Document:

exv10w46

 

EXHIBIT 10.46

STANDARD INDUSTRIAL LEASE AGREEMENT

     THIS
LEASE (“Lease”), made this 1st day of December, 2003, by and between
ROBERT PATTILLO PROPERTIES, INC., a Georgia corporation, hereinafter referred
to as “Landlord”; and POTTERY BARN, INC., a California corporation, hereinafter
referred to as “Tenant”;

     Definitions

     The “Cell One Premises” means the approximate 416,000 square foot portion
of the building on the Property (defined below) and the corresponding parking
area, all as shown on Exhibit A-1.

     The “Cell Two Premises” means the approximate 364,000 square foot portion
of the building on the Property and the corresponding parking area, all as
shown on Exhibit A-1.

     The “Cell Three Premises” means the approximate 332,800 square foot
portion of the building on the Property and the corresponding parking area, all
as shown on Exhibit A-1.

     “Cell” means each of the Cell One Premises, the Cell Two Premises and the
Cell Three Premises.

     “Landlord’s Cell One Work” has the meaning given it in Exhibit B and as
described in the Cell One Plans (defined below) and everything reasonably
inferable therefrom.

     “Landlord’s Cell Two Work” has the meaning given it in Exhibit B and as
described in the Cell Two Plans (defined below) and everything reasonably
inferable therefrom.

     “Landlord’s Cell Three Work” has the meaning given it in Exhibit B and
shall be consistent with the “Baseline Elements for Cell Three” as defined in
Paragraph 4 below and as described in the Cell Three Plans (defined below) and
everything reasonably inferable therefrom.

     “Cell One Commencement Date” shall be the date on which Landlord’s Cell
One Work is Substantially Complete. For purposes of this paragraph the office
portion of the Cell One Premises shall be deemed Substantially Complete if the
Bathrooms, the Breakroom and the Phone Room are Substantially Complete. The
remainder of the office area shall be Substantially Complete within fifty (50)
days after the approval or deemed approval of the Cell One Plans (as
hereinafter defined)(the “Cell One Office Substantial Completion Date”), as
same may be adjusted as provided herein.

     “Cell Two Commencement Date” shall be the date Landlord’s Cell Two Work is
Substantially Complete.

     “Cell Three Commencement Date” shall be the date Landlord’s Cell Three
Work is Substantially Complete.

     “Commencement Date” means each of the Cell One Commencement Date, the Cell
Two Commencement Date and the Cell Three Commencement Date.

     “Target Date” means, as applicable, each of the Cell One Target Date, the
Cell Two Target Date and the Cell Three Target Date.

     “Premises” means, collectively, (i) the Cell One Premises, the Cell Two
Premises, and, if the Expansion Option (defined below) has been exercised by
Tenant, the Cell Three Premises, but as to each Cell only to the extent its
Commencement Date has occurred plus (ii) the portion underneath the respective
Cell of the real property described on Exhibit A (the “Property”).

     “Cell One Rent” means $2.47 per square foot per year from the Cell One
Commencement Date through the fourth anniversary of the Cell One Commencement
Date, and $2.56 per square foot per year from the first day after the fourth
anniversary date of the Cell One Commencement Date until the end of the Initial
Term.

     “Cell Two Rent” means $2.47 per square foot per year from the Cell Two
Commencement Date through the fourth anniversary of the Cell One Commencement
Date, and

 

 

$2.56 per square foot per year from the first day after the fourth
anniversary date of the Cell One Commencement Date until the end of the Initial
Term.

     “Cell Three Rent” means $2.56 per square foot per year.

     “Rent” means, collectively, the Cell One Rent, the Cell Two Rent, and the
Cell Three Rent, but as to each Cell, only to the extent its Commencement Date
has occurred.

     “Building” means the portion of the Cell One Premises that is an
industrial building, that portion of the Cell Two Premises that is an
industrial building and, if constructed, that portion of the Cell Three
Premises that is an industrial building, as constructed or to be constructed as
contemplated herein.

     “Date of this Lease” shall be the date upon which both Landlord and Tenant
(and any guarantor of Tenant’s obligations hereunder) have fully executed and
delivered a copy of this Lease to the other party.

     “Business Day” means any day except a Saturday, Sunday, or other day on
which commercial banks in Atlanta, Georgia are authorized or required by
applicable law to close.

     “Term” means collectively, the Initial Term (as hereinafter defined) and,
if applicable, any Renewal Term (as hereinafter defined) exercised by Tenant in
accordance with the further provisions of this Lease.

     “Substantial Completion or Substantially Complete” means, as to each Cell,
the date on which Landlord’s Work for that Cell has been completed to the
extent that: (x) Landlord has obtained and delivered a copy to Tenant of (i) a
temporary certificate of occupancy for the Cell issued by the appropriate
governing authority authorizing the occupancy and use of that Cell; (ii) a
certificate of substantial completion for the Landlord’s Work issued by
Landlord’s architect in the form commonly used and promulgated by the American
Institute of Architects; and (y) all aspects of Landlord’s Work are complete
except for minor “punch-list” items as set forth in a written document
determined by a walk through of the Cell by Landlord and Tenant to be held
within twenty-four (24) hours of notice from Landlord to Tenant of the need for
same. Upon determination of the Commencement Date for a particular Cell, the
parties agree to execute a written statement setting forth the Commencement
Date for such Cell.

     “Landlord’s Work” means, as applicable, each of the Cell One Landlord’s
Work, the Cell Two Landlord’s Work, and the Cell Three Landlord’s Work.

W I T N E S S E T H:

Premises

     1. For and in consideration of the rents, covenants,
agreements, and stipulations hereinafter set forth,
to be paid, kept and performed by Tenant, Landlord
hereby leases and rents to Tenant, and Tenant hereby
leases and takes upon the terms and conditions
hereinafter set forth, the Premises. This Lease is
subject to all encumbrances, easements, covenants
and restrictions of record as of the Date of this
Lease which have been disclosed to Tenant in writing
prior to the Date of this Lease and to such other
customary easements and other matters as may be
hereafter placed against the Premises pursuant to
the normal development of the Premises, provided
that such other easements and matters do not
materially and adversely affect Tenant’s use or
occupancy of the Premises, and to any subsequent
mortgage granted by Landlord (“Permitted
Exceptions”).

Term

     2. (a) To have and to hold for a term to commence on
the Cell One Commencement Date as to the Cell One
Premises, and on the Cell Two Commencement Date as
to the Cell Two Premises, and to end at midnight on
the last day of the seventy-second (72nd) full
calendar month after the Cell Two Commencement Date
(the “Initial Term”), subject to the following
sentence, and Paragraphs 4 and 5. If the Expansion
Option (as hereinafter defined) is exercised, the
term for the Cell Three Premises will commence on
the Cell Three Commencement Date, and the Initial
Term for the entire Premises (the Cell One Premises,
the Cell Two Premises and the Cell Three Premises)
will end on the later of either (i) midnight of the
last day of the seventy second

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(72nd) full calendar
month after the Cell Two Commencement Date or (ii)
midnight on the last day of the sixtieth (60th) full
calendar month after the Cell Three Commencement
Date.

     (b) Notwithstanding the foregoing in this Paragraph
2, following the Date of this Lease, and prior to
any of the applicable Commencement Dates, Tenant may
enter and occupy any portion of a Cell at reasonable
times and provided that: (i) doing so will not
materially interfere with Landlord’s Work; and (ii)
Tenant’s personnel report to the job site supervisor
immediately upon entering the Premises. Any
construction or installation work performed by
Tenant at the Premises prior to a Commencement Date
for a particular Cell must be done so as to minimize
interference with Landlord’s general contractor.
Tenant agrees to indemnify and hold harmless
Landlord against all claims (except for such claims
as may arise from Landlord’s negligence or willful
misconduct) for injuries to persons or damages to
property by reason of Tenant’s entering a Cell prior
to Substantial Completion of that Cell.

Initial
Construction
Matters

     3. (a) Landlord shall fully complete (including all
punch-list items) the Landlord’s Cell One Work and
the Landlord’s Cell Two Work in accordance with the
terms of EXHIBIT B attached hereto and the
respective Cell One Plans and the Cell Two Plans and
those things reasonably inferable therefrom. Except
if caused by Tenant’s negligence or breach of this
Lease, Landlord agrees that the Landlord’s Work
shall be completed in a good and workmanlike manner
and in accordance with all applicable laws, codes
and ordinances. Landlord, at no cost to Tenant,
shall (i) repair any material defect in materials
and workmanship of the Landlord’s Cell One Work for
a period of one (1) year following the Cell One
Commencement Date, (ii) shall repair any material
defect in materials and workmanship of the
Landlord’s Cell Two Work for a period of one (1)
year following the Cell Two Commencement Date, and
(iii) if applicable, shall repair any material
defect in materials and workmanship of the
Landlord’s Cell Three Work for a period of one (1)
year following the Cell Three Commencement Date.
Further, such obligation of Landlord in the
immediately preceding sentence shall extend to two
(2) years from the applicable Commencement Date as
to the parking areas for the particular Cell.
During the Term, Landlord shall repair any latent
defects in the Premises (excluding any work
regarding items or work performed by Tenant) which
were not reasonably discoverable by a prudent
inspection of the Premises by a qualified contractor
at the time of the Commencement Date of a particular
Cell. Landlord and Tenant will cooperate with one
another in the enforcement of any warranties,
including any manufacturer’s or contractor’s
guaranties, issued in connection with the Landlord’s
Cell One Work, the Landlord’s Cell Two Work and the
Landlord’s Cell Three Work.

          (b) Before beginning construction of any portion of
the Landlord’s Cell One Work, the Landlord’s Cell
Two Work or the Landlord’s Cell Three Work, Landlord
and Tenant shall agree upon the complete plans and
specifications for Landlord’s Cell One Work (“Cell
One Plans”) and for Landlord’s Cell Two Work (“Cell
Two Plans”) or for the Landlord’s Cell Three Work
(“Cell Three Plans”), as the case may be, all of
which plans and specifications shall be consistent
in all material respects with the applicable
provisions of Exhibit B attached hereto. Landlord
shall, within ten (10) days after the Date of this
Lease (such date, the “Plan Submittal Date”), submit
to Tenant a draft of the Cell One Plans (“Cell One
Preliminary Plans”), which plans shall be marked
“For Permit” and be in form and content sufficient
for submission for review and approval by the
appropriate governing building authority. The Cell
One Plans, the Cell Two Plans and the Cell Three
Plans shall be prepared solely at Landlord’s
expense. Tenant shall notify Landlord of its
approval or disapproval of the Cell One Preliminary
Plans within four (4) days after Tenant’s receipt of
the Cell One Preliminary Plans (the “First Tenant
Response Date”). In the event Tenant disapproves any
aspect of the Cell One Preliminary Plans, Tenant
shall provide Landlord on or before the First Tenant
Response Date specific comments which, if
incorporated into the Cell One Preliminary Plans
would cause Tenant to approve the Plans.
Thereafter, Landlord shall cause to be incorporated
into the Cell One Preliminary Plans all

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of Tenant’s
comments, and, within two (2) Business Days after
receipt from Tenant of such comments (the “First
Revised Plan Date”), shall resubmit the revised Cell
One Preliminary Plans to Tenant for its approval,
which revised plans shall bear the date of such
revision and must incorporate all of Tenant’s
comments. Tenant shall again be required to respond
within four (4) days after Tenant’s receipt of the
revised Cell One Preliminary Plans (the “Second
Tenant Response Date”) and Landlord shall correct
and resubmit the Cell One Preliminary Plans with a
revision date shown on such plans again within two
(2) Business Days after the Second Tenant Response
Date (the “Second Revised Plan Date”). After the
Second Revised Plan Date, with each successive
resubmission of the corrected Cell One Preliminary
Plans by Landlord, Tenant shall then only have two
(2) days to make any further comments or
disapprovals (which date deadlines shall be
additional Tenant Response Dates). If Tenant has
not responded within two days after the Plan
Submittal Date or the First Revised Plan Date for a
Cell, then Landlord shall contact Tenant via
telephone by calling Dean Miller at (901) 546-7426
to inform the Tenant that Landlord has not received
a response from Tenant to such plans or revised
plans, as the case may be. In the event Tenant does
not respond to any proposed plans or revised plans
within the required time frame, then each day
thereafter shall be a Tenant Delay (defined below)
without any further notice requirement from
Landlord. The procedure described for plan approval
shall continue until such time as the Cell One Plans
have been approved by Tenant. In addition, Landlord
shall, on or before the Plan Submittal Date, submit
to Tenant a draft of the Cell Two Plans (“Cell Two
Preliminary Plans”) in the same level of detail and
preparation as described above for the Cell One
Preliminary Plans. The same back and forth submittal
and response mechanism, with the same time period
requirements, set forth above for the Cell One
Preliminary Plans shall ensue until the Landlord and
Tenant agree upon the Cell Two Plans. Landlord and
Tenant acknowledge that the work described on
Exhibit “B” does not constitute final construction
drawings or a complete description of the work to be
performed by Landlord, but rather, that Landlord
will prepare the Cell One Plans and the Cell Two
Plans based generally upon such work described on
Exhibit B and that such plans will be revised as
part of the plan process described above to provide
additional details and refinement as to the scope of
Landlord’s Work. To this end, Landlord agrees to
prepare the Cell One Plans and the Cell Two Plans to
include a scope of work including all of the items
shown on Exhibit “B and otherwise generally
comparable to the scope of work customarily
performed by developers of comparable industrial
facilities in the greater Memphis marketplace, but
in no event shall Landlord’s scope of work include
additional items relating to Tenant’s specific use
or desire other than as shown on Exhibit B or as
otherwise may be handled in a Change Proposal.

          (c) Landlord shall use diligent efforts to complete
the Landlord’s Cell One Work on or before the date
that is forty (40) days from and after the approval
or deemed approval of the Cell One Plans (“Cell One
Target Date”), and shall use its diligent efforts to
complete the Landlord’s Cell Two Work on or before
the date that is one hundred fifteen (115) days from
and after the approval or deemed approval of the
Cell Two Plans (“Cell Two Target Date”). The Cell
Two Target Date and the Cell Three Target Date (as
hereinafter defined) shall be subject to adjustment
due to Force Majeure (as hereinafter defined) and
the Commencement Dates shall be subject to
adjustment due to Tenant Delay (as hereinafter
defined). “Force Majeure” means an act of God,
fire, casualty, strike, boycott, power outages (not
resulting from the acts or omissions of Landlord),
floods, washouts, explosions, earthquakes, storms,
weather (including wet ground or inclement weather
which prevents construction), riot, insurrections,
war, terrorist act or catastrophe. “Tenant Delay”
means any delay in the completion of the Landlord’s
Cell One Work, the Landlord’s Cell Two Work or the
Landlord’s Cell Three Work resulting from (x) the
performance of any work or act in the Premises by
Tenant, its contractors, employees and agents, (y)
Tenant’s failure to timely respond to plan
submissions or revised plan submissions as described
in subparagraph (b) above or (z) Tenant’s failure to
timely perform the walk

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through as described in the
definition of Substantially Complete. The Cell Two
Target Date and the Cell Three Target Date, as
applicable, shall be extended by one day for each
day that the Cell Two Target Date and the Cell Three
Target Date, as applicable, is delayed by Force
Majeure. Each Target Date, as applicable, will be
extended by the aggregate number of days denominated
as extending the Target Date in the Change Proposals
for that Cell. The Cell One Commencement Date, the
Cell Two Commencement Date and the Cell Three
Commencement Date, as applicable, shall, for each
day that the Commencement Date for that particular
Cell, as applicable, has not occurred by reason of a
Tenant Delay, be deemed to have occurred on the date
each would have otherwise occurred but for the
Tenant Delay. Landlord must give telephonic notice
to Tenant by calling Dean Miller at (901) 546-7426
within twenty four (24) hours after an event that
gives rise to Force Majeure or Tenant Delay (a
“Delay Notice”). In the event that Landlord does not
timely give a Delay Notice, then the claimed delay
shall not be deemed to have occurred until twenty
four (24) hours prior to the time that such Delay
Notice is actually given by Landlord. In the event
that Tenant disputes the occurrence of any event of
Force Majeure or Tenant Delay claimed by Landlord or
the duration of any such event, Tenant shall provide
Landlord with written notice of such dispute within
ten (10) days after Landlord’s delivery of the
applicable Delay Notice (each such notice, a
“Dispute Notice”). In the event Tenant fails to
provide a timely Dispute Notice, Tenant shall be
deemed to have waived any objection to the
occurrence of such event of Force Majeure or Tenant
Delay and the duration of such event. In the event
Tenant timely delivers a Dispute Notice, Landlord
shall nonetheless proceed with Landlord’s Work.
However, as to all Dispute Notices pertaining to a
particular Cell, the dispute as to whether the
applicable event constitutes Force Majeure or Tenant
Delay and/or the duration of such event will be
resolved by submitting the matter to binding
arbitration in accordance with the rules of the
American Arbitration Association within fifteen (15)
days after the Commencement Date for that particular
Cell. The parties agree that the findings of the
arbitration shall be binding upon the parties. The
parties further agree that any fees or expenses
incurred in such arbitration in resolving any such
dispute shall be shared equally by Landlord and
Tenant.

