Exhibit
10.1


 


INDUSTRIAL
NET LEASE


 


 


 


 


 


By
and Between


 


 


 


 


Natomas Meadows Two, LLC,


a Nevada Limited Liability
Company


 


 


 


 


and


 


 


 


 


Mrs. Fields Famous Brands,
LLC


A Delaware Limited Liability
Company


 


 


 


 


for


 


 


 


 


Building IV of Freeport West
— Ninigret


1717 South 4800 West


Salt Lake City, Utah  84120


 


 


 


 


January 20, 2006


 

















 


TABLE OF CONTENTS


 


	
  1. BASIC TERMS.

  	
  1

  
	
  Section
  1.1

  	
  Date of Lease:

  	
  1

  
	
  Section
  1.2

  	
  Landlord:

  	
  1

  
	
  Section
  1.3

  	
  Tenant:

  	
  1

  
	
  Section
  1.4

  	
  The Leased Premises.

  	
  1

  
	
  Section
  1.5

  	
  Lease Term.

  	
  1

  
	
  Section
  1.6

  	
  Initial Security Deposit.

  	
  1

  
	
  Section
  1.7

  	
  Rental.

  	
  1

  
	
  Section
  1.8

  	
  Use.

  	
  1

  
	
  Section
  1.9

  	
  Common Areas.

  	
  2

  
	
  Section
  1.10

  	
  Tenant’s Proportionate Share.

  	
  2

  
	
  Section
  1.11

  	
  Tenant Improvements.

  	
  2

  
	
   

  	
   

  	
   

  
	
  2. LEASE TERM

  	
  2

  
	
  Section
  2.1

  	
  Lease of Premises for Lease Term.

  	
  2

  
	
  Section
  2.2

  	
  Delay in Possession.

  	
  3

  
	
  Section
  2.3

  	
  Holdover by Tenant.

  	
  3

  
	
   

  	
   

  	
   

  
	
  3. RENT

  	
  3

  
	
  Section
  3.1

  	
  Fixed Rent.

  	
  3

  
	
  Section
  3.2

  	
  Security Deposit.

  	
  4

  
	
   

  	
   

  	
   

  
	
  4. OTHER CHARGES PAYABLE BY TENANT

  	
  4

  
	
  Section
  4.1

  	
  Additional Rent.

  	
  4

  
	
  Section
  4.2

  	
  Taxes.

  	
  5

  
	
  Section
  4.3

  	
  Utilities.

  	
  5

  
	
  Section
  4.4

  	
  Garbage Collection.

  	
  6

  
	
  Section
  4.5

  	
  Insurance.

  	
  6

  
	
  Section
  4.6

  	
  Increased Insurance Risk.

  	
  7

  
	
  Section
  4.7

  	
  Late Charges.

  	
  7

  
	
  Section
  4.8

  	
  Interest.

  	
  8

  
	
   

  	
   

  	
   

  
	
  5. USE OF PREMISES

  	
  8

  
	
  Section
  5.1

  	
  Authorized Uses.

  	
  8

  
	
  Section
  5.2

  	
  Hazardous Materials.

  	
  8

  
	
  Section
  5.3

  	
  Waste; Nuisance; Compliance with Law.

  	
  8

  
	
  Section
  5.4

  	
  Right of Entry by Landlord.

  	
  8

  
	
  Section
  5.5

  	
  Outside Storage.

  	
  9

  
	
  Section
  5.6

  	
  Signs.

  	
  9

  
	
  Section
  5.7

  	
  Exterior Lights.

  	
  9

  
	
  Section
  5.8

  	
  Indemnity.

  	
  9

  
	
  Section
  5.9

  	
  Quiet Possession.

  	
  10

  



 


 


ii

















 


	
  Section
  5.10

  	
  Parking.

  	
  10

  
	
  Section
  5.11

  	
  Sales Prohibited.

  	
  10

  
	
   

  	
   

  	
   

  
	
  6. CONDITION OF PREMISES; MAINTENANCE; REPAIR;
  ALTERATIONS

  	
  10

  
	
  Section
  6.1

  	
  Condition on Commencement Date.

  	
  10

  
	
  Section
  6.2

  	
  Landlord’s Obligations.

  	
  10

  
	
  Section
  6.3

  	
  Tenant’s Obligations.

  	
  11

  
	
  Section
  6.4

  	
  Alterations by Tenant.

  	
  11

  
	
  Section
  6.5

  	
  Liens.

  	
  12

  
	
  Section
  6.6

  	
  Surrender of Premises.

  	
  13

  
	
   

  	
   

  	
   

  
	
  7. DAMAGE OR DESTRUCTION; CONDEMNATION

  	
  13

  
	
  Section
  7.1

  	
  Damage or Destruction of Premises.

  	
  13

  
	
  Section
  7.2

  	
  Condemnation.

  	
  14

  
	
   

  	
   

  	
   

  
	
  8. ASSIGNMENT AND SUBLETTING

  	
  15

  
	
  Section
  8.1

  	
  Landlord’s Consent.

  	
  15

  
	
  Section
  8.2

  	
  Increased Rent upon Subletting.

  	
  15

  
	
  Section
  8.3

  	
  Tenant’s Continuing Liability.

  	
  15

  
	
  Section
  8.4

  	
  Tenant’s Affiliates.

  	
  15

  
	
  Section
  8.5

  	
  Covenants Binding on Assignees.

  	
  16

  
	
   

  	
   

  	
   

  
	
  9. DEFAULT; REMEDIES

  	
  16

  
	
  Section
  9.1

  	
  Events of Default.

  	
  16

  
	
  Section
  9.2

  	
  Landlord Remedies.

  	
  17

  
	
  Section
  9.3

  	
  No Election of Remedies; No Waiver.

  	
  18

  
	
   

  	
   

  	
   

  
	
  10. LANDLORD’S LENDERS

  	
  18

  
	
  Section
  10.1

  	
  Subordination of Lease.

  	
  18

  
	
  Section
  10.2

  	
  Estoppel Certificates.

  	
  18

  
	
  Section
  10.3

  	
  Tenant’s Failure to Provide Information.

  	
  19

  
	
   

  	
   

  	
   

  
	
  11. MISCELLANEOUS PROVISIONS

  	
  19

  
	
  Section
  11.1

  	
  Attorneys’ Fees And Costs.

  	
  19

  
	
  Section
  11.2

  	
  Limitation on Landlord’s Liability.

  	
  19

  
	
  Section
  11.3

  	
  Square Footage.

  	
  20

  
	
  Section
  11.4

  	
  Severability.

  	
  20

  
	
  Section
  11.5

  	
  Right to Relocate.

  	
  20

  
	
  Section
  11.6

  	
  Rules and Regulations.

  	
  20

  
	
  Section
  11.7

  	
  Notices.

  	
  20

  
	
  Section
  11.8

  	
  Governing Law; Binding Effect; Construction of
  Lease.

  	
  21

  
	
  Section
  11.9

  	
  Entire Agreement.

  	
  21

  
	
  Section
  11.10

  	
  Waiver.

  	
  21

  
	
  Section
  11.11

  	
  Counterparts.

  	
  21

  
	
  Section
  11.12

  	
  Security.

  	
  21

  



 


 


iii

















 


	
  Section
  11.13

  	
  Survival.

  	
  21

  
	
  Section
  11.14

  	
  Authority.

  	
  21

  
	
  Section
  11.15

  	
  Broker Fees.

  	
  22

  
	
  Section
  11.16

  	
  Time.

  	
  22

  
	
   

  	
   

  	
   

  
	
  EXHIBIT “A”

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  EXHIBIT “B”

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  EXHIBIT “C”

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  EXHIBIT “D”

  	
   

  	
  26

  



 


 


iv

















INDUSTRIAL
NET LEASE


 


1.     BASIC TERMS.


This Article 1 contains the
basic terms of this Lease between the Landlord and Tenant (as hereinafter
defined).  The other articles and
paragraphs of the Lease referred to in this Article 1 explain and define the
basic terms set forth in this Article 1, and are to be read in conjunction with
the basic terms.


 


Section
1.1      
Date of Lease:


May 1, 2006. This date is
for reference purposes only.


 


Section
1.2      
Landlord:


NATOMAS MEADOWS TWO, L.L.C.,
a California limited liability company, whose address is P.O. Box 30076, Salt
Lake City, Utah  84130.


 


Section
1.3      
Tenant:


MRS. FIELDS FAMOUS BRANDS,
LLC, a Delaware limited liability company, whose address is 2855 E. Cottonwood
Parkway, Suite 400, Salt Lake City Utah 
84121-7050.


 


Section
1.4      
The Leased Premises.


