EXHIBIT 10.36
EXECUTIVE ORIGINAL
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SAN GERONIMO GOLF COURSE
SAN XXXXXXXX
XXXXX COUNTY
CALIFORNIA
L E A S E
NATIONAL GOLF OPERATING PARTNERSHIP, L.P.
Landlord
and
EVERGREEN ALLIANCE GOLF LIMITED
Tenant
Dated as of December 17, 1996
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SAN GERONIMO GOLF COURSE
SAN XXXXXXXX
XXXXX COUNTY
CALIFORNIA
LEASE
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THIS LEASE ("Lease"), dated for reference purposes only December 17,
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1996 is entered into by and between NATIONAL GOLF OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership ("Landlord"), and EVERGREEN ALLIANCE GOLF LIMITED,
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a Texas limited partnership ("Tenant"). This Lease consists of the Basic Lease
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Provisions, the Detailed Lease Provisions and Exhibits A through H, all of which
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are incorporated herein by this reference. Capitalized terms used herein have
the meanings assigned to such terms in Exhibit A.
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BASIC LEASE PROVISIONS
1. Facility: Means the Leased Property consisting of an 18-hole golf course,
clubhouse, driving range and related facilities located on the Land. The
Facility may also be referred to herein as the "Golf Club" or "Golf
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Course".
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2. Commencement Date: Means December 18, 1996.
3. Term: Twenty (20) years commencing on the Commencement Date.
4. Initial Base Rent: Means $624,691.
5. Fiscal Year: Means the 12-month period from January 1 through December 31
of each year of the Term, or the applicable portions of the first and last
Fiscal Years.
6. Annual Base Rent: Means, with respect to the Fiscal Year commencing on the
Commencement Date, the Initial Base Rent. On January 1, 1998, and on
January 1 of each following Fiscal Year through and including January 1,
2002, the Annual Base Rent shall be equal to the Annual Base Rent
applicable to the immediately preceding Fiscal Year multiplied by the
annual percentage increase in the Consumer Price Index ("CPI") from the
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immediately preceding Fiscal Year; provided, however, the CPI increase in
Annual Base Rent for any Fiscal Year pursuant to the terms of this Section
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7 shall not exceed five percent per annum. The Annual Base Rent for the
-
Fiscal Year commencing on January 1, 2003, and continuing for each Fiscal
Year for the balance of the Term of this Lease shall be the amount of the
Annual Base Rent for Fiscal Year ending December 31, 2002, with no CPI
increase.
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7. Applicable Percentages:
With respect to Course Revenue, means:
For the first Fiscal Year (1996): 30%
For the second Fiscal Year (1997): 30%
For the third Fiscal Year (1998): 31%
For the fourth Fiscal Year (1999): 32%
For the fifth Fiscal Year (2000): 33%
For the sixth Fiscal Year (2001) and for each Fiscal Year
throughout the Term: 34%
With respect to Other Revenue, means 8% for each Fiscal Year
throughout the Term:
8. Additional Rent: Means the amount, if any, by which (a) the sum of:
(i) all Course Revenue for any Fiscal Year multiplied by the
Applicable Percentage of Course Revenue; plus
(ii) all Other Revenue for any Fiscal Year multiplied by the
Applicable Percentage of Other Revenue
exceeds (b) the Annual Base Rent for such Fiscal Year. (See Section 3.3 of
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the Detailed Lease Provisions.)
9. Address for Payments:
Landlord:
National Golf Operating Partnership, L.P.
c/o National Golf Properties, Inc.
0000 00xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
(See Section 3.1 of the Detailed Lease Provisions.)
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10. Addresses for Notices:
Tenant:
Evergreen Alliance Golf Limited
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Chairman and CEO
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Landlord:
National Golf Operating Partnership, L.P.
c/o National Golf Properties, Inc.
0000 00xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
General Counsel
(See Section 26.8 of the Detailed Lease Provisions.)
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11. Within 45 days after the end of the third Fiscal Year of the Term and
within 45 days after the end of each Fiscal Year thereafter, Tenant shall
fund the Capital Improvement Account by an amount calculated as 2% of the
Total Revenue for such Fiscal Year. Tenant hereby grants to Landlord a
security interest in the Capital Improvement Account. Tenant shall keep the
Capital Improvement Account and all funds therein separate from Tenant's
other accounts and funds. Tenant and Landlord shall enter into a separate
agreement between themselves and the depository bank to effectuate such
security interest. Tenant may submit an annual detailed budget for capital
improvements or capital replacements (collectively, "Capital Expenditures")
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it proposes to make to the Leased Property, which budget will be subject to
approval by Landlord not to be unreasonably withheld or delayed (the
"Approved Cap Ex Budget"). Tenant shall only use funds from the Capital
----------------------
Improvement Account to fund Capital Expenditures to the Facility. Tenant
may withdraw funds from the Capital Improvement Account only: (i) to the
extent consistent with the Approved Cap Ex Budget preserving line item
integrity on a per project basis within 110% of the amount specified or
(ii) as otherwise approved in writing by Landlord, which approval shall not
to be unreasonably withheld or delayed. Tenant shall provide Landlord with
such information as Landlord may reasonably request to confirm the
application of funds as provided in this Section 11. Tenant shall cause all
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amounts in the Capital Improvement Account to be expended prior to the
expiration of the Term or the earlier termination of this Lease. Tenant
shall pay to Landlord any unused amounts remaining in the Capital
Improvement Account upon the expiration of the Term or earlier termination
of this Lease.
12. Reference is made to that certain Purchase and Sale Agreement by and
between Landlord (as successor-in-interest to Tenant) and C&N Corporation,
a California corporation ("Seller"), dated as of August 19, 1996, as
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amended (the "Purchase Agreement"). Landlord agrees to reasonably enforce
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on Tenant's behalf the indemnities, covenants, representations and
warranties made by Seller in favor of Landlord under the Purchase
Agreement. Tenant and Landlord acknowledge that Tenant negotiated the
material terms and conditions of the Purchase Agreement and, except with
respect to the structural engineering condition of the improvements
located at the Leased Property, Tenant has conducted its own due diligence
in connection with the ownership and operation of the Leased Property and
that Landlord is relying on Tenant's due diligence and investigations with
respect to the ownership and operation of the Leased Property. Tenant
hereby represents and warrants to Landlord that Tenant has disclosed to
Landlord all material
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reports, analyses, reports, studies and information obtained by Tenant in
connection with its due diligence investigations of the Leased Property.
13. Title Policy: Shall mean that certain ALTA Owner's Policy of Title
Insurance (Reference No. 216444) ("Title Policy") issued by Old Republic
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Title Company ("Title Company") in connection with Landlord's purchase of
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the Leased Property from Seller. Tenant may elect to cause the Title
Company to issue, at Tenant's cost, a leasehold policy of title insurance
in a form substantially similar to the Title Policy insuring Tenant's
interest in the leasehold estate created by this Lease.
14. Notwithstanding any other provision in this Lease to the contrary, Tenant
shall complete those certain initial capital improvements listed on Exhibit
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"F" attached hereto ("Initial Capital Improvements") in accordance with the
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"Budget" set forth on Exhibit "F." The Budget shall not exceed the amounts
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set forth on Exhibit "F" and the Budget shall not include any overhead
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fees, general and administrative costs, nor any other similar fees, costs
or charges payable to Tenant or any of its Affiliates in connection with
the completion of the Initial Capital Improvements. Upon Tenant submitting
to Landlord invoices, receipts or other documents evidencing costs and
expenditures in accordance with the Budget and accompanied by appropriate
waivers or releases of mechanics' and materialmen's liens, Landlord shall
pay to Tenant the amount of such costs and expenditures. As of the date of
such payment by Landlord, the Annual Base Rent then in effect shall be
increased by an amount equal to ten percent (10%) of the amount of such
payment by Landlord, and Landlord shall deliver to Tenant written notice of
this increased amount of the Annual Base Rent.
15. Notwithstanding any provision set forth in this Lease and any Exhibits
hereto, Tenant hereby expressly recognizes and agrees to assume all
obligations to hold the tournaments, banquets, meetings and other functions
scheduled to take place at the Leased Property after the Commencement
Date, as listed on Exhibit "G" attached hereto and incorporated herein by
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this reference (the "Booked Contracts"). Tenant agrees to execute any
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customary assignment or assumption instrument to evidence Tenant's
assumption of the Booked Contracts and all deposits and advance payments
for the Booked Contracts shall be paid to Tenant upon the Closing (as
defined in this Purchase Agreement).
16. Tenant hereby expressly assumes all of the obligations of the Golf Course
under the contracts and agreements set forth on Exhibit "H" attached hereto
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and incorporated herein by this reference.
17. Upon the Commencement Date, Landlord shall sell and convey to Tenant the
professional shop merchandise, food and beverage and consummables
(collectively, the "Inventories") purchased by Landlord from Seller in
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connection with Landlord's purchase of the Leased Property. Tenant shall
pay to Landlord upon the Commencement Date an amount for the conveyance of
the Inventories to Tenant, which amount (the "Inventory Payment Amount")
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shall be determined on the Closing. For purposes of calculating the Initial
Base Rent. Landlord's investment in acquiring the Leased Property shall be
reduced by the Inventory Payment Amount.
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18. Tenant acknowledges that prior to the Commencement Date, a 550-gallon
gasoline underground storage tank was removed ("Tank Removal") from an area
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adjacent to the maintenance facility located on the Leased Property. In
connection with the Tank Removal, a closure permit and approval ("Closure
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Permit") was required to be issued by the Marin County Health and Human
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Services Department ("Health Department") but that as of the Commencement
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Date, the Closure Permit has not been issued by the Health Department.
Tenant agrees that obtaining the Closure Permit is the obligation of Tenant
and not Landlord, and Tenant shall expeditiously and at its sole cost and
expense obtain the Closure Permit and otherwise comply with all other Legal
Requirements in connection with the Tank Removal. Tenant shall provide
Landlord with quarterly written updates as to the progress in obtaining the
closure Permit. Notwithstanding Section 8.3 of the Detailed Lease
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Provisions, Tenant shall indemnify and hold harmless Landlord from any
claims, costs, expenses or actions in connection with the Tank Removal and
in obtaining the Closure Permit. Landlord's obligations under Section 8.6
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of the Detailed Leased Provisions shall not apply to any matters related to
the Tank Removal or the Closure Permit.
19. Reference is made to the title insurance exception under Schedule B to the
Title Policy (the "Tunnel Exception") with respect to the golf cart tunnel
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located beneath Xxx Xxxxxxx Xxxxx Boulevard ("Tunnel"). The purpose of the
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Tunnel is to provide access for golf carts between the clubhouse and the
first nine holes at the Leased Property. As referenced in the Tunnel
Exception, the Tunnel is subject to that certain Encroachment Permit
pursuant to which the County of Marin may cause the removal or relocation
of the Tunnel upon notice to the owner of the Leased Property. Tenant
acknowledges that the effect of the Tunnel Exception is that the Title
Company will not provide affirmative title insurance coverage under the
Title Policy in the event that the Tunnel is removed or relocated or if the
Tenant is otherwise prevented from using the Tunnel. If the Tunnel is
required to be removed or relocated or if Tenant is otherwise prevented
from using the Tunnel, as between Landlord and Tenant, Tenant shall bear
all costs and expenses associated with the relocation of the Tunnel and the
design, approval and construction of a new tunnel or overhead bridge
necessary or required to provide reasonable access between the clubhouse
and the first nine holes at the Leased Property (collectively, "Tunnel
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Relocation Costs"). Tenant may use the funds held in the Capital
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Improvement Account in accordance with the provisions of Section 11 of
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these Basic Lease Provisions for the payment of Tunnel Relocation Costs
provided that the aggregate of such costs paid with funds held in the
Capital Improvement Account shall not exceed $50,000. Landlord shall
reasonably cooperate with Tenant in exercising any rights or remedies of
Landlord or Tenant with respect to the relocation of such Tunnel.
20. Reference is made to Appropriative Application 29905 ("Application 29905")
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filed with the California State Water Resources Control Board ("Water
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Board") on January 19, 1991 with respect to the diversion of water flow
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from Xxxxxx Creek onto a portion of the Leased Property. Tenant
acknowledges and agrees that Application 29905 was recommended for approval
subject to certain conditions imposed by the Water Board. Tenant agrees
that complying with the conditions imposed by the Water Board in connection
with the approval of Application 29905 ("Water Board Conditions") is the
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obligation of Tenant and not Landlord, and Tenant shall expeditiously and
at its sole cost and expense satisfy the Water Board Conditions and
otherwise comply with all other Legal Requirements in connection with
Application 29905. Tenant may use the funds held in the Capital Improvement
Account in accordance with the provisions of Section 11 of these Basic
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Lease Provisions for the payment of the costs and expenses to satisfy the
Water Board Conditions and otherwise comply with the Legal Requirements in
connection with Application 29905 provided that the aggregate of such costs
paid with funds held in the Capital Improvement Account shall not exceed
$50,000. Landlord shall reasonably cooperate with Tenant in exercising any
rights or remedies of Landlord or Tenant with respect to satisfying the
Water Board Conditions.
21. Landlord acknowledges that Tenant periodically makes distributions of its
consolidated net income to Tenant's limited partners ("Partner
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Distributions"). Tenant agrees that Tenant's obligation to pay Rent (as
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defined in Exhibit "A") and all other obligations hereunder shall be fully
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satisfied on a current basis in accordance with the terms of this Lease
prior to the payment of any Partner Distributions other than the payment of
sums necessary for its limited partners to pay federal and state income
taxes on Tenant's consolidated net income.
22. As a condition to the Closing of Escrow (as defined in the Purchase
Agreement), Seller is obligated to obtain from at least 80% of the existing
members at the Golf Club executed releases in order to terminate such
memberships on or prior to the Close of Escrow. In addition, Seller is
obligated to deposit in the Holdback Account (as defined in Section 15 of
the Purchase Agreement) that was established in connection with the
Holdback Agreement (the form of which is set forth as Exhibit "K" to the
Purchase Agreement) an amount equal to the refundable portion of the
membership deposits paid by each member whose membership is not terminated
as of the Close of Escrow. The primary purpose of the Holdback Agreement is
for Seller to establish a source of funds available for the payment of
membership deposit refunds in connection with the termination of
memberships after the Close of Escrow. Landlord hereby assigns its interest
under the Holdback Agreement to Tenant in order for Tenant to have an
available source of funds for the payment of refundable membership deposits
in connection with the termination of memberships after the Close of
Escrow. Tenant hereby assumes Landlord's obligations under the Holdback
Agreement and shall otherwise satisfy the obligations of the "Buyer" under
the Holdback Agreement. All funds released from the Holdback Account and
paid to Tenant under the Holdback Agreement and not to a resigning member
shall be included within the definition of "Course Revenue" under this
Lease.
23. Tenant acknowledges that up to approximately 20% of the existing members at
the Golf Club may remain members at the Golf Club after the Commencement
Date. Tenant shall assume all of the obligations of the Golf Club under the
terms and conditions of the membership agreements and documents pursuant to
which any memberships were created ("Membership Agreements"), including
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without limitation, the obligation to pay all membership deposit and
initiation fee refunds due and payable to all members at the Golf Club in
accordance with the terms and conditions of the respective Membership
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Agreements. Upon the Commencement Date, Tenant shall discontinue the sale
of memberships at the Golf Club pursuant to which a member would be
entitled to a refund of his or her membership deposit or initiation fee.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the date first above written.