          (d) No substantial modifications shall be made to
the Cell One Plans, the Cell Two Plans or the Cell
Three Plans, nor shall the construction contemplated
therein be materially altered or performed other
than in conformity therewith, without the prior
written consent of Landlord and Tenant. Any changes
proposed by Tenant shall be submitted to Landlord in
writing and, upon receipt, Landlord shall cause its
contractor to promptly prepare and shall submit to
Tenant a detailed, written analysis (the “Proposed
Change Proposal”) setting forth: (i) the additional
cost (if any) of construction arising from the
change(s) broken down according to trade and giving
unit pricing for all materials, and per-hour or
per-day pricing on labor, (ii) the deviations (if
any) from or changes in the approved plans for the
affected work necessitated by such change(s) and the
additional cost of same, and (iii) the number of
days (if any) by which the applicable Target Date
will be extended to account for such change(s).
Regarding clause (ii) in the preceding sentence, the
“additional cost” may not exceed the actual cost of
labor and material with no greater than a ten
percent mark-up by any subcontractor and a ten
percent mark-up by the Landlord’s general
contractor; Landlord may not mark-up the additional
cost. Within two (2) Business Days following
receipt of a Proposed Change Proposal by Tenant,
Tenant shall notify Landlord in writing of its
decision to accept, reject or negotiate the Change
Proposal. If following good faith negotiation
between Landlord and Tenant (which will not conclude
until an in-person meeting has occurred between Dean
Miller for Tenant, and James Topple for Landlord),
they are unable to agree on a Proposed Change
Proposal, Tenant shall be deemed to have rejected
the Proposed Change Proposal. Tenant, may cause the
work covered by any rejected Proposed Change
Proposal to be performed with its own forces or by a
third party, and Landlord and Tenant agree to take
all reasonable measures to allow such work to be
completed with minimal interference to both such
work and Landlord’s Work.

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In the event Tenant
accepts the Proposed Change Proposal (as accepted, a
“Change Proposal”) in the manner set forth above,
Tenant shall, within five days after the
Commencement Date of the applicable Cell, pay to
Landlord any additional funds provided for in the
Change Proposal, and Landlord shall promptly
commence construction in accordance with the Change
Proposal. In the event Tenant rejects the Proposed
Change Proposal, or is deemed to have rejected,
Landlord shall proceed with construction as
originally approved in accordance with the Plans,
unless Tenant elects to undertake the work as
described above.

          (e) Regarding each of the Cell One Premises or the
Cell Two Premises, Tenant will accrue one day free
rent for each day the Landlord is late in meeting a
Plan Submittal Date, a Revised Plan Date, the Cell
One Target Date or the Cell Two Target Date, as such
dates may have been adjusted in accordance with the
terms of paragraph 3(c) above due to Force Majeure.
Failure by Landlord to have the remainder of the
office area (i.e the areas not consisting of the
Breakroom, Bathrooms and Phone Room) Substantially
Complete on the Cell One Office Substantial
Completion Date shall give Tenant a credit of
$1,000.00 against the next rent due for each late
day, subject to Force Majeure and Tenant Delay.
Notwithstanding the first sentence of this
subparagraph (e), Landlord shall have the
opportunity to make up delays in meeting a Plan
Submittal Date or a Revised Plan Date. In this
regard, Tenant shall accrue free rent only to the
extent that the Cell One Commencement Date or the
Cell Two Commencement Date, as the case may be, (as
adjusted in accordance with the terms of paragraph
3(c) above due to Tenant Delays) occurs after the
date that would otherwise have been the Cell One
Target Date or the Cell Two Target Date but for
Landlord’s failure to meet a Plan Submittal Date or
Revised Plan Date. Further, if the Plan Submittal
Date is less than 10 days from the Date of this
Lease, Tenant shall accrue free rent only to the
extent that the Cell One Commencement Date or the
Cell Two Commencement Date, as applicable, occurs
after the date that would otherwise have been the
Cell One Target Date or the Cell Two Target Date had
the Plan Submittal Date been 10 days after the Date
of this Lease.

     For example, if the Date of Lease is November 1, the
Plan Submittal Date is November 15 (14 days after
lease execution or 4 days late), and Landlord and
Tenant approve the plans the next day (November 16);
then the Cell One Target Date would be December 26
(40 days after plan approval). If the Cell One
Lease Commencement Date occurs on December 24, then
Tenant would receive two (2) days of free rent,
since the Cell One Lease Commencement Date occurred
two (2) days after the date that would otherwise
have been the Cell One Target Date (December 22) if
not for Landlord’s delay in meeting the Plan
Submittal Date.

     By further example, if, in the above example, the
Plan Submittal Date is November 6 (5 days after
lease execution or 5 days early) and Landlord and
Tenant approve the plans the next day (November 7);
then the Cell One Target Date would be December 17.
If the Cell One Commencement Date occurs on December
20, no free rent would accrue, since the Cell One
Lease Commencement Date occurred within 40 days of
the date that would otherwise have been the Cell One
Target Date (December 22) if not for Landlord’s
acceleration of the Plan Submittal Date.

          (f) Notwithstanding the fact that the Commencement
Date for a Cell may have occurred, Landlord shall
diligently pursue completion and fully complete the
Landlord’s Work pertaining to the affected Cell in
order to obtain a full certificate of occupancy from
the appropriate governing authority. Tenant will
cooperate with Landlord to obtain a full certificate
of occupancy. If Landlord fails to complete all
punch-list items within twenty (20) days following
each Cell’s Commencement Date, Tenant may do so at
Landlord’s expense and deduct the cost thereof from
the next Rental payment due (but only until Tenant
has fully recovered the amount which it has paid on
Landlord’s behalf pursuant to this subparagraph) in
an amount not exceeding twenty-five percent (25%) of
each installment of monthly Rent. It is

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anticipated
that a full certificate of occupancy for the Cell
One Premises will be obtained contemporaneously with
Landlord’s obtaining the full certificate of
occupancy for the Cell Two Premises.

Expansion Option

     4. Subject to the further provisions of this
Paragraph 4, Tenant has a one-time option (the
“Expansion Option”) to require Landlord to undertake
and complete Landlord’s Cell Three Work, and to
lease the Cell Three Premises from Landlord under
the terms of this Paragraph 4, and on all the other
terms and conditions contained in this Lease.
Provided that Tenant is not in default beyond any
applicable notice or cure period as of the time
Tenant gives notice to Landlord or at any time
during the construction of the Cell Three Premises,
Tenant may exercise the Expansion Option, by giving
written notice to Landlord (“Tenant’s Expansion
Notice”) on or before the first anniversary of the
Cell Two Commencement Date (“Expansion Deadline
Date”). Following receipt of Tenant’s Expansion
Notice, Landlord and Tenant will follow the same
approval procedures for the plan approval and
construction of the Cell Three Premises as described
in Paragraph 3 regarding the Cell One Premises and
the Cell Two Premises, except that the “Cell Three
Target Date” shall be the date that is one hundred
thirty (130) days from and after the approval or
deemed approval of the Cell Three Plans. The
Landlord’s Cell Three Work and the Cell Three Plans
(which shall be prepared by Landlord at its expense)
shall be consistent with the following elements
(collectively, the “Baseline Elements for Cell
Three”): (i) the Cell Three Premises shall be built
using the same general warehouse specifications as
the Cell One Premises and the Cell Two Premises,
(ii) the Cell Three Premises shall have the same bay
sizes and the same general warehouse improvement
finishes as the Cell One Premises and the Cell Two
Premises including, without limitation, metal halide
lighting, sixty battery charging stations, six air
changes per hour and dock packages similar to the
Premises on all doors to be utilized by Tenant in
the Cell Three Premises in the same proportion of
doors to be used by Tenant in the Cell Two Premises
as described on Exhibit B, (iii) an additional
guardhouse will be located at the northerly end of
the Cell Three Premises, (iv) the existing auto
parking area at the south end of the Cell One
Premises will be modified to conform to the general
configuration shown on EXHIBIT A-1, and (v) there
shall be no more than 2000 square feet of office and
no additional load bearing roof requirements.
Landlord and Tenant acknowledge that the work
described in the Baseline Elements for Cell Three do
not constitute final construction drawings or a
complete description of the work to be performed by
Landlord, but rather, that Landlord will prepare the
Cell Three Plans based generally upon such work
described in the Baseline Elements for Cell Three
and that such plans will be revised as part of the
plan approval process described above to provide
additional details and refinement as to the scope of
work to be performed by Landlord. To this end,
Landlord agrees to prepare the Cell Three Plans so
as to include a scope of work including all of the
items shown in the Baseline Elements for Cell Three
and otherwise generally comparable to the scope of
work contained in Landlord’s Cell One Work and
Landlord’s Cell Two Work, and customarily performed
by developers of comparable industrial facilities in
the greater Memphis marketplace, but in no event
shall Landlord’s scope of work include additional
items relating to Tenant’s specific use or desire
other than as shown on Exhibit B or as otherwise may
be undertaken in a Change Proposal. Regarding the
Cell Three Premises, Tenant will accrue one day free
rent for each day the Landlord is late in meeting
the Cell Three Target Date, Plan Submittal Date
(which, in the case of the Cell Three Premises,
shall be ten (10) days after Landlord’s timely
receipt of Tenant’s Expansion Notice) or a Revised
Plan Date, as such dates may be adjusted due to
Force Majeure and subject further to the “make-up”
provisions of Paragraph 3(e) above. The Cell Three
Commencement Date shall be subject to advancement
due to Tenant Delays in accordance with the terms of
paragraph 3(c) above. In the event Tenant fails to
provide the Tenant’s Expansion Notice on or before
the Expansion Deadline Date, then this Expansion
Option shall terminate and Tenant shall have no
further right or option to expand the Premises or to
require the Landlord to construct the Landlord’s
Cell Three Work. The Expansion Option shall
terminate in the event that (y) the named Tenant
enters

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into an Assignment (as defined in Paragraph
17) of the Lease which, under Paragraph 17, requires
Landlord’s consent, or (z) in the event Tenant
subleases more than twenty five (25%) percent of the
combined area in the Cell One Premises and the Cell
Two Premises to any entity which, under Paragraph
17, requires Landlord’s consent.

Renewal Option

     5. Landlord grants Tenant two consecutive options
(each a “Renewal Option”) to extend the term of this
Lease. Each Renewal Option shall extend the term
for two years (each a “Renewal Term”). Tenant may
exercise a Renewal Option by delivering written
notice (a “Renewal Notice”) of its exercise not
later than six months prior to the expiration of the
Initial Term or the Renewal Term, as the case may
be. Provided that Tenant is not in default beyond
any applicable notice and cure period as of the
time Tenant gives the applicable Renewal Notice to
Landlord or at the time the then applicable term of
this Lease would otherwise expire, Tenant may
exercise its first Renewal Option as to (i) the Cell
One Premises only; (ii) the Cell One Premises and
the Cell Two Premises only; or (iii) the Cell One
Premises, the Cell Two Premises, and the Cell Three
Premises (but as to the Cell Three Premises, only if
Tenant has exercised the Expansion Option). Tenant
may exercise its second Renewal Option for all or
any of the Cells for which it exercised under its
first Renewal Option, but only in the combinations
of Cells permitted in clauses (i), (ii), or (iii) of
the immediately preceding sentence. If Tenant has
not timely exercised its first Renewal Option as to
any Cell, Tenant’s second Renewal Option will lapse
as to such Cell and be of no further force or
effect. With respect to any Cell for which Tenant
has exercised a Renewal Term, all of the terms and
conditions of this Lease shall remain in full force
and effect during the Renewal Terms except that
Landlord shall not be required to perform any
improvements, modifications or installations to the
Premises except as specifically noted below and the
following terms shall govern:

          (a) If Tenant exercises a Renewal Option for only
the Cell One Premises, the Cell One Rent will be —
$2.87 per square foot per year for the first Renewal
Term, and $2.98 per square foot per year for the
second Renewal Term, if applicable.

          (b) If Tenant exercises a Renewal Option for only
the Cell One Premises and Cell Two Premises, and did
not exercise the Expansion Option, the Cell One Rent
and the Cell Two Rent will each be — $2.76 per
square foot per year for the first Renewal Term,
and, as to the second Renewal Term, if exercised for
the Cell One Premises and the Cell Two Premises,
$2.88 per square foot per year for the second
Renewal Term, if applicable.

          (c) If Tenant exercises a Renewal Option for only
the Cell One Premises and Cell Two Premises, and did
exercise the Expansion Option, the Cell One Rent and
the Cell Two Rent will each be — $2.82 per square
foot per year for the first Renewal Term, and, as to
the second Renewal Term, if exercised for the Cell
One Premises and the Cell Two Premises, $2.93 per
square foot per year for the second Renewal Term, if
applicable.

          (d) If Tenant exercises a Renewal Option for the
Cell One Premises, Cell Two Premises, and the Cell
Three Premises, the Cell One Rent, the Cell Two Rent
and the Cell Three Rent will each be — $2.76 per
square foot per year for the first Renewal Term,
and, as to the second Renewal Term, if exercised for
the Cell One Premises, the Cell Two Premises and the
Cell Three Premises, $2.88 per square foot per year
for the second Renewal Term, if applicable.

          (e) If Tenant exercises a Renewal Option for the
Cell One Premises only, Tenant at its cost and
expense, will cause to be constructed a demising
wall between the Cell One Premises and the Cell Two
Premises, from floor to ceiling deck, with a single
layer of 5/8” sheetrock on both sides, and with a
single layer of 5/8” plywood on both sides to a
height of eight feet above the floor. If Tenant
exercises a Renewal Option for only the Cell One
Premises

- 8 -

 

and Cell Two Premises, and did exercise the
Expansion Option, the Landlord at its cost will seal
the pass-through in the existing demising wall
between the Cell Two Premises and the Cell Three
Premises. If required, the above described work as
to a wall must be constructed by the responsible
party within thirty days following the first day of
the applicable Renewal Term.

          (f) If Tenant exercises a Renewal Option for the
Cell One Premises only, then Tenant, and its
permitted subtenants, successors and assigns, shall
have the non-exclusive right to use the driveway
depicted as the (“Driveway”) on the site plan
attached hereto as EXHIBIT “E” for vehicular and
pedestrian access, ingress and egress to and from
the Cell One Premises. Landlord and Landlord’s
tenants, successors and assigns shall have the right
to use the Driveway for vehicular and pedestrian
access, ingress and egress to and from the Cell Two
Premises and the Cell Three Premises and for any
other purpose not inconsistent with the use of the
Driveway for vehicular and pedestrian access,
ingress and egress being made by Tenant. In such
event, during all applicable Renewal Periods, Tenant
shall pay CAM Charges to Landlord pursuant to
subparagraph (g) below and shall pay, in accordance
with the terms of Paragraphs 30 and 31 of this
Lease, the prorata portion of the taxes and
insurance applicable to the Cell One Premises only
(based on a per square foot basis of the Building
and a prorata portion of the acreage contained
within the Property).

          (g) At any time following the Cell One Commencement
Date, during which Tenant is leasing less than all
the Cells: (i) Landlord and Tenant shall prorate
the taxes and insurance based on a per square foot
basis of the then complete Building and a prorata
portion of the acreage contained within the
Property; and (ii) Landlord and Tenant shall work
together to determine a fair and equitable
allocation of the cost and responsibility for common
area repair and maintenance, including but not
limited to, repair and maintenance of the
landscaped areas, the Driveway and parking areas and
other common areas on the Property.

Rental

     6. Tenant shall pay Rent to Landlord monthly and on
the first day of each month, in advance, without
offset (except as provided in Paragraphs 3(f) and
10) or demand. All payments of Rent shall be sent
to Robert Pattillo Properties, Inc., P.O. Box
101923, Atlanta, Georgia, 30392, or such other
address provided to Tenant by Landlord. Tenant
shall, within three (3) days of the Date of this
Lease, pay to Landlord $42,813.33 representing
one-half of the first month’s Rent for the Cell One
Premises due hereunder. The balance of the first
month’s Rent for the Cell One Premises will be due
on the Cell One Commencement Date. In the event
Tenant fails to pay Rent or any other payment called
for under this Lease within ten (10) days of the due
date, Tenant shall pay a late charge equal to three
percent (3%) of the unpaid amount; provided that
Tenant shall be entitled to two (2) 10-day grace
periods during the Initial Term in which Tenant
shall not be assessed a late charge so long as the
amount due is paid on or before the tenth (10th)
calendar day after written notice from Landlord that
such Rent amount is past due. Landlord and Tenant
agree that such late charge is intended to
compensate Landlord for additional administrative
charges and other damages incurred by Landlord on
account of such late payment and not as a penalty.
Landlord and Tenant agree that the actual damages to
be suffered by Landlord in such event shall be
difficult, if not impossible to ascertain, and that
such late charge is a reasonable estimate of such
charges and damages. Either Landlord or Tenant may
have the area of the combined Cell One Premises and
Cell Two Premises, or the combined Cell One
Premises, Cell Two Premises and Cell Three Premises
measured by an architect or surveyor reasonably
qualified to make the measurement, which measurement
shall be measured from outside wall to outside wall
of the applicable Cell. If the Premises vary in
size from the size recited in the definitions of the
Cell One Premises, the Cell Two Premises, or the
Cell Three Premises, the Rent shall be
proportionally increased or decreased by the
increase or the decrease in size revealed in the
measurement as of the date of delivery of the
measurement to the other party. If, as a result of
the negligent acts or willful misconduct of Landlord
or any contractor

- 9 -

 

performing work on the Premises on
behalf of Landlord, Tenant is prevented from using
any material portion of the Premises in the ordinary
course of Tenant’s business, then Tenant must notify
Landlord in writing of such event (a “Stoppage
Notice”) within twenty four (24) hours of the
commencement of such event. In the event that Tenant
does not timely provide such Stoppage Notice, then
the claimed prevented use shall not be deemed to
have occurred until a time no earlier than 24 hours
prior to when such Stoppage Notice is actually
provided by Tenant to Landlord (such date, the
“Prevention Start Date”). In the event that Tenant
is so prevented from using any material portion of
the Premises and such condition continues after the
Prevention Start Date for a period of more than
forty eight consecutive hours on Business Days, the
Rent shall abate as to such portion of the Premises
that can not be used by Tenant from the end of such
forty eight hour period until Tenant’s full use and
enjoyment of such portion of the Premises is
restored.