The Premises leased hereby,
consisting of 158,800 square feet of that certain warehouse space located in
Salt Lake City, Utah, is designated the “Premises” or the “Leased Premises”.  The Premises, together with the building and
associated land containing the Premises, and all other buildings and
improvements owned by Landlord, located at the street address of 1717 South
4800 West, shall be collectively designated the “Distribution Center”.   The Premises, the square footage included in
the Premises, the improvements thereon, and the Distribution Center are more
fully described and/or depicted on Exhibit “A” attached hereto and incorporated
herein by reference.


 


Section
1.5      
Lease Term.


The term of this Lease is for a period of Ten
year(s), commencing on the First day of May, 2006 (the “Commencement Date”),
and terminating on the 30th day of April, 2016 (the “Expiration Date”),
unless terminated or extended as provided in this Lease.


 


Section
1.6      
Initial Security Deposit.


One Hundred Thousand Dollars
($100,000).


 


Section
1.7      
Rental.


The initial monthly rent shall be Sixty Nine
Thousand Eight Hundred Seventy Two Dollars ($69,872.00) per month, subject to
periodic increases, as more fully described in Article 3 hereof.


 


Section
1.8      
Use.


Tenant shall use the Premises for operation of a
mail order business and related activities including the manufacture, baking,
preparation, production and distribution of 


 


 


1

















 


baked and non-baked goods, production and preparation of catalogs,
fulfillment activities including taking orders, shipping and receiving related
products, storage, office support and other purposes ordinarily incidental to
such use, only as permissible under applicable law, and for no other purpose
unless expressly approved by Landlord in writing.  Tenant’s use of the Premises is further
defined and limited under Article 5 hereof.


 


Section
1.9      
Common Areas.


Common Area shall be defined
as all areas and facilities outside the Premises and within the exterior
boundaries of the Distribution Center that are provided and designated by
Landlord for the non-exclusive use of Landlord, Tenant and other tenants of the
Distribution Center and their respective employees, agents, customers and
invitees.  Common Areas may include, but
are not limited to:  all parking areas,
loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways, corridors, landscaped areas, and any restrooms used in common by
tenants.  Tenant shall be deemed to have
a revocable license, during the Term of this Lease, for the use of the Common
Areas.  Landlord agrees that it shall not
disrupt or adversely affect Tenant’s use or operations of Leased Premises by
unreasonably revoking Tenant’s license to the Common Areas during the term of
the Lease, and specifically recognizes and allows that during the period from
November through December of each year, heavier use of the Common Areas by
Tenant is anticipated.


 


Section
1.10   Tenant’s Proportionate Share.


Tenant’s proportionate share
of the Operating Expenses, as defined and outlined in Section 4.1 hereof, shall
be 100%.  Such proportionate share shall
be adjusted on or before the first day of each calendar year.  Such share is a fraction, the numerator of
which is the number of square feet of the Premises, and the denominator of
which is the gross square footage of total leaseable space in the Distribution
Center.  Tenant’s estimated share of the
Operating Expenses for the initial partial year of the term of this Lease,
based on the Commencement Date, shall be $0.07 per square foot per month.


 


Section 1.11 Tenant Improvements.


Tenant improvements to be performed in
the Premises will be performed in accordance with the terms and provisions set
forth in Section 6.4 hereof.  Thereafter,
during the term of this Lease, Landlord will have no obligation to alter,
change, or otherwise improve the Premises except to maintain the Premises as
provided for in Section 6.2 hereof.


2.     LEASE TERM


Section
2.1      
Lease of Premises for Lease Term.


Landlord leases the Premises
to Tenant and Tenant leases the Premises from Landlord for the Lease Term (as
defined in Section 1.5 above).  At the
conclusion of the Lease Term (including after the first renewal period)
provided Tenant is not in default of the material provisions of this Agreement,
Tenant shall have the right at its option to renew this Lease for the Leased
Premises for up to two additional five year terms on the same or similar terms
and conditions at the then prevailing market rates with the exception that the
Tenant will have no further options to extend. 
Tenant shall provide 


 


2

















 


Landlord written notice of its intent to
renew the lease at least  one hundred
eighty days (180) days prior to the Expiration Date.


 


Section
2.2      
Delay in Possession.


Landlord will use its best
reasonable efforts to deliver possession of the Premises to Tenant on the
Commencement Date.  If Landlord is unable
to deliver possession as agreed, Landlord shall not be subject to any liability
therefore, including without limitation any consequential damages suffered by
Tenant, nor shall such failure affect the validity of this Lease, except that
Tenant shall not be required to pay Rent until Landlord delivers possession of
the Premises, and Tenant shall be entitled to terminate the Lease and receive
reimbursement of the initial security deposit if possession is not delivered
within three months of the Commencement Date.


 


 


Section
2.3      
Holdover by Tenant.


Should Tenant remain in
possession of the Premises, or any part thereof, after the expiration of the
term of this Lease and any renewal hereof, unless otherwise agreed in writing,
such holding over shall constitute a tenancy from month to month only.  Tenant shall pay in advance as monthly rental
a sum equal to one and one-half (1-1/2) times the monthly rental paid to
Landlord during the last month of the term of this Lease.  Tenant’s month-to-month tenancy shall
otherwise be on the same terms and conditions as herein provided, except as to
any provisions relating to renewals and extensions, and except that Tenant may
also be evicted from the Premises in the manner provided in the statutes of the
State of Utah for month-to-month tenancies.


 


3.     RENT


Section
3.1      
Fixed Rent.


Tenant agrees to pay as
rental to Landlord at Landlord’s address set forth in Section 11.7 hereof, or
at such other place as Landlord may from time to time designate in writing, the
following specified monthly amounts for the Premises, which amounts are
calculated at the following listed rates per month.


Rent
Schedule


                                                


	
  PERIOD

  	
   

  	
  RENT PER MONTH

  	
   

  
	
  APRIL 1, 2006 to MARCH 31, 2007

  	
   

  	
  $69,872.00

  	
   

  
	
  APRIL 1, 2007 to MARCH 31, 2008

  	
   

  	
  $71,968.16

  	
   

  
	
  APRIL 1, 2008 to MARCH 31, 2009

  	
   

  	
  $74,127.20

  	
   

  
	
  APRIL 1, 2009 to MARCH 31, 2010

  	
   

  	
  $76,351.02

  	
   

  
	
  APRIL 1, 2010 to MARCH 31, 2011

  	
   

  	
  $78,641.55

  	
   

  
	
  APRIL 1, 2011 to MARCH 31, 2012

  	
   

  	
  $81,000.80

  	
   

  
	
  APRIL 1, 2012 to MARCH 31, 2013

  	
   

  	
  $83,430.82

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  APRIL 1, 2013 to MARCH 31, 2014

  	
   

  	
  $85,933.75

  	
   

  
	
  APRIL 1, 2014 to MARCH 31, 2015

  	
   

  	
  $88,511.76

  	
   

  
	
  APRIL 1, 2015 to MARCH 31, 2016

  	
   

  	
  $91,167.11

  	
   

  



 


3

















 


The monthly fixed rental
reserved under this Article is due and payable in lawful money of the United
States of America, in advance, without any prior demand therefore and without
any deduction or set-off whatsoever, upon the first day of each calendar month
during the term of this Lease.  No
payment by Tenant of any lesser amount than the full rent or other sum payable
to Landlord under the terms hereof shall be deemed to be other than payment on
account of the earliest said rent or other sum then due and payable.  No endorsement or statement on any check or
any letter accompanying any check or payment from Tenant to Landlord hereunder
shall be deemed an accord and satisfaction, and Landlord may accept such check
or payment without prejudice to Landlord’s right to recover the balance of such
rent or other sum due hereunder, or to pursue any other remedy in this Lease or
by law provided.


 


Section
3.2       Security Deposit.


Tenant has,
contemporaneously with the execution of this Lease, deposited with the Landlord
the amount set forth in Section 1.6 hereof, receipt of which is hereby
acknowledged by Landlord.  This sum shall
be held by Landlord as security for the faithful performance by Tenant of the
terms, conditions and covenants of this Lease during the term hereof.  Tenant agrees that should it default in any
rental payment or other payment to Landlord due hereunder, Landlord may apply
the security deposit, or any portion thereof, to said unpaid payment.  Should the entire security deposit, or any
portion thereof, be appropriated and applied by Landlord for the payment of
rent or other sums, as provided in this paragraph, then Tenant shall, upon the
written demand of Landlord, forthwith remit to Landlord a sufficient amount in
lawful money of the United States of America to restore said security to the
original amount of the security deposit, and Tenant’s failure to do so within
fifteen (15) days after receipt of such demand shall constitute a default under
this Lease.  Should Tenant comply with
all of the terms, conditions and covenants of this Lease, promptly pay all rental
and other amounts when due hereunder, and leave the Premises at the end of the
term hereof in good condition, subject to reasonable wear and tear, then the
security deposit shall be returned in full to Tenant at the end of the term of
this Lease.  Landlord shall have the
right to maintain the security deposit separate and apart from Landlord’s
general funds or may commingle the security deposit with Landlord’s other
funds.  Landlord shall not be required to
pay Tenant any interest on the security deposit.  Should Landlord convey its interest in the
Premises to any party during the Term of this Lease, Landlord shall transfer
the deposit to Landlord’s successor in interest, and Landlord shall have no
further liability with respect to return of such deposit.


