EXHIBITS August 14, 2023 (2024)

 
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 ELECTRONICALLY FILED Pulaski County Circuit Court Terri Hollingsworth, Circuit/County Clerk 2023-Aug-14 16:04:10 60CV-23-5873 C06D05 : 93 Pages IN THE CIRCUIT COURT OF PULASKI COUNTY, ARKANSAS _________ DIVISIONVENTURES KARMA, LLC PLAINTIFFV. CASE NO. ________JO-ANN STORES, LLC, DEFENDANT EXHIBIT 1 TO COMPLAINT LEASE AGREEMENT BetweenShackleford Crossings Investors, LLC, "Landlord" and Jo-Ann Stores, Inc., "Tenant" ~ . Dated: .'Notem~ ID , 2012 EXHIBIT 1 TABLE OF CONTENTS SECTION 1. EXHIBITS TO LEASE ......................................................................................... 1 SECTION 2. DEFINITIONS ...................................................................................................... l SECTION 3. PREMISES ........................................................................................................... 6SECTION 4. TERM AND OPTIONS TO EXTEND ................................................................. ?SECTION 5. FIXED MINIMUM RENT ................................................................................... 8SECTION 6. PERCENTAGE RENT [INTENTIONALLY OMITTED] .................................. 9SECTION 7. GROSS SALES .................................................................................................... 9SECTION 8. TAXES ................................................................................................................ 11SECTION 9. COMMON AREA COSTS ................................................................................. 13SECTION 10. CONSTRUCTION OF PREMISES ................................................................... 16SECTION 11. USE ..................................................................................................................... 18SECTION 12. COMMON AREAS ............................................................................................ 19SECTION 13. UTILITIES .......................................................................................................... 20SECTION 14. USE VIOLATION .............................................................................................. 20SECTION 15. COTENANCY .................................................................................................... 21SECTION 16. RULES AND REGULATIONS ......................................................................... 23SECTION 17. ALTERATIONS, INSTALLATIONS AND IMPROVEMENTS BY TENANT ............................................................................................................. 24SECTION 18. REPAIRS AND MAINTENANCE .................................................................... 24SECTION 19. INDEMNIFICATION ......................................................................................... 26SECTION 20. WAIVER OF SUBROGATION ......................................................................... 27SECTION 21. CASUALTY AND PUBLIC LIABILITY INSURANCE .................................. 28SECTION 22. SIGNS ................................................................................................................. 29SECTION 23. ASSIGNMENT AND SUBLETTING ............................................................... 30SECTION 24. REPAIR AFTER CASUALTY .......................................................................... 30SECTION 25. CONDEMNATION ............................................................................................ 32SECTION 26. REPRESENTATIONS AND COVENANTS OF LANDLORD ....................... 33SECTION 27. TENANT'S DEFAULT ...................................................................................... 35SECTION 28. RIGHTS OF LANDLORD ................................................................................. 36SECTION 29. LANDLORD'S DEFAULT ................................................................................ 37SECTION 30. MORTGAGE SUBORDINATION .................................................................... 37#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 SECTION 31. NO WAIVER ...................................................................................................... 38SECTION 32. SURRENDER OF PREMISES .......................................................................... 39SECTION 33. SHORT FORM LEASE, COMMENCEMENT DATE AGREEMENT ........... .39SECTION 34. NOTICE .............................................................................................................. 40SECTION 35. HAZARDOUS MATERIALS ........................................................................... .40SECTION 36. LIMITATION OF LANDLORD'S LIABILITY ............................................... .42SECTION 37. DELIVERY OF SITE PLAN ............................................................................ .43SECTION 38. SUBSTITUTE RENT ......................................................................................... 43SECTION 39. PRIOR AGREEMENTS ..................................................................................... 43SECTION 40. NO OPERATING COVENANT ....................................................................... .43SECTION 41. APPLICABLE LAW AND CONSTRUCTION ................................................. 44SECTION 42. UNAVOIDABLE DELAYS .............................................................................. .44SECTION 43. REASONABLE CONSENT ............................................................................... 