Utility Bills

     7. Following the Commencement Date with respect to
any respective Cell, Tenant shall place utility
bills of all types serving that respective Cell in
its name. Each Cell must have its own electrical
meter. Tenant shall be responsible for all such
bills, along with all charges and assessments
pertaining to utilities serving the Premises,
including, but not limited to, water and sewer,
natural gas, electricity, fire protection (including
sprinkler testing charges) and sanitary charges, but
excluding installation or connection fees and any
amounts outstanding, with respect to such Cell which
relate to a period prior to the Commencement Date
for such Cell. If Tenant does not pay its utility
bills prior to delinquency and if failure to pay
such charges would create a lien on the Premises or
would cause the gas, electric, water or fire
protection service to all or a portion of the
Premises to be suspended or result in physical
damage to the Premises, Landlord may do so ten (10)
days after delivering written notice to Tenant. The
amount paid by Landlord shall be paid by Tenant to
Landlord, as Additional Rent, within ten days of
demand therefor by Landlord and proof of payment.
The term Additional Rent shall include, without
limitation, the charges due under this paragraph
along with any charges due under the terms of this
Lease other than Rent.

Mortgagee’s Rights

     8. Landlord represents that, as of the date of this
Lease, there is no mortgage, deed of trust or
similar type lien against the Premises or ground
lease. For any future holder of a mortgage on the
Premises or ground lessor (“Lien Holder”), Tenant
will subordinate its interest in the Premises under
the Lease and attorn to such future Lien Holder,
provided that such future Lien Holder executes and
delivers a subordination, non-disturbance and
attornment agreement to Tenant in form substantially
similar in all material respects to the form
attached hereto as EXHIBIT “F”, subject to
reasonable modifications that do not materially and
adversely affect Tenant’s rights or remedies under
this Lease.

Repairs by Tenant

     9. Except for repairs and maintenance necessitated
by the acts or omissions of Landlord, its agents,
employees, contractor and invitees, or which are
covered by Landlord’s responsibilities in connection
with the terms of paragraph 3(a) above relating to
defects in materials or workmanship during certain
periods, Tenant, at its sole cost, shall keep and
maintain the Premises (except portions of the
Premises to be maintained and repaired by Landlord
under terms of Paragraph 10), including without
limitation, all paving, the driveways and walkways,
the floor slab surface, lawn maintenance and
landscaping, in good order and repair. Tenant also
agrees to keep in good repair, and replace if
necessary (subject to the succeeding sentence), all
systems pertaining to water, fire protection,
drainage, sewer (but not if located under the floor
slab or under the paving), electrical, heating,
ventilation, air conditioning and lighting
(“Building Systems”). Provided, however, if one or
more of the Building Systems or a portion thereof
requires a repair that (i) is at a cost in excess
of 40% of the cost of replacing that Building System
or applicable portion thereof or otherwise requires
replacement, and (ii) is at a cost in excess of
$10,000 in any one occurrence, and (iii) would be a
capitalized expenditure under Generally Accepted
Accounting Principles, and

- 10 -

 

(iv) is not the result of
Tenant’s negligence or a breach by Tenant of its
obligations under this Lease (which repair and
replacement shall be Tenant’s responsibility), then
Tenant must notify Landlord in writing of the need
for such repair or replacement along with supporting
estimates for the cost of same. In such event, the
Building System or affected portion thereof shall be
either replaced or repaired by Landlord, at
Landlord’s determination (“Capital
Repair\Replacement”). The cost to Tenant of a
Capital Repair\Replacement shall be initially paid
by Landlord and amortized over the useful life of
the applicable Capital Repair\Replacement in
accordance with Generally Accepted Accounting
Principles plus interest at a rate equal to the
“prime rate” as announced by Wachovia Bank, in
Atlanta, Georgia in effect at the time such Capital
Repair\Replacement is made, and the annual amortized
amount shall be paid by Tenant to Landlord monthly,
as Additional Rent, in equal installments, during
the remainder of the Initial Term (and any Renewal
Term that is exercised by Tenant) until the cost of
such Capital Repair\Replacement has been fully
amortized; provided, however, in the event that this
Lease is terminated due to a default by Tenant, all
of the payments that would have been due from Tenant
pursuant to this paragraph 9 shall be immediately
due and payable as Additional Rent, as of the day of
such termination. In the event that any Capital
Repair\Replacement is not fully amortized over the
Initial Term of the Lease and any Renewal Term,
Tenant shall only be responsible for the costs
amortized during the Initial Term and any Renewal
Term with Tenant reserving the right to prepay its
obligation at any time. Tenant agrees to return the
Building Systems to Landlord in the same condition
as they were on the Commencement Date for each Cell
upon the expiration or earlier termination of this
Lease as pertains to that Cell, normal wear and
tear, or damage by storm, fire, lightning,
earthquake or other casualty excepted. Tenant shall
not cause the Premises to become subject to any
lien, charge or encumbrance whatsoever. Tenant
shall have no authority, express or implied, to
create any lien, charge or encumbrance upon the
interest of the Landlord in the Premises. Tenant
shall, at its sole cost, maintain a regularly
scheduled preventive maintenance and service program
for the repair, maintenance and servicing of all
heating and air-conditioning systems and related
equipment within the Premises and a regularly
scheduled maintenance and inspection program
relating to the fire sprinkler system. Tenant shall
provide Landlord with copies of any reports or test
results provided by such maintenance program. Upon
written request by Tenant and at Tenant’s sole cost,
Landlord will arrange for any repair which is
Tenant’s responsibility pursuant to the terms of
this Lease to be performed by Landlord’s employees,
agents or contractors. Tenant shall pay, as
Additional Rent, the cost of such repair within ten
(10) days of receipt of a bill in detail sufficient
to determine the scope of the work performed from
Landlord.

Repairs by Landlord

     10. Except for damage caused by the negligence or
willful misconduct of Tenant, its agents, employees,
contractors and invitees, Landlord, at its sole cost
and expense, shall keep in good repair and maintain
(commensurate with other first-class warehouse and
distribution centers in the vicinity of the
Premises) the roof (including the roof membrane,
gutters, and downspouts), and all structural
elements of the Premises, including but not limited
to, foundation, the floor slab (excluding the
surface), and exterior walls (exclusive of painting,
glass and exterior doors), and all underground
portions of all Building Systems. Tenant shall
promptly notify Landlord of the need for any repairs
which are Landlord’s responsibility hereunder.
Landlord shall be under no duty to make any repairs
hereunder unless Landlord receives notice of the
need for such repairs or of which Landlord has
actual notice. In an emergency, or if Landlord
fails to begin repairs or maintenance as to an item
that is Landlord’s responsibility as described by
this Paragraph 10, within ten (10) days following
written request from Tenant (or in the case of
material roof leaks, following 24-hours written
notice from Tenant), Tenant may make the repairs
and, only after providing Landlord with written
proof of payment and lien waivers, may be entitled
to abate Rent (but only until Tenant has fully
recovered the amount which it has paid on Landlord’s
behalf pursuant to this Paragraph) in an amount not
exceeding twenty-five percent (25%) of each

- 11 -

 

installment of monthly Rent.

Modifications and Alterations to the Premises

     11. Tenant shall make no material modifications,
alterations or improvements to the Premises or cut
any openings or penetrations in the roof without the
prior written consent of Landlord, which may not
unreasonably be withheld, conditioned or delayed. In
the event Landlord gives its consent to such
modification or alteration, Landlord shall also
inform Tenant whether or not such modification or
alteration must be removed from the Premises at the
termination of this Lease. Landlord’s failure to
respond to Tenant’s written request for consent for
ten (10) days following the receipt of such request,
means that Landlord’s consent is deemed given and
that Tenant will not be required to remove the item
for which consent was sought when the Lease
terminates. Notwithstanding the preceding sentences
of this Paragraph, Tenant, without Landlord’s
consent, may install any satellite or communications
antennae and related structures on the roof provided
that Tenant will be responsible for any damage to
the roof caused thereby and for any subsequent roof
leaks or any related damage associated with leaks at
or around the areas affected by such installation
and for any damage or repair necessitated by any
breach or termination of any roof warranty caused by
such installation work. Landlord and Tenant agree to
take all steps necessary to comply with any
applicable roof warranty in conjunction with such
installation activities by Tenant affecting the roof
provided that Tenant pays the cost of any needed
inspections or tests. Further notwithstanding
anything contained in this Paragraph 11 to the
contrary, Tenant may make material modifications,
alterations or improvements to the Premises, without
Landlord’s consent (but Tenant shall be required to
inform Landlord at least ten days prior to any such
work being performed) which do not affect the
structural components of the Premises, the
structural integrity of the floor slab, the exterior
of the Premises, or materially or adversely affect
any water, fire protection, drainage, sewer,
electrical, heating, ventilation, air conditioning
or lighting systems on the Premises (“Permitted
Alterations”). Following notice from Tenant that it
intends to make a Permitted Alteration (“Permitted
Alteration Notice”), Landlord shall inform Tenant of
whether or not such modification or alteration must
be removed by Tenant at the termination of this
Lease. Landlord’s failure to respond in writing to
a Permitted Alteration Notice within ten (10) days
from Landlord’s receipt of such notice means that
Tenant will not be required to remove the Permitted
Alteration described therein. Any modifications or
alterations made by Tenant shall be completed in a
good, workmanlike and lien free manner in accordance
with all applicable codes and regulations and Tenant
shall provide Landlord with certificates of
insurance from Tenant’s contractor showing coverage
for general liability and workmens’ compensation.
Upon written request by Tenant and at Tenant’s sole
cost, Landlord will arrange for any modification,
alternation or improvement consented to by Landlord
to be performed by Landlord’s employees, agents or
contractors. Tenant shall pay, as Additional Rent,
the cost of such modification, alteration or
improvement within ten days of receipt of a bill in
detail sufficient to determine the scope of the work
performed therefor from Landlord.

Return of Premises

     12. As to each Cell, Tenant agrees to return the
Premises to Landlord at the expiration or prior
termination of this Lease broom clean and in good
condition and repair, normal wear and tear, damage
by storm, fire, lightning, earthquake or other
casualty excepted. Upon Landlord’s request, Tenant
agrees to remove those alterations installed by or
for Tenant and which, under Paragraph 11, Landlord
has elected to have Tenant remove at the end of the
Term. As to each Cell, Tenant shall remove its
personal property (including but not limited to its
racks) from the Premises on or before the expiration
or termination of this Lease. Tenant shall repair
any damage caused by any such removal.

Destruction of or Damage to Premises

     13. If the Premises are partially or totally damaged
or destroyed by storm, fire, lightning, earthquake
or other casualty, such that the Premises are
rendered totally or partially inaccessible, or
unusable by Tenant in the ordinary course of its
business, the Rent will abate proportionately to the
diminution in Tenant’s use, and Landlord shall
restore the Premises to substantially the same

- 12 -

 

condition as existed before such casualty as
speedily as practicable, whereupon full rental shall
recommence. Regardless whether Landlord or Tenant
has obtained the insurance policy on the Premises in
accordance with Paragraph 30 below, each of Landlord
and Tenant shall take all steps necessary to assist
the other in processing the insurance claim.
However, if the damage shall be so extensive that it
cannot reasonably be repaired and restored within
nine (9) months from date of the casualty, then
Tenant may terminate this Lease by giving written
notice to Landlord within thirty (30) days after the
date of such casualty. Notwithstanding the
foregoing, if the Premises are damaged and the cost
of repair is greater than thirty-five percent of the
replacement cost of the Premises, and if the damage
is of a type not covered by the insurance described
in Paragraph 30(b) herein, then Landlord may
terminate this Lease by giving written notice to
Tenant within thirty (30) days after the date of
such casualty. In addition, in the event that there
is a total destruction of the Premises during the
last year of the Initial Term or the last year of
the then current Renewal Term, then, notwithstanding
anything in this Lease to the contrary, this Lease
shall terminate as of the date of such casualty and
Landlord shall have no duty to restore or rebuild
unless Tenant agrees, at that time, to exercise the
next available renewal term, if any. In the event of
such termination, rental shall be abated as of the
date of such casualty. If neither party elects to
terminate the Lease as provided above, and if
Landlord has not commenced to repair within ninety
(90) days following the casualty, Tenant may then
terminate the Lease as of the date of the casualty
by giving written notice to Landlord. If Landlord
has commenced to repair or rebuild and has not
completed such work to the point of Substantial
Completion within one (1) year from the date of such
casualty (as may be extended by Force Majeure
occurring after the date such repair or rebuilding
work has been commenced by Landlord), then Tenant
shall have the continuing right to terminate this
Lease effective as of the date that is thirty days
after the Landlord’s receipt of such notice, unless
Landlord completes such work within such thirty
days. In no event shall Landlord be responsible for
repairing or restoring any personal property of
Tenant or any alterations or improvements made by
Tenant.

Indemnity

     14. Except to the extent arising from or related to
Landlord’s negligence, willful misconduct, or breach
of this Lease, Tenant agrees to indemnify, defend
and save harmless Landlord against all claims,
losses, liabilities, costs and expenses (including
reasonable attorney’s fees and costs of litigation)
suffered by Landlord by reason of the use or
occupancy of the Premises by Tenant. Except to the
extent arising from or related to Landlord’s
negligence, willful misconduct, or breach of this
Lease, Landlord shall not be liable to Tenant’s
employees, agents, contractors or invitees for any
injury to a person or damage to property on or about
the Premises, or any damage caused by the
improvements becoming out of repair, the failure or
cessation of any utility or by any leakage of gas,
oil, water or steam or electricity emanating from
the Premises. Landlord indemnifies and will defend
and save harmless Tenant against all claims, losses,
liabilities, costs and expenses (including
reasonable attorney’s fees and costs of litigation)
arising from or related to Landlord’s (or its
agents’) negligence, willful misconduct or breach of
this Lease.

Governmental Orders

     15. Except as provided in the following sentence,
Tenant agrees, at its own expense, to promptly
comply with all requirements of any applicable laws,
orders, ordinances, statutes or regulations
(collectively “Laws”) applicable to the Tenant’s use
of and\or occupancy of the Premises. Landlord
agrees, at its own expense, to promptly comply with
Laws applicable to the Premises if: (a) the Law
relates to items which are Landlord’s obligation to
repair, maintain or replace under Paragraphs 9, 10
or otherwise under the terms of this Lease, (b) such
failure to comply arises as a result of Landlord’s
Work not complying with Laws in effect as of the
Commencement Date for the applicable Cell (without
taking into account any subsequent amendments or
modifications to such Laws) or (c) the Laws are Laws
generally applicable to the Premises or
warehouse/distribution properties.

- 13 -

 

Condemnation

     16. If the entire Premises or such portion thereof
as will make the Premises unusable for the purpose
herein leased, as reasonably determined by Tenant,
shall be condemned by any legally constituted
authority for any public use or purpose, or sold
under threat of condemnation, then this Lease shall
terminate as of the date of such condemnation or
sale and rental shall be accounted for between
Landlord and Tenant as of such date. In the event
of a condemnation which does not result in the
termination of this Lease under the prior sentence,
rental shall be abated in a fair and equitable
manner and Landlord shall restore the remaining
portion of the Premises to substantially the same
condition as existed prior to the condemnation. In
no event shall Landlord be responsible for repairing
or restoring any personal property of Tenant or any
alterations or improvements made by Tenant. All
condemnation awards or sales proceeds in lieu
thereof shall belong to Landlord; provided, however,
Tenant shall be entitled to file a claim for loss of
its personal property and moving expenses and the
value of its rights hereunder provided the filing of
such claim does not adversely affect Landlord’s
claims for its interests in and related to the
Premises.

