-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Usb+gZK8hnMNwyOmy2edmNp5R1Lapd8x18rgJ82/UR+2cUhoGl5c0E+JplTS6b6I iH+SlNRK74GneM5Kk0rOeg== 0000931755-04-000009.txt : 20040224 0000931755-04-000009.hdr.sgml : 20040224 20040224143544 ACCESSION NUMBER: 0000931755-04-000009 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040209 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040224 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AEI INCOME & GROWTH FUND XXI LTD PARTNERSHIP CENTRAL INDEX KEY: 0000931755 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 411789725 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-85076 FILM NUMBER: 04624502 BUSINESS ADDRESS: STREET 1: 1300 MINNESOTA WORLD TRADE CENTER STREET 2: 30 EAST SEVENTH ST CITY: ST PAUL STATE: MN ZIP: 55101 BUSINESS PHONE: 6122277333 MAIL ADDRESS: STREET 1: 1300 MINNESOTA WORLD TRADE CENTER STREET 2: 30 EAST SEVENTH STREET CITY: ST PAUL STATE: MN ZIP: 55101 8-K 1 jrd8khan.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Date of Report (Date of Earliest Event Reported) February 9, 2004 AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP (Exact Name of Registrant as Specified in its Charter) State of Minnesota (State or other Jurisdiction of Incorporation or Organization) 0-29274 41-1789725 (Commission File Number) (I.R.S. Employer Identification No.) 30 East 7th Street, Suite 1300, St. Paul, Minnesota 55101 (Address of Principal Executive Offices) (651) 227-7333 (Registrant's telephone number, including area code) (Former name or former address, if changed since last report) Item 2. Acquisition or Disposition of Assets. On February 9, 2004, the Partnership purchased a 50% interest in a Jared Jewelry store in Hanover, Maryland from Transmills, LLC. The total cash purchase price of the land and building was approximately $3,927,600. The remaining interest in the property was purchased by AEI Net Lease Income & Growth Fund XX Limited Partnership, an affiliate of the Partnership. Transmills, LLC is not affiliated with the Partnership. The cash, used in purchasing the property, was from the proceeds of sale of properties. Item 7. Financial Statements and Exhibits. (a) Financial statements of businesses acquired - Not Applicable. (b) On February 9, 2004, the Partnership purchased its 50% interest in the property for $1,963,800. The property was acquired with cash which was provided from proceeds of sale of properties. A limited number of proforma adjustments are required to illustrate the effects of the transaction on the balance sheet and income statement. The following narrative description is furnished in lieu of the proforma statements: Assuming the Partnership had acquired the property on January 1, 2002, the Partnership's Investments in Real Estate would have increased by $1,963,800 and its Current Assets (cash) would have decreased by $1,963,800. The Rental Income for the Partnership would have increased from $1,591,244 to $1,745,214 for the year ended December 31, 2002 and from $1,078,111 to $1,193,588 for the nine months ended September 30, 2003 if the Partnership had owned the property during the periods. Depreciation Expense would have increased by $39,002 and $29,251 for the year ended December 31, 2002 and the nine months ended September 30, 2003, respectively. The net effect of these proforma adjustments would have caused Net Income to increase from $2,469,538 to $2,584,506 and from $1,768,415 to $1,854,641, which would have resulted in Net Income of $110.37 and $79.74 per Limited Partnership Unit outstanding for the year ended December 31, 2002 and the nine months ended September 30, 2003, respectively. (c) Exhibits Exhibit 10.1 - Assignment of Purchase Agreement dated January 2, 2004 between the Partnership, AEI Net Lease Income & Growth Fund XX Limited Partnership and AEI Fund Management, Inc. relating to the Property at 7684 Arundel Mills, Hanover, Maryland. Exhibit 10.2 - Assignment and Assumption of Lease dated February 9, 2004 between the Partnership, AEI Net Lease Income & Growth Fund XX Limited Partnership and Transmills, LLC relating to the Property at 7684 Arundel Mills, Hanover, Maryland. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP By: AEI Fund Management XXI,Inc. Its: Managing General Partner Date: February 17, 2004 /s/ Patrick W Keene By: Patrick W. Keene Its: Chief Financial Officer EX-10.1 4 hanasgpa.txt ASSIGNMENT OF PURCHASE AGREEMENT THIS ASSIGNMENT made and entered into this 2 day of January, 2004, by and between AEI FUND MANAGEMENT, INC., a Minnesota corporation, ("Assignor") and AEI Income & Growth Fund XXI Limited Partnership, a Minnesota Limited Partnership, and AEI Net Lease Income & Growth Fund XX Limited Partnership, a Minnesota Limited Partnership (as tenants in common, together collectively referred to as "Assignee"); WITNESSETH, that: WHEREAS, on the 24th day of November, 2003, Assignor entered into a Purchase Agreement ("the Agreement") for that certain property located at 7684 Arundel Mills Blvd., Hanover, MD (the "Property") with TransMills, L.L.C., as Seller; and WHEREAS, Assignor desires to assign to AEI Income & Growth Fund XXI Limited Partnership, an undivided fifty percent (50.0%) interest as a tenant in common; and AEI Net Lease Income & Growth Fund XX Limited Partnership, an undivided fifty percent (50.0%) interest as a tenant in common, of its rights, title and interest in, to and under the Agreement as hereinafter provided; NOW, THEREFORE, for One Dollar ($1.00) and other good and valuable consideration, receipt of which is hereby acknowledged, it is hereby agreed between the parties as follows: 1. Assignor assigns all of its rights, title and interest in, to and under the Agreement to Assignee, to have and to hold the same unto the Assignee, its successors and assigns; 2. Assignee hereby assumes all rights, promises, covenants, conditions and obligations under the Agreement to be performed by the Assignor thereunder, and agrees to be bound for all of the obligations of Assignor under the Agreement. All other terms and conditions of the Agreement shall remain unchanged and continue in full force and effect. ASSIGNOR: AEI FUND MANAGEMENT, INC. By: /s/ Robert P Johnson Robert P. Johnson, its President ASSIGNEE: AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP BY: AEI FUND MANAGEMENT XXI, INC. By: /s/ Robert P Johnson Robert P. Johnson, its President AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP BY: AEI FUND MANAGEMENT XX, INC. By: /s/ Robert P Johnson Robert P. Johnson, its President AMENDMENT TO PURCHASE AGREEMENT This Amendment to Purchase Agreement (the "Amendment") is entered into this 2 day of January, 2004, by and between by and between TRANSMILLS, L.L.C., a Nevada limited liability company ("Seller"), having an address at 1605 Lake Las Vegas Parkway, Henderson, Nevada 89011, and AEI Income & Growth Fund XXI Limited Partnership, a Minnesota limited partnership, and AEI Net Lease Income & Growth Fund XX Limited Partnership, a Minnesota limited partnership (as tenants in common, together collectively referred to as "Buyer"), having an address of 1300 Wells Fargo Place, 30 Seventh Street East, St. Paul, Minnesota 55101. WHEREAS, Seller and AEI Fund Management Inc., as buyer, entered into a Purchase Agreement dated November 24, 2003, as amended by a letter agreement dated December 23, 2003, as further amended by a letter agreement dated January 9, 2004, as further amended by a letter agreement dated January 16, 2004, as further amended by a letter agreement dated January 20, 2004 (hereinafter together collectively referred to as the "Purchase Agreement") for property located at 7684 Arundel Mills Blvd., Hanover, MD (the "Property"). WHEREAS, AEI Fund Management Inc. assigned its rights, title and interest under the Purchase Agreement to AEI Income & Growth Fund XXI Limited Partnership, an undivided fifty percent (50.0%) interest as a tenant in common; and AEI Net Lease Income & Growth Fund XX Limited Partnership, an undivided fifty percent (50.0%) interest as a tenant in common, in that certain Assignment of Purchase Agreement dated January 2, 2004. WHEREAS, Seller and Buyer desire to modify certain provisions of the Purchase Agreement as more fully set forth herein. NOW THEREFORE, in consideration of mutual covenants contained herein, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Buyer hereby agree as follows: 1. Purchase Price. Seller and Buyer hereby agree to modify the Purchase Price as set forth in Section 2.1 of Purchase Agreement, by deleting Four Million Four Hundred Forty Thousand Dollars ($4,400,000) and inserting Three Million Nine Hundred Twenty-Seven Thousand Six Hundred Dollars ($3,927,600.00) as the Purchase Price. 2. Except for those modifications set forth in this Amendment, the terms and conditions of the Purchase Agreement shall remain unchanged and in full force and effect. 3. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, Seller and Buyer have executed this Amendment as of the date first above written. SELLER: TRANSMILLS L.L.C., a Nevada limited liability company By: TransMills Management Corp., a Nevada corporation, its managing member By: /s/ David J Voorhies Name: David J Voorhies Title: Treasurer [Signatures continue on the following page] BUYER: AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP, a Minnesota limited partnership BY: AEI FUND MANAGEMENT XXI, INC., a Minnesota corporation, its General Partner By: /s/ Robert P Johnson Robert P. Johnson,its President AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP, a Minnesota limited partnership BY: AEI FUND MANAGEMENT XX, INC., a Minnesota corporation, its General Partner By: /s/ Robert P Johnson Robert P. Johnson, its President PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS THIS PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS (this "Agreement") is made and entered into effective as of this 24 day of November, 2003 (the "Effective Date") by and between TRANSMILLS, L.L.C., a Nevada limited liability company ("Seller"), and AEI FUND MANAGEMENT, INC., a Minnesota corporation, or its successors or assigns ("Buyer"). RECITALS: A. Seller is the owner of that certain parcel of real property located at 7684 Arundel Mills Boulevard, Hanover, Maryland, as more particularly described on Exhibit A attached hereto (the "Land"); B. Constructed on the Land is a retail jewelry store known as "Jared-The Galleria of Jewelry" (the "Improvements") which is leased to Sterling Inc., an Ohio corporation ("Sterling") pursuant to that certain lease agreement between Seller and Sterling dated April 26, 2001, as amended November 1, 2001, and that certain Guaranty of Lease executed by Sterling Jewelers Inc, copies of which will be provided to Buyer within three (3) days after the Effective Date (the "Lease"). C. Seller desires to sell the Land and the Improvements (collectively, the "Property") to Buyer and Buyer desires to purchase the Property from Seller upon the terms and conditions set forth in this Agreement. TERMS AND CONDITIONS 1. Agreement For Purchase and Sale. Seller hereby agrees to sell the Property to Buyer, and Buyer hereby agrees to purchase the Property from Seller, in accordance with and subject to the terms and conditions of this Agreement. 2. Purchase Price and Payment. 2.1 Purchase Price. The purchase price for the Property will be Three Million Nine Hundred Forty-Eight Thousand Dollars ($3,948,000) (the "Purchase Price"). 2.2 Payment. The Purchase Price shall be paid as follows: (a) Deposit. (1) Deposit. Buyer will deposit the amount of Fifty Thousand Dollars ($50,000) into escrow with First American Title Company of Nevada ("Escrow Holder") as Buyer's deposit (the "Deposit") within two (2) days following the Effective Date. (2) Release of Deposit. Upon Buyer's acceptance or waiver of Buyer's due diligence contingencies on or before the expiration of the Due Diligence Period, the Deposit will be non- refundable to Buyer except in the event of Seller's default or except as otherwise set forth herein and Escrow Holder will release the Deposit to Seller, without any further written instructions from Buyer or Seller. Buyer and Seller agree to indemnify and hold Escrow Holder harmless from and against any loss (including, without limitation, reasonable attorneys' fees) arising out of or incurred in connection with the release of the Deposit to Seller. (3) Credit Against Purchase Price. The amount of the Deposit will be applied to the Purchase Price at the Close of Escrow, but will be retained by Seller as its liquidated damages as provided in Section 12.2 if Escrow fails to close as a result of Buyer's default. (b) Balance Due at Close. Not less than one (1) business day before the Close of Escrow, Buyer will deposit into Escrow in immediately available Federal Funds an amount equal to the balance of the Purchase Price plus an amount sufficient to cover all of Buyer's closing costs. 4. BUYER'S DUE DILIGENCE. 4.1 DUE DILIGENCE PERIOD. THE "DUE DILIGENCE PERIOD" SHALL COMMENCE ON THE EFFECTIVE DATE AND EXPIRE THIRTY (30) DAYS THEREAFTER, EXCEPT AS OTHERWISE SET FORTH HEREIN RESPECTING MATTERS OF ADVERSE CHANGE OR MATERIALLY ADVERSE INFORMATION ("SUPPLEMENTAL DUE DILIGENCE") AFFECTING THE REPORTS (AS DEFINED BELOW), WHICH SUPPLEMENTAL DUE DILIGENCE IF KNOWN TO SELLER SHALL BE FORWARDED TO BUYER AND BUYER SHALL HAVE A MINIMUM OF FIVE BUSINESS DAYS THEREAFTER TO REVIEW THE SAME; THE DUE DILIGENCE PERIOD SHALL BE EXTENDED, IF NECESSARY, TO PROVIDE BUYER WITH SUCH ADDITIONAL REVIEW PERIOD OF FIVE BUSINESS DAYS AFTER RECEIPT OF SUCH SUPPLEMENTAL DUE DILIGENCE. SELLER HAS, PRIOR TO THE EXECUTION OF THIS AGREEMENT, WITHOUT WARRANTY AS TO ACCURACY OF CONTENT, EXCEPT AS OTHERWISE SET FORTH HEREIN, PROVIDED BUYER WITH COMPLETE COPIES OF ALL STUDIES, REPORTS, AGREEMENTS, DOCUMENTS, PLANS, PERMITS AND ENTITLEMENTS IN SELLER'S POSSESSION CONCERNING THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ALL ENGINEERING DRAWINGS, SURVEYS, SOILS REPORTS, SITE HISTORY INVESTIGATIONS, COPIES OF STERLING'S SALES REPORTS FOR THE PROPERTY, TOXIC OR HAZARDOUS MATERIALS INVESTIGATIONS OR REPORTS, PLANNING STUDIES, CONSTRUCTION WARRANTIES, AND TITLE REPORTS IN SELLER'S POSSESSION (COLLECTIVELY THE "REPORTS"). 4.2 Expiration of Due Diligence Period. Buyer shall, in its sole discretion, approve or disapprove, in writing, Buyer's due diligence on or before expiration of the Due Diligence Period. If Buyer disapproves Buyer's due diligence, in writing, on or before expiration of the Due Diligence Period, this Agreement shall terminate and Escrow Holder shall deliver to Buyer the Deposit and thereafter, neither Seller nor Buyer shall have any further obligation or liability under this Agreement, except for the Obligations Surviving Termination (as hereinafter defined). 5. Duration of Escrow and Escrow Instructions. 5.1 Joint Escrow Instructions and General Conditions. This Agreement shall constitute both agreements between Buyer and Seller and joint escrow instructions to Escrow Holder. Escrow Holder's general conditions (the "General Conditions") attached hereto as Exhibit B are incorporated herein by reference to the extent they are not inconsistent with the provisions of this Agreement. If there is any inconsistency between the provisions of the General Conditions and this Agreement, the provisions of this Agreement shall control. If any provisions of this Agreement are unacceptable to Escrow Holder, or if Escrow Holder requires additional instructions, the Parties agree to make any deletions, substitutions and additions as counsel for the Parties shall mutually approve and which do not materially alter the terms of this Agreement. 5.2 Close of Escrow. (a) Closing Date. Unless the Parties agree upon an earlier closing date, Escrow shall close ten (10) days after expiration of the Due Diligence Period (the "Closing Date"). (b) Close of Escrow Defined. "Close of Escrow" will have occurred when Escrow Holder records a special warranty deed (as defined below) transferring the Property. 6. Title Examination. 6.1 Procurement of Title Commitment. As soon as possible after the Effective Date, Seller shall, at its expense, provide Buyer with a current title commitment covering the Property (the "Title Commitment") issued by Escrow Holder, naming Buyer as proposed insured, in the amount of the Purchase Price, together with legible copies of all documents described in the Title Commitment. 6.2 Title Exceptions. On or before expiration of the Due Diligence Period, Buyer may give written notice to Seller of any objections Buyer may have with respect to any conditions affecting the Property or as disclosed by the Title Commitment (the "Title Objections"). If Buyer fails to give any such notice with respect to any specific matters disclosed in the Title Commitment on or before expiration of the Due Diligence Period, then Buyer shall be deemed to have waived any Title Objections with respect to all such matters as to which no objection is made and any such matter shall be deemed a "Permitted Exception". Any title matters arising subsequent to the date of the provided Title Commitment may be reviewed by Buyer and Buyer shall have at least five business days to review the same; if necessary, the Due Diligence Period shall be extended to provide Buyer with at least five business days to review any such supplemental matters. Any such extension of the Due Diligence Period shall also extend, by like number of days, the Response Period and Title Election Deadline as defined below. 6.3 Failure to Correct Title Objections. Except as hereinafter expressly provided in this Section 6.3, Seller shall have no obligation whatsoever to remove, satisfy, or otherwise cure, or to incur any expense in connection with the curing of any valid Title Objections of which Seller is notified by Buyer in accordance with Section 6.2. Seller shall notify Buyer within ten (10) days after Seller's receipt of written notice from Buyer of any Title Objections (the "Response Period") whether or not Seller agrees to take action to cause such Title Objections to be cured on or before the Closing Date although Seller shall not otherwise have any obligation to take any action to cure any Title Objections other than to release liens evidenced by mortgages, deeds of trust, financing statements, security interests and similar security instruments created by Seller (such instruments are collectively referred to herein as the "Secured Encumbrances"). Buyer acknowledges that a Title Objection shall be deemed cured if Title Company agrees to issue its policy of title insurance with respect to the Property to Buyer without exception to such Title Objection. If Seller expressly agrees in writing to take action to cure any of such Title Objections pursuant to Buyer's notice, then Seller shall have assumed the obligation to take action to cure only such Title Objections as expressly set forth by Seller, but not other Title Objections, on or before the Closing Date. If Seller does not notify Buyer within the Response Period that it has agreed in writing to take action to cure Buyer's Title Objections, or if Seller thereafter fails to take any action to cure on or before the Closing Date any Title Objections made by Buyer pursuant to Section 6.2 pursuant to Seller's written agreement to take such action (which Closing Date shall, at Buyer's election, be extended for up to fifteen (15) additional days), Buyer may, as its sole remedy, elect by written notice to Seller on or before fifteen (15) days after the end of the Response Period (the "Title Election Deadline"), to do one of the following: 6.3.1 To waive any such Title Objection (thereby making such Title Objection a "Permitted Exception") and to close the transaction in accordance with the terms of this Agreement without reduction of the Purchase Price; or 6.3.2 To terminate this Agreement, and in the event of such termination, Title Company shall deliver to Buyer the Deposit and thereafter, neither Seller nor Buyer shall have any further obligation or liability under this Agreement except for Seller's indemnification obligations under Section 11.2 of this Agreement (as limited by Section 27 of this Agreement) and Buyer's Indemnity Obligations under Sections 9.2 and 11.2 (collectively, the "Obligations Surviving Termination"). If Buyer fails to elect either option under this Section 6.3 on or before the Title Election Deadline, Buyer shall be deemed to have elected to waive such Title Objection(s) and to close the transaction in accordance with the terms of this Agreement as provided in Section 6.3.1 hereof. 7. Financing Contingency. [Intentionally Omitted] 8. Representations. 