45SECTION 44. NO PARTNERSHIP ........................................................................................... 45SECTION 45. ESTOPPEL ......................................................................................................... 45SECTION 46. QUIET ENJOYMENT........................................................................................ 45SECTION 47. HOLDING OVER .............................................................................................. 45SECTION 48. BROKERS .......................................................................................................... 46SECTION 49. CAP ON ADDITIONAL RENT ......................................................................... 46SECTION 50. DROP SITE ........................................................................................................ 46SECTION 51. CAPTIONS ......................................................................................................... 46SECTION 52. VARIATION IN PRONOUNS .......................................................................... .46SECTION 53. SECTION REFERENCES ................................................................................ .46SECTION 54. BINDING EFFECT OF AGREEMENT ........................................................... .46SECTION 55. ATTORNEY'S FEES ..........................................................................................46SECTION 56. ACCORD AND SATISFACTION .................................................................... .47SECTION 57. SHOPPING CENTER LEASE .......................................................................... .47SECTION 58. FINANCING CONTINGENCY ........................................................................ .47SECTION 59. DECLARATION AND REA ............................................................................. 47SECTION 60. SIDEWALK SALES .......................................................................................... 47SECTION 61. CONTAINER AREA; CARDBOARD STORAGE .......................................... .47SECTION 62. CART CORRALS .............................................................................................. 48#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 ii LEASE ~bu- This Lease is made as of Novernser \ D , 2012, between Shackleford CrossingsInvestors, LLC, a Delaware limited liability company ("Landlord"), and Jo-Ann Stores, Inc., anOhio corporation ("Tenant"). Landlord and Tenant covenant and agree as follows:SECTION 1. EXHIBITS TO LEASE (a) The following exhibits are attached to and made a part of this Lease, and areincorporated herein by reference: Exhibit A. The description of the lands upon which the Shopping Center islocated. Exhibit B. The site plan showing the location of the Premises, as hereafterdefined, the Shopping Center buildings, Casualty Zone, the Protected Area, the parking areas,driveways and common areas and containing other general information relative to thedevelopment of the Shopping Center (the "Site Plan"). Exhibit C. Landlord's Construction Obligations. Exhibit D. Tenant's Prototype Signage Plans. Exhibit E. Pylon Signs. Exhibit F. The Restricted Uses on the date of this Lease. Exhibit G. Form of Subordination, Non-Disturbance and Attornment Agreement. Exhibit H. Form ofEstoppel Certificate. Exhibit I. Rules and Regulations. Exhibit J. Liens and Exceptions.SECTION 2. DEFINITIONS The terms listed below have the respective meanings as follows: (a) Additional Rent: Tenant's Proportionate Share of Taxes (Section 8), Tenant'sProportionate share of Common Area Costs (Section 9), and Tenant's Proportionate Share ofInsurance (Section 21 ). (b) Anchor Tenant: Wal-Mart Super Center and JC Penney. (b-1) Junior Anchor Tenant: Gordman's and Babies R Us.#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 (c) Commencement Date: (1) the three hundred fifty seventh (357th) day after theDelivery Date, or (2) the day that Tenant opens for and conducts business in the Premises,whichever day first occurs. Unless Tenant otherwise opens for business, the CommencementDate will not occur during the period from November 15 to January 31 or during any period thatTenant has not received all required governmental permits and approvals necessary for Tenant'sWork, provided Tenant promptly applies for and diligently pursues obtaining such permits andapprovals. Should Tenant choose to open during the period November 15 to January 31, thenTenant shall pay Substitute Rent until the next following February 1. (d) Common Areas: the parking areas, driveways, aisles, sidewalks, malls (whetherenclosed or unenclosed), truck storage areas, and other common, service and related areas andimprovements within the Shopping Center, whether open to the public generally or for the nonexclusive use of one or more tenants, and whether or not shown on Exhibit B. (e) Declaration: that certain Declaration of Restrictions and Grant of Easem*ntsgoverning the Shopping Center, as amended. (f) Default Rate: an annual rate of interest equal to three and one half percentagepoints over the three month London Interbank Offered Rate (LIBOR), as published in the WallStreet Journal as of the date of default. (g) Delivery Date: the date that Landlord delivers the Premises to Tenant with all ofthe Delivery Requirements satisfied. (h) "Delivery Requirements" means the following: (1) Landlord's construction obligations with respect to the Premises (set forth on Exhibit C) are substantially complete; (2) the