and are not visible from
outside the Premises. All repairs, alterations or additions that affect the Building’s structural
components or the Building’s mechanical, electrical and plumbing systems shall be made solely by
Landlord or its contractor. Notwithstanding the foregoing, Tenant may from time to time make
non-structural alterations to the Premises without Landlord’s approval, the aggregate cost of which
shall not exceed $50,000 in any year, provided that Tenant provides Landlord with accurate as-built
drawings following any such alterations. In addition, Tenant shall be permitted, without
Landlord’s approval, to install products during the initial construction phase and thereafter in
order to do such things as pull cables, install phone jacks, install music systems, install card
readers, add icemakers, etc. Landlord hereby subordinates any lien it might have in any of
Tenant’s personal property to Tenant’s current lenders and to any future purchase money security
interest lenders.



d. Tenant shall indemnify and hold Landlord harmless from and against all costs (including
reasonable attorneys’ fees and costs of suit), losses, liabilities, or causes of action arising out
of or relating to any alterations, additions or improvements made by Tenant to the Premises,
including, but not limited to, any mechanics’ or materialmen’s liens asserted in connection
therewith. No portion of Landlord’s interest in the Building shall be subject to attachment on
account of any work performed by or on account of Tenant, and Tenant shall provide written notice
of same to all of its contractors.



e. Should any mechanic’s or other liens be filed against any portion of the Building by reason of
Tenant’s acts or omissions or because of a claim against Tenant, Tenant shall cause the same to be
canceled or discharged of record by bond or otherwise within thirty (30) days after notice by
Landlord. If Tenant shall fail to cancel or discharge said lien or liens, within said thirty (30)
day period, Landlord may, at its sole option, cancel or discharge the same and upon Landlord’s
demand, Tenant shall promptly reimburse Landlord for all reasonable costs incurred in canceling or
discharging such liens, plus an administrative fee equal to fifteen percent (15%) of such costs.



17. Repairs by Landlord . Landlord shall make such repairs to exterior, roof and
structural portions of the Building, the general Building systems and common areas of the Building
as Landlord may deem necessary for normal operations, and Landlord shall not otherwise be obligated
to make improvements to, or repairs of, the Premises or the Building. The cost of such repairs
shall be a part of Operating Expenses; except that Tenant shall pay on demand Landlord’s costs for
any repairs necessitated by the acts or omissions of Tenant or Tenant’s agents, contractors, or
employees, plus an administrative fee of fifteen percent (15%) of such costs.



18. Repairs by Tenant . Except for Landlord’s express repair and maintenance obligations
under this Lease, Tenant shall at its own cost and expense, keep the Premises and all leasehold
improvements in good and clean condition, and Tenant shall perform all maintenance, repairs and
replacements necessary to accomplish the same. In addition, Tenant shall perform all maintenance,
repairs, replacements and improvements required by any governmental law, ordination, rule or
regulation. Notwithstanding the foregoing, Landlord shall be responsible for any structural
changes to the Premises required for compliance with any governmental regulations, including
without limitation the ADA, unless such structural changes are required as a result of Tenant’s
specific use of the Premises. If Tenant fails to commence any maintenance, repairs, replacements
or improvements which it is required to perform hereunder within thirty (30) days after written
notice from Landlord to Tenant and thereafter diligently proceed with such work until completion,
Landlord may, at its option, perform any such maintenance, repairs, replacements or improvements
deemed necessary by Landlord, and Tenant shall pay to Landlord on demand Landlord’s cost thereof,
plus an administrative fee of fifteen percent (15%) of such costs.



19. Condemnation . If 40% or more of the Premises, or such portion of the Premises or the
Building as would render, in Landlord’s reasonable judgment, the continuance of Tenant’s business
from the Premises impracticable, shall be permanently taken or condemned for any public purpose,
then Landlord or Tenant may terminate this Lease. If less than all or substantially all of the
Premises or any portion of the Building shall be taken, then Landlord shall have the option of
terminating this Lease by written notice to Tenant within ten (10) days following the date of such
condemnation or taking, provided that Landlord may not terminate this Lease unless Landlord
terminates the lease of all similarly affected tenants. If this Lease is terminated as provided
above, this Lease shall cease and expire as of the date of the taking. In the event that this
Lease is not terminated and a portion of the Premises is taken, Tenant shall pay the Rental up to
the date of the taking, and this Lease shall thereupon cease and terminate with respect to the
portion of the Premises so taken. Thereafter the Base Rental and Additional Rental shall be
adjusted on an equitable basis. If this Lease is not terminated, Landlord shall promptly repair
the Premises or the Building, as the case may be, to an architectural unit, fit for Tenant’s
occupancy and business. In the event of any temporary taking or condemnation for any public
purpose of the Premises, the Building or any portion thereof, this Lease shall continue in full
force and effect except that Base Rental and Additional Rental shall be adjusted on an equitable
basis for the period of such taking, and Landlord shall be under no obligation to make any repairs
or alterations. In the event of any taking of the Premises, Tenant hereby assigns to Landlord the
value of all or any portion of the unexpired term of the Lease and all leasehold improvements, and
Tenant shall not assert a claim for a condemnation award therefore; provided, however, Tenant may
pursue a separate award from the condemning authority for (a) relocation and moving expenses, and
(b) compensation for loss of Tenant’s business.



20. Casualty .



a. In the event any portion of the Premises or any portion of the General Common Areas is damaged
by fire or other casualty, earthquake or flood or by any other cause of any kind or nature, and the
damage can, in the opinion of the Landlord’s architect, be repaired within ninety (90) calendar
days from the date of the casualty, then Landlord shall repair the damage. In the event the damage
cannot, in the opinion of Landlord’s architect, be repaired within ninety (90) days from the date
of the casualty, but can be repaired within one hundred eighty (180) days from the date of the
casualty, Landlord, at Landlord’s sole option, may elect either to terminate this Lease or to
repair the damage. If in Landlord’s opinion of Landlord’s architect, the damage cannot be repaired
within one hundred eighty (180) days from the date of the casualty, then both Landlord and Tenant
shall have the right to terminate this Lease. Tenant may terminate this Lease in the event (i)
Tenant is unable to operate its business for a period of (a) one year, or (b) 90 days in the last
two years of the term; or (ii) Landlord has not begun to rebuild within 180 days after the
casualty. Notwithstanding anything to the contrary contained herein, Landlord shall not terminate
Tenant’s lease unless Landlord shall also terminate the leases of all other similarly affected
tenants in the Project.



b. Notwithstanding any language herein to the contrary, Landlord, at Landlord’s sole option, shall
have the right to terminate this Lease if at the time of any such damage, (i) less than


two (2) years remain in the term of this Lease; (ii) the cost of repairing and restoring the damage
exceeds twenty-five percent (25%) of the replacement cost of the Building; or (iii) Landlord’s
lender does not make the insurance proceeds available to Landlord to restore the Premises.



c. In the event this Lease is not terminated as provided hereunder (i) Landlord shall be obligated
to repair the damage; (ii) Tenant shall be entitled to a pro rata abatement of Base Rental and
Additional Rental during the period of time the Premises, or any portion thereof, are untenantable
due to such damage; and (iii) if the Premises, the Building, or any portion thereof shall be
damaged through the negligence or willful misconduct of Tenant and the cost of repairing the same
is not covered by Landlord’s insurance, such damage shall be repaired by Landlord at the sole
expense of Tenant.



d. In the event of any termination of this Lease under this Section, this Lease shall cease and
terminate as if the date of such damage were the expiration date of the term of this Lease.