8.1 Seller's Representations. As an inducement to Buyer to enter into this Agreement, Seller warrants, covenants and represents to Buyer, which representations shall be deemed to be true and correct as of the Closing unless Seller shall have notified Buyer to the contrary, and which warranties, covenants and representations shall survive closing for a period of one (1) year, as follows: 8.1.1 Authority. Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Nevada and has the right, power, and authority to enter into this Agreement and the right, power, and authority to convey the Property in accordance with the terms and conditions of this Agreement. 8.1.2 Environmental. To the best of Seller's Actual Knowledge (as defined below) as of the date hereof, based on the Environmental Site Assessment Report prepared by Professional Service Industries, Inc. dated November 7, 2000 and the Subsurface Exploration and Geotechnical Evaluations prepared by Professional Service Industries, Inc. dated November, 2000 (collectively, the "Environmental Report"), and except as disclosed in the Environmental Report, no hazardous materials (as described in such report) are present on the Property at levels that require removal, remediation or other corrective action under applicable laws, ordinances, rules and regulations in effect and applicable to the Property on such date. For purposes of this Agreement, "Seller's Actual Knowledge" shall mean the actual (as opposed to constructive) knowledge of Tom Robinson, Fred Goldstein, John Plunkett or Steve Shapiro. Seller represents that such individuals are privy to and hold such position within Seller as to be familiar with the factual circumstances, if the same might exist, for which knowledge may be imputed under commercially reasonable circumstances, upon such matters as Seller may represent to its actual knowledge in this Agreement. 8.1.3 Property and Sterling Matters. To Seller's Actual Knowledge, the Property is not under threat of condemnation of eminent domain, is in substantially good repair and working order, all real estate taxes are current, and Sterling has obtained all licenses, permits and certificates of occupancy necessary to conduct its business on the Property. To Seller's Actual Knowledge, Sterling has not declared Seller in default under any term or provision of the Lease relating to Landlord's work or construction responsibilities, matters of zoning, title, or environmental concern, or any other matter, nor to the Seller's Actual Knowledge, has any event occurred that, with the passing of time, would constitute a default by Seller under the Lease, nor is Sterling in material default under the Lease. Furthermore, Sterling Jewelers Inc. has not declared Seller in default under any term or provision of the Lease relating to Landlord's work or construction responsibilities, matters of zoning, title, or environmental concern, or any other matter, nor to the Seller's Actual Knowledge, has any event occurred that, with the passing of time, would constitute a default by Seller under the Guaranty of Sterling Jewelers Inc., nor is Sterling Jewelers Inc. in material default under the Guaranty. 8.2 Buyer's Representations. As an inducement to Seller to enter into this Agreement, Buyer warrants and represents to Seller that AEI Fund Management, Inc. is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota and has the right, power, and authority to enter into this Agreement and the right, power, and authority to purchase the Property in accordance with the terms and conditions of this Agreement. Buyer further acknowledges, represents and warrants to Seller that Buyer has the knowledge and experience in financial and business matters to enable Buyer to evaluate the merits and risks of the transaction contemplated by this Agreement, and that Buyer is not in a disparate bargaining position relative to Seller with respect to this Agreement. 8.3 No Further Representations or Warranties. Buyer agrees that Buyer's election not to terminate this Agreement pursuant to Section 9.4 below shall constitute a representation by Buyer to Seller that Buyer has fully inspected the Property and agrees to purchase the Property wholly "as is, where is, with all faults", subject to Seller's representations in Sections 8.1 and 11.2 hereof. Buyer acknowledges that Seller has made no warranties or representations whatsoever pertaining to the Property, the condition thereof, the value thereof, or any other matter with respect to the Property that will survive the Closing, other than as may be contained in the documents to be delivered at Closing as provided in Section 10.1.1, the brokerage representation and indemnity set forth in Section 11.2, and the representations set forth in Section 8.1 above. 9. Inspections. 9.1 Access. From the Effective Date through and including the Closing Date, Buyer and its agents, shall have the right to enter upon the Property to inspect, examine, and study the physical integrity of the Property, which, in the opinion of Buyer, are necessary to determine the physical condition of the Property. Seller hereby agrees to cooperate with Buyer and its agents, in connection with such inspections. 9.2 Insurance and Indemnification. Buyer agrees that, in making any inspections of the Property, Buyer or Buyer's agents will (i) carry not less than One Million Dollars ($1,000,000.00) commercial general liability insurance with contractual liability endorsement naming Seller as an additional insured thereunder and insuring Buyer's Indemnity Obligations (as hereinafter defined) and, prior to the entering upon the Property to make such inspection, will provide Seller with written evidence of same, (ii) will not reveal to any third party not approved by Seller (other than Buyer's agents, employees, contractors, design professionals, and lenders or as required by law or court order) the results of its inspections, and (iii) will restore promptly any physical damage caused by the inspections. Buyer shall give Seller reasonable prior notice of its intention to conduct any inspections, and Seller reserves the right to have a representative present at such inspections. Buyer agrees to provide Seller with a copy of any inspection report upon Seller's written request. Buyer agrees to indemnify, defend, and hold Seller free and harmless from any loss, injury, damage, claim, lien, allegation, cost or expense, including reasonable attorneys' fees, arising out of a breach of the foregoing agreements by Buyer in connection with the inspection of the Property, or otherwise from the exercise by Buyer or its agents or representatives of the right of access under Section 9.1 (collectively, the "Buyer's Indemnity Obligations"). Any inspections shall be at Buyer's sole cost and expense. The provisions of this Section 9.2 shall survive Closing. 9.3 Reports. Within five (5) business days after the Effective Date, Seller will provide, if not previously provided, to Buyer all of the following (but only as such may be in the Seller's or Seller's agents' or representatives' possession or control or are otherwise readily obtainable): 9.3.1 A preliminary title commitment and copies of all underlying documents covering the Property as set forth in Section 6 above, and in addition, including an ALTA survey of the Property; 9.3.2 All existing contracts, construction warranties, or other agreements affecting the Property that shall survive Closing; 9.3.3 Copies of the most recent Phase I Environmental Report with respect to the Property; and 9.3.4 Drawings, plans or specifications for Improvements. Seller makes no representations or warranties as to the truth, accuracy or completeness of any materials, data or other information supplied to Buyer in connection with Buyer's inspection of the Property (e.g., that such materials are complete, accurate or the final version thereof, or that all such materials are in Seller's possession). To Seller's Actual Knowledge, such materials are not inaccurate. It is the parties' express understanding and agreement that such materials are provided only for Buyer's convenience in making its own examination of the Property, and, in doing so, Buyer shall rely exclusively on its own independent investigation and evaluation of every aspect of the Property and not on any materials supplied by Seller. Buyer expressly disclaims any intent to rely on any such materials provided to it by Seller in connection with its inspection, except to the extent otherwise represented, warranted and covenanted herein by Seller, and agrees that it shall rely solely on its own independently developed or verified information. 9.4 Right to Terminate. If, in the sole and absolute opinion of Buyer, the Property is not suitable or acceptable to Buyer for any reason or no reason, Buyer shall have the right at any time prior to 5:00 p.m. Pacific Time on the date which the Due Diligence Period expires, to terminate this Agreement by sending written notice of termination to Seller. In the event of termination pursuant to this Section 9.4, Title Company shall return the Deposit to Buyer, less one-half of the Title Company's cancellation fees, and thereafter, neither Seller nor Buyer shall have any further obligation or liability under this Agreement except for Obligations Surviving Termination. If Buyer does not elect to terminate this Agreement as provided in this Section 9.4, Buyer shall be deemed to have waived its right to terminate this Agreement under this Section 9.4, and the Deposit shall be fully earned by Seller and non-refundable to Buyer, except as otherwise expressly provided in this Agreement. 10. The Closing. 10.1 Deliveries at Closing. The Closing shall occur as follows, subject to satisfaction of all of the terms and conditions of this Agreement: 10.1.1 Seller shall convey its interest in and to the Property to Buyer by depositing into Escrow a special warranty deed (the "Deed"), which Deed shall convey fee simple title to the Property to Buyer, subject to the Permitted Exceptions and the reservations, covenants and restrictions set forth in Exhibit C attached hereto and made a part hereof (the "Deed Restrictions"). The Deed (including the Deed Restrictions) shall be expressly accepted by and binding upon Buyer, its successors and assigns and the Property from and after the Closing Date. 10.1.1.1 Such assignment, documents and other instruments and agreements, executed, witnessed and acknowledged in recordable form, as shall be reasonably required by Title Company to release of record the Property from the Secured Encumbrances and all Title Objections which Seller has agreed to remove in accordance with the provisions of Section 6 above; 10.1.1.2 Such other documents, instruments, and agreements, including, but not limited to, an Assignment of Lease, Assignment of Warranties, Permits, Plans and Specifications, if any, and any other documents as are customarily executed and delivered at closing by sellers of real property in Anne Arundel County, Maryland (the "County"), including but not limited to a standard Seller's affidavit respecting mechanic's liens, and a FIRPTA Affidavit. 10.1.1.3 An Assignment and Assumption of Lease and Guaranty document providing, inter alia, that Seller has good and indefeasible title to the Lease free and clear of all liens and encumbrances except the Permitted Exceptions, and a mutual indemnification of Buyer and Seller, respectively, for lessor obligations under the Lease, pre and post closing, respectively. The form of said Assignment and Assumption Agreement shall be negotiated in good faith between the parties during the Due Diligence Period, and failure to agree on the form of the same shall be grounds for either party to terminate this Agreement. 10.1.1.4 An estoppel from Sterling and Sterling Jewelers Inc. in the form attached hereto as Exhibit D, dated no more than ten (10) days prior to the closing. 10.2 Closing Costs. Seller and Buyer shall respectively pay the following costs and expenses: 10.2.1 Seller shall pay (i) the fees and expenses of Seller's attorneys, (ii) the transfer and recordation tax due with respect to the Deed by which the Property is conveyed to Buyer, (iii) such recording fees and filing fees for all recordable instruments necessary to clear title to the Property of any Secured Encumbrances and any other Title Objections that Seller has agreed to remove, (iv) one-half of any escrow fees charged by Title Company, (v) prorated taxes and assessments and other charges as may be applicable to the Property; (vi) the cost of providing a standard ALTA Owner's Policy of Title Insurance to Buyer, (vii) real estate commissions payable to Brokers, as set forth in Section 11.1 of this Agreement, and (viii) any other amounts sufficient to cover costs which are customarily borne by sellers of real property in the County. In addition, Seller shall instruct Escrow Holder to make appropriate adjustments for prepaid rent and security deposits, if any. 10.2.2 Buyer shall pay (i) the fees and expenses of Buyer's attorneys, (ii) the cost of recording the Grant Deed, (iii) any other charges relating to Buyer's inspection of the Property, (iv) one-half of any escrow fees charged by Title Company, (v) prorated taxes and assessments and other charges as may be applicable to the Property, except to the extent payable by Sterling; (vi) real estate commissions payable to Brokers, as set forth in Section 10.1 of this Agreement, and (vii) any other amounts sufficient to cover costs which are customarily borne by buyers of real property in Anne Arundel County, Maryland. 11. Real Estate Brokers. 11.1 Commission. Seller shall pay at Closing real estate commissions in the total amount of three and one-half percent (3.5%) of the Purchase Price to Marcus & Millichap (the "Seller's Broker") 11.2 Representations and Indemnity Regarding Brokers. Except as specifically set forth in Section 11.1, Seller and Buyer each represent and warrant to the other that neither has employed, retained, or consulted any broker, agent, or finder in carrying on the negotiations in connection with this Agreement or the purchase and sale referred to herein. Seller hereby indemnifies Buyer and agrees to hold Buyer harmless from and against any and all claims (and all expenses, including reasonable attorneys' fees incurred in defending any such claim or in enforcing this indemnity) for real estate commissions (including, without limitation, the said commission payable by Seller to Broker) or similar fees if such claims are made by an agent or broker claiming to have dealt with Seller. Buyer hereby indemnifies Seller and agrees to hold Seller harmless from and against any and all claims (and all expenses, including reasonable attorneys' fees incurred in defending any such claim or in enforcing this indemnity) for real estate commissions or similar fees if such claims are made by an agent or broker claiming to have dealt with Buyer. The indemnities contained in this Section 11.2 shall survive the Closing or any termination of this Agreement. 11.3 Failure to Close. Neither Seller nor Buyer shall have any liability to Brokers in the event the sale of the Property should fail to close for any reason whatsoever, including, without limitation, a default by Seller or Buyer. 12. Default. 12.1 Seller's Default. If the sale and purchase of the Property contemplated by this Agreement is not consummated on account of Seller's default, then Buyer shall be entitled, as Buyer's sole and exclusive remedies, (i) to terminate this Agreement, receive the Deposit and receive reimbursement of Buyer's due diligence costs up to the date of Seller's breach or (ii) to seek specific performance of this Agreement against Seller. Notwithstanding anything in this Section 12.1 to the contrary, in the event of any default by Seller hereunder other than in Seller's obligations to sell the Property, there shall be no limitation on remedy with respect to such default, and Buyer shall have all of its rights and remedies available at law or in equity with respect to such default. 12.2 Buyer's Default. If the sale and purchase of the Property as contemplated by this Agreement is not consummated because of Buyer's default, then Seller shall be entitled, as Seller's sole and exclusive remedy with respect thereto, to unilaterally direct Title Company in writing (with a copy to Buyer), to pay the Deposit to Seller as full liquidated damages for such default of Buyer. Buyer and Seller agree to indemnify and hold Title Company harmless from and against any loss (including, without limitation, reasonable attorneys' fees) arising out of or incurred in connection with the release of the Deposit to Seller. The parties hereto expressly acknowledge that it is impossible to estimate more precisely the damages to be suffered by Seller upon Buyer's default in its obligation to purchase the Property, and that retention of the Deposit is intended not as a penalty, but as full liquidated damages. The parties further acknowledge that the amount of the Deposit is a reasonable estimate by the parties of the amount of probable loss that Seller should be expected to suffer in the event the sale and purchase of the Property is not closed because of Buyer's default. Seller's right to retain the Deposit as full liquidated damages is Seller's sole and exclusive remedy in the event of default hereunder by Buyer with respect to its obligation to purchase the Property, and Seller hereby waives and releases any right to (and hereby covenants that it shall not) sue Buyer (i) for specific performance of this Agreement or (ii) to prove that Seller's actual damages resulting from such default exceed the Deposit which is hereby provided Seller as full liquidated damages. In the event the purchase and sale contemplated in this Agreement is not consummated because of Buyer's default, Buyer hereby waives and releases any right to sue (and hereby covenants that it shall not sue) Seller or Title Company to recover the Deposit or any part thereof on the grounds that it is unreasonable in amount or that its retention by Seller is a penalty and not agreed upon and reasonable liquidated damages. 13. No Recording. The parties acknowledge that this Agreement is not in recordable form and agree not to record this Agreement. 14. Date Of Performance. If the time period or date by which any right, option, or election provided under this Agreement must be exercised, or by which any act required hereunder must be performed, or by which the Closing must be held, expires or occurs on a Saturday, Sunday, or legal or bank holiday, then such time period or date shall be automatically extended through the close of business on the next regularly scheduled business day. 15. Governing Law. This Agreement shall be construed, interpreted, and enforced in accordance with the internal laws of the State of Maryland, without regard to the principles of conflicts of law. 16. Notices. Any notices, requests, or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or courier without limitations (including an overnight courier service such as FedEx) or mailed by United States certified mail, return receipt requested, postage prepaid and addressed to each party at the address set forth below, or transmitted by facsimile to the facsimile number set forth below with confirmed receipt and hard copy sent within three (3) days thereof by one of the other approved methods of delivery. Any such notice, request, or other communication shall be considered given, delivered or received, as the case may be, on the date of hand or courier delivery or facsimile transmission or on the third (3rd) day following deposit in the United States mail as provided above. Rejection or other refusal to accept or inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice, request, or other communication. By giving at least five (5) days' prior written notice thereof, any party may from time to time and at any time change its mailing address or facsimile number hereunder. To Seller: TransMills, L.L.C. 1605 Lake Las Vegas Parkway Henderson, Nevada 89011 Attention: John R. Plunkett, Jr. Fax: (702) 565-2266 with a copy to: TransMills, L.L.C. 1605 Lake Las Vegas Parkway Henderson, Nevada 89011 Attention: General Counsel Fax: (702) 565-2266 To Buyer: AEI Fund Management, Inc. 1300 Wells Fargo Place 30 Seventh Street East St. Paul, Minnesota 55101 Attn: George J. Rerat Fax (651) 227-7705 with a copy to: Michael B. Daugherty, Esq. 1300 Wells Fargo Place 30 Seventh Street East St. Paul, Minnesota 55101 Fax (612) 677-3181 Phone (612) 720-0777 To Title Company: First American Title Company of Nevada 900 South Pavilion Center Drive #190 Las Vegas, Nevada 89144 Attention: Sharon Silverberg Fax: (702) 433-2252 Phone: (702) 254-1418 17. Entire Agreement; Modification. This Agreement supersedes all prior discussions and agreements between Seller and Buyer with respect to the Property and contains the sole and entire understanding between Seller and Buyer with respect thereto. All promises, inducements, offers, letters of intent, solicitations, agreements, commitments, representation, and warranties heretofore made between such parties with respect to the Property are merged into this Agreement. This Agreement shall not be modified or amended in any respect except by a written instrument executed by or on behalf of each of Buyer and Seller. 