Premises is delivered to Tenant free and clear of any Hazardous Material; (3) Intentionally omitted; (4) all Common Areas in the Shopping Center (with the exception of those areas immediately surrounding the Demised Premises and as described in Exhibit C) have been substantially completed in accordance with all applicable Laws, including, without limitation, all delivery access, paving and striping of the parking areas, and landscaping; and (5) Intentionally omitted. (i) Estimated Delivery Date: Landlord's good-faith estimate of the Delivery Date isMarch 1, 2013. (j) Gross Leasable Area: the number of square feet of floor area on all levels(including any mezzanines, basem*nts or balconies that are used for retail sales), measured fromthe exterior face of exterior walls and of service corridor walls, the exterior building line for#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 2 sidewalk or mall frontage, and the center line of party walls, with no deduction for columns, stairs, elevators, or any interior construction or equipment but excluding any mezzanines, basem*nts or balconies that are not used for retail sales and excluding free-standing buildings which maintain their own parcels. All office space is to be included in the Gross Leasable Area oft'iie Shopping Center. With respect to the Shopping Center, the Gross Leasable Area is the total constructedGross Leasable Area available for the exclusive use and occupancy of tenants within theShopping Center, whether or not actually rented or open for business, as the same exists fromtime to time. With respect to the Premises, the Gross Leasable Area will be the actual completed GrossLeasable Area, as the same exists from time to time. Any change in Gross Leasable Area, whether of the Premises or Shopping Center, will bedeemed in effect on the first day of the next succeeding month following such change. Landlordcovenants to advise Tenant of any increase or decrease in the Gross Leasable Area of theShopping Center due to the construction or demolition of any buildings in the Shopping Centerwithin a commercially reasonable time following any such change, together with a current SitePlan reflecting such change. Landlord represents and warrants that to the best of Landlord's knowledge the GrossLeasable Area of the Shopping Center intended for exclusive use and occupancy as shown in theSite Plan is at least 286,636 square feet. (k:) Intentionally omitted. (1) Hazardous Materials: See Section 35. (m) HVAC: heating, ventilating and air conditioning. (n) Landlord's Work: the work to be performed by or at the direction of Landlord asset forth on Exhibit C. (o) Laws: any and all laws, codes, ordinances or regulations passed into existence byany Public Entity now or hereinafter in existence. (p) Lease Year: a period of 12 consecutive calendar months during the Term. Thefirst Lease Year (or Lease Year One) begins on the first day of February next following theCommencement Date, unless the Commencement Date is the first day of February, in whichevent the first Lease Year begins on the Commencement Date. The first Lease Year will includethe first Partial Lease Year, if any. Rent and any limitations on such Rent for purposes of anyPartial Lease Year will be proportionately adjusted based upon the actual number of days of suchPartial Lease Year in relation to the number of days in a full Lease Year. (q) Intentionally omitted.#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 3 (r) Partial Lease Year: the period, if any, of fewer than 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 12 consecutive calendar months between the last day of the last Lease Year and the expiration of the Tenn. (s) Intentionally omitted. (t) Permitted Use: Subject to existing exclusive uses and covenants of record, Tenant may use the Premises for the sale of fabrics of all kinds; goods sold by the yard; patterns; knitting supplies, needlepoint, macrame; art materials and supplies; finished crafts, craftmaterials and supplies; educational aids, materials and supplies; yarns; all types of notions; floralproducts, artificial flowers and accessories; scrapbooks and scrapbooking supplies and materials; framed artwork; picture frames, framing (both readymade and custom made) and framingmaterials and supplies; fabric care items; foam products; ceramics; wearable art and wearable artsupplies; miniatures, dolls, hobby items; sewing machines, sewing machine furniture; irons,ironing boards; seasonal merchandise; custom services and custom products using arts and craftand sewing components including, but not limited to, quilting, bow-making, window treatments,floral design, fashion sewing, instructional classes, materials and services; and the incidental saleof (defined as no more than 10% of any individual following item) baskets, wicker items;housewares; linens, curtains, towels, pillows; drapery and upholstery materials; draperies,drapery hardware; blinds, shades, shutters and window treatments; do-it-yourself products andaccessories; bridal apparel and accessories, wedding supplies; gift items, cards, party supplies;paper goods, stationery; candles, candlesticks, brass and pottery; indoor and outdoor housedecorating products and accessories; furniture; prepackaged and unpackaged food and foodproducts, coffee, tea, and assorted beverages; instructional books and tapes; children's books;toys; vacuum cleaners, lamps, small household appliances; products, accessories related to all ofthe foregoing, and other items and services