"LANDLORD" "TENANT"
NATIONAL GOLF OPERATING EVERGREEN ALLIANCE GOLF
PARTNERSHIP, L.P., LIMITED,
a Delaware limited partnership a Texas limited partnership
By: NATIONAL GOLF PROPERTIES, INC., By: EVERGREEN ALLIANCE GOLF
a Maryland corporation MANAGEMENT, INC.,
Its General Partner a Texas corporation
Its General Partner
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxx
General Counsel Chairman and CEO
LIST OF ATTACHMENTS AND EXHIBITS:
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Detailed Lease Provisions
Exhibit A Defined Terms; Interpretation
Exhibit B Legal Description of the Land
Exhibit C Other Leased Properties
Exhibit D Operating Standards
Exhibit E Landlord's Personal Property
Exhibit F Initial Capital Improvements
Exhibit G Booked Contracts
Exhibit H Contracts to be Assumed by Tenant
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DETAILED LEASE PROVISIONS
TABLE OF CONTENTS
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PAGE
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ARTICLE 1 - LEASED PROPERTY.................................................. -1-
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ARTICLE 2- TERM.............................................................. -1-
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ARTICLE 3- RENT.............................................................. -1-
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3.1 Rent................................................................ -1-
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3.2 Base Rent........................................................... -1-
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3.3 Additional Rent..................................................... -2-
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3.4 Additional Charges.................................................. -3-
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3.5 Late Payment of Rent................................................ -3-
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3.6 Net Lease........................................................... -4-
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3.7 Marketing Programs.................................................. -4-
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3.8 Income/Expense Prorations........................................... -5-
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ARTICLE 4 - IMPOSITIONS...................................................... -5-
4.1 Payment of Impositions.............................................. -5-
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4.2 Information and Reporting........................................... -5-
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4.3 Assessment Challenges............................................... -5-
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4.4 Prorations.......................................................... -6-
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4.5 Refunds............................................................. -6-
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4.6 Utility Charges..................................................... -6-
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4.7 Reassessments Upon Transfer......................................... -6-
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4.8 Assessment Districts................................................ -6-
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ARTICLE 5 - TENANT WAIVERS................................................... -6-
5.1 No Termination, Abatement, Etc. .................................... -6-
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5.2 Condition of the Leased Property.................................... -7-
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ARTICLE 6 - OWNERSHIP OF PROPERTY............................................ -8-
6.1 Leased Property..................................................... -8-
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6.2 Landlord's Personal Property........................................ -8-
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6.3 Tenant's Personal Property.......................................... -9-
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6.4 Purchase of Tenant's Personal Property.............................. -9-
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6.5 Removal of Personal Property........................................ -10-
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6.6 Landlord's Waivers.................................................. -10-
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6.7 Water Rights........................................................ -10-
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6.8 Liquor License...................................................... -11-
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ARTICLE 7 - USE OF LEASED PROPERTY........................................... -11-
7.1 Use................................................................. -11-
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7.2 Specific Prohibited Uses............................................ -12-
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PAGE
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7.3 Membership Matters, Fees and Charges............................... -12-
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ARTICLE 8 - HAZARDOUS MATERIALS............................................. -13-
8.1 Representations.................................................... -13-
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8.2 Remediation........................................................ -13-
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8.3 Tenant's Indemnification of Landlord............................... -13-
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8.4 Survival of Indemnification Obligations............................ -14-
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8.5 Environmental Violations at Expiration or Termination of Lease..... -14-
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8.6 Landlord's Indemnification of Tenant............................... -14-
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ARTICLE 9 - MAINTENANCE AND REPAIR.......................................... -15-
9.1 Tenant's Sole Obligation........................................... -15-
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9.2 Waiver of Statutory Obligations.................................... -15-
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9.3 Mechanic's Liens................................................... -16-
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9.4 Surrender of Leased Property....................................... -16-
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ARTICLE 10- TENANT'S IMPROVEMENTS........................................... -16-
10.1 Tenant's Right to Construct....................................... -16-
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10.2 Scope of Right.................................................... -16-
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10.3 Cooperation of Landlord........................................... -17-
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10.4 Commencement of Construction...................................... -17-
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10.5 Rights in Tenant Improvements..................................... -18-
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ARTICLE 11 - LIENS, ENCROACHMENTS AND OTHER TITLE MATTERS................... -18-
11.1 Liens............................................................. -18-
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11.2 Encroachments and Other Title Matters............................. -19-
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ARTICLE 12 - PERMITTED CONTESTS............................................. -20-
ARTICLE 13 - INSURANCE...................................................... -21-
13.1 General Insurance Requirements.................................... -21-
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13.2 Replacement Cost.................................................. -22-
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13.3 Waiver of Subrogation............................................. -22-
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13.4 Form Satisfactory, Etc. .......................................... -22-
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13.5 Change in Limits.................................................. -23-
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13.6 Blanket Policy.................................................... -23-
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ARTICLE 14 - APPLICATION OF INSURANCE PROCEEDS.............................. -24-
14.1 Insurance Proceeds................................................ -24-
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14.2 Reconstruction Covered by Insurance............................... -25-
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14.3 Reconstruction Not Covered by Insurance........................... -27-
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14.4 Waiver............................................................ -27-
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14.5 Damage Near End of Term........................................... -28-
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PAGE
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ARTICLE 15 - CONDEMNATION................................................... -28-
15.1 Total Taking...................................................... -28-
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15.2 Partial Taking.................................................... -28-
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15.3 Restoration....................................................... -28-
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15.4 Award-Distribution................................................ -28-
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15.5 Temporary Taking.................................................. -29-
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ARTICLE 16 - EVENTS OF DEFAULT.............................................. -29-
16.1 Events of Default................................................. -29-
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16.2 Payment of Costs.................................................. -31-
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16.3 Exceptions........................................................ -31-
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16.4 Certain Remedies.................................................. -31-
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16.5 Damages........................................................... -32-
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16.6 Additional Remedies............................................... -33-
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16.7 Appointment of Receiver........................................... -33-
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16.8 Waiver............................................................ -33-
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16.9 Application of Funds.............................................. -33-
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16.10 Impounds......................................................... -33-
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ARTICLE 17 - LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT...................... -34-
ARTICLE 18 - LEGAL REQUIREMENTS............................................. -34-
ARTICLE 19 - HOLDING OVER................................................... -34-
ARTICLE 20 - RISK OF LOSS................................................... -35-
ARTICLE 21 - INDEMNIFICATION................................................ -35-
21.1 Tenant's Indemnification of Landlord.............................. -35-
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21.2 Landlord's Indemnification of Tenant.............................. -36-
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21.3 Mechanics of Indemnification...................................... -36-
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21.4 Survival of Indemnification Obligations........................... -37-
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ARTICLE 22 - SUBLETTING AND ASSIGNMENT...................................... -37-
22.1 Prohibition Against Subletting and Assignment..................... -37-
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22.2 Changes of Control................................................ -37-
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22.3 Subleases......................................................... -38-
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22.4 Assignment........................................................ -39-
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22.5 REIT Limitations.................................................. -39-
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ARTICLE 23 - OFFICER'S CERTIFICATES AND OTHER STATEMENTS.................... -40-
23.1 Officer's Certificates............................................ -40-
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23.2 Annual Financial Statements of Tenant............................. -40-
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23.3 Quarterly Financial Statements of Tenant.......................... -41-
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PAGE
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23.4 Monthly Course Statements......................................... -41-
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23.5 Annual Course Statements.......................................... -41-
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23.6 Budgets........................................................... -42-
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23.7 Environmental Statements.......................................... -42-
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23.8 Confidential Information.......................................... -42-
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ARTICLE 24 - LANDLORD MORTGAGES............................................. -43-
24.1 Landlord May Grant Liens.......................................... -43-
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24.2 Tenant's Non-Disturbance Rights................................... -43-
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24.3 Breach by Landlord................................................ -44-
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24.4 Facility Mortgage Protection...................................... -44-
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ARTICLE 25 - FINANCIAL COVENANTS............................................ -44-
25.1 Financial Covenants............................................... -44-
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25.2 Provision of Letter of Credit..................................... -45-
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25.3 Terms of Letters of Credit........................................ -45-
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25.4 Draws Against Letters of Credit; Application of Proceeds.......... -46-
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25.5 Renewals of Letter of Credit...................................... -46-
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25.6 Distributions by Tenant and Other Credit Impairments.............. -46-
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25.7 Liquidated Damages................................................ -47-
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25.8 Letters of Credit Not Additive.................................... -48-
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ARTICLE 26 - MISCELLANEOUS.................................................. -48-
26.1 Landlord's Right to Inspect....................................... -48-
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26.2 No Waiver......................................................... -48-
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26.3 Remedies Cumulative............................................... -48-
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26.4 Acceptance of Surrender........................................... -48-
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26.5 No Merger of Title................................................ -49-
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26.6 Convevance by Landlord............................................ -49-
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26.7 Quiet Enjoyment................................................... -49-
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26.8 Notices........................................................... -49-
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26.9 Survival of Claims................................................ -49-
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26.10 Invalidity of Terms or Provisions................................ -49-
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26.11 Prohibition Against Usury........................................ -49-
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26.12 Amendments to Lease.............................................. -50-
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26.13 Successors and Assigns........................................... -50-
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26.14 Titles........................................................... -50-
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26.15 Governing Law.................................................... -50-
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26.16 Memorandum of Lease.............................................. -50-
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26.17 Attorneys' Fees.................................................. -50-
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26.18 Non-Recourse as to Landlord...................................... -50-
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26.19 No Relationship.................................................. -50-
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26.20 Signs; Reletting................................................. -51-
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PAGE
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26.21 Golf Course Name.................................................-51-
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26.22 Judicial Reference...............................................-51-
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DETAILED LEASE PROVISIONS
ARTICLE 1 - LEASED PROPERTY
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Upon and subject to the terms and conditions set forth in this Lease,
Landlord leases to Tenant and Tenant rents from Landlord the following real
property, improvements and related rights (collectively the "Leased Property"):
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(a) the land described in Exhibit B attached hereto (collectively,
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the "Land");
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(b) all buildings, structures, Fixtures and other improvements of
every kind including, but not limited to, alleyways and connecting
tunnels, sidewalks, utility pipes, conduits and lines (on site and off
site), parking areas, driving ranges, roadways, cart paths, bridges,
lakes, irrigation systems, and course markers presently situated upon
the Land, but not including any Tenant Improvements (collectively, the
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"Leased Improvements");
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(c) all easements, rights and appurtenances relating to the Land and
the Leased Improvements (collectively, the "Related Rights"); and
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(d) all personal property, if any, owned by Landlord and located on
the Leased Property, which personal property is described in Exhibit E
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attached hereto ("Landlord's Personal Property").
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(e) any other property conveyed to Landlord pursuant to the terms of
the Purchase Agreement, including, but not limited to, all property,
included in the term "Property" as defined therein (but excluding the
Inventory).
ARTICLE 2 - TERM
----------------
The Term of this Lease shall commence on the Commencement Date.
ARTICLE 3 - RENT
----------------
3.1 Rent. Tenant will pay to Landlord in lawful money of the United
----
States of America the Base Rent and Additional Rent during the Term. Payments of
Base Rent and Additional Rent shall be paid at Landlord's address set forth in
the Basic Lease Provisions or at such other place or to such other Person as
Landlord from time to time may designate in writing. If any payment owing
hereunder shall otherwise be due on a day that is not a Business Day, such
payment shall be due on the next succeeding Business Day.
3.2 Base Rent. Tenant shall pay Base Rent to Landlord in advance on
---------
the first day of each calendar month; provided, however, that the first monthly
-----------------
installment shall be payable on the Commencement Date and the first and last
month's payments shall be prorated as to any partial month.
1
3.3 Additional Rent. In addition to the Base Rent, Tenant shall pay
---------------
to Landlord Additional Rent in quarterly installments as provided in
Section 3.3.1.
-------------
3.3.1 Quarterly Calculation and Payment of Additional Rent.
----------------------------------------------------
Tenant shall calculate and pay Additional Rent for each Fiscal Quarter. The
amount of the Additional Rent for the Second, Third and Fourth Fiscal
Quarters shall account for any interim reconciliations made with respect to
prior Fiscal Quarters in such Fiscal Year as certified by Tenant to
Landlord as provided by this Section 3.3.1, but subject to a final
-------------
reconciliation as provided by Section 3.3.2. Such Additional Rent shall be
-------------
paid to Landlord, together with an Officer's Certificate setting forth the
calculation thereof, within 30 days after the end of each Fiscal Quarter.
3.3.2 Annual Reconciliation. Within 60 days after the end of
---------------------
each Fiscal Year, or after the expiration or termination of the Lease,
Tenant shall deliver to Landlord an Officer's Certificate setting forth (i)
the Course Revenue and the Other Revenue for the Fiscal Year just ended,
and (ii) a comparison of the amount of Additional Rent actually paid during
such Fiscal Year versus the amount of Additional Rent actually owing on the
basis of the annual calculation of the Course Revenue and the Other
Revenue. If the Additional Rent for such Fiscal Year exceeds the sum of the
quarterly payments previously paid by Tenant, Tenant shall pay such
deficiency to Landlord along with such Officer's Certificate. If the
Additional Rent for such Fiscal Year is less than the amount previously
paid by Tenant, Landlord shall, at Tenant's option, either (i) remit to
Tenant its check in an amount equal to such difference, or (ii) grant
Tenant a credit against the payment of Additional Rent next coming due. The
amount of the reconciliation payment, whether in favor of Landlord or
Tenant, shall bear interest from the date of such overpayment or
underpayment at a rate equal to the rate payable on 90-day U.S. Treasury
Bills as of January 1 of the year following the close of such Fiscal Year
until the amount of such difference shall be paid or otherwise discharged.
If the timing of the annual reconciliation as set forth in this Section
-------
3.3.2 presents an unreasonable burden on Tenant, Landlord shall consider
-----
reasonable modifications to the provisions of this Section 3.3.2 in order
-------------
to reduce such burden.
3.3.3 Record-keeping. Tenant shall utilize an accounting system
--------------
for the Leased Property in accordance with its usual and customary
practices and in accordance with accrual basis accounting principles
(applied on a basis consistent with the Other Leased Properties, if any)
which will accurately record all Course Revenue and Other Revenue. Tenant
shall utilize cash basis accounting principles in accounting for the
amounts to be deposited into the Capital Improvement Account. Tenant shall
retain reasonably adequate records for each Fiscal Year conforming to such
accounting system until at least five years after the expiration of such
Fiscal Year (and in any event until the reconciliation described in Section
-------
3.3.2 above for such Fiscal Year has been made).
-----
3.3.4 Audits. Landlord, at its own expense except as provided
------
hereinbelow, shall have the right from time to time directly or through its
accountants to audit the information set forth in the Officer's Certificate
referred to in Section 3.3.2 and in connection with such audits to examine
-------------
Tenant's books and records with respect thereto (including supporting data,
sales tax returns and Tenant's work papers). If any
2
such audit discloses a deficiency in the payment of Additional Rent, Tenant
shall forthwith pay to Landlord the amount of the deficiency, as finally
agreed or determined, together with interest at the Overdue Rate from the
date when said payment should have been made to the date of payment
thereof; provided, however, that as to any audit that is commenced more
-----------------
than 12 months after the date Course Revenue or Other Revenue for any
Fiscal Year is reported by Tenant to Landlord, the deficiency, if any, with
respect to such Course Revenue or Other Revenue shall bear interest as
permitted herein only from the date such determination of deficiency is
made unless such deficiency is the result of gross negligence or willful
misconduct on the part of Tenant. If any such audit discloses that the
Course Revenue or Other Revenue actually received by Tenant for any Fiscal
Year exceeds the Course Revenue or Other Revenue reported by Tenant by more
than five percent, Tenant shall pay the reasonable cost of such audit and
examination. Landlord shall not conduct more than two audits in any
calendar year; provided that for purposes of such limitation any audit in
which there were discrepancies in excess of $5,000 shall not count towards
such limitation.
3.4 Additional Charges. In addition to the Base Rent and Additional
------------------
Rent, (1) Tenant shall also pay and discharge when due and payable all other
amounts, liabilities, obligations and Impositions which Tenant assumes or agrees
to pay under this Lease, and (2) in the event of any failure on the part of
Tenant to pay any of those items referred to in clause (1) above, Tenant shall
also pay and discharge every fine, penalty, interest and cost which may be added
for non-payment or late payment of such items (the items referred to in clauses
(1) and (2) above being referred to herein collectively as the "Additional
----------
Charges"). Except as otherwise provided in this Lease, including Article 12, all
-------
Additional Charges shall be due and payable 30 days after either Landlord or the
applicable third party who may be billing Tenant therefor shall deliver an
invoice to Tenant therefor. To the extent that Tenant pays any Additional
Charges to Landlord pursuant to any requirement of this Lease, Tenant shall be
relieved of its obligation to pay such Additional Charges to the entity to which
they would otherwise be due.
3.5 Late Payment of Rent. Tenant hereby acknowledges that late
--------------------
payment by Tenant to Landlord of Base Rent, Additional Rent or Additional
Charges will cause Landlord to incur costs not contemplated under the terms of
this Lease, the exact amount of which is presently anticipated to be extremely
difficult to ascertain. Such costs may include processing and accounting charges
and late charges which may be imposed on Landlord by the terms of any mortgage
or deed of trust covering the Leased Property and other expenses of a similar or
dissimilar nature. Accordingly, if any installment of Base Rent, Additional Rent
or Additional Charges (but only as to those Additional Charges which are payable
directly to Landlord) shall not be paid within five Business Days after this due
date, Tenant will pay Landlord on demand, as Additional Charges, a late charge
equal to the lesser of five percent of such installment or $1,000. The parties
agree that this late charge represents a fair and reasonable estimate of the
costs that Landlord will incur by reason of late payment by Tenant. In addition,
if any installment of Base Rent, Additional Rent or Additional Charges (but only
as to those Additional Charges which are payable directly to Landlord) shall not
be paid on its due date, the amount unpaid shall bear interest, from the due
date of such installment to the date of payment thereof, computed at the Overdue
Rate on the amount of such installment, and Tenant will pay such interest to
Landlord on demand, as Additional Charges. The payment of said late charge or
such
3
interest shall not constitute a waiver, nor excuse or cure, of any default under
this Lease, nor prevent Landlord from exercising any other rights and remedies
available to Landlord.
3.6 Net Lease. The Rent shall be paid absolutely net to Landlord
---------
and, except as expressly provided in Section 4.7, Article 14 and Article 15,
----------- ---------- ----------
without notice or demand and without set-off, counterclaim, recoupment,
abatement, suspension, deferment, deduction or defense, so that this Lease shall
yield to Landlord the full amount of the installments of Base Rent, Additional
Rent and Additional Charges throughout the Term, all as more fully set forth in
Article 5.
---------
3.7 Marketing Programs.
------------------
3.7.1 Tenant Conflicts. Landlord and Tenant recognize that
----------------
Tenant or its affiliates may in the future acquire the ownership or
operation of other courses which compete with the Leased Property. Subject
to Tenant's compliance with this Section 3.7, Landlord acknowledges this
-----------
potential conflict of interest and agrees that it does not constitute a
breach or default of any term, condition, representation or warranty under
the Lease. Provided, however, Tenant agrees that it shall operate the
Leased Property on an arm's-length and non-discriminatory basis with
respect to other courses owned or operated by Tenant or its affiliates
("Tenant's Properties").
-------------------
3.7.2 Approval of Joint Usage Programs. Subject to Landlord's
--------------------------------
prior written approval and the provisions of this Section 3.7, Tenant may
-----------
have the Leased Property participate in joint usage programs involving the
Leased Property and properties of the Tenant other than the Leased Property
(collectively, "Programs") that Tenant may sponsor from time to time.
--------
Landlord agrees that it will not unreasonably withhold or delay its consent
to such Programs if Landlord is satisfied that such Programs would not
adversely affect the amount of Additional Rent to be payable hereunder nor
otherwise adversely affect the Leased Property relative to Tenant's
Properties. Tenant agrees as a condition to any such consent by Landlord to
such Programs, that Landlord may require Tenant to provide to Landlord
during the duration of such Programs such information (including rounds
played and average green fees) regarding the Tenant Properties included in
such Programs as Landlord may request to monitor that there are no
discriminatory impacts of the Programs approved.
3.8 Income/Expense Prorations. Income and expense items received or
-------------------------
paid with respect to the period in which the Term commences or terminates shall
be adjusted and prorated between Landlord and Tenant as of the date of the
commencement or expiration of the Term or earlier termination of this Lease, as
applicable.
ARTICLE 4 - IMPOSITIONS
-----------------------
4.1 Payment of Impositions. Subject to Section 4.7 and Section
---------------------- ----------- -------
16.10, Tenant will pay, or cause to be paid, all Impositions before any fine,
-----
penalty, interest or cost may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible. All payments of Impositions
shall be subject to Tenant's right of contest pursuant to the provisions of
Article 12. Upon request, Tenant shall promptly furnish to Landlord copies
----------
4
of official receipts, if available, or other satisfactory proof evidencing such
payments, such as cancelled checks.
4.2 Information and Reporting. Landlord shall give prompt notice to
-------------------------
Tenant of all Impositions payable by Tenant hereunder of which Landlord at any
time has knowledge, but Landlord's failure to give any such notice shall in no
way diminish Tenant's obligations hereunder to pay such Impositions. Landlord
and Tenant shall, upon request of the other, provide such data as is maintained
by the party to whom the request is made with respect to the Leased Property as
may be necessary to prepare any required returns and reports. In the event any
applicable governmental authorities classify any property covered by this Lease
as personal property, Tenant shall file all personal property tax returns in
such jurisdictions where it must legally so file. Each party, to the extent it
possesses the same, will provide the other party, upon request, with cost and
depreciation records necessary for filing returns for any property so classified
as personal property.
4.3 Assessment Challenges. In addition to Tenant's rights under
---------------------
Article 12, Tenant may, upon notice to Landlord, at Tenant's option and at
----------
Tenant's sole cost and expense, protest, appeal, or institute such other
proceedings as Tenant may deem appropriate to effect a reduction of real estate
or personal property assessments and Landlord, at Tenant's expense as aforesaid,
shall fully cooperate with Tenant in such protest, appeal, or other action.
4.4 Prorations. Impositions imposed in respect of the tax-fiscal
----------
period during which the Term commences or terminates shall be adjusted and
prorated between Landlord and Tenant, whether or not such Imposition is imposed
before or after such termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination. If any Imposition may, at the
option of the taxpayer, lawfully be paid in installments (whether or not
interest shall accrue on the unpaid balance of such Imposition), Tenant may
elect to pay in installments, in which event Tenant shall pay all installments
(and any accrued interest on the unpaid balance of the Imposition) that are due
during the Term hereof before any fine, penalty, premium, further interest or
cost may be added thereto.
4.5 Refunds. If any refund shall be due from any taxing authority in
-------
respect of any Imposition paid by Tenant, the same shall be paid over to or
retained by Tenant if no Event of Default shall have occurred hereunder and be
continuing. Any such funds retained by Landlord due to an Event of Default shall
be applied as provided in Article 16.
----------
4.6 Utility Charges. Tenant shall pay or cause to be paid prior to
---------------
delinquency charges for all utilities and services, including, without
limitation, electricity, telephone, trash disposal, gas, oil, water, sewer,
communication and all other utilities used in the Leased Property during the
Term.
4.7 Reassessments Upon Transfer. Notwithstanding any other provision
---------------------------
in this Lease to the contrary. Landlord shall pay all incremental increases in
the Impositions under this Lease arising solely from (a) Landlord's sale,
disposition or other transfer of the Leased Property after the date of this
Lease or (b) a change of control or ownership in Landlord after the date of this
Lease.
5
4.8 Assessment Districts. Neither party shall voluntarily consent to
--------------------
or agree in writing to (i) any special assessment or (ii) the inclusion of any
material portion of the Leased Premises into a special assessment district or
other taxing jurisdiction unless the other party shall have consented thereto,
which consent shall not be unreasonably withheld.