21. Insurance .



a. Landlord shall maintain property insurance coverage on the Building. Said insurance shall be
maintained in amounts equal to the full replacement cost of the Building and all improvements and
payments for losses there under shall be made solely to Landlord. Tenant shall maintain at its
expense business interruption insurance and property insurance coverage at full replacement cost on
of all its personal property, including removable trade fixtures located in the Premises and on all
additions and improvements (including fixtures) made by Tenant.



b. Landlord and Tenant shall each maintain a policy or policies of commercial general liability
insurance. Such insurance shall afford minimum protection (which may be affected by primary and/or
excess coverage) of not less than $1,000,000 per occurrence for injury to or death of any person,
with a $2,000,000 annual aggregate and an umbrella policy of at least $5,000,000, and of not less
than $1,000,000.00 per occurrence for property damage.



c. If Tenant shall fail to procure and maintain the insurance required herein, Landlord may, but
shall not be required to, procure and maintain the same, but at the expense of Tenant, plus a
fifteen percent (15%) administrative fee, which Tenant shall pay to Landlord upon demand. Unless
otherwise permitted by Landlord, Tenant’s insurance required hereunder shall be in companies rated
A-, Class XII in “Best’s Insurance Guide.” Tenant shall deliver to Landlord prior to occupancy of
the Premises copies of policies of liability insurance required herein or certificates evidencing
the existence and amounts of such insurance with loss payable clauses satisfactory to Landlord.
Tenant shall use its best efforts to deliver to Landlord renewals of such policies or certificates
at least thirty (30) days prior to their expiration, and it shall be a default should Tenant fail
to deliver renewals of such policies prior to expiration. No policy shall be cancelable or subject
to reduction of coverage except after thirty (30) days’ prior written notice to Landlord.



d. The cost of Landlord’s insurance shall be included in Operating Expenses. However, if the
annual premiums to be paid by Landlord shall exceed the standard rates because of Tenant’s
operations within, or contents of, the Premises, Tenant shall promptly pay the excess amount of the
premium upon request by Landlord. Landlord warrants that Tenant’s permitted use will not cause any
increase in premiums.



e. Anything in this Lease to the contrary notwithstanding, Landlord and Tenant each hereby waives
any and all rights of recovery, claim, action or cause of action, against the other, its agents,
servants, partners, shareholders, officers or employees, for personal injury, loss or damage to
business, and loss or damage that may occur to the Premises, the Building or the Project or any
personal property located thereon arising from any cause that (a) would be insured against under
the terms of any insurance required to be carried hereunder; or (b) is insured against under the
terms of any insurance actually carried, regardless of whether the same is required hereunder. The
foregoing waiver shall apply regardless of the cause or origin of such claim, including but not
limited to the negligence of a party, or such party’s agents, officers, employees or contractors.
The foregoing waiver shall not apply if it would have the effect, but only to the extent of such
effect, of invalidating any insurance coverage of Landlord or Tenant. Each party shall obtain any
special endorsements, if any, required by their respective insurers to evidence compliance with the
aforementioned waiver.



22. Damages from Certain Causes . Neither Landlord nor Tenant shall be liable or
responsible to the other party for any loss or damage to any property or person occasioned by
theft, fire, act of God, public enemy, riot, strike, insurrection, war, act or omission of any
tenant or occupant of the Building, any nuisance or interference caused or created by any tenant or
occupant of the Building, requisition or order of governmental body or authority, court order or
injunction, or any cause beyond Landlord’s or Tenant’s control or, except in the case of the gross
negligence or intentional misconduct of Landlord or Tenant, or as otherwise set forth herein, for
any damage or inconvenience which may arise through repair or alteration of any part of the
Building.



23. Hold Harmless . Landlord shall not be liable to Tenant, its agents, servants,
employees, contractors, customers or invitees for any damage to person or property caused by any
act, omission or neglect of Tenant. Without limiting or being limited by any other indemnity in
this Lease, but rather in confirmation and furtherance thereof, Tenant agrees to indemnify, defend
by counsel reasonably acceptable to Landlord and hold Landlord harmless of, from and against any
and all losses, damages, liabilities, claims, liens, costs and expenses (including, but not limited
to, court costs, reasonable attorneys’ fees and litigation expenses) in connection with injury to
or death of any person or damage to or theft, loss or loss of the use of any property occurring in
or about the Premises, the Building or the Project arising from Tenant’s occupancy of the Premises,
or the conduct of its business or from any activity, work, or thing done, by Tenant in or about the
Premises, the Building or the Project, or from any breach or default on the part of Tenant in the
performance of any covenant or agreement on the part of Tenant to be performed pursuant to the
terms of this Lease, or due to any other act or omission or willful misconduct of Tenant or any of
its agents, employees, contractors, assigns, or sub-tenants. Tenant shall not be liable to
Landlord, its agents, servants, employees, contractors, customers or invitees for any damage to
person or property caused by any act, omission or neglect of Landlord. Without limiting or being
limited by any other indemnity in this Lease, but rather in confirmation and furtherance thereof,
Landlord agrees to indemnify, defend by counsel reasonably acceptable to Tenant and hold Tenant
harmless of, from and against any and all losses, damages, liabilities, claims, liens, costs and
expenses (including, but not limited to, court costs, reasonable attorneys’ fees and litigation
expenses) in connection with injury to or death of any person or damage to or theft, loss or loss
of the use of any property occurring in or about the Premises, the Building or the Project arising
from the conduct of Landlord’s business or from any activity, work, or thing done, by Landlord in
or about the Premises, the Building or the Project, or from any breach or default on the part of
Landlord in the performance of any covenant or agreement on the part of Landlord to be performed
pursuant to the terms of this Lease, or due to any other act or omission or willful misconduct of
Landlord or any of its agents, employees, contractors, or assigns.