customarily offered for sale by a fabric, craft orgeneral merchandise store, and such other related merchandise and services typically offered in amajority of the stores operated by Tenant under the name Jo-Ann, Jo-Ann Fabrics and Crafts orsuch other name under which Tenant may operate. (u) Plans and Specifications: the final plans and specifications for the construction orremodeling of the Premises, in the form of Exhibit C, as the same may be modified by writtenagreement by and between Landlord and Tenant. (v) Premises: a portion of the Shopping Center as shown on the Site Plan and as morefully described in Section 3(a)(i) below. (w) Protected Area: the area depicted and labeled on the Site Plan. (x) Protected Use: the sale of fabrics of all kinds; fabrics sold by the yard; upholsterymaterials (except as may be sold by a seller of custom or made to order furniture); scrapbooksand scrapbooking materials and supplies; patterns, yarns and knitting supplies; needlepoint;macrame; artificial flowers and accessories; arts and crafts materials and supplies; all types ofnotions; custom framing and framed artwork (except as may be sold by an art/framing orphotography studio in the Shopping Center, not to exceed 4,000 sq. ft.); sewing machines;#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 4 sewing machine furniture; and products, accessories and services related to all of the foregoing ("Protected Use Items"). (y) Public Entity: the federal, state, county, municipal or other governmental unit, however denominated, and any agency, division, department or public official thereof, now or hereafter having jurisdiction, in any respect, over the Premises, the Shopping Center or Shopping Center. (z) REA: that certain Reciprocal Easem*nt Agreement governing the ShoppingCenter and adjacent property, to be entered into between Landlord and the owner of the adjacentparcel depicted and labeled on the Site Plan. (aa) Rent: Fixed Minimum Rent, Tenant's Proportionate Share of (i) Common AreaChanges; (ii) Taxes; and (iii) Insurance Costs, Substitute Rent and all other monetary obligationsof Tenant to Landlord under this Lease. To the extent either party is obligated to pay orreimburse the other party for any fees or charges in this Lease, including but not limited toattorney fees, such reimbursing party shall only be obligated for such fees to the extent that suchfees are reasonable. (bb) Shopping Center: the Shackleford Crossing Shopping Center located at LittleRock, Arkansas consisting of all buildings including the Premises and Common Areas, and otherimprovements located within the Shopping Center and identified on Exhibit A. Landlord shallhave the right, from time to time, in its sole discretion, to increase, reduce and/or otherwise alterthe Shopping Center, including, without limitation, the sale and/or acquisition of land, whetheror not currently subdivided, and/or the buildings comprising the Shopping Center. Additionally,notwithstanding anything contained herein to the contrary, for the limited purpose of calculatingthe Common Area Costs, Taxes, and Insurance Costs, Landlord shall have the right, from time totime, in its sole discretion, to include or exclude parcels or areas adjacent to or within theShopping Center, which may be owned by Landlord or an entity other than Landlord, including,without limitation, Landlord's affiliates, subsidiaries, joint venture partners or parent entity;prm,ided that the calculation of Tenant's Proportionate Share of the Common Area Costs, Taxes,and Insurance Costs shall be adjusted accordingly to include or exclude, as the case may be, theGross Leasable Area of the buildings located within such parcels or areas. (cc) Intentionally omitted. (dd) Sign Drawings: the portion of the final plans and specifications for Tenant's pylonsigns and exterior sign(s) on or about the Shopping Center which are part of Exhibits D and E, asthe same may be modified by written agreement by and between Landlord and Tenant. (ee) Substantially complete: complete with the exception of minor "punchlist" itemsthat can be completed without interfering with the performance of Tenant's Work. (ff) Substitute Rent: an amount equal to 50% of the Fixed Minimum Rent in lieu ofthe Fixed Minimum Rent (but Tenant shall continue to pay all Additional Rent) required to bepaid hereunder. Tenant is not obligated to pay any Fixed Minimum Rent (but Tenant shallcontinue to pay all Additional Rent) at any time when Substitute Rent is payable pursuant to anyprovision of this Lease.#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 5 (gg) Tenant's Delay: any delay caused solely by the acts or omissions of Tenant inciuding, without limitation, Tenant's failure to perform any of Tenant obligations under this Lease to the extent such performance by Tenant is necessary in order for Landlord to perform Landlord's obligation under this Lease. (hh) Tenant's Proportionate Share: a fraction, the numerator of which is the GrossLeasable Area of the Premises and the denominator of which is the Gross Leasable Area of theShopping Center. Notwithstanding the foregoing, if any portion of Common Area Costs, Taxes,or Insurance Costs are furnished or directly payable by an individual tenant or occupant asopposed to Landlord, the cost of the item(s) furnished or payable by such tenant or occupantshall not be included in Common Area Costs, Taxes, or Insurance Costs, as the case may be, andthe square footage of the tenant or occupant furnishing or paying for such item(s) shall not beincluded in