Document:

Exhibit 10.1

 

	
HAMILTON
    	
 
    
	
 
    	
PARTNERS
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Real   Estate Investment
    	
 
    

 

OFFICE LEASE AGREEMENT

 

 

	
STANDARD   OFFICE LEASE
    	
Prepared   on: September 3, 2014
    
	
IL   2/99
    	
By:   Brian R. Lunt / Hamilton Partners, Inc.
    

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT made and entered into between Riverwalk South, L.L.C., an Illinois limited liability company (“Landlord”) and RestorGenex Corporation (“Tenant”).

 

Article 1.                                            Basic Terms

 

	
1.1                                         Date of   Lease:
    	
September 4,   2014
    
	
 
    	
 
    
	
1.2                                         Landlord’s   Address for Notices:
    	
300   Park Boulevard-Itasca, IL 60143 
    
	
 
    	
 
    
	
 
    	
Attention:   Sr. Asset Manager
    
	
 
    	
 
    
	
Landlord’s   Address For Rent Payments:
    	
300   Park Boulevard — Itasca, IL 60143
    
	
 
    	
 
    
	
1.3                                         Tenant’s   Address for Notices:
    	
2150   E. Lake Cook Road — Suite 750
    
	
 
    	
 
    
	
 
    	
Buffalo   Grove, IL 60089
    
	
 
    	
 
    
	
1.4                                         Development:
    	
The   complex commonly known as Riverwalk I.
    
	
 
    	
 
    
	
1.5                                         Property:
    	
The   real property described in Exhibit A
    
	
 
    	
 
    
	
1.6                                         Building:
    	
The   improvements situated on the Property and commonly known as 2150 E. Lake   Cook Road — Buffalo Grove, IL
    
	
 
    	
 
    
	
1.7                                         Premises:
    	
Those   certain premises in the Building as shown on Exhibit B and known as   Suite 750.
    
	
 
    	
 
    
	
1.8                                         Schedule of   Base Rent:
    	
 
    

 

	
Period
    	
 
    	
Annual Base Rent
    	
 
    	
Monthly Base Rent
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
09/15/14-02/14/15 
    	
 
    	
$
    	
00.00
    	
 
    	
$
    	
00.00
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
02/15/15-02/28/15
    	
 
    	
$
    	
2,988.54
    	
 
    	
$
    	
2,988.54
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
03/01/15-02/28/16
    	
 
    	
$
    	
71,725.00
    	
 
    	
$
    	
5,977.08
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
03/01/16-02/28/17
    	
 
    	
$
    	
73,159.50
    	
 
    	
$
    	
6,096.63
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
03/01/17-02/28/18
    	
 
    	
$
    	
74,594.00
    	
 
    	
$
    	
6,216.17
    	
 
    

 

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If   the Commencement Date is not the first day of a calendar month, the date of   each Base Rent increase will be extended until the first day of the month   following the applicable anniversary of the Commencement Date.  Notwithstanding the terms and conditions   within Articles 4 and 5 of this Lease, Tenant shall not be responsible for   its prorata share of Operating Costs and Taxes on any rental abatement   periods as outlined in the Rent Schedule in the Lease.
    
	
 
    	
 
    
	
1.9                                         Rentable Area   of the Building:
    	
253,363 Square Feet
    
	
 
    	
 
    
	
1.10                                  Rentable Area   of the Premises:
    	
2,869 Square Feet
    
	
 
    	
 
    
	
1.11                                  Tenant’s   Proportionate Share:
    	
1.132 % (The   percentage calculated by dividing the Rentable Area of the Premises by the   Rentable Area of the Building).
    
	
 
    	
 
    
	
1.12                                  Tax Stop:
    	
$3.32   per Rentable Square Foot
    
	
 
    	
 
    
	
1.13                                  Operating Cost   Stop:
    	
$6.67   per Rentable Square Foot
    
	
 
    	
 
    
	
1.14                                  Projected   Commencement Date:
    	
September 15, 2014
    
	
 
    	
 
    
	
1.15                                  Term:
    	
The   period of time commencing on the Commencement Date (as defined in   Exhibit C) and expiring forty-one and one-half (41.5) months   after the Commencement Date (except that if the expiration date would not be   the last day of a calendar month the Term shall extend until the last day of   the calendar month), unless sooner terminated or extended as may be herein   provided.
    
	
 
    	
 
    
	
1.16                                  Security   Deposit:
    	
$ 5,977.08
    
	
 
    	
 
    
	
1.17                                  Permitted   Uses:
    	
General   office purposes
    
	
 
    	
 
    
	
1.18                                  Broker(s):
    	
Brian   Lunt of Hamilton Partners on behalf of Tenant and Landlord
    

 

Attachments to Lease

 

Exhibit A:                                         Legal Description

 

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Exhibit B:                                         Plan of Premises

 

Exhibit C:                                         Work Letter

 

Exhibit D:                                         Rules and Regulations

 

Article 2.                                           Premises and Term

 

2.1                               In consideration of the obligation of Tenant to pay rent and the other terms, provisions, and covenants hereof, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord the Premises for the Term.

 

2.2                               If this Lease is executed before the Premises become ready for occupancy, and Landlord cannot, using good faith efforts, deliver possession of the Premises by the Projected Commencement Date, Landlord shall not be deemed to be in default, nor in any way liable to Tenant because of such failure.  Tenant agrees to accept possession of the Premises on the Commencement Date as defined in the Work Letter.  Landlord hereby waives payment of Base Rent and Tenant’s Proportionate Share of Taxes and Operating Expenses covering any period prior to the Commencement Date.  If the Commencement Date is before the Projected Commencement Date, the Term shall be extended by the number of days between the Commencement Date and the Projected Commencement Date and Tenant shall pay Base Rent for the period prior to the Projected Commencement Date based upon the per square foot per year rental rate for the initial period of the Term.

 

2.3                               Tenant acknowledges that no representations as to the repair of the Premises, nor promises to alter, remodel or improve the Premises have been made by Landlord, unless such are expressly set forth in this Lease.  Except as provided in the Work Letter, the taking of possession by Tenant shall be deemed conclusively to establish that the Premises have been completed in accordance with the plans and specifications and are in good and satisfactory condition as of when possession was so taken.  Promptly following the Commencement Date, Tenant shall execute and deliver Landlord’s standard form of letter of acceptance of delivery of the Premises.

 

Article 3.                                            Base Rent and Security Deposit

 

3.1                               Tenant agrees to pay to Landlord in lawful money of the United States Base Rent for the entire Term at the rates set forth above per month, in advance, except that the monthly installment which otherwise shall be due on the Commencement Date, shall be due and payable on the date hereof.  Thereafter one such monthly installment shall be due and payable without demand on or before the first day of each calendar month succeeding the Commencement Date; further provided, that the rental payment for any fractional calendar month at the commencement or termination of the Term shall be prorated.

 

3.2                               In addition, Tenant agrees to deposit with Landlord on the date hereof the Security Deposit set forth above, which sum shall be held by Landlord, without obligation for interest, as security for the full, timely and faithful performance of Tenant’s covenants and obligations under this Lease, it being expressly understood and agreed that such deposit is not an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default.  Upon the occurrence of any event of default by Tenant, Landlord may, from time to time, without 

 

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prejudice to any other remedy provided herein or by law, use such fund to the extent necessary to make good any arrears of rent or other payments due Landlord hereunder, and any other damage, injury, expense or liability caused by any event of Tenant’s default; and Tenant shall pay to Landlord on demand the amount so applied in order to restore the Security Deposit to its original amount.  Any remaining balance of such deposit shall be returned to Tenant at such time after termination of this Lease when Landlord shall have determined that all Tenant’s obligations under this Lease have been fulfilled.  Subject to the other terms and conditions contained in this Lease, if the Building is conveyed by Landlord, said deposit may be turned over to Landlord’s grantee, and if so, Tenant hereby releases Landlord from any and all liability with respect to said deposit and its application or return.

 

Article 4.                                            Taxes

 

4.1                               Landlord agrees to pay all general and special taxes, assessments and governmental charges of any kind and nature whatsoever (collectively “Taxes”) lawfully levied against the Property, the Building, and the grounds, parking areas, driveways and alleys around the Building.  If for any real estate tax year applicable to the Term or any extension of such Term (on an accrual basis), Taxes levied for such tax year divided by the Rentable Area of the Building shall exceed the Tax Stop, Tenant shall pay to Landlord as additional rent upon demand at the time the bill for such tax year issues, the product of such excess multiplied by the Rentable Area of the Premises less any monthly payments paid by Tenant as provided below for such tax year.  In addition, Tenant shall pay upon demand Tenant’s Proportionate Share of any contingent fees, expenses and costs incurred by Landlord in protesting any assessments, levies or the tax rate.  Any payment to be made pursuant to this Article 4 with respect to the real estate tax year in which this Lease commences or terminates shall be prorated.  The Tax Stop is not a representation or estimate as to the Taxes incurred or to be incurred in any tax year.

 

4.2                               During December of each year or as soon thereafter as practicable, Landlord shall give Tenant written notice of its estimate of the amount payable under Paragraph 4.1 for the ensuing calendar year.  On or before the first day of each month thereafter, Tenant shall pay to Landlord as additional rent one-twelfth (1/12th) of such estimated amount, provided that if such notice is not given in December, Tenant shall continue to pay on the basis of the prior year’s estimate until the first day of the month after the month in which such notice is given.  If at any time it appears to Landlord that the amount payable under Paragraph 4.1 will vary from its estimate by more than five percent (5%), Landlord may, by written notice to Tenant, revise its estimate for such year, and subsequent payments by Tenant for such year shall be based upon such revised estimate.

 

4.3                               As soon as practicable after the Taxes for a year are determined, Landlord shall deliver to Tenant a statement showing the Taxes under Paragraph 4.1 and Tenant’s share thereof.  If such statement shows an amount due from Tenant that is less than the estimated payments previously paid by Tenant, it shall be accompanied by a refund of the excess to Tenant.  If such statement shows an amount due from Tenant that is more than the estimated payments previously paid by Tenant, Tenant shall pay the deficiency to Landlord, as additional rent, within thirty (30) days after delivery of the statement.

 

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4.4                               If the Building is not fully occupied during all or a portion of any year and as a result of such lack of occupancy Taxes are reduced, Landlord may make an appropriate adjustment in Taxes for such year by adjusting those components of Taxes which vary with the occupancy level of the Building so that the Taxes that would have been paid or incurred by Landlord had the Building been fully rented and occupied shall be deemed to have been the Taxes for such year.

 

4.5                               If at any time during the Term, the present method of taxation shall be changed so that in lieu of or in addition to the whole or any part of any Taxes, there shall be levied, assessed or imposed on Landlord a capital levy or other tax directly on the rents received and/or a franchise tax, assessment, levy or charge measured by or based, in whole or in part, upon such rents, then all such taxes, assessments, levies or charges, or the part thereof so measured or based, shall be deemed to be included within the term “Taxes” for the purposes hereof.

 

Article 5.                                            Operating Costs

 

5.1                               If for any calendar year falling partly or wholly within the Term, Operating Costs incurred by Landlord divided by the Rentable Area of the Building shall exceed the Operating Cost Stop, Tenant shall pay to Landlord as additional rent the product of such excess multiplied by the Rentable Area of the Premises less any monthly payments paid by Tenant as provided below.  Any payment to be made pursuant to this Article 5 with respect to the year in which this lease commences or terminates shall be prorated.

 

5.2                               As used in this Lease, the term “Operating Costs” shall mean any and all expenses, costs and disbursements (other than Taxes) of any kind and nature whatsoever incurred by Landlord in connection with the ownership, leasing, management, maintenance, operation and repair of the Building or the Property or any improvements situated on the Property (including, without limitation, the cost of maintaining and repairing parking lots, parking structures, and easements, salaries, fringe benefits and related costs, for building staff, insurance costs of every kind and nature, heating and air conditioning costs, common area utility costs such as electricity, sewer and water charges, the cost of cleaning and removing snow from common areas, the cost of routine repairs, maintenance and decorating of common areas and the Building’s or Property’s share of costs of the Development), except the following:  (1) costs of alterations of tenants’ premises; (2) depreciation; (3) interest and principal payments on mortgages, and other debt costs; (4) real estate brokers’ leasing commissions or compensation; (5) any cost or expenditure (or portion thereof) for which Landlord is reimbursed, whether by insurance proceeds or otherwise, and (6) cost of any service furnished to any other occupant of the Building which Landlord does not provide to Tenant.  Operating Costs shall also include a property management fee and/or an administrative fee in the aggregate of five percent (5%) of gross receipts from the Property, which for avoidance of doubt, “gross receipts” does not mean “revenues” of the Tenant.  Notwithstanding anything contained herein to the contrary, (i) all expenditures for replacements or improvements of $10,000 or less shall be included in Operating Costs and (ii) the amount allowed annually as depreciation for federal income tax purposes with respect to any capital improvements made after the date of this Lease which are intended to reduce Operating Costs or which are required under any governmental laws, regulations, or ordinances which were not applicable to the Building at the time it was constructed, shall be included in Operating Costs.  In addition, interest on the undepreciated cost of any such improvement (at the long term 

 

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mortgage loan rate set forth in the mortgage encumbering the Building on the date the cost of such improvement was incurred or, if there was no such loan, then at the long term mortgage loan rate that would have been available to Landlord on the date the cost of such improvement was incurred as reasonably determined by Landlord) shall also be included in Operating Costs.  In the event Landlord elects to self insure, insure with a deductible in excess of $1,000 or obtain insurance coverage in which the premium fluctuates in proportion to losses incurred, then Landlord shall estimate the amount of premium that Landlord would have been required to pay to obtain insurance coverage (or insurance coverage without such provision) with a recognized carrier and such estimated amount shall be deemed to be an Operating Cost.  If Landlord is not furnishing any particular work or service (the cost of which, if performed by Landlord, would be included in Operating Costs) to a tenant who has undertaken to perform such work or service in lieu of the performance thereof by Landlord, Operating Expenses shall be deemed for the purposes of this Paragraph to be increased by an amount equal to the additional Operating Costs which would reasonably have been incurred during such period by Landlord if it had at its own expense furnished such work or service to such tenant.  Landlord may, in a reasonable manner, allocate insurance premiums for so-called “blanket” insurance policies which insure other properties as well as the Building and said allocated amount shall be deemed to be an Operating Cost.  If Landlord selects the accrual accounting method rather than the cash accounting method for Operating Costs purposes, Operating Costs shall be deemed to have been paid when such expenses have accrued.

 

5.3                               In the event during all or any portion of any calendar year the Building is not fully rented and occupied, Landlord may elect to make an appropriate adjustment in occupancy related Operating Costs for such year, employing sound accounting and management principles, to determine Operating Costs that would have been paid or incurred by Landlord had the Building been fully rented and occupied and the amount so determined shall be deemed to have been Operating Costs for such year.  At any time when a service is furnished to, or an item of Operating Costs is incurred with respect to only a part of the Building, the cost of such service or the amount of such item of Operating Costs may, if in Landlord’s judgement it is appropriate to do so, be allocated entirely to such part of the Building and Tenant’s Proportionate Share of such Operating Costs shall be adjusted accordingly.

 

5.4                               Landlord and Tenant acknowledge that certain of the costs of management, operation and maintenance of the Development are contractually allocated among all of the buildings in the Development using methods of allocation that are considered reasonable and appropriate for the circumstances.  Tenant hereby consents to such contractual allocations and agrees that the Building’s portion shall be included in Operating Costs.

 

5.5                               During December of each year or as soon thereafter as practicable.  Landlord shall give Tenant written notice of its estimate of the amount payable under Paragraph 5.1 for the ensuing calendar year.  On or before the first day of each month thereafter, Tenant shall pay to Landlord as additional rent one-twelfth (1/12th) of such estimated amount, provided that if such notice is not given in December, Tenant shall continue to pay on the basis of the prior year’s estimate until the first day of the month after the month in which such notice is given.  If at any time it appears to Landlord that the amount payable under Paragraph 5.1 for the then current calendar year will vary from its estimate by more than five percent (5%), Landlord may, by 

 

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written notice to Tenant, revise its estimate for such year, and subsequent payments by Tenant for such year shall be based upon such revised estimate.

 

5.6                               Within ninety (90) days after the close of each calendar year or as soon thereafter as practicable, Landlord shall deliver to Tenant a statement showing the Operating Costs under Paragraph 5.1 and Tenant’s share thereof.  If such statement shows an amount due from Tenant that is less than the estimated payments previously paid by Tenant, it shall be accompanied by a refund of the excess to Tenant.  If such statement shows an amount due from Tenant that is more than the estimated payments previously paid by Tenant, Tenant shall pay the deficiency to Landlord, as additional rent, within thirty (30) days after delivery of the statement.