ARTICLE 5 - TENANT WAIVERS
--------------------------
5.1 No Termination, Abatement, Etc. Except as otherwise specifically
------------------------------
provided in this Lease, (i) Tenant, to the extent permitted by law, shall remain
bound by this Lease in accordance with its terms and shall neither take any
action without the consent of Landlord to modify, surrender or terminate the
same, nor be entitled to any abatement, deduction, deferment or reduction of
Rent, or set-off against the Rent by reason of, and (ii) the respective
obligations of Landlord and Tenant shall not be otherwise affected by reason of:
(a) any damage to, or destruction of, any Leased Property or any
portion thereof from whatever cause or any taking of the Leased Property or any
portion thereof;
(b) the lawful or unlawful prohibition of, or restriction upon,
Tenant's use of the Leased Property, or any portion thereof, the interference
with such use by any Person or by reason of eviction by paramount title (other
than as provided in Section 5.3);
-----------
(c) any claim which Tenant has or might have against Landlord or by
reason of any default or breach of any warranty by Landlord under this Lease or
any other agreement between Landlord and Tenant;
(d) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Landlord or any assignee or transferee of Landlord; or
(e) for any other cause whether similar or dissimilar to any of the
foregoing other than a discharge of Tenant from any such obligations as a matter
of law.
Except as otherwise specifically provided in this Lease, Tenant hereby
specifically waives all rights, arising from any occurrence whatsoever, which
may now or hereafter be conferred upon it by law (i) to modify, surrender or
terminate this Lease or quit or surrender the Leased Property or any portion
thereof, or (ii) to entitle Tenant to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Tenant hereunder. The obligations
of Landlord and Tenant hereunder shall be separate and independent covenants and
agreements and the Rent and all other sums payable by Tenant hereunder shall
continue to be payable in all events unless the obligations to pay the same
shall be terminated pursuant to the express provisions of this Lease or by
termination of this Lease other than by reason of an Event of Default.
5.2 Condition of the Leased Property. Tenant acknowledges receipt
--------------------------------
and delivery of possession of the Leased Property and that Tenant has examined
or otherwise has knowledge of the condition of the Leased Property prior to the
execution and delivery of this Lease. Regardless, however, of any inspection
made by Tenant of the Leased Property and
6
whether or not any patent or latent defect or condition was revealed or
discovered thereby, Tenant is leasing the Leased Property "as is" in its present
condition. Tenant waives and releases any claim or action against Landlord in
respect of the condition of the Leased Property including any defects or adverse
conditions latent or patent, matured or unmatured, known or unknown by Tenant or
Landlord as of the date hereof. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER
ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT
MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY, INCLUDING ANY WARRANTY
OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR
USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii)
THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) VALUE, (v) COMPLIANCE WITH
SPECIFICATIONS, (vi) LOCATION, (vii) USE, (viii) CONDITION, (ix)
MERCHANTABILITY, (xii) QUALITY, (xiii) DESCRIPTION, (xiv) DURABILITY, (xv)
OPERATION, (xvi) THE EXISTENCE OF ANY HAZARDOUS MATERIAL, (xvii) COMPLIANCE OF
THE LEASED PROPERTY WITH ANY LAW (INCLUDING ENVIRONMENTAL LAWS) OR LEGAL
REQUIREMENTS OR (xviii) LANDLORD'S TITLE THERETO. TENANT ACKNOWLEDGES THAT THE
LEASED PROPERTY HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT. IN THE
EVENT OF ANY DEFECT OR DEFICIENCY IN THE LEASED PROPERTY OF ANY NATURE, WHETHER
LATENT OR PATENT, AS BETWEEN LANDLORD AND TENANT, LANDLORD SHALL NOT HAVE ANY
RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF
THIS SECTION 5.2 HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE
-----------
EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH
RESPECT TO THE LEASED PROPERTY. ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE
OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.
ARTICLE 6 - OWNERSHIP OF PROPERTY
---------------------------------
6.1 Leased Property. Tenant acknowledges that the Leased Property is
---------------
the property of Landlord and that Tenant has only the right to the exclusive
possession and use of the Leased Property during the Term of and upon the terms
and conditions of this Lease. Tenant acknowledges that the Leased Property is
subject to certain exceptions as referenced in the Title Policy.
6.2 Landlord's Personal Property. If Landlord has provided any
----------------------------
Landlord's Personal Property (as described in Exhibit E), Tenant shall maintain
---------
such Property in the same manner as Tenant maintains Tenant's Personal Property.
Upon the loss, destruction, or obsolescence of any of the Landlord's Personal
Property, Tenant shall replace such property with Tenant's Personal Property,
which such property shall be owned by Tenant during the remainder of the Term.
Upon the expiration or sooner termination of this Lease, Tenant shall be
obligated to leave at the Facility at no cost to Landlord and free of any liens
or encumbrances: (i) any Landlord's Personal Property: and (ii) any replacements
of Landlord's Personal Property (the "Replacement Property"), provided that the
Replacement Property shall be high-quality
7
equipment in good working order and condition and shall be reasonably comparable
in quality and quantity to the property provided to Tenant by Landlord at the
Commencement Date. Notwithstanding Section 6.4, at the expiration or sooner
-----------
termination of this Lease, Landlord shall not be obligated to purchase from
Tenant the Replacement Property and the Replacement Property shall be conveyed
to Landlord by Tenant at no cost to Landlord.
6.3 Tenant's Personal Property. Tenant may (and shall as provided
--------------------------
below), at its expense, install, affix or assemble or place on any parcels of
the Land or in any of the Leased Improvements, any items of Tenant's Personal
Property, and Tenant may, subject to the conditions set forth below, remove the
same upon the expiration or any prior termination of the Term. Tenant shall
provide and maintain during the entire Lease Term all such Tenant's Personal
Property as shall be necessary in order to operate the Facility in compliance
with all applicable Legal Requirements and Insurance Requirements and otherwise
in accordance with customary practice in the industry for the Primary Intended
Use and in accordance with its past practices.
6.4 Purchase of Tenant's Personal Property. Subject to Section 6.2,
-------------------------------------- -----------
upon the expiration or sooner termination of this Lease, Landlord shall have the
right (but not the obligation) to purchase from Tenant all, but not less than
all, of tangible Tenant's Personal Property (which shall not include software):
(i) if owned by Tenant and not subject to any secured financing
entered into in good faith by Tenant with an unaffiliated Person, at
the fair market value thereof (subject to Section 6.2);
-----------
(ii) if owned by Tenant, but subject to such secured financing, at
the greater of the fair market value thereof or the amount of the debt
owing under such financing (subject to Section 6.2); and
-----------
(iii) if leased by Tenant in good faith from an unaffiliated Person,
and the applicable lease provides for termination of the lease as to
such Property upon the payment of a given sum, at the greater of the
fair market value thereof or the amount of the payment so provided;
provided, however, that at Landlord's option and if the lessor will
-----------------
permit Landlord to assume the obligations under the applicable lease
with respect to such property (separate from the obligations under a
master lease if in effect). Tenant shall, upon the request of
Landlord, assign the applicable lease (or portion thereof) to Landlord
upon Landlord's payment in cash to Tenant of any equity value under
the applicable lease (or portion thereof);
provided, further, however, that if Landlord's purchase right arises because of
--------------------------
a termination of this Lease as a result of an Event of Default, the fair market
value under clauses (i) through (iii) above shall be deemed to be the
depreciated net book value of Tenant's Personal Property. Landlord may elect to
purchase Tenant's Personal Property by giving notice to Tenant not later than,
as the case may be, 60 days prior to the expiration of this Lease or 60 days
after the termination of this Lease upon any Event of Default. Tenant shall
transfer title to such property by a xxxx of sale without warranty (except as to
ownership free of liens) upon concurrent payment in cash by Landlord; provided,
---------
however, if Landlord has any unpaid damages resulting from any
-------
8
Event of Default, Landlord may make payment by delivery of a receipt for an
offset against such damages to the extent of any cash payment otherwise owed by
Tenant to Landlord.
6.5 Removal of Personal Property. Subject to applicable law: (i) all
----------------------------
items of Tenant's Personal Property not removed by Tenant within 14 days
following the expiration or earlier termination of this Lease shall be
considered abandoned by Tenant and may, at Landlord's discretion and without any
obligation, be appropriated, sold, destroyed or otherwise disposed of by
Landlord without first giving notice thereof to Tenant and without any payment
to Tenant and without any obligation to account therefor; (ii) Tenant shall, at
its expense, restore the Leased Property to the condition required by Section
-------
9.1, including repair of all damage to the Leased Property caused by the removal
---
of Tenant's Personal Property, whether effected by Tenant or Landlord; and (iii)
Landlord shall not be responsible for any loss or damage to Tenant's Personal
Property, or any other property of Tenant, by virtue of Landlord's removal
thereof at any time subsequent to the 14-day period provided for herein.
6.6 Landlord's Waivers. Any lessor Tenant's Personal Property may,
------------------
upon notice to Landlord and during reasonable hours, enter the Facility and take
possession of any of Tenant's Personal Property without liability for trespass
or conversion. Landlord shall, upon the request of Tenant, execute and deliver
to Tenant "landlord's waivers" as may be reasonable and customary in connection
with the financing or leasing of personal property. Such "landlord's waiver"
shall limit to 30 days the amount of time the lessor or lender has to enter upon
the Leased Premises after notice from Landlord that the Term has expired or
otherwise terminated. If Tenant requests a "landlord's waiver," Tenant shall
attempt to secure from any financing source or lessor the right on the part of
Landlord to cure the defaults of Tenant and to use any such Property upon
providing such cure.
6.7 Water Rights
------------
6.7.1 Landlord Rights. To the extent Landlord has any Water
---------------
Rights by virtue of its ownership of the Leased Property or to the extent
Landlord otherwise acquires Water Rights specifically for use by the Leased
Property, Landlord agrees to make such Water Rights available to Tenant at
Landlord's cost for Tenant to fulfill its obligations hereunder. Landlord makes
no assurances whatsoever as to the existence, quantity, priority or price of any
Water Rights owned by Landlord. Landlord shall have no obligation to acquire or
expend funds to maintain the ownership of any Water Rights.
6.7.2 Tenant Rights. To the extent as of the Commencement Date,
-------------
Tenant owns any rights for the supply or transportation of water to the Leased
Property (the "Tenant's Original Water Rights"), Tenant shall, through the Term
------------------------------
and subject to the provisions of this Section 6.7, maintain and hold Tenant's
-----------
Original Water Rights on a first priority basis for the benefit of the Leased
Property. If and solely to the extent that Tenant's Original Water Rights
provide resources in excess of what is needed to properly serve the Leased
Property, Tenant may use Tenant's Original Water Rights for other purposes as it
determines consistent with any restrictions under applicable law or the terms of
Tenant's Original Water Rights. During the Term, Tenant may sell or exchange
Tenant's Original Water Rights if, prior to doing so, Tenant secures Replacement
Water Rights. Upon the expiration or sooner termination of this Lease, Tenant
shall, within 10 days after request made by Landlord, transfer to Landlord or
its
9
designee for no consideration Tenant's Original Water Rights (to the extent
still owned by Tenant) and all Replacement Water Rights. Upon the expiration or
sooner termination of this Lease, to the extent Tenant had sold or exchanged
Tenant's Original Water Rights during the Term, Tenant shall deliver to Landlord
or its designee Replacement Water Rights that are not less favorable in any
material respect to the holder of such Water Rights than the quantity, price and
priority of Tenant's Original Water Rights.
6.8 Liquor License. Tenant shall take whatever steps are
--------------
commercially necessary to obtain a license for serving liquor at the Facility
("Liquor License") and shall keep the Liquor License in effect during the Term.
--------------
Upon the expiration of the Term or earlier termination of this Lease, Tenant
shall transfer the Liquor License to Landlord (or its designee), subject to
applicable law, for a purchase price of $1.00; provided, however, Landlord shall
pay all costs and expenses with respect to the transfer of the Liquor License to
Landlord. Tenant shall cooperate in all respects with Landlord (and its
designee) in order to effect an orderly transfer of the Liquor License to
Landlord (or its designee) including, without limitation, completing all
application forms, providing such information and documents as may be required
by applicable governmental agencies, and appearing and testifying at any public
hearings in connection with the transfer of the Liquor License to Landlord (or
its designee).
ARTICLE 7 - USE OF LEASED PROPERTY
----------------------------------
7.1 Use. After the Commencement Date and during the Term, Tenant
---
shall use or cause to be used the Leased Property and the improvements thereon
for its Primary Intended Use and for such other uses as may be necessary or
incidental to such use. Tenant shall not use the Leased Property or any portion
thereof for any other use without the prior written consent of Landlord, which
consent shall not be unreasonably withheld. No use shall be made or permitted to
be made of the Leased Property, and no acts shall be done, which will cause the
cancellation of any insurance policy covering the Leased Property or any part
thereof, nor shall Tenant sell or otherwise provide to patrons, or permit to be
kept, used or sold in or about the Leased Property any article which may be
prohibited by law or by the standard form of fire insurance policies, or any
other insurance policies required to be carried hereunder, or fire underwriters
regulations. Tenant shall, at its sole cost, comply with all of the requirements
pertaining to the Leased Property or other improvements of any insurance board,
association, organization or company necessary for the maintenance of insurance,
as herein provided, covering the Leased Property and Tenant's Personal Property.
Landlord and Tenant acknowledge that Landlord has acquired the Leased Property
subject to the terms of the Existing Instruments and that Tenant will be
obligated to perform all obligations under the Existing Instruments during the
Term.
7.2 Specific Prohibited Uses. Tenant shall not use or occupy or
------------------------
permit the Leased Property to be used or occupied, nor do or permit anything to
be done in or on the Leased Property, in a manner which would (i) violate or
fail to comply with any law, rule or regulation or Legal Requirement or the
Existing Instruments, (ii) subject to Article 10, cause structural injury to any
----------
of the Improvements or (iii) constitute a public or private nuisance or waste.
Tenant shall not allow any Hazardous Material to be located in, on or under the
Leased Property, or any adjacent property, or incorporated in the Facility or
any improvements thereon except in compliance with applicable law (including any
Environmental Law). Tenant shall not
10
allow the Leased Property to be used as a landfill or a waste disposal site, or
a manufacturing, distribution or disposal facility for any Hazardous Materials.
Tenant shall neither suffer nor permit the Leased Property or any portion
thereof, including Tenant's Personal Property, to be used in such a manner as
(i) might reasonably tend to impair Landlord's title thereto or to any portion
thereof, or (ii) may reasonably make possible a claim or claims of adverse usage
or adverse possession by the public, as such, or of implied dedication of the
Leased Property or any portion thereof, or (iii) is in material violation of any
applicable Environmental Law.
7.3 Membership Matters, Fees and Charges. The Leased Property shall
------------------------------------
be operated as a "daily fee" golf course and not as a non-equity membership
country club. Subject to the limitations of this Section 7.3, (i) Tenant shall
-----------
have the right to convert the operation of the Leased Property to a non-equity
membership country club without the prior approval of Landlord and (ii) Tenant
shall have the right to determine all matters relating to the sale and
classification of memberships, including the right to set initiation fees, dues,
and other charges, the number of memberships sold, and the rules, regulations,
policies, and procedures pertaining to memberships. Prior to the sale of any
memberships (other than annual memberships), Tenant shall notify Landlord about
its plans to adopt a membership program and shall, if requested by Landlord,
meet with Landlord to provide any information reasonably requested by Landlord
about the proposed membership program and Tenant's reasons for so doing.
Notwithstanding any other provision of this Section 7, (i) no membership shall
---------
extend beyond the expiration of the Term without Landlord's prior written
approval, which approval may be withheld at Landlord's sole and absolute
discretion and (ii) the membership applications (or other appropriate
documentation) to be signed by the members must disclose in writing the
limitation on the duration of the membership interest and of Tenant's interest
in the Leased Premises, the form of which disclosure shall be subject to the
approval of Landlord, which approval shall not be unreasonably withheld or
delayed. Tenant shall have the right to determine all fees, rates and other
charges relating to the goods and services provided by Tenant at the Leased
Premises and the use of the Leased Premises by patrons, customers and members.
ARTICLE 8 - HAZARDOUS MATERIALS
-------------------------------
8.1 Representations. Tenant hereby represents and warrants to
---------------
Landlord that it has disclosed to Landlord all material information with respect
to the environmental conditions of the Leased Property that Tenant obtained
prior to the Commencement Date. Landlord hereby represents and warrants to
Tenant that it has disclosed to Tenant all material information with respect to
the environmental conditions of the Leased Property that Landlord obtained prior
to the Commencement Date.
8.2 Remediation. If Tenant becomes aware of the presence of any
-----------
Hazardous Material in a quantity sufficient to require remediation or reporting
under any Environmental Law in, on or under the Leased Property or if Tenant,
Landlord, or the Leased Property becomes subject to any order of any federal,
state or local agency to investigate, remove, remediate, repair, close,
detoxify, decontaminate or otherwise clean up the Leased Property, Tenant shall,
at its sole expense, carry out and complete any required investigation, removal,
remediation, repair, closure, detoxification, decontamination or other cleanup
of the Leased Property. If Tenant fails to implement and diligently pursue any
such repair, closure, detoxification, decontamination or other cleanup of the
Leased Property in a timely manner, Landlord
11
shall have the right, but not the obligation after written notification to
Tenant and Tenant's failure to cure as provided herein to carry out such action
and to recover all of the reasonable costs and expenses from Tenant as
Additional Charges.
8.3 Tenant's Indemnification of Landlord. Tenant shall pay, protect,
------------------------------------
indemnify, save, hold harmless and defend Landlord and any Facility Mortgagee
from and against all liabilities, obligations, claims, damages (including
punitive damages), penalties, causes of action, demands, judgments, costs and
expenses (including reasonable attorneys' fees and expenses), to the extent
permitted by law, imposed upon or incurred by or asserted against Landlord or
the Leased Property by reason of any Environmental Law (irrespective of whether
there has occurred any violation of any Environmental Law) in respect of the
Leased Property howsoever arising, without regard to fault on the part of
Tenant, including (a) liability for response costs and for costs of removal and
remedial action incurred by the United States Government, any state or local
governmental unit to any other Person, or damages from injury to or destruction
or loss of natural resources, including the reasonable costs of assessing such
injury, destruction or loss, incurred pursuant to any Environmental Law, (b)
liability for costs and expenses of abatement, investigation, removal,
remediation, correction or clean-up, fines, damages, response costs or penalties
which arise from the provisions of any Environmental Law, or (c) liability for
personal injury or property damage arising under any statutory or common-law
tort theory, including damages assessed for the maintenance of a public
or private nuisance or for carrying on of a dangerous activity, or (d) by reason
of a breach of the representation and warranty in Section 8.1. Notwithstanding
-----------
the foregoing or any other provision of this Lease (including, without
limitation, Section 5.2, Section 8.4 and Article 21), Tenant shall not be
----------- ----------- ----------
liable, or otherwise be required to indemnify Landlord (or any Facility
Mortgagee) from and against any matters, conditions or events that arose,
existed or occurred prior to the Commencement Date; provided, that this sentence
shall not relieve Tenant of its obligation to operate the Leased Property in
compliance with Environmental Laws including Tenant's obligation to maintain,
repair, remove or replace any underground storage tanks.
8.4 Survival of Indemnification Obligations. Tenant's obligations
---------------------------------------
and/or liability under this Article 8 arising during the Term hereof shall
---------
survive any termination of this Lease.
8.5 Environmental Violations at Expiration or Termination of Lease.
--------------------------------------------------------------
Notwithstanding any other provision of this Lease, if, at a time when the Term
would otherwise terminate or expire, a violation of any Environmental Law has
been asserted by Landlord and has not been resolved in a manner reasonably
satisfactory to Landlord, or has been acknowledged by Tenant to exist or has
been found to exist at the Leased Property or has been asserted by any
governmental authority and failure to have completed all action required to
correct, xxxxx or remediate such a violation of any Environmental Law materially
impairs the leasability of the Leased Property upon the expiration of the Term,
then, at the option of Landlord, the Term shall be automatically extended with
respect to the Leased Property beyond the date of termination or expiration and
this Lease shall remain in full force and effect under the same terms and
conditions beyond such date with respect to the Leased Property until the
earlier to occur of (i) the completion of all remedial action in accordance with
applicable Environmental Laws or (ii) 12 months beyond such expiration or
termination date; provided, that Tenant may, upon any such extension of the
--------
Term, terminate the Term by paying to the
12
Landlord such amount as is necessary in the reasonable judgment of Landlord to
complete or perform such remedial action.