18. Survival of Covenants. All covenants, representations, warranties, obligations and agreements contained in this Agreement shall survive the Close of Escrow and the delivery and recordation of all documents or instruments in connection therewith. Notwithstanding the foregoing, however, a Party's obligation to perform a certain act or take a certain action as required hereunder shall cease upon that Party's timely and proper performance thereof. 19. Exhibits. Each and every exhibit referred to or otherwise mentioned in this Agreement is attached to this Agreement and shall be construed to be made a part of this Agreement by such reference or other mention at each point at which such reference or other mention occurs, in the same manner and with the same effect as if each exhibit were set forth in full and at length every time it is referred to or otherwise mentioned. 20. Captions. All captions, headings, section and subsection numbers and letters, and other reference numbers or letters are solely for the purpose of convenience and shall not be deemed to supplement or limit the subject of such Sections or to be considered in their construction. 21. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall constitute an original and all of which when taken together shall constitute one and the same instrument. 22. Waiver. Any condition or right of termination, cancellation, or rescission granted by this Agreement to Buyer or Seller may be waived by such party; provided, however, that no waiver shall be binding on a party hereto unless made expressly and in writing. 23. Rights Cumulative. Except as expressly limited by the terms of this Agreement, all rights, powers, and privileges conferred hereunder shall be cumulative and not restrictive of those given by law. 24. Successors And Assigns. This Agreement shall be binding upon and inure of the benefit of the parties hereto and their respective heirs, successors, and assigns. 25. Assignment. Without the prior written consent of Seller, Buyer shall not assign, mortgage, pledge, or in any other way encumber or transfer any of Buyer's rights hereunder or any part thereof to any person, firm, partnership, corporation, or other entity by operation of law or otherwise; provided, however, Buyer may assign its rights hereunder to any person, corporation, partnership, limited liability company, or other entity, if the same controls Buyer, is controlled by Buyer or is under common control with Buyer. In the event of such permitted assignment, Buyer shall remain liable for Buyer's obligations under this Agreement. 26. Time Of Essence. Time is of the essence in the performance of each provision of this Agreement. 27. Limitation Of Liability. Buyer (on behalf of itself, its direct and indirect partners, all persons or entities controlling, controlled by, or under common control with Buyer, and all officers, directors, employees, trustees, advisors, agents, shareholders, or contractors of any of the foregoing) agrees and acknowledges that the obligations of Seller under this Agreement do not constitute personal obligations of Seller, the direct or indirect partners of Seller or the members of Seller or their respective officers, directors, trustees, advisors, members, agents, shareholders, employees, or contractors, and that Buyer agrees that it will look solely to the interest of Seller in the Property and the proceeds thereof (including, without limitation, the Purchase Price) for satisfaction of any liability of Seller with respect to this Agreement, and will not seek recourse against any other assets of Seller, or the members of Seller, or their respective officers, directors, trustees, advisors, members, agents, shareholders, employees or contractors, or any of their personal assets, for such satisfaction. In addition, the obligations of the members of Seller to make capital contributions to Seller shall not constitute assets of Seller against which recourse may be sought for purposes hereof. The provisions of this Section 27 shall survive Closing. Seller (on behalf of itself, its direct and indirect partners, all persons or entities controlling, controlled by, or under common control with Seller, and all officers, directors, employees, trustees, advisors, agents, shareholders, or contractors of any of the foregoing) agrees and acknowledges that the obligations of Buyer under this Agreement do not constitute personal obligations of the direct or indirect partners of Buyer or the members of Buyer or their respective officers, directors, trustees, advisors, members, agents, shareholders, employees, or contractors, and that Seller agrees that it will look solely to the interest of Buyer in the Property and the proceeds thereof and Buyer's assets for satisfaction of any liability of Buyer with respect to this Agreement, and will not seek recourse against any members of Buyer, or their respective officers, directors, trustees, advisors, members, agents, shareholders, employees or contractors, or any of their personal assets, for such satisfaction. In addition, the obligations of the members of Buyer to make capital contributions to Buyer shall not constitute assets of Buyer against which recourse may be sought for purposes hereof. The provisions of this Section 27 shall survive Closing. 28. Severability. If any portion of this Agreement becomes illegal, null, void or against public policy, for any reason, or is held by any court of competent jurisdiction to be illegal, null, void or against public policy, the remaining portions of this Agreement shall not be affected thereby and shall remain in effect to the fullest extent permitted by law. 29. Interpretation. No provision of this Agreement shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured, drafted or dictated such provision. 30. Attorney's Fees. If Seller or Buyer shall engage an attorney in connection with any action or proceeding to enforce this Agreement, the prevailing party in such action or proceeding shall be entitled to recover its court costs including reasonable attorneys' fees, to the extent permitted by law. If different parties are the prevailing parties on different issues, the respective court costs and related attorneys' fees shall be apportioned in proportion to the value of the issues decided for or against the parties. 31. Section 1031 Exchange. Seller agrees that it will cooperate, without cost or expense to Seller, with Buyer in effectuating an Internal Revenue Service Section 1031 Exchange with this Property, provided (a) Seller will not be required to take title to any exchange property and (b) the exchange does not delay Closing. [Remainder of page intentionally left blank] IN WITNESS WHEREOF, the parties hereto have duly signed, sealed and delivered this Agreement as of the date first written above. SELLER: TRANSMILLS, L.L.C., a Nevada limited liability company By: TransMills Management Corp., a Nevada corporation, its Managing Member By: /s/ David J Voorhies Name: David J Voorhies Title: Treasurer Date of Execution:November 24, 2003 BUYER: AEI FUND MANAGEMENT, INC., a Minnesota corporation By: /s/ Robert P Johnson Name: Robert P Johnson Title: President Date of Execution: November 21, 2003 CONSENT OF ESCROW HOLDER Escrow Holder hereby agrees to be bound by and perform its duties in accordance with the foregoing instructions. FIRST AMERICAN TITLE COMPANY OF NEVADA Date: December 1, 2003 By: /s/ Sharon Silverberg Name:Sharon Silverberg Title: Commercial Escrow Officer EXHIBIT A CSI File No. 001658 Policy No. 001658 All that certain lot, piece, or parcel of land, together with the improvements thereon, situate in Anne Arundel County, Maryland, and being more particularly described as follows: Lot 5, Block E, as shown on the plat dated November 2000, entitled "Administrative Plat Regional Commercial Complex Arundel Mills" and recorded in Plat Book 232 pages 31 through 41. TOGETHER WITH the easements, covenants and restrictions benefiting the above described property as contained in the following instruments: 1. Master Development Agreement recorded in Liber 9247 at folio 1. Notice and Reconfirmation dated December 1, 1999 by and between Arundel Mills Limited Partnership, Dorchester Associates, L.L.C., Dorchester Limited Partnership, Piney-100 Land Limited Partnership and Kirk Property Limited Partnership, recorded in Liber 9798 at page 381. 2. Memorandum of Agreement between Dorchester Limited Partnership, Piney-100 Land Limited Partnership and Arundel Mills Limited Partnership dated November 30, 1999, recorded December 1, 1999 in Liber 9529 at folio 394. 3. Arundel Mills Master Declaration of Easements, Covenants, Conditions and Restrictions dated May 9, 2000, made by Arundel Mills Limited Partnership and Arundel Mills Residual Limited Partnership, and recorded in Liber 9769 at folio 701. As amended by First Amendment to Master Declaration of Easements, Covenants, Conditions and Restrictions dated August 23, 2000, recorded in Liber 9917 at folio 492. As amended by Second Amendment to Master Declaration of Easements, Covenants, Conditions and Restrictions dated December 11, 2000 and recorded December 14,2000 in Liber 10086 at folio 678. 4. Restrictive Covenant and Easement Agreement (Sewer Facilities) dated November 30, 1999, by and between Arundel Mills Limited Partnership, Dorchester Associates, L.L.C., Kirk Property Limited Partnership, Dorchester Limited Partnership and Piney-100 Land Limited Partnership, and recorded in Liber 9798 at folio 108. 5. Restrictive Covenant (Disclosure of Future Development) dated November 30, 1999, by and between Dorchester Associates, L.L.C., Dorchester Limited Partnership, Piney- 100 Land Limited Partnership, Kirk Property Limited Partnership and Arundel Mills Limited Partnership, and recorded in Liber 9798 at folio 226. 6. Restrictive Covenant (Future Development Use Restrictions) dated November 30, 1999, by and between Dorchester Associates, L.L.C., Dorchester Limited Partnership, Piney- 100 Land Limited Partnership, Kirk Property Limited Partnership and Arundel Mills Limited Partnership, and recorded in Liber 9798 at folio 284. 7. Deed vesting title in the Insured, as recorded in Liber 10108 at folio 639. A portion of tax account number:04-005-90109462. A.LTA 1992 Owners Policy EX-10.2 5 hanasgls.txt ASSIGNMENT AND ASSUMPTION OF LEASE THIS ASSIGNMENT AND ASSUMPTION OF LEASE (this "Assignment") made this 9th day of February, 2004, by and between TRANSMILLS, L.L.C., a Nevada limited liability company ("Assignor"), having an address at 1605 Lake Las Vegas Parkway, Henderson, Nevada 89011, and AEI Income & Growth Fund XXI Limited Partnership, a Minnesota limited partnership, and AEI Net Lease Income & Growth Fund XX Limited Partnership, a Minnesota limited partnership (as tenants in common, together collectively referred to as "Assignee"), having an address of 1300 Wells Fargo Place, 30 Seventh Street East, St. Paul, Minnesota 55101. W I T N E S S E T H: WHEREAS, Assignor is the owner of certain real property located at 7684 Arundel Mills Boulevard, Hanover, Anne Arundel County, Maryland (the "Property"); WHEREAS, Assignor has leased the Property to Sterling Inc., an Ohio corporation ("Sterling"), pursuant to that certain Lease Agreement dated April 26, 2001, as amended on November 1, 2001 (as amended, the "Lease"); and WHEREAS, Sterling Jewelers Inc., a Delaware corporation ("Guarantor") has executed a Guaranty of Lease dated November 1, 2001 (the "Guaranty"); and WHEREAS, Assignor desires to assign its right, title and interest in and to the Lease and the Guaranty to AEI Income & Growth Fund XXI Limited Partnership, an undivided fifty percent (50.0%) interest as a tenant in common; and AEI Net Lease Income & Growth Fund XX Limited Partnership, an undivided fifty percent (50.0%) interest as a tenant in common, and Assignee desires to assume Assignor's right, title and interest in and to the Lease and the Guaranty; NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged by each of the parties hereto, Assignor and Assignee do hereby agree as follows: 1. ASSIGNMENT. Assignor hereby gives, grants, bargains, sells, conveys, transfers and sets over unto Assignee, its successors and assigns, as of the date first above written (the "Effective Date"), all of Assignor's right, title and interest in and to the Lease and the Guaranty. 2. ACCEPTANCE OF ASSIGNMENT AND ASSUMPTION. Assignee hereby accepts the foregoing assignment, and hereby assumes and agrees to be bound by and perform all of Assignor's obligations and liabilities to be performed and/or occurring under the Lease or the Guaranty on or after the Effective Date, including, without limitation, the obligations for return of security deposits as provided in the Lease or the Guaranty and/or required by law, and any and all obligations for any and all leasing commissions, brokerage fees and similar payments which become due and payable after the Effective Date, including, without limitation, any and all leasing commissions, brokerage fees and similar payments which become due and payable in connection with the exercise of any option or right under the Lease. 3. INDEMNIFICATION. (a) Assignor hereby indemnifies Assignee, and agrees to defend and hold harmless Assignee from and against any and all liability, loss, damage and expense, including without limitation reasonable attorneys' fees, which Assignee may or shall incur under the Lease or the Guaranty by reason of any failure or alleged failure of Assignor to have complied with or to have performed, before the Effective Date, the obligations of the landlord thereunder which were to be performed before the Effective Date. (b) Assignee hereby indemnifies Assignor, and agrees to defend and hold harmless Assignor from and against any and all liability, loss, damage and expense, including without limitation reasonable attorneys' fees, which Assignor may or shall incur under the Lease or the Guaranty by reason of any failure or alleged failure of Assignee to comply with or perform, on or after the Effective Date, all the obligations of the landlord thereunder which are to be performed on or after the Effective Date. 4. SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. 5. RETAINED RIGHTS. Assignee hereby agrees that Assignor may, at Assignor's election and expense, proceed at law or equity to collect any delinquent rents accruing under the Lease prior to the Effective Date. Assignor hereby agrees that Assignee shall have no obligation to collect any rent due prior to the Effective Date under the Lease; provided, however, that in the event Assignee is paid rent from a tenant that has delinquent rent accruing prior to the Effective Date, and such payment is in excess of current rent due and payable under the Lease and any collection costs incurred by Assignee to collect such rents, then Assignee agrees to pay such excess amount to Assignor as soon as reasonably practicable after the date of receipt by Assignee. 6. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. [The remainder of this page has been intentionally left blank. Signature pages to follow.] IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed on the day and year first set forth above. ASSIGNOR: TRANSMILLS L.L.C., a Nevada limited liability company By: TransMills Management Corp., a Nevada corporation, its managing member By: /s/John R Plunkett Jr.,President Name: John R Plunkett Jr Title: President STATE OF NEVADA ) ) ss. COUNTY OFCLARK ) The foregoing was acknowledged before me this 29th day of January, 2004, by John R Plunkett Jr, the President of TransMills Management Corp., a Nevada corporation, the manager of TransMills, LLC, a Nevada limited liability company, who acknowledged the execution of the foregoing instrument to be the voluntary act and deed of said corporation by authority of its Board of Directors. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State of aforesaid, the day and year last above-written. /s/ Teresa A Neuman Notary Public [notary seal] ASSIGNEE: AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP, a Minnesota limited partnership BY: AEI FUND MANAGEMENT XXI, INC., a Minnesota corporation, its General Partner By: /s/ Robert P Johnson Robert P. Johnson, its President AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP, a Minnesota limited partnership BY: AEI FUND MANAGEMENT XX, INC., a Minnesota corporation, its General Partner By: /s/ Robert P Johnson Robert P. Johnson, its President STATE OF MINNESOTA ) ) ss. COUNTY OF RAMSEY ) The foregoing was acknowledged before me this 29 day of January, 2004, by Robert P. Johnson, the President of AEI Fund Management XXI, INC., a Minnesota corporation, the General Partner of AEI Income & Growth Fund XXI Limited Partnership, a Minnesota limited partnership, who acknowledged the execution of the foregoing instrument to be the voluntary act and deed of said corporation by authority of its Board of Directors. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State of aforesaid, the day and year last above-written. /s/ Jennifer L Schreiner Notary Public [notary stamp] STATE OF MINNESOTA ) ) ss. COUNTY OF RAMSEY ) The foregoing was acknowledged before me this 29 day of January, 2004, by Robert P. Johnson, the President of AEI Fund Management XX, INC., a Minnesota corporation, the General Partner of AEI Net Lease Income & Growth Fund XX Limited Partnership, a Minnesota limited partnership, who acknowledged the execution of the foregoing instrument to be the voluntary act and deed of said corporation by authority of its Board of Directors. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State of aforesaid, the day and year last above-written. /s/ Jennifer L Schreiner Notary Public [notary stamp] EXHIBIT "A" LEGAL DESCRIPTION OF LAND All of those lots or parcels of land located in Anne Arundel County, Maryland and more particularly described as follows: BEGINNING for the same at a point where the Easter boundary line of Block "E" Lot 5 intersects the Northern right-of-way of Arundel Mills Boulevard (Variable Width Public R/W) as shown on Administrative Plat 5 of 11 entitled "Arundel Mills-Block "A" Lot 1, Block "B" Lot 1, Block "d" Lots 2 and 6, Block "E" Lots 2 and 5, Block "F" Lots 1 and 2, Block "G" Lot 1 and Reserve Parcels "A" through "H", recorded among the Plat Records of Anne Arundel County, Maryland in Plat Book 232, Page 35, Plat No. 12161, thence leaving said point of beginning and running with an d binding on part of the Northern right-of-way line of said Boulevard, the following four (4) courses and distances, with all the courses and distances referenced to the Maryland N.A.D. 1983 North Grid Meridian, viz: 1. North 86 degrees 12 minutes 09 seconds West 46.44 feet to an iron pipe and cap set (Corp. 41), thence 2. South 48 degrees 47 minutes 51 seconds West 28.28 feet to an iron pipe and cap set (Corp. 41), thence 3. North 86 degrees 12 minutes 26 seconds West 2.46 feet to an iron pipe and cap set (Corp. 41) at a point of curvature, thence 4. 184.28 feet along the arc of a tangent curve to the left having a radius of 1713.00 feet and being subtended by a chord bearing North 89 degrees 17 minutes 04 seconds West 184.19 feet, thence leaving the aforesaid right-of-way line and running with and binding on the division line of Reserve Parcel "G" and the parcel of land now being described as shown on the Plat mentioned above, the following six (6) courses and distances, viz: 5. North 02 degrees 22 minutes 24 seconds West 92.14 feet 6. North 55 degrees 52 minutes 46 seconds East 2777.44 feet 7.South 10 degrees 52 minutes 46 seconds West 19.39 feet 8. South 34 degrees 07 minutes 14 seconds East 40.91 feet to a point of curvature, thence with a tangenet curve, 9. 66.18 feet along the arc of a curve to the right having a radius of 100.00 feet and being subtended by a chord bearing South 15 degrees 09 minutes 39 seconds East 64.98 feet, to a point of tangency, thence with a tangent line, 10. South 03 degrees 47 minutes 56 seconds West 119.23 feet to a point of beginning Containing 44,359 square feet of 1.018 acres of land more or less Store No. 0470 Arundel Mills Anne Arundel County, Maryland LEASE BETWEEN TRANSMILLS, L.L.C. A Nevada limited liability company AND STERLING INC., An Ohio corporation Dated: April 26, 2001 LEASE In consideration of the rents and covenants set forth below, Landlord (as hereinafter defined) hereby leases to Tenant (as hereinafter defined), and Tenant hereby leases from Landlord, the Premises (as hereinafter defined), upon the following terms and conditions: ARTICLE1 FUNDAMENTAL LEASE PROVISIONS The provisions in this Article shall be referred to in this Lease as the "Fundamental Lease Provisions." 