the calculation of Tenant's Proportionate Share of such item(s). Tenant'sProportionate Share shall be adjusted in the event of any increase or decrease in the GrossLeasable Area of all buildings within the Shopping Center or the ground floor area of thePremises. (ii) Tenant's Work: the work, if any, to be performed by or at the direction of Tenantin finishing the Premises as provided in the Plans and Specifications. (jj) Term: the Initial Term, as hereafter defined, and each Extended Term, as hereafterdefined, if any, and any period of holdover tenancy. (kk) Termination Date: July 1, 2013. (11) Intentionally omitted. (mm) Unavoidable Delay: A material delay beyond the reasonable control of thedelayed party caused by labor strikes, lock-outs, labor troubles, industry-wide inability toprocure materials, failure of power, extraordinary restrictive governmental laws or regulations(such as gas rationing), riots, war, military or usurped governmental power, acts of terrorism,sabotage, material fire or other material casualty, or an extraordinary and material act of God(such as a tornado or earthquake), but excluding inadequacy of insurance proceeds, litigation orother disputes, financial inability, lack of suitable financing, and delays of the delayed party'scontractor unless otherwise caused by an event of Unavoidable Delay.SECTION 3. PREMISES (a) For the Rent and upon the terms and conditions contained in this Lease, Landlorddemises, leases and lets to Tenant during the Term, and Tenant rents and hires from Landlordduri.llg the Term, the following described property: (1) The Premises, located within the Shopping Center, on the Shopping Center, consisting of space having approximately 14,000 square feet of Gross Leasable Area, with minimum frontage of 75 feet (to the center of the side walls), identified by street address to be identified prior to the Commencement Date and outlined on the Site Plan (the parties agree that if Tenant installs a mezzanine in the Premises that is not open to the#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 6 public, such space shall not be included in the Gross Leasable Area of the Premises); and (2) The right, in common with Landlord and all other tenants and occupants of the Shopping Center granted similar rights by Landlord, to the non- exclusive use of all Common Areas. At any time up to 60 days after the Commencement Date, either party has the right tomeasure the Premises. If the parties cannot agree to the measurement, then representatives ofLandlord and Tenant will jointly measure the Premises. If such representatives cannot agree,then the Premises will be measured by an architect jointly selected by Landlord and Tenant,whose fee will be paid equally by Landlord and Tenant, and the measurement of the floor area bysuch architect will bind Landlord and Tenant. If actual field measurements indicate a GrossLeasable Area smaller than set forth above in Section 3(a)(l), then Rent will be reduced on thebasis of the actual field measurements. If actual field measurements indicate a Gross LeasableArea larger than set forth above in Section 3(a)(l), then there shall be an adjustment in Rent,provided that such adjustment shall not exceed one percent (1 %) unless Tenant requested that theGross Leasable Area be increased. (b) Subject to the reasonable consent of Tenant, Landlord expressly reserves the rightto maintain, use, repair and replace the pipes, ducts, conduits, utility lines, tunneling and wiresleading through the ceiling, plenum areas, columns, partitions, and within or under the floor slabscomprising part of the Premises, but only to the extent that such installations (i) are reasonablynecessary to serve the Premises or other parts of the Shopping Center, (ii) are installed inlocations that will not unreasonably interfere with Tenant's use of the Premises or Tenant'spermitted signage, (iii) are not exposed within the selling area of the Premises, and (iv) do notdecrease the ceiling height of the Premises. In exercising the foregoing right, Landlord shall notunreasonably interfere with the use or occupancy of the Premises or commence any such workwithout first notifying Tenant, at least five (5) days in advance (except in the event of anemergency, in which event no such notice shall be required), of the commencement of suchwork.SECTION 4. TERM AND OPTIONS TO EXTEND (a) The Initial Term begins on the Commencement Date and ends on the last day ofthe tenth (10th) Lease Year, unless sooner terminated as herein provided. (b) Provided Tenant is not then in default of this Lease beyond applicable cureperiods, Landlord grants Tenant the right and option to extend this Lease for four (4) additionalperiods of five (5) years each (individually called an "Extended Term" and collectively called"Extended Terms"), commencing upon the expiration of the Initial Term or such prior ExtendedTerm, as the case may be. Each Extended Term shall be upon the same terms, covenants andconditions as the Initial Term except (i) for the option to extend then exercised, (ii) for suchchanges, if any, in Rent or other Tenant charges as are expressly set forth in this Lease, and (iii)that the Premises will be provided in their then existing condition, on an "as-is" basis at the timethe applicable extension term commences, and Tenant shall not be entitled to any construction,buildout or other allowances with respect to the Premises during the Extended Term.