8.6 Landlord's Indemnification of Tenant. Landlord shall pay, protect,
------------------------------------
indemnify, save, hold harmless and defend Tenant from and against all
liabilities, obligations, claims, damages (including punitive damages),
penalties, causes of action, demands, judgments, costs and expenses (including
reasonable attorneys' fees and expenses), to the extent permitted by law,
imposed upon or incurred by or asserted against Tenant or the Leased Property by
reason of any Environmental Law (irrespective of whether there has occurred any
violation of any Environmental Law) in respect of any matter, condition, or
event that arose, existed or occurred prior to the Commencement Date, without
regard to fault on the part of Landlord, including (a) liability for response
costs and for costs of removal and remedial action incurred by the United States
Government, any state or local governmental unit to any other Person, or damages
from injury to or destruction or loss of natural resources, including the
reasonable costs of assessing such injury, destruction or loss, incurred
pursuant to any Environmental Law, (b) liability for costs and expenses of
abatement, investigation, removal, remediation, correction or clean-up, fines,
damages, response costs or penalties which arise from the provisions of any
Environmental Law, or (c) liability for personal injury or property damage
arising under any statutory or common-law tort theory, including damages
assessed for the maintenance of a public or private nuisance or for carrying on
of a dangerous activity; provided, however: (i) the foregoing shall not relieve
Tenant of its obligation to operate the Leased Property in compliance with
Environmental Laws including Tenant's obligation to maintain, repair, remove or
replace any underground storage tanks installed by Tenant or at the direction of
Tenant; and (ii) nothing herein shall create in favor of Tenant a right of
set-off to be applied against the payment of Rent hereunder. Notwithstanding the
foregoing or any other provision of this Lease (including, without limitation,
Section 8.2 and Article 21), Landlord shall not be liable, or otherwise be
----------- ----------
required to indemnify Tenant from and against any matters, conditions or events
that arose, existed or occurred on or after the Commencement Date unless such
matters, conditions or events are caused by Landlord.
ARTICLE 9 - MAINTENANCE AND REPAIR
----------------------------------
9.1 Tenant's Sole Obligation. Subject to Unavoidable Delays, Tenant,
------------------------
at its expense, will keep the Leased Property and Tenant's Personal Property in
good order, repair and appearance (whether or not the need for such repairs
occurs as a result of Tenant's use, any prior use, the elements or the age of
the Leased Property, or any portion thereof) and maintain the Leased Property in
accordance with any applicable Legal Requirements, and, except as otherwise
provided in Article 14, with reasonable promptness, make all necessary and
----------
appropriate repairs thereto of every kind and nature, whether interior or
exterior, structural or non-structural, ordinary or extraordinary, foreseen or
unforseen or arising by reason of a condition existing prior to the commencement
of the Term of this Lease (concealed or otherwise). Subject to Unavoidable
Delays, Tenant shall maintain the Leased Premises in accordance with the
Operating Standards set forth in Exhibit D; provided, however that Tenant may
--------- -----------------
make such modifications to such Operating Standards as Tenant may reasonably
determine to be appropriate for the prudent management of the Leased Property or
as may be appropriate to comply with Legal Requirements. Nothing in this Article
-------
9 shall obligate Tenant to make any
-
13
capital improvements or replacements to the Leased property if the Leased
Property can be repaired to the standard required by this Section 9.1.
-----------
9.2 Waiver of Statutory Obligations. Landlord shall not under any
-------------------------------
circumstances be required to build or rebuild any improvements on the Leased
Property, or to make any repairs, replacement, alterations, restorations or
renewals of any nature or description to the Leased Property, whether ordinary
or extraordinary, structural or non-structural, foreseen or unforeseen, or to
make any expenditure whatsoever with respect thereto, in connection with this
Leased, or to maintain the Leased Property in any way. Tenant hereby waives, to
the extent permitted by law, the right to make repairs at the expense of
Landlord pursuant to any law in effect at the time of the execution of this
Leased or hereafter enacted.
9.3 Mechanic's Liens. Nothing contained in this Leased and no action
----------------
or inaction by Landlord shall be construed as (i) constituting the consent or
request of Landlord expressed or implied, to any contractor, subcontractor,
laborer, materialman or vendor to or for the performance of any labor or
services or the furnishing of any materials or other property for the
construction, alteration, addition, repair or demolition of or to the Leased
Property or any part thereof; or (ii) giving Tenant any right, power or
permission to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property, in either case, in such
fashions as would permit the making of any claim against Landlord in respect
thereof or to make any agreement that may create, or in any way be the basis
for, any right, title, interest, lien, claim or other encumbrance upon the
estate of Landlord in the Leased Property, or any portion thereof.
9.4 Surrender of Leased Property. Unless the Lease shall have been
----------------------------
terminated pursuant to the provisions of Article 14, Tenant shall, upon the
----------
expiration or prior termination of the Term, vacate and surrender the Leased
Property to Landlord in the condition in which the Leased Property was
originally received from Landlord, except as repaired, rebuilt, restored,
altered or added to as permitted or required by the provisions of this Lease and
except for ordinary wear and tear (subject to the obligation of Tenant to
maintain the Leased Property in good order and repair during the entire Term of
the Lease).
ARTICLE 10 - TENANT'S IMPROVEMENTS
----------------------------------
10.1 Tenant's Right to Construct. During the Term of this Lease,
---------------------------
Tenant may make alterations, additions, changes and/or improvements to the
Leased Property (individually a "Tenant Improvement," and collectively, "Tenant
------------------ ------
Improvements"). Except as otherwise agreed to be Landlord in writing, any such
------------
Tenant Improvement shall be made at Tenant's sole expense and shall become the
property of Landlord upon termination of this Lease. Unless made on an emergency
basis to prevent injury to Person or property, Tenant will submit plans for any
Tenant Improvement with a value of more than $100,000 in the first Fiscal Year
(and increased by three percent per annum for each subsequent Fiscal Year) to
Landlord for Landlord's prior approval, such approval not to be unreasonably
withheld or delayed. The construction and installation of any Tenant
Improvements shall be subject to the terms and conditions set forth in the
Existing Instruments.
14
10.2 Scope of Right. Subject to Section 10.1 and the terms and
-------------- ------------
conditions set forth in the Existing Instruments, at Tenant's cost and expense,
Tenant shall have the right to:
(a) seek any governmental approvals, including building permits,
licenses, conditional use permits and any certificates of need that
Tenant requires to construct any Tenant Improvement;
(b) demolish, remove or otherwise dispose of any of the Leased
Improvements;
(c) erect upon the Leased Property such Tenant Improvements as Tenant
deems desirable;
(d) make additions, alterations, changes and improvements in any
Tenant Improvement so erected;
(e) raze and demolish any Tenant Improvement together with the right
to salvage therefrom; and
(f) engage in any other lawful activities that Tenant determines are
necessary or desirable for the development of the Leased Property in
accordance with its Primary Intended Use;
provided, however, Tenant shall not make any Tenant Improvement which would,in
-----------------
Landlords's reasonable judgment, impair in any material respect the value or
Primary Intended Use of the Leased Property without Landlord's prior written
consent.
10.3 Cooperation of Landlord. Landlord shall cooperate with Tenant and
-----------------------
take such actions, including the execution and delivery to Tenant of any
applications or other documents, reasonably requested by Tenant in order to
obtain any governmental approvals sought by Tenant to construct any Tenant
Improvement within 10 Business Days following the later of (a) the date Landlord
receives Tenant's request, or (b) the date of delivery of any such application
or document to Landlord, so long as the taking of such action, including the
execution of said applications or documents, shall be without cost to Landlord
(or if there is a cost to Landlord, such cost shall be reimbursed by Tenant),
and will not cause Landlord to be in violation of any law, ordinance or
regulation.
10.4 Commencement of Construction. Tenant agrees that:
----------------------------
(a) Tenant shall diligently seek all governmental approvals relating
to the construction of any Tenant Improvement;
(b) Once Tenant begins the construction of any Tenant Improvement,
Tenant shall diligently prosecute any such construction to completion
in accordance with applicable insurance requirements and the laws,
rules and regulations of all governmental bodies or agencies having
jurisdiction over the Leased Property;
15
(c) Landlord shall have the right at any time from time to time to
post and maintain upon the Leased Property such notices as may be
necessary to protect Landlord's interest from mechanics' liens,
materialmen's liens or liens of a similar nature;
(d) Tenant shall not suffer or permit any mechanics' liens or any
other claims or demands arising from the work of construction of any
Tenant Improvement to be enforced against the Leased Property or any
part thereof, and Tenant agrees to hold Landlord and said Leased
Property free and harmless from all liability from any such liens,
claims or demands, together with all costs and expenses in connection
therewith; and
(e) All work shall be performed in a good and workmanlike manner.
10.5 Rights in Tenant Improvements. Notwithstanding anything to the
-----------------------------
contrary in this Lease, all Tenant Improvements constructed pursuant to Section
-------
10.1, and any and all subsequent additions thereto and alterations and
----
replacements thereof, shall be the sole and absolute property of Tenant during
the Term of this Lease. Upon the expiration or early termination of this Lease,
all such Tenant Improvements shall become the property of Landlord. Without
limiting the generality of the foregoing, Tenant shall be entitled to all
federal and state income tax benefits associated with any Tenant Improvement
during the Term of this Lease.
ARTICLE 11 - LIENS, ENCROACHMENTS AND OTHER TITLE MATTERS
---------------------------------------------------------
11.1 Liens. Subject to the provisions of Article 12 relating to
----- ----------
permitted contests, Tenant will not directly or indirectly create or allow to
remain, and will promptly discharge at its expense any lien, encumbrance,
attachment, title retention agreement or claim upon the Leased Property or any
attachment, levy, claim or encumbrance in respect of the Rent, not including,
however:
(a) this Lease;
(b) the matters, if any, that existed as of the Commencement Date
or which are consented to in writing by Landlord;
(c) restrictions, liens and other encumbrances which are consented
to in writing by Landlord, or any easements granted pursuant to the
provisions of Section 7.4 of this Lease;
-----------
(d) liens for those taxes of Landlord, if any, which Tenant is not
required to pay hereunder;
(e) subleases permitted by Article 24;
----------
(f) liens for Impositions or for sums resulting from noncompliance
with Legal Requirements so long as (1) the same are not yet payable or
payable without
16
the addition of any fine or penalty or (2) such liens are in the
process of being contested as permitted by Article 12;
----------
(g) liens of mechanics, laborers, materialmen, suppliers or vendors
for sums either disputed (provided that such liens are in the process
-------------
of being contested as permitted by Article 12) or not yet due; and
----------
(h) any liens which are the responsibility of Landlord pursuant to
the provisions of Article 24 or liens arising from the acts of
----------
Landlord's employees or authorized agents or any Person (other than
Tenant) whose claim arose under Landlord.
11.2 Encroachments and Other Title Matters. Excepting any matters
-------------------------------------
granted or created by Landlord, if any of the Leased Improvements shall, at any
time, encroach upon any property, street or right-of-way adjacent to the Leased
Property, or shall violate the agreements or conditions contained in any lawful
restrictive covenant or other agreement affecting the Leased Property, or any
part thereof, or shall impair the rights of others under any easement or right-
of-way to which the Leased Property is subject, or the use of the Leased
Property is impaired, limited or interfered with by reason of the exercise of
the right of surface entry or any other rights under a lease or reservation of
any oil, gas, water or other minerals, then promptly upon the request of
Landlord or at the behest of any Person affected by any such encroachment,
violation or impairment, Tenant, at its sole cost and expense (subject to its
right to contest the existence of any such encroachment, violation or
impairment), shall protect, indemnify, save harmless and defend Landlord from
and against all losses, liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses (including reasonable attorneys' fees and
expenses) based on or arising by reason of any such encroachment, violation or
impairment and in such case, in the event of any adverse final determination,
either (i) obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation or
impairment, whether the same shall affect Landlord or Tenant; or (ii) make such
changes in the Leased Improvements, and take such other actions, as Tenant in
the good faith exercise of its judgement deems reasonably practicable, to remove
such encroachment, and to end such violation or impairment, including, if
necessary, the alteration of any of the Leased Improvements, and in any event
take all such actions as may be necessary in order to be able to continue the
operation of the Leased Improvements for the Primary Intended Use substantially
in the manner and to the extent the Leased Improvements were operated prior to
the assertion of such violation or encroachment. Tenant's obligations under this
Section 11.2 shall be in addition to and shall in no way discharge or diminish
------------
any obligation of any insurer under any policy of title or other insurance and
Tenant shall be entitled to a credit for any sums recovered by Landlord under
(i) any such policy of title or other insurance, or (ii) any suit or action
against any Person involved in said matter. If Landlord is a necessary party to
any such action, Tenant shall, at Tenant's expense and with such indemnification
as Landlord shall reasonably request, have the right to pursue claims against
Landlord's title insurance or any other Person involved in said matter.
17
ARTICLE 12 - PERMITTED CONTESTS
-------------------------------
Tenant, on its own or on Landlord's behalf (or in Landlord's name) but
at Tenant's expense, may contest, by appropriate legal proceedings conducted in
good faith and with due diligence, the amount or validity or application, in
whole or in part, of any Imposition or any legal Requirement or Insurance
Requirement or any lien, attachment, levy, encumbrance, charge or claim not
otherwise permitted by Section 11.1, provided that:
------------ -------------
(a) in the case of unpaid Imposition, lien, attachment, levy,
encumbrance, charge or claim, the commencement and continuation of
such proceedings shall suspend the collection thereof from Landlord
and from the Leased Property, and neither the Leased property nor any
Rent therefrom nor any part thereof or interest therein would be in
any danger of being sold, forfeited, attached or lost pending the
outcome of such proceedings;
(b) in the case of a Legal Requirement, Landlord would not be subject
to criminal or material civil liability for failure to comply
therewith pending the outcome of such proceedings. Nothing in this
Section 12(b), however, shall permit Tenant to delay compliance with
-------------
any requirement of an Environmental Law to the extent such non-
compliance poses an immediate threat of injury to any Person or to the
public health or safety or of material damage to any real or personal
property;
(c) in the case of a Legal Requirement and/or an Imposition, lien,
encumbrance or charge, Tenant shall give such reasonable security, if
any, as may be demanded by Landlord to insure ultimate payment of the
same and to prevent any sale or forfeiture of the affected Leased
Property or the Rent by reason of such non-payment or noncompliance,
provided however, the provisions of this Article 12 shall not be
---------------- ----------
construed to permit Tenant to contest the payment of Rent (except as
to contests concerning the method of computation or the basis of levy
of any Imposition or the basis for the assertion of any other claim)
or any other sums payable by Tenant to Landlord hereunder;
(d) no such contest shall interfere in any material respect with the
use or occupancy of the Leased Property;
(e) in the case of an Insurance Requirement, the coverage required by
Article 13 shall be maintained; and
----------
(f) if such contest be finally resolved against Landlord or Tenant,
Tenant shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid together with all interest and penalties
accrued thereon, or comply with the applicable Legal Requirement or
Insurance Requirement.
Landlord, at Tenant's expense, shall execute and deliver to Tenant such
authorizations and other documents as may reasonably be required in any such
contest, and, if reasonably requested by Tenant or if Landlord so
desires, Landlord shall join as a party therein. Tenant shall indemnify
18
and save Landlord harmless against any liability, cost or expense of any kind
that may be imposed upon Landlord in connection with any such contest and any
loss resulting therefrom
ARTICLE 13 - INSURANCE
----------------------
13.1 General Insurance Requirements. During the Term of this Lease,
------------------------------
Tenant shall at all times keep the Leased Property, and all property located in
or on the Leased Property, including all Tenant's Personal Property and any
Tenant Improvements, insured with the kinds and amounts of insurance described
below. This insurance shall be written by companies authorized to do insurance
business in the State in which the Leased Property is located. The policies must
name Landlord as an "Additional Insured." Losses shall be payable to Landlord
and/or Tenant as provided in Article 14. In addition, the policies shall name as
----------
an additional insured the holder of any mortgage, deed of trust or other
security agreement securing any indebtedness or any other Landlord's Encumbrance
placed on the Leased Property in accordance with the provisions of Article 24 ("
----------
Facility Mortgage") by way of a standard form of mortgagee's loss payable
-----------------
endorsement. Any loss adjustment shall require the written consent of Landlord,
Tenant, and each Facility Mortgagee, not to be unreasonably withheld. Evidence
of insurance shall be deposited with Landlord and, if requested, with any
Facility Mortgagee(s). The policies on the Leased Property, including the Leased
Improvements, Fixtures, Tenant's Personal Property and any Tenant Improvements,
shall insure against the following risks:
13.1.1 All Risk. Loss or damage by all risks perils including
--------
but not limited to, fire, vandalism, malicious mischief and extended
coverages, including but not limited to, sprinkler leakage, in an amount
not less than 100% of the then Full Replacement Cost thereof.
13.1.2 Liability. Claims for personal injury or property
---------
damage under a policy of comprehensive general liability insurance with
amounts not less than $10,000,000 per occurrence and in the aggregate.
13.1.3 Flood. Flood and such other hazards and in such amounts
-----
as may be customary for comparable properties in the area; provided
--------
however, that Tenant shall not be required to participate in the National
-------
Flood Insurance Program.
13.1.4 Worker's Compensation. Adequate worker's compensation
---------------------
insurance coverage for all Persons employed by Tenant on the Leased
Property in accordance with the requirements of applicable federal, state
and local laws.
13.1.5 Other Insurance. Such other insurance on or in
---------------
connection with any of the Leased Property as Landlord or any Facility
Mortgagee may reasonably require, which at the time is usual and commonly
obtained in connection with properties similar in type of building size and
use to the Leased Property and located in the geographic area where the
Leased Property is located; provided however, that Landlord shall bear the
-------- -------
cost of any such coverage requested under this Section 13.1.5.
--------------
13.2 Replacement Cost. In the event either party believes that the
----------------
Full Replacement Cost of the insured property has increased or decreased at
any time during the
19
Term, it shall have the right to have such Full Replacement Cost redetermined by
the fire insurance company which is then carrying the largest amount of fire
insurance carried on the Leased Property (the "Impartial Appraiser"). The party
-------------------
desiring to have the Full Replacement Cost so redetermined shall forthwith, on
receipt of such determination by such Impartial Appraiser, give written notice
thereof to the other party hereto. The determination of such Impartial Appraiser
shall be final and binding on the parties hereto, and Tenant shall forthwith
increase, or may decrease, the amount of the insurance carried pursuant to this
Section 13.2, as the case may be, to the amount so determined by the Impartial
------------
Appraiser. Each party shall pay one-half of the fee, if any, of the Impartial
Appraiser.
13.3 Waiver of Subrogation. Landlord and Tenant waive their respective
---------------------
right of recovery against the other to the extent damage or liability is insured
against under a policy or policies or insurance. All insurance policies carried
by either party covering the Leased Property including contents, fire and
casualty insurance, shall expressly waive any right of subrogation on the part
of the insurer against the other party (including any Facility Mortgagee). The
parties hereto agree that their policies will include such waiver clause or
endorsement so long as the same are obtainable without extra cost, and in the
event of such an extra charge the other party, at its election, may pay the
same, but shall not be obligated to do so.