1.1 EXHIBITS TO LEASE. The following exhibits are attached to and made a part of this Lease, and are incorporated herein by reference: EXHIBIT " A ". The description of the Premises. EXHIBIT "B". The site plan showing the location of the Premises and the Building, parking areas, driveways and common area and containing other general information relative to the development of the Premises Site (the "Site Plan"). EXHIBIT "C". A list of the plans and specifications prepared and provided by Tenant and approved by Landlord, wherein are detailed Landlord's Work (as hereinafter defined) in the Premises. Exhibit "C" shall include the plans and specifications for Tenant's satellite dish. Exhibit "C-l ". The list of items which comprise Tenant's Work (as hereinafter defined). Exhibit "D". The plans and specifications prepared and provided by Tenant and approved by Landlord, wherein are detailed Tenant's exterior sign(s). Exhibit "E". The projected cost to perform Landlord's Work. Exhibit "F". Tenant's Trade Fixtures which shall remain the personal property of Tenant and may be removed upon expiration or termination of this Lease. Exhibit "Q". The Prohibited Uses. Exhibit "H". The certification of gross sales. 1.2 DEFINITIONS. Unless otherwise defined herein, capitalized terms used in this Lease shall have the meanings listed in the Fundamental Lease Provisions. Arundel Mills Purchase and Sale Agreement: shall mean that certain agreement between Arundel Mills Residual Limited Partnership, as Seller, and Tenant, as buyer, entered into on or about October 13, 2000 whereby Tenant has the right to purchase the Premises. Assignment Agreement: shall mean that certain agreement between Tenant, as assignor, and Landlord, as assignee, whereby Tenant has assigned to Landlord all of its rights and interest in and to the Arundel Mills Purchase and Sale Agreement and Landlord has agreed to Lease the Premises to and develop and construct the Premises for Tenant. Building: shall mean the building containing approximately 6,000 square feet of floor area and all improvements thereto (including Tenant's Work) to be constructed on the Premises and as identified on Exhibit "B" attached hereto. Commencement Date: shall mean the earlier of sixty (60) days after the Delivery Date or the day that Tenant opens for and conducts business in the Premises. Construction Period: shall mean the period commencing upon the execution of this Lease and ending one hundred fifty (150) days following the later of i) the date of the Permit Approval Notice, or ii) the date Tenant is satisfied that the Roadway Improvements will be completed and provides notice to Landlord. CPI: shall mean the revised Consumer Price Index for All Urban Consumers (1982-1984 = 100), U.S. City Average All Items promulgated by the Bureau of Labor Statistics of the United States Department of Labor. CPI Adjustment: shall mean that fraction, the numerator of which shall be the CPI published for the month closest to, but prior to, the date of the adjustment, and the denominator of which shall be the CPI as of the date of the recordation of the deed pursuant to the Arundel Mills Purchase and Sale Agreement. Deed Restrictions: shall mean those certain restrictions contained in the Deed which transferred the Premises from Arundel Mills Residual Limited Partnership to Landlord pursuant to the Arundel Mills Purchase and Sale Agreement. Delivery Date: shall mean the date that Landlord delivers the Premises to Tenant with Landlord's Work substantially complete such that Tenant may reasonably enter the Premises to perform Tenant's Work. Fixed Monthly Rent: 12% of the Premises Cost (as detailed on Exhibit "E") divided by twelve, subject to proration and adjustment as provided in Section 2.3. Force Majeure: shall mean the occurrence of one of the below listed events which prevents, delays or hinders the performance of any act required hereunder: strikes, lockouts, inability to procure materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, war, or any other reason of a like nature not the fault of the party delayed in performing work or doing any act required under the terms of this Lease. Gross Leasable Area: shall mean the number of square feet of the Building. Increase Date: fifth (5th) anniversary of the Commencement Date, and every five (5) years thereafter, including Renewal Terms. Increase Percentage: ten percent (10%). Initial Term: twenty (20) Lease Years and any Partial Lease Years, commencing on the Commencement Date. Landlord: TransMills, L.L.C. Attention: John R. Plunkett, Jr. 1605 Lake Las Vegas Parkway Henderson, Nevada 89011 F AX: (702) 564-9886 With a copy to: Stephen Shapiro, Esq. 420 East Carrillo Street Santa Barbara, California 93101 F AX: (805) 965-8726 Landlord's Work: shall mean the work to be performed by or at the direction of Landlord in constructing the Premises, the Building and related improvements, as more particularly specified in Article 15 below and Exhibit "C". Lease Year: shall mean a period of twelve (12) consecutive calendar months during the Term, the first of which shall begin on the first day of February next following the Commencement Date, (unless the Commencement Date shall be the first day of February, in which event the first lease year shall begin on the Commencement Date ) and ending on the following January 31. Maintenance Assessment: shall have the same meaning as is set forth in the Master Declaration. Master Declaration: shall mean that certain Master Declaration of Easements, Covenants, Conditions and Restrictions recorded in the Land Records of Anne Arundel County, Maryland in Liber 9769, folio 701. as amended from time to time. Partial Lease Years: shall mean the period, if any, of fewer than twelve (12) consecutive calendar months between the Commencement Date and the first day of the first Lease Year and the period, if any, of less than twelve (12) consecutive calendar months between the last day of the Lease Year and the expiration of the Term. Permitting Period: shall mean the period beginning on the date Landlord executes this Lease and ending on the Construction Commencement Date as defined in the Arundel Mills Purchase and Sale Agreement. Permitted Uses: shall mean a retail jewelry store operating under the trade name "Jared, The Galleria of Jewelry" and which is substantially identical (including, without limitation. with respect to store design, inventory and operations) to those certain Jared, The Galleria of Jewelry stores currently operating in the Baltimore, Maryland and Washington, D.C. regions; provided, however, Tenant may operate the Premises under a different trade name so long as all Jared. The Galleria of Jewelry stores in the Baltimore, Maryland and Washington, D.C. regions are operating under such modified trade name; or such other uses as permitted by Section 3.1. Plans and Specifications: shall mean the plans and specifications for the construction of the Premises, a list of which is attached hereto as Exhibit "C", as the same may be modified by written agreement by and between Landlord and Tenant. Premises: that certain real property more particularly described in Exhibit A" which is generally depicted as Parcel E-4 on the Site Plan, together with all improvements thereon, located in Anne Arundel County , Maryland. The Premises shall include the right of Tenant, together with its employees, agents, customers, business invitees, business guests and licensees, to use that certain non- exclusive, perpetual easement for pedestrian and vehicular traffic, ingress and egress to and from the Premises and those certain tracts or parcels of land designated as Parcel E-3 and Parcel E-5 on the Site Plan over all portions of the Entrance Driveway (as depicted on the Site Plan) and all access drives, access roads and other improvements installed for purposes of affording access, ingress and egress, which are located from time to time on the Premises, Parcel E-3 and Parcel E-5. Premises Cost: shall mean the cost to perform Landlord's Work, which cost is computed on Exhibit "E" attached hereto and made a part hereof, subject to adjustment as provided in Article 2.3. Premises Site: shall mean the land described on Exhibit " A ". Promotion Assessment: shall mean the annual assessment for the purpose of advertising and promoting businesses to be conducted upon the Premises and the other properties in the development where the Premises are located as provided in Article 7 of the Master Declaration. Renewal Terms: two (2) terms of five (5) year(s) each. Roadway Improvements: shall mean those certain improvements to be made to Arundel Mills Boulevard and the 1- 295 interchange with Arundel Mills Boulevard Seller: shall mean Arundel Mills Residual Limited Partnership. Sign Drawings: shall mean the plans and specifications for Tenant's exterior sign(s) on the Premises, in the form of Exhibit "D", as the same may be modified by written agreement by and between Landlord and Tenant. Tenant: Sterling Inc. 375 Ghent Road Akron, Ohio 44333 Attn: Real Estate Department F AX: (330) 668-5050 With copies to: Brouse McDowel1 LP A 1001 Lakeside Avenue, Suite 1600 Cleveland, Ohio 44114 Attn: David A. Lum, Esq. F AX: (216) 830-6807 Tenant's Work: shall mean the work, if any, to be performed by or at the direction of Tenant in flXturing the Premises as more specifically identified on Exhibit "C-l ". attached hereto. Trade Fixtures: those items listed on attached Exhibit "F". which are and shall remain the personal property of Tenant. ARTICLE2 TERM AND RENT 2.1 TERM. The Initial Term of this Lease shall be as set forth in the Fundamental Lease Provisions. Provided Tenant is not then in default under this Lease, Tenant shall have the option to extend the Initial Term by the number of successive Renewal Terms described in the Fundamental Lease Provisions by giving Landlord written notice of its election to extend the term of this Lease by the succeeding Renewal Term not less than one hundred eighty (180) days prior to expiration of the Initial Term or the then- running Renewal Term, as the case may be. Excepting the amount of the Fixed Monthly Rent, as adjusted, the terms and conditions of this Lease shall apply during each Renewal Term. The Initial Term, as it may be extended by one or more Renewal Terms, shall be hereinafter referred to as the "Lease Term." 2.2 Intentionally Omitted. 2.3 FIXED MONTHLY RENT For the use and occupancy of the Premises, Tenant shall pay Landlord the Fixed Monthly Rent, in advance and without demand, commencing on the Commencement Date and continuing on the first day of each calendar month thereafter during the Lease Term, without any offset or deduction except as specifically provided for herein. The Fixed Monthly Rent in effect immediately prior to the Increase Date shall increase by the Increase Percentage on each Increase Date. Should the Lease Term commence on a day other than the first day of a calendar month, then the rental for such first fractional month shall be computed on a daily basis for the period from the Commencement Date to the end of such calendar month at an amount equal to 1/30th of the Fixed Monthly Rent for each day. Should the Lease Term end on a day other than the last day of a calendar month, then the rental for such fractional month shall be computed on a daily basis at an amount equal to 1/30th of the Fixed Monthly Rent for each day. Tenant shall pay Landlord the Fixed Monthly Rent in lawful money of the United States at the address for Landlord set forth in the Fundamental Lease Provisions, or to such other persons or at such other places as Landlord may designate in writing to Tenant. Landlord and Tenant acknowledge that the Premises Cost computation on Exhibit "E" is an estimate, and agree to supplement and/or amend Exhibit "E" after the Premises Cost is actually detennined. Landlord and Tenant shall retroactively adjust the Fixed Monthly Rental payments once the computation of Exhibit "E" has been finalized. In the event the cost of developing and constructing the Premises, including the Building and related improvements, increases as a result of a change in the Plans and Specifications requested by Tenant or an unforeseen event or circumstance beyond the control of the parties hereto, such increase in cost shall, at the option of Tenant, (i) be paid by Tenant; or (ii) be added to the Premises Cost and Fixed Monthly Rent shall be adjusted accordingly; provided, however, that if the additional cost of developing and constructing the Premises is due to the gross negligence or willful misconduct of Landlord, then Tenant shall have no liability therefor and the Premises Cost and Fixed Monthly Rent shall not be increased as a result thereof, such cost being the sole responsibility of Landlord. 2.4 ADDITIONAL RENT. In addition to the Fixed Monthly Rent, as increased, Tenant .?i shall pay to the parties respectively entitled thereto all insurance premiums, Taxes (as defined in .:; Article 4), the Maintenance Assessment (as defined in Section 2.8), the Promotion Assessment (as defined in Section 2.8), operating charges, maintenance charges, construction costs, reasonable accounting and legal fees, and any other charges, costs and expenses which arise or may be contemplated under any provision of this Lease during the Lease Term (collectively , the "Additional Rent"). Tenant shall furnish to Landlord, promptly after payment of any Taxes or insurance premiums, and, with respect to any other Additional Rent, promptly upon request of Landlord, official receipts or other satisfactory proof evidencing payment of such Additional Rent. Upon Tenant's failure to pay such Additional Rent on more than one occasion during any twelve month period, where after written notice thereof from Landlord to Tenant such second event of failure shall continue for a period of ten (10) days, Landlord shall have the option to require Tenant to deposit with Landlord (i) funds sufficient for the payment of the current Additional Rent required to be paid by Tenant hereunder, and (ii) one-twelfth of the current annual or annualized Additional Rent, as the case may be (or those of the preceding years if the current amounts thereof have not been fixed), in advance and on the same day upon which the Fixed Monthly Rent is due. 2.5 LATE CHARGE. If any installment of the Fixed Monthly Rent, or any other payment provided for under this Lease which is payable by Tenant, is not received by Landlord within ten (10) days after written notice from Landlord to Tenant that such payment is overdue, Tenant shall pay Landlord an amount equal to 4% of the overdue amount as a late charge (the "Late Charge"). Landlord and Tenant agree that the Late Charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of any such late payment by Tenant. Acceptance of the Late Charge by Landlord shall not constitute a waiver of Tenant' s default, if any. with respect to the overdue amount. nor prevent Landlord from exercising any other rights and remedies available to Landlord under this Lease. 2.6 INTEREST ON OVERDUE AMOUNTS. The Fixed Monthly Rent. the Additional Rent and all other amounts due Landlord under this Lease which are not paid when due shall bear interest at a per annum rate equal to the prime rate of interest charged by the then largest chartered bank in the state where the Premises is located plus 2% from the date due until paid; provided. however. that if such rate shall exceed the lawful rate of interest which Landlord is entitled to charge under applicable law. then the per annum rate of interest on any such overdue amounts shall be the maximum rate permitted by applicable law. 2. 7 NET LEASE. This Lease is what is commonly called a "triple net lease..' it being understood that Landlord shall receive the Fixed Monthly Rent free and clear of any and all Taxes. other Additional Rent. liens. charges, liabilities or expenses of any nature whatsoever incurred in connection with the ownership and operation of the Premises. 2.8 MAINTENANCE AND PROMOTION ASSESSMENT. Landlord and Tenant understand and acknowledge that there may be a certain Maintenance Assessment and Promotion Assessment against the Premises pursuant to the Deed Restrictions. Master Declaration or other documents affecting the Premises. Such Assessments shall be the sole responsibility of Tenant during the term of this Lease and shall be paid by Tenant as and when such Assessments become due and payable. The rights and responsibilities pursuant to such Assessments shall "pass-through" to Tenant and shall be binding on and inure to the benefit of Tenant. Landlord shall cooperate with Tenant to seek enforcement of any rights or remedies with respect to such Assessments. 2.9 Intentionally omitted ARTICLE 3 USE OF THE PREMISES 3.1 USE OF THE PREMISES. Tenant shall use the Premises solely for the Permitted Uses or any other lawful purpose; provided. however, that any such use shall be for a single commercial purpose only. shall be subject to all matters of record. and shall not diminish the value of the Premises or violate any applicable zoning codes. the Master Declaration. the Prohibited Uses (as set forth on attached Exhibit .'G"), or any existing exclusive or restrictive uses which Seller or its affiliates may grant for the benefit of another owner or occupant of the development of which the Premises are a part. 3.2 CONDITION OF PREMISES. Subject to the due diligence periods and contingency periods provided in this Lease, except as otherwise provided in this Lease including. but not limited to. Article 15 hereof. Tenant accepts the Premises in its ''as is.' condition and acknowledges that Landlord makes no warranty with respect to the Premises. 3 .3 COMPLIANCE WITH LAW. 3.3.1 Tenant shall, at Tenant's sole expense, comply in all MATERIAL respects with all applicable laws, ordinances, orders, rules, or regulations of any governmental authorities and with any directive of any public officer which shall impose any violation, order or duty upon Landlord or Tenant with respect to the Premises or the use or occupation thereof or signage thereon, including, without limitation, any governmental law or statute, rule, regulation, ordinance, code, policy or rule of common law now or hereafter in effect relating to the environment, health or safety . 3.3.2 Tenant shall not use or permit the Premises to be used in any manner which will result in waste, reasonable wear and tear and casualty damage (to the extent not required to be repaired or restored by Tenant pursuant to this Lease) excepted, or the creation of a nuisance, and Tenant shall maintain the Premises free of any objectionable noises, odors, or disturbances. 3.4 ENVIRONMENTAL COMPLIANCE. Excepting acts or omissions of Landlord or its agents, for which Tenant shall have no liabilities, Tenant acknowledges the following: 3.4.1 Tenant shall, at its sole cost and expense at all times during the Term, comply in all respects with the Environmental Laws (as defined below) in its use and operation of the Premises. 3.4.2 Tenant shall not use the Premises for the purpose of storing Hazardous Materials .1 (as defined below) except those Hazardous Materials commonly used in the type of business, being conducted by Tenant on the Premises and provided such use and storage is in full compliance with the Environmental Laws and other applicable law, and shall not cause the release of any Hazardous Materials. 3.4.3 Tenant shall notify Landlord promptly and in reasonable detail in the event that Tenant becomes aware of or suspects (i) the presence of any Hazardous Materials on the Premises (other than any Permitted Hazardous Materials, as defined below), or (ii) a violation of the Environmental Laws on the Premises. 3.4.4 If Tenant uses or permits the Premises to be used so as to subject Tenant, Landlord or any occupant of the Premises to a claim of violation of the Environmental Laws (unless contested in good faith by appropriate proceedings), Tenant shall, at its sole cost and expense, immediately cease or cause cessation of such use or operations and shall remedy and fully cure any conditions arising there from. 3.4.5 At its sole cost and expense, Tenant shall (i) immediately pay, when due, the cost of compliance with the Environmental Laws within the Premises required as a result of any acts or omissions of Tenant, or as otherwise required by this Lease, and (ii) keep the Premises free of any liens imposed pursuant to the Environmental Laws. Tenant shall, at all times, use, handle and dispose of any Permitted Hazardous Material in a commercially reasonable manner and in compliance with the Environmental Laws and applicable industry standards. Tenant shall cooperate with Landlord in any program between Landlord and any governmental entity for proper disposal and/or recovery of any Permitted Hazardous Material. 