 

5.7                               Tenant shall have the right to review Landlord’s books and records of Operating Costs during normal business hours within twenty (20) days following the furnishing of the annual statement to Tenant, subject to execution of a confidentiality agreement reasonably acceptable to Landlord, and provided that if Tenant utilizes an independent accountant or other third party to perform such review it shall be one of national standing which is reasonably acceptable to Landlord, is not compensated on a contingency basis and is also subject to such confidentiality agreement.  Unless Tenant takes written exception to any item within thirty (30) days following the furnishing of the annual statement of Tenant, such statement shall be considered as final and accepted by Tenant.  The taking of exception to any item shall not excuse Tenant from the obligation to make timely payment based upon the statement as delivered by Landlord.

 

Article 6.                                            Electric Service

 

6.1                               To the extent Tenant is not billed directly by a public utility, Tenant shall pay, upon demand, as additional rent, for all electricity used by Tenant in the Premises for lighting, convenience outlets, and other direct uses.  The charge shall be based upon metered use and shall be at the rates charged for such services by the local public authority or utility.  Landlord shall furnish all electric light bulbs, tubes and ballasts for Building standard fixtures and include the cost thereof in Operating Costs.  Tenant will not without the written consent of Landlord use any apparatus or device in the Premises which will in any way increase its usage beyond the amount of electricity which Landlord determines to be reasonable for use of the Premises as general office space, nor connect with electric current (except through existing electrical outlets in the Premises) any apparatus or device for the purpose of using electric current.  If Tenant shall require electric current in excess of that which is reasonably obtainable from existing electric outlets and normal for use of the Premises as general office space, then Tenant shall first procure the consent of Landlord (which consent will not be unreasonably withheld).  Tenant shall pay all costs of installation of all facilities necessary to furnishing such excess capacity and for such increased electricity usage.

 

6.2                               Interruptions of any service shall not be deemed an eviction or disturbance of Tenant’s use and possession of the Premises or any part thereof, or render Landlord liable for damages by abatement of rent or otherwise or relieve Tenant from performance of Tenant’s obligations under this Lease, except as provided in Paragraph 8.3.

 

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Article 7.                                            Alterations

 

7.1                               Landlord agrees to install at Landlord’s cost and expense the improvements described in Exhibit C.  All other improvements to the Premises (“Alterations”) shall be installed at the cost and expense of Tenant, but only in accordance with plans and specifications which have been previously submitted to and approved in writing by Landlord, and only by Landlord or by contractors and subcontractors on Landlord’s list of approved contractors.  In connection with any request for an approval of Alterations, Landlord may retain the services of an architect and/or engineer and Tenant shall reimburse Landlord for the reasonable fees of such architect and/or engineer.  All Alterations shall be constructed in accordance with all governmental laws, ordinances, rules and regulations (“Laws”) and Tenant shall, prior to construction, provide such assurances to Landlord, including but not limited to, waivers of lien, surety company performance bonds and personal guaranties of individuals of substance, as Landlord shall require to assure payment of the costs thereof and to protect Landlord against any loss from any mechanics’, laborers’, materialmen’s or other liens.  At the time of completion of each Alteration, Tenant shall deliver to Landlord a set of final “as-built” plans.  All Alterations shall be and remain the property of Tenant during the Term and Tenant shall, unless Landlord otherwise elects, remove all Alterations and restore the Premises to its original condition by the date of termination of this Lease or upon earlier vacating of the Premises; provided, however, that, if at such time Landlord so elects, such Alterations shall become the property of Landlord as of the date of termination of this Lease or upon earlier vacating of the Premises and title shall pass to Landlord under this Lease as by a bill of sale.  All such removals and restoration shall be accomplished in a good workmanlike manner by contractors approved in writing by Landlord (which approval shall not be unreasonably withheld) so as not to damage the Building.

 

7.2                               Landlord shall be responsible for any costs incurred in bringing the shell and core Building facilities into compliance with governmental requirements, including the Americans With Disabilities Act (“ADA”).  If Tenant makes any Alterations to the Premises which affect governmental compliance, including ADA compliance, Tenant shall be responsible for any costs of compliance with such governmental requirements resulting from such Alterations.

 

Article 8.                                           Services

 

8.1                               Landlord agrees to furnish Tenant, while occupying the Premises:  water, hot, cold and refrigerated at those points of supply provided for general use of tenants; heated and refrigerated air conditioning in season at such times as Landlord normally furnishes these services to all tenants of the Building, and at such temperatures as are in accordance with any applicable statutes, rules or regulations and are considered by Landlord to be standard; janitor service to the Premises on weekdays other than holidays and such window washing as may from time to time in the Landlord’s judgment be reasonably required; operatorless passenger elevators, provided Landlord may reasonably limit the number of elevators to be in operation on Saturdays, Sundays, and holidays; but any stoppage or interruption of these defined services, resulting from any cause, shall not render Landlord liable in any respect for damages to any person, property, or business, nor be construed as an eviction of Tenant or work an abatement of rent, nor relieve Tenant from fulfillment of any covenant or agreement hereof.  Should any equipment or machinery furnished by Landlord cease to function properly, Landlord shall use reasonable diligence to repair the same promptly, but Tenant shall have no claim for rebate of 

 

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rent or damages on account of any interruptions in service occasioned thereby or resulting therefrom.  Landlord hereby reserves the right to charge Tenant for any additional services requested by Tenant on such basis as Landlord, in its sole discretion, determines.  Whenever heat generating machines or equipment are used by Tenant in the Premises which affect the temperature otherwise maintained by the air conditioning equipment, Landlord reserves the right to install supplementary air conditioning units in the Premises (or for the use of the Premises) and the expense of such purchase, installation, maintenance, and repair shall be paid by Tenant upon demand as additional rent.

 

8.2                               Tenant shall not provide any janitorial services without Landlord’s written consent and then only subject to supervision of Landlord.  Any such services provided by Tenant shall be Tenant’s sole risk and responsibility.

 

8.3                               If there is an interruption of services which renders the Premises unusable for its intended purpose for more than five (5) consecutive business days and such interruption is a result of factors within the reasonable control of Landlord, then rent shall abate from the sixth day until such services are restored.

 

Article 9.                                            Use of Premises

 

9.1                               The Premises shall be used for the Permitted Uses and no others.  Tenant will not occupy or use, nor permit any portion of Premises to be occupied or used, for any use or purpose which is unlawful in part or in whole or deemed to be disreputable in any manner, or extra hazardous on account of fire, nor permit anything to be done which will render void or in any way increase the rate of fire insurance on the Building or its contents, and Tenant, shall immediately cease and desist from such use, paying all costs and expenses resulting therefrom.  Tenant will conduct his business and control his agents, employees and invitees in such a manner as not to create any nuisance, nor unreasonably interfere with, annoy, or disturb other tenants or Landlord in the management of the Building.

 

9.2                               Tenant shall at its own cost and expense promptly obtain any and all licenses and permits necessary for any Permitted Use.  Tenant shall comply with all Laws applicable to the use and its occupancy of the Premises, and shall promptly comply with all governmental orders and directives for the correction, prevention and abatement of any violations or nuisances in or upon, or connected with, the Premises, all at Tenant’s sole expense.  If, as a result of any change in Laws the Premises must be altered to lawfully accommodate Tenant’s use and occupancy, such alterations shall be made only with the consent of Landlord, but the entire cost shall be borne by Tenant; provided, that, the necessity of Landlord’s consent shall in no way create any liability against Landlord for failure of Tenant to comply with such Laws.

 

9.3                               Tenant will maintain the Premises (including all fixtures installed by Tenant, water heaters within the Premises and plate glass) in good repair, reasonable wear and tear excepted, and in a clean and healthful condition, and comply with all Laws with reference to condition, or occupancy of the Premises.  Any repairs or replacements shall be with materials and workmanship of the same character, kind and quality as the original.  Tenant will not, without the prior written consent of Landlord, paint, install lighting or decorations, or install any signs, window or door lettering or advertising media of any type on or about the Premises.  At

 

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termination of this Lease, upon its expiration or otherwise, Tenant shall deliver up the Premises in good repair and condition, reasonable wear and tear excepted, broom clean and free of all debris.

 

9.4                               Tenant shall pay upon demand as additional rent the full cost of repairing any damage to the Premises, Building or related facilities resulting from and/or caused in whole or in part by the negligence or misconduct of Tenant, its agents, servants, employees, patrons, customers, or any other person entering upon the Development as a result of Tenant’s business activities or resulting from Tenant’s default hereunder.

 

9.5                               The current rules and regulations are described in Exhibit D.  Landlord shall at all times have the right to change such rules and regulations or to promulgate other rules and regulations in such reasonable manner as may be deemed advisable for the safety, care, and cleanliness of the Building or the Development and copies thereof will be forwarded to Tenant.  Tenant will comply fully with such rules and regulations.  Tenant shall further be responsible for the compliance with such rules and regulations by Tenant’s employees, servants, agents and visitors.

 

9.6                               Tenant agrees that Tenant, its agents and contractors, licensees, or invitees shall not handle, use, manufacture, store or dispose of any flammables, explosives, radioactive materials, hazardous wastes or materials, toxic wastes or materials, asbestos, PCB’s, petroleum products or derivatives or other similar substances (collectively “Hazardous Materials”) on, under, or about the Premises; provided that Tenant may handle, store, use or dispose of products containing small quantities of Hazardous Materials, which products are of a type customarily found in offices and households (such as toner for copies, and the like); provided further that Tenant shall handle, store, use and dispose of any such Hazardous Materials in a safe and lawful manner and shall not allow such Hazardous Materials to contaminate the Premises, the Building or the environment.  Tenant further agrees that Tenant will not permit any substance to come into contact with groundwater under the Premises.  Any such substance coming into contact with groundwater shall, regardless of its inherent hazardous characteristics, be considered a Hazardous Material for purposes of this Lease.

 

9.7                               Without limiting the above, Tenant shall reimburse, defend, indemnify and hold Landlord harmless from and against any and all claims, losses, liabilities, damages, costs and expenses, including without limitation, loss of rental income, loss due to business interruption, and attorneys fees and costs, arising out of or in any way connected with the use, manufacture, storage, or disposal of Hazardous Materials by Tenant, its agents or contractors on, under or about the Premises including, without limitation, the costs of any required or necessary investigation, repair, cleanup or detoxification and the preparation of any closure or other required plans in connection therewith, whether voluntary or compelled by governmental authority.  The indemnity obligations of Tenant under this clause shall survive any termination of the Lease.  Any of Tenant’s insurance insuring against claims of the type dealt with in this Paragraph shall be considered primary coverage for claims against the Premises arising out of or under this Paragraph.

 

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Article 10.                                     Inspections

 

Landlord shall have the right to enter the Premises at any reasonable time following reasonable notice (except in the case of emergencies or to provide routine cleaning or maintenance), for the following purposes:  (a) to ascertain the condition of the Premises; (b) to determine whether Tenant is diligently fulfilling Tenant’s responsibilities under this Lease; (c) to clean and to make such repairs as may be required or permitted to be made by Landlord under the terms of this Lease; or (d) to do any other act or thing which Landlord deems reasonable to preserve the Premises and the Building.  During the last six (6) months of the Term and at any time Tenant is in default hereunder, Landlord shall have the right to enter the Premises at any reasonable time during business hours for the purpose of showing the Premises.  Tenant shall give written notice to Landlord at least thirty (30) days prior to vacating and shall arrange to meet with Landlord for a joint inspection of the Premises.  In the event of Tenant’s failure to give such notice or arrange such joint inspection, Landlord’s inspection at or after Tenant vacates the Premises shall be conclusively deemed correct for purposes of determining Tenant’s responsibility for repairs and restoration.

 

Article 11.                                     Assignment and Subletting

 

11.1                        Tenant shall not have the right to assign or pledge this Lease or to sublet the whole or any part of the Premises, whether voluntarily or by operation of law, or permit the use or occupancy of the Premises by anyone other than Tenant, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, and such restrictions shall be binding upon any assignee or subtenant to which Landlord has consented.  In the event Tenant desires to sublet the Premises, or any portion thereof, or assign this Lease, Tenant shall give written notice thereof to Landlord within a reasonable time prior to the proposed commencement date of such subletting or assignment, which notice shall set forth the name of the proposed subtenant or assignee, the relevant terms of any sublease and copies of financial reports and other relevant financial information of the proposed subtenant or assignee.  In no event may Tenant sublet, nor will Landlord consent to any sublease of, all or any portion of the Premises if the rent is determined in whole or in part based upon the income or profits derived by the sublessee (other than a rent based on a fixed percentage or percentages of receipts or sales).  Notwithstanding any permitted assignment or subletting, Tenant shall at all times remain directly, primarily and fully responsible and liable for the payment of the rent herein specified and for compliance with all of its other obligations under the terms, provisions and covenants of this Lease.  Upon the occurrence of an “event of default” (as hereinafter defined), if the Premises or any part thereof are then assigned or sublet, Landlord, in addition to any other remedies herein provided or provided by law, may, at its option, collect directly from such assignee or subtenant all rents due and becoming due to Tenant under such assignment or sublease and apply such rent against any sums due to Landlord from Tenant hereunder, and no such collection shall be construed to constitute a novation or a release of Tenant from the further performance of Tenant’s obligations hereunder.  Tenant shall pay to Landlord, on demand, a reasonable service charge for the processing of the application for the consent and for the preparation of the consent.  Such service charge shall be collectible by Landlord only where consent is granted by Landlord.

 

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11.2                        If Tenant is an entity other than a natural person, the ownership interests of which at the time of execution of this Lease, are held by fewer than fifty (50) persons, and if at any time during the Term persons or other entities who own at least one-third (1/3) of its ownership interests at the time of the execution of this Lease or following Landlord’s consent to a transfer of such ownership interests, cease to own such ownership interests (other than as a result of transfer by bequest or inheritance), such transfer shall, at the option of Landlord, be deemed a default by Tenant under this Lease.

 

11.3                        In addition to, but not in limitation of, Landlord’s right to approve of any subtenant or assignee, Landlord shall have the option, in its sole discretion, in the event of any proposed subletting or assignment, to terminate this Lease, or in the case of a proposed subletting of less than the entire Premises, to recapture the portion of the Premises to be sublet, as of the date the subletting or assignment is to be effective.  The option shall be exercised, if at all, by Landlord giving Tenant written notice thereof within sixty (60) days following Landlord’s receipt of Tenant’s written notice and accompanying information as required above.  If this Lease shall be terminated with respect to the entire Premises pursuant to this Paragraph, the Term shall end on the date stated in Tenant’s notice as the effective date of the sublease or assignment as if that date had been originally fixed in this Lease for the expiration of the Term.  If Landlord recaptures under this Paragraph only a portion of the Premises, the rent during the unexpired Term shall abate proportionately.  Tenant shall, at Tenant’s own cost and expense, discharge in full any outstanding commission which may be due and owing as a result of any proposed assignment or subletting, whether or not the Premises are recaptured pursuant hereto and rented by Landlord to the proposed tenant or any other tenant.  In the event of the recapture of a portion of the Premises by Landlord pursuant to the terms of this Paragraph, Tenant shall pay all costs associated with the separation of the recaptured premises from the portion not recaptured, including, but without limitation, the cost of all demising partitions, changes in lighting and HVAC Systems and all reasonable architectural and/or engineering fees.

 

11.4                        In the event that Tenant sublets, assigns or otherwise transfers its interest in this Lease and at any time receives Excess Rent, Tenant shall pay to Landlord one hundred percent (100%) of the Excess Rent as received by Tenant.  Tenant shall furnish Landlord with a sworn statement, certified by an officer of Tenant or an independent certified public accountant, setting forth in detail the computation of Excess Rent, and Landlord, or its representatives, shall have access to the books, records and papers of Tenant in relation thereto, and the right to make copies thereof.  If a part of the consideration for such sublease or assignment shall be payable other than in cash, the payment to Landlord shall be payable in such form as is reasonably satisfactory to Landlord.  For purposes of this Paragraph, the term “Excess Rent” shall mean the excess, if any, of (i) all amounts received or to be received in the form of cash, cash equivalents, and non-cash consideration by Tenant from any assignee or sublessee over (ii) the sum of the rent payable to Landlord hereunder (or, in the case of a sublease of a portion of the Premises, the portion of the Rent which is allocable on a per square foot basis to the space sublet), plus the amount of any reasonable brokers’ commissions and costs of tenant improvements incurred by Tenant in connection with such assignment or sublease, all of which shall be, in the case of a sublease, amortized over the term of the sublease for the purpose of calculating the amounts of the periodic payments due to Landlord hereunder.