24. Default and Remedies.



a. The occurrence of any of the following shall constitute a default under and breach of this Lease
by Tenant (an “Event of Default”):




	 	i)	 	Failure by Tenant to pay any Rental within ten (10) days after
written notice that the same is past due;






	 	iii)	 	Failure by Tenant to observe or perform any of the covenants in
respect of assignment and subletting;






	 	iv)	 	Failure by Tenant to commence curing, within three (3) days
after receipt of notice from Landlord, and thereafter diligently pursuing the
completion of such cure of any hazardous condition which Tenant has created or
permitted in violation of law or of this Lease;






	 	v)	 	Failure by Tenant to complete, execute and deliver any
instrument or document required to be completed, executed and delivered by
Tenant within thirty (30) days after the initial written demand therefor to
Tenant;






	 	vi)	 	Failure by Tenant to observe or perform any other covenant,
agreement, condition or provision of this Lease, if such failure shall continue
for thirty (30) days after written notice thereof from Landlord to Tenant;
provided that such thirty (30) day period shall be extended for the time
reasonably required to complete such cure, if such failure cannot reasonably be
cured within said thirty (30) day period and Tenant commences to cure such
failure within said thirty (30) day period and thereafter diligently and
continuously proceeds to cure such failure;






	 	vii)	 	The levy upon execution or the attachment by legal process of
the leasehold interest of Tenant, or the filing or creation of a lien in
respect of such leasehold interest, which lien shall not be released or
discharged within thirty (30) days from the date of such filing;






	 	viii)	 	Tenant or any guarantor of Tenant’s obligations under this
Lease becomes insolvent or bankrupt or admits in writing its inability to pay
its debts as they mature, or makes an assignment for the benefit of creditors,
or applies for or consents to the appointment of a trustee or receiver for all
or a major part of its property;






	 	ix)	 	A trustee or receiver is appointed for Tenant, any guarantor of
Tenant’s obligations under this Lease or for a major part of either party’s
property and is not discharged within sixty (60) days after such appointment;






	 	x)	 	Any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, or other proceeding for relief under any bankruptcy law
or similar law for the relief of debtors, is instituted (A) by Tenant or any
guarantor of Tenant’s obligations under this Lease, or (B) against Tenant or
any guarantor of Tenant’s obligations under this Lease and is allowed against
it or is consented to by it or is not dismissed within sixty (60) days after
such institution; or






	 	xi)	 	Tenant’s repeated or continued failure to timely pay any Rental
due Landlord hereunder where such failure shall continue or be repeated for a
total of four (4) months in any period of twelve (12) consecutive months.






	 	xii)	 	Tenant’s repeated failure to observe or perform any of the
other covenants, terms or conditions hereof more than six (6) times, in the
aggregate, in any period of twelve (12) consecutive months.





b. Upon the occurrence of an Event of Default, Landlord shall have the option to do and perform any
one or more of the following in addition to, and not in limitation of, any other remedy or right
permitted it by law or in equity or by this Lease:




	 	i)	 	Landlord, with or without terminating this Lease, may
immediately or at any time thereafter re-enter the Premises and correct or
repair any condition which shall constitute a failure on Tenant’s part to keep,
observe, perform, satisfy, or abide by any term, condition, covenant,
agreement, or obligation of this Lease, and Tenant shall fully reimburse and
compensate Landlord on demand.






	 	ii)	 	Landlord, with or without terminating this Lease, may
immediately or at any time thereafter demand in writing that Tenant vacate the
Premises and thereupon Tenant shall vacate the Premises and remove therefrom
all property thereon belonging to or placed on the Premises by, at the
direction of, or with consent of Tenant within twenty (20) days of receipt by
Tenant of such notice from Landlord, whereupon Landlord shall have the right to
re-enter and take possession of the Premises.






	 	iii)	 	Landlord, with or without terminating this Lease, may
immediately or at any time thereafter, re-enter the Premises and remove
therefrom Tenant and all property belonging to or placed on the Premises by, at
the direction of, or with consent of Tenant. Any such re-entry and removal by
Landlord shall not of itself constitute an acceptance by Landlord of a
surrender of this Lease or of the Premises by Tenant and shall not of itself
constitute a termination of this Lease by Landlord.






	 	iv)	 	Landlord, with or without terminating this Lease, may
immediately or at any time thereafter relet the Premises or any part thereof
for such time or times, at such rental or rentals and upon such other terms and
conditions as Landlord in its sole discretion may deem advisable, and Landlord
may make any alterations or repairs to the Premises which it may deem necessary
or proper to facilitate such reletting; and Tenant shall pay all costs of such
reletting including but not limited to the cost of any such repairs to the
Premises, attorneys’ fees, leasing inducements, and brokerage commissions; and
if this Lease shall not have been terminated, Tenant shall continue to pay all
rent and all other charges due under this lease up to and including the date of
beginning of payment of rent by any subsequent tenant of part or all of the
Premises, and thereafter Tenant shall pay monthly during the remainder of the
term of this Lease the difference, if any, between the rent and other charges
collected from any such subsequent tenant or tenants and the rent and other
charges reserved in this Lease, but Tenant shall not be entitled to receive any
excess of any such rents collected over the rents reserved herein.






	 	v)	 	Landlord may immediately or at any time thereafter terminate
this Lease, and this Lease shall be deemed to have been terminated upon receipt
by Tenant of written notice of such termination; upon such termination Landlord
shall recover from Tenant all damages Landlord may suffer by reason of such
termination including, without limitation, all arrearages in rentals, costs,
charges, additional rentals, and reimbursements, the cost (including court
costs and attorneys’ fees) of recovering possession of the Premises, the cost
of any repair to the Premises which is necessary or proper to prepare the same
for reletting and, in addition thereto, Landlord at its election shall have and
recover from Tenant either (A) an amount equal to the excess, if any, of the
total amount of all rents and other charges to be paid by Tenant for the
remainder of the term of this Lease over the then reasonable rental value of
the Premises for the remainder of the term of this Lease, or (B) the rents and
other charges which Landlord would be entitled to receive from Tenant pursuant
to the provisions of subsection (iv) if the Lease were not terminated,
discounted to present value at the prime rate of interest. Such election shall
be made by Landlord by serving written notice upon Tenant of its choice within
thirty (30) days of the notice of termination. Failure of Landlord to send
notice of election to Tenant shall be deemed an election of option (A) above.
In the event that Landlord elects option (B) above, to the extent Landlord
re-lets all or a portion of the Premises during the remainder of the Term of
the Lease (had the Lease not been terminated), Landlord shall pay over to
Tenant all rents and other charges received by Landlord from such replacement
tenant, up to the full amount paid by Tenant to Landlord under option (B)
above.






	 	vi)	 	The exercise by Landlord or Tenant of any one or more of the
rights and remedies provided in this Lease shall not prevent the subsequent
exercise by Landlord or Tenant of any one or more of the other rights and
remedies herein provided. All remedies provided for in this Lease are
cumulative and may, at the election of Landlord or Tenant, as the case may be,
be exercised alternatively, successively, or in any other manner and are in
addition to any other rights provided for or allowed by law or in equity.






	 	vii)	 	No act by Landlord with respect to the Premises shall terminate
this Lease, including, but not limited to, acceptance of the keys, institution
of an action for detainer or other dispossessory proceedings, it being
understood that this Lease may only be terminated by express written notice
from Landlord to Tenant, and any reletting of the Premises shall be presumed to
be for and on behalf of Tenant, and not Landlord, unless Landlord expressly
provides otherwise in writing to Tenant.





c. Any one or more of the following shall constitute a default by Landlord: (a) the failure by
Landlord to pay any amounts due to Tenant within ten (10) days after written notice from Tenant
that the same is due hereunder; or (b) the failure by Landlord to cure any failure to perform or
observe any of its covenants under this Lease within 30 days after written notice thereof from
Tenant, unless such failure is of such nature that it cannot be cured within such 30-day period, in
which case Landlord shall have such additional time as is necessary to cure it so long as Landlord
commences the curing within such 30-day period and thereafter diligently prosecutes the curing.
Upon the occurrence of any default by Landlord, Tenant shall have the right to (1) terminate this
Lease with no further liability to Landlord (except for sums already due prior to the termination),
and (2) exercise any other legal or equitable right or remedy it may have. In addition, Tenant may
cure Landlord’s default and offset the reasonable expense thereof against Base Rental and
Additional Rental thereafter accruing.