3.4.6 Tenant shall indemnify, save and hold Landlord harmless from and against any claim, liability, loss, damage or expense (including, without limitation, reasonable attorneys' fees and disbursements) arising out of any violation of the covenants of Tenant contained in this Section by Tenant, or out of any violation of the Environmental Laws by Tenant, its owners, employees, agents, contractors, customers, guests and invitees, which indemnity obligation shall survive the expiration or termination of this Lease. 3.4.7 In the event that Tenant fails to comply with the any of the foregoing requirements of this Section, after the expiration of the cure period permitted under the Environmental Laws, if any, Landlord may, but shall not be obligated to (i) elect that such failure constitutes a default under this Lease; and/or (ii) take any and all actions, at Tenant's sole cost and expense, that Landlord deems necessary or desirable to cure any such noncompliance. Tenant shall reimburse Landlord for any costs incurred by Landlord in exercising its options under this subsection within five (5) days after receipt of a bill therefor. 3.4.8 Landlord shall indemnify, save and hold Tenant harmless from and against any claim, liability, loss damage or expense (including, without limitation, reasonable attorneys' fees and disbursements) arising out of or in any way relating to any violation of the Environmental Laws by or the existence or presence of Hazardous Materials on the Premises due to the acts or omissions of Landlord, its owners, employees, agents, contractors, invitees or representatives, which indemnity obligation shall survive the expiration or termination of this Lease. 3.4.9 Landlord acknowledges and covenants that in the event that through no fault of Tenant, Tenant's use, occupancy and enjoyment of the Premises ("Occupancy") shall be materially interfered with by reason of the existence or remediation of any Hazardous Materials for a period of two (2) years or more, then Tenant shall have the right to terminate this Lease by giving written notice to Landlord of its election to do so, whereupon this Lease shall automatically terminate and end effective as of the date of such notice and neither party shall have any further obligations hereunder; PROVIDED, HOWEVER, Landlord may nullify Tenant's notice of termination if at the time such notice is given Landlord shall be diligently prosecuting the rectification of such Hazardous Materials interference and thereafter completes the rectification in accordance with all applicable governmental laws, codes, regulations and requirements within one (I) year after the date of Tenant's termination notice, whereupon this Lease shall continue in full force and effect in accordance with its terms. During any time period where Tenant's Occupancy is so interfered, Landlord and Tenant agree to work together and cooperate with one another to rectify and remediate any Hazardous Materials existing on the Premises and to recover any and all costs and expenses related thereto from the party responsible for such Hazardous Materials. 3.4.10 The provisions of this Section shall survive the expiration or termination of the Lease Term. Capitalized terms used in this Section and not otherwise defined herein shall have the following meanings. "HAZARDOUS MATERIALS" means any of the following as defined by the Environmental Laws: solid wastes; medical or nuclear waste or materials; toxic or hazardous substances; natural gas, liquefied natural gas or synthetic fuel gas; petroleum products or derivatives, wastes or contaminants (including, without limitation, polychlorinated biphenyls); paint containing lead; urea-formaldehyde foam insulation; asbestos (including, without limitation, fibers and friable asbestos); explosives; discharges of sewage or effluent; and any other substance, gas or other material regulated by federal, state, local or other governmental laws, ordinances, or restrictions. "ENVIRONMENTAL LAWS" means all requirements of environmental, ecological, health, or industrial hygiene laws or regulations or rules of common law related to the Property, including all requirements imposed by any law, rule, order, or regulation of any federal, state, or local executive, legislative, judicial, regulatory, or administrative agency, board, or authority, which relate to (i) noise; (ii) pollution or protection of the air, surface water, ground water, or land; (iii) solid, gaseous, or liquid waste generation, treatment, storage, disposal, or transportation; (iv) exposure to Hazardous Materials; or (v) regulation of the manufacture, processing, distribution and commerce, use, or storage of Hazardous Materials. "PERMITTED HAZARDOUS MATERIAL" means any Hazardous Materials which are necessary and commercially reasonable for the provision of any good or service related to; the Permitted Uses, provided the use and storage thereof is in full compliance with the Environmental Laws and other applicable laws. 3.5 PERMITS AND LICENSES. After Tenant's acceptance of Landlord's delivery of the Premises, Tenant shall be solely responsible to apply for and secure any building permit or permission of any duly constituted authority for the purpose of doing any of the things which Tenant is required or permitted to do under the provisions of this Lease. ARTICLE 4 TAXES AND UTILITIES 4.1 PAYMENT OF TAXES. Tenant shall pay the Taxes (as defined in the following Section) applicable to the Premises during the Lease Term. Landlord shall provide Tenant with copies of any tax bills applicable to the Premises promptly after receipt of such bills. All such payments shall be made at least ten (10) days prior to the delinquency date of such payment. Tenant shall promptly furnish Landlord with satisfactory evidence that such Taxes have been paid. If any such Taxes paid by Tenant shall cover any period of time prior to, or after the expiration of, the Lease Term, Landlord shall reimburse Tenant to the extent required. If Tenant shall fail to pay any such Taxes, Landlord shall have the right (but not the obligation) to pay the same, in which case Tenant shall repay such amount plus any penalties and interest resulting there from to Landlord within five (5) days after receipt of a bill therefor. 4.2 DEFINITION OF "TAXES". As used herein, the term "TAXES" shall include: 4.2.1 any form of real estate tax or assessment, special taxes and assessments, ad valorem tax or gross receipts tax imposed by any authority having the direct or indirect power to tax, including any city , county, state, or federal government, or any school, agricultural, sanitary , fire, street, drainage, or other improvement district thereof, on, against or with respect to the Premises, this Lease, any legal or equitable interest of Landlord or any superior landlord in the Premises, or in the real property of which the Premises are a part, Landlord's right to rent or other income there from and Landlord's business of leasing the Premises; 4.2.2 any tax, fee, levy, assessment, penalty, interest or other charge (i) in substitution of, partially or totally, any tax, fee, levy, assessment, or charge hereinabove included within this definition of Taxes, or (ii) any tax or increase in any tax which is imposed as a result of a transfer, either partial or total, of Landlord's interest in the Premises to Tenant, or (iii) any tax or increase in tax which is imposed by reason of this transaction, any modifications or changes hereto, or any transfers hereof; and 4.2.3 all inspection fees, taxes, bonds, permits, certificates, assessments and sales, use, property or other taxes, fees or tolls of any nature whatsoever (together with any related interest or penalties) now or hereafter imposed against Landlord or Tenant by any federal, state, county or local governmental authority upon or with respect to the Premises, or the use thereof, or upon the possession, leasing, use, operation or other disposition thereof, or upon the rents, receipts or earnings arising there from or upon or with respect to this Lease; and 4.2.4 all taxes assessed against and levied upon trade fixtures, furnishings, equipment, and all other personal property of Tenant contained in the Premises or elsewhere, which Tenant shall cause to be separately assessed and billed directly to Tenant. . Tenant shall pay when due, and indemnify and hold Landlord harmless from and against, any Taxes. Notwithstanding the foregoing, the term "TAXES" shall not include any general income taxes, inheritance taxes, and estate taxes imposed upon Landlord. 4.3 TENANT'S RIGHT TO CONTEST TAXES. 4.3.1 Tenant shall have the right, at its sole cost and expense, to contest the amount or validity, in whole or in part, of any Taxes by appropriate proceedings diligently conducted in good faith, but no such contest shall be carried on or maintained by Tenant after the time limit for the payment of any Taxes unless Tenant shall (i) pay the amount involved under protest; (ii) procure and maintain a stay of all proceedings to enforce any collection of any Taxes, together with all penalties, interest, costs and expenses, by a deposit of a sufficient sum of money, or by such undertaking, as may be required or permitted by law to accomplish such stay; or (iii) deposit with Landlord, as security for the performance by Tenant of its obligations hereunder with respect to such Taxes, 120% of such contested amount or such other reasonable security as may be reasonably demanded by Landlord to insure payment of such contested Taxes and all penalties, interest, costs and expenses which may accrue during the period of the contest. Upon the termination of any such proceedings, Tenant shall pay the amount of such Taxes or part thereof, as finally determined in such proceedings, together with any costs, fees (including all reasonable attorneys' fees and expenses), penalties or other liabilities in connection therewith; provided, however, that if Tenant has deposited cash or cash equivalents with Landlord as security under clause (iii) above, then, so long as no default exists under this Lease, Landlord shall arrange to pay such Taxes (or part thereof) together with the applicable costs, fees and liabilities as described above out of such cash or cash equivalents and return any unused balance, if any, to Tenant. Otherwise, Landlord shall return to Tenant all amounts, if any, held by or on behalf of Landlord which were deposited by Tenant in accordance with such clause (iii). In the event enforcement proceedings are commenced with respect to any unpaid Taxes during a contest by Tenant, Landlord shall have the right to pay all amounts which are subject to such enforcement proceedings and Tenant shall reimburse Landlord for such amounts within five (5) days after receipt of written demand therefor from Landlord. Tenant shall indemnify and hold harmless Landlord from any increase in Taxes resulting from Tenant's exercise of its right to contest Taxes. 4.3.2 Tenant shall have the right, at its cost and expense, to seek a reduction in the c valuation of the Premises as assessed for tax purposes and to prosecute any action or proceeding in connection therewith. Provided Tenant is not in default hereunder, Tenant shall be authorized to retain any tax refund of any tax paid by Tenant. 4.3.3 Landlord agrees that whenever Landlord's cooperation is required in any proceeding brought by Tenant to contest any tax, Landlord will reasonably cooperate therein, provided same shall not entail any cost, liability or expense to Landlord. Tenant shall pay, indemnify and save Landlord harmless of and from, any and all liabilities, losses, judgments, decrees, costs and expenses (including all reasonable attorneys' fees and expenses) in connection with any such contest and shall, promptly after the final settlement, fully pay and discharge the amounts which shall be levied, assessed, charged or imposed or be determined to be payable therein or in connection therewith, and Tenant shall perform and observe all acts and obligations, the performance of which shall be ordered or decreed as a result thereof. No such contest shall subject Landlord to the risk of any civil liability or the risk of any criminal liability , and Tenant shall give such reasonable indemnity or security to Landlord as may reasonably be demanded by Landlord to insure compliance with the foregoing provisions of this Section. 4.4 PAYMENT OF UTILITIES. Tenant shall pay to the utility companies or other parties entitled to payment the cost of all water, heat, air conditioning, gas, electricity, telephone, and other utilities and services provided to or for the Premises, including, without limitation, connection fees (unless provided for on Exhibit "F") and taxes thereon. ARTICLE 5 INSURANCE AND INDEMNIFICATION 5.1 TENANT'S INSURANCE. From and after taking possession of the Premises, Tenant shall carry and maintain, at its sole cost and expense, the following types and amounts of insurance: Insurance Type Amount of Coverage Risks Covered Commercial General $1,000,000 per occurrence and personal injury, bodily Liability $2,000,000 in the aggregate injury property damage and per location contractual liability Property Damage full replacement value "all risk",including sprinkler (including earthquake damage and flood if required by Landlord) Business Interruption not less than 12 installments loss of earnings by at least Fixed of Monthly Rent the least the perils of fire and lightning,extended coverage, vandalism, malicious mischief and sprinkler leakage Worker's compensation as required by law Boiler and Machinery in an amount reasonably acceptable to Landlord 5.2 POLICY FORM. 5.2.1 Tenant shall obtain all policies of insurance required by Section 5.1 from insurance companies reasonably acceptable to Landlord which are qualified and admitted to do business in the jurisdiction where the Premises are situated. All such policies shall be issued in the name of Tenant, and, if requested by Landlord, Landlord, and any mortgagee or beneficiary of Landlord or such other parties as required under any matter of record, shall also be named as additional insureds. In addition, all such policies providing coverage for physical damage shall include loss payee and mortgagee endorsement in favor of Landlord and Landlord's mortgagee or beneficiary , respectively and as applicable. The Tenant shall cause copies of such policies of insurance or originally executed certificates thereof to be delivered to Landlord prior to Landlord's execution of this Lease, and not less than thirty (30) days prior to any renewal thereof. As often as any such policy shall expire or terminate, Tenant shall procure and maintain renewal or additional policies with like terms. None of such policies shall contain any co- insurance requirements and all such policies shall provide for written notice to Landlord and any mortgagee or beneficiary of Landlord not less than thirty (30) days prior to any modification, cancellation, lapse, or reduction in the amounts of insurance, and shall further provide that any loss otherwise payable thereunder shall be payable notwithstanding any act or negligence of Landlord or Tenant which might, absent such provision, result in a forfeiture of all or part of the payment of such loss. All general liability , property damage, and other casualty policies shall be written on an occurrence basis as primary policies, not contributing with or in excess of coverage which Landlord may carry .The insurance limits set forth in this Article 5 are subject to such reasonable increases as requested by Landlord. 5.2.2 Tenant's obligations to carry the insurance provided for above may be brought within the coverage of an "umbrella" policy or policies of insurance carried and maintained by Tenant; provided, however, that such policy or policies shall (i) have limits of not less than $10,000,000, (ii) name Landlord and any mortgagee or beneficiary of Landlord as additional insureds as their interests may appear, and (iii) provide that the coverage afforded Landlord will not be reduced or diminished by reason of the use of such blanket policies. Tenant agrees to permit Landlord at all reasonable times to inspect any policies of insurance of Tenant which Tenant has not delivered to Landlord. 5.3 SUBROGATION- WAIVER. Landlord (for itself and its insurer) hereby waives any rights, including rights of subrogation, and Tenant (for itself and its insurer) hereby waives any rights, including rights of subrogation, each may have against the other on account of any loss or damage occasioned to Landlord or Tenant, as the case maybe, to their respective property, the Premises or its contents that are caused by or result from risks insured against under any insurance policies required to be carried by the parties under this Lease or carried by the parties hereto and in force at the time of any such damage. The foregoing waivers of subrogation shall be operative only so long as available in the jurisdiction where the Premises are located and so long as no policy of insurance is invalidated thereby. 5.4 PAYMENT OF INSURANCE. In the event that Tenant shall fail to obtain the insurance policies required hereunder or to pay the premiums due for the insurance policies required hereby, Landlord shall have the right, but not the obligation, to procure or to pay the same in which case Tenant shall repay such amount plus any penalties or additional amounts resulting there from to Landlord within five (5) days after receipt of a bill therefor. 5.5 INSURANCE USE RESTRICTIONS. Tenant shall not carry any stock or goods or do anything in, on, or about the Premises which will substantially increase the insurance rates upon the building of which the Premises are a part. 5.6 INDEMNIFICATION. 5.6.1 Subject to Subsection 5.6.3 below, Tenant shall indemnify Landlord for, defend Landlord against, and save Landlord harmless from any liability, loss, cost, injury, damage or other expense or risk whatsoever, including reasonable attorneys' fees, that may occur or be claimed by or with respect to any person(s) or property on or about the Premises and resulting directly or indirectly from: (a) the use, occupancy, possession, operation, maintenance or management of the Premises by Tenant or other persons claiming through or under Tenant, or their respective agents, employees, licensees, invitees, guests or other such persons; (b) any work or thing done by Tenant, its employees, agents or licensees, in respect of construction of, in or to the Premises or any part of the improvements now or hereafter constructed on the Premises (other than work by Landlord); (c) the condition, including environmental conditions (unless such conditions were pre-existing or caused by a party other than Tenant), of the Premises or any part thereof; (d) any negligence on the part of Tenant or any of its agents, contractors, servants, employees, licensees or invitees; (e) any accident, injury or damage to any person or property occurring in, on or about the Premises or any part thereof including any sidewalk adjacent thereto. 5.6.2 [Intentionally Omitted] 5.6.3 Landlord shall indemnify and save Tenant harmless from and against any and all claims, demands, actions, damages, liability and expense, including reasonable attorneys' fees, in connection with the loss, damage, or injury to persons or property whether for injuries to persons or loss of life, or damage to property, arising in connection with the negligence or intentional misconduct of the Landlord, Landlord's agents, employees, or contractors. ARTICLE 6 MAINTENANCE AND REP AIRS 6.1 TENANT'S OBLIGATIONS. 6.1.1 Tenant shall, at its sole cost and expense, maintain in good repair, order, and serviceable condition the Premises and every part thereof, including, without limitation, every part of the interior and exterior portions of the Building, including its roof, walls, all windows, doors, storefronts, plate glass, interior walls, and structural elements thereof and all painting thereof; all plumbing, ventilation, heating, air conditioning, and electrical systems and equipment in, on, or exclusively serving the Premises; and all exterior improvements including, without limitation, landscaping, light poles, signage and parking lot areas which are part of the Premises. Tenant shall be obligated to make replacements at the Premises when reasonably necessary and . such replacements shall be, to the extent reasonably practicable, with materials of a quality comparable to those initially installed. Subject to Landlord's satisfaction of the conditions set forth in Section 6.2.1, Tenant shall not make any claim or demand upon or bring any action against Landlord for any loss, cost, injury, damage or expense caused by any failure or defect, structural or non-structural, of the Premises or any part thereof. 