 


4.     OTHER CHARGES PAYABLE BY TENANT


Section
4.1      
Additional Rent.


All charges payable by
Tenant other than Rent and the Security Deposit set forth in Article 3 above
shall be “Additional Rent.”  Tenant shall
pay all Additional Rent as and when due, as more fully set forth in this
Article 4.  Tenant shall pay Tenant’s pro
rata share of all real property taxes, property and liability insurance and
utilities, as set forth in Sections 4.2, 4.3, 4.5.3, 4.5.4, and 4.5.5,
below.  Additionally, Tenant shall pay
its pro rata share of all Common Area maintenance fees, as more fully set forth
in Section 6.3.3.  The amounts due under
this Section 4.1 shall be designated as “Operating Expenses”.


 


4

















 


The Operating Expenses due and payable by Tenant
under this Section 4.1 (the “Tenant’s Operating Expenses”) is a percentage of
the total Operating Expenses computed by multiplying the total amount of
Operating Expenses by a fraction, the numerator of which shall be the number of
square feet in the Premises (as set forth on attached Exhibit “A”), and the
denominator of which shall be the gross square footage of the total leasable area in
the Distribution Center.


 


On or about April 1 of each
calendar year, Landlord shall provide Tenant a statement showing the actual amount
of Operating Expenses expended during the preceding year.  If the Tenant Expenses paid by Tenant
pursuant hereto for any year exceeds Tenant’s actual share of the Operating
Expenses, Landlord shall apply the excess against the current year Tenant Expenses.  If the Tenant Expenses paid by Tenant
pursuant hereto for any year is less than Tenant’s actual share of the
Operating Expenses, Tenant shall have thirty (30) days from receipt of the
statement showing the actual amount of Operating Expenses hereunder to remit
the shortfall to Landlord.


 


                If
the term of this Lease begins any time other than the beginning of a calendar
year, the amount of Tenant Expenses for the partial year shall be calculated by
Landlord at the time of the beginning of the Lease for that partial year, as
set forth in Section 1.10 hereof.  If
this Lease is terminated at other than the end of a calendar year, all amounts
payable by Tenant to Landlord under the provisions of this Section shall be
prorated on the basis of a 360-day year, thirty (30) days allocated to each
month.


 


Section
4.2      
Taxes.


Tenant agrees to pay its pro
rata share of all real property taxes assessed or levied by any governmental
agency against the Distribution Center, or any part thereof, during the term of
this Lease; provided, however, that Tenant may dispute and contest the same at
its own expense and cost.


 


                For
purposes of this Paragraph, real property taxes include all assessments and
other governmental levies, ordinary and extraordinary, foreseen and unforeseen,
which are assessed or imposed upon the Premises or become payable during the
term of this Lease, and also include any tax assessed upon or measured by rents
received by Landlord from Tenant where such tax is in addition to an income tax
upon Landlord’s income.


 


Tenant shall pay any and all
sales, use or personal property taxes incurred in connection with or reasonably
attributable to Tenant’s use of the Premises, including without limiting the
generality of the foregoing, the cost or value of Tenant’s equipment,
furniture, fixtures and other personal property on the Premises or Tenant’s
business conducted thereon.


 


Section 4.3       Utilities.


4.3.1   Tenant shall pay when due all charges for
heat, gas, electricity, telephone and other utilities or assessments separately
metered and used or consumed on the Premises. 
Tenant shall make such payments directly to the utility service provider
supplying said utilities.


 


5

















 


4.3.2   In the event charges for heat, gas,
electricity, telephone and other utilities or assessments are not separately
metered, then Tenant shall pay its pro rata share for all such charges in the
manner provided under Section 4.1, above.


 


4.3.3   Tenant shall pay its pro rata share of all
charges for water and sewer in the manner provided under Section 4.1, above.


 


In
the event any utility service to the Premises is interrupted or discontinued
for any reason whatsoever, Landlord shall not be liable therefore to Tenant and
such interruption or discontinuation shall not be deemed to be an eviction or
interference with Tenant’s use or occupancy of the Premises.


 


Section
4.4      
Garbage Collection.


Cost of garbage collection
shall be borne by Tenant.  Arrangement
for such service shall be made by Tenant, subject to the approval of Landlord.


 


 


 


Section 4.5       Insurance.


4.5.1   Tenant shall purchase and maintain such
insurance complying with the laws of the State of Utah as will protect it from
claims under Workers Compensation Acts, and any other employee benefit acts.


 


4.5.2   Tenant shall purchase and maintain
comprehensive public liability insurance indemnifying Landlord and Tenant
against all claims and demands for injury to or death of persons or damage to
property that may be claimed to have occurred upon the Premises, or arising out
of Tenant’s operations or use of the Premises. 
Tenant shall name Landlord as an additional insured under such
policy.  The policy limits for Tenant’s
insurance on property damage or personal injury shall not be less than the
following amounts:  Bodily injury or
death:  $2,500,000.00, and property
damage: $1,500,000.00.  Tenant shall
provide evidence from the insurance company of such insurance stating the
policy limits, and affirmatively stating that the policy cannot be canceled or
reduced in coverage without ten (10) days’ prior written notice to
Landlord.  In the event Tenant fails to
purchase and/or maintain the insurance required under this Section 4.5, in
addition to such being an Event of Default under Section 9.1 hereof, Tenant
shall be liable for any and all damage occasioned by any such insurable loss
that would otherwise have been covered under the insurance policy required
hereunder, whether incurred by Landlord, Tenant, or other party.


 


4.5.3   During the Lease Term, Landlord may, at its
option, maintain standard form or extended coverage insurance covering loss of
or damage to the Premises and/or the Distribution Center.  Such policy may include protection against
all perils included within the classification of fire, extended coverage,
vandalism, malicious mischief, special extended perils (all risk), sprinkler
leakage and any other perils, which Landlord deems reasonably necessary,
including flood 


 


6

















 


and earthquake
insurance.  Landlord will not obtain
insurance for Tenant’s fixtures or equipment or for improvements installed by
Tenant on the Property.  Landlord may
also, at its option, maintain a rental income insurance policy, with loss
payable to Landlord, in an amount equal to one year’s Base Rent, plus estimated
real property taxes and insurance premiums. 
Tenant shall not do or permit anything to be done which invalidates any
such insurance policies.


 


4.5.4   Landlord, at its option, may purchase and
maintain insurance on the Premises or otherwise to protect Landlord from claims
arising out of Tenant’s use of the Premises or operations under this
Lease.  Any such insurance purchased and
maintained by Landlord shall inure to the benefit and protection of Landlord
only, and not to Tenant.


 


4.5.5   Tenant shall pay to Landlord any property
insurance premiums allocable to the Leased Premises for any year during the
term of this Lease.  The premium will be
allocated to the Leased Premises based on the square footage that is the
subject of this Lease as a percentage of the total net leaseable square footage
in the Distribution Center.  In the event
Landlord elects to purchase such insurance at a time other than the first of any
calendar year, Landlord will provide Tenant with a statement of the premium as
furnished by the insurance carrier, together with a computation of the amount
due and owing by Tenant for the partial year. 
Within thirty (30) days thereafter Tenant shall pay Landlord the
insurance premium set forth in the computation. Thereafter, the premium for
said insurance shall be included as part of the Tenant Expenses, as more fully
described under Section 4.1 hereof. 
Tenant shall be liable for the payment of any deductible amount under
Landlord’s or Tenant’s insurance policies maintained on the Leased Premises
pursuant to this section 4.5.


 


4.5.6   If this lease is terminated at other than
the end of a calendar year, all amounts payable by Tenant to Landlord under the
provisions of this paragraph shall be prorated on the basis of a 360-day year,
30 days allocated to each month.


 


Section
4.6       Increased Insurance Risk.


Tenant will not permit the
Premises to be used for any purpose which would render void or cause
cancellation of any insurance policy covering the Premises.  If Landlord’s insurance rates are increased
during Tenant’s occupancy, Tenant agrees to reimburse Landlord for such
increased insurance costs over those in effect prior to Tenant’s
occupancy.  In the event Landlord’s
insurance is canceled because of a change in Tenant’s use of the Premises,
Tenant agrees to indemnify Landlord and hold it harmless for any loss or damage
to the Premises occurring before reinstatement or replacement of Landlord’s
insurance.