 

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11.5                        Any assignment or subletting by Tenant pursuant to Paragraph 11.1 of all or any portion of the Premises, or termination of the Lease for a portion of the Premises pursuant to Paragraph 11.2, shall automatically operate to terminate each and every right, option, or election, if any exist, belonging to Tenant, including by way of illustration, but not limitation, any option to expand its premises or to extend or renew the term of Tenant’s lease for all or any portion of the Premises — i.e., such rights and options shall cease as to both space sublet or assigned and as to any portion of the original Premises retained by Tenant.

 

Article 12.                                     Fire and Casualty Damage

 

12.1                        If the Building or Premises are rendered partially or wholly untenantable by fire or other casualty, Landlord shall deliver to Tenant a notice within sixty (60) days of such fire or other casualty setting forth the time, as reasonably determined by Landlord, required to materially restore the Building or Premises.  If such damage cannot, in Landlord’s reasonable estimation, be materially restored within one hundred eighty (180) days of such damage, then either party may terminate this Lease.  A party shall exercise its option by written notice within ten (10) days of the date of Landlord’s determination notice.  For purposes hereof, the Building or Premises shall be deemed “materially restored” if they are in such condition as would not prevent or materially interfere with Tenant’s use of the Premises for the purpose for which it was then being used.  If this Lease shall be terminated pursuant to this Article 12, the Term shall end on the date of the notice of termination as if that date had been originally fixed in this Lease for the expiration of the Term and, if the Premises is untenantable in whole or in part following the casualty, the rent payable during the period in which the Premises is untenantable shall be reduced to such extent, if any, as may be fair and reasonable under all of the circumstances.

 

12.2                        If this Lease is not terminated pursuant to Paragraph 12.1, then Landlord shall proceed with all due diligence to repair and restore the Building or Premises, as the case may be (except that Landlord may elect not to rebuild if such damage occurs during the last year of the Term exclusive of any option which is unexercised at the date of such damage).  If this Lease shall not be terminated pursuant to this Article 12 and if the Premises is untenantable in whole or in part following the casualty, the rent payable during the period in which the Premises is untenantable shall be reduced to such extent, if any, as may be fair and reasonable under all of the circumstances.

 

12.3                        In the event that Landlord should fail to complete such repairs and material restoration within one hundred eighty (180) days after the date of such damage, Tenant may at its option and as its sole remedy terminate this Lease by delivering written notice to Landlord, whereupon the Lease shall end on the date of such notice as if the date of such notice were the date originally fixed in this Lease for the expiration of the Term; provided however, that if construction is delayed because of changes, deletions, or additions in construction requested by Tenant, strikes, lockouts, casualties, acts of God, war, material or labor shortages, governmental regulation or control or other causes beyond the reasonable control of Landlord, the period for restoration, repair or rebuilding shall be extended for the amount of time Landlord is so delayed.  Notwithstanding the above, if Landlord delivers to Tenant a notice setting forth a new projected date for completion of the material restoration of the Premises (such notice shall be accompanied by an explanation for the revised date), then Tenant shall have fifteen (15) days thereafter to exercise its right to terminate; if Tenant does not exercise its right to terminate within such 

 

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fifteen (15) day period it shall be deemed to have agreed to allow Landlord until the date set forth in Landlord’s notice to materially restore the Premises and may not thereafter exercise this right to terminate unless and until Landlord has failed to materially restore by such later date.

 

12.4                        In no event shall Landlord be required to rebuild, repair or replace any Alterations which may have been placed in or about the Premises by Tenant.  Any insurance which may be carried by Landlord or Tenant against loss or damage to the Building or Premises shall be for the sole benefit of the party carrying such insurance and under its sole control.

 

12.5                        Notwithstanding anything herein to the contrary, in the event the holder of any indebtedness secured by a mortgage or deed of trust covering the Premises, Building or Property requires that any insurance proceeds be applied to such indebtedness, then Landlord shall have the right to terminate this Lease by delivering written notice to Tenant within fifteen (15) days after such requirement is made by any such holder, whereupon the Lease shall end on the date of such notice as if the date of such notice were the date originally fixed in this Lease for the expiration of the Term.

 

12.6                        Each of Landlord and Tenant hereby releases the other from any and all liability or responsibility to the other or anyone claiming through or under them by way of subrogation or otherwise for any loss or damage to property caused by fire, extended coverage perils, vandalism or malicious mischief, sprinkler leakage or any other perils insured in policies of insurance covering such property (or which would have been insured if coverage required herein had been carried), even if such loss or damage shall have been caused by the fault or negligence of the other party, or anyone for whom such party may be responsible, including any other tenants or occupants of the remainder of the Building; provided, however, that this release shall be applicable and in force and effect only to the extent that such release shall be lawful at that time and in any event only with respect to loss or damage occurring during such times as the releasor’s policies shall contain a clause or endorsement to the effect that any such release shall not adversely affect or impair said policies or prejudice the right of the releasor to recover thereunder and then only to the extent of the insurance proceeds payable under such policies.  Each of Landlord and Tenant agrees that it will require its insurance carriers to include in its policies such a clause or endorsement.

 

12.7                        In the event of any damage or destruction to the Building or Premises, Tenant shall, upon notice from Landlord, remove forthwith, at its sole cost and expense, such portion or all of the property belonging to Tenant from such portion or all of the Building or Premises as Landlord shall request.

 

Article 13.                                     Liability

 

Landlord shall not be liable for and Tenant will indemnify and hold Landlord harmless from any loss, liability, costs and expenses, including reasonable attorney’s fees, arising out of any claim of injury or damage on or about the Premises caused by the negligence or misconduct or breach of this Lease by Tenant, its employees, subtenants, invitees or by any other person entering the Premises, Building or Development under express or implied invitation of Tenant or arising out of Tenant’s use of the Premises.  Landlord shall not be liable to Tenant or Tenant’s agents, employees, invitees or any person entering upon the Development in whole or in part 

 

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because of Tenant’s use of the Premises for any damage to persons or property due to condition, design, or defect in the Building or its mechanical systems which may exist or occur, and Tenant assumes all risks of damage to such persons or property.  Landlord shall not be liable or responsible for any loss or damage to any property or person occasioned by theft, fire, act of God, public enemy, injunction, riot, strike, insurrection, war, court order, requisition or order of governmental body or authority, or other matter beyond control of Landlord, or for any injury or damage or inconvenience, which may arise through repair or alteration of any part of the Building, or failure to make repairs, or from any cause whatever except Landlord’s willful acts or gross negligence.  Tenant shall procure and maintain throughout the term of this Lease a policy of insurance, in form and substance satisfactory to Landlord, at Tenant’s sole cost and expense, insuring both Landlord and Tenant against all claims, demands or actions arising out of or in connection with:  (a) the Premises; (b) the condition of the Premises; (c) Tenant’s operations in and maintenance and use of the Premises; and (d) Tenant’s liability assumed under this Lease; the limits of such policy to be in the amount of not less than $1,000,000 per occurrence in respect of injury to persons (including death) and in the amount of not less than $500,000 per occurrence in respect of property damage or destruction, including loss of use thereof.  Such policy shall be procured by Tenant from responsible insurance companies satisfactory to Landlord.  A certified copy of such policy, together with receipt evidencing payment of the premium, shall be delivered to Landlord prior to the Commencement Date.  Not less than thirty (30) days prior to the expiration date of such policy, a certified copy of a renewal thereof (bearing notations evidencing the payment of the renewal premium) shall be delivered to Landlord.  Such policy shall further provide that not less than thirty (30) days’ written notice shall be given to Landlord before such policy may be cancelled or changed to reduce the insurance coverage provided thereby.

 

Article 14.                                     Condemnation

 

14.1                        If any substantial part of the Building or Premises should be taken for any public or quasi-public use under Laws or by private purchase in lieu thereof (a “Taking”) and the Taking would prevent or materially interfere with the use of the Building or Premises for the purpose for which it is then being used, this Lease shall terminate effective when the Taking shall occur in the same manner as if the date of such Taking were the date originally fixed in this Lease for the expiration of the Term.

 

14.2                        If part of the Building or Premises shall be taken in a Taking, and this Lease is not terminated as provided in Paragraph 14.1, this Lease shall not terminate but the rent payable hereunder during the unexpired portion of this Lease shall be reduced to such extent, if any, as may be fair and reasonable under all of the circumstances and Landlord shall undertake to restore the Building and Premises to a condition suitable for Tenant’s use, as near to the condition thereof immediately prior to such Taking as is reasonably feasible under all the circumstances.

 

14.3                        In the event of any such Taking, Landlord and Tenant shall each be entitled to receive and retain such separate awards and/or portion of lump sum awards as may be allocated to their respective interests in any condemnation proceedings; provided that Tenant shall not be entitled to receive any award for Tenant’s loss of its leasehold interest, the right to such award being hereby assigned by Tenant to Landlord.

 

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Article 15.                                     Holding Over

 

Tenant will, at the termination of this Lease by lapse of time or otherwise, yield up immediate possession of the Premises to Landlord.  If Tenant retains possession of the Premises or any part thereof after such termination, then Landlord may, at its option, serve written notice upon Tenant that such holding over constitutes any one of (a) creation of a tenancy at sufferance, (b) creation of a month to month tenancy, or (c) if such hold over continues for sixty (60) days, renewal of this Lease for one year, and from year to year thereafter, in any case upon the terms and conditions set forth in this Lease; provided, however, that the rental shall, in addition to all other sums which are to be paid by Tenant hereunder, be equal to double the rental being paid under this Lease immediately prior to such termination.  If no such notice is served, then a tenancy at sufferance shall be deemed to be created at the rent in the preceding sentence.  Tenant shall also pay to Landlord all damages sustained by Landlord resulting from retention of possession by Tenant, including the loss of any proposed subsequent tenant for any portion of the Premises.  The provisions of this Article shall not constitute a waiver by Landlord of any right of re-entry as herein set forth; nor shall receipt of any rent or any other act in apparent affirmance of the tenancy operate as a waiver of the right to terminate this Lease for a breach of any of the terms, covenants, or obligations herein on Tenant’s part to be performed.

 

Article 16.                                     Quiet Enjoyment

 

Landlord represents and warrants that it has full right and authority to enter into this Lease and that Tenant, while paying the rental and performing its other covenants and agreements herein set forth, shall peaceably and quietly have, hold and enjoy the Premises for the Term without hindrance or molestation from Landlord subject to the terms and provisions of this Lease.  Landlord shall not be liable for any interference or disturbance by other tenants or third persons, nor shall Tenant be released from any of the obligations of this Lease because of such interference or disturbance.

 

Article 17.                                     Events of Default.

 

Each of the following events shall be deemed to be an “event of default” by Tenant under this Lease:

 

17.1                        Tenant shall fail to pay when or before due any sum of money becoming due to be paid to Landlord hereunder, whether such sum be any installment of the rent herein reserved, any other amount treated as additional rent hereunder, or any other payment or reimbursement to Landlord required herein, whether or not treated as additional rent hereunder, and such failure shall continue for a period of five (5) days from the date such payment was due;

 

17.2                        Tenant shall fail to comply with any term, provision or covenant of this Lease other than by failing to pay when or before due any sum of money becoming due to be paid to Landlord hereunder, and shall not cure such failure within twenty (20) days (forthwith, if the default involves a hazardous condition) after written notice thereof to Tenant;

 

17.3                        Tenant shall fail to vacate the Premises immediately upon termination of this Lease, by lapse of time or otherwise;

 

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17.4                        The leasehold interest of Tenant shall be levied upon under execution or be attached by process of law or Tenant shall fail to contest diligently the validity of any lien or claimed lien and give sufficient security to Landlord to insure payment thereof or shall fail to satisfy any judgment rendered thereon and have the same released, and such default shall continue for ten (10) days after written notice thereof to Tenant;

 

17.5                        Tenant shall become insolvent, admit in writing its inability to pay its debts generally as they become due, file a petition in bankruptcy or a petition to take advantage of any insolvency statute, make an assignment for the benefit of creditors, make a transfer in fraud of creditors, apply for or consent to the appointment of a receiver of itself or of the whole or any substantial part of its property, or file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws, as now in effect or hereafter amended, or any other applicable law or statute of the United States or any state thereof;

 

17.6                        A court of competent jurisdiction shall enter an order, judgment or decree adjudicating Tenant a bankrupt, or appointing a receiver of Tenant, or of the whole or any substantial part of its property, without the consent of Tenant, or approving a petition filed against Tenant seeking reorganization or arrangement of Tenant under the bankruptcy laws of the United States, as now in effect or hereafter amended, or any state thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within thirty (30) days from the date of entry thereof.

 

Article 18.                                     Remedies

 

Upon the occurrence of an event of default, Landlord shall have the option to pursue any one or more of the following remedies without any notice or demand whatsoever:

 

18.1                        Landlord may, at its election, terminate this Lease or terminate Tenant’s right to possession only, without terminating the Lease;

 

18.2                        Upon any termination of this Lease, whether by lapse of time or otherwise, or upon any termination of Tenant’s right to possession without termination of the Lease, Tenant shall surrender possession and vacate the Premises immediately, and deliver possession thereof to Landlord, and Tenant hereby grants to Landlord full and free license to enter into and upon the Premises in such event with or without process of law and to repossess Landlord of the Premises as of Landlord’s former estate and to expel or remove Tenant and any others who may be occupying or within the Premises and to remove any and all property therefrom, without being deemed in any manner guilty of trespass, eviction or forcible entry or detainer, and without incurring any liability for any damage resulting therefrom, Tenant hereby waiving any right to claim damage for such reentry and expulsion, and without relinquishing Landlord’s right to rent or any other right given to Landlord hereunder or by operation of law;

 

18.3                        Upon any termination of this Lease, whether by lapse of time or otherwise, Landlord shall be entitled to recover as damages, all rent, including any amounts treated as additional rent hereunder, and other sums due and payable by Tenant on the date of termination, plus the sum of (1) an amount equal to the then present value of the rent, including any amounts treated as additional rent hereunder, and other sums provided herein to be paid by Tenant for the 

 

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residue of the Term, less the then present value of the fair rental value of the Premises for such residue (taking into account the time and expense necessary to obtain a replacement tenant or tenants, including expenses hereinafter described relating to recovery of the Premises, preparation for reletting and for reletting itself), and (2) the cost of performing any other covenants which would have otherwise been performed by Tenant;

 

18.4

 

18.4.1.           Upon any termination of Tenant’s right to possession only without termination of the Lease, Landlord may, at Landlord’s option, enter into the Premises, remove Tenant’s signs and other evidences of tenancy, and take and hold possession thereof as provided in Paragraph 18.2, without such entry and possession terminating the Lease or releasing Tenant, in whole or in part, from any obligation, including Tenant’s obligation to pay the rent, including any amounts treated as additional rent, hereunder for the full term.  In any such case Tenant shall pay forthwith to Landlord, if Landlord so elects, a sum equal to the entire amount of the rent, including any amounts treated as additional rent hereunder, for the residue of the Term plus any other sums provided herein to be paid by Tenant for the remainder of the Term, to be used by Landlord as a deposit against Tenant’s obligations under Subparagraph 18.4.2;

 

18.4.2.           Landlord shall use reasonable efforts to relet the Premises or any part thereof for such rent and upon such terms as Landlord, in its reasonable discretion, shall determine.  Landlord and Tenant agree that Landlord may relet the Premises for a greater or lesser term than that remaining under this Lease, relet the Premises as a part of a larger area, or change the character or use made of the Premises.  Landlord and Tenant further agree that Landlord shall only be required to use the same efforts Landlord then uses to lease other properties Landlord owns or manages (or if the Premises is then managed for Landlord, then Landlord will instruct such manager to use the same efforts such manager then uses to lease other space or properties which it owns or manages); provided, however, that Landlord (or its manager) shall not be required to give any preference or priority to the showing or leasing of the Premises over any other space that Landlord (or its manager) may be leasing or have available and may place a suitable prospective tenant in any such available space regardless of when such alternative space becomes available; provided, further, that Landlord shall not be required to observe any instruction given by Tenant about such reletting or accept any tenant offered by Tenant.  In any such case, Landlord may, but shall not be required to, make repairs, alterations and additions in or to the Premises and redecorate the same to the extent Landlord deems necessary or desirable, and Tenant shall, upon demand, pay the cost thereof, together with Landlord’s expenses of reletting, including, without limitation, any broker’s commission incurred by Landlord.  If the consideration collected by Landlord upon any such reletting plus any sums previously collected from Tenant are not sufficient to pay the full amount of all rent, including any amounts treated as additional rent hereunder and other sums reserved in this Lease for the remaining Term, together with the costs of repairs, alterations, additions, redecorating, and Landlord’s expenses of reletting and the collection of the rent accruing therefrom (including reasonable attorney’s fees and broker’s commissions), Tenant shall pay to Landlord the amount of such deficiency upon demand and Tenant agrees that Landlord may file suit to recover sums falling due under this section from time to time;

 

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18.5                        Landlord may, at Landlord’s option, enter into and upon the Premises, with or without process of law, if Landlord determines in its sole discretion that Tenant is not acting within a commercially reasonable time to maintain, repair or replace anything for which Tenant is responsible hereunder and correct the same, without being deemed in any manner guilty of trespass, eviction or forcible entry and detainer and without incurring any liability for any damage resulting therefrom and Tenant agrees to reimburse Landlord, on demand, as additional rent, for any expenses which Landlord may incur in thus effecting compliance with Tenant’s obligations under this Lease;

 

18.6                        Any and all property which may be removed from the Premises by Landlord pursuant to the authority of the Lease or of law, to which Tenant is or may be entitled, may be handled, removed and stored, as the case may be, by or at the direction of Landlord at the risk, cost and expense of Tenant, and Landlord shall in no event be responsible for the value, preservation or safekeeping thereof.  Tenant shall pay to Landlord, upon demand, any and all expenses incurred in such removal and all storage charges against such property so long as the same shall be in Landlord’s possession or under Landlord’s control.  Any such property of Tenant not retaken by Tenant from storage within thirty (30) days after removal from the Premises shall, at Landlord’s option, be deemed conveyed by Tenant to Landlord under this Lease as by a bill of sale without further payment or credit by Landlord to Tenant.