25. Late Payments . In the event any installment of any Rental owed by Tenant hereunder is
not paid when due, Tenant shall pay a late charge equal to the greater of (a) $100.00, or (b)
interest on such past-due amount from the date such amount became due until payment thereof, at an
annual interest rate of the prime rate of interest plus two percent (2%). The parties agree that
such charge is a fair and reasonable estimate of Landlord’s administrative expense incurred on
account of late payment. Should Tenant make a partial payment of past due amounts, the amount of
such partial payment shall be applied first to reduce all accrued and unpaid late charges, in
inverse order of their maturity, and then to reduce all other past due amounts, in inverse order of
their maturity.



26. Attorney’s Fees . In the event that the parties hereto enter into litigation over any
matter concerning this Lease, the prevailing party shall be entitled to collect its reasonable
attorneys’ fees and other costs from the other party.



27. No Waiver of Rights . No failure or delay of Landlord or Tenant to exercise any
right or power given it herein or to insist upon strict compliance by Tenant or Landlord of any
obligation imposed on it herein and no custom or practice of either party hereto at variance with
any term hereof shall constitute a waiver or a modification of the terms hereof by Landlord or
Tenant or any right it has herein to demand strict compliance with the terms hereof by Tenant or
Landlord, as the case may be. No waiver of any right of Landlord or Tenant or any default by
Tenant or Landlord on one occasion shall operate as a waiver of any of Landlord’s or Tenant’s other
rights or of any subsequent default by Tenant or Landlord. No express waiver shall affect any
condition, covenant, rule, or regulation other than the one specified in such waiver and then only
for the time and in the manner specified in such waiver. No person has or shall have any authority
to waive any provision of this Lease unless such waiver is expressly made in writing and signed by
an authorized officer of Landlord or Tenant, as the case may be.



28. Holding Over . In the event of holding over by Tenant after expiration or termination
of this Lease without the written consent of Landlord, Tenant shall pay as rent for such holdover
period one hundred twenty five percent (125%) of the Base Rental and one hundred percent (100%) of
Additional Rental that would have been payable if this Lease had not so terminated or expired. No
holding over by Tenant after the term of this Lease shall be construed to extend this Lease, and
Tenant shall be deemed a month-to-month tenant at will, terminable on thirty days notice from
either party. However, notwithstanding the foregoing, in the event that Tenant and Landlord have
engaged in good faith negotiations for an extension of the Lease for a period not to exceed ninety
(90) days, Tenant shall not be liable for any additional rent above the normal rent set forth
herein during such period of negotiation.



29. Subordination.



a. This Lease and the rights of Tenant hereunder shall be and are hereby expressly made subject to
and subordinate at all times to any deed of trust or mortgage (a “Mortgage”) or ground lease now or
hereafter existing on the Building, and to all amendments, modifications, renewals, extensions,
consolidations and replacements thereof, and to all advances made or hereafter to be made upon the
security thereof; provided, however, that the holder of the deed of trust or mortgage (the
“Mortgagee”) or the ground lessor, as applicable, shall, so long as no Event of Default has
occurred, not disturb Tenant in its possession of the Premises. Upon request, Tenant agrees to
execute and deliver to Landlord such further instruments consenting to or confirming the
subordination of this Lease to the Mortgage or ground lease and containing such other provisions
which may be requested in writing by Landlord, the Mortgagee or the ground lessor. Notwithstanding
anything to the contrary contained herein, any Mortgagee may subordinate, in whole or in part, its
Mortgage to this Lease without joinder of Tenant by sending Tenant notice in writing.



b. Tenant agrees that if Landlord defaults in the performance or observance of any covenant or
condition of this Lease required to be performed or observed by Landlord hereunder, Tenant will
give written notice specifying such default by certified or registered mail, postage prepaid, to
any Mortgagee or any ground lessor of which Tenant has been notified in writing, and before Tenant
exercises any right or remedy which it may have on account of any such default of Landlord, such
party shall have the same cure period that Landlord has hereunder. Whether or not any Mortgage is
foreclosed or any ground lease is terminated, or any Mortgagee or ground lessor succeeds to any
interest of Landlord under this Lease, no Mortgagee or ground lessor shall have any liability to
Tenant for any security deposit paid to Landlord by Tenant hereunder, unless such security deposit
has actually been received by such Mortgagee or ground lessor. No Mortgagee or ground lessor of
which Tenant has been notified, in writing, shall be bound any amendment or modification of this
Lease made without the written consent of such Mortgagee or ground lessor, nor shall any such party
be liable for any defaults of Landlord under this Lease.



30. Estoppel Certificate . Tenant agrees that, from time to time upon request by Landlord,
or any existing or prospective Mortgagee or ground lessor, within thirty (30) days from Tenant’s
receipt of such written request, Tenant will complete, execute and deliver a written estoppel
certificate certifying (a) that this Lease is unmodified and is in full force and effect (or if
there have been modifications, that this Lease, as modified, is in full force and effect and
setting forth the modifications); (b) the amounts of the monthly installments of Base Rental,
Additional Rental and other sums then required to be paid under this Lease by Tenant; (c) the date
to which the Base Rental, Additional Rental and other sums required to be paid under this Lease by
Tenant have been paid; (d) that to Tenant’s knowledge Landlord is not in default under any of the
provisions of this Lease, or if in default, the nature thereof in detail and what is required to
cure same; and (e) such other information concerning the status of this Lease or the parties’
performance hereunder reasonably requested by Landlord or the party to whom such estoppel
certificate is to be addressed. At any time and from time to time Landlord, upon 30 days’ request
from Tenant, will execute and deliver a similar instrument to Tenant, without cost to Tenant.