 


Section
4.7      
Late Charges.


Should Tenant fail to pay
any rental payment within fifteen (15) days from the date it is due, Landlord
shall charge, and Tenant shall pay, a late charge equal to five percent (5%) of
the delinquent Rent.  The parties agree
that such late charge represents a fair and reasonable estimate of Landlord’s
costs occasioned by such late payment.


 


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Section
4.8      
Interest.


In addition to any
applicable late charges, as set forth in Section 4.6 hereof, should Tenant fail
to pay any rent or Additional Rent when due, and said failure shall continue
for thirty (30) days, any amounts so owing shall bear interest at the rate of
eighteen percent (18%) per annum, from the date due until paid.  Notwithstanding anything provided under
Section 4.7 hereof and this Section 4.8, Landlord shall have all legal
remedies, in addition to all remedies provided by this Lease, available for the
enforcement of payment of rent hereunder. 
In the event Landlord resorts to court action to enforce Tenant’s
obligation to pay Rent hereunder, Landlord shall be entitled post-judgment to
continue to assess and collect interest at the rate of one and one-half percent
(1.5%) per month.


 


5.     USE OF PREMISES


Section
5.1      
Authorized Uses.


Tenant shall use the Premises
only for the use described in Section 1.8 above, and for purposes ordinarily
incidental to such use.


 


Section
5.2      
Hazardous Materials.


Tenant agrees not to keep, use or permit to be kept
or used on the Leased Premises, without the express written consent of
Landlord, any flammable fluids, explosives, or any “hazardous substance,” “solid
waste,” or “hazardous waste,” as said terms are defined in all applicable federal, state
and local statutes, ordinances, regulations and rules relating to environmental
quality, health, safety, contamination and clean-up, including, but not limited
to, 42 U.S.C. Section 9601, et seq. (The Comprehensive Environmental Response,
Compensation and Liability Act, or CERCLA), 42 U.S.C. Section 7401 et seq. (The
Clean Water Act), 42 U.S.C. Section 6901, et seq. (The Resource Conservation
and Recovery Act (“RCRA”), 33 U.S.C. Section 1251, et seq. (The Clean Water
Act), and  40 C.F.R. 261.1 et. seq. (RCRA
Identification and Listing of Hazardous Waste), and any amendments thereto or
rules or regulations promulgated thereunder. 
Notwithstanding the foregoing, Tenant may keep and use small amounts of
items or substances used in the ordinary course of business, including cleaning
solvents, copy machine supplies, engine maintenance supplies, and other similar
substances.


 


Section
5.3      
Waste; Nuisance; Compliance with
Law.


Tenant shall not commit any
waste upon the Premises and shall not conduct or allow any business, activity,
or thing on the Premises which is or becomes unlawful, prohibited, or a
nuisance, or which may be an annoyance or cause damage to Landlord or other
lessees, occupants, or users of the Distribution Center.  Tenant shall at its own expense comply with
and abide by all laws, ordinances, regulations, and directives of all
municipal, county, state, and federal authorities which are now in force or
which may hereafter become effective or be issued with respect to the
condition, use, or occupancy of the Premises.


 


Section
5.4      
Right of Entry by Landlord.


Upon reasonable notice,
meaning not less than at least one business day, except for emergency access,
given by Landlord to Tenant, Tenant hereby agrees to permit inspection of the
Premises during reasonable business hours by Landlord or its agents or 


 


8

















 


representatives
for the purpose of (1) ascertaining the condition of the Premises at least
annually, (2) making such repairs as may be required by Landlord under the
terms of this Lease, and (3) for such other purposes as from time to time may
be reasonable.  During the period that
commences sixty (60) days prior to the Expiration Date, Landlord or its agents
or representatives may enter the Premises at any reasonable time during business
hours to show the Premises to prospective tenants.  During such sixty (60) day period, Landlord
may also erect a sign or suitable notice indicating that the Premises are for
lease or sale.


 


Section
5.5      
Outside Storage.


Other than self-propelled
vehicles, nothing may be stored outside of a building which is part of the
Premises without written consent of Landlord.


 


Section
5.6      
Signs.


Tenant may place suitable
signs on the Leased Premises for the purpose of identifying the business and
indicating the nature of the business carried on by Tenant in the Premises;
provided, however, that such signs shall be approved by the Landlord in writing
prior to their erection and shall not damage the Leased Premises in any
manner.  Such approval by the Landlord
shall not be unreasonably delayed or refused.  
On or prior to the Expiration Date, or other termination of this Lease
as provided herein, Tenant shall remove any signs Tenant has placed on the
Premises and shall restore the sign location to its original condition.


 


Section
5.7      
Exterior Lights.


Tenant shall cause such
lights affixed to the exterior of any building occupied pursuant to this Lease
to be illuminated from one (1) hour after sunset to one (1) hour before sunrise
nightly.


 


Section 5.8       Indemnity.


5.8.1   Tenant shall indemnify and hold Landlord
harmless against any expense, loss or liability paid, suffered or incurred as
the result of any breach of this Lease by the Tenant, or caused by the acts of
Tenant’s agents, invitees, servants, employees, contractors, customers,
visitors or licensees, or as the result of Tenant’s use or occupancy of the
Premises, or the carelessness, negligence or improper conduct of the Tenant,
Tenant’s agents, invitees, servants, employees, contractors, customers,
visitors or licensees.  Tenant’s
liability under this Lease extends to the acts and omissions of any assignee or
subtenant and any agent, invitee, servant, customer, employee, contractor,
visitor or licensee of any such assignee or subtenant.


 


5.8.2   Tenant agrees to indemnify and hold Landlord
harmless from all claims of injury to persons from any cause whatsoever, except
gross negligence of Landlord, arising out of the Tenant’s occupancy and use of
the Premises during the term of this Lease, or any renewal or extension
thereof, or any other holdover occupancy.


 


9

















 


5.8.3   Tenant agrees to indemnify and hold Landlord
harmless from any and all claims of any kind or nature relating to personal
property of Tenant or others arising from Tenant’s occupancy and use of the
Premises, and Tenant hereby waives all claims against Landlord for damage to
its goods, wares and merchandise and any and all other property including loss
of use of the Premises due to any cause whatsoever, except gross negligence of
Landlord, during the term of this Lease or any extension thereof or any other
holdover occupancy.


 


Section
5.9      
Quiet Possession.


If Tenant pays the rent and
Additional Rent and complies with all other terms of this Lease, Tenant may
occupy and enjoy the Premises without interference by Landlord for the full
Lease Term, subject to the provisions of this Lease.


 


Section
5.10   Parking.


Tenant shall be entitled to
use those certain parking spaces or areas in the Distribution Center as
specifically set forth on Exhibit “C”, attached hereto and by this reference
made a part hereof.  Tenant shall be
deemed to have a license for the use of the parking areas set forth on Exhibit “C”
during the Term of this Lease on the same terms and limitations outlined in
Section 1.9 above.


 


Section 5.11   Sales Prohibited.


The use of the Premises for
the purposes specified in this Lease shall not in any event be deemed to
include, and Tenant shall not use, or permit the use of, the Premises or any
part thereof, for the conduct of any public sale or auction of any kind or
nature.


 


 


6.     CONDITION OF PREMISES; MAINTENANCE; REPAIR; ALTERATIONS


Section
6.1      
Condition on Commencement Date.


Tenant has inspected the
Premises and accepts them “AS IS” and to be in good condition at the
Commencement Date.  Tenant acknowledges
that neither Landlord nor any agent of Landlord has made any representation as
to the condition of the Premises or the suitability of the Premises for Tenant’s
intended use.  Tenant waives the benefit
of any present or future law which might give Tenant the right to repair the
Premises at Landlord’s expense or to terminate the Lease because of the
condition of the Premises.


 


Section 6.2       Landlord’s Obligations.


6.2.1   Landlord agrees to maintain in good
condition the exterior walls, foundation, roof and other structural components
of the Premises, unless said walls, foundation, roof and other structural
components are damaged by Tenant or Tenant’s employees, agents or invitees, or
as a result of a breach of any provision of this Lease.  Landlord shall not, however, be required to
make any such repairs until written notice of the need for repair shall have
been delivered to Landlord in the manner provided herein, and after such notice
is so given, Landlord shall have a reasonable time in which to make such
repairs.  Landlord shall have no
liability whatsoever for any resulting damage to the contents of the Premises
or to Tenant’s business, unless it fails to diligently proceed to make such
repair after 


 


10

















 


receipt of Tenant’s written
notice.  In no event may Tenant claim
damage in excess of the depreciated value of the damaged contents of the
Premises and out-of-pocket expenses.