 

18.7                        In the event Tenant fails to pay any installment of rent, including any amount treated as additional rent, or other sums hereunder as and when such installment or other charge is due, Tenant shall pay to Landlord on demand a late charge in an amount equal to five percent (5%) of such installment or other charge overdue in any month and five percent (5%) each month thereafter until paid in full to help defray the additional cost to Landlord for processing such late payments, and such late charge shall be additional rent hereunder and the failure to pay such late charge within ten (10) days after demand therefor shall be an additional event of default.  The provision for such late charge shall be in addition to all of Landlord’s other rights and remedies hereunder or at law and shall not be construed as liquidated damages or as limiting Landlord’s remedies in any manner.

 

18.8                        Pursuit of any of the foregoing remedies shall not preclude pursuit of any of the other remedies herein provided or any other remedies provided by law (all such remedies being cumulative), nor shall pursuit of any remedy herein provided constitute a forfeiture or waiver of any rent due to Landlord hereunder or of any damages accruing to Landlord by reason of the violation of any of the terms, provisions and covenants herein contained.  No act or thing done by Landlord or its agents during the term hereby granted shall be deemed a termination of this Lease or an acceptance of the surrender of the Premises, and no agreement to terminate this Lease or accept a surrender of said Premises shall be valid unless in writing signed by Landlord.  No waiver by Landlord of any violation or breach of any of the terms, provisions and covenants herein contained shall be deemed or construed to constitute a waiver of any other violation or breach of any of the terms, provisions and covenants herein contained.  Landlord’s acceptance of the payment of rental or other payments hereunder after the occurrence of an event of default shall not be construed as a waiver of such default, unless Landlord so notifies Tenant in writing.  Forbearance by Landlord in enforcing one or more of the remedies herein provided upon an event of default shall not be deemed or construed to constitute a waiver of such default or of Landlord’s right to enforce any such remedies with respect to such default or any subsequent

 

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default.  If, on account of any breach or default by Tenant in Tenant’s obligations under the terms and conditions of this Lease, it shall become necessary or appropriate for Landlord to employ or consult with an attorney concerning or to enforce or defend any of Landlord’s rights or remedies hereunder, Tenant agrees to pay any attorney’s fees so incurred.  Without limiting the foregoing, Tenant hereby expressly waives any right to trial by jury.

 

Article 19.                                     Tenant’s Bankruptcy Or Insolvency.

 

If at any time and for so long as Tenant shall be subjected to the provisions of the United States Bankruptcy Code or other law of the United States or any state thereof for the protection of debtors as in effect at such time (each a “Debtor’s Law”), Tenant, Tenant as debtor-in-possession, and any trustee or receiver of Tenant’s assets (each a “Tenant’s Representative”) shall have no greater right to assume or assign this Lease or any interest in this Lease, or to sublease any of the Premises then accorded to Tenant in Article 11, except to the extent Landlord shall be required to permit such assumption, assignment or sublease by the provisions of such Debtor’s Law.  Without limitation of the generality of the foregoing, any right of any Tenant’s Representative to assume or assign this Lease or to sublease any of the Premises shall be subject to the conditions that:

 

19.1                        Such Debtor’s Law shall provide to Tenant’s Representative a right of assumption of this Lease which Tenant’s Representative shall have timely exercised and Tenant’s Representative shall have fully cured any default of Tenant under this Lease.

 

19.2                        Tenant’s Representative or the proposed assignee, as the case shall be, shall have deposited with Landlord as security for the timely payment of rent an amount equal to the larger of:  (a) three months’ rent and other monetary charges accruing under this Lease; and (b) any sum specified in Article 3; and shall have provided Landlord with adequate other assurance of the future performance of the obligations of the Tenant under this Lease.  Without limitation, such assurances shall include, at least, in the case of assumption of this Lease, demonstration to the satisfaction of the Landlord that Tenant’s Representative has and will continue to have sufficient unencumbered assets after the payment of all secured obligations and administrative expenses to assure Landlord that Tenant’s Representative will have sufficient funds to fulfill the obligations of Tenant under this Lease; and, in the case of assignment, submission of current financial statements of the proposed assignee, audited by an independent certified public accountant reasonably acceptable to Landlord and showing a net worth and working capital in amounts determined by Landlord to be sufficient to assure the future performance by such assignee of all of the Tenant’s obligations under this Lease.

 

19.3                        The assumption or any contemplated assignment of this Lease or subleasing any part of the Premises, as shall be the case, will not breach any provision in any other lease, mortgage, financing agreement or other agreement by which Landlord is bound.

 

19.4                        Landlord shall have, or would have had absent the Debtor’s Law, no right under Article XI to refuse consent to the proposed assignment or sublease by reason of the identity or nature of the proposed assignee or sublessee or the proposed use of the Premises concerned.

 

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Article 20.                                     Mortgages

 

Tenant accepts this Lease subject and subordinate to any mortgages and deed of trust now or at any time hereafter constituting a lien or charge upon the Property, or the improvements situated thereon, provided, however, that if the mortgagee, trustee, or holder of any such mortgage or deed of trust (“Mortgagee”) elects to have Tenant’s interest in this Lease superior to any such instrument, then by notice to Tenant from such Mortgagee, this Lease shall be deemed superior to such lien whether this Lease was executed before or after said mortgage or deed of trust.  Tenant shall at any time hereafter on demand execute any instruments, releases or other documents which may be required by any such Mortgagee for the purpose of subjecting and subordinating this Lease to the lien of any such mortgage or for the purpose of evidencing the superiority of this Lease to the lien of any such mortgage, as may be the case.

 

Article 21.                                     Mechanic’s and Other Liens

 

Tenant shall have no authority, express or implied, to create or place any lien or encumbrance of any kind or nature whatsoever upon, or in any manner to bind, the interest of Landlord in the Premises or to charge the rentals payable hereunder for any claim in favor of any person dealing with Tenant, including those who may furnish materials or perform labor for any construction or repairs, and each such claim shall affect and each such lien shall attach to, if at all, only the leasehold interest granted to Tenant by this Lease.  Tenant covenants and agrees that it will pay or cause to be paid all sums legally due and payable by it on account of any labor performed or materials furnished in connection with any work performed on the Premises on which any lien is or can be validly and legally asserted against its leasehold interest in the Premises or the improvements thereon and that it will save and hold Landlord harmless from any and all loss, liability, cost or expense based on or arising out of asserted claims or liens against the leasehold estate or against the right, title and interest of the Landlord in the Premises or under the terms of this Lease.  Tenant will not permit any mechanic’s lien or liens or any other liens which may be imposed by law affecting Landlord’s or its Mortgagees’ interest in the Premises or the Building to be placed upon the Premises or the Building arising out of any action or claimed action by Tenant, and in case of the filing of any such lien Tenant will promptly pay same.  If any such lien shall remain in force and effect for twenty (20) days after written notice thereof from Landlord to Tenant, Landlord shall have the right and privilege of paying and discharging the same or any portion thereof without inquiry as to the validity thereof, and any amounts so paid, including expenses and interest, shall be so much additional rent hereunder due from Tenant to Landlord and shall be paid to Landlord immediately on rendition of bill therefor.  Notwithstanding the foregoing, Tenant shall have the right to contest any such lien in good faith and with all due diligence so long as any such contest, or action taken in connection therewith, protects the interest of Landlord and Landlord’s Mortgagee in the Premises, and Landlord and any such Mortgagee are, by the expiration of said twenty (20) day period, furnished such protection, and indemnification against any loss, liability, cost or expense related to any such lien and the contest thereof as are satisfactory to Landlord and any such Mortgagee.

 

Article 22.                                     Notices

 

Any notice or document required or permitted to be delivered under this Lease shall be addressed to the intended recipient, shall be transmitted personally, by fully prepaid registered or

 

21

 

certified United States Mail return receipt requested, or by reputable independent contract delivery service furnishing a written record of attempted or actual delivery, and shall be deemed to be delivered when tendered for delivery to the addressee at its address set forth in Article 1, or at such other address as it has then last specified by written notice delivered in accordance with this Article 22, or if to Tenant at either its aforesaid address or its last known registered office or home of a general partner or individual owner, whether or not actually accepted or received by the addressee.  All parties included within the terms “Landlord” and “Tenant,” respectively, shall be bound by notices given in accordance with the provisions of this Article to the same effect as if each had received such notice.

 

Article 23.                                     Substitution of Premises

 

At any time after date of execution of this Lease, Landlord may substitute for the Premises, other premises in the Development (the “new premises”), in which event the new premises shall be deemed to be the Premises for all purposes under this Lease, provided:  (1) the new premises shall be located in the Riverwalk Complex and shall be substantially similar to the Premises in square footage, windowline and appropriateness for the use of Tenant’s purposes; (2) if Tenant is then occupying the Premises, Landlord shall pay the expense of moving Tenant, its property and equipment (including cable and wiring) to the new premises and such moving shall be done at such time and in such manner so as to cause the least inconvenience to Tenant; (3) Landlord shall give to Tenant not less than thirty (30) days’ prior written notice of such substitution; and (4) Landlord shall, at its sole cost, improve the new premises with improvements substantially similar to those located in the Premises.  Landlord shall replace Tenant’s current inventory of paper goods bearing it’s old address.  If Landlord chooses to substitute Tenant’s premises and such substitution takes place within the last six (6) months of the original lease term, then either Tenant or Landlord shall have the option to terminate this Lease with thirty (30) days prior written notice to the other Party.

 

Article 24.                                     Certain Rights Reserved To The Landlord

 

The Landlord reserves and may exercise the following rights without affecting Tenant’s obligations hereunder:

 

24.1                        to change the name or street address of the Building;

 

24.2                        to install and maintain a sign or signs on the exterior of the Building;

 

24.3                        to have access for the Landlord and the other tenants of the Building to any mail chutes located on the Premises according to the rules of the United States Post Office;

 

24.4                        to designate all sources furnishing sign painting and lettering, ice, drinking water, towels, coffee cart service and toilet supplies, lamps and bulbs used on the Premises;

 

24.5                        to retain at all times pass keys to the Premises;

 

24.6                        to grant to anyone the exclusive right to conduct any particular business or undertaking in the Building;

 

22

 

24.7                        to close the Building after regular working hours and on the legal holidays subject, however, to Tenant’s right to admittance, under such reasonable regulations as Landlord may prescribe from time to time, which may include by way of example but not of limitation, that persons entering or leaving the Building identify themselves to a watchman by registration or otherwise and that said persons establish their right to enter or leave the Building;

 

24.8                        to take any and all measures, including inspections, repairs, alterations, decorations, additions and improvements to the Premises or Building, as may be necessary or desirable for the safety, protection or preservation of the Premises or Building or the Landlord’s interests, or as may be necessary or desirable in the operation of the Building; and

 

24.9                        to add, remove or modify buildings, roadways, walkways, landscaping, lakes, grading and other improvements in or to the Development.

 

Landlord may enter upon the Premises and may exercise any or all of the foregoing rights hereby reserved without being deemed guilty of an eviction or disturbance of Tenant’s use or possession and without being liable in any manner to Tenant and without abatement of rent or affecting any of Tenant’s obligations hereunder.

 

Article 25.                                     Miscellaneous

 

25.1                        Words of any gender used in this Lease shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires.

 

25.2                        The terms, provisions and covenants and conditions contained in this Lease shall apply to, inure to the benefit of, and be binding upon, the parties hereto and upon their respective heirs, legal representatives, successors and permitted assigns, except as otherwise expressly provided herein.  Landlord shall have the right to assign any of its rights and obligations under this Lease and Landlord’s grantee or Landlord’s successor shall upon such assignment, become “Landlord” hereunder, thereby freeing and relieving the grantor or assignor of all covenants and obligations of “Landlord” hereunder; provided, however, that no successor Landlord shall be responsible for the return of any security deposit provided for pursuant to Paragraph 3.2 unless such successor receives the deposit.  Tenant agrees to furnish promptly upon demand, a corporate resolution, proof of due authorization by partners, or other appropriate documentation evidencing the due authorization of Tenant to enter into this Lease.  Nothing herein contained shall give any other tenant in the Building of which the Premises is a part any enforceable rights either against Landlord or Tenant as a result of the covenants and obligations of either party set forth herein.

 

25.3                        The captions inserted in this Lease are for convenience only and in no way define, limit or otherwise describe the scope or intent of this Lease, or any provision hereof.

 

25.4                        Tenant shall at any time and from time to time within ten (10) days after written request from Landlord execute and deliver to Landlord or any prospective Landlord or Mortgagee or prospective Mortgagee a sworn and acknowledged estoppel certificate, in form reasonably satisfactory to Landlord and/or Landlord’s Mortgagee or prospective Mortgagee certifying and stating as follows:  (1) this Lease has not been modified or amended (or if

 

23

 

modified or amended, setting forth such modifications or amendments); (2) this Lease (as so modified or amended) is in full force and effect (or if not in full force and effect, the reasons therefor); (3) the Tenant has no offsets or defenses to its performance of the terms and provisions of this Lease, including the payment of rent (or if there are any such defenses or offsets, specifying the same); (4) Tenant is in possession of the Premises if such be the case; (5) if an assignment of rents or leases has been served upon Tenant by a Mortgagee or prospective Mortgagee, Tenant has received such assignment and agrees to be bound by the provisions thereof; and (6) any other accurate statements reasonably required by Landlord or its Mortgagee or prospective Mortgagee.  It is intended that any such statement delivered pursuant to this subsection may be relied upon by any prospective purchaser or Mortgagee and their respective successors and assigns and Tenant shall be liable for all loss, cost or expense resulting from the failure of any sale or funding of any loan caused by any material misstatement contained in such estoppel certificate.  Tenant hereby irrevocably appoints Landlord or if Landlord is a trust, Landlord’s beneficiary, as attorney-in-fact for the Tenant with full power and authority to execute and deliver in the name of Tenant such estoppel certificate if Tenant fails to deliver the same within such ten (10) day period and such certificate as signed by Landlord or Landlord’s beneficiary, as the case may be, shall be fully binding on Tenant, if Tenant fails to deliver a contrary certificate within five (5) days after receipt by Tenant of a copy of the certificate executed by Landlord or Landlord’s beneficiary, as the case may be, on behalf of Tenant.  In addition to any other remedy Landlord may have hereunder, Landlord may, at its option, if Tenant does not deliver to Landlord an estoppel certificate as set forth above within fifteen (15) days after Tenant is requested to do so, cancel this Lease effective the last day of the then current month, without incurring any liability on account thereof, and the Term is expressly limited accordingly.