13.4 Form Satisfactory, Etc. All of the policies of insurance referred
----------------------
to in Section 13.1 shall be written in a form reasonably satisfactory to
------------
Landlord and by insurance companies rated not less than A-X by A.M. Best's
Insurance Guide. In addition, all insurance carried by Tenant hereunder shall
have deductible amounts which are reasonably acceptable to Landlord. Tenant
shall pay all premiums for the policies or insurance referred to in Section 13.1
-----------
and shall deliver certificates thereof to Landlord prior to their effective date
(and with respect to any renewal policy, at least 10 days prior to the
expiration of the existing policy). In the event Tenant fails to satisfy its
obligations under this Section 13.4, Landlord shall be entitled, but shall have
------------
no obligation, to effect such insurance and pay the premiums therefor, which
premiums shall be repayable to Landlord upon written demand as Additional
Charges. Each insurer mentioned in Section 13.1 shall agree, by endorsement on
------------
the policy or policies issued by it, or by independent instrument furnished to
Landlord, that it will give to Landlord 30 days' written notice before the
policy or policies in question shall be altered, allowed to expire or cancelled.
Each such policy shall also provide that any loss otherwise payable thereunder
shall be payable notwithstanding (i) any act or omission of Landlord or Tenant
which might, absent such provision, result in a forfeiture of all or a part of
such insurance payment, (ii) the occupation or use of the Leased Property for
purposes more hazardous than those permitted by the provisions of such policy,
(iii) any foreclosure or other action or proceeding taken by any Facility
Mortgagee pursuant to any provision of a mortgage, note, assignment or other
document evidencing or securing a loan upon the happening of an event of default
therein or (iv) any change in title to or ownership of the Leased Property.
13.5 Change in Limits. In the event that Landlord shall at any time
----------------
reasonably determine on the basis of prudent industry practice that the
liability insurance carried by Tenant pursuant to Section 13.1.2 is either
--------------
excessive or insufficient (but only if the liability insurance limit is not
less than $3,000,000 per person or per occurrence). the parties shall endeavor
to agree on the proper and reasonable limits for such insurance to be carried;
and such insurance shall thereafter be carried with the limits thus agreed on
until further changed pursuant to the
20
provisions of this Section 13.5. Notwithstanding the foregoing, the deductibles
------------
for such insurance or the amount of such insurance which is self-retained by
Tenant shall be as reasonably determined by Tenant so long as Tenant can
reasonably demonstrate to Landlord its ability to satisfy such deductible or
amount of such self-retained insurance.
13.6 Blanket Policy. Notwithstanding anything to the contrary
--------------
contained in this Article 13, Tenant's obligations to carry the insurance
----------
provided for herein may be brought within the coverage of a so-called blanket
policy or policies of insurance carried and maintained by Tenant; provided,
--------
however, that the coverage afforded Landlord will not be reduced or diminished
-------
or otherwise be different from that which would exist under a separate policy
meeting all other requirements of this Lease by reason of the use of such
blanket policy of insurance, and provided further that the requirements of this
Article 13 are otherwise satisfied. The amount of the total insurance shall be
----------
specified either (i) in each such "blanket" or umbrella policy or (ii) in a
written statement, which Tenant shall deliver to Landlord and Facility
Mortgagee, from the insurer thereunder. A certificate of each such "blanket" or
umbrella policy shall promptly be delivered to Landlord and Facility Mortgagee.
If requested by Landlord, Tenant shall provide Landlord with a certified copy of
the "blanket" or umbrella insurance policy.
ARTICLE 14 - APPLICATION OF INSURANCE PROCEEDS
----------------------------------------------
14.1 Insurance Proceeds. All proceeds of insurance payable by
------------------
reason of any loss or damage to the Leased Property, or any portion thereof, and
insured under any policy of insurance required by Article 13 shall (i) if
----------
greater than $100,000, be paid to Landlord and held by Landlord and (ii) if less
than such amount, be paid to Tenant and held by Tenant. All such proceeds shall
be held in trust and shall be made available for reconstruction or repair, as
the case may be, of any damage to or destruction of the Leased Property, or any
portion thereof.
14.1.1 Disbursement of Proceeds. Any proceeds held by
------------------------
Landlord or Tenant shall be paid out by Landlord or Tenant from time to
time for the reasonable costs of such reconstruction or repair; provided,
--------
however, that Landlord shall disburse proceeds subject to the following
-------
requirements:
(i) prior to commencement of restoration, (A) the architects,
contracts, contractors, plans and specifications for the restoration
shall have been approved by Landlord, which approval shall not be
unreasonably withheld or delayed and (B) appropriate waivers of
mechanics' and materialmen's liens shall have been filed;
(ii) at the time of any disbursement, subject to Article 12, no
----------
mechanics' or materialmen's liens shall have been filed against any of
the Leased Property and remain undischarged, unless a satisfactory
bond shall have been posted in accordance with the laws of the State;
(iii) disbursements shall be made as requested by Tenant, not more
frequently than monthly, upon not less than 15 days' notice in an
amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of (A)
21
satisfactory evidence of the stage of completion, the estimated total
cost of completion and performance of the work to date in a good and
workmanlike manner in accordance with the contracts, plans and
specifications, (B) waivers of liens, (C) a satisfactory bringdown of
title insurance and (D) other evidence of cost and payment so that
Landlord and Facility Mortgagee can verify that the amounts disbursed
from time to time are represented by work that is completed, in place
and free and clear of mechanics' and materialmen's lien claims;
(iv) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by the president or a vice president of
Tenant, describing the work for which payment is requested, stating
the cost incurred in connection therewith, stating that Tenant has not
previously received payment for such work and, upon completion of the
work, also stating that the work has been fully completed and complies
with the applicable requirements of this Lease; and
(v) to the extent actually held by Landlord and not by a Facility
Mortgagee, (1) the proceeds shall be held in a separate account and
shall not be commingled with Landlord's other funds, and (2) interest
shall accrue on funds so held at the money market rate of interest and
such interest shall constitute part of the proceeds.
14.1.2 Excess Proceeds. Any excess proceeds of insurance
---------------
remaining after the completion of the restoration or reconstruction of the
Leased Property (or in the event neither Landlord nor Tenant is required or
elects to repair and restore) shall be paid to Landlord and Tenant in like
proportions to the value of Landlord's interests in the Leased Property and
Tenant's interest in Tenant's Personal Property and the Tenant
Improvements, or any portion thereof, as determined under Article 13, upon
----------
completion of any such repair and restoration except as otherwise
specifically provided below in this Article 14. All salvage resulting from
----------
any risk covered by insurance shall belong to Landlord.
14.2 Reconstruction Covered by Insurance.
-----------------------------------
14.2.1 Destruction Rendering Facility Unsuitable for its
-------------------------------------------------
Primary Use. If during the Term the Leased Property is totally or partially
-----------
destroyed from a risk covered by the insurance described in Article 13 and
----------
the Facility thereby is rendered Unsuitable For Its Primary Intended Use,
Tenant shall diligently restore the Facility to substantially the same
condition as existed immediately before the damage or destruction;
provided, however, if the Facility cannot be fully repaired or restored
within a 12-month period from the date of the damage or destruction to
substantially the same condition as existed immediately before the damage
or destruction, then Tenant may terminate this Lease by giving Landlord
written notice of such termination within 60 days after the date of such
damage or destruction, and the effective date of such termination shall be
30 days following such notice of termination; provided, however, if
Landlord notifies Tenant in writing within 15 days of Landlord's receipt of
Tenant's notice of termination that Landlord intends to restore the
Facility to substantially the same condition as existed immediately before
the damage and destruction and Landlord diligently commences and
22
prosecutes such restoration and completes such restoration within 12 months
after the date of the damage or destruction, then Tenant's election to
terminate the Lease shall be deemed rescinded and the Lease shall remain in
full force and effect. Notwithstanding Section 14.4 below, in the event
------------
Landlord elects to restore the Facility as provided in the immediately
preceding sentence, during the period from the date of Tenant's notice of
termination through the date the restoration of the Facility is completed,
the Base Rent shall be deemed to be zero and Tenant's payment of Rent shall
consist only of the payment of Additional Rent in accordance with Section 9
---------
of the Basic Lease Provisions and the Additional Charges as required by the
Detailed Lease Provisions. Upon any such termination of the Lease by Tenant
or upon Landlord's election to restore the Facility as provided in this
section, Landlord shall be entitled to retain all insurance proceeds,
grossed up by Tenant to account for the deductible or any self-insured
retention; provided, further, that Tenant shall be entitled to retain or
receive all insurance proceeds relating to Tenant's Personal Property and
the Tenant Improvements.
14.2.2 Destruction Not Rendering Facility Unsuitable for its
-----------------------------------------------------
Primary Use. If during the Term, the Leased Property is totally or
-----------
partially destroyed from a risk covered by the insurance described in
Article 13, but the Facility is not thereby rendered Unsuitable For Its
----------
Primary Intended Use, Tenant shall diligently restore the Facility to
substantially the same condition as existed immediately before the damage
or destruction; provided, however, Tenant shall not be required to restore
-----------------
Tenant's Personal Property and/or any Tenant Improvements if failure to do
so does not adversely affect the amount of Additional Rent payable
hereunder. Such damage or destruction shall not terminate this Lease;
provided further, however, if Tenant and Landlord cannot within 12 months
-------------------------
after said damage obtain all necessary governmental approvals, including
building permits, licenses, conditional use permits and any certificates of
need, after diligent efforts to do so in order to be able to perform all
required repair and restoration work and to operate the Facility for its
Primary Intended Use in substantially the same manner as immediately prior
to such damage or destruction, Tenant may terminate this Lease upon 30 days
prior written notice to Landlord; provided further, however, if Landlord
-------------------------
notifies Tenant in writing within 15 days of Landlord's receipt of Tenant's
notice of termination that Landlord intends to restore the Facility to
substantially the same condition as existed immediately before the damage
and destruction and Landlord diligently commences and prosecutes such
restoration and completes such restoration within 90 days after the date of
Tenant's notice of termination, then Tenant's election to terminate the
Lease shall be deemed rescinded and the Lease shall remain in full force
and effect. Notwithstanding Section 14.4 below, in the event Landlord
------------
elects to restore the Facility as provided in the immediately preceding
sentence, during the period from the date of Tenant's notice of termination
through the date the restoration of the Facility is completed, the Base
Rent shall be deemed to be zero and Tenant's payment of Rent shall consist
only of the payment of Additional Rent in accordance with Section 9 of the
---------
Basic Lease Provisions and the Additional Charges as required by the
Detailed Lease Provisions. Upon any such termination of the Lease by Tenant
or upon Landlord's election to restore the Facility as provided in this
section, Landlord shall be entitled to retain all insurance proceeds,
grossed up by Tenant to account for the deductible or any self-insured
retention; provided, further, that Tenant shall be entitled to retain or
receive all insurance proceeds relating to (i) Tenant's Personal Property
(ii) the Tenant
23
Improvements and (iii) subject to inclusion in Course Revenue, Tenant's
business interruption insurance.
14.2.3 Costs of Repair. If Tenant restores the Facility as
---------------
provided in Sections 14.2.1 and 14.2.2 above and the cost of the repair or
--------------- ------
restoration exceeds the amount of proceeds received by Landlord or Tenant
from the insurance required under Article 13, Tenant shall pay for such
----------
excess cost of repair or restoration. If Landlord restores the Facility as
provided in Sections 14.2.1 and 14.2.2 above and the cost of the repair or
--------------- ------
restoration exceeds the amount of proceeds received by Landlord as provided
in those sections, Landlord shall pay for such excess cost of repair or
restoration.
14.3 Reconstruction Not Covered by Insurance. If during the Term,
---------------------------------------
the Facility is totally or materially destroyed from a risk not covered by the
insurance described in Article 13, whether or not such damage or destruction
----------
renders the Facility Unsuitable For Its Primary Intended Use, Tenant shall
either (A) restore the Facility, at Tenant's cost, to substantially the same
condition as existed immediately before the damage or destruction, or (B) elect
to terminate this Lease upon 60 days prior written notice to Landlord; provided,
however, if Landlord notifies Tenant in writing within 15 days of Landlord's
receipt of Tenant's notice of termination that Landlord intends to restore the
Facility, at Landlord's cost, to substantially the same condition as existed
immediately before the damage and destruction and Landlord diligently commences
and prosecutes such restoration and completes such restoration within 90 days
after the date of Tenant's notice of termination, then Tenant's election to
terminate the Lease shall be deemed rescinded and the Lease shall remain in full
force and effect. In the event Landlord elects to restore the Facility as
provided in the immediately preceding sentence, during the period from the date
of Tenant's notice of termination through the date the restoration of the
Facility is completed, the Base Rent shall be deemed to be zero and Tenant's
payment of Rent shall consist only of the payment of Additional Rent in
accordance with Section 9 of the Basic Lease Provisions and the Additional
---------
Charges as required by the Detailed Lease Provisions.
14.4 Waiver. Tenant hereby waives any statutory rights of
------
termination which may arise by reason of any damage or destruction of the
Facility which Landlord or Tenant is obligated to restore or may restore under
any of the provisions of this Lease.
14.5 Damage Near End of Term. Notwithstanding any other provision
-----------------------
to the contrary in this Article 14, if damage to or destruction of the Leased
----------
Property occurs during the last 24 months of the Term of this Lease, and if such
damage or destruction cannot reasonably be expected to be fully repaired or
restored prior to the date that is 12 months prior to the end of the
then-applicable Term, then Tenant shall have the right to terminate the Lease on
30 days' prior notice to Landlord by giving notice thereof to Landlord within 60
days after the date of such damage or destruction. Upon any such termination,
Landlord shall be entitled to retain all insurance proceeds, grossed up by
Tenant to account for the deductible or any self-insured retention; provided,
---------
however, that, Tenant shall be entitled to retain or receive all insurance
-------
proceeds relating to (i) Tenant's Personal Property, (ii) Tenant Improvements
and (iii) subject to the inclusion in Course Revenue. Tenant's business
interruption insurance.
24
ARTICLE 15 - CONDEMNATION
-------------------------
15.1 Total Taking. If at any time during the Term the Leased
------------
Property is totally and permanently taken by Condemnation, this Lease shall
terminate on the Date of Taking and Tenant shall promptly pay all outstanding
rent and other charges through the date of termination.
15.2 Partial Taking. If a portion of the Leased Property is taken
--------------
by Condemnation, this Lease shall remain in effect if the Facility is not
thereby rendered Unsuitable For Its Primary Intended Use, but if the Facility is
thereby rendered Unsuitable For Its Primary Intended Use, this Lease shall
terminate on the Date of Taking.
15.3 Restoration. If there is a partial taking of the Leased
-----------
Property and this Lease remains in full force and effect pursuant to Section
-------
15.2, Landlord at its cost shall accomplish all necessary restoration up to but
----
not exceeding the amount of the Award payable to Landlord, as provided herein.
If Tenant receives an Award under Section 15.4, Tenant shall repair or restore
------------
any Tenant Improvements up to but not exceeding the amount of the Award payable
to Tenant therefor.
15.4 Award Distribution. To entire Award shall belong to and be
------------------
paid to Landlord, except that, subject to the rights of the Facility Mortgagee,
Tenant shall be entitled to receive from the Award, if and to the extent such
Award specifically includes such items, a sum attributable to the value, if any,
of: (i) any Tenant Improvements and (ii) the leasehold interest of Tenant under
this Lease; provided, however, that if the amount received by Landlord and the
------------------
Facility Mortgagee is less than the Condemnation Threshold, then the amount of
the Award otherwise payable to Tenant for the value of its leasehold interest
under this Lease (and not any other funds of Tenant) shall instead be paid over
to Landlord up to the amount of the shortfall.
15.5 Temporary Taking. The taking of the Leased Property, or any
----------------
part thereof, by military or other public authority shall constitute a taking by
Condemnation only when the use and occupancy by the taking authority has
continued for longer than six months. During any such six month period, which
shall be a temporary taking, all the provisions of this Lease shall remain in
full force and effect with no abatement of rent payable by Tenant hereunder. In
the event of any such temporary taking, the entire amount of any such Award made
for such temporary taking allocable to the Term of this Lease, whether paid by
way of damages, rent or otherwise, shall be paid to Tenant, provided however
that notwithstanding the preceding, to the extent that Tenant successfully
prevails against the condemning authority on a claim that the Leased Property
would have generated a given level of revenues which would have produced
Additional Rent during the period of such taking, then the appropriate portion
of the Award which is attributable to revenue that would have generated
Additional Rent for said period shall be paid to Landlord, if due and payable,
as Additional Rent.
25
(vi) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other
applicable law or statute of the United States of America or
any state thereof;
(e) if Tenant shall, on a petition in bankruptcy filed against it,
be adjudicated as bankrupt or a court of competent jurisdiction shall
enter an order or decree appointing, without the consent of Tenant, a
receiver of Tenant or of the whole or substantially all of its
property, or approving a petition filed against it seeking
reorganization or arrangement of Tenant under the federal bankruptcy
laws or any other applicable law or statute of the United States of
America or any state thereof, and such judgment, order or decree shall
not be vacated or set aside or stayed within 60 days from the date of
the entry thereof;
(f) if Tenant shall be liquidated or dissolved, or shall begin
proceedings toward such liquidation or dissolution;
(g) if the estate or interest of Tenant in the Leased Property or
any part thereof shall be levied upon or attached in any proceeding
and the same shall not be vacated or discharged within the later of 90
days after commencement thereof or 30 days after receipt by Tenant of
notice thereof from Landlord (unless Tenant shall be contesting such
lien or attachment in accordance with Article 12); provided, however,
---------- ------------------
that such notice shall be in lieu of and not in addition to any notice
required under applicable law;
(h) if, except as a result of damage, destruction or partial or
complete Condemnation or other Unavoidable Delays, Tenant voluntarily
ceases operations on the Leased Property for a period in excess of 45
consecutive days other than relating to the closure of up to nine
holes at a time or the clubhouse in order for Tenant to carry out
renovations so long as Tenant is diligently performing such
renovations:
(i) any representation or warranty made by Tenant herein or in any
certificate, demand or request made pursuant hereto proves to be
incorrect, now or hereafter, in any material respect and any adverse
effect on Landlord of any such misrepresentation or breach of warranty
has not been corrected to Landlord's satisfaction within 30 days after
Tenant becomes aware of, or is notified by Landlord of the fact of,
such misrepresentation or breach of warranty;
(j) with respect to any of the Other Property Leases, either an
Event of Default has occurred and is continuing or such leases have
been terminated by reason of an Event of Default;
(k) if Tenant shall make a Distribution and shall have failed to
post the Distribution Letter of Credit if and as required by Section
-------
25.6 and such default continues for five days after written notice to
----
Tenant; or
27
ARTICLE 16 - EVENTS OF DEFAULT
------------------------------
16.1 Events of Default. If any one or more of the following events
-----------------
(individually, an "Event of Default") shall occur:
----------------
(a) if Tenant shall fail to make payment of the Rent payable by
Tenant under this Lease when the same becomes due and payable and such
failure is not cured by Tenant within a period of seven days after
receipt by Tenant of notice thereof from Landlord; provided, however,
-----------------
that such notice shall be in lieu of and not in addition to any
notice required under applicable law;
(b) if Tenant shall fail to obtain, maintain or replace a Letter of
Credit or a Distribution Letter of Credit as required by Article 25
----------
and such default continues for three business days after written
notice to Tenant;
(c) if, other than as a result of Unavoidable Delays, Tenant shall
fail to observe or perform any material term, covenant or condition of
this Lease and such failure is not cured by Tenant within a period of
30 days after receipt by Tenant of written notice thereof from
Landlord, unless such failure cannot with due diligence be cured
within a period of 30 days, in which case such failure shall not be
deemed to continue if Tenant proceeds promptly and with due diligence
to cure the failure and diligently completes the curing thereof;
provided, however, that such notice shall be in lieu of and not in
-----------------
addition to any notice required under applicable law; provided
further, however, that the cure period shall not extend beyond 30 days
as otherwise provided by this Section 16.1(c) if the facts or
---------------
circumstances giving rise to the default are creating a further harm
to Landlord or the Leased Property and Landlord makes a good faith
determination that Tenant is not undertaking remedial steps that
Landlord would cause to be taken if this Lease were then to terminate.