6.2 LANDLORD'S OBLIGATIONS. Excepting Landlord's duties and obligations under Article 15 hereof, Landlord shall have no obligation to repair and maintain the Premises, nor any improvements or equipment thereon, whether interior or exterior, structural or nonstructural, ordinary or extraordinary. Except as otherwise provided in this Lease, Tenant expressly waives the benefit of any statute or law now or hereafter in effect which would otherwise afford Tenant the right to terminate this Lease because of Landlord's failure to keep the Premises in good order, condition, and repair, or the right to repair and offset the cost related thereto against rent. 6.2.1. Landlord shall obtain in the name of Tenant and Landlord warranties, to the extent available, on all materials, fixtures, and equipment incorporated in or on the Premises (the "Warranties"). Further, in the event Tenant is not deemed a third- party beneficiary or a direct assignee of the contract(s) Landlord enters into with its contractors ("Landlord's Contractor's") in connection with Landlord's Work, Landlord shall take such action as may be reasonably necessary to enable Tenant to make any demand upon or claim upon or bring any action against Landlord's Contractors (i) for any loss, cost, injury, damage or other expense caused by any failure or defect, structural or non- structural, of the Premises or any part thereof or (ii) to enforce the Warranties. 6.3 LANDLORD'S RIGHTS. If Tenant refuses or neglects to make repairs or maintain the Premises, or any part thereof, in a manner reasonably satisfactory to Landlord, without prejudice to any other remedy Landlord may have hereunder, upon giving Tenant ten (10) days prior written notice, Landlord shall have the right to enter the Premises and perform such maintenance or make such repairs on behalf of and for the account of Tenant. In the event Landlord so elects, Tenant shall pay the cost of such repairs, maintenance, or replacements within five (5) days following receipt of a bill therefor. Tenant agrees to permit Landlord or its agent to enter the Premises, upon reasonable notice to Tenant and in the presence of Tenant's store manager during normal business hours, for the purpose of inspecting the Premises. Provided Landlord uses its best efforts to notify Tenant, Landlord shall have the right to enter the Premises in the event of an emergency. ARTICLE 7 ALTERATIONS 7.1 CONSENT TO ALTERATIONS. Tenant may make any interior non- structural alterations, replacements, additions, changes and improvements to the Premises that Tenant, in its sole discretion, deems advisable. Subject to the prior written consent of Landlord, which consent shall not be unreasonably withheld, Tenant may, at its sole cost and expense, make any alterations, replacements, additions, changes, and improvements (collectively referred to in this Article as " Alterations") to the Premises, other than interior non-structural Alterations, as it may find necessary or convenient for its purposes, together with copies of all architectural plans and specifications relating to any such Alteration. Notwithstanding the foregoing, Landlord's consent with respect to any structural Alterations to the Premises, including the foundations, structural walls, roof, roof membrane, utilities and/or building systems, may be conditioned upon Tenant's removing any such Alterations upon the expiration or termination of the Lease Term and restoring the Premises to the condition which existed on the date Tenant took possession, subject to normal wear and tear. 7 .2 REMOVAL OF ALTERATIONS. Except as set forth in Subsection 7.2.1 below, all Alterations made on the Premises shall become the property of Landlord at the expiration or termination of the Lease Term and shall be surrendered with the Premises. 7.2.1 All signs, furnishings, trade fixtures, inventory, equipment and other removable property, including but not limited to Tenant's Trade Fixtures, as listed on Exhibit "F" attached hereto, installed in or on the Premises by Tenant, shall remain the personal property of Tenant, shall not be subject to any Landlord's lien or lien or security interest against the property of Landlord, and shall be removed by Tenant not later than fifteen (15) days after the termination or expiration of this Lease, provided that Tenant shall repair any damage caused by removal of its personal property or vault or which is structural in nature. If, however, any such personal property of Tenant is not removed on or before the fifteenth (15th) day following the termination of this Lease, Landlord shall provide written notice to Tenant and if such property is not removed within ten ( 10) days of receipt of such notice such property , Landlord may remove and store such property at Tenant's cost and expense. 7 .3 ALTERATIONS REQUIRED BY LAW. Subsequent to Tenant's acceptance of Landlord's delivery of the Premises, Tenant shall, at its sole cost and expense, make any Alteration, Structural or otherwise, to or on the Premises, or any part thereof, which may be necessary or required by reason of any law, rule, regulation, or order promulgated by competent government authority. 7 .4 GENERAL CONDITIONS RELATING: TO ALTERATIONS. Any Alteration shall be subject to the following conditions: 7.4.1 No Alteration shall be undertaken until Tenant shall have procured and paid for all required permits and authorizations of all municipal departments and governmental subdivisions having jurisdiction. 7.4.2 [Intentionally Omitted] 7.4.3 Any Alteration shall be made promptly and in a good workmanlike manner, by properly qualified and licensed personnel, and in compliance with all applicable permits and authorizations and building and zoning laws and all laws, and in accordance with the orders, rules and regulations of the Board of Fire Insurance Underwriters and any other body hereafter exercising similar functions having or asserting jurisdiction over the Premises. 7.4.4 No Alteration shall tie-in or connect the Premises or any improvements thereon with any property outside the Premises without the prior written consent of Landlord. 7.4.5 No Alteration shall reduce the value of the Premises or impair the structural integrity of any building comprising a part of the Premises. 7.5 LIENS In connection with Alterations or otherwise, Tenant shall do all things reasonably necessary to prevent the filing of any liens or encumbrances against the Premises, or any part thereof, or upon any interest of Landlord or any mortgagee or beneficiary under a deed of trust or any ground or underlying lessor in any portion of the Premises, by reason of labor, services or materials supplied or claimed to have been supplied to Tenant, or anyone holding the Premises, or any part thereof, through or under Tenant. If any such lien or encumbrance shall at any time be filed against all or any portion of the Premises, Tenant shall either cause same to be discharged of record within twenty (20) days after the date of filing of same or Tenant's receipt of written notice from Landlord or, if Tenant in good faith determines that such lien should be contested, Tenant shall either (i) bond over such lien in accordance with applicable law in an amount sufficient to remove the subject liens as a matter of record, or (ii) furnish such security as Landlord shall determine to be necessary and/or required to prevent any foreclosure proceedings against all or any portion of the Premises during the pendency of such contest. If Tenant shall fail to discharge or bond over such lien or encumbrance or fail to furnish such security within such period, then, in addition to any other right or remedy of Landlord resulting from said default of Tenant, Landlord may, but shall not be obligated to, discharge the same either by paying the amount claimed to be due or by procuring the discharge of such lien by giving security or in such other manner as is or may be prescribed by law, and Tenant agrees to reimburse Landlord within five (5) days after demand for all costs, expenses, and other sums of money spent in connection therewith. 7.6 SIGNS. Tenant shall have the right to install and maintain a sign or signs on all fascia of the Premises; provided, however, that any exterior signage shall not represent more than one trade name. In addition, Tenant shall have the right to install a sign on the rear of the Premises. All such signs shall comply with all requirements of (i) appropriate governmental authorities; and (ii) agreements or restrictions of record (or disclosed to Tenant before its execution of this Lease) running with the Premises. All necessary permits, licenses or approvals required by agreements or restrictions identified in item (ii) of the previous sentence shall be obtained by Tenant. Tenant shall maintain its signs in good condition and repair at all times, and shall save the Landlord harmless from injury to person or property arising from the erection and maintenance of said signs. Upon vacating the Premises, Tenant shall remove all signs and repair all damage caused by such removal including restoring areas occupied by the Signs to the extent reasonably practicable to the condition existing prior to such removal. Landlord covenants and warrants that it has approved Tenant's signs and the Sign Drawings attached hereto as Exhibit D prior to or simultaneously with its execution of this Lease. ARTICLE8 DAMAGE, DESTRUCTION, OBLIGATION TO REBUILD 8.1 OBLIGATION TO REBUILD. If any portion of the Premises is damaged or destroyed by fire or other casualty, Tenant shall forthwith give notice thereof to Landlord. Tenant shall promptly obtain an estimate from a licensed architect or contractor of the cost to complete such repair, restoration, rebuilding or replacement, and Tenant shall, at its sole cost and expense, promptly repair, restore, rebuild or replace the damaged or destroyed improvements, fixtures or equipment, and complete the same as soon as reasonably possible, to the condition they were in prior to such damage or destruction, except for such changes in design or materials as may then be required by law. In such event, Landlord shall, to the extent and at the times the proceeds of the insurance are made available to Landlord, and only so long as Tenant shall not be in default under this Lease, reimburse Tenant for the costs of making such repairs, restoration, rebuilding and replacements as they are completed, but not more often than once each month, upon receipt of a written request therefor, which request shall be accompanied by a certification from Tenant's architect certifying as to completion of the work for which reimbursement is being requested. To the extent, if any, that the proceeds of insurance made available by Landlord are insufficient to pay the entire cost of making such repairs, restoration, rebuilding and replacements, Tenant shall pay the remainder. Any surplus of insurance proceeds over the cost of restoration, net of all reasonable expenses incurred by Landlord in connection with the administration thereof, shall be promptly paid over to Landlord. Tenant hereby waives any statutory right relating to casualties, it being understood and agreed by the parties that the provisions of this Article 8 shall govern and control in all events. 8.1.1 Notwithstanding the foregoing, in the event Tenant is unable to obtain any necessary governmental approvals, authorizations or permits, despite Tenant's diligent pursuit of same, three hundred sixty (360) calendar days from the date of such fire or casualty (such period not to include unreasonable delays caused by Tenant), Tenant shall have the option to terminate this Lease. In the event Tenant elects to so terminate, Tenant shall pay to Landlord the difference, if any, between the insurance proceeds received by Landlord and the unamortized portion of the Premises Cost. 8.2 CASUALTY DURING LAST EIQHTEEN (18) MONTHS. Notwithstanding anything to the contrary in this Article 8, if the Premises is damaged or destroyed by fIfe or other casualty during the last eighteen (18) months of the Initial Term or the then-running Renewal Term such that twenty-five percent (25%) or more of the Premises are rendered unuseable by Tenant, Tenant may elect not to rebuild and to terminate this Lease; provided that Landlord shall receive insurance proceeds in the full amount of the casualty loss and the difference, if any, between the insurance proceeds received by Landlord and the unamortized portion of the Premises Cost. 8.3 Intentionally Omitted. 8.4 INSURANCE PROCEEDS. NOTWITHSTANDING anything to the contrary contained herein, any reference to casualty insurance and/or insurance proceeds shall mean insurance payable with respect to the Building on the Premises. Any insurance with respect to Tenant's Trade Fixtures or other personal property of Tenant shall be, and remain, the property of Tenant, notwithstanding anything to the contrary herein. ARTICLE 9 EMINENT DOMAIN 9.1 TOTAL TAKING. If the entire Premises are taken under the power of eminent domain by any public or quasi-public authority, this Lease shall tem1inate and expire as of the date of such taking, and upon Tenant's payment to Landlord of all rents accruing through such date, Landlord and Tenant shall each thereafter be released from any further liability accrued under this Lease. In the event that Tenant shall have paid any rent for any period beyond the date of such taking, Landlord shall reimburse same, pro rata. 9.2 PARTIAL TAKING. in the event that (i) more than 25% of the Gross Leasable Area of the Premises, including the parking area serving the Premises, is taken under the power of eminent domain by any public or quasi-public authority, (ii) by reason of any appropriation or taking, regardless of the amount so taken, the remainder of the Premises is not one undivided parcel of property, or (iii) as a result of any taking, regardless of the amount so taken, the remainder of the Premises is rendered unsuitable for the continued operation of Tenant's business, either Landlord or Tenant shall have the right to terminate this Lease as of the date Tenant is required to vacate a portion of the Premises, by giving the other notice of such election within thirty (30) days after receipt by Tenant from Landlord of written notice that the Premises have been so appropriated or taken. Landlord agrees immediately after learning of any appropriation or taking to give to Tenant notice in writing thereof. In the event of such termination, upon Tenant's payment to Landlord of all rents accruing through such date, both Landlord and Tenant shall thereupon be released from any liability thereafter accruing hereunder. If both parties elect not to terminate this Lease, Tenant shall remain in that portion of the Premises not so taken and Tenant, at Tenant's sole cost and expense, shall restore the remaining portion of the Premises as soon as possible to a complete unit of like quality and character as existed prior to such taking. Landlord agrees to reimburse Tenant for the cost of restoration, but in no event shall Landlord's obligation to reimburse Tenant for the cost of restoring the remaining portion of the Premises exceed the amount of award of compensation that Landlord receives for a partial taking of that portion of the Premises resulting in the need for restoration. So long as this Lease is not terminated in the manner provided above, there shall be an equitable adjustment of the rent payable by Tenant hereunder by reason of such partial taking. Tenant hereby waives any statutory rights of termination which may arise by reason of any partial taking of the Premises under the power of eminent domain. 9.3 DISTRIBUTION OF A WARD. The entire award or compensation in such eminent domain proceeding, whether for a total or partial taking or for diminution in the value of the leasehold or for the fee, shall be distributed to Landlord; provided however, that Tenant may apply for award of the value of Tenant's Trade Fixtures or other personal property, loss of income, relocation costs, improvements and the value of the leasehold interest created hereby, according to the law in effect in the jurisdiction where the Premises are located, so long as such award does not diminish the value of Landlord's award. In the event that a separate award is not made to Tenant, Tenant shall be entitled to share in any award made to Landlord, as long as Landlord first receives the fair market value of the real property upon which the Premises are located plus the unamortized Premises Cost. ARTICLE 10 ASSIGNMENT AND SUBLETTING 10.1 RIGHT OF ASSIGNMENT AND SUBLETTING. 10.1.1 Tenant shall have the free right to assign this Lease or sublet the Premises provided Tenant remains liable under this Lease and provided that the proposed assignee's intended use does not violate any protected, exclusive or restricted uses then in effect with respect to the Premises. Notwithstanding the foregoing, Tenant shall not mortgage, pledge or hypothocate this Lease or Tenant's interest in and to the Premises or any part thereof without the prior written consent of Landlord, which consent shall not be unreasonably withheld. 10.1.2 Any permitted assignee, subtenant, transferee, licensee, concessioner, or mortgagee shall be bound by, and shall assume and perform all of the terms, covenants, and conditions of this Lease from and after the date of any such transfer. 10.2 NO RELEASE OF TENANT. No assignment shall release Tenant of Tenant's obligation or alter the primary liability of Tenant to pay the rent and to perform all other obligations to be performed by Tenant hereunder. The acceptance of rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof. In the event of default by any assignee of Tenant, or any successor Tenant, in the performance of any of the terms hereof, Landlord may, subject to Landlord's duty to mitigate and take all reasonable efforts to relet the Premises, proceed directly against Tenant without the necessity of exhausting remedies against such assignee. ARTICLE 11 DEFAULT REMEDIES 11.1 DEFAULT. The occurrence of anyone or more of the following events shall constitute a default by Tenant under this Lease: 11.1.1 [Intentionally Omitted] 11.1.2 The failure by Tenant to make any payment of Fixed Monthly Rent, Additional Rent or any other payment required to be made by Tenant hereunder, where after written notice thereof from Landlord to Tenant, such failure shall continue for a period of ten (10) days. 11.1.3 Except as otherwise provided in this Lease, the failure by Tenant to observe or perform any of the non-monetary covenants, conditions, or provisions of this Lease to be observed or performed by Tenant, where such failure shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant's noncompliance is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said 30-day period and thereafter diligently prosecutes such cure to completion and, in any event, completes the cure within ninety (90) days. 11.1.4 Institution by or against Tenant of any bankruptcy, insolvency, reorganization, receivership or other similar proceeding involving the creditors of Tenant, which, if instituted against Tenant, is not dismissed within sixty (60) days after the commencement thereof. 11.1.5 The issuance or filing of any judgment, attachment, levy, garnishment or the commencement of any related proceeding or the commencement of any other judicial process upon or with respect to all or substantially all of the assets of Tenant, or the Premises. 11.1.6 [Intentionally Omitted] 11.1.7 Bankruptcy, dissolution, termination of existence, insolvency, business failure or assignment for the benefit of creditors of or by Tenant. In the event of bankruptcy by Tenant, this Lease will be governed in accordance with the determinations of the Bankruptcy Court. 11.1.8 Any statement, representation or information made or furnished by or on behalf of Tenant to Landlord in connection with or to induce Landlord to enter into this Lease which is proved to be materially false or misleading when made or furnished. 