 

25.5                        Tenant shall, from time to time, upon the written request of Landlord, deliver to or cause to be delivered to Landlord or its designee then current financial statements (including a statement of operations and balance sheet and statement of cash flows) certified as accurate by a certified public accountant and prepared in conformance with generally accepted accounting principles for (i) Tenant, (ii) any entity which owns a controlling interest in Tenant, (iii) any entity the controlling interest of which is owned by Tenant, (iv) any successor entity to Tenant by merger or operation of law, and (v) any guarantor of this Lease

 

25.6                        This Lease may not be altered, changed or amended except by an instrument in writing signed by both parties hereto.

 

25.7                        All obligations of Tenant hereunder not fully performed as of the expiration of earlier termination of the Term shall survive the expiration or earlier termination of the Term, including without limitation, all payment obligations with respect to Taxes and Operating Costs and all obligations concerning the condition of the Premises.  Upon the expiration or earlier termination of the Term, Tenant shall pay to Landlord the amount, as estimated by Landlord, necessary:  (1) to repair and restore the Premises as provided herein; and (2) to discharge Tenant’s obligation for unpaid Taxes, Operating Costs or other amounts due Landlord.  All such amounts shall be used and held by Landlord for payment of such obligations of Tenant, with Tenant being liable for any additional costs upon demand by Landlord, or with any excess to be returned to Tenant after all such obligations have been determined and satisfied.  Any security

 

24

 

deposit held by Landlord shall be credited against the amount payable by Tenant under this Paragraph 25.7.

 

25.8                        If any clause, phrase, provision or portion of this Lease or the application thereof to any person or circumstance shall be invalid or unenforceable under applicable Laws, such event shall not affect, impair or render invalid or unenforceable the remainder of this Lease nor any other clause, phrase, provision or portion hereof, nor shall it affect the application of any clause, phrase, provision or portion hereof to other persons or circumstances, and it is also the intention of the parties to this Lease that in lieu of each such clause, phrase, provision or portion of this Lease that is invalid or unenforceable, there be added as a part of this Lease a clause, phrase, provision or portion as similar in terms to such invalid or unenforceable clause, phrase, provision or portion as may be possible and be valid and enforceable.

 

25.9                        Submission of this Lease shall not be deemed to be a reservation of the Premises.  Landlord shall not be bound hereby until its delivery to Tenant of an executed copy hereof signed by Landlord, already having been signed by Tenant, and until such delivery Landlord reserves the right to exhibit and lease the Premises to other prospective tenants.  Notwithstanding anything contained herein to the contrary, Landlord may withhold delivery of possession of the Premises from Tenant until such time as Tenant has paid to Landlord the security deposit required by Paragraph 3.2, the first month’s rent as set forth in Paragraph 3.1, and any sum owed pursuant to this Lease.

 

25.10                 Whenever a period of time is herein prescribed for action to be taken by Landlord, the Landlord shall not be liable or responsible for, and there shall be excluded from the computation for any such period of time, any delays due to causes of any kind whatsoever which are beyond the control of Landlord.

 

25.11                 If there be more than one Tenant, the obligations hereunder imposed upon Tenant shall be joint and several.  Any indemnification of, insurance of, or option granted to Landlord shall also include or be exercisable by Landlord’s trustee, beneficiary, agents and employees, as the case may be.

 

25.12                 Each of the parties (1) represents and warrants to the other that it has not dealt with any broker or finder in connection with this Lease, except as described in Article 1; and (2) indemnifies and holds the other harmless from any and all losses, liability, costs or expenses (including attorneys’ fees) incurred as a result of an alleged breach of the foregoing warranty.  Landlord agrees to promptly pay the broker, if any, listed in Article 1.

 

25

 

Article 26.                                     Landlord’s Exculpation

 

It is expressly understood and agreed that nothing in this Lease shall be construed as creating any liability whatsoever against the Landlord, or its successors and assigns, personally, and in particular without limiting the generality of the foregoing, there shall be no personal liability to pay any indebtedness accruing hereunder or to perform any covenant, either express or implied, herein contained, and that all personal liability of Landlord, or its successors and assigns, of every sort, if any, is hereby expressly waived by Tenant, and every person now or hereafter claiming any right or security hereunder, and that so far as Landlord, or its successors and assigns, is concerned the owner of any indebtedness or liability accruing hereunder shall look solely to Landlord’s interest in the Building for the payment thereof.

 

	
TENANT:
    	
LANDLORD:
    
	
 
    	
 
    
	
RestorGenex   Corporation
    	
 
    	
Riverwalk   South, L.L.C., an Illinois limited liability company
    
	
 
    	
 
    
	
 
    	
BY:   HP Riverwalk Land Limited Partnership, an Illinois limited partnership, its   Manager
    
	
 
    	
 
    
	
 
    	
BY:   Hamilton Partners Office Division #1, Inc., an Illinois   corporation, Its sole general partner
    
	
 
    	
 
    
	
By:
    	
/s/   Phillip B. Donenberg
    	
 
    	
By:
    	
/s/   Timothy B. Beechick
    
	
Title:
    	
CFO
    	
 
    	
Title:
    	
Vice   President
    
	
Date:
    	
September 3,   2014
    	
 
    	
Date:
    	
September 4,   2014
    
	
 
    	
 
    
	
 
    	
 
    
	
FEIN:
    	
 
    	
 
    	
 
    
							

 

26

 

RIDER TO LEASE AGREEMENT

 

RENEWAL OPTION.  So long as this Lease is in full force and effect and provided that Tenant is not in default beyond any applicable cure period of any terms and conditions hereof and that there has not been (a) material adverse change in the financial condition of Tenant as reasonably determined by Landlord, (b) neither the Premises nor any part thereof have not been sublet, Tenant shall have the option to extend the original term of this Lease for one (1) additional term of three (3) years (the “Renewal Term”) by providing Landlord written notice of its intent to renew no less than nine (9) months prior to the expiration date of the current lease term.  Such renewal shall be on the same terms, covenants and conditions as provided for in the original lease term, except that (1) no further renewal terms shall be provided; (2) no termination options shall be provided; and (3) the rental rate during the Renewal Term shall be adjusted to the then Fair Market Rental Rate then in effect on equivalent properties, of equivalent size, in equivalent areas, taking into account the length of the lease, the length of the renewal term, the credit standing of the Tenant and the scope of the leasehold improvements (the “Fair Market Rental Rate”). In no event shall the base rental for the Renewal Term be less than the base rental applicable to the immediately preceding lease period.

 

27

 

EXHIBIT A
 LEGAL DESCRIPTION OF THE PROPERTY

 

THAT PART OF LOT 1 AND OUTLOT “A” IN RIVERWALK UNIT - 1, BEING A SUBDIVISION OF PART OF THE SOUTHEAST QUARTER OF SECTION 35, TOWNSHIP 43 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED NOVEMBER 16, 1989 AS DOCUMENT NO.  2851778, AND AMENDED BY CERTIFICATE OF CORRECTION FILED JUNE 14, 1991 AS DOCUMENT NO.  3029425, DESCRIBED AS FOLLOWS:  BEGINNING AT THE MOST NORTHERLY CORNER OF SAID LOT 1, BEING ALSO THE MOST EASTERLY CORNER OF LOT 2 IN SAID RIVERWALK UNIT - 1; THENCE SOUTH 44 DEGREES 42 MINUTES 41 SECONDS EAST ALONG THE NORTHEASTERLY LINE OF SAID LOT 1, 139.03 FEET TO A POINT OF CURVATURE IN SAID LINE; THENCE SOUTHEASTERLY ALONG THE NORTHEASTERLY LINE OF SAID LOT 1, BEING A CURVED LINE CONVEX SOUTHWESTERLY AND HAVING A RADIUS OF 180.00 FEET, AN ARC DISTANCE OF 146.90 FEET TO A POINT OF TANGENCY IN SAID LINE (THE CHORD OF SAID ARC BEARS SOUTH 68 DEGREES 05 MINUTES 27 SECONDS EAST, 142.86 FEET); THENCE NORTH 88 DEGREES 31 MINUTES 46 SECONDS EAST ALONG THE NORTHEASTERLY LINE OF SAID LOT 1, 50.26 FEET TO A POINT OF CURVATURE IN SAID LINE; THENCE SOUTHEASTERLY ALONG THE NORTHEASTERLY LINE OF SAID LOT 1, BEING A CURVED LINE CONVEX NORTHEASTERLY AND HAVING A RADIUS OF 80.00 FEET, AN ARC DISTANCE OF 128.12 FEET TO A POINT OF TANGENCY IN SAID LINE (THE CHORD OF SAID ARC BEARS SOUTH 45 DEGREES 35 MINUTES 27 SECONDS EAST, 114.86 FEET); THENCE SOUTH 00 DEGREES 17 MINUTES 19 SECONDS WEST ALONG THE EASTERLY LINE OF SAID LOT 1, 106.39 FEET TO AN ANGLE POINT IN SAID LINE; THENCE SOUTH 08 DEGREES 31 MINUTES 39 SECONDS WEST ALONG THE EASTERLY LINE OF SAID LOT 1, 133.53 FEET TO THE MOST EASTERLY SOUTHEAST CORNER OF SAID LOT 1, BEING ALSO THE MOST EASTERLY NORTHEAST CORNER OF OUTLOT “C” IN SAID RIVERWALK UNIT - 1; THENCE SOUTH 52 DEGREES 54 MINUTES 38 SECONDS WEST ALONG THE SOUTHEASTERLY LINE OF SAID LOT 1, 44.92 FEET TO A CORNER OF SAID LOT 1; THENCE NORTHWESTERLY ALONG THE SOUTHERLY LINE OF SAID LOT 1, BEING A CURVED LINE CONVEX SOUTHWESTERLY AND HAVING A RADIUS OF 1025.00 FEET, AN ARC DISTANCE OF 210.68 FEET TO A POINT OF TANGENCY IN SAID LINE (THE CHORD OF SAID ARC BEARS NORTH 77 DEGREES 17 MINUTES 19 SECONDS WEST, 210.31 FEET); THENCE NORTH 71 DEGREES 24 MINUTES 01 SECONDS WEST ALONG THE SOUTHERLY LINE OF SAID LOT 1, 40.60 FEET TO A SOUTHWEST CORNER OF SAID LOT 1, BEING ALSO THE SOUTHEAST CORNER OF SAID OUTLOT “A”; THENCE CONTINUING NORTH 71 DEGREES 24 MINUTES 01 SECONDS WEST ALONG THE SOUTHERLY LINE OF SAID OUTLOT “A”, 108.98 FEET TO AN ANGLE POINT IN SAID LINE; THENCE NORTH 67 DEGREES 50 MINUTES 16 SECONDS WEST ALONG THE SOUTHERLY LINE OF SAID OUTLOT “A”, 213.36 FEET TO A POINT OF CURVATURE IN SAID LINE; THENCE WESTERLY ALONG THE SOUTHERLY LINE OF SAID OUTLOT “A”, BEING A CURVED LINE CONVEX NORTHERLY AND HAVING A RADIUS OF 275.00 FEET, AN ARC DISTANCE OF 71.24 FEET TO AN INTERSECTION WITH THE SOUTHERLY EXTENSION OF THE WEST LINE OF SAID LOT 1; THENCE NORTH 00 DEGREES 17 MINUTES 19 SECONDS EAST ALONG THE SOUTHERLY EXTENSION OF THE WEST LINE OF SAID LOT 1 AND ALONG THE WEST LINE OF SAID LOT 1, 173.78 FEET TO THE MOST WESTERLY NORTHWEST CORNER OF SAID LOT 1; THE FOLLOWING 6 COURSES ARE ALONG THE NORTHERLY LINE OF SAID LOT 1; THENCE SOUTH 89 DEGREES 42 MINUTES 41 SECONDS EAST,  30.83 FEET; THENCE NORTH 45 DEGREES 17 MINUTES 19 SECONDS EAST,   7.07 FEET; THENCE SOUTH 89 DEGREES 42 MINUTES 41 SECONDS EAST,  25.75 FEET; THENCE NORTH 00 DEGREES 17 MINUTES 19 SECONDS EAST,   6.00 FEET; THENCE SOUTH 89 DEGREES 42 MINUTES 41 SECONDS EAST, 122.68 FEET; THENCE NORTH 45 DEGREES 17 MINUTES 19 SECONDS EAST, 171.05 FEET TO THE POINT OF BEGINNING,  IN LAKE COUNTY, ILLINOIS

 

A-1

 

EXHIBIT B
 PLAN OF PREMISES

 

 

B-1

 

EXHIBIT C
 WORK LETTER

 

Landlord hereby agrees to provide the following tenant improvements necessary to refit the leased premises:

 

1.              Steam clean the existing carpeting;

 

2.              Patch and then paint any existing holes in the walls of the premises.

 

C-2

 

EXHIBIT D
 RULES AND REGULATIONS

 

1.                                      The sidewalks, halls, passages, elevators and stairways shall not be obstructed by Tenant or used for any purpose other than for ingress to and egress from the Premises.  Landlord shall retain the right to control access to the halls, passages, entrances, elevators, stairways, and balconies, provided, that nothing herein contained shall be construed to prevent such access to persons with whom Tenant normally deals in the ordinary course of its business unless such persons are engaged in illegal activities.  In case of invasion, mob, riot, public excitement, or other commotion, Landlord reserves the right to prevent access to the Building during the continuance of the same by closing the doors or otherwise, for the safety of the tenants or Landlord and protection of property in the Building.  Tenant and its employees shall not go upon the roof of the Building without the written consent of the Landlord.

 

2.                                      The windows, glass lights, and any skylights that reflect or admit light into the halls or other places of the Buildings shall not be covered or obstructed, except that blackout shades will be permitted.  The toilets, sinks and other water apparatus shall not be used for any purpose other than that for which they were constructed, and no foreign substance of any kind whatsoever shall be thrown therein.

 

3.                                      If Landlord, by a notice in writing to Tenant, shall object to any curtain, blind, shade or screen attached to, or hung in, or used in connection with, any window or door of the Premises, such use of such curtain, blind, shade or screen shall be discontinued forthwith by Tenant.  No awnings shall be permitted on any part of the Premises.  Tenant shall not place or install any antennae or aerials or similar devices outside of the Premises.

 

4.                                      Tenant shall not place a load upon any floor of the Premises which exceeds the load per square foot which such floor was designed to carry and which is allowed by law.  The moving of heavy objects shall occur only between such hours as may be designated by, and only upon previous notice to, the manager of the Building, and the persons employed to move heavy objects in or out of the Building must be acceptable to Landlord.

 

5.                                      No animals (except Seeing Eye Dogs) may be brought into or kept in or about the Building.

 

6.                                      Tenant shall not use or keep in the Building any inflammables, including but not limited to kerosene, gasoline, naphtha and benzene (except cleaning fluids in small quantities and when in containers approved by the Board of Underwriters), or explosives or any other articles of intrinsically dangerous nature, or use any method of heating other than that supplied by Landlord.

 

7.                                      If Tenant desires telephone connections, Landlord will direct electricians as to where and how the wires are to be introduced to the Premises.  No boring or cutting for wires or otherwise shall be made without specific directions from Landlord.

 

8.                                      Tenant, upon the termination of the tenancy, shall deliver to the Landlord all the keys of offices, rooms and toilet rooms which shall have been furnished Tenant or which Tenant

 

D-1

 

shall have had made, and in the event of loss of any keys so furnished shall pay the Landlord therefor.

 

9.                                      Tenant shall not put down any floor covering in the Leased Premises without the Landlord’s prior approval of the manner and method of applying such floor covering.

 

10.                               On Saturdays, Sundays and legal holidays, and on other days between the hours of 6 PM and 8 AM, access to the Building, or to the halls, corridors, elevators or stairways in the Building, or to the Premises may be refused unless the person seeking access is known to the watchman of the Building in charge and has a pass or is properly identified.  Services to be provided to the Tenant as previously outlined in this Lease shall be provided only during those hours in which the Building is open to the public.

 

11.                               Tenant assumes full responsibility for protecting its space from theft, robbery and pilferage which includes keeping doors locked and windows and other means of entry to the Premises closed. Landlord will not be responsible for lost or stolen personal property, equipment, money or jewelry from Tenant’s area or any public rooms regardless of whether such loss occurs when such area is locked against entry or not.

 

12.                               Tenant shall not alter any lock or install a new or additional lock or any bolt on any door of the Premises without prior written consent of Landlord.  If Landlord shall give its consent, Tenant shall in each case furnish Landlord with a key for any such lock.