(d) if Tenant shall:
(i) admit in writing its inability to pay its debts
generally as they become due,
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act,
(iii) make an assignment for the benefit of its creditors,
(iv) be unable to pay its debts as they mature.
(v) consent to the appointment of a receiver of itself or of
the whole or any substantial part of its property, or
26
(l) if Tenant pays any Partner Distributions prior to the payment
of Rent currently owing under this Lease.
THEN, Landlord may terminate this Lease by giving Tenant not less than
10 days' written notice (or no notice for clauses (d), (e) and (f) with respect
to Tenant) of such termination and upon the expiration of the time fixed in such
notice, the Term shall terminate and all rights of Tenant under this Lease shall
cease. Landlord shall have all rights at law and in equity available to Landlord
as a result of Tenant's breach of this Lease.
16.2 Payment of Costs. Tenant shall, to the extent permitted by
----------------
law, pay as Additional Charges all costs and expenses incurred by or on behalf
of Landlord, including reasonable attorneys' fees and expenses, as a result of
any Event of Default hereunder.
16.3 Exceptions. No Event of Default (other than a failure to make
----------
payment of money or post a Letter of Credit, if required hereunder) shall be
deemed to exist under clause (c) or clause (j) of Section 16.1 during any time
------------
the curing thereof is prevented by an Unavoidable Delay; provided that, upon the
-------------
cessation of such Unavoidable Delay, Tenant shall remedy such default without
further delay.
16.4 Certain Remedies. If an Event of Default shall have occurred
----------------
(and the event giving rise to such Event of Default has not been cured within
the curative period relating thereto as set forth in Section 16.1) and be
------------
continuing, whether or not this Lease has been terminated pursuant to Section
-------
16.1, Tenant shall, to the extent permitted by law, if required by Landlord so
----
to do, immediately surrender to Landlord the Leased Property pursuant to the
provisions of Section 16.1 and quit the same and Landlord may enter upon and
------------
repossess the Leased Property by reasonable force, summary proceedings,
ejectment or otherwise, and may remove Tenant and all other Persons and any and
all Tenant's Personal Property from the Leased Property subject to any
requirement of law.
16.5 Damages. None of (a) the termination of this Lease pursuant to
-------
Section 16.1, (b) the repossession of the Leased Property, (c) the failure of
------------
Landlord, notwithstanding reasonable good faith efforts, to relet the Leased
Property, (d) the reletting of all or any portion thereof, nor (e) the failure
of Landlord to collect or receive any rentals due upon any such reletting, shall
relieve Tenant of its liability and obligations hereunder, all of which shall
survive any such termination, repossession or reletting. In the event of any
such termination, Tenant shall forthwith pay to Landlord all Rent due and
payable with respect to the Leased Property to, and including, the date of such
termination. Thereafter, Tenant shall forthwith pay to Landlord, at Landlord's
option, as and for liquidated and agreed current damages for Tenant's default,
either:
(a) the sum of:
(i) the worth at the time of award of the unpaid Rent which
had been earned at the time of termination,
(ii) the worth at the time of award of the amount by which
the unpaid Rent which would have been earned after termination
until the time of
28
award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided,
(iii) the worth at the time of award of the amount by which the
unpaid Rent for the balance of the Term after the time of award
exceeds the amount of such rental loss that Tenant proves could
be reasonably avoided, and
(iv) any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform
its obligations under this Lease or which in the ordinary course
of things would be likely to result therefrom.
In making the above determinations, the worth at the time of the award
shall be determined by the court having jurisdiction thereof using the
San Francisco Federal Funds Rate plus one percent and the Additional
Rent shall be deemed to be the same as for the then-current Fiscal
Year or, if not determinable, the immediately preceding Fiscal Year,
for the remainder of the Term, or such other amount as either party
shall prove reasonably could have been earned during the remainder of
the Term or any portion thereof; or
(b) without termination of Tenant's right to possession of the
Leased Property, each installment of said Rent and other sums payable
by Tenant to Landlord under the Lease as the same becomes due and
payable, which Rent and other sums shall bear interest at the Overdue
Rate from the date when due until paid, and Landlord may enforce, by
action or otherwise, any other term or covenant of this Lease.
16.6 Additional Remedies. Landlord has all other remedies that may
-------------------
be available under applicable law.
16.7 Appointment of Receiver. Upon the entry of a court order that
-----------------------
an Event of Default has occurred, Landlord shall be entitled, as a matter of
right, to the appointment of a receiver or receivers acceptable to Landlord of
the Leased Property and the Facility and of the revenues, earnings, income,
products and profits thereof, pending such proceedings, with such powers as the
court making such appointment shall confer.
16.8 Waiver. If this Lease is terminated pursuant to Section 16.1,
------ ------------
Tenant waives, to the extent permitted by applicable law (a) any right of
redemption, re-entry or repossession and (b) any right to a trial by jury in the
event of summary proceedings to enforce the remedies set forth in this Article
-------
16.
--
16.9 Application of Funds. Any payments received by Landlord under
--------------------
any of the provisions of this Lease during the existence or continuance of any
Event of Default (and such payment is made to Landlord rather than Tenant due to
the existence of an Event of Default) shall be applied to Tenant's obligations
in the order which Landlord may determine or as may be prescribed by the laws of
the State.
29
16.10 Impounds. Landlord shall have the right during the continuance
--------
of an Event of Default to require Tenant to pay to Landlord an additional
monthly sum (each an "Impound Payment") sufficient to pay the Impound Charges
---------------
(as hereinafter defined) as they become due. As used herein, "Impound Charges"
---------------
shall mean real estate taxes on the Leased Property or payments in lieu thereof
and premiums on any insurance required by this Lease. Landlord shall determine
the amount of the Impound Charges and of each Impound Payment. The Impound
Payments shall be held in a separate account and shall not be commingled with
other funds of Landlord and interest thereon shall be held for the account of
Tenant. Landlord shall apply the Impound Payments to the payment of the Impound
Charges on their respective due dates. Any Impound Payments which have not been
applied to Impound Charges shall be released to Tenant six months after the
Event of Default is cured without any reoccurring Event of Default. If at any
time the Impound Payments theretofore paid to Landlord shall be insufficient for
the payment of the Impound Charges, Tenant, within 10 days after Landlord's
demand therefor, shall pay the amount of the deficiency to Landlord.
ARTICLE 17 - LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT
------------------------------------------------------
If Tenant shall fail to make any payment or to perform any act
required to be made or performed under this Lease, and to cure the same within
the relevant time periods provided in Section 16.1, Landlord, after notice to
------------
and demand upon Tenant, and without waiving or releasing any obligation or
default, may (but shall be under no obligation to) at any time thereafter make
such payment or perform such act for the account and at the expense of Tenant.
Landlord may, to the extent permitted by law, enter upon the Leased Property for
such purpose and take all such action thereon as, in Landlord's opinion, may be
necessary or appropriate therefor. No such entry shall be deemed an eviction of
Tenant. All sums so paid by Landlord and all costs and expenses (including
reasonable attorneys' fees and expenses, to the extent permitted by law) so
incurred, together with a late charge thereon at the Overdue Rate from the date
on which such sums or expenses are paid or incurred by Landlord, shall be paid
by Tenant to Landlord on demand. The obligations of Tenant and rights of
Landlord contained in this Article 17 shall survive the expiration or earlier
----------
termination of this Lease.
ARTICLE 18 - LEGAL REQUIREMENTS
-------------------------------
Subject to Article 12 regarding permitted contests, Tenant, at its
----------
expense, shall promptly (a) comply with all Legal Requirements and Insurance
Requirements in respect of the use, operation, maintenance, repair and
restoration of the Leased Property, whether or not compliance therewith shall
require structural changes in any of the Leased Improvements or interfere with
the use and enjoyment of the Leased Property; and (b) procure, maintain and
comply with all licenses and other authorizations required for any use of the
Leased Property then being made, and for the proper erection, installation,
operation and maintenance of the Leased Property or any part thereof.
ARTICLE 19 - HOLDING OVER
-------------------------
If Tenant shall for any reason remain in possession of the Leased
Property after the expiration of the Term or earlier termination of the Term
hereof, such possession shall be as a month-to-month tenant during which time
Tenant shall pay as rental each month. 150% of
30
the aggregate of (i) one-twelfth of the aggregate Base Rent and Additional Rent
payable with respect to the last Fiscal Year of the preceding Term; (ii) all
Additional Charges accruing during the month; and (iii) all other sums, if any,
payable by Tenant pursuant to the provisions of this Lease with respect to the
Leased Property. During such period of month-to-month tenancy, Tenant shall be
obligated to perform and observe all of the terms, covenants and conditions of
this Lease, but shall have no rights hereunder other than the right, to the
extent given by law to month-to-month tenancies, to continue its occupancy and
use of the Leased Property. Nothing contained herein shall constitute the
consent, express or implied, of Landlord to the holding over of Tenant after the
expiration or earlier termination of this Lease.
ARTICLE 20 - RISK OF LOSS
-------------------------
During the Term of this Lease, the risk of loss or of decrease in the
enjoyment and beneficial use of the Leased Property as a consequence of the
damage or destruction thereof by fire, the elements, casualties, thefts, riots,
wars or otherwise, or in consequence of foreclosures, attachments, levies or
executions (other than by Landlord or Landlord's employees, authorized agents or
contractors, and those claiming from, through or under Landlord) is assumed by
Tenant. In the absence of Landlord's negligence (and subject to Article 8), acts
---------
of Landlord or Landlord's employees, authorized agents or contractors, or those
claiming from, through or under Landlord, or breach of this Lease by Landlord,
which in any of the foregoing cases causes such loss or decrease in the
enjoyment and beneficial use of the Leased Property, (i) Landlord shall in no
event be answerable or accountable for any of the events mentioned in the first
sentence of this Article 20 and (ii) none of such events shall entitle Tenant
----------
to any abatement of Rent except as otherwise provided in the Lease.
ARTICLE 21 - INDEMNIFICATION
----------------------------
21.1 Tenant's Indemnification of Landlord. Subject to Article 8,
------------------------------------ ---------
Tenant will protect, indemnify, save harmless and defend Landlord from and
against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including reasonable attorneys' fees and expenses)
(collectively, "Claims"), to the extent permitted by law, imposed upon or
------
incurred by or asserted against Landlord by reason of:
(a) any accident, injury to or death of Persons or loss of or damage
to property occurring on or about the Leased Property or adjoining
sidewalks during the Term of this Lease, including, but not limited
to, any accident, injury to or death of Person or loss of or damage to
property resulting from golf balls, golf clubs, golf shoes, lawn
mowers or other gardening devices, golf carts, tractors or other
motorized vehicles present on or adjacent to the Leased Property;
(b) any use, misuse, non-use, condition, maintenance or repair by
Tenant of the Leased Property;
(c) any Impositions (which are the obligations of Tenant to pay
pursuant to the applicable provisions of this Lease):
31
(d) any failure on the part of Tenant to perform or comply with any
of the terms of this Lease;
(e) the non-performance of any of the terms and provisions of any and
all existing and future subleases of the Leased Property to be
performed by the landlord (Tenant) thereunder;
(f) any Claims Landlord may incur or suffer as a result of any
permitted contest by Tenant pursuant to Article 12; and
----------
(g) any Claims Landlord may incur or suffer in connection with the
Existing Instruments.
21.2 Landlord's Indemnification of Tenant. Subject to Article 8,
------------------------------------ ---------
Landlord shall protect, indemnify, save harmless and defend Tenant from and
against all Claims imposed upon or incurred by, or asserted against Tenant as a
result of (i) Landlord's or Landlord's employees, authorized agents' or
contractors' negligence, or (ii) any acts of Landlord or Landlord's employees,
authorized agents or contractors, or those claiming from, through or under
Landlord (other than such acts which are authorized under the Lease or
applicable law), or (iii) breach of this Lease by Landlord, including any Claims
Tenant may incur or suffer in connection with the Existing Instruments as a
result of any breach of this Lease by Landlord.
21.3 Mechanics of Indemnification. As soon as reasonably
----------------------------
practicable after receipt by the indemnified party of notice of any liability or
claim incurred by or asserted against the indemnified party that is subject to
indemnification under this Article 21, the indemnified party shall give notice
----------
thereof to the indemnifying party. The indemnified party may at its option
demand indemnity under this Article 21 as soon as a claim has been made in
----------
writing by a third party, regardless of whether an actual loss has been
suffered, so long as the indemnified party shall in good faith determine that
such claim is not frivolous and that the indemnified party may be liable for, or
otherwise incur, a loss as a result thereof and shall give notice of such
determination to the indemnifying party. The indemnified party shall permit the
indemnifying party, at its option and expense, to assume the defense of any such
claim by counsel selected by the indemnifying party and reasonably satisfactory
to the indemnified party, and to settle or otherwise dispose of the same;
provided, however, that the indemnified party may at all times participate in
-------- -------
such defense at its expense; and provided further, however, that the
-------- ------- -------
indemnifying party shall not, in defense of any such claim, except with the
prior written consent of the indemnified party, consent to the entry of any
judgment or to enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff in question
to the indemnified party and its affiliates a release of all liabilities in
respect of such claims, or that does not result only in the payment of money
damages by the indemnifying party. If the indemnifying party shall fail to
undertake such defense within 30 days after such notice, or within such shorter
time as may be reasonable under the circumstances, then the indemnified party
shall have the right to undertake the defense, compromise or settlement of such
liability or claim on behalf of and for the account of the indemnifying party.
32
21.4 Survival of Indemnification Obligations. Tenant's or
---------------------------------------
Landlord's liability for a breach of the provisions of this Article 21 arising
----------
during the Term hereof shall survive any termination of this Lease.
ARTICLE 22 - SUBLETTING AND ASSIGNMENT
--------------------------------------
22.1 Prohibition Against Subletting and Assignment. Subject to
---------------------------------------------
Section 22.3, Tenant shall not, without the prior written consent of Landlord
------------
(which consent Landlord may grant or withhold in its sole and absolute
discretion), assign, mortgage, pledge, hypothecate, encumber or otherwise
transfer (except to an Affiliate of Tenant) the Lease or any interest therein,
all or any part of the Leased Property or suffer or permit the Lease or the
leasehold estate created hereby or thereby or any other rights arising under the
Lease to be assigned, transferred, mortgaged, pledged, hypothecated or
encumbered, in whole or in part, whether voluntarily, involuntarily or by
operation of law. For purposes of this Section 22.1, an assignment of the Lease
------------
shall be deemed to include any Change of Control of Tenant, as if such Change of
Control were an assignment of the Lease. Notwithstanding the first sentence of
this Section 22.1, an assignment of this Lease in connection with the sale,
------------
conveyance or other transfer of all or substantially all of the assets of Tenant
(whether by operation of law or otherwise) shall be treated as a Change in
Control (and therefore will be permitted if the requirements of Section 22.2.1
--------------
through Section 22.2.3 hereof are met).
--------------
22.2 Changes of Control. A Control of Control requiring the consent
------------------
of Landlord shall mean:
(a) the issuance and/or sale by Tenant or the sale by any
stockholder of Tenant of a Controlling interest in Tenant to a Person
other than an Affiliate of Tenant, other than in either case a
distribution to the public pursuant to an effective registration
statement under the Securities Act of 1933, as amended (a "Registered
----------
Offering");
--------
(b) the sale, conveyance or other transfer of all or substantially
all of the assets of Tenant (whether by operation of law or
otherwise), which may include a transfer of assignment of this Lease;
(c) any transaction pursuant to which Tenant is merged with or
consolidated into another entity (other than an entity owned and
Controlled by an Affiliate of Tenant), and Tenant is not the surviving
entity;
provided, however, that notwithstanding the foregoing any such transaction shall
-----------------
not be deemed a Change of Control if each of the following conditions are met:
22.2.1 Financial Covenants. Unless a Distribution Letter of
-------------------
Credit in an amount specified in Section 25.6 is posted in favor of
------------
Landlord concurrently with any such consolidation, merger, sale or
conveyance, the Person formed by or surviving such transaction shall have
(i) a Tangible Net Worth not less than $4,000.000 and (ii) a Fixed Charge
Coverage Ratio of not less than 1.3 to 1.0 for four consecutive Fiscal
Quarters.
33
22.2.2 Operating Standards. The surviving entity shall
-------------------
operate the Leased Property at a standard at least as high as that operated by
Tenant prior to the Change of Control.
22.2.3 Commitment to the Golf Industry. Immediately after
-------------------------------
such consolidation, merger, sale or conveyance, the surviving entity and its
Affiliates shall have not less than 20 total golf courses (or less if acceptable
to Landlord) under management or lease, which number shall be maintained for not
less than three years after the Change of Control.
22.3 Subleases.
---------
22.3.1 Permitted Subleases. Tenant shall, without Landlord's
-------------------
prior approval, be permitted to sublease portions of the Leased Property to
concessionaires or licensees to:
(a) operate golf professionals' shops;
(b) operate golf driving ranges;
(c) provide golf lessons;
(d) operate restaurants;
(e) operate bars; and
(f) operate any other portions (but not the entirety) of the Leased
Property customarily associated with or incidental to the operation of
the Golf Course.
22.3.2 Terms of Sublease. Each sublease of any of the Leased
-----------------
Property shall be subject and subordinate to the provisions of this Lease.
No sublease made as permitted by Section 22.3.1 shall affect or reduce any
--------------
of the obligations of Tenant hereunder, and all such obligations shall
continue in full force and effect as if no sublease had been made. No
sublease shall impose any additional obligations on Landlord under this
Lease.
22.3.3 Copies. Tenant shall, within 10 days after the
------
execution and delivery of any sublease permitted by Section 22.3.1, deliver
--------------
a duplicate original thereof to Landlord.
22.3.4 Assignment of Rights in Subleases. As security for
---------------------------------
performance of its obligations under this Lease, Tenant hereby grants,
conveys and assigns to Landlord all right, title and interest of Tenant in
and to all subleases now in existence or hereinafter entered into for any
or all of the Leased Property, and all extensions, modifications and
renewals thereof and all rents, issues and profits therefrom. Landlord
hereby grants to Tenant a license to collect and enjoy all rents and other
sums of money payable under any sublease of any of the Leased Property;
provided, however, that Landlord shall have the absolute right at any time
after the occurrence and continuance
34
of an Event of Default upon notice to Tenant and any subtenants to revoke
said license and to collect such rents and sums of money and to retain the
same. Tenant shall not (i) after the occurrence and continuance of an Event
of Default, consent to, cause to allow any material modification or
alteration of any of the terms, conditions or covenants of any of the
subleases or the termination thereof, without the prior written approval of
Landlord nor (ii) accept any rents (other than customary security deposits)
more than 90 days in advance of the accrual thereof nor permit anything to
be done, the doing of which, nor omit or refrain from doing anything, the
omission of which, will or could be a breach of or default in the terms of
any of the subleases.
22.3.5 Licenses, Etc. For purposes of Sections 22.1, 22.3 and
------------- -----------------------
22.5, subleases shall be deemed to include any licenses, concession
----
arrangements, management contracts or other arrangements relating to the
possession or use of all or any part of the Leased Property.
22.4 Assignment. No assignment shall in any way impair the
----------
continuing primary liability of Tenant hereunder, and no consent to any
assignment in a particular instance shall be deemed to be a waiver of the
prohibition set forth in Article 22. Any assignment shall be solely of Tenant's
----------
entire interest in this Lease. Any assignment or other transfer of all or any
portion of Tenant's interest in the Lease in contravention of Article 22 shall
----------
be voidable at Landlord's option.