#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 7 (c) Tenant must deliver written notice to Landlord of its election to extend this Lease for an Extended Term on or before the date that is 180 days before the expiration of the Term. If Tenant fails to timely deliver such notice, the Lease shall expire as of the end of the then current Tenn. (d) Intentionally omitted. SECTION 5. FIXED MINIMUM RENT (a) From and after the Commencement Date, Tenant shall pay to Landlord, withoutnotice, demand or offset, except as otherwise expressly permitted in this Lease, at the addressherein specified for notices to Landlord, all Rents, including without limitation, Fixed MinimumRent for the Premises as follows: (1) During Lease Years One through Five of the Initial Term at the rate of $10.50 per square foot in equal monthly installments of $12,250.00; and (2) During Lease Years Six through Ten of the Initial Term at the rate of $11.50 per square foot in equal monthly installments of$13,416.67; and (3) During the first five-year Extended Term at the rate of $12.55 per square foot in equal monthly installments of$14,641.67; and (4) During the second five-year Extended Term at the rate of $13.68 per square foot in equal monthly installments $15,960.00; and (5) During the third five-year extended term at the rate of $14.91 per square foot in equal monthly installments of $17,395.00; and (6) During the fourth five-year extended term at the rate of $16.25 per square foot in equal monthly installments of$18,958.33. (b) Tenant must pay monthly installments of Fixed Minimum Rent in advance on orbefore the first day of each month during the Term, commencing on the first day of the firstmonth next following the Commencement Date (unless the Commencement Date is the first dayof the month, in which event the first monthly installment shall be due on the CommencementDate). Notwithstanding the foregoing, Landlord must invoice Tenant, which invoicing will notoccur before the Commencement Date, for the first monthly installment of Pixed Minimum Rent.In no event will such installment be due until ten days after Tenant's receipt of this initialinvoice. Fixed Minimum Rent for the partial month, if any, after the Commencement Date willbe computed on a per diem basis (assuming a 30-day month), and Tenant must pay the FixedMinimum Rent for such partial month concurrently with the first monthly installment. If Tenantfails to pay Rent on the due date and Landlord notifies Tenant in writing of such failure twice inany Lease Year, then if Tenant fails to pay Rent on the due date thereafter in the same LeaseYear, then the Landlord, in addition to the Rent then owed, is entitled a late fee of $100 for suchthird late payment and any such other late payment of Rent thereafter during that Lease Year.#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 8 SECTION 6. PERCENTAGE RENT [INTENTIONALLY OMITTED] SECTION 7. GROSS SALES (a) "Gross Sales" means the entire amount of the actual receipts, whether cash orotherwise, from all sales of merchandise and services for all business conducted in, on or fromthe Premises, including mail or telephone orders received at the Premises and filled from thePremises or elsewhere (but excluding mail, telephone, internet or other orders not originated orfilled at the Premises and including income to Tenant from sales by any assignees, sublessees,concessionaires or licensees of Tenant located at or on the Premises). Each sale upon installmentor credit shall be treated as a sale for the full amount thereof in the month during which such saleshall be made, irrespective of the time when Tenant shall receive payment (whether full orpartial) from its customers. Layaway sales, so called, shall be included in the Gross Sales of therespective computation period only to the extent of payments received during that computationperiod. Notwithstanding the foregoing, Tenant shall (x) not be obligated to verify, (y) not beliable for the accuracy or inaccuracy of, and (z) not be placed in default and this Lease shall notbe tenninated due to any Gross Sales reported or not reported by any assignee, sublessee,concessionaire or licensee of Tenant. (b) Notwithstanding anything to the contrary, the following are excluded from GrossSales: (1) sums collected and paid out for any sales tax or excise tax imposed by any duly constituted governmental authority; (2) the value or price of merchandise exchanged between the stores of Tenant, or the affiliates of Tenant, if any, where such exchange of merchandise is made solely for the convenient operation of the business of Tenant or the affiliate of Tenant and not for the purpose of consummating a sale which has been made at, in, from or upon the Premises, or for the purpose of depriving Landlord of the benefit of a sale which otherwise would be made at, in, from or upon the Premises; (3) the amount of returns to shippers or manufacturers; (4) sales to employees made at a discount not to exceed two percent (2%) of Gross Sales; (5) non-sufficient funds check charges or financing charges to customers whether or not separately stated or billed not to exceed two percent (2%) of Gross Sales; (6) service charges to customers who buy a budget or deferred payment plan; (7) revenue from gift certificates or gift cards until redeemed at the Premises; (8) revenue from vending machines in non-sales areas used solely for the benefit of employees;#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 9 (9) the amount of any cash or credit refund made upon any sale where the merchandise sold, or some part thereof, is thereafter returned by the