 

13.                               In advertising or other publicity, Tenant shall not use the name of the Building except as the address of its business and shall not use pictures of the Building.

 

14.                               Tenant shall not make any room-to-room canvass to solicit business from other tenants in the Building.

 

15.                               Tenant shall not waste electricity, water or air conditioning and agrees to cooperate fully with Landlord to assure the most effective operation of the Building’s heating and air conditioning, and shall not allow the adjustment (except by Landlord’s authorized Building personnel) of any controls other than room thermostats installed for Tenant’s use.  Tenant shall keep corridor doors closed and shall not open any windows except that if the air circulation shall not be in operation, windows which are can be opened may be opened with Landlord’s consent.

 

16.                               Tenant shall not do any cooking in the Premises except the use of coffee makers and microwave ovens in the pantry area.

 

17.                               Any wallpaper or vinyl fabric materials which Tenant may install on painted walls shall be applied with a strippable adhesive.  The use of non strippable adhesives will cause damage to the walls when materials are removed, and repairs made necessary thereby shall be made by Landlord at Tenant’s expense.

 

18.                               Tenant will refer all contractors, contractor’s representatives and installation technicians, rendering any service to Tenant, to Landlord for Landlord’s supervision, approval, and control before performance of any contractual service.  This provision shall apply to all work

 

D-2

 

performed in the Building including installations of telephones, electrical devices and attachments and installations of any nature affecting floors, walls, woodwork, trim, windows, ceilings, equipment or any other physical portion of the Building.

 

19.                               Movement in or out of the Building of furniture, office equipment, or other bulky materials, or movement through the Building entrances or lobby shall be subject to Landlord’s control of the time, method, and routing of movement.  Tenant assumes all risk as to damage to articles moved and injury to persons, including equipment, property, and personnel of Landlord if damaged or injured as a result of acts in connection with carrying out this service for Tenant; and Landlord shall not be liable for acts of any person engaged in, or any damage or loss to any of said property or persons resulting from any act in connection with such service performed for Tenant and Tenant hereby agrees to indemnify and hold harmless Landlord from and against any such damage, injury, or loss, including attorney’s fees.  All movement in or out of the building is required to be completed after normal building hours.  Engineering supervision will be required during the move and the resulting supervision costs will be the responsibility of the tenant.  If a tenant requests to utilize the top hatch of an elevator for moving larger items the elevator maintenance company will attend the move and their charges for one or more technicians will be the responsibility of the tenant.

 

20.                               Tenant and its employees, agents, and invitees shall observe and comply with the driving and parking signs and markers on the property surrounding the Building.

 

21.                               Tenant shall give prompt notice to Landlord of any accidents to or defects in plumbing, electrical fixtures, or heating apparatus so that such accidents or defects may be attended to promptly.

 

22.                               The directories of the Building shall be used exclusively for the display of the name and location of the tenants only and will be provided at the expense of Landlord.  Any additional names requested by Tenant to be displayed in the directories must be approved by Landlord and, if approved, will be provided at the sole expense of Tenant.

 

23.                               Tenant shall comply with the rules and regulations of the Development attached hereto or delivered to Tenant.

 

24.                               NON-SMOKING AREAS.  In order to maintain compliance with the new PUBLIC HEALTH (410 ILCS 82/) Smoke Free Illinois Act that went into effect on January 1st 2008, all public and private areas of the Riverwalk Property are considered to be non-smoking areas.  This includes, but is not limited to, lobbies, atriums, washrooms, public corridors, elevators, vestibules, private offices and all building entrances.

 

This new law stipulates that smoking is prohibited in a public place; place of employment; or within a minimum distance of 15 feet from entrances, exits, windows that open and ventilation intakes and provides penalties for violations thereof.

 

A copy of the new Smoke Free Illinois Act can be obtained by calling the Management Office at 847-215-6010.

 

D-3

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE 1.
    	
BASIC TERMS
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE 2.
    	
PREMISES AND TERM
    	
3
    
	
 
    	
 
    	
 
    
	
ARTICLE 3.
    	
BASE RENT AND SECURITY DEPOSIT
    	
3
    
	
 
    	
 
    	
 
    
	
ARTICLE 4.
    	
TAXES
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE 5.
    	
OPERATING COSTS
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE 6.
    	
ELECTRIC SERVICE
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE 7.
    	
ALTERATIONS
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE 8.
    	
SERVICES
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE 9.
    	
USE OF PREMISES
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE 10.
    	
INSPECTIONS
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE 11.
    	
ASSIGNMENT AND SUBLETTING
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE 12.
    	
FIRE AND CASUALTY DAMAGE
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE 13.
    	
LIABILITY
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE 14.
    	
CONDEMNATION
    	
15
    
	
 
    	
 
    	
 
    
	
ARTICLE 15.
    	
HOLDING OVER
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE 16.
    	
QUIET ENJOYMENT
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE 17.
    	
EVENTS OF DEFAULT
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE 18.
    	
REMEDIES
    	
17
    
	
 
    	
 
    	
 
    
	
ARTICLE 19.
    	
TENANT’S BANKRUPTCY OR INSOLVENCY
    	
20
    
	
 
    	
 
    	
 
    
	
ARTICLE 20.
    	
MORTGAGES
    	
21
    
	
 
    	
 
    	
 
    
	
ARTICLE 21.
    	
MECHANIC’S AND OTHER LIENS
    	
21
    
	
 
    	
 
    	
 
    
	
ARTICLE 22.
    	
NOTICES
    	
21
    
	
 
    	
 
    	
 
    
	
ARTICLE 23.
    	
SUBSTITUTION OF PREMISES
    	
22
    
	
 
    	
 
    	
 
    
	
ARTICLE 24.
    	
CERTAIN RIGHTS RESERVED TO THE   LANDLORD
    	
22
    
	
 
    	
 
    	
 
    
	
ARTICLE 25.
    	
MISCELLANEOUS
    	
23
    
	
 
    	
 
    	
 
    
	
ARTICLE 26.
    	
LANDLORD’S EXCULPATION
    	
26
    

 

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An extra section break has been inserted above this Paragraph.  Do not delete this section break if you plan to add text after the Table of Contents/Authorities.  Deleting this break will cause Table of Contents/Authorities headers and footers to appear on any pages following the Table of Contents/Authorities.

 

1TRU.8.2.2014-Ex10.1

Execution Copy

EMPLOYMENT AGREEMENT
MICHAEL J. SHORT

This EMPLOYMENT AGREEMENT (the “Agreement”) is dated as of June 19th, 2014 (the “Execution Date”) by and between Toys “R” Us, Inc. (the “Company”) and Michael J. Short (the “Executive”).
WHEREAS, as of the Execution Date, the Company desires to employ Executive and to enter into an agreement embodying the terms of such employment and Executive desires to accept such employment and enter into such an agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:
1.Term of Employment.  Subject to the provisions of Section 7 of this Agreement, Executive shall be employed by the Company and designated indirect subsidiaries of the Company (each, a “Subsidiary”), for a period commencing on June 23, 2014 (the “Commencement Date”) and ending on the second anniversary of the Commencement Date (the “Initial Term”), on the terms and subject to the conditions set forth in this Agreement.  Following the Initial Term, the term of Executive’s employment hereunder shall automatically be renewed on the terms and conditions hereunder for additional one year periods commencing on each anniversary of the last day of the Initial Term (the Initial Term and any annual extensions of the term of this Agreement, subject to the provisions of Section 7 hereof, together, the “Employment Term”), unless either party gives written notice of non-renewal at least 60 days prior to such anniversary. 
2.    Position.
a.    During the Employment Term, Executive shall serve as the Executive Vice President - Chief Financial Officer of each of the Company, Toys “R” Us – Delaware, Inc. and any other indirect Subsidiaries that the board of directors of the Company (the “Board”) designates (such entities collectively referred to as the “TRU Group”).  In such positions, Executive shall have such duties and authority as determined by the Board and the board of directors of each Subsidiary, as applicable (each, a “Subsidiary Board”) and commensurate with the position of the Chief Financial Officer of a company of similar size and nature to that of the TRU Group.  During the Employment Term, the Executive shall report to the Chief Executive Officer.
b.    During the Employment Term, Executive will devote Executive’s full business time and reasonable best efforts to the performance of Executive’s duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere in any material respect with the rendition of such services either directly or indirectly, without the prior written consent of the Board; provided that nothing 

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herein shall preclude Executive from continuing to serve on any board of directors or trustees, advisory board or government commission which is listed on Exhibit A attached hereto, or, subject to the prior approval of the Board, from accepting appointment to serve on any board of directors or trustees of any business corporation or any charitable organization; provided in each case in the aggregate, that such activities do not conflict or interfere with the performance of Executive’s duties hereunder or conflict with Section 8.  Except as specifically authorized with respect to the entities identified on Exhibit A, Executive shall terminate any participation in any other business entities, including but not limited to Better Boating Partners, LLC, within three (3) months of the Commencement Date.
3.    Base Salary.  During the Employment Term, the Company shall pay Executive a base salary at the annual rate of $700,000.00, payable in substantially equal periodic payments in accordance with the Company’s practices for other executive employees, as such practices may be determined from time to time.  Executive shall be entitled to such increases in Executive’s base salary, if any, as may be determined from time to time in the sole discretion of the Board, which shall at least annually review Executive’s rate of base salary to determine if any such increase shall be made.  Executive’s annual base salary, as in effect from time to time hereunder, is hereinafter referred to as the “Base Salary.”    
4.    Bonus.  
a.     Annual Bonus.  During the Employment Term, Executive shall be eligible to earn an annual bonus award in respect of each fiscal year of the Company (an “Annual Bonus”), in a target amount of up to 100% of Executive’s Base Salary (the “Target Bonus”), payable upon the Company’s achievement of certain performance targets established by the Board or any appropriate committee or delegee thereof and pursuant to the terms of the Company’s incentive plan, as in effect from time to time.  Notwithstanding the foregoing, in the event the Company’s performance exceeds such performance targets, Executive shall be eligible to earn an Annual Bonus in an amount in excess of the Target Bonus, as determined by the Board or any appropriate committee or delegee thereof in accordance with the Company’s incentive plan, as in effect from time to time.  The Annual Bonus, if any, shall be paid to Executive not later than two and one-half (21⁄2) months after the end of the applicable fiscal year of the Company.  For 2014 only, Executive shall he eligible to earn an Annual Bonus pro-rated for the period he was employed during Fiscal Year 2014.
5.    Employee Benefits; Perquisites; Business and Relocation Expenses.  
a.    Employee Benefits.  During the Employment Term, Executive and his spouse and dependents, as applicable, shall be entitled to participate in the Company’s welfare benefit plans and retirement plans, including, without limitation, the Company’s 401(k) and supplemental executive retirement plans and medical, dental and life insurance plans, as in effect from time to time (collectively, the “Employee Benefits”), on the same basis as those benefits are or may be made available to the other senior executives of the Company (other than benefits which have been terminated or for which participation has been frozen).  The Company shall be permitted to modify such benefits from time to time consistent with any modifications that impact other senior executives of the Company.  

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b.    Perquisites.  During the Employment Term, Executive shall be entitled to receive such perquisites as are made available to other senior executives of the Company in accordance with the Company’s policies, as in effect from time to time.  Executive shall be entitled to not less than four (4) weeks of paid vacation per year, which vacation shall be taken at such times as are reasonably acceptable to the Company in light of the Company’s operations, Executive’s performance of his duties, and in accordance with the terms of the Company’s vacation policy, as in effect from time to time, applicable to Executive.
c.    Business Expenses.  During the Employment Term, reasonable business expenses incurred by Executive in the performance of Executive’s duties hereunder shall be reimbursed by the Company in accordance with the Company’s policies, as in effect from time to time, applicable to senior executive officers of the Company.
d.    Relocation Expenses.  During the Employment Term, Executive shall maintain a primary residence within 40 miles of the Company’s Wayne, NJ headquarters.  Provided that Executive initiates the relocation of his primary residence within 40 miles of the Company’s headquarters within eighteen (18) months of the Commencement Date, the Company will provide relocation benefits to Executive including moving expenses and a guaranteed buy-out of Executive’s home located in Florida, consistent with the Company’s current relocation policies (“Relocation Expenses”).  The Relocation Expenses shall be subject to repayment as follows:
(i)    If Executive resigns without Good Reason (as defined in Section 7) or Executive is terminated by the Company for Cause (as defined in Section 7) on or before the second anniversary of the Commencement Date, he shall reimburse the Company 100% of the Relocation Expenses within five business days of Executive’s last date of employment with the Company.
(ii)    If Executive resigns without Good Reason (as defined in Section 7) or Executive is terminated by the Company for Cause (as defined in Section 7) after the second anniversary of the Commencement Date but before the third anniversary of the Commencement Date, he shall reimburse the Company 50% of the Relocation Expenses within five business days of Executive’s last date of employment with the Company.   
To the extent permitted by applicable law, the Company may offset any amounts owed pursuant to this Section 5(d) against any amounts payable to Executive by the Company at the time that any such repayment is due and owing.
6.    Equity.  
a.    Sign-On Equity Award.  Executive shall receive a one-time sign-on equity award as set forth on Exhibit B (the “Sign-On Equity Award”).
b.    Additional One-Time Equity Award.   Executive shall receive an additional one-time equity award as set forth on Exhibit B (the “One-Time Equity Award”). 

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c.    Annual Equity Award.  Beginning on or after April 1, 2018, Executive shall participate in the Toys “R” Us, Inc. 2010 Incentive Plan (the “Incentive Plan”) in accordance with the policies and procedures of the Incentive Plan and any subsequent plans.
7.    Termination.  The Employment Term and Executive’s employment hereunder may be terminated by either party at any time and for any reason; provided that Executive will be required to give the Company at least 60 days’ advance written notice of any resignation of Executive’s employment without Good Reason (as defined in Section 7(c) below) (other than due to Executive’s death or Disability).  Notwithstanding any other provision of this Agreement, the provisions of this Section 7 shall exclusively govern Executive’s rights upon termination of employment with the TRU Group; provided, however, that nothing contained in this Section 7 shall alter Executive’s or the Company’s rights with respect to the Incentive Plan, which shall continue to govern Executive’s equity holdings following any termination in accordance herewith.
a.    By the Company For Cause or By Executive Without Good Reason.
(i)    The Employment Term and Executive’s employment hereunder may be terminated by the Company for Cause (as defined below) and shall terminate automatically upon Executive’s resignation without Good Reason (other than due to Executive’s death or Disability); provided that Executive will be required to give the Company at least 60 days’ advance written notice of such resignation.
(ii)     For purposes of this Agreement, “Cause” shall mean any of the following, as determined by the Board: (A) Executive’s willful failure to perform any material portion of his duties; (B) the commission of any fraud, misappropriation or misconduct by Executive that causes demonstrable injury, monetarily or otherwise, to the Company or an affiliate; (C) the conviction of, or pleading guilty or nolo contendere to, a felony involving moral turpitude; (D) an act resulting or intended to result, directly or indirectly, in material gain or personal enrichment to the Executive at the expense of the Company or an affiliate; (E) any material breach of Executive’s fiduciary duties to the Company or an affiliate as an employee or officer; (F) a material violation of the Company’s Code of Ethical Standards, Business Practices and Conduct or any other violation of a TRU Group policy; (G) the failure by the Executive to comply, in any material respect, with the provisions of Sections 8 and 9 of this Agreement; or (H) the failure by the Executive to comply with any other undertaking set forth in this Agreement or any other agreement Executive has with the Company or any affiliate or any breach by Executive hereof or thereof if such failure or breach is reasonably likely to result in a material injury to the Company or an affiliate.
(iii)      If Executive’s employment is terminated by the Company for Cause, or if Executive resigns without Good Reason, Executive shall be entitled to receive:
(A)        a lump sum payment of the Base Salary that is earned by Executive but unpaid as of the date of Executive’s termination of employment, paid in accordance with the Company’s payroll practices, but in no event later than thirty (30) days following Executive’s termination of employment;

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(B)        a lump sum payment of any Annual Bonus that is earned by Executive but unpaid as of the date of termination for the immediately preceding fiscal year, paid in accordance with Section 4 (except to the extent payment is otherwise deferred pursuant to any applicable deferred compensation arrangement with the Company); 
(C)        reimbursement, within 30 days following submission by Executive to the Company of appropriate supporting documentation, for any unreimbursed business expenses properly incurred by Executive in accordance with the Company policy referenced in Section 5(c) above prior to the date of Executive’s termination; provided claims for such reimbursement (accompanied by appropriate supporting documentation) are submitted to the Company within ninety (90) days following the date of Executive’s termination of employment; and
(D)        such Employee Benefits, if any, as to which Executive may be entitled under the employee benefit plans of the Company (the amounts described in clauses (A) through (D) hereof being referred to as the “Accrued Rights”).
Following such termination of Executive’s employment by the Company for Cause or resignation by Executive without Good Reason, except as set forth in this Section 7(a)(iii), Executive shall have no further rights to any compensation or any other benefits under this Agreement. 
b.    Disability or Death.
(i)    The Employment Term and Executive’s employment hereunder shall terminate upon Executive’s death and may be terminated by the Company upon the Executive’s Disability.  For purposes of this Agreement, “Disability” shall mean the determination that the Executive is disabled pursuant to the terms of the Company’s long term disability plan.  
(ii)    Upon termination of Executive’s employment hereunder for either Disability or death, Executive or Executive’s estate (as the case may be) shall be entitled to receive:
(A)        the Accrued Rights; and
(B)        a pro rata portion of the Annual Bonus, if any, that Executive would have been entitled to receive pursuant to Section 4 hereof for such year based upon the Company’s actual results for the year of termination and the percentage of the fiscal year that shall have elapsed through the date of Executive’s termination of employment, payable to Executive pursuant to Section 4 had Executive’s employment not terminated.
Following Executive’s termination of employment due to Executive’s death or Disability, except as set forth in this Section 7(b)(ii), Executive or his estate, as applicable, shall have no further rights to any compensation or any other benefits under this Agreement. 