11.2 REMEDIES. Upon the occurrence of a default by Tenant pursuant to the foregoing Subsection or otherwise under this Lease, Landlord may at any time thereafter, with or without notice or demand and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such default: 11.2.1 Terminate Tenant's right to possession of the Premises by "any lawful means, in which case this Lease and the term hereof shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. In such event, Landlord shall be entitled to recover from Tenant all damages permitted by applicable law. 11.2.2 Maintain Tenant's right to possession of the Premises by any lawful means, in which case this Lease and the term hereof shall continue in effect whether or not Tenant shall have vacated or abandoned the Premises. In such event Landlord shall be entitled to enforce all of Landlord's rights and remedies under the Lease, including the right to recover the rent as it becomes due hereunder. Notwithstanding the foregoing, the Landlord shall use reasonable efforts to mitigate its damages to the extent required by law. 11.2.3 If Tenant, after taking possession of the Premises, defaults under this Lease, Tenant shall pay Landlord Fixed Monthly Rent until such time as Landlord relets the Premises, so long as Landlord makes all reasonable efforts to mitigate its damage and relet the Premises. Further, from the date Landlord relets the Premises until the expiration of the Term, or the then running renewal term, Tenant shall pay Landlord, as it becomes due, the difference between the rental amount obtained by Landlord upon such reletting the Premises (which rental amount shall be upon commercially reasonable terms) and the Fixed Monthly Rent. In the event the rental amount obtained by Landlord upon such reletting is greater than the Fixed Monthly Rent, such excess amount shall be for the benefit of Tenant and applied to any future amounts owed by Tenant. 11.2.4 Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the jurisdiction where the Premises are located. 11.2.5. Recover from Tenant, as an element of its damages, the cost of reletting the Premises, including, but not limited to, reasonable brokerage fees, attorneys' fees, retrofit costs and other expenses of mitigation. 11.3 CUMULATIVE REMEDIES. Except as specifically provided herein to the contrary no remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies provided in this Article or otherwise available at law or in equity. ARTICLE 12 REPRESENTATIONS AND.WARRANTIES; FINANCIAL REPORTING 12.1 REPRESENTATIONS AND WARRANTIES. To induce Landlord to enter into this Lease, Tenant represents and warrants to Landlord as follows: 12.1.1 This Lease is an enforceable obligation of Tenant. 12.1.2 Tenant is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as such terms are defined in the Internal Revenue Code of 1986,'as amended, and the regulations promulgated thereunder). 12.1.3 The financial statements of Tenant delivered to Landlord are true and correct in all material respects, have been prepared in accordance with generally accepted accounting principles, and fairly present the respective financial conditions of the subjects thereof as of the respective dates thereof. No materially adverse change has occurred in the financial conditions reflected therein since the respective dates thereof. 12.1.4 There are no actions, suits or proceedings pending, or to the best of Tenant's knowledge, threatened, against or affecting it or the Premises which, if adversely determined, would materially impair the ability of Tenant to satisfy their obligations under or relating to this Lease. 12.1.5 Tenant is not in default under any obligation for the payment of borrowed money, for the deferred purchase price of property or for the payment of any rent under any lease agreement, which, either individually or in the aggregate, would adversely affect the financial condition of Tenant, or the ability of Tenant to perform its obligations hereunder, or comply with the terms of this Lease. 12.2 FINANCIAL STATEMENTS. Tenant has furnished certain financial statements to Landlord, which statements completely and accurately present the financial condition of Tenant on the dates thereof. There has been no material adverse change in business, property or condition of Tenant since the date of such financial statements. Tenant is not insolvent within the meaning of Section 548(a)(2)(B) of the United States Bankruptcy Code or any other federal or state law using or defining such term, and will not be rendered insolvent by the transactions contemplated by this Lease. ARTICLE 13 GROSS SALES STATEMENT Within forty-five (45) days after the end of each calendar year following the recording of the deed in accordance with the terms of the Arundel Mills Purchase and Sale Agreement, Tenant shall deliver to Seller or Seller's designated representative a written statement in the form attached hereto as Exhibit "H" certified to be correct by an authorized officer of Tenant setting forth the amount of gross sales received from or at the Premises including, sales of licensees or concessionaires operating at the Premises. ARTICLE 14 DUE DILIGENCE AND PERMITTING 14.1 Intentionally omitted. 14.2 Intentionally omitted. 14.3 Intentionally omitted. ARTICLE 15 CONSTRUCTION 15.1 PERMITS. Landlord shall use its diligent efforts to obtain all necessary governmental and quasi-governmental permits and approvals (collectively the "Permits") on or before the expiration of the Permitting Period. Once Landlord has secured all necessary Permits it shall provide Tenant with written notice (the "Permit Approval Notice"). 15 .2 LANDLORD' S WORK. After having obtained the Pem1its, Landlord shall construct the Premises and related improvements on the Premises Site on a turnkey basis at no cost to Tenant, in accordance with the Plans and Specifications attached hereto as Exhibit "C" and in accordance with the zoning, building, environmental, health and safety codes of the governmental units in which the Premises are situated ("Landlord's Work"). Landlord shall complete all foundations for the improvements to be constructed on the Premises (to Commence Construction as defined in the Arundel Mills Purchase and Sale Agreement) on or before the later to occur of (i) the date which is five (5) days after the Roadway Improvements are opened for vehicular traffic; or (ii) three (3) months after the date of the execution of the Arundel Mills Purchase and Sale Agreement Landlord's Work shall be substantially completed, excepting Punchlist Items (as hereinafter defined), and possession of the completed Premises shall be delivered to Tenant for the commencement of Tenant's Work within the Construction Period, delays due to Force Majeure events excepted. Tenant shall be deemed to have accepted the Premises provided Landlord's Work is substantially complete, excepting Punchlist Items which Landlord shall be obligated to complete as set forth in Section 15.4, and provided further that Tenant is able to, perform Tenant's Work without unreasonable interference by Landlord. Conditioned upon Tenant's providing Landlord reasonable assurance that Tenant's placement of a satellite dish on the roof of the Premises will not void applicable roof warranties, Tenant shall have the right to install on the roof of the Premises a satellite dish in accordance with plans and specifications set forth on Exhibit "C". Upon expiration or earlier termination of this Lease, Tenant shall remove any satellite dish and related equipment installed on the roof of the Premises and repair any damage caused in connection therewith. 15.3 DELIVERY DATE NOTICE. Landlord shall give Tenant written notice of the Delivery Date not less than ten (10) days before the Delivery Date (the "Delivery Date Notice"). Upon receipt of Landlord's Delivery Date Notice, Tenant shall have access to the Premises for inspection and performance of Tenant's Work. In no event shall Tenant be required to accept delivery of the Premises unless and until all conditions to the occurrence of the Delivery Date have been satisfied. 15.4 PUNCHLIST WORK. Notwithstanding anything to the contrary in this Lease, within five (5) days after Landlord has provided Tenant with the Delivery Date Notice, Tenant and a representative of Landlord, at a mutually agreeable time, shall inspect the Premises and shall compile a list of items which have not been completed as required in Exhibit "C" (the "Punchlist Items"). Tenant shall have the right to supplement the list of Punchlist Items during the first forty-five (45) days following the Delivery Date. Landlord shall use reasonable efforts to complete the Punchlist Items by the Delivery Date or as soon as possible after Landlord's receipt of a supplemental list of Punchlist Items, as the case may be. In the event Landlord is unable to complete such Punchlist Items within thirty (30) days after the Delivery Date or within thirty (30) days after receipt of a supplemental list, Tenant shall have the right, but not the obligation, to complete such Punchlist Items at Landlord's cost and expense and to either request reimbursement from Landlord or to offset the cost thereof against rent. Upon Landlord's completion of all Punchlist Items, Landlord shall have no further obligation with respect to the construction of the Premises. 15.5 PRE-COMPLETION ACCEPTANCE. If the Delivery Date has not occurred within the Construction Period, Tenant shall have the right, but shall not be obligated, to accept delivery of the Premises, without relieving Landlord of any obligation to fully complete Landlord' s Work, If Tenant accepts delivery of the Premises prior to the completion of Landlord's Work, Landlord shall complete Landlord's Work, including completing any Punchlist Items, as soon as possible, and in so doing shall not unreasonably interfere, and shall cause its contractors not to unreasonably interfere, with the fixturing, furnishing, equipping and stocking of the Premises by Tenant and its contractors. Notwithstanding the foregoing, once (i) Tenant has taken possession of the Premises and Landlord has completed Landlord's. Work, (ii) all Punchlist Items have been completed, and (iii) all warranties have been assigned to Tenant, Landlord shall have no further construction obligations hereunder- 15.6 FAILURE TO DELIVER. Notwithstanding any provision of this Lease to the contrary, if the Delivery Date has not occurred within thirty (30) days after the Construction Period (delays due to the occurrence of Force Majeure events excepted) (the "Cancellation Date"), Tenant shall have the right, in addition to and not in lieu of any and all other rights and remedies available at law or equity , to cancel this Lease by giving written notice to Landlord at any time thereafter but before the Delivery Date (the "Notice of Cancellation"). Tenant must provide its Notice of Cancellation to Landlord within thirty (30) days after the Cancellation Date. If Tenant fails to provide a Notice of Cancellation within such thirty (30) day period, Tenant shall be deemed to have waived its right to cancel pursuant to this section 15.6. If Tenant provides timely Notice of Cancellation, Tenant shall be relieved of all obligations hereunder and Tenant shall not be liable to Landlord in damages or otherwise. 15.7 LIQUIDATED DAMAGES. In the event Landlord does not deliver the Premises to Tenant in the condition as herein required by the end of the Construction Period, Landlord shall pay to Tenant the sum of Two Hundred Dollars ($200.00), for each day between the last day of the Construction Period and the Delivery Date, or, if Tenant exercises its right to cancel for Landlord's failure to deliver, for each day between the last day of the Construction Period and Tenant's Notice of Cancellation (delays due to the occurrence of Force Majeure events excepted). If Landlord fails to pay Tenant as aforesaid, then Tenant shall have the right (without limiting any other right or remedy of Tenant) to deduct such amount from rent and other payments due Landlord. The liability of Landlord under this paragraph shall be in addition to all other claims which Tenant may have against Landlord. Landlord agrees that the amount provided for in this section constitutes a reasonable estimate of the damages that Tenant is likely to incur in the event of a breach by Landlord as herein provided, and shall not constitute a penalty. 15.8 COMPLETION OF ROADWAY IMPROVEMENTS. Landlord and Tenant acknowledge that pursuant to Section 7.25 of the Arundel Mills Purchase and Sale Agreement there may be remedies against Seller if the Roadway Improvements are not substantially completed and opened for vehicular traffic on or before July 1,2001. If the Roadway Improvements are not so completed, Landlord and Tenant shall cooperate with each other (at no cost to Landlord except for time) to establish the conditions and recover from Seller the amounts provided in Section 7.25 of the Arundel Mills Purchase and Sale Agreement To the extent Landlord and Tenant are able to recover such sums from the Seller they shall either: i) be paid to Tenant, or ii) paid to Landlord for the account of Tenant Landlord shall cooperate with Tenant and take all reasonable action necessary to assist Tenant in collecting such sums from Seller. ARTICLE 16 GENERAL PROVISIONS 16.1 QUIET ENIOYMENT Subject to the terms and conditions of this Lease, Tenant shall have the quiet and peaceful possession of the Premises. 16.2 DEFINITION OF RENT. All monetary obligations of Tenant to Landlord under the terms of this Lease, including, without limitation, the Taxes, insurance premiums and other, Additional Rent payable hereunder, shall be deemed to be "rent". 16.3 SUBORDINATION. This Lease shall be subordinate to the lien of any superior lease, mortgage, deed of trust, or any other hypothecation or security now existing or hereafter placed upon the Premises, and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements, and extensions thereof, and Tenant hereby agrees, upon request by Landlord, to execute and deliver to Landlord and its lender(s) a subordination, non-disturbance and attornment agreement in a form reasonably acceptable to Tenant prescribed by such lender(s) with respect to any such superior lease, mortgage, deed of trust, hypothecation, or security; provided, however, that no such instrument shall materially limit Tenant's rights or materially expand Tenant's obligations under this Lease. Such agreement shall be executed by Tenant within thirty (30) days after receipt of written request from Landlord. Landlord agrees to obtain a non-disturbance and attornment agreement from the holder of any mortgage given with respect to the Premises existing at the time of the execution of this Lease or the recording of a Memorandum Lease or at such other times as may be reasonably requested by Tenant 16.3.1 It is a condition, however, of the subordination provisions of Section 16.3 above that Landlord shall procure from any such mortgagee an agreement in writing, which shall be delivered to Tenant, providing in substance that (i) so long as Tenant shall faithfully discharge the obligations on its part to be kept and performed under the terms of this Lease, Tenant's tenancy will not be disturbed nor this Lease affected by any default or foreclosure under such mortgage, and that the mortgagee agrees that this Lease shall remain in full force and effect even though Default in and foreclosure under the mortgage may occur; and (ii) such mortgagee shall permit insurance proceeds or condemnation awards, as the case may be, to be used for any restoration and repaid as required by the provisions of this Lease as set forth in Sections 8 and 9. The word "mortgage" as used herein means (i) any lease of land only or of land and buildings in a sale-lease-back transaction involving all or any part of the Premises, or (ii) any mortgage, deed of trust or other similar security instruments constituting a lien upon all or any part of the Premises, whether the same shall be in existence as of the date hereof or created hereafter, and any modifications, extensions, renewals and replacements thereof. "Mortgagee" as used herein means a party having the benefit of a Mortgage, whether as lessor, mortgagee, trustee or note- holder. 16.3.2 No change in ownership of all or any portion of the Premises, or assignment of this Lease, or the rentals provided for herein, shall be binding upon Tenant for any purpose until after Tenant has been furnished with written notice from Landlord notifying Tenant of a change in ownership or assignment. 16.3.3 In the event Tenant receives a written notice from any party claiming a collateral interest in this Lease or in the rentals hereunder and, by reason thereof, a present entitlement to collect the rentals under this Lease, Tenant shall have the right either (i) to pay such rentals to such party which payment shall satisfy any and all liabilities of Tenant to Landlord with respect to such payment without obligation on the part of Tenant to make further inquiry but subject to such party's providing to Tenant a copy of the instrument pursuant to which such party claims such entitlement and to such claim being plausible on the face of such instrument; or (ii) to withhold such rentals pending the determination by a court of competent jurisdiction of the entitlement thereto. 16.4 SURRENDER OF PREMISES. Except for changes resulting from eminent domain proceedings, at the expiration or sooner termination of the Lease Term, Tenant shall surrender the Premises in the same condition as the Premises were in upon delivery of possession thereto under this Lease, reasonable wear and tear and damage due to casualty (to the extent not required to be repaired or restored by Tenant under this Lease) excepted, and shall surrender all keys for the Premises to Landlord at the place then fixed for the payment of rent and shall inform Landlord of all combinations on locks, safes and vaults, if any, in the Premises. Tenant shall at such time remove all of Tenant's Trade Fixtures including, but not limited to, equipment, signs, furnishings, inventory , machinery , and other personal property, as well as any alterations or improvements, and shall repair any damage to the Premises caused thereby. Any or all of such property not so removed shall, at Landlord's option, become the exclusive property of Landlord or be disposed of by Landlord, at Tenant's sole cost and expense, if not removed by Tenant after receipt of written notice from Landlord pursuant to Section 7.2.1. In the event Tenant shall fail to pay the cost of any such repair, Landlord may do so and Tenant shall reimburse Landlord for the amount thereof within five (5) days after receipt of a bill therefore. If Tenant shall so surrender the Premises, Tenant shall indemnify Landlord against loss or liability resulting from the delay by Tenant in so surrendering the Premises including, without limitation, any claims made by any succeeding occupant founded on such delay. Tenant's obligation to observe or perform this covenant shall survive the expiration or other termination of the Lease Term. 16.5 ESTOPPEL CERTIFICATES. Each party (each a "Responding Party") shall at any time upon not less than ten (10) days prior written notice from the other party (each a "Requesting Party) execute, acknowledge, and deliver to the Requesting party a statement in a form prescribed by Landlord and reasonably acceptable to Tenant certifying and acknowledging the following: (i) that this Lease represents the entire agreement between Landlord and Tenant, and is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the date to which the Fixed Monthly Rent and other charges are paid in advance, if any; (ii) that there are not, to the Responding Party's knowledge, any uncured defaults on the part of the Requesting Party, or specifying such defaults if any are claimed; and (iii) any other information reasonably requested by the Requesting Party. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the Premises or of the business of the Requesting Party 16.6 SEVERABILITY .The invalidity of any provision of this Lease as determined by a court of competent jurisdiction shall in no way affect the validity of any other provision hereof. 16. 7 ENTIRE AGREEMENT. This Lease constitutes the entire agreement between Landlord and Tenant and supersedes all prior agreements between them with respect to the Premises, whether written or oral. 16.8 NOTICES. Any notice required or permitted to be given hereunder shall be in writing and may be given by facsimile (provided a copy is immediately sent by one of the other methods of providing notice), personal delivery, certified mail, return receipt requested, or by nationally recognized overnight courier service delivered to Tenant or to Landlord, as the case may be, at the FAX numbers or addresses for each set forth in the Fundamental Lease Provisions. Either party may by notice to the other specify a different FAX number or address for notice purposes. A copy of all notices required or permitted to be given to Landlord hereunder shall be concurrently transmitted to such party or parties at such addresses as Landlord may from time to time hereafter designate by notice to Tenant. 