purchaser and accepted by Tenant; (10) sales of fixtures; (11) all sums and credits received in settlement of claims for loss or damage to merchandise; (12) non-retail bulk sales of merchandise outside of the ordinary course of business on the Premises; (13) tax exempt sales or merchandise donated or sold at a discount to charitable or non-profit organizations; ( 14) the value attributed to merchandise taken in trade; (15) referrals to affiliates of or other divisions of Tenant; (16) fees for gift wrapping, mailing and other customer services provided on a not for profit basis; (17) sales of lottery tickets, special event tickets and the like (but the commissions paid to Tenant shall be included in Gross Sales); (18) the amount of credit sales and credit accounts incurred at the Premises which are written off as bad debts and deducted as an expense not to exceed two percent (2%) of Gross Sales; and (19) sales by any sublessee, concessionaire or licensee in the Premises, except that any payments to Tenant by such entity will be included in Gross Sales. (c) At any time within two years after the close of each Lease Year and Partial LeaseYear, but not more often than once with respect to any Lease Year and Partial Lease Year,Landlord may cause an audit to be made by any accountant designated in writing by Landlord ofall of the books of account, documents, records, returns, papers and files of Tenant relating toGro~s Sales for such Lease Year made at, in, on or from the Premises. Tenant, upon at least 10days' prior request of Landlord, shall make all such records available for such examination at theaddress specified in this Lease for notices to Tenant during regular business hours. Landlordmust hold in strict confidence any information obtained from all such records and reportsexamined by it or by its designated accountant. Tenant shall pay to Landlord the amount of anyunderpayment revealed by such audit upon 30 days notice of such underpayment. If Landlordmakes an audit for any Lease Year or Partial Lease Year, and the Gross Sales shown by Tenant'sstatement for such Lease Year or Partial Lease Year have been understated by more than 3%,then Tenant, in addition to immediately paying to Landlord the full amount of any underpaymentas determined by such audit, must pay to Landlord the reasonable cost of such audit, not to#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 10 exceed $1,000; otherwise the audit will be at Landlord's sole cost and expense. Tenant makes no representation or warranty as to the sales that it expects to make in the Premises. (d) The Gross Sales of any Lease Year or Partial Lease Year, as the case may be, and the Substitute Rent due thereon, if any, have no bearing on or connection with the Gross Sales of any other Lease Year or Partial Lease Year. SECTION 8. TAXES (a) Landlord covenants and warrants that the entire Shopping Center will be locatedon tax parcels to be identified prior to the Commencement Date (the "Tax Parcel(s)"), that theTax Parcels shall not extend beyond the perimeter of the Shopping Center and that theimprovements comprising the Shopping Center (including the Premises and Common Areas)will be the only improvements located thereon. Once or twice per Lease Year, depending onwhen tax bills are issued by the government authority, Tenant must pay to Landlord each yearduring the Term Tenant's Proportionate Share of real estate taxes ("Taxes") and assessmentsimposed or levied upon the Tax Parcel(s) comprising the Shopping Center and paid by Landlordduring each year of the Term, after reducing Taxes by: (i) the amount of any contributions forTaxes paid by any party having the right to use the Common Areas of the Shopping Center otherthan tenant, occupant and licensees, and (ii) any rollback, discount for timely or early paymentactually received by Landlord, credit or reduction that has been granted or issued by any taxingauthority or other governmental group or agency. Notwithstanding the foregoing, if thePremises, or a portion of the Shopping Center including the Premises, is separately assessed,then Tenant will pay, the Taxes for the separately assessed parcel. Taxes shall include taxes onrents assessed in lieu, or partially in lieu of real estate taxes based on such separately assessedparcel. Landlord estimates Tenant's Proportionate Share of Taxes for the first Lease Year to beapproximately $1.80 per square foot of Gross Leasable Area of the Premises. (b) Tenant will pay to Landlord in 12 'equal installments, each in advance on the firstday of each and every calendar month, an estimated sum, which sum from the time Tenant opensfor business in the Premises through the end of the first full calendar year of the Initial Term isestimated to be $1.80 per square foot per year prorated for any partial calendar year multipliedby the Gross Leasable Area of the Premises. This estimated sum is subject to annual adjustmentsby Landlord to reflect actual changes in the Taxes. (c) Within 30 days after the end of each Lease Year, Landlord must provide Tenantwith a statement assessing and prorating the Taxes, together with copies of receipted tax bills forwhich payment is sought and reasonable verification for the computation of Tenant'sProportionate Share. Tenant must pay to Landlord, within 30 days of such receipt, anydeficiency owed to Landlord. (d) If Tenant's estimated payments are in excess of Tenant's Proportionate Share inany Lease Year, then such excess will be applied to the following Lease Year unless such LeaseYear is the final Lease Year of Tenant's occupancy, in which case Landlord must refund suchoverpayment to Tenant within 30 days after the end of such Lease Year. (e) Intentionally omitted.