31. Sublease or Assignment by Tenant .



a. Except as set forth herein, Tenant shall not, without the Landlord’s prior written consent,
which will not be unreasonably withheld, (i) assign, convey, mortgage, pledge, encumber, or
otherwise transfer (whether voluntarily, by operation of law, or otherwise) this Lease or any
interest hereunder; (ii) allow any lien to be placed upon Tenant’s interest hereunder; (iii) sublet
the Premises or any part thereof; or (iv) permit the use or occupancy of the Premises or any part
thereof by anyone other than Tenant. Any attempt to consummate any of the foregoing without
Landlord’s consent shall be void and of no force or effect.



b. For any proposed assignment or subletting Tenant shall submit to Landlord a copy of the proposed
sublease or assignment, and such additional information concerning the business, reputation and
creditworthiness of the proposed sublessee or assignee as shall be sufficient to allow Landlord to
form a commercially reasonable judgment with respect thereto. If Landlord approves any proposed
sublease or assignment, Landlord shall receive from Tenant as additional rent hereunder fifty
percent (50%) of any rents received by Tenant pursuant to said sublease or assignment in excess of
the rentals payable to Landlord by Tenant under this Lease (after deducting all of Tenant’s
reasonable costs associated therewith, including reasonable brokerage fees and the reasonable cost
of remodeling or otherwise improving the Premises for said sublessee or assignee), as such rents or
other sums are received by Tenant from the approved sublessee or assignee. Landlord may require
that any rent or other sums paid by a sublessee or assignee be paid directly to Landlord.



c. Notwithstanding the giving by Landlord of its consent to any subletting, assignment or occupancy
as provided hereunder or any language contained in such lease, sublease or assignment to the
contrary, unless this Lease is expressly terminated by Landlord, Tenant shall not be relieved of
any of Tenant’s obligations or covenants under this Lease and Tenant shall remain fully liable
hereunder.



d. Notwithstanding anything contained in this Lease to the contrary, Tenant shall have the absolute
right, without the consent of Landlord, to assign or sublet this Lease to an affiliate or
wholly-owned subsidiary of Tenant or of Tenant’s parent company; or to assign or sublet this Lease
as part of any “Public Offering” or “Private Placement” by Tenant; to assign or sublet this Lease
to any entity into which Tenant merges or to that surviving entity as the result of an acquisition
or reorganization of Tenant. To the extent that Tenant is a surviving entity after any such
assignment, Tenant shall remain liable for all of its obligations hereunder.



32. Quiet Enjoyment . Landlord covenants that Tenant shall and may peacefully have, hold
and enjoy the Premises free from hindrance by Landlord or any person claiming by, through or under
Landlord but subject to the other terms hereof, provided that Tenant pays the Rental and other sums
herein recited to be paid by Tenant and performs all of Tenant’s covenants and agreements herein
contained. It is understood and agreed that this covenant and any and all other covenants of
Landlord contained in this Lease shall be binding upon Landlord and its successors only with
respect to breaches occurring during the ownership of the Landlord’s interest hereunder.



33. Landlord’s Relocation Right . INTENTIONALLY DELETED



34. Assignment by Landlord . Landlord shall have the right to transfer and assign, in
whole or in part, all its rights and obligations hereunder, in the Premises and the Building, and
in such event and upon such transfer no further liability or obligation shall thereafter accrue
against Landlord hereunder.



35. Limitation of Landlord’s Personal Liability . Tenant specifically agrees to look


solely to Landlord’s equity interest in the Project, the rent stream therefrom, and any sales
proceeds thereof for the recovery of any monetary judgment against Landlord, it being agreed that
Landlord (and its partners, members and shareholders) shall never be personally liable for any such
judgment. The provision contained in the foregoing sentence is not intended to, and shall not,
limit any right that Tenant might otherwise have to obtain injunctive relief against Landlord or
Landlord’s successors in interest or any suit or action in connection with enforcement or
collection of amounts which may become owing or payable under or on account of insurance maintained
by Landlord.



36. Force Majeure . Landlord and Tenant (except with respect to the payment of Rental or
any other monetary obligation under this Lease) shall be excused for the period of any delay and
shall not be deemed in default with respect to the performance of any of the terms, covenants and
conditions of this Lease when prevented from so doing by a cause or causes beyond the Landlord’s or
Tenant’s (as the case may be) control (excluding financial inability to perform), which shall
include, without limitation, all labor disputes, governmental regulations or controls, fire or
other casualty, inability to obtain any material or services, acts of God, or any other cause not
within the reasonable control of Landlord or Tenant (as the case may be).



37. Surrender of Premises. Upon the termination of this Lease by lapse of time or
otherwise or upon the earlier termination of Tenant’s right of possession, Tenant shall quit and
surrender possession of the Premises to Landlord, broom clean, in the same condition as upon
delivery of possession to Tenant hereunder, normal wear and tear and damage from casualty excepted
(except as caused by the gross negligence or willful misconduct of Tenant as set forth in Section
22 hereof). Before surrendering possession of the Premises, Tenant shall, without expense to
Landlord, remove all signs, furnishings, equipment, trade fixtures, merchandise and other personal
property installed or placed in the Premises and all debris and rubbish, and Tenant shall repair
all damage to Premises resulting from such removal. If Tenant fails to remove any of the signs,
furnishings, equipment, trade fixtures, merchandise and other personal property installed or placed
in the Premises by the expiration or termination of this Lease, then Landlord may remove any and
all such items and store or dispose of the same at Tenant’s expense. Tenant shall pay Landlord on
demand any and all expenses incurred by Landlord in the removal of such items, including, without
limitation, the cost of repairing any damage to the Premises or the Building caused by such removal
and storage charges (if Landlord elects to store such property).



38. Notices . Any notice or other communications required or permitted to be given under
this Lease must be in writing and shall be effectively given or delivered if (a) hand delivered to
the addresses for Landlord and Tenant stated below, (b) sent by certified or registered United
States Mail, return receipt requested, to said addresses, or (c) sent by nationally recognized
overnight courier (such as Federal Express, UPS Next Day Air or Airborne Express), with all
delivery charges paid by the sender and signature required for delivery, to said address. Any
notice mailed shall be deemed to have been given upon receipt or refusal thereof. Notice effected
by hand delivery shall be deemed to have been given at the time of actual delivery. Either party
shall have the right to change its address to which notices shall thereafter be sent and the party
to whose attention such notice shall be directed by giving the other party notice thereof in
accordance with the provisions of this Section.



Landlord:



Two Rivers Corporate Centre, L.P.



c/o SmartSpace, LLC



3055 Lebanon Road



Building Two, Suite 2200



Nashville, TN 37214



with a copy to:



Mr. Kim Brown, Esq.



Sherrard & Roe, PLC



424 Church Street, Suite 2000



Nashville, Tennessee 37219



Tenant:



Kirkland’s, Inc.



2501 McGavock Pike



Suite 1000



Nashville, TN 37214



Attention: SVP Real Estate



with a copy to:



Kirkland’s, Inc.