16.9 WAIVERS. No waiver by Landlord or Tenant of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent default by Landlord or Tenant of the same of any other provision. Landlord's consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act by Tenant. The acceptance of rent hereunder by Landlord shall not be a waiver of any preceding default by Tenant hereunder, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord' s knowledge of such preceding default at the time of acceptance of such rent. 16.10 RECORDING. Either Landlord or Tenant shall, upon request of the other, execute, acknowledge, and deliver to the other a "short form" memorandum of this Lease for recording purposes. Such memorandum shall be in the form reasonably prescribed by Landlord. In addition, any termination agreement or quitclaim deed shall be similarly recorded, which agreement shall survive the termination of this Lease. The cost of recording shall be borne by the party requesting such recording. 16.10.1 At the time that the Commencement Date of the term of this Lease is firmly established, the parties shall promptly enter into a Supplemental Lease Agreement, setting forth the actual commencement and expiration of the Initial Term and any extensions thereof and describing the Premises, but containing no further provisions of this Lease, which Supplemental Lease Agreement may be recorded by either party .If the Commencement Date is firmly established before a short form lease or memorandum of lease has been executed by the parties, the short form lease or memorandum of lease and the Supplemental Lease Agreement may be consolidated into a single recordable document. .. 16.11 HOLDING OVER. If Tenant remains in possession of the Premises or any part thereof after the expiration or termination of the Lease Term, such occupancy shall be a tenancy from month- to-month upon all the provisions of this Lease pertaining to the obligations of Tenant and Tenant shall thereby waive its rights of notice to quit, but Tenant's right as to any Renewal Term shall terminate. The monthly rent due during such hold-over period shall be equal to 125% of the Fixed Monthly Rent then in effect, and Tenant shall continue to be obligated to pay all Additional Rent and other amounts required to be paid by the terms of this Lease. Notwithstanding the foregoing, in the event that Landlord and Tenant are engaged in good faith negotiations for a new lease at the expiration or termination of the Lease Term, ') Tenant's continuing possession shall not constitute holding over for so long as such negotiations continue. However, Landlord shall in its sole discretion have the right to notify Tenant in writing, that Landlord elects to terminate such negotiations whereupon thirty (30) days after Tenant's receipt of such notice the monthly rent due thereafter shall be equal to 150% of the Fixed Monthly Rent then in effect. 16.12 CHOICE OF LAW. The laws of the jurisdiction in which the Premises are located shall govern the validity, performance, and enforcement of this Lease. 16.13 ATTORNEYS' FEES. Should either party institute any action or proceeding to enforce any provision hereof or for a declaration of such party's rights or obligations hereunder, the prevailing party shall be entitled to receive from the losing party such amounts as the court may adjudge to be reasonable attorneys' fees and expenses for services rendered to the party prevailing in any such action or proceeding, and such fees shall be deemed to have accrued upon the announcement of such action or proceeding and shall be enforceable whether or not such action or proceeding is prosecuted to judgment. 16.14 WAIVER OF JURY TRIAL. LANDLORD AND TENANT EACH HEREBY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY CLAIM, ACTION, PROCEEDING OR COUNTERCLAIM BY EITHER LANDLORD OR TENANT AGAINST THE OTHER ON ANY MA TTERS ARISING OUT OF OR IN ANY W A Y CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, AND/OR TENANT'S USE OR OCCUP ANCY OF THE PREMISES. 16.15 LIABILITY OF LANDLORD. In the event of any sale or other transfer of Landlord's interest in the Premises, Landlord shall be relieved of all liabilities and obligations of Landlord hereunder arising after the date of such transfer. Notwithstanding anything contained herein to the contrary , neither Landlord nor its officers, directors, members, agents, representatives, employees or affiliates, shall have no personal liability in respect of any of the tenns, covenants, conditions or provisions of this Lease. In the event of a breach or default by Landlord of any of its obligations under this Lease, Tenant, and any persons claiming by, through or under Tenant, shall look solely to the equity of the Landlord in the Premises for the satisfaction of Tenant's and/ or such persons' remedies and claims for damages. 16.16 NO MERGER. There shall be no merger of this Lease, or the leasehold estate created by this Lease, with any other estate or interest in the Premises, or any part thereof, by reason of the fact that the same person, firm, corporation or other entity may acquire or own or hold, directly or indirectly, (i) this lease or the leasehold estate created by this Lease or any interest in this Lease or in any such leasehold estate; and (ii) any such other estate or interest in the Premises or any part thereof. No such merger shall occur unless and until all persons, corporations, firms and other entities having an interest (including a security interest) in (1) this Lease or the leasehold estate created by this Lease; and .(2) any such other estate or interest in the Premises, or any part thereof, shall join in a written instrument effecting such merger and shall duly record the same. 16.17 INTEMRETATION. The captions by which the Articles and Sections of this Lease are identified are for convenience only and shall have no effect upon the interpretation of this Lease. Whenever the context so requires, singular numbers shall include the plural, the plural shall refer to the singular, the neuter gender shall include the masculine and feminine genders, and the terms "Landlord" and "Tenant" and "person" shall include corporations, limited liability companies, partnerships, associations, other legal entities, and individuals. 16.18 RELATIONSHIP OF THE PARTIES. Nothing in this Lease shall create a partnership, joint venture, employment relationship, borrower and lender relationship, or any other relationship between Landlord and Tenant, other than the relationship of landlord and tenant. 16.19 SUCCESSORS. This Lease shall be binding upon and inure to the benefit of the parties hereto and their respective personal and legal representatives, heirs, successors, and assigns. 16.20 MODIFICATIONS. This Lease may not be altered, amended, changed, waived, terminated, or modified in any manner except by a written instrument executed by Landlord and Tenant. 16.21 BROKERAGE FEES. Landlord and Tenant each represent and warrant that they have not employed a broker in connection with the execution of this Lease. Landlord and Tenant shall each indemnify and hold the other harmless from and against any claim or claims for brokerage or other commissions arising from such party having employed a broker contrary to its representation in this Section. 16.22 WAIVER OF REDEMRTION. To the extent permitted by law, Tenant hereby waives any and all rights of redemption with respect to this Lease. Tenant hereby waives any rights it may have to any notice to cure or vacate or to quit provided by any current or future law; provided that the foregoing shall not be deemed to waive any notice expressly provided in this Lease. 16.23 NOT BINDING UNTIL EXECUTED. This Lease does not constitute an "offer" and is not binding until fully executed and delivered by Landlord. 16.24. REASONABLE CONSENT. Wherever Landlord's consent or approval shall be required herein, such consent or approval shall not be unreasonably or arbitrarily withheld or delayed unless otherwise set forth to the contrary in this Lease. 16.25 NO CONTINUOUS OPRERATION. Notwithstanding anything contained in this Lease, expressly or impliedly, to the contrary, and notwithstanding the agreement herein contained for the payment by Tenant of rent, it is specifically and expressly understood and agreed that Tenant shall be under no duty or obligation, either express or implied, to open, or thereafter to continuously conduct, its business in the Premises at any time during the Term. Further, Tenant's failure to open for business in the Premises shall not otherwise entitle Landlord to commence or to maintain any action, suit, or proceeding, whether in law or in equity , relating in any way to Tenant's failure to open or thereafter to continuously conduct its business in the Premises. Without limiting the generality of the foregoing, Tenant shall have the right to close two partial days per year to take inventory and shall, at Tenant's option, be closed Thanksgiving Day, Christmas Day, New Years Day, and Easter. 16.26 MATTERS OF RECORD. This Lease is expressly subject to all matters of record and Tenant hereby agrees to comply with the terms of all agreements and other matters of record. The rights of Tenant set forth herein are subject to the rights of other parties under agreements of record, and the exercise of such rights by such parties shall not constitute a breach under this Lease. 16.27 FINANCIAL ASSURANCE PROVISION. Notwithstanding anything to the contrary contained in this Lease, if at any time during the initial seven (7) years of the Term (measured from the Commencement Date) (the "Financial Assurance Period"), the. "tangible net worth" (as hereinafter defined) of Tenant (as of the time any quarterly or annual financial statement and/or calculation of tangible net worth is due, as provided below) falls below the amount equal to fifty percent (50%) of Tenant's tangible net worth as of January 29, 2000 of Two Hundred Fifty- Five Million Three Hundred Six~-Four Thousand Dollars ($255,364,000.00) (a "Financial Assurance Failure Event"), Tenant shall immediately notify Landlord and, within ten (10) days following such notice from Tenant (or, in the event Landlord becomes aware of a Financial Assurance Failure Event prior to such notice from Tenant, then within ten (10) days following written notice from Landlord) remit to Landlord a sum (in cash or other immediately available funds) equal to the aggregate Fixed Monthly Rent payments scheduled to be paid during the final twelve (12) months of the Initial Term of this Lease (the "Financial Assurance Amount"). The Financial Assurance Amount shall be promptly deposited by Landlord in an interest bearing account selected by Landlord, in Landlord's sole discretion. Notwithstanding anything to the contrary contained herein, any interest which accrues on the Financial Assurance Amount shall be added to and included as part of the Financial Assurance Amount for all purposes under this Section. In connection with the foregoing, on or before the date which is forty-five (45) days following the expiration of each fiscal quarter (other than the last fiscal quarter) of Tenant (it being understood and agreed that Tenant's fiscal year shall end on the Saturday closest to January 31 in each year) during or relating to the Financial Assurance Period , the dates which are three (3), six (6) and nine (9) months, respectively, following the expiration of the previous fiscal year of Tenant), Tenant shall furnish or cause to be furnished to Landlord current financial statements and a calculation of Tenant's then current tangible net worth, all prepared in accordance with generally accepted accounting principles (GAAP) and certified by the Chief Financial Officer of Tenant. In addition, on or before the date which is ninety (90) days following the expiration of each fiscal year of Tenant during or relating to the Financial Assurance Period, Tenant shall (i) furnish or cause to be furnished to Landlord audited, current financial statements prepared in accordance with generally accepted accounting principles (GAAP) and certified by a reputable accounting firm reasonably acceptable to Landlord, and (ii) a calculation of Tenant's then current tangible net worth (certified by Tenant's Chief Financial Officer), prepared in accordance with generally accepted accounting principles (GAAP). Tenant's failure to timely provide any financial statement required pursuant to this Section shall, without further notice, constitute a default under this Lease. Notwithstanding anything to the contrary herein, all financial statements provided to Landlord pursuant to the provisions of this Paragraph shall be subject to the agreements regarding confidentiality set forth in that certain letter agreement dated July 12, 2000 and executed by Landlord' s representative (John Plunkett) on July 13, 2000; provided, however, and notwithstanding the foregoing or any other contrary provision, Landlord may disclose such financial statements to its accountants, attorneys and other representatives and/or agents in connection with the administration of this Lease (which parties shall also maintain such financial statements as confidential) and/or in connection with any litigation or other dispute concerning this Lease (provided Landlord shall not oppose or contest a motion by Tenant to have such documents maintained under seal of the decision making authority). The Financial Assurance Amount shall be held by Landlord, subject to the following provisions of this Section, as security for the faithful performance by Tenant of all of the terms, covenants and conditions of this Lease to be kept and performed by Tenant during the remainder of the Lease Term. If Tenant defaults (beyond applicable notice and cure periods) with respect to any provision of this Lease, including but not limited to the provisions relating to the payment of Fixed Monthly Rent, Additional Rent and other charges payable to Landlord under this Lease, Landlord may (but shall not be required to) use, apply or retain all or any part of the Financial Assurance Amount for the payment of any such sum in default or for the payment of any amount which Landlord may spend or become obligated to spend by reason of Tenant's default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant's default. Notwithstanding anything to the contrary contained in this Lease, Landlord's receipt, use or application of the Financial Assurance Amount shall in no way limit any other right or remedy available to Landlord under this Lease or applicable law or equity . Provided Tenant is not then in default under this Lease beyond applicable notice and cure periods, and Tenant has not previously been in default under this Lease beyond applicable notice and cure periods at any time during the period in which Landlord was in receipt of the Financial Assurance Amount (or any portion thereof), then on the first 1st anniversary of the expiration of the Financial Assurance Period (the "Disgorgement Commencement Date") and on each anniversary of such date thereafter, Landlord shall disgorge to Tenant an amount equal to one-seventh (1/7) of the amount of the Financial Assurance Amount as of the Disgorgement Commencement Date until the Financial Assurance Amount is completely disgorged to Tenant; provided, however, and notwithstanding the foregoing, the seventh (7th) such payment by Landlord to Tenant shall include any remaining portion of the Financial Assurance Amount. In the event Landlord is not required to disgorge the Financial Assurance Amount (or any remaining portion thereof) then, provided such amount is not otherwise used or applied by Landlord in accordance with the other provisions of this Section, Landlord shall return to Tenant (or, at Landlord's option, the last assignee of Tenant's interest hereunder) the remaining balance of the Financial Assurance Amount within thirty (30) days following the expiration of the Term of this Lease. For purposes of this Section, "tangible net worth" shall mean shareholders' equity in Tenant, minus the value of intangible assets, as defined under generally accepted accounting principles (GAAP) (as such definition exists as of November 30, 2000), such as, but not limited to, goodwill, patents and trademarks. 16.28 SELLER'S RECAPTURE RIGHTS. Landlord and Tenant understand that Seller has certain rights of recapture with respect to the Premises in accordance with Section 7 of the Deed Restrictions (herein a "Recapture Right"). In the event that Landlord and Tenant are unable to obtain all necessary governmental permits and approvals prior to the Construction Commencement Date (as defined in the Deed Restrictions) and Seller elects to exercise a Recapture Right as a result of such failure to obtain the permits and commence construction, notwithstanding anything contained herein to the contrary, this Lease shall be null and void and Landlord and Tenant shall look to that certain "Repurchase Agreement" they entered into as of the -day of December, 2000 for their rights and remedies. If, however, Landlord and Tenant have obtained all of the necessary governmental permits and approvals for the construction of the Premises as required by this Lease by the "Construction Commencement Date" and Seller elects to exercise a Recapture Right for the Premises as a result of a violation of Section 7(A) or 7(B) of the Deed Restrictions, then i) Tenant shall have no further liability or obligation under this Lease or the Repurchase Agreement, and ii) Landlord, as its sole and exclusive remedy, shall be entitled to any amounts to be paid by Seller pursuant to the recapture right. In the event Seller exercises its Recapture Right for the Premises as a result of a violation of Section 7(C), 7(D) or 7(E) under the Deed Restrictions, Landlord, as its sole and exclusive remedy shall be entitled to receive the entire amount to be paid by Seller under the Deed Restrictions for recapture of the Premises; in addition, Tenant shall reimburse Landlord the difference, if any, between a) the amount required to be paid by Seller under the Deed Restrictions, and b) the sum of i) the purchase price paid by Landlord for the Premises, plus ii) the unamortized portion of the Development Costs (as defined in the Deed Restrictions) for the Premises as of the date of the recapture, based upon the straight-line method of depreciation over a twenty year period. Upon such payment, this Lease shall terminate and be of no further force and effect. In the event of a recapture of the Premises by Seller, Landlord and Tenant shall cooperate to maximize the value received from Seller. IN WITNESS WHEREOF, the parties have executed this Lease as of the 26th day of April, 2001. WITNESSES LANDLORD: TRANSMILLS,L.L.C., a Nevada limited liability company By: TransMills Management Corp. a Nevada corporation Its: Managing Member /s/ Sherry Harrison By: /s/ John Plunkett Jr Print Name: Sherry Harrison Its: VP /s/ Joanne Lucas Print Name: Joanne Lucas TENANT: STERLING INC. By: /s/ Richard W Miller /s/George S Frankovich Its: Executive Vice President Print Name: George S Frankovich /s/ Jennifer L Ritchey Print Name: Jennifer L Ritchey STATE OF ) COUNTY OF ) BEFORE ME, a Notary Public, in and for said County and State, personally appeared , the of Transcontinental Ventures, Inc., a Nevada corporation, the General Partner of TransKo Limited Partnership, a Delaware limited partnership, the Managing Member of TransMills, L.L.C. a Nevada limited liability company, who acknowledged that he did .sign the foregoing instrument and that the same is his free act and deed, and the free act and deed of said limited liability company. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this day of 2000. Notary Public STATE OF OHIO ) COUNTY OF SUMMIT ) BEFORE ME, a Notary Public, in and for said County and State, personally appeared Richard W Miller, the exec vice pres of Sterling Jewelers Inc. who acknowledged that he did sign the foregoing instrument and that the same is his free act and deed, and the free act and deed of said corporation. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this 16th day of April, 2001. /s/ Jennifer L Ritchey Notary Public [notary stamp] TENANT: STERLING INC. By: Print Name: Print Name: STATE OF NEVADA ) COUNTY OF CLARK BEFORE ME, a Notary Public, in and for said County and State, personally appeared John Plunkett, the Vice President of TransMills Management Corp. a Nevada corporation, the Managing Member of TransMills, LLC a Nevada limited liability company, who acknowledged that he did sight the foregoing instrument and that the same is his free act and deed, and the free act and deed of said limited liability company. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this day 26 day of April, 2001. /s/ Jeanne A Lansford Notary Public [notary stamp] -----END PRIVACY-ENHANCED MESSAGE-----