 


6.2.2   Landlord agrees to maintain the automatic
sprinkler system.  Notwithstanding the
foregoing, Tenant agrees to repair any damage to this system arising out of
Tenant’s use or occupancy of the Leased Premises and to hold Landlord free and
harmless from damage to or destruction of any and all property resulting from
leakage of said automatic sprinkler system during the term of this Lease, or
any extension thereof, or any holdover occupancy.


 


Section 6.3       Tenant’s Obligations.


6.3.1   Tenant agrees to maintain the interior of
the Premises, the improvements made by Landlord and/or Tenant thereto inside
and outside the Premises, and the grounds and landscaping surrounding the
Premises, in good condition and repair, including, without limitation:  all glass, lighting fixtures, heating and air
conditioning equipment, truck dock bumpers, support columns, all doors,
including overhead freight doors, electrical wiring and plumbing systems.  Tenant further agrees to clean and paint the
interior of the Premises as often as necessary in order to maintain said
Premises in a clean, attractive and sanitary condition.


 


6.3.2   Tenant shall keep the entrance ways
reasonably free from ice and snow and keep the grounds surrounding the Premises
clean, and remove therefrom all trash, rubbish, cartons or other debris.


 


6.3.3   Tenant agrees to pay its proportionate share
for all labor and materials necessary, in Landlord’s discretion, for  property management, landscaping, exterior
painting, outside lighting, pest control, and snow removal.  Except as specifically excluded elsewhere in
this Lease, Tenant accepts responsibility for any damage to the Premises and
improvements thereto and to the surrounding grounds during the term of this
Lease and agrees to immediately repair such damage and restore the Premises and
the grounds to their predamaged condition without any notice or demand from
Landlord.  Should Tenant fail to maintain
the Premises or fail to make any repair to the Premises and grounds as
contemplated by this Paragraph, Tenant shall be deemed in default under this
Lease and Landlord may, but shall not be required to, enter the Premises and
perform the maintenance or necessary repairs and submit a statement to Tenant
for the cost therefore, which statement shall be promptly paid by Tenant.


6.3.4   Without prior notification or demand from
Landlord, Tenant agrees to immediately replace all glass broken or damaged
during the term of this Lease with glass of the same or higher quality as that
broken or damaged.


 


Section
6.4      
Alterations by Tenant.


Tenant may, with the
specific written approval of Landlord which shall not be unreasonably withheld,
make such alterations, additions, installations or repairs, at its 


 


11

















 


own expense, to the interior of the Premises
as Tenant may require to conduct its business; provided, however, that such
alterations, additions, installations or repairs may not materially alter the
basic character or structure of the building or improvements or weaken the
structure of the Premises in any way. 
Any such alterations, additions, installations or repairs must be
performed in a good, workmanlike manner, and Tenant agrees that Landlord may,
upon notice to Tenant, come upon the Premises to inspect such alterations,
additions, installations or repairs to determine that they are being made
subject to the terms of said written approval. 
Said written approval may include the requirement that such alterations,
additions, installations or repairs be incorporated into the Premises and left
therein at the termination of this Lease. 
Tenant shall require any contractor performing any such alterations,
additions, installations or repairs to provide (i) public liability and
property damage insurance meeting the requirements of Section 4.5 hereof and
naming Landlord as an additional insured; and (ii) an indemnification and hold
harmless agreement in favor of Landlord covering any loss, damage, claim,
liability, cost or expense for injuries, death, or property damage in
connection with contractor’s performance of the work.  In addition, the Tenant Improvements, as more
fully described on Exhibit “B” hereto, shall be subject to the following:  Landlord agrees to provide Tenant with a One
Million Two Hundred Fifty Thousand Dollar ($1,250,000) allowance for the
exclusive purpose of improving the building for Tenants use.  Landlord shall have the absolute right to
approve or disapprove (a) all written plans and specifications, (b) any
modifications to the plans and specifications or any change orders; (c) the
contractor to perform the Tenant Improvements. 
Tenant shall provide Landlord with notice of the time and date of, and
shall allow Landlord or Landlord’s representative, to attend and participate
in, any and all construction and/or progress meetings.  All invoices for work performed in connection
with the Tenant Improvements shall be submitted to Landlord for approval.  Landlord agrees to pay the initial One
Million Two Hundred Fifty Thousand Dollar ($1,250,000) of the Tenant
Improvements and the additional costs to be sole obligation of the Tenant.  In the event any lien is filed against the
Premises, or any notice of intent to file a lien is provided to Tenant, and
Tenant shall not take the actions required in Section 6.5 hereof, then Landlord
shall have the absolute right to either (a) require the Tenant to post a cash
bond guaranteeing payment of the ongoing Tenant Improvements, or (b) require
the contractor to stop work on the Tenant Improvements.


 


Section
6.5      
Liens.


Tenant agrees not to permit
any lien or judgment for monies owed to it, services rendered or materials
provided in connection with work done on the Leased Premises, or any other lien
to remain against the Premises for a period of more than ten (10) days
following actual discovery of the same, or following the date upon which it
reasonably should have been discovered, by Tenant, whichever date comes
first.  In addition, in the event Tenant
receives notice of intent to file a lien, Tenant shall have ten (10) days
following receipt of such notice to pay any and all amounts due and owing as
set forth in the notice.  Nothing herein
contained shall prevent Tenant, in good faith and for good cause, from
contesting in the courts the claim or claims of any person, firm or corporation
arising out of Tenant’s operation of the Premises or costs of improvements by
Tenant of the said Premises.  Should any
such lien be filed and not released or discharged or action not commenced to
declare the same invalid within the ten (10) day period described in this
Paragraph by Tenant, Landlord may, at Landlord’s option (but without any
obligation to do so), pay or discharge such lien, and may likewise pay and
discharge any taxes, 


 


12

















 


assessments
or other charges against the Premises which Tenant is obligated hereunder to
pay and which may or might become a lien on said Premises.  Tenant agrees to repay any sums so paid by
Landlord upon demand, together with interest at the rate of eighteen percent
(18%) per annum from the date Landlord makes any such payment.  Landlord may also treat Tenant’s failure to
perform under this Paragraph as a default of this Lease.


 


Section
6.6      
Surrender of Premises.


Tenant agrees to surrender
the Premises on the Expiration Date or sooner termination of this Lease, or any
renewal or extension thereof, in good condition and repair, ordinary wear and
tear excepted.  Upon the Expiration Date
or earlier termination of this Lease and at the election of Landlord in its
sole discretion, Tenant, at its expense, either shall remove any alteration,
addition, or improvement to the Premises made by Tenant (other than trade
fixtures) and repair all damage caused by such removal, or shall leave any such
alteration, addition or improvement in place to become the property of Landlord.


 


7.     DAMAGE OR DESTRUCTION; CONDEMNATION


Section
7.1      
Damage or Destruction of Premises.


If, during the term of this
Lease, the Premises, or any portion thereof, should be damaged or destroyed by
fire or other casualty, Landlord shall repair, reconstruct or restore the
damaged or destroyed Premises so far as it is practicable to the Premises’
condition immediately prior to such damage or destruction, except as otherwise
provided in this paragraph, and subject to any delay beyond Landlord’s control,
including, but not limited to, delays due to adjustment of insurance claims,
strikes and unavailability of required materials. Tenant shall have no interest
in or claims to any portion of the proceeds of any fire or other casualty or
extended protection insurance carried by Landlord hereunder.


 


                If
the Premises should be damaged to an extent of twenty-five percent (25%) or
more of the replacement costs of any single building constituting part or all
of the Premises, then either party hereto may elect to terminate this Lease by
giving written notice to the other within sixty (60) days after the occurrence
of such damage or destruction.


 


                Tenant
agrees at all times after such damage or destruction to the Premises to
continue the operation of its business therein to the extent reasonably
practicable; provided, however, that during the period commencing on the date
of this damage or destruction and ending with the completion of Landlord’s
repair, reconstruction or restoration of the Premises, the monthly rental
reserved under this Lease shall be proportionately abated in an amount equal to
the proportion thereof, which the number of square feet in the Premises
rendered unusable by the damage or destruction bears to the total number of
square feet in the Premises immediately prior to such damage or
destruction.  Landlord shall have no
interest in or claim to any portion of the proceeds of any insurance on Tenant’s
personal property carried by Tenant or required on the part of Tenant to be
maintained hereunder.