Assignment

     17. Tenant may not assign this Lease or any interest
hereunder or sublet the Premises in whole or in part
or allow all or a portion of the Premises to be used
by a third party (a “Transfer”) without the prior
written consent of Landlord, which may not
unreasonably be withheld, conditioned or delayed.
If Tenant is a corporation, partnership, limited
liability company or other entity that is not
publicly traded, the transfer of more than fifty
percent (50%) of the ownership interests of Tenant
or the transfer of a lesser percentage which results
in a transfer of control of Tenant, whether in one
transaction or a series of related transactions,
shall constitute a Transfer for purposes of this
Lease. Notwithstanding the preceding two sentences,
Tenant, without Landlord’s consent, may transfer
this Lease: (i) to any entity which controls, is
controlled by or is under common control with Tenant
or Williams-Sonoma, Inc.; (ii) to any entity
resulting from a consolidation or merger with
Tenant; or (iii) to any person acquiring all, or
substantially all, of Tenant’s assets or issued and
outstanding stock. Any assignee (and if Landlord so
elects, any subtenant) shall become liable directly
to Landlord for all obligations of Tenant hereunder.
No such assignment or sublease shall release Tenant
or any guarantor hereunder from any of its duties
and obligations under this Lease, except, in an
assignment, if the assignee or its guarantor has a
then current corporate credit rating of no lower
than BBB- (triple B minus) from Standard & Poor’s or
a then equivalent rating, then Tenant and guarantor
automatically shall be released from all their
duties and obligations under this Lease and the
Guaranty, respectively, effective upon approval of
the assignment by Landlord (for assignments that
require Landlord’s approval) and delivery by Tenant
to Landlord of an assignment document executed by
Tenant, Guarantor and applicable assignees or
guarantors.

Hazardous Substances

     18. Tenant covenants that, without first obtaining
Landlord’s written consent, that neither Tenant, nor
any of its agents, employees, contractors or
invitees shall cause or permit any Hazardous
Materials to be stored, handled, treated, released
or brought upon or disposed of on the Premises in
violation of any Environmental Laws (defined
below). Landlord hereby consents to the use in the
Premises of the Hazardous Materials described on
Exhibit C hereto provided same are in compliance
with all applicable Environmental Laws. Tenant
shall comply with any and all applicable laws,
ordinances, rules, regulations and requirements
respecting the storage, handling, treatment,
release, disposal, presence or use of Hazardous
Materials (“Environmental Laws”) in, on or about the
Premises. As used herein, the term “Hazardous
Materials” means asbestos, polychlorinated
biphenyls, oil, gasoline or other petroleum based
liquids, any and all materials or substances defined
as hazardous or toxic under, or regulated by,
Environmental Laws, including but not limited to
substances defined as hazardous under the
Comprehensive Environmental Response, Compensation
and Liability Act, as amended, 42 U.S.C. § 9601 et
seq., the Resource Conservation and Response Act, as
amended, 42 U.S.C. § 6901 et seq. (or any state
counterpart to the foregoing

- 14 -

 

statutes) or determined
to present the unreasonable risk of injury to health
or the environment under the Toxic Substances
Control Act, as amended, 15 U.S.C. § 2601 et seq.
Landlord indemnifies and shall defend and hold
Tenant harmless from and against any and all claims,
judgments, damages, penalties, fines, costs
(including without limitation, consultants’ fees,
experts’ fees, attorneys’ fees and court costs),
liabilities or losses arising out or of resulting
from Landlord’s storage, handling, treatment,
release, disposal, presence or use of Hazardous
Material in, on, or about each Cell: (a) before its
Commencement Date; or (b) brought in, on or about
that Cell by Landlord or any party acting through
Landlord (other than Tenant or its employees,
contractors, agents or others on or at the Premises
by or at the instance of Tenant) . Tenant shall
indemnify, defend and hold Landlord harmless from
and against any and all claims, judgments, damages,
penalties, fines, costs (including without
limitation, consultants’ fees, experts’ fees,
attorney’s fees and court costs), liabilities or
losses resulting from Tenant’s storage, handling,
treatment, release, disposal, or use of Hazardous
Materials in, on or about the Premises. Without
limiting the generality of the foregoing indemnity,
in the event Landlord has sufficient evidence from
which to form a reasonable belief that the covenant
set forth in this Paragraph has been materially
violated by Tenant, Landlord shall be entitled, at
Tenant’s sole expense, to take reasonable actions to
assess, contain, delineate and/or remediate any
contamination by such Hazardous Materials. Any sums
reasonably expended by Landlord shall be reimbursed
by Tenant, as Additional Rent, within thirty (30)
days of demand therefor by Landlord. The
obligations of this Paragraph 18 shall survive the
expiration or earlier termination of this Lease.

Removal of Fixtures

     19. Tenant may remove all fixtures and equipment
which Tenant has placed in the Premises, however,
Tenant shall repair all damages to the Premises
caused by such removal. In no event shall Tenant
remove heating, ventilating, air conditioning,
plumbing, electrical and lighting systems and
fixtures or dock levelers, dock locks, dock lights
or dock seals. In the event this Lease is
terminated for any reason, any property remaining in
or upon the Premises may, at the option of Landlord,
either be deemed to become property of Landlord or
Landlord may dispose of such property as Landlord
deems proper with no obligation to Tenant.

Default; Remedies

     20. In the event (i) any payment of rental or other
sum due hereunder is not paid as and when due and
Tenant fails to cure such default within ten (10)
days after written demand from Landlord ; (ii)
Tenant abandons the Premises; (iii) Tenant shall
fail to comply with any term, provision, condition,
or covenant of this Lease (other than an obligation
requiring the payment of Rent or other sums
hereunder) and shall not cure such failure within
thirty days after written notice to the Tenant of
such failure to comply, or if such failure
reasonably is not susceptible to cure in thirty
days, then Tenant must commence the cure in the
thirty-day period and use continuous, commercially
reasonable efforts to pursue it to completion; or
(iv) Tenant shall file a petition under any
applicable federal or state bankruptcy or insolvency
law, or have any involuntary petition filed
thereunder against it and not dismissed within sixty
days, then Landlord shall have the option to do any
one or more of the following:

          (a) Terminate this Lease, by delivery of written
notice of such termination at least fifteen (15)
days prior to the effective termination date, in
which event Tenant shall immediately surrender the
Premises to Landlord. Tenant agrees to indemnify
Landlord for all loss, damage and expense which
Landlord may suffer by reason of such termination.

          (b) Without terminating this Lease, by delivery of
written notice to Tenant thirty (30) days prior to
terminating Tenant’s right of possession, terminate
Tenant’s right of possession, whereupon rental shall
continue to accrue and be owed by Tenant hereunder.
Thereafter, at Landlord’s option, Landlord may enter
upon and relet all or a portion of the Premises (or
relet the Premises together with any additional
space) for a term longer or shorter than the
remaining term hereunder and otherwise on terms

- 15 -

 

satisfactory to Landlord. Tenant shall be liable to
Landlord for the deficiency, if any, between
Tenant’s rent hereunder and all net sums received by
Landlord on account of such reletting (after
deducting all reasonable costs incurred by Landlord
in connection with any such reletting, including
without limitation, tenant improvement costs,
brokerage commissions and attorney’s fees).

          (c) Pursue a dispossessory action against Tenant, in
which event Tenant shall remain liable for all
amounts owed hereunder, including amounts accruing
hereunder from and after the date that a writ of
possession is issued.

          (d) Perform any unperformed obligation of Tenant.
Any sums expended by Landlord shall be repaid by
Tenant, as Additional Rent, within ten (10) days of
demand therefor by Landlord.

     Pursuit of any of the foregoing remedies shall not
preclude pursuit of any other remedies herein
provided or any other remedies provided by law. In
the event Landlord places the enforcement of all or
any part of this Lease in the hands of an attorney
on account of Tenant’s default, Tenant agrees to pay
Landlord’s cost of collection, including reasonable
attorney’s fees, whether suit is actually filed or
not.

Entry by Landlord

     21. Landlord may post a sign stating that the
Premises are “For Lease” six (6) months prior to the
termination of this Lease or “For Sale” at any time
during the Initial Term or any renewal of this
Lease. Landlord may enter the Premises following
24-hours written notice to Tenant at reasonable
hours during the term of this Lease to exhibit same
to prospective purchasers, lenders or financial
partners, to make repairs required of Landlord under
the terms hereof, to make repairs to Landlord’s
adjoining property, if any, or to conduct reasonable
tests of the Premises but only to the extent the
foregoing do not unreasonably interfere with
Tenant’s operations or business, or cause Tenant any
material inconvenience.

Estoppel Certificates

     22. Landlord and Tenant each agrees to furnish to
the other, within ten (10) days following receipt of
a request, a written statement confirming (to the
extent true): (i) that the Lease is in full force
and effect and not amended or modified except as
disclosed; (ii) the relevant Commencement Date(s);
(iii) the Rent; and, (iv) that, to the knowledge of
the certifying party, no defaults exist under the
Lease.

     23. Intentionally Omitted.

Holding Over

     24. If Tenant remains in possession of the Premises
after expiration of the term hereof, with Landlord’s
acquiescence and without any express written
agreement of parties, Tenant shall be a
month-to-month tenant upon all the same terms and
conditions as contained in this Lease, except that
the rental rate shall become one and one-quarter
times the amount in effect at the end of the term of
this Lease, and there shall be no renewal of this
Lease by operation of law. Such month-to-month
tenancy shall be terminable upon thirty (30) days
notice by either party to the other. Tenant waives
any right that it may have to additional notice
pursuant to applicable law. If Tenant remains in
possession of the Premises after the expiration of
the term hereof without Landlord’s acquiescence,
Tenant shall be a tenant at sufferance subject to
immediate eviction. In such event, in addition to
paying Landlord any damages resulting from such
holdover, Tenant shall pay rental at the rate of one
and one-half times the amount in effect at the end
of the term of the Lease.

Miscellaneous

     25. All rights, powers and privileges conferred
hereunder upon parties hereto shall be cumulative
but not restrictive to those given by law. No
failure of Landlord or Tenant to exercise any power
given it hereunder, or to insist upon strict
compliance by the other party with its obligations
hereunder, and no custom or practice of the parties
at variance with the terms hereof shall constitute a
waiver of either party’s right to demand exact
compliance with the terms hereof. Time is of the
essence of this Lease. Subject to the terms of

- 16 -

 

paragraph 17 above, this Lease shall be binding upon
and shall inure to the benefit of the respective
successors and assigns of Landlord and Tenant.
Tenant shall pay and be liable for all rental, sales
and use taxes, and other similar taxes, if any,
levied or imposed by any city, state, county or
other governmental authority. Such taxes, when
possible or allowed, shall be paid directly by
Tenant to the taxing authority prior to any
delinquency. Such payments shall be paid
concurrently with the payment of Rent or other sums
due hereunder upon which the tax is based. This
Lease contains the entire agreement of the parties
hereto as to the Premises, and no representations,
inducements, promises or agreements, oral or
otherwise, between the parties, not embodied herein,
shall be of any force or effect. If any term,
covenant or condition of this Lease or the
application thereof to any person, entity or
circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the
application of such term, covenant or condition to
persons, entities or circumstances other than those
which or to which used may be held invalid or
unenforceable, shall not be affected thereby, and
each term, covenant or condition of this Lease shall
be valid and enforceable to the fullest extent
permitted by law. The circulation of one or more
drafts of this Lease shall not constitute a
reservation of the Premises or an offer to lease the
Premises to Tenant. Neither party shall be bound
hereunder until such time as both parties have
signed this Lease. Landlord covenants that on
paying the rent and performing the covenants herein
contained, Tenant shall peacefully and quietly have,
hold, and enjoy the Premises for the term. This
Lease shall be governed by the laws of the State of
Mississippi.

Notices

     26. Any notice given pursuant to this Lease shall be
in writing and sent by hand delivery, by facsimile
transmission or by reputable overnight courier to:

          (a) Landlord: Robert Pattillo Properties, Inc.,
2987 Clairmont Road, Suite 550, Atlanta, Georgia
30329; Facsimile Number: 404-235-3541, or at such
other address or to such other facsimile number as
Landlord may designate in writing to Tenant.

          (b) Tenant: Pottery Barn Inc. attn: Sr. Vice
President Distribution, 4300 Concorde, Memphis, TN
38118; Facsimile number (901) 546-6147, or at such
other address or to such other facsimile number as
Tenant may designate in writing to Landlord. Copy
to: William-Sonoma, Inc., 3250 Van Ness Avenue, San
Francisco, CA 94109, attn: General Counsel;
Facsimile number (415) 283-3627.

Any notice sent in the manner set forth above shall
be deemed sufficiently given for all purposes
hereunder and shall be deemed received upon receipt
if sent by hand delivery, on the next business day
after deposit, prepaid, with a reputable overnight
courier, or if sent by facsimile, on the date such
notice is transmitted, provided a copy of such
notice is sent within two (2) business days by
overnight delivery to the recipient’s address set
forth above.

Brokerage

     27. Landlord and Tenant each represents and warrants
to the other that it has not dealt with any broker,
agent or finder in connection with or regarding this
Lease, except for Bayard Snowden (“Snowden”) who has
represented Landlord and Wilkinson & Snowden
(“Tenant Broker”) who has represented Tenant.
Landlord will pay Snowden and Tenant Broker under a
separate agreement. Each of Landlord and Tenant
covenants and agrees to indemnify and hold the other
harmless from any and all loss, liability, damage,
claim, judgment, cost and expense (including without
limitation attorney’s fees and litigation costs)
that may be incurred or suffered by the other
because of any claim for any fee, commission or
similar compensation with respect to this Lease,
made by any broker, agent or finder claiming by,
through or under the indemnifying party, whether or
not such claim is meritorious.

Signs

     28. Tenant may erect a building sign on or about the
Premises subject to Landlord’s reasonable approval
of the sign and its location, and its

- 17 -

 

compliance
with any applicable governmental regulations or
laws. Prior to the expiration of the term of this
Lease, Tenant shall remove any such sign and repair
any damage to the Building occasioned by the
installation and/or removal of such sign.

Use of Premises

     29. The Premises may be used for warehousing and
distribution and any related or appurtenant purposes
allowed under applicable zoning laws and ordinances
(“Tenant’s Use”) and no other purpose. The Premises
shall not be used for any illegal purposes, nor in
any manner to create any nuisance or trespass,
vitiate Landlord’s insurance or violate any
restrictive covenants encumbering the building.
Outside storage or outside manufacturing are
prohibited without Landlord’s written consent, which
shall not be unreasonably withheld, conditioned or
delayed.

Insurance

     30. (a) Tenant will carry, at Tenant’s expense,
commercial property insurance that, at a minimum,
shall cover the perils under ISO special causes of
loss form (CP 10 30) on all equipment, inventory,
fixtures, furniture, appliances and other personal
property on the Premises. Tenant shall procure,
maintain and keep in full force and effect at all
times during the term of this Lease commercial
general liability insurance with respect to the
Premises and the conduct and operation of Tenant’s
business therein, naming Landlord as additional
insured and Landlord’s lender as mortgagee, with
limits of not less than $2,000,000.00 for death or
bodily injury to one or more persons in a single
occurrence and not less than $2,000,000 for property
damage. Such general liability insurance policy
shall contain a broad form contractual liability
endorsement covering Tenant’s indemnities in favor
of Landlord provided hereunder.

          (b) Landlord will carry, at Tenant’s expense (which
may not include any mark-up whatsoever) commercial
property insurance that, at a minimum, shall cover
the perils under the ISO special causes of loss form
(CP 10 30) in amounts equal to the replacement costs
(including demolition and debris removal) of the
Premises, and commercially reasonably available
insurance in such amounts as Landlord may reasonably
require against damages by such other hazards as any
mortgage lending institution holding a mortgage on
the Premises, or mortgage lending institutions
generally, may from time to time require in case of
similar properties; insurance against abatement or
loss of Rent in case of fire or other casualty
similarly insured against, in an amount at least
equal to the minimum Rent and taxes to be paid by
Tenant during the one year next ensuing as
reasonably determined by Landlord and broad form
Boiler and Machinery coverage on all equipment and
delivery systems for heat, cooling and water for the
Premises. Tenant shall pay to Landlord, as
Additional Rent, the amount of Landlord’s premium
within thirty (30) days of demand from Landlord.
Tenant’s obligation as to the payment of such
insurance premiums shall be apportioned on a per
diem basis for the years in which the Lease term
commences and terminates. Tenant may, at its
option, but not its obligation, elect to insure the
Premises under a policy obtained by Tenant for the
same limits and required coverage perils by giving
at least thirty (30) days prior written notice to
Landlord. If Tenant makes such election, Tenant’s
insurance coverage shall meet the requirements set
forth above. If Tenant makes such election,
Landlord and any mortgagee holding a security
interest in the Premises shall be named as
additional insureds under the insurance policy. The
insurance policies required to be maintained by
Tenant hereunder may be furnished by Tenant under
one or more blanket policies carried by Tenant, but
only if such blanket policies contain one or more
specific endorsements that (a) name Landlord and any
mortgagee as an additional insured, (b) reference
the Premises with particularity and guarantees a
minimum limit available for the Premises equal to
the insurance otherwise required for the
aforementioned “all risk” policy. All insurance
required to be carried by Tenant shall be effected
under enforceable policies issued by insurers rated
“A-/IX” or better as defined in the then current
edition of Best’s Insurance Reports (or the
equivalent thereof if Best’s Insurance Reports is no
longer published) and licensed to do business in

- 18 -

 

Mississippi. Tenant may rescind its election to
insure the Premises by giving at least thirty (30)
days written notice to Landlord. In the event
Tenant fails to procure, maintain, and/or pay for
the insurance required by this Lease, at the times
and for the duration specified in this Lease,
Landlord shall have the right, but not the
obligation, at any time and from time to time, and
without notice, to procure such insurance and/or to
pay the premiums for such insurance, in which event,
Tenant shall repay Landlord, immediately upon demand
by Landlord, all sums so paid by Landlord, and any
costs or expenses incurred by Landlord in connection
therewith, without prejudice to any other rights and
remedies of Landlord under this Lease.