805 North Parkway



Jackson, TN 38305



Attention: General Counsel



39. Miscellaneous .



a. This Lease shall be binding upon and inure to the benefit of the successors and assigns of
Landlord, and shall be binding upon and inure to the benefit of Tenant, its successors, and, to the
extent assignment may be permitted or otherwise approved by Landlord hereunder, Tenant’s assigns.



b. All rights and remedies of Landlord and Tenant under this Lease shall be cumulative and none
shall exclude any other rights or remedies allowed by law. This Lease is declared to be a
Tennessee contract, and all of the terms hereof shall be construed according to the laws of the
State of Tennessee.



c. This Lease may not be altered, changed or amended, except by an instrument in writing executed
by all parties hereto.



d. If Tenant is a corporation, partnership, limited liability company or other entity, Tenant
warrants that all consents or approvals required of third parties (including but not limited to its
Board of Directors, partners or members) for the execution, delivery and performance of this Lease
have been obtained and that Tenant has the right and authority to enter into and perform its
covenants contained in this Lease.



e. To the extent permitted by applicable law, the parties hereto shall and they hereby do waive
trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto
against the other on any matters whatsoever arising out of or in any way connected with this lease,
the relationship of landlord and tenant, Tenant’s use or occupancy of the Premises and/or any claim
of injury or damage. In the event Landlord commences any proceedings for nonpayment of rent or any
other amounts hereunder, Tenant shall not interpose any counterclaim of whatever nature or
description in any such proceeding, unless the failure to raise the same would constitute a waiver
thereof. This shall not, however, be construed as a waiver of Tenant’s right to assert such claims
in any separate action brought by Tenant.



f. If any term or provision of this Lease, or the application thereof to any person or
circumstance, shall to any extent be invalid or unenforceable, the remainder of this Lease, or the
application of such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be
valid and shall be enforceable to the extent permitted by law.



g. Time is of the essence in this Lease.



h. Tenant and Landlord each represents and warrants to the other party that they did not deal with
any broker in connection with this Lease. Tenant and Landlord shall indemnify, defend and hold the
other party harmless of, from and against any and all losses, damages, liabilities, claims, liens,
costs and expenses (including, without limitation, court costs, reasonable attorneys’ fees and
litigation expenses) arising from any claims or demands of any other broker or brokers or finders
for any commission alleged to be due such other broker or brokers or finders claiming to have dealt
with Tenant or Landlord, as the case may be, in connection with this Lease or with whom Tenant or
Landlord hereafter deals or whom Tenant or Landlord employs.



i. If Tenant comprises more than one person, corporation, partnership, limited liability company or
other entity, the liability hereunder of all such persons, corporations, partnerships or other
entities shall be joint and several.



j. Landlord’s receipt of any Rental payable by Tenant hereunder with knowledge of the breach of a
covenant or agreement contained in this Lease shall not be deemed a waiver of the breach. No
acceptance by Landlord or Tenant of a lesser amount than the installment of Rental or other amount
which is due shall be considered, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment be deemed, an accord and satisfaction. Landlord or Tenant may
accept a check or payment without prejudice to Landlord’s or Tenant’s right to recover the balance
due or to pursue any other remedy provided in this Lease.



k. Submission of this instrument for examination shall not constitute a reservation of or option to
lease the Premises or in any manner bind Landlord, and no lease or obligation on Landlord shall
arise until this instrument is signed and delivered by Landlord and Tenant.



l. Any claim, cause of action, liability or obligation arising under the term of this Lease and
under the provisions hereof in favor of a party hereto against or obligating the other party hereto
and all of Tenant’s and Landlord’s indemnification obligations hereunder shall survive the
expiration or any earlier termination of this Lease.



1



IN WITNESS WHEREOF, the parties hereto have executed and sealed this Lease as of the date
aforesaid.



LANDLORD:



Two Rivers Corporate Centre, L.P.


By: RS Development, LLC


Its: General Partner



By: /s/ Floyd Shechter     


Floyd Shechter

Title: Managing Member



TENANT:



Kirkland’s, Inc.



By: /s/ Roland Mackie 


Roland Mackie

Title: Senior Vice President



2



3




EXHIBIT A-1 — DESCRIPTION OF LAND









4






EXHIBIT B — LANDLORD’S WORK




WORK LETTER AGREEMENT




This Work Letter Agreement (this “WORK LETTER) is made and entered into as of this
first day of March, 2007, by and between Two Rivers Corporate Centre, L.P. (“Landlord”),
and Kirkland’s, Inc., (“Tenant”) under the following circumstances:



A. Landlord and Tenant are entering into a Lease of even date herewith (the “Lease”)
relating to space in a building owned by Landlord, known as Two Rivers Corporate Centre, Suite1000,
having a street address of 2501 McGavock Pike, Donelson, Tennessee (the “Building”); and



B. Landlord and Tenant desire entering into this Work Letter for the purpose of setting
forth their agreements relating to the design and construction of the tenant improvements in such
space.




NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Landlord and Tenant agree as follows:



1. Tenant Improvements to Designated Space.



(a) Landlord shall install, furnish and construct in a prompt, good and workmanlike manner,
the interior partitions, finishes and other tenant improvement work (the “Tenant
Improvements”) in and for the Demised Premises in accordance with the “T.I. Plans and
Specifications” to be produced in accordance with Section 2 herein below. It is intended that the
Tenant Improvements will include and the T.I. Plans and Specifications will describe all work,
labor, material, installations and construction required to produce in the entirety of the Demised
Premises, on a “turn key” basis, a completed space ready for use and occupancy as first class suite
by Tenant, subject only to installation of furniture and equipment of Tenant. Landlord’s
obligation to fund the cost of Tenant Improvements shall be limited to an allowance of $35.00
multiplied by the Rentable Area of the Demised Premises, for a total of $964,145 (the “T.I.
Allowance). Landlord shall not enter into any contract for the construction of the Tenant
Improvements unless the proposed contractor has been approved by Tenant, which approval shall not
be unreasonably withheld or delayed. The contractor that has been approved by Tenant is
hereinafter referred to as the “Contractor” and the contract and contract documents approved by the
Tenant are hereinafter referred to as the “Contract.” The cost of the Tenant Improvements as set
forth in the Contract shall be referred to as the “Contract Sum”. In the event that the cost of
the Tenant Improvements for the Demised Premises which has been approved by Tenant as aforesaid
exceeds the T.I. Allowance, then the Tenant shall be responsible for the costs in excess of the
T.I. Allowance. In the event that the cost of the Tenant Improvements for the Demised Premises is
less than the T.I. Allowance, then Tenant’s Base Rent shall be reduced on a dollar-for-dollar basis
over the initial Term of the Lease in an amount equal to the balance of the T.I. Allowance. For
example, if the full cost of the Tenant Finish Work is equal to $28.00 per square foot of the
Premises, then Tenant’s Base Rent shall be reduced by $1.00 per square foot for each of the seven
years of the initial Term of the Lease (for a total rent reduction of $7.00 per square foot).



(b) Tenant shall pay all costs of the Tenant Finish Work as described above in Section 1(a)
to the extent that such expenditures exceed $35.00 per square foot of the Premises. Tenant shall
also pay the full cost of all change orders approved in writing by Tenant. Tenant shall have the
right to review each draw request for a Progress Payment and any supporting documentation of each
such draw request submitted by the Contractor to the Landlord or Project Architect.