 


13

















 


                Tenant
and Landlord hereby mutually release and waive their entire right of recovery
against the other party for any and all loss or damage to the improvements, all
personal property of Tenant and any installations, betterment or improvements
added to the building by Tenant where such loss is occasioned, caused or
incurred by, or results from, fire, flood, windstorm, hail, explosion, riot
attending strike, civil disorder, acts of terrorism, aircraft or vehicle collision,
smoke, vandalism and all other perils which are insurable against, whether said
loss occurred or was caused by the negligence of the Tenant or Landlord, their
agents, servants, employees, sublessees or concessionaires, or otherwise.  Landlord and Tenant each further warrant that
insurance companies insuring Landlord or Tenant shall have no rights against
the other, whether by assignment, subrogation or otherwise.  Willful misconduct lawfully attributable to
either party shall, to the extent that said conduct contributes to loss or
damage, not be excused under this Paragraph.


 


Section
7.2       Condemnation.


In the event any power of
condemnation shall be exercised by any governmental authority or other entity
empowered by law to exercise said power of condemnation against the Premises,
in whole or in part, the parties agree to the terms and conditions set forth in
this Section 7.2.


 


                In
the event of a taking of a portion constituting twenty-five percent (25%) or
less of the Premises, Tenant may terminate this Lease by written notice to
Landlord only upon a showing that such taking shall prevent its reasonable use
and enjoyment of the Premises and substantially impairs its ability to conduct
its business thereon.  In the event
Tenant continues in possession of that portion of the Premises not so taken for
whatever reason, the rent hereinunder shall be abated by the proportion that
the number of square feet of the building floor space taken bears to the total
number of square feet of building floor space included in the Premises. If
Tenant elects or is required to continue in possession, and if any portion of
any building or buildings comprising the Premises shall have been taken,
Landlord shall restore such building or buildings by repairing and enclosing them
to the extent necessary and possible to provide an integral and complete
building suitable for the Tenant’s purposes set forth herein.


 


                In
the event of the taking of a portion constituting more than twenty-five (25%)
of the Premises, Tenant may elect to terminate this lease by giving written
notice to Landlord, or in lieu of exercising its right of termination, Tenant
may continue in possession of that portion of the Premises not so taken, and
the rent hereunder shall be abated by the proportion that the number of square
feet of the building floor space taken bears to the total number of square feet
of building floor space included in the Premises.  If Tenant elects to continue in possession,
and if any portion of any building or buildings comprising the Premises shall
have been taken, Landlord shall restore such building or buildings by repairing
and enclosing them to the extent necessary and possible to provide an integral
and complete building suitable for the Tenant’s purposes set forth herein.


 


                Any
condemnation award, whether resulting by judgment or verdict after trial or by
agreement under threat of condemnation applying to the leasehold interest
created hereby, shall be paid to Landlord, and Tenant waives any right
thereto.  Nothing in this


 


14

















Paragraph shall be construed as limiting
Tenant’s right to pursue an action for damages to its business or property, or
other damages, against the condemning entity.


 


8.     ASSIGNMENT AND SUBLETTING


Section
8.1      
Landlord’s Consent.


Tenant shall not transfer,
assign, sublet, enter into a license, concession agreement or mortgage or
hypothecate (“transfer”) this Lease or Tenant’s interest in the Premises, in
whole or in part, without first procuring the written consent of Landlord
except as otherwise provided for below, which consent shall not be unreasonably
withheld by the Landlord acting in good faith. 
The written notice to Landlord shall fully describe the area Tenant
desires to transfer, the rent thereon, the consideration receivable by Tenant
for the transfer, the name and business address of the proposed transferee, and
a current financial statement of the proposed transferee in order to grant the
Landlord reasonable information in determining if its interest in the rents and
ownership interest in the Premises will be adequately protected.  Landlord shall not withhold consent on any
unreasonable or unjustifiable grounds. 
Landlord specifically reserves the right to refuse consent if, in
Landlord’s reasonable business judgment, the financial worth of the proposed
transferee is less than that of Tenant. 
In no event shall Landlord be obligated to give consent for any such
transfer if Tenant is in default under any of the terms or conditions of this
Lease.  A transfer by Tenant in violation
of this Section 8.1 shall be void and confer no rights upon any third party and
Landlord shall have the right to declare said transfer as an Event of Default
under Article 9 hereof.


 


Section
8.2       
Increased Rent upon Subletting.


If Landlord agrees to a
subletting of all or part of the Premises, and the rental payable by the
subtenant to Tenant is increased over the amount of rent paid by Tenant to
Landlord hereunder, then Landlord may also require Tenant to pay an amount up
to eighty percent (80%) of such increased rental to Landlord.  Such increased rent shall be payable on the
tenth day of each month after the subletting is approved by Landlord without
statement or demand.


 


Section
8.3      
Tenant’s Continuing Liability.


Landlord may require as a
condition of any transfer under this Article that Tenant remain liable to
Landlord under the terms of this Lease should any assignee or subtenant or
other transferee under this Article default in the performance of any of the
terms and conditions of this Lease, including but not limited to Tenant’s
primary liability to pay the Rent and Additional Rent, and to perform all other
obligations under this Lease.


 


Section
8.4      
Tenant’s Affiliates.


If Tenant desires to
transfer or assign this Lease as part of a corporate restructure, by way of
corporate merger or to an affiliated corporation or entity, Tenant shall
provide notice to the Landlord at least thirty (30) days prior to the
assignment or merger and supply Landlord with such information concerning the
assignee entity as Landlord may reasonably request.  Landlord shall notify Tenant within ten (10)
days of receipt of such information whether such transfer or assignment is
acceptable.  Landlord’s consent to
assignment to Tenant’s affiliated entity shall not be unreasonably withheld.


 


15

















 


Section
8.5      
Covenants Binding on Assignees.


The covenants and agreements
contained in this Lease shall apply to, inure to the benefit of, and be binding
upon the parties hereto and upon their respective successors in interest and
legal representatives.  Any document
transferring Tenant’s interest pursuant to this Paragraph shall refer to this
Lease and contain a provision stating that Tenant’s transferee shall be bound
by the terms and conditions of this Lease.


 


9.     DEFAULT; REMEDIES


Section
9.1      
Events of Default.


Upon the occurrence of any
of the following listed events (“Events of Default”), Tenant shall be deemed in
default under this Lease:


 


9.1.1   Default in the timely payment of any Rent,
Additional Rent, or any other amount required to be paid hereunder and the
continuance of such default for a period of fifteen (15) business days from the
date such Rent, Additional Rent, or other amount is due and payable, or from
the date set by written notice or statement for the payment of any other amount
under the terms of this Lease.


 


9.1.2   Default in performance of any of the terms
and conditions of this Lease, other than those requiring payments of rental or
any other amounts which are covered by Section 9.1.1 hereof, which default
shall continue for a period of thirty (30) days after written notice of the
default is mailed or delivered to Tenant by Landlord, unless a shorter period
is specifically provided under any provision of this Lease.  If a default cannot be cured with due
diligence within thirty (30) days, the time within which Tenant shall cure the
default shall be extended for such time as may be necessary to cure the same
with all due diligence, provided that Tenant commences promptly and proceeds
diligently to cure the default, and further provided that such period of time
shall not be so extended so as to subject Landlord to any criminal liability or
increased insurance cost.  If Tenant’s
default under this Section 9.1.2 creates an emergency or hazard to persons or
property, then Landlord may demand immediate cure of the default.


 


9.1.3   Assignment or subletting by Tenant, without
adhering to the conditions and covenants of Article 8 above.


 


9.1.4   Abandonment or vacation of the Premises, or
any material part thereof, by Tenant, or dispossession of Tenant of the
Premises, or any part thereof, by authority other than Landlord, except in
cases of condemnation, which is governed by Section 7.2 of this Lease.


 


9.1.5   Tenant’s insolvency or the filing of a
voluntary or involuntary petition in bankruptcy by or against Tenant, the
filing or institution of any proceeding under any provisions of any insolvency
act or Bankruptcy Code seeking to effect Tenant’s reorganization or composition
with its creditors or if (in any proceedings based on the insolvency of Tenant
or relating to bankruptcy proceedings) a receiver or trustee shall be appointed
for Tenant or the Premises, the filing of proceedings for the reorganization of
Tenant, the execution on 


 


16

















 


Tenant’s admission in
writing of its inability to pay its obligations generally as they become due.


 


9.1.6   At Landlord’s option and with notice to
Tenant, the occurrence of any three or more Events of Default during any
consecutive twenty-four month period of the Term of this Lease, whether cured
or not.


 


Section
9.2      
Landlord Remedies.