Landlord shall procure, maintain and keep in full
force and effect at all times during the term of
this Lease commercial general liability insurance
with respect to the Premises and the conduct and
operation of Landlord’s business therein, naming
Tenant as additional insured, with limits of not
less than $2,000,000.00 for death or bodily injury
to one or more persons in a single occurrence and
not less than $2,000,000 for property damage. Such
general liability insurance policy shall contain a
broad form contractual liability endorsement
covering Landlord’s indemnities in favor of Tenant
provided hereunder.

          (c) To the full extent permitted by law, Landlord
and Tenant each waives all right of recovery against
the other and its officers, employees, and agents
for, and agrees to release the other and its
officers, employees and agents from liability for,
loss or damage to the extent such loss or damage is
covered by valid and collectible insurance in effect
at the time of such loss or damage; provided,
however, that the foregoing release by each party is
conditioned upon the releasing party’s insurer
endorsing the releasing party’s insurance policy so
as to permit such waiver without affecting the
coverage thereunder. If such endorsement is not
obtained or maintained by either party, then such
party’s release shall be deemed to be rescinded
until such endorsement is provided by such insurer.

          (d) All insurance required to be carried by Landlord
and Tenant shall be effected under enforceable
policies issued by insurers reasonably approved by
the other party. Landlord and Tenant may utilize
reasonable deductibles given their size and
financial stability. Both parties will be
responsible to pay any loss amount that lies within
their deductible, up to the maximum amount of the
deductible. At least fifteen (15) days prior to the
expiration date of any policy procured by Landlord
or Tenant, the certificate of insurance for such
insurance shall be delivered by the other party.
Within fifteen (15) days after the premium on any
such policy shall become due and payable, the
non-carrying party shall be furnished with
satisfactory evidence of its payment. All such
policies shall contain an agreement by the insurers
that such policies shall not be canceled or
materially modified without at least thirty (30)
days (except ten (10) days for non-payment of
premium) prior written notice to the other party
and, where applicable, to the holder of any mortgage
to whom loss hereunder may be payable. If any
insurance required by this Lease is in the form of a
blanket policy, the insurance will comply in all
respects with the provisions of this Lease and the
coverage thereunder shall be at least equal to the
coverage which would be provided under a separate
policy covering only the Premises.

Ad Valorem Taxes

     31. Tenant shall pay, as Additional Rent, all ad
valorem real estate taxes and assessments assessed
or levied against the Premises for full taxable
years within the Lease term and shall pay a per diem
apportionment thereof for the years in which the
Lease commences and terminates. Tenant shall remit
such amounts to Landlord on the later of (a) thirty
(30) days after notice (along with a legible copy of
the tax bill from the taxing authority) from
Landlord of such amount; or (b) ten days prior to
delinquency thereof. So long as Tenant remits such
amounts as provided in the preceding sentence,
Tenant shall not be liable for any penalties for
late payment. Any and all reductions, abatements or
inducement arranged by or on behalf of

- 19 -

 

Tenant shall
inure to the benefit of Tenant. Notwithstanding the
foregoing in this Paragraph 31, Tenant shall have
the right to contest or review all ad valorem taxes
by legal proceedings (including appropriate
certiorari proceedings and appeals from orders
therein and appeals from any judgments, decrees or
orders), or in such other manner as it may deem
suitable provided that, as a condition to such
action, Tenant shall pay such taxes to Landlord
under protest and shall take such other action as
Landlord may reasonably require to ensure that no
liens will be placed on the Premises. If Tenant
institutes such proceedings, Tenant shall conduct
the same promptly at its own cost and expense and
free of any expense or liability to Landlord and, if
necessary, in the name of Landlord. Landlord agrees
to cooperate with Tenant, so long as such
cooperation does not involve or result in Landlord
incurring any expense, obligation or liability, and
Landlord agrees to execute all reasonable documents
necessary to accomplish the foregoing. Tenant shall
indemnify, hold harmless and defend Landlord from
any liability for such taxes or interest or
penalties caused by or resulting from such contest.
In the event of any reduction, cancellation or
discharge, Tenant shall pay the amount finally
levied to be due and payable on any such contested
real property taxes. In the event that a refund is
obtained for any taxes for which Tenant previously
reimbursed Landlord, Landlord shall promptly pay
Tenant such refund.

Exhibits

     32. The following exhibits are attached hereto and
made a part hereof:

	 	 	 
	Exhibit A

	 	Legal Description
	Exhibit A-1

	 	Cell One Premises, Cell Two Premises and
Cell Three Premises
	Exhibit B

	 	Landlord’s Cell One Work, Landlord’s Cell
Two Work and Landlord’s Cell Three Work
	Exhibit C

	 	Allowed Hazardous Materials
	Exhibit D

	 	Form of Guaranty
	Exhibit E

	 	Location of Driveway
	Exhibit F

	 	Form of SNDA

Representations

     33. Landlord represents and warrant to Tenant that,
as of the date of this Lease, and as of each
Commencement Date (with the representations and
warranties at that time then being limited only to
the Cell then being commenced under this Lease):
(a) Landlord has the power and authority to enter
into, and fulfill its duties and obligations under
this Lease, and is authorized to execute and deliver
this Lease; (b) Landlord holds fee simple title to
the Premises subject only to the Permitted
Exceptions; (c) the Premises and the Building
Systems are in good, workmanlike and new condition,
and materially are free from defects; (d) the
Premises complies with all Laws, including but not
limited to Environmental Laws; (e) the Premises and
warehouse/distribution use complies with all
applicable zoning and planning ordinances, the
Premises are currently zoned M-1 and complies with
any applicable private land use restrictions,
regulations, or requirements and does not vitiate
Landlord’s insurance; (f) all utilities are
connected to the Premises over existing easements or
rights-of-way; (g) the Premises is open to public
rights-of-way.

Attorney’s Fees

     34. In any action or arbitration between Landlord
and Tenant regarding or relating to this Lease, the
prevailing party’s reasonable attorney’s fees and
costs shall be paid by the non-prevailing party.

Building Addition

     35. Tenant acknowledges that Landlord may elect, at
its option, to construct an addition to the Cell Two
Premises in the area covered by the Cell Three
Premises, regardless of whether Tenant exercises its
Expansion Option or not. Any such construction by
Landlord prior to the time that the Expansion Option
has expired shall not in any way alter or diminish
Tenant’s rights under such Expansion Option. In the
event Landlord does so construct the addition, then
Tenant acknowledges and agrees that the addition
will

- 20 -

 

have a shared wall with the demising wall at
the north end of the Cell Two Premises and that
Landlord shall have the right, at no expense to
Tenant, to tie the ESFR system serving such addition
into the ESFR system serving the Cell One Premises
and the Cell Two Premises. Landlord agrees that the
construction of any such addition shall not
unreasonably interfere with Tenant’s use or access
to the Premises.

Guaranty

     36. As a material inducement for Landlord to enter
into this Lease, Tenant has agreed to obtain and
provide Landlord with a guaranty of the obligations
hereunder from Williams-Sonoma, Inc. in the form of
the Guaranty attached hereto as EXHIBIT “D”.

     IN WITNESS WHEREOF, the parties have hereunto set their hands and seals,
effective the day and year first above written.

LANDLORD:

ROBERT PATTILLO PROPERTIES, INC.,

a Georgia corporation

By: /s/
David Wald

Title:
Vice President

By:
/s/ J. H. Topple

Title:
Vice President

        (Corp. Seal)

TENANT:

POTTERY BARN, INC.,

a California corporation

By: /s/ ED MUELLER

Witness:
/s/ KATHLEEN MCCARTHY

Title: Chief Executive Officer

(Corp. Seal)

- 21 -

 

Exhibit A

Legal Description

Lot 4, Olive Branch Distribution Center, Phase I, in Sections 13 and 24,
Township 1 South, Range 6 West, City of Olive Branch, DeSoto County,
Mississippi, as shown by plat appearing of record in Plat Book 74, Pages
42-43, in the office of the Chancery Clerk of DeSoto County, Mississippi.

 

 

Exhibit A-1

Cell One Premises, Cell Two Premises and Cell Three Premises

 

 

 

 

Exhibit B

Landlord’s Cell One Work, Landlord’s

Cell Two Work and Landlord’s Cell Three Work

Facility Improvement

Specifications

For

Williams-Sonoma Inc.

Olive Branch Distribution Center

Olive Branch, MS.

Robert Pattillo Properties

Olive Branch, MS.

November 17, 2003

 

II.INDEX

	 	 	 	 	 
	SECTION
	 	PAGE

	1 - General Requirements
	 	 	1	 
	2 - Site Work
	 	 	2	 
	3 - Concrete
	 	 	3	 
	4 - Masonry
	 	 	3	 
	5 - Metals
	 	 	3	 
	6 - Carpentry
	 	 	4	 
	7 - Thermal and Moisture Protection
	 	 	4	 
	8 - Doors, Windows and Hardware
	 	 	4	 
	9 - Finishes
	 	 	4	 
	10 - Specialties
	 	 	4	 
	11 - Dock Equipment
	 	 	4	 
	12 - Mechanical
	 	 	5	 
	13 - Electrical
	 	 	5	 
	14 – Exterior Finishes
	 	 	6	 
	15 – Exclusions and Clarifications
	 	 	6	 

 

1 - GENERAL REQUIREMENTS (SHELL/EXPANSION)

	1.1	 	Summary of the Work

	A.	 	The work includes the completion of the 416,000 square foot
building and an addition of 364,000 square feet. The building shell
and expansion will be constructed of load-bearing, painted, concrete
tilt wall panels, interior steel columns, steel joists and girders,
metal roof deck and a single-ply membrane 45 mil EPDM roof. The
Building expansion will meet the quality and specifications of the
existing 416,000 square foot portion of the building.

	1.2	 	Building Features

	 	 	 
	A. Total building footprint

	 	780,000 square feet (520 x 1500)
	 
	B. Existing building shell: (520 x 800)

	 	416,000 SF Structure (Cell 1) (520’ x 800’)
	 
	C. Building Expansion

	 	364,000 (Cell 2) – (520’ x 700’)
	 
	D. Office Areas

	 	8,000 square feet in Cell 1 and 8,000 square feet in Cell 2
	 
	E. Clear Height:

	 	36’ under the bar joist
	 
	F. Typical Bay:

	 	50’ x 50’ (60’ staging loading dock bays)
	 
	G. Concrete Floor Slab:

	 	7”
	 
	H. Car Parking:

	 	222 spaces (9’ x 18’)
	 
	I. Trailer Parking:

	 	212 spaces in the truck courts
	 
	J. Electrical Service:

	 	480/277 Volt
	 
	K. Fire Sprinkler System

	 	ESFR, K-14 heads in Cell 1 and K-25 heads in Cell 2
	 
	L. Drive-in Doors:

	 	Two 12’ x 14’ in Cell 1
	 
	M. Dock Door Positions

	 	Cell 1 – 83, 9’ x 10’, Cell 2 – 84, 9’x10’
	 
	N. Dock Packages

	 	Dock Packages include seals, levelers, lights and locks

	1.3	 	Design Criteria

	 	 	The building will be designed in accordance with these Outline Specifications.

	1.4	 	General

	A.	 	All material will be new and of good quality. All work will
be performed in a professional, workmanlike manner in accordance
with good and generally accepted practices.
	 
	B.	 	The site will be presented to the Tenant free of all rubbish
and the building slab area left in broom clean condition.

2 - SITE WORK

	2.1	 	Paving and Surfacing

	A.	 	Car parking (6” soil cement, with 3” asphalt) and truck
maneuvering areas (10” soil cement, with 5” asphalt).
	 
	B.	 	Concrete paving (60’) for the dolly pads will be 6” thick
4,000-psi concrete reinforced.
	 
	C.	 	Handicap parking stalls will be provided as required by local
codes.
	 
	D.	 	Parking for 222 cars (9’ x 18’ stalls).

	2.2	 	Site Utilities

	A.	 	Storm run-off will sheet drain across the paved areas to the
surface drainage ditches. Roof run-off will be collected by gutters
and downspouts and deposited on grade.
	 
	B.	 	Sanitary sewers will be provided to service the office and
toilet room areas from the existing sanitary sewer line to the
building.
	 
	C.	 	Fire service line will be provided from the property line to
within the building fire pump room.
	 
	D.	 	Domestic water service line will be provided from the
property line to within the proposed building and to all points of
use.

	E.	 	Electrical and telephone service will be brought underground
to the center of the South elevation.
	 
	F.	 	Exterior wall pack lighting is provided.

	2.3	 	Landscaping

	A.	 	Seed, sod, trees, shrubs, plantings and irrigation are
provided as required by the Industrial Park Developers and the City
of Olive Branch.
	 
	B.	 	6’ high chain link fencing will be provided around each truck
court with one motorized gate at each side.

3 - CONCRETE

	3.1	 	Footings and Foundations

	A.	 	The building expansion foundations and columns will be
supported by continuous and spread footings bearing on engineered
fill, as approved by the soils engineer.
	 
	B.	 	Concrete footings, grade beams and foundation walls will be
reinforced with grade 60 reinforcing steel.

	3.2	 	Concrete Slabs

	A.	 	The floor slab will be a 7” nominal thickness, 4000 p.s.i.
concrete slab. Sawed 1/8” wide, control joists will be provided on
a grid pattern. FF60/FL40 average, minimum local values FF30/FL20.
6” soil cement is the sub-base of the slab on grade.
	 
	B.	 	3/4” diameter dowels will be installed 24” o.c. in all
construction joints.
	 
	C.	 	Lapidolith sealer is provided.

	3.3	 	Tilt-Up Wall Panels (Expansion)

	A.	 	The perimeter walls will be load-bearing, 91⁄4” thick,
tilt-up panels. The panels will extend from the continuous footer
to the joist bearing elevation.

 

     B. The panels will be manufactured on the floor slabs and tilted
into place from outside of the building.

	C.	 	The panels will be grouted in place using a mixture of
Portland Cement and sand.
	 
	D.	 	The end wall of Cell 1 will consist of metal wall panels
(without plywood wainscot); Cell 2 end wall will be tilt up
concrete. The Cell 1 end wall will be removed when construction of
Cell 2 is complete.

4 – MASONRY

	 	 	An 8” concrete block pump and electrical room is provided.

5 - METALS

	5.1	 	Structural Steel

	A.	 	Structural steel will be ASTM A36 or A572 fabricated and
erected in accordance with the latest American Institute of Steel
Construction Specifications. All structural steel will have a shop
coat of gray primer. Touch-up painting is included for steel, joist
or deck.
	 
	B.	 	Steel in East staging bay of Cell 2 will support the 6500#’s
per 10’ as shown on the Shoe Sorter Loading diagram furnished by
Tenant.

	5.2	 	Bolts and Bracing

	A.	 	Steel connectors will be A325 high strength bolts.

	5.3	 	Steel Joist

	A.	 	Joists will be open web bar joist (Series “K”), manufactured
in accordance with the specifications of the Steel Joist Institute.
	 
	B.	 	The bay spacing will be 50’ x 50’ typically. (50’ x 60’
staging loading dock bays)

	5.4	 	Steel Deck

	A.	 	Roof deck will be 1 1/2”, 22 gauge, Type B with white primer
on one side manufactured in accordance with the Steel Deck Institute
Specifications.
	 
	B.	 	All deck will be installed and attached in accordance with
the engineer’s specifications.

	5.5	 	Miscellaneous Steel

	A.	 	Steel emergency exit stairs are included as required by code.

6 - CARPENTRY

	6.1	 	Blocking

	A.	 	Roof blocking will be treated as required.

7 - THERMAL AND MOISTURE PROTECTION

	7.1	 	Roofing

	A.	 	The roofing membrane will be a loose laid single layer of 45
mil EPDM unreinforced ballasted system.
	 
	B.	 	Insulation will be Polyisocyanurate foam insulation board
(R-19).
	 
	C.	 	Flashings will be a prefinished metal (24 Gauge). All details
will comply with the manufacturer’s requirements.

	7.2	 	Caulking and Sealants

	A.	 	Caulking will be one part polyurethane Dymonic as
manufactured by Tremco or equal. Color will be similar to the
adjacent material.
	 
	B.	 	Panel joints will be caulked on the exterior face of all
panel joints.

8 - DOORS, WINDOWS AND HARDWARE

	8.1	 	Hollow Metal Door Frames

	A.	 	Hollow metal doorframes will be 16 gauge frames and will be
welded as manufactured by Ceco or equal.
	 
	B.	 	All materials, construction, and installation will conform
with the Steel Door Institute Specifications.
	 
	C.	 	Glazed window openings are provided and installed to match existing.

9 - FINISHES

	9.1	 	Painting

	A.	 	The exterior surfaces of the concrete wall panels will be
painted with a (2) color paint scheme. (Cell 2 will match the Cell 1
scheme). The paint will be a one-coat system. Interior painting of
the concrete wall panels is provided with white painting.
	 