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c.    By the Company Without Cause or by Executive for Good Reason.  
(i)    Executive’s employment hereunder may be terminated (A) by the Company without Cause (which shall not include Executive’s termination of employment due to his death or Disability) or (B) by Executive for Good Reason (as defined below).  
(ii)    For purposes of this Agreement, “Good Reason” shall mean, without the consent of the Executive and other than in connection with a termination of the Executive’s employment by the Company for Cause or due to Executive’s death or Disability, (A) the failure of the Company to pay any undisputed amount due under this Agreement; (B) a substantial reduction in Executive’s targeted compensation level (other than a general reduction in base salary or annual incentive compensation opportunities that affects all members of senior management of the Company proportionally); (C) notice by the Company pursuant to Section 1 that it is not extending the Employment Term; (D) a change in reporting structure such that Executive no longer reports directly either to the CEO of the Company (irrespective of who maintains the role of CEO) or the Board; or (E) the Company’s headquarters are relocated to a location that is greater than 50 miles away from the current headquarters location in Wayne, NJ.  Notwithstanding the foregoing, any termination by Executive for Good Reason may only occur if Executive provides a Notice of Termination (as defined in Section 7(d)) for Good Reason within 45 days after Executive learns (or reasonably should have learned) about the occurrence of the event giving rise to the claim of Good Reason.  Notwithstanding the foregoing, resignation by Executive shall not be deemed for “Good Reason” if the basis for such Good Reason is cured within a reasonable period of time (determined in light of the cure appropriate to the basis of such Good Reason), but in no event more than thirty (30) business days after the Company receives the Notice of Termination specifying the basis of such Good Reason.
(iii)     If Executive’s employment is terminated by the Company without Cause (excluding by reason of Executive’s death or Disability) or by Executive for Good Reason, Executive shall be entitled to receive:
(A)        the Accrued Rights; 
(B)        a pro rata portion of the Annual Bonus, if any, that Executive would have been entitled to receive pursuant to Section 4 hereof for such year based upon the Company’s actual results for the year of termination and the percentage of the fiscal year that shall have elapsed through the date of Executive’s termination of employment, payable to Executive pursuant to Section 4 had Executive’s employment not terminated;
(C)    subject to Executive’s continued compliance with the provisions of Sections 8 and 9 and Executive’s execution (and non-revocation) of a release of all claims against the TRU Group in a form substantially similar to the Separation and Release Agreement attached hereto as Exhibit C, 
(i)  if the termination occurs prior to the second anniversary of the Commencement Date, an amount equal to two (2) times the Base Salary at 

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the rate in effect immediately prior to the date of Executive’s termination of employment, payable in twenty-four (24) equal monthly installments following Executive’s termination;
(ii)  if the termination occurs on or after the second anniversary of the Commencement Date, an amount equal to two (2) times the sum of (x) the Base Salary at the rate in effect immediately prior to the date of Executive’s termination of employment and (y) the target Annual Bonus, payable in twenty-four (24) equal monthly installments following Executive’s termination;    
provided, however, that the aggregate amount described in this subsection (C) shall be in lieu of notice or any other severance amounts to which Executive may otherwise be entitled and shall be reduced by any amounts owed by Executive to the Company or any affiliate; and provided further, that if Executive’s termination of employment under this Section 7(c) occurs within two (2) years after a Change in Control, Executive shall be entitled to receive the foregoing payments and benefits as set forth in this Section 7(c)(iii)(C) in a lump sum payment within sixty (60) days following Executive’s termination of employment.  For the foregoing purpose, “Change in Control” has the meaning ascribed to it in the Toys “R” Us, Inc. 2010 Incentive Plan; and
(D)    continuation of medical, dental and life insurance benefits (pursuant to the same benefit plans as in effect for active employees of the Company), with Executive paying a portion of such costs as if Executive’s employment had not terminated, until the earlier to occur of (x) 18 months from the date of termination and (y) the date on which Executive commences to be eligible for coverage under substantially comparable medical, dental and life insurance benefit plans from any subsequent employer (the “Benefit Continuation Period”); provided if such continued coverage is not possible under the general terms and provisions of such plan(s) during such period, the Company shall pay an amount to Executive equal to the Company’s cost of providing such benefits to Executive as if Executive’s employment had not terminated (the “Company Subsidy”).  In order to facilitate such coverage, Executive and his spouse and dependents, as applicable, in accordance with the Company’s policies in effect at the time of Executive’s termination, shall agree to elect continuation coverage in accordance with the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA Coverage”) and the Company may satisfy its obligations hereunder by paying a portion of the premiums required for such COBRA Coverage. In the event that the Company, in its sole and absolute discretion, determines at any time that the continued payment of Executive’s COBRA premiums is in violation of the nondiscrimination rules set forth in Section 105(h) of the Code, which will result in a detrimental tax result for Executive (taxability of Executive’s health benefits), the Company reserves the right to discontinue such practice to the extent necessary, and to thereafter pay to Executive the taxable Company Subsidy each month for the remainder of the Benefit 

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Continuation Period, less applicable withholding.  The medical, dental and life insurance coverage under this Section 7(c)(iii)(D) provided in any one calendar year shall not affect the amount of benefits to be provided in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred.  Executive’s rights pursuant to this Section 7(c)(iii)(D) shall not be subject to liquidation or exchange for another benefit.  
Following Executive’s termination of employment by the Company without Cause (excluding by reason of Executive’s death or Disability) or by Executive for Good Reason, except as set forth in this Section 7(c)(iii), Executive shall have no further rights to any compensation or any other benefits under this Agreement. 
d.    Notice of Termination.  Any purported termination of employment by the Company or by Executive (other than due to Executive’s death or Disability) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 13(g) hereof.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated.  
e.     Board/Committee Resignation.  Upon termination of Executive’s employment for any reason, Executive agrees to resign, as of the date of such termination and to the extent applicable, from the Board and any Subsidiary Boards (and any committees thereof).  
8.    Non-Competition.   
a.    Executive acknowledges and recognizes the highly competitive nature of the businesses of the Company and its affiliates and accordingly agrees as follows:
(i)    During the Employment Term and a twenty-four (24) month period commencing on Executive’s termination of employment (the “Restricted Period”), Executive will not, whether on Executive’s own behalf or on behalf of or in conjunction with any person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise whatsoever (“Person”), directly or indirectly:
(A)    engage in any business that directly or indirectly is a “Competitive Business.”  For purposes of this subsection (A) a “Competitive Business” means, with respect to the Executive at any time, any Person engaged wholly or in part (directly or through one or more subsidiaries) in the retail sale or distribution (including in stores or via mail order, e-commerce, or similar means) of “Competing Products,” if more than one-third (1/3) of such Person's gross sales for the twelve (12) month period preceding such time (or with respect to the period after Executive’s termination date, as of such termination date) are generated by engaging in such sale or distribution of Competing Products.  Without limiting the foregoing, the term “Competitive Business” shall in any event include Wal-Mart, K-Mart/Sears, Target, Amazon.com, 

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Buy Buy Baby, Mattel, Hasbro, Tesco, Carrefour and any of their respective parents, subsidiaries, affiliates or commonly controlled entities.   For purposes of this subsection (A) “Competing Products” means, with respect to the Executive at any time, (1) toys and games, (2) video games, computer software for children, and electronic toys or games, (3) juvenile or baby products, apparel, equipment, furniture, or consumables, (4) wheeled goods for children, and (5) any other product or group of related products that represents more than twenty (20) percent of the gross sales of the Company and its subsidiaries for the twelve (12) month period preceding such time (or with respect to the period after the Executive’s termination date, as of such termination date);
(B)    enter the employ of, or render any services to, any Person (or any division or controlled or controlling affiliate of any Person) who or which engages in a Competitive Business;
(C)    acquire a financial interest in, or otherwise become actively involved with, any Competitive Business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant; or
(D)    interfere with, or attempt to interfere with, business relationships (whether formed before, on or after the date of this Agreement) between the Company  or any of its affiliates and customers, clients, suppliers, partners, members or investors of the Company or its affiliates.
(E)    Notwithstanding anything to the contrary in this Agreement, Executive may, directly or indirectly own, solely as a passive investment, securities of any Person engaged in a Competitive Business which are publicly traded on a national or regional stock exchange or on the over-the-counter market or privately held if Executive (x) is not a controlling Person of, or a member of a group which controls, such Person and (y) does not, directly or indirectly, own 3% or more of any class of securities of such Person who is publicly traded or privately held.
(ii)    During the Restricted Period, Executive will not, whether on Executive’s own behalf or on behalf of or in conjunction with any Person, directly or indirectly:
(A)        solicit to leave the employment of, or encourage any employee of the Company or its affiliates to leave the employment of, the Company or its affiliates; or
(B)        hire any such employee (other than clerical or administrative support personnel) who was employed by the Company or its affiliates as of the date of Executive’s termination of employment with the Company or who left the employment of the Company or its affiliates coincident with, or within one year prior to, the termination of Executive’s employment with the Company.

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(iii)     During the Restricted Period, Executive will not, directly or indirectly, solicit to leave the employment of, or encourage to cease to work with, as applicable, the Company or its affiliates any consultant, supplier or service provider then under contract with the Company or its affiliates.
(A)        It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 8 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable.  Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.  
9.    Confidentiality.
a.    Executive will not at any time (whether during or after Executive’s employment with the Company), except when required to perform his or her duties to the TRU Group, (x) retain or use for the benefit, purposes or account of Executive or any other Person; or (y) disclose, divulge, reveal, communicate, share, transfer or provide access to any Person outside the TRU Group (other than its professional advisers who are bound by confidentiality obligations), any non-public, proprietary or confidential information --including without limitation rates, trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals -- concerning the past, current or future business, activities and operations of the Company and its subsidiaries and/or any third party that has disclosed or provided any of same to the Company and its subsidiaries on a confidential basis (“Confidential Information”) without the prior written authorization of the Board.
b.    “Confidential Information” shall not include any information that is (x) generally known to the industry or the public other than as a result of Executive’s breach of this covenant or any breach of other confidentiality obligations by third parties; (y) required by law or judicial process to be disclosed; provided that Executive shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and cooperate with any attempts by the Company to obtain a protective order or similar treatment; or (z) disclosed in connection with a litigation or arbitration proceeding between the parties.
c.    Except as required by law or judicial process, Executive will not disclose to anyone, other than Executive’s immediate family, legal and/or financial advisors, the existence or contents of this Agreement; provided that Executive may disclose to any prospective 

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future employer the provisions of Sections 8 and 9 of this Agreement, provided they agree to maintain the confidentiality of such terms.
d.    Upon termination of Executive’s employment with the TRU Group for any reason, Executive shall (x) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned by the Company, its subsidiaries or affiliates; (y) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Executive’s possession or control (including any of the foregoing stored or located in Executive’s office, home, laptop or other computer, whether or not the Company’s property) that contain Confidential Information or otherwise relate to the business of the Company, its affiliates or subsidiaries (whether or not the retention or use thereof would reasonably be expected to result in a demonstrable injury to the Company, its affiliates or subsidiaries), except that Executive may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information; and (z) notify and fully cooperate with the Company regarding the delivery or destruction of any other Confidential Information of which Executive is or becomes aware.
e.    Executive shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the TRU Group any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party.  Executive hereby indemnifies, holds harmless and agrees to defend the TRU Group and its respective officers, directors, partners, employees, agents and representatives from any actual breach of the foregoing covenant.  During the Employment Term, Executive shall comply with all relevant written policies and guidelines of the Company and its subsidiaries and affiliates which have been made available or disclosed to him, including regarding the protection of Confidential Information and intellectual property and potential conflicts of interest.  Executive acknowledges that the Company and its subsidiaries and affiliates may amend any such policies and guidelines from time to time, and that Executive remains at all times bound by their most current version; provided, however, that Executive shall not be bound by any such amendments unless and until Executive receives notice of such amendments and copies thereof are made available or disclosed to him.
f.    The provisions of this Section 9 shall survive the termination of Executive’s employment for any reason.
10.    Specific Performance.  Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Sections 8 or 9 would be inadequate and the Company and its subsidiaries and affiliates would suffer irreparable damages as a result of such breach or threatened breach.  In recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to cease making any 

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payments or providing any benefit otherwise required by this Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available.
11.    Arbitration.  Except as provided in Section 10, any other dispute arising out of or asserting breach of this Agreement, or any statutory or common law claim by Executive relating to his employment under this Agreement or the termination thereof (including any tort or discrimination claim), shall be exclusively resolved by binding statutory arbitration in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association.  Such arbitration process shall take place in New York, New York.  A court of competent jurisdiction may enter judgment upon the arbitrator’s award.  Each party shall pay the costs and expenses of arbitration (including fees and disbursements of counsel) incurred by such party in connection with any dispute arising out of or asserting breach of this Agreement.
12.    Code Section 409A. 
a.    General.  This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements of Section 409A of the Code and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder (and any applicable transition relief under Section 409A of the Code). Nevertheless, the tax treatment of the benefits provided under the Agreement is not warranted or guaranteed.  Neither the Company nor its directors, officers, employees or advisers (other than Executive) shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive as a result of the application of Section 409A of the Code.
b.    Definitional Restrictions.  Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (“Non-Exempt Deferred Compensation”) would otherwise be payable or distributable hereunder, or a different form of payment of such Non-Exempt Deferred Compensation would be effected, by reason of a Change in Control or Executive’s Disability or termination of employment, such Non-Exempt Deferred Compensation will not be payable or distributable to Executive, and/or such different form of payment will not be effected, by reason of such circumstance unless the circumstances giving rise to such Change in Control, Disability or termination of employment, as the case may be, meet any description or definition of “change in control event”, “disability” or “separation from service”, as the case may be, in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition).  This provision does not affect the dollar amount or prohibit the vesting of any Non-Exempt Deferred Compensation upon a Change in Control, Disability or termination of employment, however defined.  If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, or the application of a different form of payment, such payment or distribution shall be made at the time and in the form that would have applied absent the non-409A-conforming event.  