Upon occurrence of such
Events of Default, Landlord shall have the option to pursue any one or more of
the following remedies, or any other remedy at law or in equity:


 


9.2.1   Performance Under the Lease.  If Tenant shall default in the fulfillment of
any of the terms and conditions of this Lease, Landlord may, at its option,
after giving notice to Tenant, as required herein, make performance of Tenant
necessary to cure the defaults and for that purpose pay such amounts as may be
necessary.  Any amounts so paid or any
expense incurred or sum of money paid by Landlord by reason of the failure of
Tenant to comply with any term or condition of this Lease, or in defending any
action to which Landlord may be subjected by reason of Tenant’s failure, shall
be deemed to be Additional Rent for the Premises and shall be due and payable
to Landlord on demand, and interest shall accrue thereon at the rate of
eighteen percent (18%) per annum.


 


9.2.2   Termination of Lease.  Landlord may, but shall not be obligated to,
terminate this Lease when Tenant continues in possession after three (3) days’
written notice requiring in the alternative the payment of Tenant’s obligations
to Landlord or surrender of the Premises, or when Tenant continues in
possession after five (5) days’ written notice requiring in the alternative
performance of a condition under the Lease or surrender of the Premises, or
when Tenant continues possession after three (3) days’ notice to quit the
Premises for unauthorized assignment or subletting, committing waste or
maintaining an unlawful business.  After
using summary proceedings, Landlord or Landlord’s agents may at any time
thereafter re-enter the Premises and remove all persons and property therefrom
without being liable to indictment, prosecution or damage therefor, and Tenant
hereby expressly waives the service of any notice in writing of intention to
re-enter the Premises after service of the notices described in this
section.  Pursuant to said right of
re-entry, Landlord may remove all of Tenant’s property remaining on the
Premises and store it, or may store it on the Premises, at the cost and for the
account of Tenant.


 


9.2.3   Right to Relet on Tenant’s Behalf.  Landlord may retake possession of the
Premises following the legal notices described in this Section, and after using
summary proceedings, if necessary, without terminating this Lease may relet
said Premises on behalf of Tenant. 
Landlord shall apply any monies collected first to the payment of
expenses of resuming or obtaining possession, second to the payment of costs of
placing the Premises in rentable condition, third to the costs of reletting the
Premises, and fourth to the payment of rent due hereunder, and any other
indebtedness due Landlord.  Any remaining
surplus 


 


17

















 


shall be paid to
Tenant.  Tenant shall pay, upon demand
from Landlord, any deficiency in amounts due under this Lease after Landlord
has applied the proceeds from reletting the Premises to the categories
described in this subsection.  Such
indebtedness shall be calculated and paid monthly.  Reletting may be in the name of Landlord or
otherwise, for such term or terms (which may be greater or less than the period
which would otherwise have constituted the balance of the term of this Lease)
and on such conditions (which may include concessions or free rent) as
Landlord, in its sole discretion, may determine.  Landlord may collect and receive the rents
therefor.  Landlord shall make a
reasonable effort to relet the Premises to acceptable tenants and collect rents
therefrom, but Landlord shall in no way be responsible or liable for any
failure to relet the Premises, or any part thereof, or for any failure to
collect any rent due upon such reletting. 
No such reletting shall relieve Tenant of any liability, and Tenant’s
obligations shall survive any such reletting. 
No such reletting of said Premises by Landlord shall be construed as an
election on its part to terminate this Lease, unless a written notice of such
intention be mailed or delivered to Tenant. 
Notwithstanding election to relet without terminating this Lease by
Landlord, Landlord may at any time thereafter elect to terminate this Lease for
any default or breach hereof by Tenant.


 


Section
9.3      
No Election of Remedies; No
Waiver.


Use of any of the foregoing
remedies shall not preclude pursuit of any of the other remedies provided for
herein, or by law or in equity, which may be enforced cumulatively, nor shall
pursuit of any remedy provided for herein or otherwise constitute a forfeiture
or waiver of any rent or other amounts due Landlord hereunder or of any damage
accruing to Landlord by the violation of any of the terms and conditions of
this Lease.  Failure by Landlord to
enforce one or more of the remedies herein provided upon an Event of Default
shall not be deemed or construed to constitute a waiver of such default or a
waiver of any other violation or breach of any of the terms and conditions of
this Lease.


 


10.  LANDLORD’S LENDERS


Section
10.1   Subordination of Lease.


This Lease shall be subject
and subordinate to any mortgage of any type whatsoever on the Premises given to
secure a loan made to Landlord, and to any renewals, replacements, extensions
or consolidations of such loan.  Any such
subordination shall state that the mortgage holder shall not disturb Tenant’s
possession or other rights under the Lease so long as Tenant performs all of
its covenants and agreements and is not in default hereunder.  Tenant agrees to execute a document
subordinating this Lease to any mortgage of any type contemplated by this
Article.


 


Section
10.2   Estoppel Certificates.


Upon Landlord’s written
request, Tenant shall execute, acknowledge and deliver to Landlord a written
statement certifying the following:  (i)
that none of the terms or provisions of this Lease have been changed (or if
they have been changed, stating how they have been changed); (ii) that this
Lease has not been canceled or terminated; (iii) the last date of payment of
the Rent, Additional Rent and other charges and the time period 


 


18

















 


covered
by such payment; (iv) that Landlord is not in default under this Lease (or, if
Landlord is claimed to be in default, stating why); (v) the amount of the
security deposit, if any,  being held by
Landlord on Tenant’s behalf; and (vi) such other representations or information
with respect to Tenant or the Lease as Landlord may reasonably request or which
any prospective purchaser or encumbrancer of the Premises may require.  Tenant shall deliver such statement to
Landlord (or such other person or entity as Landlord shall direct) within ten
(10) days after Landlord’s request. 
Landlord may give any such statement by Tenant to any prospective
purchaser or encumbrancer of the Premises. 
Such purchaser or encumbrancer may rely conclusively upon such statement
as true and correct.


 


                If Tenant does not
deliver such statement to Landlord within such ten (10) day period, without any
further notice to Tenant, any prospective purchaser or encumbrancer may
conclusively presume and rely upon the following facts:  (i) that the terms and provision of this
Lease have not been changed except as otherwise represented by Landlord; (ii)
that this Lease has not been canceled or terminated except as otherwise
represented by Landlord; (iii) that not more than one month’s Rent, Additional
Rent, or other charges have been paid in advance; and (iv) that Landlord is not
in default under the Lease.  In such
event, Tenant shall be estopped from denying the truth of such facts.


 


Section
10.3   Tenant’s Failure to Provide Information.


If Tenant fails to provide
any such Subordination or Estoppel Certificate within ten (10) days of Landlord’s
request, Landlord shall be entitled to assess a late fee of $50 per day until
Tenant provides such requested documentation. 
If Tenant’s failure to provide such documents continues for more than
twenty (20) days, such failure may, at Landlord’s discretion, be deemed an
Event of Default under this Lease.


 


11.  MISCELLANEOUS PROVISIONS


Section
11.1   Attorneys’ Fees And Costs.


If any legal action or other
proceeding is brought for the enforcement of this Lease, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the terms of this Lease, the prevailing or successful party shall be entitled
to recover from the nonprevailing party all costs, including reasonable attorneys’
fees, incurred in connection with such action or proceeding, and in enforcing
or collecting any judgment rendered herein.


 


Section
11.2   Limitation on Landlord’s Liability.


The obligations of Landlord
under this Lease do not constitute personal obligations of the individual
partners, members, shareholders, officers or other principals of Landlord.  Tenant shall look solely to the property
owned by Landlord which is the subject of this Lease, and to no other assets of
the Landlord or any affiliated entity or individual for satisfaction of any
liability in respect of this Lease and will not seek recourse against the
individual partners, members, shareholders, officers or other principals of
Landlord or any of their personal assets for such satisfaction.


 


19

















 


Section
11.3   Square Footage.


Landlord and Tenant
acknowledge that any references to square footage for the Premises and other
portions of the Distribution Center are based on approximate measurements.  Landlord and Tenant further acknowledge that
these approximate measurements of square footage, as set forth on Exhibit “A”
hereof, shall be binding on Landlord and Tenant for purposes of determining any
and all obligations of the parties under this Lease, including calculations of
Rent and Additional Rent.


Section 11.4   Severability.


If any provision of this
Lease, or the application of said provision to any person or circumstance,
shall be held invalid or unenforceable, the remainder of this Lease, or the application
of such provisions to persons or circumstances other than those as to which it
is held invalid or unenforceable, shall not be affected thereby, and shall
remain in full force and effect.


 


Section
11.5   Right to Relocate.


[Intentionally left blank].


 


Section
11.6   Rules and Regulations.