	B.	 	All exposed metals will receive two coats of enamel paint.
	 
	C.	 	All Interior columns will be painted white.

10 – SPECIALTIES

	A.	 	A guardhouse allowance of $35,000 is included in Cell 1; this
is to include guardhouse, plumbing, electrical, conduit for data and
access control.

11 - DOCK EQUIPMENT

	11.1	 	Overhead Doors

	A.	 	Eighty three (83) 9’-0” x 10’-0” uninsulated sectional doors
in Cell 1; eight-four (84) in Cell 2.
	 
	B.	 	Overhead door tracks will be guarded by track guards.
	 
	C.	 	Two (2) 12’-0” x 14’-0” high drive-in doors in Cell 1.

	11.2	 	Dock Equipment

	A.	 	Dock levelers are 30,000 lb mechanical (Kelly model CM7x8-30)
	 
	B.	 	Dock seals at each dock leveler location (Weather All model
WSH-100)
	 
	C.	 	Dock Lights at each dock leveler location (APS Resource model
K-1040)
	 
	D.	 	Dock lock at each dock leveler location (Kelly model Star 4)
	 
	E.	 	Dock packages on Cell 2 will be of equal quality.

 

12 - MECHANICAL

	12.1	 	Plumbing

	A.	 	A single sanitary sewer line and domestic water line will run
to the building and all points of use.
	 
	B.	 	The domestic water piping will be above grade and provided to
all points of use.
	 
	C.	 	Domestic water, storm sewer, and sanitary sewer will be
provided from the local utility service locations to the building.
	 
	D.	 	Gas is provided from the local utility tie-in to the
buildings. Gas distribution piping, valves, and equipment is
provided to all gas-fire equipment, in accordance with the
appropriate edition of the Mississippi Mechanical code and NFPA

	12.2	 	Fire Protection

	A.	 	A complete hydraulically calculated wet pipe ESFR sprinkler
system will be provided per NFPA guidelines throughout the Building.
	 
	B.	 	K-14 sprinkler heads are utilized in Cell 1, K-25 heads will
be utilized in Cell 2.
	 
	C.	 	The entire facility including the loading dock will be fully
sprinkled in accordance with applicable publications of NFPA.
	 
	D.	 	ESFR sprinklers will be designed based on the operation of 12
heads, with a minimum 25 psi. end head pressure plus a 250 gpm hose
stream allowance. The layout of the sprinkler systems will be
closely coordinated with the structural, lighting, and mechanical
layouts to prevent obstructions to the ESFR heads.
	 
	E.	 	Entire system will be designed, fabricated, installed,
tested, and approved in accordance with the appropriate editions of
the Mississippi building code, NFPA-13.
	 
	F.	 	Complete shop drawings and hydraulic calculations will be
submitted for approval.

	12.3	 	Heating and Air Conditioning

	A.	 	Main warehouse will be heated to maintain a minimum
temperature of 45° F at 0° F utilizing Cambridge heaters and
ventilated to provide six (6) air changes per hour.
	 
	B.	 	Gas piping will be installed below deck

13 - ELECTRICAL

	13.1	 	Service

	A.	 	Service to building will be underground. The power
transformers will be sized and installed by the local utility
company.
	 
	B.	 	An electrical system and the utility service will be sized
for the square footage specified for the facility. Electrical
service for Cell 2 will be minimum 3000amp. The main switchboard
will provide space for future feeders to serve the indicated future
warehousing activities. The service voltage is 480/277, 3-phase,
4-wire, 60 cycles.

	13.2	 	Power Wiring

	A.	 	Electrical distribution beyond the office and general
warehouse requirements are not included.
	 
	B.	 	There is no power distribution for tenant furnished equipment
included.
	 
	C.	 	A $20,000 electrical allowance for Cell 1 and 2 is
included.

	13.3	 	Lighting

	A.	 	Light fixtures will be 1000 watt metal halide high bay.
	 
	B.	 	All warehouse and exterior lighting will be 480V.

	a)	 	40-foot candles at 30 inches above floor in open areas,
25-foot candles in aisles.
	 
	b)	 	Mechanical/Electrical Rooms - Fluorescent strip
fixtures with T-8 lamps and electronic ballasts as required.

	C.	 	Light fixtures to be Metalux, Lithonia or equal.
	 
	D.	 	Warehouse lighting will be zoned and controlled from the
switch gear location.
	 
	E.	 	The exterior lighting will be controlled by a 24 hour time
switch with auxiliary relay and manual/off/automatic selector
switch. System to be energized and de-energized by photoelectric
control.
	 
	F.	 	Exit and egress lighting is provided as required by code.
	 
	G.	 	Site lighting for parking, employee safety, security and
operations is provided per code.
	 
	H.	 	All roof-mounted equipment will be equipped with receptacles.
Receptacles to be GFI type.
	 
	I.	 	Electrical service will be provided for a Battery Charger
Station (60) to be located on the South wall; this area will not
include epoxy flooring.

	13.4	 	Telephone and Cable

	A.	 	Telephone service entrance and spare conduit (two conduits
total) will be provided from the property line to the electrical
room.
	 
	B.	 	No telephone wiring, security, fire alarm, data or phone
system is included.
	 
	C.	 	Provisions for cable are not included.

14 - EXTERIOR FINISHES

	14.1	 	Finishes

	A.	 	Panels to be painted (2 Colors).
	 
	B.	 	Exterior hollow metal doors to match exterior panel paint
scheme.
	 
	C.	 	Overhead doors will be pre-finished per manufacturer standard
colors. The factory finish will match the building color scheme.

 

	 	 	15- EXCLUSIONS AND CLARIFICATIONS

15.1 Items not included in The Developer’s scope of work

	A.	 	Signage.
	 
	B.	 	Screen for pad-mounted transformer.
	 
	C.	 	Pay telephones, Telephone equipment and/or receptacles and wiring.
	 
	D.	 	Kitchen appliances or vending machines.
	 
	E.	 	Skylights.
	 
	F.	 	Fire alarm or security systems or conduit for same.
	 
	G.	 	Emergency engine generator or uninterrupted power supply (UPS) systems.
	 
	H.	 	Smoke vents or draft curtains.
	 
	I.	 	Flagpoles.
	 
	J.	 	Air compressor and air lines.
	 
	K.	 	Electrical secondary service and connections beyond general
warehouse requirements outlined in outline specification.
	 
	L.	 	Racking.
	 
	M.	 	Battery chargers. (Electrical service provided)
	 
	N.	 	Factory Mutual or Special Tenant insurance Underwriter
requirements outside NFPA.
	 
	O.	 	Mezzanine of any type

 

Tenant Office Improvement Specifications

8,000sf Main Office Area

November 17, 2003

 

 

1 - GENERAL REQUIREMENTS

	1.1	 	Summary of the Work

	A.	 	The work includes the construction of (1) Main Office (8,000
sf)
	 
	B.	 	Office Square Footage: 8,000 sf shall be designed for general
office with reception area, offices, conference room, open area for
cubicles, phone room, storage, janitor closet, break room and
restrooms for male and female.

	1.2	 	Building Office & Warehouse Features

	 	 	 
	A. Column Spacing

	 	50’ x 50’
	B. Main Office

	 	8,000 sf on Grade

2 - TENANT OFFICE AND WAREHOUSE FINISHES – GENERAL SPECIFICATION

	2.1	 	Partition

	A.	 	Main office exterior walls shall extend approximately 12’0”
high, shall be taped and spotted and painted on one (1) side only.
Partitions shall be constructed of 3 5/8” metal studs on 24” centers
and covered with 1/2” drywall to 10’0” on the office side and full
height on the warehouse side.
	 
	B.	 	Interior partitions are to consist of a minimum of three and
five-eighths inch (3 5/8”) metal stud construction with minimum
1/2-inch thick Gypsum wallboard on both sides floor to ceiling.
Partitions to be taped, and painted with two (2) coats of semi-glass
paint.
	 
	C.	 	Partitions common to the Main Office and warehouse space
shall be insulated with R-19 fiberglass insulation. Partitions
surrounding restrooms and conference rooms shall be insulated with
same.
	 
	D.	 	The conference room will be sized to accommodate 12 people.

	2.2	 	Doors, Frames and Hardware

	A.	 	Interior office doors shall be 3’0” x
7’0” x 13⁄4”
solid-core birch in hollow metal knock-down frames with Schlage “D”
series hardware or equal, and include glass view panel. Offices shall
be individually keyed with master key access.
	 
	B.	 	Each room/office shall have one entrance door with the
exception of the offices adjoining the warehouse which will have
doors into the office space and into the warehouse. Offices adjoining
the warehouse shall also have a 3’ x 3’ plate glass viewing
window into the warehouse. The
conference room will have two doors.
	 
	C.	 	The following list of finish hardware is included as
required:

	 	 	 	 	 	 	 
	•

	 	Lock Sets
	 	•
	 	Closers
	 
	•

	 	Passage Sets
	 	•
	 	Standard Hinges
	 
	•

	 	Privacy Sets
	 	•
	 	Floor Stops

	2.3	 	Acoustical Ceilings

	A.	 	A total of 8,000 square feet of suspended, standard 2’x4’
acoustical ceiling tiles and grid are included for the Main Office.
Ceiling shall be continuous, except for bathrooms and conference
rooms which walls will extend 1’ above ceiling.
	 
	B.	 	The suspended ceiling shall be insulated as needed with 6”
fiberglass batts.
	 
	C.	 	Ceilings in the office to be suspended lay-in ceilings, ten
feet (9’) above finished floor, with new Armstrong or equal
acoustical “I” bar suspended ceiling.

	2.4	 	Painting and Staining (Colors selected by Tenant)

	A.	 	Birch doors shall be field stained and varnished or painted.
	 
	B.	 	Hollow metal door frames shall receive two (2) coats of enamel paint.
	 
	C.	 	Office drywall partitions shall receive two (2) coats of flat latex
paint.
	 
	D.	 	Restroom walls shall receive three (3) coats of washable
semi-gloss paint.

	2.5	 	Floor Coverings (Colors selected by Tenant)

	A.	 	Furnish and install carpet, type, and color to be selected by
Tenant in general office area . Carpet will be minimum twenty-six
(26) ounce level loop and is to be furnished and installed.
(Allowance $12.00 SY)
	 
	B.	 	VCT is provided in the break room, phone room, locker room,
bathrooms, employee entrance, janitor room and reception area.
	 
	C.	 	Vinyl base shall be provided through out the Main Office
area.

	2.6	 	Exterior Glazing

	A.	 	Two (2) entrance doors are provided at main office entrance.
	 
	B.	 	Two (2) entrance doors are provided at employee entrance.
	 
	B.	 	Provide mini-blinds at all exterior office windows.

	2.7	 	Restrooms & Casework

	A.	 	Restrooms are sized and equipped to service the handicapped
as needed.
	 
	B.	 	Toilet accessories include paper towel dispensers (will be
provided by WS vendors), toilet
paper holders, mirror and grab bars.
	 
	C.	 	Toilet partitions shall be provided and will be floor mounted
and overhead braced with a baked enamel finish.
	 
	D.	 	An allowance has been included for base and wall cabinets in
the Break Room and vanity in both the Men’s and Women’s restrooms.
Also there is a base and wall cabinet in the Nurse’s room and a
countertop in the janitor’s room. All cabinetry shall be plastic
laminate.

	2.8	 	Plumbing/Sprinkler System

	A.	 	The plumbing fixtures as needed are included:

 

	 	 	 	 	 	 	 
	•

	 	Lavatories
	 	•
	 	Drinking Fountain
	 
	•

	 	Handicapped Toilets
	 	•
	 	Break Room Sink (2)
	 
	•

	 	Standard Toilets (American Standard)
	 	•
	 	Urinal
	 
	•

	 	Water Heater
	 	•
	 	Icemaker Hook-up
	 
	•

	 	Janitor mop Sink	 	 	 	 

	B.	 	Provide separate restrooms for male and female personnel.
Restrooms to be constructed to code
per handicapped requirements and fixtures to meet code requirements,
per employee counts given (100-Cell1, 100-Cell 2).

	2.9	 	HVAC

	A.	 	Office and break room to be heated and cooled with
roof-mounted equipment. Exhaust fans are to be included for all
bathrooms.
	 
	B.	 	Air Conditioning condensers shall be located on the roof.
	 
	C.	 	HVAC system shall maintain 70° F in the summer and 72° in the
winter. HVAC controls include a seven day time clock with day-night
set back controls. Locking covers are provided. The general office
area shall be on a separate system from the drivers receiving and
lounge area.

	2.10	 	Electric and Lighting

	A.	 	Provide electrical service to office as needed for 8000 sf.

	 
	B.	 	
Electrical fixtures and devices shall be provided as needed:

	•	 	2’x4’ parabolic fixtures with T8 lamps have been
included in the Lobby and Conference
areas. Standard prismatic lenses shall be used in all other areas.
	 
	•	 	Exit and emergency lighting as required.
	 
	•	 	Switching as required.
	 
	•	 	General purpose receptacles.
	 
	•	 	Dedicated receptacles for vending machines and copiers.

	•	 	6 microwaves - each one is 110 volts and each one will pull 11 amps
	 
	•	 	1 Coffee Dispenser - 110 volt and pulls 16 amps
	 
	•	 	3 drink machines - each one is 110 volts and each one will pull 12 amps
	 
	•	 	1 sandwich machine - 110 volts and it will pull 16 amps
	 
	•	 	2 snack machines - 110 volts each and each will pull 3 amps
	 
	•	 	1 ice machine - 110 volts and it will pull 13 amps
	 
	•	 	Voice/data rough-in, which includes junction
box set in the wall, with conduit and pullstring to above the
ceiling.
	 
	•	 	Down lighting and dimmer for conference room.
	 
	•	 	480 volt feeders to roof-top equipment.

3- EXCLUSIONS AND CLARIFICATIONS

	3.1	 	Services/Signs
	 
	 	 	Fire Alarms System and security monitoring system is by Tenant.

	3.2	 	Provided by tenant if required

	A.	 	Additional signage for building or offices.
	 
	B.	 	Telephone equipment and/or receptacles and wiring.
	 
	C.	 	Vending Equipment. (Ice maker, microwave, disposal and dish
washer to be installed by Tenant)
	 
	D.	 	Interior color selection.
	 
	E.	 	Furniture and lockers
	 
	F.	 	Security systems or conduit for same.
	 
	G.	 	Emergency engine generator or UPS System.
	 
	H.	 	Electrical secondary service and connections beyond office
requirements outlined here-in.
	 
	I.	 	Flagpoles.
	 
	J.	 	Vinyl wall-covering and ceramic tile
	 
	K.	 	Folding Partitions.
	 
	L.	 	Mezzanine.
	 
	L.	 	Leibert units or special heating and cooling of computer room.

 

Exhibit C

Allowed Hazardous Materials

None

 

 

Exhibit D

Form of Guaranty

     The undersigned, WILLIAMS-SONOMA, INC., a California corporation
(“Guarantor”), as a material and necessary inducement to ROBERT PATTILLO
PROPERTIES, INC., a Georgia corporation (“Landlord”), to enter into that
certain Standard Industrial Lease Agreement (the “Lease”) dated as of even date
herewith with POTTERY BARN, INC., a California corporation (“Tenant”), for that
certain real property as more particularly described in the Lease (the
"Property”), hereby agrees as follows:

     1. Guarantor hereby unconditionally and irrevocably guarantees to
Landlord:

          (a) the payment when due of all costs, expenses, fees, rents and other
sums payable by Tenant under the Lease and the full, faithful and prompt
performance when due of each and every one of the terms, conditions and
covenants to be kept and performed by Tenant under the Lease, including,
without limitation, any and all (i) indemnification and insurance obligations,
(ii) obligations to operate, rebuild, restore or replace the Property or any
facilities or improvements now or hereafter constituting a portion of the
Property, and (iii) obligations of the Tenant under the Lease resulting from
the exercise of any renewal or expansion option under the Lease; and

          (b) the payment, on demand, of any fees, costs and charges of enforcement
of the Lease, and the preservation and protection of Property and collateral
from Tenant, if any, which would be owing by Tenant under clause (a) above, but
for the effect of the federal Bankruptcy Code or any other state or local
debtor relief law.

The foregoing obligations are hereafter collectively referred to as the
"Guaranteed Obligations.” The Guaranteed Obligations shall not be reduced by
any payments or performance made by any other guarantor or surety, the
retention or receipt of any collateral, letter of credit or bond securing or
otherwise supporting the Guaranteed Obligations, or the receipt of any
collateral, letter of credit or bond securing or otherwise supporting the
Guaranteed Obligations, or the receipt of any proceeds thereof. In the event
of the failure of Tenant to pay or perform any of the Guaranteed Obligations
when due, Guarantor shall forthwith pay or perform the same, as applicable, and
pay all damages that may result from the non-payment or non-performance thereof
to the full extent provided under the Lease. Guarantor acknowledges that the
Guaranteed Obligations may exceed the payment or performance obligations of
Tenant under the Lease. Payment by Guarantor shall be made to Landlord in
immediately available federal funds to an account designated by Landlord.