22.5 REIT Limitations. Anything contained in this Lease to the
----------------
contrary notwithstanding, Tenant shall not (i) sublet or assign the Leased
Property or this Lease on any basis such that the rental or other amounts to be
paid by the sublessee or assignee thereunder would be based, in whole or in
part, on the income or profits derived by the business activities of the
sublessee or assignee; (ii) sublet or assign the Leased Property or this Lease
to any person that Landlord owns, directly or indirectly (by applying
constructive ownership rules set forth in Section 856(d)(5) of the Code), a 10%
or greater interest in; or (iii) sublet or assign the Leased Property or this
Lease in any other manner or otherwise derive any income which could cause any
portion of the amounts received by Landlord pursuant to this Lease or any
sublease to fail to qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, or which could cause any other income received by
Landlord to fail to qualify as income described in Section 856(c)(2) of the
Code. The requirements of this Section 22.5 shall likewise apply to any further
------------
subleasing by any subtenant.
ARTICLE 23 - OFFICER'S CERTIFICATES AND OTHER STATEMENTS
--------------------------------------------------------
23.1 Officer's Certificates. At any time, and from time to time
----------------------
upon Tenant's receipt of not less than 10 days' prior written request by
Landlord, Tenant will furnish to Landlord an Officer's Certificate certifying
that:
(a) this Lease is unmodified and in full force and effect (or that
this Lease is in full force and effect as modified and setting forth
the modifications);
(b) the dates to which the Rent has been paid:
35
22.2.2 Operating Standards. The surviving entity shall
-------------------
operate the Leased Property at a standard at least as high as that operated
by Tenant prior to the Change of Control.
22.2.3 Commitment to the Golf Industry. Immediately after such
-------------------------------
consolidation, merger, sale or conveyance, the surviving entity and its
Affiliates shall have not less than 20 total golf courses (or less if
acceptable to Landlord) under management or lease, which number shall be
maintained for not less than three years after the Change of Control.
22.3 Subleases.
---------
22.3.1 Permitted Subleases. Tenant shall, without Landlord's
-------------------
prior approval, be permitted to sublease portions of the Leased Property to
concessionaires or licensees to:
(a) operate golf professionals' shops;
(b) operate golf driving ranges;
(c) provide golf lessons;
(d) operate restaurants;
(e) operate bars; and
(f) operate any other portions (but not the entirety) of the Leased
Property customarily associated with or incidental to the operation of
the Golf Course.
22.3.2 Terms of Sublease. Each sublease of any of the Leased
-----------------
Property shall be subject and subordinate to the provisions of this Lease.
No sublease made as permitted by Section 22.3.1 shall affect or reduce any
--------------
of the obligations of Tenant hereunder, and all such obligations shall
continue in full force and effect as if no sublease had been made. No
sublease shall impose any additional obligations on Landlord under this
Lease.
22.3.3 Copies. Tenant shall, within 10 days after the
------
execution and delivery of any sublease permitted by Section 22.3.1, deliver
--------------
a duplicate original thereof to Landlord.
22.3.4 Assignment of Rights in Sublease. As security for
--------------------------------
performance of its obligations under this Lease, Tenant hereby grants,
conveys and assigns to Landlord all right, title and interest of Tenant in
and to all subleases now in existence or hereinafter entered into for any
or all of the Leased Property, and all extensions, modifications and
renewals thereof and all rents, issues and profits therefrom. Landlord
hereby grants to Tenant a license to collect and enjoy all rents and other
sums of money payable under any sublease of any of the Leased Property;
provided, however, that Landlord shall have the absolute right at any time
after the occurrence and continuance
34
of an Event of Default upon notice to Tenant and any subtenants to revoke
said license and to collect such rents and sums of money and to retain the
same. Tenant shall not (i) after the occurrence and continuance of an Event
of Default, consent to, cause or allow any material modification or
alteration of any of the terms, conditions or covenants of any of the
subleases or the termination thereof, without the prior written approval of
Landlord nor (ii) accept any rents (other than customary security deposits)
more than 90 days in advance of the accrual thereof nor permit anything to
be done, the doing of which, nor omit or refrain from doing anything, the
omission of which, will or could be a breach of or default in the terms of
any of the subleases.
22.3.5 Licenses, Etc. For purposes of Sections 22.1, 22.3 and
------------- -----------------------
22.5, subleases shall be deemed to include any licenses, concession
----
arrangements, management contracts or other arrangements relating to the
possession or use of all or any part of the Leased Property.
22.4 Assignment. No assignment shall in any way impair the continuing
----------
primary liability of Tenant hereunder, and no consent to any assignment in a
particular instance shall be deemed to be a waiver of the prohibition set forth
in Article 22. Any assignment shall be solely of Tenant's entire interest in
----------
this Lease. Any assignment or other transfer of all or any portion of Tenant's
interest in the Lease in contravention of Article 22 shall be voidable at
----------
Landlord's option.
22.5 REIT Limitations. Anything contained in this Lease to the
----------------
contrary notwithstanding, Tenant shall not (i) sublet or assign the Leased
Property or this Lease on any basis such that the rental or other amounts to be
paid by the sublessee or assignee thereunder would be based, in whole or in
part, on the income or profits derived by the business activities of the
sublessee or assignee; (ii) sublet or assign the Leased Property or this Lease
to any person that Landlord owns, directly or indirectly (by applying
constructive ownership rules set forth in Section 856(d)(5) of the Code), a 10%
or greater interest in; or (iii) sublet or assign the Leased Property or this
Lease in any other manner or otherwise derive any income which could cause any
portion of the amounts received by Landlord pursuant to this Lease or any
sublease to fail to qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, or which could cause any other income received by
Landlord to fail to qualify as income described in Section 856(c)(2) of the
Code. The requirements of this Section 22.5 shall likewise apply to any further
------------
subleasing by any subtenant.
ARTICLE 23 - OFFICER'S CERTIFICATES AND OTHER STATEMENTS
--------------------------------------------------------
23.1 Officer's Certificates. At any time, and from time to time upon
----------------------
Tenant's receipt of not less than 10 days' prior written request by Landlord,
Tenant will furnish to Landlord an Officer's Certificate certifying that:
(a) this Lease is unmodified and in full force and effect (or that
this Lease is in full force and effect as modified and setting forth
the modifications);
(b) the dates to which the Rent has been paid;
35
(c) whether or not to the best knowledge of Tenant, Landlord is in
default in the performance of any covenant, agreement or condition
contained in this Lease and, if so, specifying each such default of
which Tenant may have knowledge;
(d) that, except as otherwise specified, there are no proceedings
pending or, to the knowledge of the signatory, threatened, against
Tenant before or by any court or administrative agency which, if
adversely decided, would materially and adversely affect the financial
condition and operations of Tenant; and
(e) responding to such other questions or statements of fact as
Landlord shall reasonably request.
Tenant's failure to deliver such statement within such time shall
constitute an acknowledgment by Tenant that this Lease is unmodified and in full
force and effect except as may be represented to the contrary by Landlord,
Landlord is not in default in the performance of any covenant, agreement or
condition contained in this Lease and the other matters set forth in such
request, if any, are true and correct. Any such certificate furnished pursuant
to this Section 23.1 may be relied upon by Landlord.
------------
23.2 Annual Financial Statements of Tenant. Tenant will furnish to
-------------------------------------
Landlord, within 90 days after the end of Tenant's fiscal year, a copy of its
audited consolidated balance sheet as of the end of such fiscal year, and
related audited consolidated statement of income and statement of cash flows for
such fiscal year (each with footnotes), prepared by a regional recognized
accounting firm approved by Landlord, provided that Landlord's approval shall
not be unreasonably withheld or delayed. The financial statements shall be
prepared in accordance with generally accepted accounting principles applied on
a basis consistently maintained throughout the period involved, except with
respect to such deviations as indicated in the notations to the financial
statements. All annual financial statements shall be accompanied by a
certificate of the Chief Financial Officer (or equivalent officer) of Tenant
delivered with such statements, stating (i) that the officer knows of no Event
of Default, or event which, upon notice or the passage of time or both, would
become an Event of Default, which has occurred and is continuing under this
Lease or, if any such event has occurred or is continuing, specifying the nature
and period of existence thereof and what action Tenant has taken or proposes to
take with respect thereto, and (ii) except as otherwise specified in such
certificate, that to the best of such officer's knowledge, Tenant has fulfilled
all of its obligations under this Lease which are required to be fulfilled on a
prior date to such certificate.
23.3 Quarterly Financial Statements of Tenant. Tenant will furnish to
----------------------------------------
Landlord, within 45 days after the end of each of the first three fiscal
quarters of Tenant's fiscal year, a copy of its unaudited consolidated balance
sheet as of the end of such fiscal quarter, and related unaudited consolidated
statement of income and statement of cash flows for such fiscal quarter (each
with footnotes), prepared in accordance with generally accepted accounting
principles applied on a basis consistently maintained throughout the period
involved (except with respect to such deviations as indicated in the notations
to the financial statements) and certified as true and correct by the Chief
Financial Officer (or equivalent officer) of Tenant. All quarterly financial
statements shall be accompanied by a certificate of the Chief Financial Officer
(or equivalent officer) of Tenant, delivered with such statements, stating (i)
that the officer knows of no Event of Default, or event which, upon notice or
the passage of time or both, would
36
become an Event of Default, which as occurred and is continuing under the Lease
or, if any such event has occurred or is continuing, specifying the nature and
period of existence thereof and what action Tenant has taken or proposes to take
with respect thereto, (ii) except as otherwise specified in such certificate,
that to the best of such officer's knowledge. Tenant has fulfilled all of its
obligations under the Lease which are required to be fulfilled on a prior date
to such certificate, and (iii) Tenant's Tangible Net Worth and supporting
calculations.
23.4 Monthly Course Statements. Tenant will furnish to Landlord,
-------------------------
within 20 days after the end of each month during each fiscal year, a copy of
its operating statements for the Property and each of the Other Leased
Properties which shall include, without limitation, profit and loss statements,
including departmental revenue and expense analysis including rounds data and
membership data prepared on a modified accrual basis in accordance with
generally accepted accounting principles, except for depreciation, taxes,
capitalized interest and corporate and certain expense allocations, applied on a
basis consistently maintained throughout the period involved. Significant
departures from modified accrual basis will be identified in balance sheet
analysis (i.e., accounts receivable, property, plant and equipment, capital
spending and capitalized interest).
23.5 Annual Course Statements. Tenant will furnish to Landlord within
------------------------
90 days after the end of its fiscal year a copy of its operating statements for
the Property and each of the Other Leased Properties which shall include,
without limitation, profit and loss statements, including departmental revenue
and expense analysis including rounds data and membership data prepared on a
modified accrual basis in accordance with generally accepted accounting
principles, except for depreciation, taxes, capitalized interest and corporate
and certain expense allocations, applied on a basis consistently maintained
throughout the period involved. Significant departures from modified accrual
basis will be identified in balance sheet analysis (i.e., accounts receivable,
property, plant and equipment, capital spending and capitalized interest).
23.6 Budgets. Tenant shall furnish to Landlord copies of annual
-------
budgets, including monthly breakdowns for the Property and each of the Other
Leased Properties no later than 30 days prior to the applicable fiscal year of
Tenant. Such annual budgets shall include, without limitation, repairs, capital
budgets and marketing plans for each of the Properties. If prepared by Tenant,
Tenant shall also promptly deliver to Landlord any quarterly and annual
reforecasts of the budgets.
23.7 Environmental Statements. Immediately upon Tenant's learning, or
------------------------
having reasonable cause to believe, that any Hazardous Material in a quantity
sufficient to require remediation or reporting under applicable law is located
in, on or under the Leased Property or any adjacent property, Tenant shall
notify Landlord in writing of (a) any enforcement, cleanup, removal, or other
governmental or regulatory action instituted, completed or threatened; (b) any
claim made or threatened by any Person against Tenant or the Leased Property
relating to damage, contribution, cost recovery, compensation, loss, or injury
resulting from or claimed to result from any Hazardous Material; and (c) any
reports made to any federal, state or local environmental agency arising out of
or in connection with any Hazardous Material in or removed from the Leased
Property, including any complaints, notices, warnings or asserted violations in
connection therewith.
37
23.8 Confidential Information.
------------------------
(a) Except as otherwise provided in this Section 23.8, Landlord
------------
agrees that all financial statements, budgets, reports, and business plans
relating to Tenant (as opposed to golf course level information) (collectively,
the "Information") shall be kept confidential and shall not be disclosed by
-----------
Landlord to any other party (including without limitation, any affiliate of
Landlord) without Tenant's prior written consent, which consent may be withheld
at Tenant's sole discretion. Landlord agrees that (i) the Information shall be
disclosed only to the officers, employees, authorized representatives of
Landlord, prospective bona fide purchasers of the Leased Property and their
authorized representatives who need access to the Information (all such persons
hereinafter referred to as the "Authorized Representatives"), (ii) all of the
--------------------------
Authorized Representatives shall be informed of the confidential nature of the
Information and shall maintain the confidentiality of the Information as
provided herein, and (iii) Landlord shall exercise the same degree of care to
preserve the confidentiality of Information as Landlord and a reasonable prudent
person would to protect its own confidential information.
(b) If Landlord receives a request to disclose any Information
under subpoena or order, it shall (i) promptly notify Tenant thereof, (ii)
consult with Tenant on the advisability of taking steps to resist or narrow such
request, and (iii) if disclosure is required or deemed advisable, cooperate with
Tenant in any attempt that Tenant may make to obtain an order or other reliable
assurance that confidential treatment will be accorded to designated portions of
the Information. Landlord shall be entitled to reimbursement for its expenses,
including the fees and expenses of its counsel, in connection with action taken
pursuant to this Section 23.8(b). If Landlord is required (by oral
--------------
questions, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar legal process) to disclose any Information
supplied to it in the course of its dealing with Tenant or its representatives.
Landlord shall provide Tenant with prompt notice of such request(s) so Tenant
may seek an appropriate protective order and/or waive Landlord's compliance with
the provisions of this Lease. If in the absence of a protective order or the
receipt of a waiver hereunder, Landlord is nonetheless, in the opinion of
Landlord's counsel, compelled to disclose any Information to any tribunal or
else stand liable for contempt or to suffer other censure or penalty, Landlord
may disclose such Information pursuant to such legal process without liability
hereunder.
(c) This Section 23.8 shall not apply to: (i) disclosures which legal
------------
counsel for Landlord advises are reasonably necessary to meet reporting or
disclosure requirements to which Landlord or its affiliates are subject,
including reporting obligations under the Securities Exchange Act of 1934, as
amended, (ii) Information which is publicly available or which is obtained by
Landlord from third party sources other any person who Landlord would have
reasonable basis to believe is bound by a confidentiality agreement with Tenant
and (iii) disclosures in connection with an exercise by Landlord of remedies
hereunder.
ARTICLE 24 - LANDLORD MORTGAGES
-------------------------------
24.1 Landlord may Grant Liens. Subject to Section 24.2, without the
------------------------ ------------
consent of Tenant. Landlord may, from time to time, directly or indirectly,
create or otherwise cause to exist any lien, encumbrance or title retention
agreement ("Landlord's Encumbrance") upon the Leased Property, or any portion
----------------------
thereof or interest therein, whether to secure any borrowing
38
or other means of financing or refinancing. This Lease is and at all times shall
be subject and subordinate to any ground or underlying leases, mortgages, trust
deeds or like encumbrances, which may now or hereafter affect the Leased
Property and to all renewals, modifications, consolidations, replacements and
extensions of any such lease, mortgage, trust deed or like encumbrance. This
clause shall be self-operative and no further instrument of subordination shall
be required by any ground or underlying lessor or by any mortgagee or
beneficiary, affecting any lease or the Leased Property. In confirmation of such
subordination, Tenant shall execute promptly any certificate that Landlord may
request for such purposes.
24.2 Tenant's Non-Disturbance Rights. So long as Tenant shall pay all
-------------------------------
Rent as the same becomes due and shall fully comply with all of the terms of
this Lease and fully perform its obligations hereunder, none of Tenant's rights
under this Lease shall be disturbed by the holder of any Landlord's Encumbrance
which is created or otherwise comes into existence after the Commencement Date.
Landlord shall obtain from any holder of a Landlord Encumbrance a nondisturbance
agreement in a form reasonably acceptable to such holder and shall deliver such
nondisturbance agreement to Tenant. The nondisturbance agreement shall protect
Tenant's possession and other rights under this Lease absent an Event of Default
by Tenant hereunder.
24.3 Breach by Landlord. It shall be a breach of this Lease if
------------------
Landlord shall fail to observe or perform any material term, covenant or
condition of this Lease on its part to be performed or if Landlord shall have
breached any material representation or warranty made by Landlord and such
failure or beach shall continue for a period of 30 days after notice thereof
from Tenant, unless such failure or breach cannot with due diligence be cured
within a period of 30 days, in which case such failure or breach shall not be
deemed to continue if Landlord, within said 30-day period, proceeds promptly and
with due diligence to cure the failure and diligently completes the curing
thereof. The time within which Landlord shall be obligated to cure any such
failure shall also be subject to extension of time due to the occurrence of any
Unavoidable Delay.
24.4 Facility Mortgage Protection. Tenant agrees that the holder of
----------------------------
any Landlord Encumbrance shall have no duty, liability or obligation to perform
any of the obligations of Landlord under this Lease, but that in the event of
Landlord's default with respect to any such obligation, Tenant will give any
such holder whose name and address have been furnished to Tenant in writing for
such purpose notice of Landlord's default and allow such holder 30 days
following receipt of such notice for the cure of said default before invoking
any remedies Tenant may have by reason thereof.
ARTICLE 25 - FINANCIAL COVENANTS
--------------------------------
25.1 Financial Covenants. Tenant shall post and maintain a Letter of
-------------------
Credit unless and until Tenant: (a) maintains a minimum Tangible Net Worth of at
least $4,000,000 or, following a Change in Control, $4,000.000 increased by the
annual increase in the CPI (not to exceed four percent per annum) compounded
annually from the Commencement Date to the date of such Change in Control; (b)
maintains a Rent Coverage Ratio of not less than 1.25 to 1.0 for any period
encompassing four consecutive Fiscal Quarters; (c) maintains a Fixed Charge
Coverage Ratio of not less than 1.3 to 1.0 for any period encompassing four
consecutive Fiscal Quarters; and (d) increases for the second Fiscal Year
through and including the eighth Fiscal
39
Year the Tangible Net Worth (including within such definition for purposes of
this Section 25.1(d) any loans to affiliates of Tenant) by an amount equal to at
---------------
least fifty percent (50%) of Tenant's positive net income on a consolidated
basis after making distributions to Tenant's limited partners for the payment of
federal and state income taxes (collectively, the "Financial Covenants") in the
-------------------
Letter of Credit Amount as provided in this Article 25 and subject to the
----------
provisions set forth in the definition of "Letter of Credit Amount" in Exhibit A
----------------------- ---------
attached hereto. Tenant shall provide an Officer's Certificate to Landlord not
later than 30 days after the end of each Fiscal Quarter of Tenant as to Tenant's
compliance or noncompliance with the Financial Covenants, which certificate
shall include a calculation in reasonable detail of such compliance or
noncompliance. In addition, Tenant shall set forth any Distribution or Partner
Distribution to be made by Tenant.
25.2 Provision of Letter of Credit. If any certificate delivered
-----------------------------
pursuant to Section 25.1 shall disclose that Tenant is not in compliance with
------------
the Financial Covenants, Tenant shall deliver to Landlord a Letter of Credit
within 30 days after the date of such certificate, but in no event after the end
of Tenant's subsequent Fiscal Quarter. Upon delivery of such new Letter of
Credit to Landlord, no breach or default under this Lease shall arise as a
result of Tenant's failure to meet the Financial Covenants. The Letter of Credit
shall be maintained and delivered to Landlord until such date as: (i) Tenant
shall be in compliance with the Financial Covenants set forth in Section 25.1;
------------
and (ii) there shall be no Event of Default hereunder.