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c.    Six-Month Delay in Certain Circumstances.  Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Agreement by reason of Executive’s separation from service during a period in which he is a “specified employee” (as defined in Section 409A of the Code and applicable regulations), then, subject to any permissible acceleration of payment by the Company under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes):  (i) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following Executive’s separation from service will be accumulated through and paid or provided on the first day of the seventh month following Executive’s separation from service (or, if Executive dies during such period, within 30 days after Executive’s death) (in either case, the “Required Delay Period”); and (ii) the normal payment or distribution schedule for any remaining payments or distributions will resume at the end of the Required Delay Period. 
d.    Treatment of Installment Payments.  Each payment of termination benefits under Section 7 of this Agreement, including, without limitation, each installment payment and each payment or reimbursement of premiums for continued medical, dental or life insurance coverage under Section 7(c)(iii)(D), shall be considered a separate payment, as described in Treas. Reg. Section 1.409A-2(b)(2), for purposes of Section 409A of the Code.  
e.    Timing of Release of Claims.  Whenever in this Agreement the provision of a payment or benefit is conditioned on Executive’s execution and non-revocation of a release of claims, such release must be executed, and all revocation periods shall have expired, within 60 days after the date of termination of Executive’s employment, failing which such payment or benefit shall be forfeited.  If such payment or benefit constitutes non-exempt deferred compensation, and if such 60-day period begins in one calendar year and ends in the next calendar year, the payment or benefit shall not be made or commence before the second such calendar year, even if the release becomes irrevocable in the first such calendar year.
f.    Permitted Acceleration.  The Company shall have the sole authority to make any accelerated distribution permissible under Treas. Reg. Section 1.409A-3(j)(4) to Executive of deferred amounts, provided that such distribution meets the requirements of Treas. Reg. Section 1.409A-3(j)(4).  
13.    Miscellaneous.
a.    Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey, without regard to conflicts of laws principles thereof.
b.    Entire Agreement/Amendments.  This Agreement and the Incentive Plan contain the entire understanding of the parties with respect to the employment of Executive by the TRU Group.  There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those 

13

expressly set forth herein and therein.  This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto.
c.    No Waiver.  The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.
d.    Severability.  In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.
e.    Assignment.  This Agreement, and all of Executive’s rights and duties hereunder, shall not be assignable or delegable by Executive; provided, however, that if Executive shall die, all amounts then payable to Executive hereunder shall be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee or other designee or, if there be no such devisee, legatee or designee, to Executive’s estate.  Any purported assignment or delegation by Executive in violation of the foregoing shall be null and void ab initio and of no force and effect.  This Agreement may be assigned by the Company to a person or entity which is an affiliate, and shall be assigned to any successor in interest to substantially all of the business operations of the Company.  Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate or successor person or entity.  Further, the Company will require any successor (whether, direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall mean the Company and any successor to its business and/or assets which is required by this Section 13(e) to assume and agree to perform this Agreement or which otherwise assumes and agrees to perform this Agreement; provided, however, in the event that any successor, as described above, agrees to assume this Agreement in accordance with the preceding sentence, as of the date such successor so assumes this Agreement, the Company shall cease to be liable for any of the obligations contained in this Agreement.
f.    Set Off; Mitigation.  The Company’s obligation to pay Executive the amounts provided and to make the arrangements provided hereunder shall not be subject to set-off, counterclaim or recoupment, other than amounts loaned or advanced to Executive by the Company or its affiliates, [amounts provided to Executive pursuant to Section 5(b) as per the terms thereof.] amounts owed by Executive under the Incentive Plan, or otherwise as provided in Section 7(c) hereof.  Executive shall not be required to mitigate the amount of any payment provided for pursuant to this Agreement by seeking other employment or otherwise and the amount of any payment provided for pursuant to this Agreement shall not be reduced by any compensation earned as a result of Executive’s other employment or otherwise.

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g.    Notice.  For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three days after it has been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
If to the Company:
Toys “R” Us, Inc.
One Geoffrey Way
Wayne, New Jersey 07470 
Attention:  General Counsel 

If to Executive:
To the most recent address of Executive set forth in the personnel records of the Company.
h.    Executive Representation.  Executive hereby represents to the Company that the execution and delivery of this Agreement by Executive and the performance by Executive of Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any employment agreement or other agreement or policy to which Executive is a party or otherwise bound.
i.    Prior Agreements. This Agreement supersedes all prior agreements and understandings (including verbal agreements) between Executive and the Company and/or its affiliates regarding the terms and conditions of Executive’s employment with the Company and/or its affiliates (including, without limitation, the Prior Agreement); provided, however, that the Incentive Plan shall govern the terms and conditions of Executive’s equity holdings in the Company.
j.    Cooperation.  Executive shall provide Executive’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during Executive’s employment hereunder, but only to the extent the Company requests such cooperation with reasonable advance notice to Executive and in respect of such periods of time as shall not unreasonably interfere with Executive’s ability to perform his duties with any subsequent employer; provided, however, that the Company shall pay any reasonable travel, lodging and related expenses that Executive may incur in connection with providing all such cooperation, to the extent approved by the Company prior to incurring such expenses.  Executive is entitled to be paid or reimbursed for any expenses under this Section 13(j), the amount reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred.  Executive’s rights to payment or reimbursement of expenses pursuant to this Section 

15

13(j) shall expire at the end of 20 years after the Execution Date and shall not be subject to liquidation or exchange for another benefit.
k.    Withholding Taxes.  The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.
l.    Counterparts.  This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this amended and restated Agreement as of the day and year first above written.

TOYS “R” US, INC.

By:       /s/ Deborah Derby    
                  Name:  DEBORAH DERBY
                    Title:  Vice Chair & Executive Vice President

EXECUTIVE

/s/ Michael J. Short    
MICHAEL J. SHORT

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EXHIBIT A

Give Kids the World

1

EXHIBIT B
Equity Award.  Executive shall receive a one-time Sign-On Equity Award of stock options and an Additional One-Time Equity Award of stock options under the Toys “R” Us, Inc. 2010 Incentive Plan (the “Incentive Plan”) as soon as is practicable following the Commencement Date, based upon the valuation of Toys “R” Us, Inc. common stock anticipated to be approved by the Board in June 2014 (“June 2014 Valuation”) which in no event shall exceed $10 per share, as follows: 

		
	•
	Sign-On Equity Award.  Executive shall receive 30,000 stock options to acquire Toys “R” Us, Inc. common stock with an exercise price per share equal to the June 2014 Valuation (the “Sign –On Options”).  The Sign-On Options shall have a ten-year term and shall be subject to the following vesting conditions: 

		
	▪
	7,500 Sign-On Options shall vest on the first anniversary of the grant date;

		
	▪
	7,500 Sign-On Options shall vest on the second anniversary of the grant date; 

		
	▪
	7,500 Sign-On Options shall vest on the third anniversary of the grant date; and

		
	▪
	7,500 Sign-On Options shall vest on the fourth anniversary of the grant date.

		
	•
	Additional One-Time Equity Award.  Executive shall receive 450,000 stock options to acquire Toys “R” Us, Inc. common stock with an exercise price per share equal to the June 2014 Valuation (the “Additional Options”).  The Additional Options shall have a ten-year term and shall be subject to the following vesting conditions: 

		
	◦
	Time Vesting Options.  One half of the Additional Options (i.e., 225,000) shall vest over time as follows, provided that Executive remains employed on the applicable vesting date:

		
	§
	56,250 Additional Options shall vest on the first anniversary of the grant date;

		
	§
	56,250 Additional Options shall vest on the second anniversary of the grant date; 

		
	§
	56,250 Additional Options shall vest on the third anniversary of the grant date; and

		
	§
	56,250 Additional Options shall vest on the fourth anniversary of the grant date.

		
	◦
	Time and Performance Vesting Options.  One half of the Additional Options (i.e., 225,000) shall be subject to both time and performance vesting, and will only be deemed full vested when they have time vested and performance vested in accordance with the terms hereof.  

		
	§
	112,500 of the Additional Options will satisfy the performance-vesting contingency upon the occurrence, on or before the 10th anniversary of the grant date, of a Measurement Event (as defined below) in which the consideration received by the Sponsors reflects a price of Toys “R” Us, Inc. common stock of at least $26.75 per share.  

		
	§
	An additional 112,500 of the Additional Options (i.e, a total of 225,000) will satisfy the performance-vesting contingency upon the occurrence, on or before the 10th anniversary of the grant date, of a Measurement Event in which the consideration received by the Sponsors reflects a price of Toys “R” Us, Inc. common stock of at least $33.50 per share.

2

		
	§
	Of the Additional Options that meet the performance contingency, the time-vesting contingency will be met as follows, depending on Executive’s continued employment as of the applicable date:

  
		
	•
	25% shall time-vest on the first anniversary of the grant date;

		
	•
	Another 25% shall time-vest on the second anniversary of the grant date at which time a total of 50% shall be time-vested; 

		
	•
	Another 25% shall time-vest on the third anniversary of the grant date at which time a total of 75% shall be time-vested; and

		
	•
	The remaining 25% shall time-vest on the fourth anniversary of the grant date at which time a total of 100% shall be time-vested.

For example, if a Measurement Event occurred shortly after the first anniversary of the grant date in which the consideration received by the Sponsors reflected a price of Toys “R” Us, Inc. common stock of $30.00 per share, 112,500 Additional Options would meet the performance condition.  If Executive then resigned between the second and third anniversaries of the grant date, he would have vested in 56,250 Additional Options (50% of the 112,500 that met the performance condition) and the remaining 168,750 Additional Options would be forfeited.

For purposes of these Options:

“Measurement Event” means (i) prior to an Initial Public Offering (as defined below) and on or before the 10th anniversary of the grant date, any transaction or series of related transactions which result in the KKR, Bain and Vornado (hereinafter collectively, the “Sponsors”) ceasing collectively to own securities which represent at least 50% of the total voting power or economic interest in Toys “R” Us, Inc., (ii) at any time on or before the 10th anniversary of the grant date, any transaction or series of related transactions which result in an independent third party acquiring securities which represent more than 50% of the total voting power or economic interest in Toys “R” Us, Inc., (iii) at any time on or before the 10th anniversary of the grant date, a sale or disposition of all or substantially all of the assets of Toys “R” Us, Inc. and its subsidiaries on a consolidated basis; provided that, in the case of clauses (i) and (ii) above, such transactions shall only constitute a Measurement Event if they result in the Sponsors ceasing to have the power (whether by ownership of voting securities, contractual right, or otherwise) collectively to elect a majority of the Board, and (iv) after an Initial Public Offering, any equity securities (including securities which are convertible into equity securities) held by the Sponsors which will be deemed to have been sold for a price per share equal to the weighted average (by dollar volume) of the closing trading price for each of the 90 consecutive trading days ending on such measurement date, and for purposes of calculating the target price points for the performance-vesting condition such sale will be deemed to occur on the first day of such 90 trading day period.

“Initial Public Offering” means an initial public offering, after the Commencement Date, of Toys “R” Us, Inc.’s common stock pursuant to an offering registered under the Securities Act of 1933 as amended from time to time, other than any such offerings which are registered on Forms S-4 or S-8.

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EXHIBIT C
SEPARATION AND RELEASE AGREEMENT
This Separation and Release Agreement (“Agreement”) is entered into as of this ___ day of __________________________, 20__, between TOYS “R” US, INC. and any successor thereto (collectively, the “Company”) and _______________ (the “Executive”).
The Executive and the Company agree as follows:
1.The employment relationship between the Executive and the Company and its subsidiaries and affiliates, as applicable, terminated on _________________________________ (the “Termination Date”).
2.    In accordance with the Executive’s Employment Agreement, Executive is entitled to receive certain payments and benefits after the Termination Date.
3.    In consideration of the above, the sufficiency of which the Executive hereby acknowledges, the Executive, on behalf of the Executive and the Executive’s heirs, executors and assigns, hereby releases and forever discharges the Company and its members, parents, affiliates, subsidiaries, divisions, any and all current and former directors, officers, employees, agents, and contractors and their heirs and assigns, and any and all employee pension benefit or welfare benefit plans of the Company, including current and former trustees and administrators of such employee pension benefit and welfare benefit plans, from all claims, charges, or demands, in law or in equity, whether known or unknown, which may have existed or which may now exist from the beginning of time to the date of this Agreement, including, without limitation, any claims the Executive may have arising from or relating to the Executive’s employment or termination from employment with the Company and its subsidiaries and affiliates, as applicable, including a release of any rights or claims the Executive may have under Title VII of the Civil Rights Act of 1964, as amended, and the Civil Rights Act of 1991 (which prohibit discrimination in employment based upon race, color, sex, religion, and national origin); the Americans with Disabilities Act of 1990, as amended, and the Rehabilitation Act of 1973 (which prohibit discrimination based upon disability); the Family and Medical Leave Act of 1993 (which prohibits discrimination based on requesting or taking a family or medical leave); Section 1981 of the Civil Rights Act of 1866 (which prohibits discrimination based upon race); Section 1985(3) of the Civil Rights Act of 1871 (which prohibits conspiracies to discriminate); the Employee Retirement Income Security Act of 1974, as amended (which prohibits discrimination with regard to benefits); any other federal, state or local laws against discrimination; or any other federal, state, or local statute, or common law relating to employment, wages, hours, or any other terms and conditions of employment. This includes a release by the Executive of any claims for wrongful discharge, breach of contract, torts or any other claims in any way related to the Executive’s employment with or resignation or termination from the Company and its subsidiaries and affiliates, as applicable. This release also includes a release of any claims for age discrimination under the Age Discrimination in Employment Act, as amended (“ADEA”). The ADEA requires that the Executive be advised to consult with an attorney before the Executive waives any claim under ADEA. In addition, the ADEA provides the Executive with at least 21 

4

days to decide whether to waive claims under ADEA and seven days after the Executive signs the Agreement to revoke that waiver. This release does not release the Company from any obligations due to the Executive under the Executive’s Employment Agreement or under this Agreement, any rights Executive has to indemnification by the Company and any vested rights Executive has under the Company’s employee pension benefit and welfare benefit plans.
Additionally, in consideration of the foregoing, the Company agrees to release and forever discharge the Executive and the Executive’s heirs, executors and assigns from any claims, charges or demands, and/or causes of action whatsoever, in law or in equity, whether known or unknown, which may have existed or which may now exist from the beginning of time to the date of this Agreement, including, but not limited to, any claim, matter or action related to the Executive’s employment and/or affiliation with, or termination and separation from the Company and its subsidiaries and affiliates; provided that such release shall not release the Executive from any loan or advance by the Company or its subsidiaries or affiliates, as applicable, a breach of Executive’s fiduciary obligations under New Jersey state law or a breach under Section 8 or 9 of the Executive’s Employment Agreement.
4.    This Agreement is not an admission by either the Executive or the Company or its subsidiaries or affiliates of any wrongdoing or liability.
5.    The Executive waives any right to reinstatement or future employment with the Company and its subsidiaries and affiliates following the Executive’s separation from the Company and its subsidiaries and affiliates on the Termination Date.
6.    As a material condition of this Agreement, Executive agrees not to engage in any act – direct, indirect, verbal, written, or otherwise – that does or may reasonably be expected to disparage or harm the reputation, name, business, prospects, or operations of the Company or its subsidiaries or affiliates or their respective officers, directors, stockholders or employees.  The Company agrees that it will undertake reasonable efforts to ensure that the CEO and other members of the Company’s executive management team do not engage in any act which is intended, or may reasonably be expected to harm the reputation, business or prospects of the Executive.
7.    The Executive shall continue to be bound by Sections 8 and 9 of the Executive’s Employment Agreement.
8.    The Executive shall promptly return all Company and subsidiary and affiliate property in the Executive’s possession, including, but not limited to, Company or subsidiary or affiliate keys, credit cards, cellular phones, computer equipment, software and peripherals and originals or copies of books, records, or other information pertaining to the Company or subsidiary or affiliate business. 
9.    This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey, without reference to the principles of conflict of laws. Exclusive jurisdiction with respect to any legal proceeding brought concerning any subject matter 

5

contained in this Agreement shall be settled by arbitration as provided in the Executive’s Employment Agreement.
10.    This Agreement represents the complete agreement between the Executive and the Company concerning the subject matter in this Agreement and supersedes all prior agreements or understandings, written or oral. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.
11.    Each of the sections contained in this Agreement shall be enforceable independently of every other section in this Agreement, and the invalidity or unenforceability of any section shall not invalidate or render unenforceable any other section contained in this Agreement.
12.    It is further understood that for a period of 7 days following the execution of this Agreement in duplicate originals, the Executive may revoke this Agreement, and this Agreement shall not become effective or enforceable until the revocation period has expired. No revocation of this Agreement by the Executive shall be effective unless the Company has received within the 7 day revocation period, written notice of any revocation, all monies received by the Executive under this Agreement and the Executive’s Employment Agreement and all originals and copies of this Agreement.
13.    This Agreement has been entered into voluntarily and not as a result of coercion, duress, or undue influence. The Executive acknowledges that the Executive has read and fully understands the terms of this Agreement and has been advised to consult with an attorney before executing this Agreement. Additionally, the Executive acknowledges that the Executive has been afforded the opportunity of at least 21 days to consider this Agreement.
The parties to this Agreement have executed this Agreement as of the day and year first written above.
TOYS “R” US, INC.

By: _________________________
Name:
Title:

EXECUTIVE

____________________________

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