#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 11 (t) In no event will Tenant pay for Taxes for a time period longer than the Term. Forexample, if the Term is 10 years, then notwithstanding if the Taxes are paid in advance,contemporaneously, or in arrears to the taxing authority, Tenant will reimburse Landlord forTaxes paid during the 10 years of the Term, regardless of when such Taxes are levied or the timeperiod for when such Taxes are placed on the Shopping Center or the Premises. (g) If Landlord is not contesting such Taxes, Tenant, at its own cost and expense, hasthe right to undertake by appropriate proceedings to review or contest any Taxes levied orassessed with respect to the Tax Parcel for any tax year during the Term in the event the Tenant'srepresenting at least 70% of the Gross Leasable Area of the Shopping Center agree. Landlordhas no right to pay the same during the pendency of such proceedings, except to the extentnecessary to avoid forfeiture, so long as Tenant has first provided Landlord with a bond or othersecurity, reasonably satisfactory to Landlord, in an amount equal to the Taxes so contested, plusany penalty or interest resulting from nonpayment thereof. Landlord must sign and deliver anydocuments required to enable Tenant to prosecute any such proceedings. Any refund received asa result of such proceedings shall be applied first to reimburse Tenant for its expenses ofprosecuting such proceedings, including reasonable attorney's fees, second to Tenant asproportional reimbursem*nt for Taxes paid by Tenant to Landlord for the tax year or years whichare the subject of such proceedings, and the balance shall become the property of Landlord. Ifanyone other than Tenant (including Landlord) successfully contests such Taxes, the resultingrefund, if any, after deduction of expenses for conducting such proceedings, shall be proratedand Tenant's Proportionate Share paid to Tenant. Any increase in such Taxes incurred as a resultof such proceedings for the tax year contested by Tenant shall be paid by Tenant and the Tenant'sconsenting to such contest on a pro-rata basis. (h) If any Taxes may be paid in installments, and, subject to the exclusions below,only the installments coming due during the Term will be included within Taxes. Landlord mustuse commercially reasonable efforts to minimize the Taxes assessed against the Tax Parcel. (i) Notwithstanding anything to the contrary, the following are excluded from Taxes: (1) The amount of Taxes attributable to any increase in the assessed value of the Tax Parcel that is directly attributable to tenant improvements and tenant space completion work performed after the date of this Lease (whether by Landlord or by any other party) that constitutes "above standard" quality tenant improvements, provided that (A) all current buildings and improvements in the Shopping Center or as otherwise shown on the Site Plan, including without limitation Tenant's initial leasehold improvements as reflected in the Plans and Specifications, shall be deemed "standard" quality tenant improvements for all purposes of this subparagraph, and (B) this subparagraph shall be applicable only if the tax assessment (or the Public Entity's backup documentation in support of the tax assessment, such as appraisal reports) identifies the basis for the applicable increase in the assessed value of the Tax Parcel as being attributable to specified tenant improvements or tenant space ·completion work;#2349 Little Rock, ARShackleford CrossingExecution Version 10/30/12 12 (2) Any portion of the Taxes in the nature of fees, charges or assessments for governmental services or improvements directly related to the initial construction or any alteration, expansion or rehabilitation of the Shopping Center or other improvement of the Tax Parcel; (3) Any impact fee, user fee, exaction fee, environmental fee or other tax paid as a prerequisite to construction of the Shopping Center, or construction of any addition or improvement thereto (other user fees being expressly included in taxes); (4) Any assessment, bond, tax, or other finance vehicle that is (A) imposed directly as a result of Landlord's initial construction of the Shopping Center, or (B) used to fund construction of additions or improvements to the Shopping Center; and (5) Any penalty, interest or other charge attributable to Landlord's late or delinquent payment of Taxes, provided Tenant has timely paid Tenant's Proportionate Share of Taxes. (j) Tenant must pay before delinquency all municipal, county and state taxesassessed during the Term against any leasehold interest and personal property of any kind,owned by or placed in, upon or about the Premises by Tenant.SECTION 9. COMMON AREA COSTS (a) In addition to payment of the Fixed Minimum Rent, Tenant must pay to LandlordTenant's Proportionate Share of Landlord's reasonable costs for the operation, maintenance, andrepair of the Common Areas ("Common Area Costs"), after reducing such Common Area Costsby (i) the amount of any contributions toward Common Area Costs paid by any party not atenant of the Shopping Center; and (ii) all fees and revenue collected or paid to Landlord forparking in, at, on, near or around the Shopping Center. Tenant must pay to Landlord in 12 equalinstallments, each in 

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