     2. Guarantor represents, warrants and covenants that:

          (a) Guarantor has full power, authority and legal right to execute and to
deliver and to perform and observe the obligations and provisions of this
Guaranty;

 

 

          (b) this Guaranty has been duly executed and delivered by Guarantor, and
constitutes the valid and binding obligation of Guarantor, enforceable against
Guarantor in accordance with its terms;

          (c) Guarantor is solvent, has timely and accurately filed all tax returns
required to be filed by it and is not in default in the payment of any taxes
levied or assessed against it or any of its assets, or subject to any judgment,
audit, order, decree, rule or regulation of any governmental authority which
would, in each case or in the aggregate, adversely affect Guarantor’s financial
condition; and

          (d) no consent, approval or other authorization of, or registration,
declaration or filing with, any person or entity is required for the due
execution and delivery by Guarantor of this Guaranty, or for the performance by
or the validity or enforceability hereof against Guarantor, other than such
consents, approvals, authorizations, registration, declarations, or filings
that have previously been obtained or made.

     3. Guarantor hereby unconditionally and irrevocably indemnifies, protects
and agrees to defend and hold harmless Landlord from and against, and agrees to
reimburse Landlord for, any and all loss, cost or expense (including any and
all first-party losses, costs or expenses), including costs and reasonable
legal fees, arising from the breach or violation of any representation or
warranty of Guarantor hereunder.

     4. In such manner, upon such terms and at such times as Landlord in its
sole discretion deems necessary or expedient, and without notice to or consent
by Guarantor, which notice and consent are hereby expressly waived by
Guarantor, Landlord may do or perform any of the following: (a) alter,
compromise, accelerate, extend or change the time or manner for the payment or
the performance of any Guaranteed Obligation; (b) extend, amend or terminate
the Lease; (c) release Tenant by consent to any assignment (or otherwise) as to
all or any portion of the Guaranteed Obligations; (d) release, substitute or
add any one or more guarantors, tenants or other obligors; (e) accept
additional or substituted security for any Guaranteed Obligation; (f) if
Landlord shall recover possession of the Property by summary proceedings or
otherwise, Landlord at its option may repair, subdivide, alter or change the
character of the Property from time to time as Landlord may deem appropriate,
and may relet the Property or any part thereof for the whole or any part of the
balance of the original term of the Lease and for such rent and upon other
terms and conditions as Landlord may determine; (g) release or subordinate any
security for any Guaranteed Obligation; and (h) Landlord may otherwise deal
with Tenant or any other guarantor or any security or collateral held by
Landlord as Landlord may determine in its sole and absolute discretion. No
exercise or non-exercise by Landlord of any right hereby given Landlord, no
neglect or delay in connection with exercising any such right, no dealing by
Landlord with Tenant, any other guarantor or any other person, and no change,
impairment, release or suspension of any right or remedy of Landlord against
any person, including Tenant and any other guarantor or other person, shall in
any way affect any of the obligations of Guarantor hereunder or any security
furnished by Guarantor or give Guarantor any recourse or right of offset
against Landlord. If Landlord has exculpated Tenant from liability in whole or
in part

2

 

and/or
agreed to look solely to any security for the Guaranteed Obligations or
any other asset for the satisfaction of the Guaranteed Obligations, such
exculpation and/or agreement shall not affect the obligations of Guarantor
hereunder, it being understood that Guarantor’s obligations hereunder are
independent of the obligations of Tenant or any other guarantor, and are to be
construed as if no such exculpation or agreement had been given to Tenant or
any other guarantor. It is further understood and agreed that if any such
exculpation or agreement has been or at any time hereafter is given to Tenant
or any other guarantor, Landlord has done or will do so in reliance upon the
agreement of Guarantor expressed herein.

     5. Guarantor hereby waives and relinquishes all rights and remedies
accorded by applicable law to sureties and/or guarantors or any other
accommodation parties, under any statutory provision, common law or any other
provision of law, custom or practice, and agrees not to assert or take
advantage of any such rights or remedies, including, without limitation, (a)
any right to require Landlord to proceed against Tenant, any other guarantor or
any other person or to proceed against or exhaust any security held by Landlord
at any time or to pursue any other remedy in Landlord’s power before proceeding
against Guarantor; (b) any defense that may arise by reason of the incapacity,
lack of authority, insolvency, bankruptcy, death or disability of any other
guarantor or other person or the failure of Landlord to file or enforce a claim
against the estate (in administration, bankruptcy or any other proceeding) of
any other guarantor or other person; (c) notice of the existence, creation or
incurring of any new or additional indebtedness or obligation or of any action
or non-action on the part of Tenant, or additional indebtedness or obligation
or of any action or non-action on the part of Tenant, or any creditor thereof,
or on the part of any other guarantor or other person under any other
instrument in connection with any obligation or evidence of indebtedness held
by Landlord or in connection with any Guaranteed Obligation; (d) any defense
based upon an election of remedies by Landlord which destroys or otherwise
impairs any subrogation rights of Guarantor or any right of Guarantor to
proceed against Tenant or any other party for reimbursement, or both; (e) any
defense based upon any statute or rule of law including without limitation the
federal Bankruptcy Code or any other state or local debtor relief law which
provides that the obligation of a surety must be neither larger in amount nor
in other respects more burdensome than that of the principal; (f) any duty on
the part of Landlord to disclose to Guarantor any facts Landlord may now or
hereafter know about Tenant, regardless of whether Landlord has reason to
believe that any such fact materially increases the risk beyond that which
Guarantor intends to assume or has reason to believe that any such fact is
unknown to Guarantor or has a reasonable opportunity to communicate such fact
to Guarantor, it being understood and agreed that Guarantor is fully
responsible for being and keeping informed of the financial condition of Tenant
and of all circumstances bearing on the risk of non-payment or non-performance
of any Guaranteed Obligation; (g) any defense arising because of Landlord’s
election, in any proceeding instituted under the federal Bankruptcy Code, of
the application of Section 1111(b)(2) of the federal Bankruptcy Code; (h) any
defense based upon the validity or enforceability of, or change in, this
Guaranty; (i) any defense or rights arising under any appraisal, valuation,
stay, extension, marshalling of assets, redemption or similar law or
requirement, which may delay, prevent or otherwise affect the performance by
Guarantor of any of the Guaranteed Obligations; (j) diligence,

3

 

presentment and demand; (k) any requirement to mitigate any damages
resulting from any default under the Lease; and (l) any defense based on any
borrowing or grant of a security interest under Section 364 of the federal
Bankruptcy Code. Without limiting the generality of the foregoing provisions
or any other provision hereof, Guarantor hereby expressly waives any and all
benefits which might otherwise be available to guarantors under the laws of the
State of California, including California Civil Code Sections 2809, 2810, 2819,
2820, 2821, 2822, 2845, 2848, 2849 and 2850, in each instance to the extent
such laws, or any of them, are applicable to this Guaranty, the Lease or any of
the Guaranteed Obligations.

     6. Until all of the Guaranteed Obligations have been satisfied and
discharged in full, Guarantor shall not exercise its right of subrogation and
Guarantor hereby waives any right to enforce any remedy which Landlord now has
or may hereafter have against Tenant, any other guarantor or any other party
and any benefit of, and any right to participate in, any security or other
assets now or hereafter held by Landlord with respect to the Lease.

     7. Existing and future indebtedness and other obligations to Guarantor of
Tenant and the right of Guarantor to withdraw any capital invested by Guarantor
in Tenant is hereby subordinated to the Guaranteed Obligations. From and after
the occurrence of any default under the Lease, no portion of such subordinated
indebtedness or capital shall be paid or withdrawn, nor will Guarantor accept
any payment of or on account of any such indebtedness or as a withdrawal of
capital, without the prior written consent of Landlord. At Landlord’s request,
Guarantor shall cause Tenant or such other party to pay to Landlord all or any
part of such subordinated indebtedness or capital which Guarantor is entitled
to withdraw for application by Landlord to the Guaranteed Obligations. Any
payment of such subordinated indebtedness and any capital which Guarantor is
entitled to withdraw which is received by Guarantor after receipt of the
above-referenced request shall be received by Guarantor in trust for Landlord,
and Guarantor shall cause the same to be paid immediately to Landlord on
account of the Guaranteed Obligations.

     8. Guarantor shall file in any bankruptcy or other proceedings in which
the filing of claims is required by law all claims which Guarantor may have
against Tenant or relating to any indebtedness or obligations of Tenant to
Guarantor and will assign to Landlord all rights of Guarantor thereunder. If
Guarantor does not file any such claim, Landlord, as attorney-in-fact for
Guarantor, is hereby authorized to do so in the name of Guarantor or, in
Landlord’s discretion, to assign the claim to a nominee and to cause a proof of
claim to be filed in the name of Landlord’s nominee. The foregoing power of
attorney is coupled with an interest and is irrevocable. Landlord or its
nominee shall have the sole right to accept or reject any plan proposed in any
such proceeding and to take any other action which a party filing a claim is
entitled to do. In all such cases, whether in administration, bankruptcy or
otherwise, the person or persons authorized to pay such claim shall pay to
Landlord the amount payable on such claim and, to the full extent necessary for
that purpose, Guarantor hereby assigns to Landlord all of Guarantor’s rights
to any such payments or distributions to which Guarantor would otherwise be
entitled; provided, however, that Guarantor’s obligations hereunder shall not

4

 

be satisfied except to the extent that Landlord receives cash in full or
property acceptable to Landlord by reason of such payment or distribution. If
Landlord receives anything under this Guaranty other than cash in full or
property acceptable to Landlord, the same shall be held as collateral for
amounts due under this Guaranty.

     9. With or without notice to Guarantor, Landlord, in Landlord’s sole
discretion and at any time and from time to time and in such manner and upon
such terms as Landlord deems fit, may (a) apply any or all payments or
recoveries from Tenant or from any other guarantor or realized from any
security, in such manner and order of priority as Landlord may determine, to
any indebtedness or obligation of Tenant with respect to the Lease, whether or
not such indebtedness or is otherwise secured or is due at the time of such
application, and (b) refund to Tenant any payment received by Landlord under
the Lease.

     10. The amount of Guarantor’s liability and all rights, powers and
remedies of Landlord hereunder and under any other agreement now or at any time
hereafter in force between Landlord and Guarantor, including, without
limitation, any other guaranty executed by Guarantor relating to any
indebtedness or other obligation of Tenant to Landlord, shall be cumulative and
not alternative, and such rights, powers and remedies shall be in addition to
all rights, powers and remedies given to Landlord by law. This Guaranty is in
addition to and exclusive of any other guaranty of the Guaranteed Obligations,
including, without limitation, any other guaranty.

     11. The obligations of Guarantor hereunder are primary, direct and
independent of the obligations of Tenant, including, without limitation, any
other guarantor, and, in the event of any default under the Lease (following
the expiration of any applicable grace period), a separate action or actions
may be brought and prosecuted against Guarantor, whether or not Tenant,
including, without limitation, any other guarantor, is joined therein or a
separate action or actions are brought against Tenant, including, without
limitation, any other guarantor. Landlord may maintain successive actions for
other defaults. Landlord’s rights hereunder shall not be exhausted by its
exercise of any of its rights or remedies or by any such action or by any
number of successive actions until and unless all Guaranteed Obligations have
been paid in full in cash or performed in full.

     12. Guarantor shall pay to Landlord reasonable attorneys’ fees and all
costs and other expenses which Landlord expends or incurs in collecting or
compromising or enforcing payment or performance of the Guaranteed Obligations
or in enforcing this Guaranty, whether or not suit is filed, including, without
limitation, all reasonable attorneys’ fees and all costs and other expenses
expended or incurred by Landlord in connection with any insolvency, bankruptcy,
reorganization, arrangement or other similar proceedings involving Guarantor
which in any way affects the exercise by Landlord of its rights and remedies
hereunder.

     13. If any provision or portion of this Guaranty is declared or found by a
court of competent jurisdiction to be unenforceable or null and void, such
provision or portion

5

 

hereof shall be deemed stricken and severed from this Guaranty, and the
remaining provisions and portions hereof shall continue in full force and
effect.

     14. Within ten (10) calendar days after Guarantor receives any request
from Landlord for such information, Guarantor will execute and deliver to
Landlord, and to any third party designated by Landlord, in recordable form, a
certificate reciting that: (i) this Guaranty is unmodified and in full force
and effect, or that this Guaranty is in full force and effect as modified and
setting forth all modifications thereto; and (ii) no event has occurred which,
with the passage of time or the giving of notice or both, would constitute or
entitle Guarantor to any defense, offset, counterclaim or exoneration under
this Guaranty or, if any such event has occurred, specifying such event and
setting forth the defense, offset, counterclaim or right of exoneration
resulting therefrom. Guarantor expressly agrees that any such certificate
executed and delivered by Guarantor may be relied upon by Landlord and any
other person to whom the certificate is delivered without independent
investigation or examination to determine the accuracy, reasonableness or good
faith of the information and recitals contained in such certificate.

     15. This Guaranty shall inure to the benefit of Landlord, its successors
and assigns, including, without limitation, the assignees of any of the
Guaranteed Obligations, and any subsequent landlords or encumbrancers of the
Property, and shall bind the heirs, executors, administrators, personal
representatives, successors and assigns of Guarantor, whether by operation of
law or otherwise; provided, however, that Guarantor may not, without Landlord’s
prior written consent, which such consent may be granted or withheld in
Landlord’s sole discretion, assign or transfer any of its rights, powers,
duties or obligations hereunder. This Guaranty may be assigned by Landlord
with respect to all or any portion of the Guaranteed Obligations to any
subsequent landlords or encumbrancers of the Property. When so assigned,
Guarantor shall be liable to the assignees under this Guaranty without in any
manner affecting the liability of Guarantor hereunder with respect to any of
the Guaranteed Obligations retained by Landlord.

     16. Guarantor’s failure to perform any of the covenants, obligations or
duties of Guarantor set forth in this Guaranty shall constitute an “Event of
Default” under this Guaranty, without Landlord being required to give Guarantor
written notice of such Event of Default or any opportunity to cure such Event
of Default. Guarantor acknowledges and agrees that an Event of Default under
this Guaranty shall also constitute a material default under the Lease.

     17. No provision of this Guaranty or right of Landlord hereunder can be
waived in whole or in part, nor can Guarantor be released from its obligations
hereunder, except by a writing duly executed by an authorized officer, member,
or partner, as applicable, of Landlord.

     18. When the context and construction so require, all words used in the
singular herein shall be deemed to have been used in the plural and the
masculine shall include the feminine and neuter and vice versa. The word
“person” as used herein shall include any individual, company, firm,
association, partnership, corporation, trust or other legal entity of any kind
whatsoever. The term “Tenant,” as used herein, shall mean

6

 

the party herein so named and its respective successors and assigns,
whether by operation of law or otherwise, including, without limitation, a
debtor in possession under Chapter 11 of the federal Bankruptcy Code and any
other person at any time assuming or succeeding to all or substantially all of
the Guaranteed Obligations. If more than one person or entity is a Guarantor
hereunder, the obligations of all such persons and/or entities shall be joint
and several.

     19. Guarantor represents and warrants that the value of the consideration
received, and to be received, by Guarantor in connection with the transactions
contemplated under the Lease is worth at least as much as the liabilities and
obligations of Guarantor under this Guaranty, and that such liabilities and
obligations are expected to benefit Guarantor either directly or indirectly.

     20. EXCEPT WHERE FEDERAL LAW IS APPLICABLE AND UNLESS OTHERWISE EXPRESSLY
PROVIDED HEREIN, THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF CALIFORNIA.

     21. GUARANTOR REPRESENTS AND ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF
COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS AND OBLIGATIONS HEREUNDER.

     Guarantor’s
Initials: EAM
     
22. Except as provided in any other written agreement now or at any time
hereafter in force between Landlord and Guarantor, this Guaranty shall
constitute the entire agreement of Guarantor with Landlord with respect to the
subject matter hereof, and no representation, understanding, promise or
condition concerning the subject matter hereof shall be binding upon Landlord
or Guarantor unless expressed herein.

     23. This Guaranty shall remain in full force and effect and continue to be
effective in the event any petition is filed by or against Tenant or Guarantor
(or any one of them) for liquidation or reorganization, in the event Guarantor
becomes insolvent or makes an assignment for the benefit of creditors or in the
event a receiver or trustee is appointed for all or any significant part of the
assets of Tenant or Guarantor, and shall continue to be effective or be
reinstated, as the case may be, if at any time payment or performance of the
Guaranteed Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by
Landlord, whether as a “voidable preference,” “fraudulent conveyance” or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Guaranteed Obligations shall be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored or returned.

     24. Guarantor will from time to time promptly execute and deliver all
further instruments and take all further action that may be necessary or
desirable, or that Landlord may reasonably request, in order to enable Landlord
to exercise and enforce its

7

 

rights and remedies under this Guaranty or to carry out the provisions and
purposes hereof.

     25. Any notice, demand and other communication hereunder shall be given in
accordance with the provisions therefore set forth in the Lease, except that
for purposes of this Guaranty the address for notice for Guarantor is set forth
below its signature hereto.

     26. Guarantor acknowledges that this Guaranty has been fully negotiated at
arms’ length between Guarantor and Landlord and Guarantor has carefully read
and reviewed this Guaranty and understands it contents. Guarantor has had the
opportunity to review this Guaranty with, and seek the advice of, legal counsel
and/or other representatives chosen by Guarantor. Guarantor acknowledges that
Landlord’s counsel has drafted this Guaranty and, notwithstanding such fact,
this Guaranty shall not be construed against Landlord on account hereof.