2. Space Plan and Specifications. (a) On or before March 31, 2007, Tenant shall
prepare and deliver to Landlord draft floor plans and outline specifications for the Demised
Premises and the Tenant Improvements. Landlord shall not unreasonably withhold or delay its
approval of such floor plans and outline specifications. If Landlord has any objections or
comments with respect to such draft floor plans and outline specifications, Landlord shall notify
Tenant of such objections in writing within 5 (five) days after Landlord’s receipt thereof or
Landlord shall be deemed to have approved such draft floor plans and outline specifications.
Tenant shall promptly cause the requested changes and modifications to be made to the floor plan
and outline specifications, and shall promptly resubmit to Landlord the modified floor plan and
outline specifications, which shall be subject to the same review, approval and modification
procedures set for above. The final floor plans and outline specifications for the Demised
Premises and the Tenant Improvements approved by Landlord shall hereinafter be referred to as the
“T.I. Outline Specifications.”



(b) Following approval of the T.I. Outline Specifications, Landlord shall cause its project
architect, The Collaborative Studio (the “Project Architect”) to prepare and deliver to Tenant for
Tenant’s approval (which it shall not unreasonably withhold or delay) within ten (10) days after
Landlord’s approval of the T.I. Outline Specifications as set forth above in Section 2(a), any and
all necessary construction documents for the Tenant Improvements in the Demised Premises, including
but not limited to, 1/4” architectural, mechanical and electrical working drawings to scale together
with specifications necessary to complete such Tenant Improvements. The construction documents
will be prepared based upon the T.I. Outline Specifications, and shall in all material respects be
consistent with the development of such T.I. Outline Specifications. If Tenant has any objections
or comments with respect to such construction documents, working drawings and specifications, it
shall notify Landlord and the Project Architect in writing such objections within five (5) days
after receipt thereof or Tenant shall be deemed to have approved such documents, drawings and
specifications. Landlord shall cause the Project Architect in writing to make the requested
changes and modifications to the construction documents, working drawings and specifications, and
shall resubmit to Tenant and the Review Architect the modified construction documents, working
drawings and specifications, which shall be subject to the same review, approval and modification
procedures set forth above. The final construction documents, working drawings and specifications
for the Tenant Improvements approved by Tenant, shall be referred to as the “T.I. Plans and
Specifications.” None of the T.I. Plans and Specifications may be changed or otherwise
modified without the prior written consent of Tenant. The work of the Project Architect shall be
provided at no charge to Tenant.



3. Permits. Landlord shall obtain and maintain all authorizations, approvals and
permits required by any governmental entity for the Tenant Improvements described herein to be
performed by Landlord. Tenant shall cooperate with Landlord in obtaining such authorizations,
approvals or permits.



4. Completion. The Tenant Improvements shall be deemed complete when all of the
following have occurred: (A) the Project Architect’s certificate of Final Completion with respect
to the Tenant Improvements shall have been delivered to Landlord and Tenant; (B) Landlord shall
have obtained and delivered to Tenant a Temporary Certificate of Occupancy for the Demised Premises
from the governmental authority which has authority to issue such certificates in the jurisdiction
wherein the Premises are located, which Temporary Certificate of Occupancy shall indicate that the
Final Certificate of Occupancy will be issued in due course; and (C) Landlord and Tenant shall have
accepted the Tenant Improvements as being in substantial conformity with the T.I. Plans and
Specifications and have executed a written acknowledgment of such acceptance setting forth the T.I.
Completion Date (the “T.I. Completion Date Certificate”), excepting punch list items as
defined below, which shall also be signed by Landlord.



5. Access Before Completion. Tenant shall have access to the Demised Premises in
which Tenant Improvements are being performed prior to completion only for the purposes of
inspecting Landlord’s work, for the installation of Tenant’s telephone, computer and audio/visual
equipment or otherwise as agreed to by the parties in writing.



6. Punch List Work. Following issuance of the Project Architect’s Certificate of
Final Completion with respect to the Tenant Improvements, Tenant may inspect the Tenant
Improvements and prepare a punch list setting forth all incomplete, defective or other items of
construction not in conformity to the T.I. Plans and Specifications and if such punch list is
delivered to Landlord, Landlord shall complete or correct all items on the punch list within thirty
(30) days of receipt thereof (or within a reasonable period of time if thirty (30) days is
insufficient time during which to complete such item). In the event Landlord fails to complete or
correct any or all items on the punch list as herein provided, Tenant may complete or correct any
or all such items and Landlord shall reimburse Tenant for the cost thereof plus interest thereon at
the rate of twelve percent (12%) per annum within thirty (30) days after receipt from Tenant of
written demand for such payment and in the event Landlord fails to reimburse Tenant for such cost
and 12% interest per annum within such thirty (30) day period, Tenant may either deduct such cost
and interest from the next ensuing installments of rent coming due under the Lease until such costs
plus interest are recovered or pursue whatever remedies Tenant may have against Landlord at law or
in equity. Landlord shall complete and correct each item set forth on the punch list even if the
determination of whether the Tenant Improvements have been constructed in substantial conformity
with the T.I. Plans and Specifications has been submitted to arbitration or litigation.



7. Defective Work. Landlord warrants to Tenant that (i) the Tenant Improvements will
be constructed in accordance with the T.I. Plans and Specifications, (ii) all materials and
equipment furnished will be new, unless otherwise specified, (iii) Tenant Improvements will be of
good quality, free from faults and defects, and (iv) the Tenant Improvements shall be in full
compliance with all applicable laws, codes and regulations, including by way of example, but not as
a limitation, environmental, zoning, building and land use laws, codes and regulations. Without
limiting the generality of the foregoing, if within one year after the date of substantial
completion of all the Tenant Improvements, or within such longer period of time as may be
prescribed by law or the terms of any applicable warranty required by the T.I Plans and
Specifications, the Tenant Improvements or any part or element of either is found to be defective
or not in accordance with the T.I. Plans and Specifications, Landlord shall correct same within 30
days after receipt of written notice from Tenant to do so or a longer reasonable period if such
correction cannot reasonably be completed within a 30-day period, unless Tenant has previously
given Landlord a written acceptance of such condition. Unless such condition is specifically
referred to and accepted in a written instrument delivered to Landlord, acceptance by Tenant of the
Tenant Improvements pursuant to the lease shall not be deemed to be written acceptance of any such
condition.



8. No Chargebacks. Notwithstanding anything else herein or in the Lease to the
contrary, Tenant shall not be liable to Landlord for any payment or performance bonds, security
deposits, construction deposits, barricade fees, impact fees, advance rentals, architectural review
fees, water or sewer tap-in fees, or construction chargebacks (except that Tenant shall repay to
Landlord all construction costs in excess of $35.00 per square foot of the Premises).




LANDLORD:




Two Rivers Corporate Centre, L.P.




By: RS Development, LLC ,




its General Partner




By: /s/ Floyd Shechter     




	 	 	Floyd Shechter





TENANT:



Kirkland’s, Inc.