From time to time, Landlord
may promulgate such rules and regulations as reasonably necessary to regulate
the use of the Premises which are the subject of this Lease, as well as the
surrounding Premises of Landlord’s other tenants, including, but not limited
to, traffic and parking rules and regulations. 
A copy of said Rules and Regulations are attached hereto as Exhibit “D”
and incorporated herein.  Landlord agrees
to notify Tenant of such rules and regulations, and Tenant agrees thereafter to
comply with and use reasonable efforts to cause its employees and other
personnel to comply with such rules and regulations.  Tenant agrees to be responsible for causing
its employees to park in designated areas and to operate their motor vehicle
within posted speed limits and in accordance with other traffic signs.


 


Section
11.7   Notices.


Any notice required or
permitted to be given hereunder shall be in writing and shall be deemed
sufficiently given if deposited in the United States Mail, postage prepaid, and
addressed as aforesaid:


 




	
  To Landlord:

  	
   

  	
  Natomas
  Meadows Two, LLC

  
	
   

  	
   

  	
  P.O.
  Box 30076

  
	
   

  	
   

  	
  Salt
  Lake City, UT 84130

  
	
   

  	
   

  	
   

  
	
  To
  Tenant:

  	
   

  	
  Mrs.
  Fields Famous Brands, LLC

  
	
   

  	
   

  	
  2855
  E. Cottonwood Parkway, Suite 400

  
	
   

  	
   

  	
  Salt
  Lake City, UT 84121-7050

  
	
   

  	
   

  	
  Attention:
  General Counsel

  






 


Either party may, upon written notice to the
other as provided by this Section 11.7, designate a new address where notices
must be mailed to comply herewith.


 


20

















 


Section
11.8   Governing Law; Binding Effect; Construction of Lease.


This Lease shall be governed
by and construed in accordance with Utah law. 
This Lease shall be binding upon the parties, their personal
representatives, successors and assigns. 
Words used in the singular shall be construed to include the plural when
the sense requires.  Article and section
headlines herein are inserted only for convenience to which they refer or on
the Lease itself.


Section 11.9   Entire Agreement.


This Lease represents the
entire agreement between the parties relating to the subject matter hereof and
there are no other courses of dealing, understandings, agreements,
representations or warranties, written or oral, except as set forth
herein.  No amendment or modification
hereto shall be effective until and unless the same shall have been set forth
in writing and signed by the parties. 
Tenant acknowledges that the Landlord has made no agreement or promise
concerning the alteration, improvement, adaptation or repair of any part of the
Premises which has not been set forth herein, and that this Lease contains all
the agreements made and entered into between Tenant and Landlord.


 


Section
11.10 Waiver.


It is agreed that the
waiving of any breach of covenants of this Lease by either party shall be
limited to the particular instance and shall not be deemed to waive any other
breaches of any covenants or any provisions herein contained, nor shall waiver
of any breach by another of Landlord’s tenants be deemed to waive any breach by
Tenant herein.  No delay in exercising
any rights under this Lease shall operate as a waiver of any such rights by
either party.  No statement on a payment
check from Tenant or in a letter accompanying a payment check shall be binding
on Landlord or be deemed an accord and satisfaction.


 


Section
11.11 Counterparts.


This Lease may be executed
in multiple counterparts, each of which shall be deemed an original.


 


Section
11.12 Security.


Tenant hereby acknowledges
that Landlord shall have no obligation whatsoever to provide guard service or
other security measures to or for the benefit of the Premises.  Tenant assumes all responsibility for any
protection measures it deems necessary on the Premises or the Distribution
Center, and for the protection of Tenant’s agents and invitees from acts of
third parties.  Nothing herein contained
shall prevent Landlord, at Landlord’s option, from providing security measures
on the Premises.


 


Section
11.13 Survival.


All representations and
warranties of Landlord and Tenant shall survive the termination of this Lease.


 


Section
11.14 Authority.


Each of the undersigned
hereby acknowledges and affirms that the undersigned holds the position or
title set forth below, and on behalf of the named entity and by proper 


 


21

















 


authority,
executed this Lease, and that Lease was the act of such named entity for the
purposes stated in it.


 


Section
11.15 Broker Fees.


Landlord and Tenant  have dealt with NAI Utah Commercial, Zach
Anderson and Kelsie Akiama, in connection with this Lease, and Landlord agrees
to pay all reasonable and customary commissions per a separate agreement in
connection therewith.


 


Section
11.16 Time.


Time is of the essence of
this Lease.


 


 


 


 


 


	
  LANDLORD

  	
  NATOMAS CREEK, L.L.C.,

  
	
   

  	
  a California limited
  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Kern W. Schumacher

  
	
   

  	
   

  	
  Kern W. Schumacher

  
	
   

  	
  Its

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
  TENANT

  	
  MRS. FIELDS FAMOUS BRANDS,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ MICHAEL WARD

  
	
   

  	
   

  	
  Michael Ward

  
	
   

  	
  Its

  	
   Exec. Vice
  President/General Counsel

  



 


22

















 


EXHIBIT “A”


 


Description
of Leased Premises


 


 


 


 


23

















 


EXHIBIT “B”


 


Description
of Tenant Improvements


 


Tenant will
accept premises “AS IS” and will make necessary improvements in accordance with
Section 6.4.


 


 


24

















 


EXHIBIT “C”


 


Description/Outline
of Tenant’s Designated Parking Area


 


 


 


 


25

















 


EXHIBIT “D”


 


Rules
and Regulations


 


 


                1.             Landlord will furnish Tenant with
two keys to each door lock in the Premises. 
Landlord may make a reasonable charge for any additional keys requested
by Tenant.  Tenant shall not have any
keys made for the Premises and shall not alter any lock or install any new or
additional lock or bolt on any door in the Premises without the prior written
approval of Landlord.  Upon the
expiration or termination of Tenant’s tenancy, Tenant shall deliver to Landlord
all keys in its possession for all locks and bolts in the Premises.


 


                2.             Tenant shall refer all of its
contractors, contractors’ representatives, and installation technicians
rendering any service on or to the Premises to Landlord for Landlord’s approval
and supervision prior to such third parties’ performance of any work in the
Premises, including, but not limited to installation of telephones, electrical
devices and attachments, and installations of any nature affecting floors,
walls, woodwork, trim, windows, ceilings, equipment, or any other portion of
the Premises.


 


                3.             Tenant shall not at any time allow
any part of the Premises to be occupied as sleeping or lodging quarters.


 


                4.
            No birds, fowl, or other
animals shall be bought into or kept in or about the Premises.


 


                5.             None of the entries, passages,
doors, stairways, or vestibules of the Premises shall be blocked or obstructed,
nor shall any rubbish, litter, trash, or materials of any nature be placed,
emptied, or thrown into such areas, nor shall such areas be used at any time
except for ingress and egress by Tenant or its agents, employees, or invitees.


 


                6.             No person shall waste water by
interfering with the faucets in the Premises or otherwise.


 


                7.             No person shall disturb the
occupants of the Industrial Park by the use of any musical instrument, by
playing radios or other sound-producing equipment at an unreasonably high
volume, by making of unseemly noises, or by any reasonable use.


 


                8.             Tenant shall provide its own
dumpster for trash storage and removal. 
Tenant shall not leave or store any materials, litter, or trash on the
Common Areas, including on the Parking Areas. 
Landlord shall have the right to approve the type of dumpster utilized
by Tenant, which approval shall not be unreasonably withheld.


 


                9.             Tenant shall not use or permit the
use by its employees, agents, or invitees of the Parking Areas or of any
loading dock areas for the overnight storage of parking of automobiles or other
vehicles which would interfere with maintenance, snow removal, 


 


26

















 


traffic flow, emergency vehicles, or other
necessary activities or functions. 
Landlord shall have the right to tow away any vehicle belonging to
Tenant or its agents, employees, or invitees which is improperly parked and
which Tenant fails to remove after written notice from Landlord.


 


                10.           No sign, advertisement, or lettering
shall be painted, affixed, or exposed on the windows, doors, or exterior
surfaces of the Premises except as specifically permitted in writing by
Landlord.


 


                11.           Landlord will not be responsible for
lost or stolen personal property, equipment, money, or jewelry from the
Premises, regardless of whether or not loss occurs when an area is locked
against entry.


 


                12.           Tenant shall be responsible for any
damage to paving caused by the parking, movement, or loading of trailers or
trucks.


 


                13.           No drapes, curtains, blinds, or other
window coverings in the Premises shall be installed by Tenant without the prior
written approval of Landlord, which approval will not be unreasonably withheld.


 


                14.           It is Landlord’s desire to maintain
in the Industrial Park the highest standard of dignity and good taste,
consistent with the comfort and convenience for Tenant and the other
occupants.  Any action or condition not
meeting with this standard should be reported to Landlord.  Tenant’s cooperation will be beneficial and
sincerely appreciated.


 


 


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