[Signature Page Follows]

8

 

IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as of
this 1st day of December, 2003.

	 	 	 	 	 	 	 
	 	 	 	 	GUARANTOR:
	 
	 	 	 	 	 	 
	 	 	 	 	WILLIAMS-SONOMA, INC.,

a California corporation
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ ED MUELLER
	 	 	 	 	Name: Ed Mueller

Title: President
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ SETH R. JAFFE
	 	 	 	 	Name: Seth R. Jaffe

Title: Secretary
	 
	 	 	 	 	 	 
	 	 	Addresses for Notices:
	 
	 	 	 	 	 	 
	 	 	3250 Van Ness Avenue San Francisco, CA 94109

9

 

Exhibit E

Location of Driveway

 

 

 

 

Exhibit F

Form of SNDA

SUBORDINATION NON-DISTURBANCE ATTORNMENT AGREEMENT

     This Subordination Non-Disturbance Attornment Agreement (“Agreement”) is
made by and between POTTERY BARN, Inc., a California corporation, as “Tenant”,
and_____, a_____, as “Lender”, and Robert Pattillo
Properties, Inc., a Georgia corporation, as “Landlord”.

RECITALS

     A. On
November_____, 2003 Landlord and Tenant entered into a written lease
(“Lease”) for certain premises in the City of Olive Branch, Desoto County, and
State of Mississippi, which are more particularly described in Exhibit 1
(“Premises”), attached and incorporated into this Agreement; and

     B. Lender is the holder of a lien and encumbrance on the Premises as
security for the obligation of Landlord pursuant to a document entitled
Mortgage, recorded at               in the public records of DeSoto County,
Mississippi (“Mortgage”); and

     THEREFORE, in consideration of the mutual covenants contained in this
Agreement, Tenant, Mortgagee and Landlord agree as follows:

     1. Subordination. Tenant, Landlord and Lender agree that the Lease is (or
is hereby made) and will remain, subject and subordinate in all respects to the
Mortgage and to all renewals, modifications, replacements, substitutions or
extensions thereof, subject to the terms of this Agreement.

     2. Non-disturbance. So long as Tenant is not in default under the Lease
beyond any applicable notice and cure periods, Lender agrees for itself and its
successors in interest and for any purchaser of the Premises upon a foreclosure
of the Mortgage for the foreclosure of the Mortgage or the sale of the
Premises, Tenant shall not be named as a party therein unless such joinder
shall be required by law, provided, however, such joinder shall not result in
the termination of the Lease or disturb the Tenant’s possession, quiet
enjoyment or use of the premises demised thereunder, and the sale of the
Premises in any such action or proceeding and the exercise by Lender of any of
its other rights under the Mortgage shall be made subject to all rights of
Tenant under the Lease. For the purposes of this Agreement, a “foreclosure”
shall include (but not be limited to) a sheriff’s or trustee’s sale under the
power of sale contained in the Mortgage, and any other transfer of the
Landlord’s interest in the Premises under peril of foreclosure, including,
without limitation, the generality of the foregoing, an assignment or sale in
the lieu of foreclosure.

     3. Attornment. If Lender succeeds to the interest of the landlord under
the Lease, through foreclosure of the Mortgage, deed in lieu of foreclosure, or
other means, Tenant will be bound to Lender under all of the terms of the Lease
for the balance of the term with the same force and effect as if Lender were
the landlord named in the Lease, and Tenant will attorn to Lender as its
landlord, the attornment to be effective and self-operative, without the
execution of any further instruments, immediately upon Lender succeeding to the
interest of the landlord under the Lease. Lender agrees that Tenant will be
under no obligation to pay rent to Lender until Lender has succeeded to the
interest of the landlord under the Lease and has so notified Tenant in writing.
The respective rights and obligations of Tenant and Lender upon such
attornment will, for the balance of the term of the Lease, be the same as now
set forth in the Lease, it being the intention of the parties for this purpose
to incorporate the Lease into this Agreement by reference.

     4. No Liability. Lender and Tenant agree that if Lender or any other
party that succeeds to the interest of the landlord under the Lease
(collectively, “Successor”) shall become the owner of the Premises by reason of
the foreclosure of the Mortgage or the acceptance of a deed or assignment in
lieu of foreclosure or otherwise, the Lease shall not be terminated or affected
thereby but shall continue in full force and effect as a direct lease between
Successor and Tenant upon all of the terms, covenants and conditions set forth
in the Lease and in that event, Tenant agrees to attorn to Successor and
Successor agrees to accept such attornment, provided, however, that Successor
shall not be:

-9-

 

          (a) liable for any act or omission of any prior landlord (including
Landlord), or

          (b) subject to any offsets or defenses that Tenant might have against any
prior landlord (including Landlord); or

          (c) bound by any rent or additional rent which is payable on a monthly
basis and which Tenant might have paid for more than one (1) month in advance
to any prior landlord (including Landlord), unless such prepayment is required
under the Lease; or

          (d) bound by any amendment or modification of the Lease which would change
the term of the Lease (except for any possible extensions that are already
described in the Lease) or the fixed rent specified therein (except as may
relate to the expansion contemplated in the Lease) made without Lender’s prior
written consent.

     5. Lender’s Consent. Tenant shall not, without obtaining the prior
written consent of Lender, (a) enter into any agreement amending or modifying
the Lease which would change the term of the Lease (except for any possible
extensions that are already described in the Lease) or the fixed rent specified
therein (except as may relate to the expansion contemplated in the Lease) or
(b) prepay any of the rents, additional rents or other sums due under the Lease
for more than one (1) month in advance of the due dates thereof, unless such
prepayment is required under the terms of the Lease.

     6. Lender to Receive Notices. Tenant shall provide Lender with copies of
all written notices of any default by Landlord sent to Landlord pursuant
to the Lease simultaneously with the transmission of such notices to the
Landlord. Lender shall have the right to remedy any Landlord default
under the Lease, or to cause any default of Landlord under the Lease to
be remedied during the same time period as Landlord as set forth in the
Lease. Tenant shall accept performance by Lender of any term, covenant,
condition or agreement to be performed by Landlord under the Lease with
the same force and effect as though performed by Landlord.

     7. Binding Effect. The rights and obligations of Tenant and Lender will
bind and inure to the benefit of their respective successors and assigns.

Lender

	 	 	 
	By:
	 	 
	

	 	

	Its:
	 	 
	

	 	

	 
	 	 
	Tenant
	 
	 	 
	Pottery Barn, Inc.,

a California corporation
	 
	 	 
	By:
	 	 
	

	 	

	Its:
	 	 
	

	 	

	 
	 	 
	Landlord
	 
	Robert Pattillo Properties, Inc.,

a Georgia corporation
	 
	 	 
	By:
	 	 
	

	 	

	Its:
	 	 
	

	 	

-10-exv10w47

 

EXHIBIT 10.47

FIRST AMENDMENT

     THIS FIRST AMENDMENT dated as of January 29, 2004 (this “Amendment”) is to
the Second Amended and Restated Credit Agreement (the “Credit Agreement”) dated
as of October 22, 2002 among WILLIAMS-SONOMA, INC., a California corporation
(the “Borrower”), various financial institutions (the “Lenders”) and BANK OF
AMERICA, N.A., as agent for the Lenders (the “Agent”). Unless otherwise
defined herein, terms defined in the Credit Agreement are used herein as
defined in the Credit Agreement.

     WHEREAS, the parties hereto desire to amend the Credit Agreement in
certain respects;

     NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto agree as follows:

     SECTION 1. Amendments. Effective on, and subject to the occurrence of,
the Amendment Effective Date (as defined below):

     1.1 Section 1.1 of the Credit Agreement shall be amended by adding the
following definition thereto in its appropriate alphabetical position:

     “First Amendment Effective Date” means the “Amendment Effective
Date” under and as defined in the First Amendment to this Agreement dated
as of January 29, 2004.

     1.2 The definition of “Letter of Credit Sublimit” in Section 1.1 of the
Credit Agreement shall be amended by deleting the figure “$50,000,000” where it
appears in such definition and inserting the figure “$100,000,000” in lieu
thereof.

     1.3 Section 11.4 of the Credit Agreement shall be amended by deleting
clause (x) of such Section and inserting the following in lieu thereof:

          (x) the Borrower may repurchase its Capital Stock, provided that (A)
(1) the aggregate amount of all such repurchases during the period from
the Closing Date to the First Amendment Effective Date shall not exceed
an amount equal to the sum of $100,000,000, plus an amount equal to ten
percent (10.0%) of the Borrower’s Net Income during the period from the
Closing Date through the end of the Fiscal Quarter ending immediately
prior to the date of such repurchase and (2) the aggregate amount of all
such repurchases during any Fiscal Year (commencing with the Borrower’s
Fiscal Year beginning February 2, 2004) shall not exceed $100,000,000 (it
being understood that all repurchases of Capital Stock by the Borrower
during the period from the First Amendment Effective Date through January
30, 2004 shall be counted against the limitation in this clause (A)(2)
with respect to the Borrower’s Fiscal Year beginning February 2, 2004)
and (B) no Default shall be in existence at the time of such repurchase.

     SECTION 2. Representations and Warranties. The Borrower represents and
warrants to the Agent and the Lenders that: (a) the representations and
warranties made in the Credit Agreement and in the other Loan Documents are
true and correct in all material respects on the date of the execution and
delivery hereof by the Borrower with the same effect as if made on

 

 

such date (except to the extent relating solely to a specific earlier
date, in which case they were true and correct as of such earlier date); (b) no
Default exists or will result from the effectiveness of this Amendment; (c) no
material adverse change has occurred with respect to the business, assets,
liabilities (actual or contingent), operations, condition (financial or
otherwise) or prospects of the Borrower (individually) or the Borrower and its
Subsidiaries (taken as a whole) since February 3, 2002; (d) the execution and
delivery by the Borrower of this Amendment and the performance by the Borrower
of its obligations under the Credit Agreement, as amended hereby (the “Amended
Credit Agreement”), (i) are within the corporate powers of the Borrower, (ii)
have been duly authorized by all necessary corporate action, (iii) have
received all necessary approval from any Governmental Authority and (iv) do not
and will not contravene or conflict with any provision of any law, rule or
regulation or any order, decree, judgment or award which is binding on the
Borrower or any of its Subsidiaries or of any provision of the certificate of
incorporation or bylaws or other organizational documents of the Borrower or
any of its Subsidiaries or any agreement, indenture, instrument or other
document which is binding on the Borrower or any of its Subsidiaries; and (e)
the Amended Credit Agreement is the legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally or by
equitable principles relating to enforceability.

     SECTION 3. Effectiveness.

     3.1 Effectiveness. The amendments to the Credit Agreement set forth in
Section 1 above shall become effective on the date (the “Amendment Effective
Date”) on which the Agent shall have received (a) counterparts of this
Amendment executed by the Borrower and the Required Lenders, (b) for each
Lender that has executed and delivered to the Agent a counterpart of this
Amendment prior to 5:00 p.m. (Chicago time) on January 29, 2004, an amendment
fee equal to $2,500 and (c) each of the following documents, each in form and
substance satisfactory to the Agent:

          (i) Confirmation. Counterparts of the Confirmation, substantially
in the form of Exhibit A, executed by each Guarantor.

          (ii) Other Documents. Such other documents as the Agent or any
Lender may reasonably request.

     SECTION 4. Miscellaneous.

     4.1 Continuing Effectiveness, etc. As herein amended, the Credit
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects. After the effectiveness of any amendment set forth
herein, all references in the Credit Agreement, the Notes, each other Loan
Document and any similar document to the “Credit Agreement” or any similar term
shall refer to the Credit Agreement as amended hereby.

     4.2 Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same Amendment.

-2-

 

     4.3 Expenses. The Borrower agrees to pay the reasonable costs and
expenses of the Agent (including reasonable fees and disbursements of counsel,
including the allocable costs of internal legal services and all disbursements
of internal legal counsel) in connection with the preparation, execution and
delivery of this Amendment.

     4.4 Governing Law. This Amendment shall be a contract made under and
governed by the laws of the State of California applicable to contracts made
and to be wholly performed within the State of California.

     4.5 Successors and Assigns. This Amendment shall be binding upon the
Borrower, the Lenders and the Agent and their respective successors and
assigns, and shall inure to the benefit of the Borrower, the Lenders and the
Agent and the successors and assigns of the Lenders and the Agent.

-3-

 

Delivered as of the day and year first above written.

	 	 	 	 	 
	 	 	WILLIAMS-SONOMA, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Sharon L. McCollam
	

	 	 	 	

	 	 	Title: EVP & CFO
	 
	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as Agent
	 
	 	 	 	 
	

	 	By:
	 	/s/ Tiffany Shin
	

	 	 	 	

	 	 	Title: AVP
	 
	 	 	 	 
	 	 	BANK OF AMERICA, N.A., as a Lender and as

L/C Issuer
	 
	 	 	 	 
	

	 	By:
	 	/s/ Lisa M. Thomas
	

	 	 	 	

	 	 	Title: Senior Vice President
	 
	 	 	 	 
	 	 	FLEET NATIONAL BANK, as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Stephen Garvin
	

	 	 	 	

	 	 	Title: Managing Director
	 
	 	 	 	 
	 	 	THE BANK OF NEW YORK, as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Randolph E.J. Medrano
	

	 	 	 	

	 	 	Title: Vice President

-4-

 

	 	 	 	 	 
	 	 	WELLS FARGO BANK, N.A., as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Jeff Bailard
	

	 	 	 	

	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK, as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ James A. Knight
	

	 	 	 	

	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	UNION BANK OF CALIFORNIA, N.A., as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Theresa L. Rocha
	

	 	 	 	

	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION, as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Gregory Dryden
	

	 	 	 	

	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	NATIONAL CITY BANK, as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Joe Kwasny
	

	 	 	 	

	 	 	Title: Vice President

-5-

 

Exhibit A

CONFIRMATION

Dated as of January 29, 2004

	 	 	To: Bank of America, N.A., individually and as Agent, and the other financial
institutions party to the Credit Agreement referred to below

     Please refer to: (a) the Second Amended and Restated Credit Agreement
dated as of October 22, 2002 (the “Credit Agreement”) among Williams-Sonoma,
Inc., a California corporation (the “Borrower”), various financial institutions
(the “Lenders”) and Bank of America, N.A., as Agent (the “Agent”); (b) the
Subsidiary Guaranty dated as of August 23, 2000 made by the subsidiaries of the
Borrower in favor of the Agent (the “Guaranty”); and (c) the First Amendment
dated as of January 29, 2004 to the Credit Agreement (the “First Amendment”).

     Each of the undersigned hereby confirms to the Agent and the Lenders that,
after giving effect to the First Amendment and the transactions contemplated
thereby, the Guaranty continues in full force and effect and is the legal,
valid and binding obligation of such undersigned, enforceable against such
undersigned in accordance with its terms.

     This Confirmation shall be governed by the internal laws of the State of
California.

	 	 	 	 	 
	 	 	WILLIAMS-SONOMA STORES, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Sharon L. McCollam
	

	 	 	 	

	 	 	Name: Sharon L. McCollam

Title: EVP & CFO
	 
	 	 	 	 
	 	 	WILLIAMS-SONOMA STORES, LLC
	 
	 	 	 	 
	

	 	By:
	 	/s/ Sharon L. McCollam
	

	 	 	 	

	 	 	Name: Sharon L. McCollam

Title: EVP & CFO
	 
	 	 	 	 
	 	 	HOLD EVERYTHING, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Sharon L. McCollam
	

	 	 	 	

	 	 	Name: Sharon L. McCollam

Title: EVP & CFO

A-1

 

	 	 	 	 	 
	 	 	POTTERY BARN, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Sharon L. McCollam
	

	 	 	 	

	 	 	Name: Sharon L. McCollam

Title: EVP & CFO
	 
	 	 	 	 
	 	 	POTTERY BARN KIDS, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Sharon L. McCollam
	

	 	 	 	

	 	 	Name: Sharon L. McCollam,

Title: EVP & CFO
	 
	 	 	 	 
	 	 	CHAMBERS CATALOG COMPANY, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Sharon L. McCollam
	

	 	 	 	

	 	 	Name: Sharon L. McCollam

Title: EVP & CFO
	 
	 	 	 	 
	 	 	WILLIAMS-SONOMA RETAIL SERVICES, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Sharon L. McCollam
	

	 	 	 	

	 	 	Name: Sharon L. McCollam

Title: EVP & CFO
	 
	 	 	 	 
	 	 	WILLIAMS-SONOMA DIRECT, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Sharon L. McCollam
	

	 	 	 	

	 	 	Name: Sharon L. McCollam

Title: EVP & CFO
	 
	 	 	 	 
	 	 	WEST ELM, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Sharon L. McCollam
	

	 	 	 	

	 	 	Name: Sharon L. McCollam

Title: EVP & CFO

A-2

 

	 	 	 	 	 
	 	 	WILLIAMS-SONOMA PUBLISHING, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Sharon L. McCollam
	

	 	 	 	

	 	 	Name: Sharon L. McCollam

Title: EVP & CFO
	 
	 	 	 	 
	 	 	POTTERY BARN TEEN, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Sharon L. McCollam
	

	 	 	 	

	 	 	Name: Sharon L. McCollam

Title: EVP & CFO

A-3

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