By: /s/ Roland Mackie 

Roland Mackie

Title: Senior Vice President




5



EXHIBIT C — COMMENCEMENT DATE AGREEMENT




This Agreement is made and entered into as of the day of     , 2007 between Two Rivers
Corporate Centre, L.P. (“Landlord”) and Kirkland’s, Inc., (“Tenant”), and shall be attached to and
made a part of that certain Lease between Landlord and Tenant dated      , 2007 (the
“Lease”). Pursuant to the provisions of the Lease, Landlord and Tenant intending to be legally
bound hereby, agree to the following:



b. The Commencement Date of the Lease occurred on the     day of June, 2007.



b. Tenant agrees that, as of and through the date hereof, Landlord has fully and timely complied
with and performed each and every of its obligations as set forth in the Lease and that Tenant has
no claims or causes of action against Landlord whatsoever and has no right to any setoffs against
any and all sums due Landlord.



IN WITNESS WHEREOF, the parties have duly executed this supplement to the Lease as of the day
and year first above written



LANDLORD:



Two Rivers Corporate Centre, L.P.


By: RS Development, LLC


Its: General Partner


By:     



Floyd Shechter



Title: Managing Member



TENANT:



Kirkland’s, Inc.



By:     



Roland Mackie



Title: Senior Vice President



6



EXHIBIT D — BASE RENTAL




	 	 	 	 	 	 	 
	Year

	 	Per Square Foot
	 	Per Annum
	 	Per Month
	 

	 	 
	 	 
	 	 
	1

2

3

4

5

6

7

	 	$13.00

$13.50

$14.00

$14.35

$14.71

$15.08

$15.45
	 	$358,111.00

$371,884.50

$385,658.00

$395,299.45

$405,181.94

$415,408.76

$425,601.15
	 	$29,842.58

$30,990.37

$32,138.17

$32,941.62

$33,765.16

$34,617.40

$35,466.76






7




EXHIBIT E — BUILDING SERVICES




Landlord will furnish building standard air conditioning and heating between 7 a.m. and 6 p.m.
on weekdays (from Monday through Friday, inclusive) and between 8 a.m. and 1:00 p.m. on Saturdays
and Sundays, all exclusive of Holidays as defined below (the “Building Operating Hours”). Upon
request of Tenant made in accordance with the rules and regulations for the Building, Landlord will
furnish air conditioning and heating at other times (that is, at times other than the times
specified above), in which event Tenant shall reimburse Landlord for Landlord’s actual cost of
furnishing such services. Landlord will provide an override button for HVAC services, that will
allow Tenant to obtain such services for an additional hour each time Tenant pushes such override
button. The cost of such additional HVAC services shall be at Landlord’s actual cost per hour.



The following dates shall constitute “Holidays” as said term is used in this Lease:



(a) New Year’s Day



(b) Memorial Day



(c) Independence Day



(d) Labor Day



(e) Thanksgiving Day



(f) Christmas



(g) Any other holiday mandated by law for a retail operation.



If in the case of any holiday described in (a) through (h) above, a different day shall be observed
than the respective day above-described, then that day which constitutes the day observed by
national banks in Nashville, Tennessee on account of such holiday shall constitute the holiday
under this Lease.



8



EXHIBIT F — BUILDING RULES AND REGULATIONS





	1.	 	Sidewalks, doorways, vestibules, halls, stairways, and other similar areas shall not be used
for the disposal of trash, be obstructed by tenants, or be used by tenants for any purpose
other than entrance to and exit from the Premises and for going from one part of the Building
to another part of the Building.






	2.	 	Plumbing fixtures shall be used only for the purposes for which they are designed, and no
sweepings, rubbish, rags or other unsuitable materials shall be disposed into them. Damage
resulting to any such fixtures from misuse by a tenant shall be the liability of said tenant.






	3.	 	Signs, advertisements, or notices visible in or from public corridors or from outside the
Building shall be subject to Landlord’s prior written approval.






	4.	 	Movement in or out of the Building of furniture, office equipment, or any other bulky or
heavy materials shall be restricted to such hours as Landlord shall reasonably designate.
Landlord will determine the method and routing of said items so as to ensure the safety of all
persons and property concerned. Advance written notice of intent to move such items must be
made to the Building management office.






	5.	 	All routine deliveries to a tenant’s Premises during 8:00 a.m. to 5:00 p.m. weekdays shall be
made through the freight elevators. Passenger elevators are to be used only for the movement
of persons, unless an exception is approved by the Building management office. Delivery
vehicles shall be permitted only in such areas as are designated by Landlord, from time to
time, for deliveries to the Building. Notwithstanding anything herein to the contrary, Tenant
shall have direct and unrestricted access with its own employees to accept deliveries at the
rear of the Premises. Landlord shall not have the right to restrict the time of delivery to
the Premises. There will be no material change to the Project which would affect Tenant’s
ability to accept deliveries at the rear of the Premises without Tenant’s prior written
consent.






	6.	 	Building management shall have the authority to prescribe the manner that heavy furniture and
equipment is positioned.






	7.	 	Corridor doors, when not in use, shall be kept closed.






	8.	 	All freight elevator lobbies are to be kept neat and clean. The disposal of trash or storage
of materials in these areas is prohibited.






	9.	 	No animals shall be brought into or kept in, on or about the Building, except for seeing-eye
dogs.






	10.	 	Tenant will comply with all security procedures during business hours and after hours and on
weekends.






	11.	 	Tenants are requested to lock all office doors leading to corridors and to turn out all
lights at the close of their working day.






	12.	 	All requests for overtime air conditioning or heating must be submitted in writing to the
Building management office by 2:00 p.m. on the day desired for weekday requests, by 2:00 p.m.
Friday for weekend requests and by 2:00 p.m. on the preceding business day for holiday
requests.






	13.	 	No flammable or explosive fluids or materials shall be kept or used within the Building
except in areas approved by Landlord, and Tenant shall comply with all applicable building and
fire codes relating thereto.






	14.	 	Tenant may not make any modifications, additions or repairs to the Premises and may not
install any furniture, fixtures or equipment in the Premises that is in violation of any
applicable building and/or fire code governing the Premises or the Building.






	15.	 	All vending machines located within the demised premises shall be operated and maintained by
Landlord’s approved food and beverage vendors.






	16.	 	Except in those areas designated by Landlord, if any, smoking is prohibited in the Building
(including, but not limited to, the Premises, the main building lobby, public corridors,
elevator lobbies, service elevator vestibules, stairwells, restrooms and other common areas
within the Building).






	17.	 	There shall be no food or beverage vending permitted in the demised premises other than by
Landlord’s approved vendors. This rule shall not prohibit Tenant from using any catering
services for meals, meetings, etc.





Landlord reserves the right to rescind any of these rules and regulations and to make such other
and further rules and regulations as in its reasonable judgment shall, from time to time, be
required for the safety, protection, care and cleanliness of the Building, the operation thereof,
the preservation of good order therein and the protection and comfort of the tenants and their
agents, employees and invitees. Such rules and regulations, when made and written notice thereof
is given to a tenant, shall be binding upon it in like manner as if originally herein prescribed.
All rules shall be reasonable and enforced in a non-discriminatory manner. In the event of a
conflict between the provisions of this Lease and any rules or regulations, the provisions of the
Lease shall govern. Landlord shall not have the right to establish any rule or regulation that
requires that Tenant pay any fees or which otherwise affects the economic bargain of Tenant as set
forth in the Lease.




9