25.3 Terms of Letters of Credit. The Letter of Credit or Distribution
--------------------------
Letter of Credit shall:
(i) be an irrevocable standby letter of credit from a bank with a
long-term debt rating from each of Standard & Poor's and Xxxxx'x of
investment grade naming Landlord (and/or any Facility Mortgagee if
requested by Landlord) as beneficiary to secure Tenant's obligations
hereunder and Tenant's or an Affiliate of Tenant's obligations under the
Other Property Leases;
(ii) have a stated amount equal to the Letter of Credit Amount or
Distribution LC Amount plus, if such letters of credit are intended to
satisfy Tenant's obligations under the Other Property Leases with Landlord,
the amounts required under such other leases;
(iii) have a term of not less than one year;
(iv) provide that it will be honored upon a signed statement by
Landlord that Landlord is entitled to draw upon the letter of credit under
this Lease as a result of an Event of Default, and shall require no
signature or statement from any party other than Landlord;
(v) provide that Landlord had given not less than three Business Day's
notice to Tenant prior to submitting the Letter of Credit to the bank for
presentation; and
(vi) permit multiple draws by providing that following the honor of
any drafts in an amount less than the aggregate stated amount of the Letter
of Credit, the issuing
40
bank shall return the original letter of credit to Landlord and that
Landlord's rights as to the remaining stated amount of the Letter of Credit
will not be extinguished.
25.4 Draws Against Letters of Credit: Application of Proceeds.
--------------------------------------------------------
Landlord may draw against the Letter of Credit or the Distribution Letter of
Credit upon any Event of Default in an amount equal to Landlord's reasonable
estimate of its damages at the time of the draw, with a right to make future
draws if such estimate proves to be inadequate. Landlord may apply any amounts
drawn under such letters of credit to the satisfaction of any obligations owed
to Landlord under this Lease or the Other Property Leases. Any proceeds from
such letters of credit drawn but not so applied shall be held by Landlord as a
security deposit and if not utilized to satisfy obligations owed to Landlord
under the Lease or Other Property Leases shall be released to Tenant six months
after the Event of Default is cured without any reoccurring Event of Default.
25.5 Renewal of Letter of Credit. If the Letter of Credit shall
---------------------------
expire at a time when the Letter of Credit is still required under Section 25.2,
------------
Tenant shall renew the Letter of Credit at least 30 days prior to its
expiration. If Tenant shall fail to renew the Letter of Credit prior to such
time, Landlord may draw against the same and hold the proceeds thereof as a
security deposit until such time as Tenant shall renew the Letter of Credit.
Landlord shall hold such security deposit in a separate account in trust for
Tenant and shall account to Tenant for any interest earned thereon.
25.6 Distributions by Tenant and
Other Credit Impairments
---------------------------
25.6.1 Posting of Distribution Letter of Credit. In addition to
----------------------------------------
Tenant's obligation to post the Letter of Credit under Section 25.2 (but
------------
subject to Section 25.8), if during the Term any of the following occurs:
------------
(i) Tenant makes a Distribution and after giving effect to the
Distribution the Tangible Net Worth is less than $4,000,000; or
(ii) a default by Tenant in any payment of principal or interest on
any obligations for borrowed money having a principal balance of
$250,000 or more in the aggregate (excluding obligations which are
limited in recourse to specific property of Tenant provided that such
property is not a substantial portion of the assets of Tenant), or in
the performance of any other provision contained in any instrument
under which any such obligation is created or secured (including the
breach of any covenant thereunder), if an effect of such default is
that the holder(s) of such obligation cause such obligation to become
due prior to its stated maturity; or
(iii) a final, non-appealable judgment or judgments for the payment of
money in excess of $250.000 in the aggregate not fully covered
(excluding deductibles) by insurance shall be rendered against Tenant
and the same shall remain undischarged, unvacated, unbounded, or
unstayed for a period of 60 consecutive days; or
41
(iv) if Tenant elects to post a Distribution Letter of Credit in lieu
of satisfying the financial covenants set forth in Section 22.2.1.
--------------
THEN Tenant shall deliver to Landlord a Distribution Letter of Credit in a
stated amount equal to the Distribution LC Amount. Tenant shall deliver to
Landlord the Distribution Letter of Credit as required by clause (i) no
later than 10 Business Days prior to making such Distribution and as
required by clause (ii) or (iii) immediately upon the occurrence thereof.
25.6.2 Cancellation or Reduction of Distribution Letter of
---------------------------------------------------
Credit. The Distribution Letter of Credit shall be:
------
(i) surrendered to the issuing bank for cancellation upon such date
that (a) the Tangible Net Worth for two consecutive Fiscal
Quarters exceeds $4,000,000, (b) no Event of Default shall have
occurred during such Fiscal Quarters and (c) neither of the
events set forth in clauses (ii) or (iii) of Section 25.6.1
--------------
shall have occurred during such Fiscal Quarters.
(ii) surrendered to the issuing bank for adjustment to the
Distribution LC Amount which would then be applicable under
Section 25.6.1 upon such date that (a) the Tangible Net Worth
--------------
equals an amount for two consecutive Fiscal Quarters such that a
higher or lower Distribution LC Amount would then be applicable
pursuant to Section 25.6.1; provided however that such
--------------
Distribution LC Amount shall only be adjusted downward if (b) no
Event of Default shall have occurred during such Fiscal Quarters
and (c) neither of the events set forth in clauses (ii) or (iii)
of Section 25.6.1 shall have occurred during such Fiscal
--------------
Quarters.
25.6.3 Renewal of Distribution Letter of Credit. If the
----------------------------------------
Distribution Letter of Credit shall expire at a time when the Distribution
Letter of Credit is still required under Section 25.6, Tenant shall renew
------------
the Distribution Letter of Credit at least 30 days prior to its expiration.
If Tenant shall fail to renew the Distribution Letter of Credit prior to
such time, Landlord may draw against the same and hold the proceeds thereof
as a security deposit until such time as Tenant shall renew the
Distribution Letter of Credit. Landlord shall hold such security deposit in
a separate account in trust for Tenant and shall account to Tenant for any
interest earned thereon.
25.7 Liquidated Damages. The requirement for the delivery of a Letter
------------------
of Credit or Distribution Letter of Credit as required by Tenant under this
Article 25 herein shall not create liquidated damages on behalf of Landlord for
----------
a default by Tenant under this Article 25. Tenant shall be liable for Landlord's
----------
actual damages calculated as of the time of the default caused by Tenant's
failure to deliver and maintain the Letter of Credit or Distribution Letter of
Credit as required under this Article 25.
----------
25.8 Letters of Credit Not Additive. Notwithstanding the other
------------------------------
provisions of this Article 25, if Tenant is required by the terms of this Lease
----------
to provide and maintain a Letter of Credit and a Distribution Letter of Credit.
Tenant will only be obligated to provide and
42
maintain a letter of credit in the stated amount equal to the greater of the two
requirements and not the sum of the two requirements.
ARTICLE 26 - MISCELLANEOUS
--------------------------
26.1 Landlord's Right to Inspect. Upon reasonable prior notice to
---------------------------
Tenant, Tenant shall permit Landlord and its authorized representatives to
inspect the Leased Property during usual business hours subject to any security,
health, safety or confidentiality requirements of Tenant or any governmental
agency or insurance requirement relating to the Leased Property, or imposed by
law or applicable regulations. Notwithstanding the foregoing, no prior notice to
Tenant shall be required for casual Landlord visits not imposing any
unreasonable burdens upon Tenant. Landlord shall indemnify Tenant for all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against Tenant by reason of Landlord's
inspection pursuant to this Section 26.1.
------------
26.2 No Waiver. No failure by Landlord to insist upon the strict
---------
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
26.3 Remedies Cumulative. To the extent permitted by law, each legal,
-------------------
equitable or contractual right, power and remedy of Landlord now or hereafter
provided either in this Lease or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power and remedy. The
exercise or beginning of the exercise by Landlord of any one or more of such
rights, powers and remedies shall not preclude the simultaneous or subsequent
exercise by Landlord of any or all of such other rights, powers and remedies.
26.4 Acceptance of Surrender. No surrender to Landlord of this Lease
-----------------------
or of the Leased Property or any part thereof, or of any interest therein, shall
be valid or effective unless agreed to and accepted in writing by Landlord and
no act by Landlord or any representative or agent of Landlord, other than such a
written acceptance by Landlord, shall constitute an acceptance of any such
surrender.
26.5 No Merger of Title. There shall be no merger of this Lease or of
------------------
the leasehold estate created hereby by reason of the fact that the same Person
may acquire, own or hold, directly or indirectly, (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate and (b) the fee estate in the Leased Property.
26.6 Conveyance by Landlord. If Landlord shall convey the Leased
---------------------
Property in accordance with the terms hereof other than as security for a debt.
Landlord shall, upon the written assumption by the transferee of the Leased
Property of all liabilities and obligations of the Lease by released from all
future liabilities and obligations under this Lease arising or accruing from and
after the date of such conveyance or other transfer as to the Leased Property.
All such future liabilities and obligations shall thereupon be binding upon the
new owner.
43
26.7 Quiet Enjoyment. So long as Tenant shall pay all Rent as the
---------------
same becomes due and shall fully comply with all of the terms of this Lease and
fully perform its obligations hereunder, Tenant shall peaceably and quietly
have, hold and enjoy the Leased Property for the Term hereof, free of any claim
or other action by Landlord or anyone claiming by, through or under Landlord,
but subject to all liens and encumbrances contained in the title policy as of
the date hereof.
26.8 Notices. All notices, demands, requests, consents, approvals
-------
and other communications hereunder shall be in writing and delivered or mailed
(by registered or certified mail, return receipt requested and postage prepaid),
addressed to the respective parties, as provided in the Basic Lease Provisions.
26.9 Survival of Claims. Anything contained in this Lease to the
------------------
contrary notwithstanding, all claims against, and liabilities of, Tenant or
Landlord arising prior to any date of termination of this Lease shall survive
such termination.
26.10 Invalidity of Terms of Provisions. If any term or provision of
---------------------------------
this Lease or any application thereof shall be invalid or unenforceable, the
remainder of this Lease and any other application of such term or provision
shall not be affected thereby.
26.11 Prohibition Against Usury. If any late charges provided for in
-------------------------
any provision of this Lease are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be fixed
at the maximum permissible rate.
26.12 Amendments to Lease. Neither this Lease nor any provision
-------------------
hereof may be changed, waived, discharged or terminated except by an instrument
in writing and in recordable form signed by Landlord and Tenant.
26.13 Successors and Assigns. All the terms and provisions of this
----------------------
Lease shall be binding upon and inure to the benefit of the parties hereto. All
permitted assignees or sublessees shall be subject to the terms and provisions
of this Lease.
26.14 Titles. The headings in this Lease are for convenience of
------
reference only and shall not limit or otherwise affect the meaning hereof.
26.15 Governing Law. This Lease shall be governed by and construed in
-------------
accordance with the internal laws of the State of California (but not including
its conflict of laws rules).
26.16 Memorandum of Lease. Landlord and Tenant shall, promptly upon
-------------------
the request of either, enter into a short form memorandum of this Lease, in form
and substance satisfactory to Landlord and suitable for recording under the
State, in which reference to this Lease, and all options contained herein, shall
be made. Tenant shall pay all costs and expenses of recording such Memorandum of
Lease.
26.17 Attorneys' Fees. In the event of any dispute between the
---------------
parties hereto involving the covenants or conditions contained in this Lease or
arising out of the subject matter
44
of this Lease, the prevailing party shall be entitled to recover against the
other party reasonable attorneys' fees and court costs.
26.18 Non-Resource as to Landlord. Anything contained herein to the
---------------------------
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord under this Lease shall be enforced only against the Leased Property and
not against any other assets, properties or funds of (a) Landlord, (b) any
director, officer, general partner, limited partner, employee or agent of
Landlord, or with respect to any general partner of Landlord, any of their
respective general partners or stockholders (or legal representative, heir,
estate, successor or assign of any thereof), (c) any predecessor or successor
partnership or corporation (or other entity) of Landlord, or any of their
respective general partners, either directly or through either Landlord or
their respective general partners or any predecessor or successor partnership or
corporation or their stockholders, officers, directors, employees or agents (or
other entity), or (d) any other Person affiliated with any of the foregoing, or
any director, officer, employee or agent of any thereof.
26.19 No Relationship. Landlord shall in no event be construed for
---------------
any purpose to be a partner, joint venture or associate of Tenant or of any
subtenant, operator, concessionaire or licensee of Tenant with respect to the
Leased Property or any of the Other Leased Properties or otherwise in the
conduct of the respective business.
26.20 Signs; Relating. During the last two (2) years of the Term,
---------------
Landlord shall have the right (i) to advertise the availability of the Leased
Property for sale or reletting and to erect upon the Leased Property signs
indicating such availability and (ii) to show the Leased Property to prospective
purchasers or tenants or their agents at such reasonable times as Landlord may
elect.
26.21 Golf Course Name. The Leased Property shall be known by such
----------------
trade name and/or trademark or logo as may from time to time be determined by
Tenant, subject to Landlord's approval which shall not be unreasonably withheld.
Tenant may identify the Leased Property as a golf course managed and operated by
Tenant and may use Tenant's logo alone or in conjunction with other words or
names or designs owned by Tenant or any of its Affiliates ("Tenant-Owned
------------
Names").
-----
26.22 Judicial Reference. Landlord and Tenant agree to waive and give
------------------
up the right to a jury trial and to submit all disputes, controversies,
differences, claims or demands, whether of fact or of law or both, relating to
or arising out of this contract, to be resolved at the request of any party, by
a trial on Order of Reference conducted by a retired judge or justice from the
panel of Judicial Arbitration & Medication Services, Inc. (JAMS) appointed
pursuant to the provisions of CCP (S) 638(1) or any amendment, addition or
successor section thereto to hear the case and report a statement of decision
thereon. The parties intend this general reference agreement to be specifically
enforceable in accordance with said section. The following procedures shall be
followed in any such reference:
26.22.1 Petition to Compel Reference. Any party seeking to
----------------------------
enforce the provision for reference contained in this agreement shall file a
petition to enforce the reference agreement in any court of competent
jurisdiction, or if an action has already been commenced
45
respecting any dispute covered by this reference agreement, a motion for
reference pursuant to the provisions of CCP (S) 638.
26.22.2 Selection of Referee. The parties will attempt to
--------------------
agree on a retired judge from the JAMS panel. If they are unable to agree, JAMS
will provide a list of three available judges and each party may strike one
name from the list. The remaining judge will serve as the referee (unless he or
she is disqualified after appropriate objection pursuant to CCP (S)(S) 641 and
642). If the parties strike the same judge, leaving two remaining judges, the
parties will flip a coin. The winner of such coin flip shall strike one
additional judge, leaving one remaining judge who will serve as the referee
(unless he or she is disqualified after appropriate objection pursuant to CCP
(S)(S) 641 and 642). If any referee is disqualified under CCP (S)(S) 641 and
642, the foregoing process shall be repeated to select a new referee.
26.22.3 Prehearing Conference. The referee shall schedule a
---------------------
prehearing conference to reach agreement on procedural matters, arrange for the
exchange of information, obtain stipulations, and attempt to narrow the issues.
26.22.4 Discovery. The parties will submit a proposed
---------
discovery schedule to the referee at the prehearing conference. All discovery
methods (and sanctions and other remedies for noncompliance with same) available
to litigants under the Civil Discovery Act (CCP (S) 2016, et seq.) and means of
production permitted under CCP (S) 1985, et seq. shall be available to parties
in such reference. Such discovery may include exchanges to expert trial witness
information pursuant to CCP (S) 2034. Absent other agreement by the parties, the
parties shall be afforded not less than two months and not more than four months
to complete discovery.
26.22.5 The Hearing.
-----------
(a) Unless otherwise agreed by the parties, the hearing
shall commence within six months if the court's order for
reference.
(b) The parties shall file briefs with the referee at least
three days before the hearing, specifying the facts each
intends to prove and analyzing the applicable law.
(c) The parties shall have the right to representation by
legal counsel throughout the reference proceedings.
(d) California Evidence Code rules of evidence and
procedure relating to the conduct of the hearing, examination
of witnesses, and presentation of evidence shall apply.
(e) Any party desiring a stenographic record may secure a
court reporter to attend the proceedings. The requesting party
must notify the other parties of the arrangements in advance of
the hearing and must pay for the cost incurred.
46
(f) Any party may request oral evidence to be given under
oath.
26.22.6 The Decision.
------------
(a) The referee shall issue a written statement of decision
which shall be reported to the court in accordance with CCP (S)
643 and mailed promptly to the parties.
(b) Judgment may be entered on the decision of the referee
in accordance with CCP (S) 644, and the decision may be
expected to, challenged and appealed according to law.
26.22.7 Fees and Expenses. The referee must award costs,
-----------------
including reasonable attorneys fees, to the prevailing party, if any, and may
order the referee's fees to be paid or shared by the parties in such manner as
the referee deems just.
26.22.8 Extraordinary and Interim Relief. Notwithstanding the
--------------------------------
foregoing, in the event that extraordinary or interim relief is necessary and no
referee has been appointed, Landlord or Tenant may resort to any court of
competent jurisdiction for purposes of seeking such extraordinary or interim
relief including an injunction. In the event it becomes necessary to file a
legal action or proceeding to enforce this agreement, the prevailing party in
such action or proceeding shall be entitled to recover all costs and expenses
incurred in connection with such action or proceeding, including reasonable
attorneys fees and courts costs.
47
EXHIBIT A
---------
Defined Terms; Interpretation
-----------------------------
Defined Terms. For all purposes of this Lease, except as otherwise expressly
-------------
provided or unless the context otherwise requires, the terms defined below have
the meanings assigned to them below.
Additional Charges: As defined in Section 3.4.
------------------ -----------
Additional Rent: As defined in Basic Lease Provisions.
---------------
Affiliate: As applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person.
Annual Base Rent: As defined in the Basic Lease Provisions.
----------------
Applicable Percentage: As defined in the Basic Lease Provisions.
---------------------
Award: Means all compensation, sums or anything of value awarded,
-----
paid or received on a total or partial Condemnation.
Base Rent: Means one-twelfth of the Annual Base Rent.
---------
Basic Lease Provisions: The provisions so labelled starting on
----------------------
page (i) of this Lease.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and
------------
Friday which is not a day on which national banks in the City of New York, New
York, are authorized, or obligated, by law or executive order, to close.
Capital Improvement Account: Means a deposit account in the name
---------------------------
of Tenant maintained in Texas with a major bank selected by Tenant.
Change of Control: As defined in Section 22.2.
----------------- ------------
Code: The Internal Revenue Code of 1986, as amended.
----
Commencement Date: As defined in the Basic Lease Provisions.
-----------------
Condemnation: Means (a) the exercise of any governmental power,
------------
whether by legal proceedings or otherwise, by a Condemnor, and (b) a voluntary
sale or transfer by Landlord to any Condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending.
Condemnation Threshold. Means $6,700,00.
----------------------
A-1
Condemnor: Means any public or quasi-public authority, or private
---------
corporation or individual, having the power of condemnation.
Consumer Price Index: Means the Consumer Price Index for all Urban
--------------------
Consumers for U.S. City Average.
Control: Means (including, with correlative meanings, the terms
-------
"controlling" and "controlled by"), as applied to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
Course Cash Flow: Means for any trailing twelve-month period, Total
----------------
Revenue minus the sum of: (a) the cost of goods sold, (b) all operating expenses
(including an administrative fee equal to 3% of Total Revenue, all lease costs
and property taxes but excluding depreciation and amortization), (c) an amount
for capital improvement reserves equal to 2% of Total Revenue and (d) a
management fee/lease payment to an operator of the Facility equal to the
following amounts for the respective Fiscal Year:
first Fiscal Year (1996): $ 50,000
second Fiscal Year (1997): $ 50,000
third Fiscal Year (1998): $100,000
fourth Fiscal Year (1999): $150,000
fifth Fiscal Year (2000): $175,000
sixth Fiscal Year (2001) and each
Fiscal Year thereafter: $225,000
provided that for the first 12 months after the Commencement Date, the "trailing
twelve-month period" shall be deemed to be the projections set forth in the
column "1997" in the final pro forma signed by Landlord and Tenant, a copy of
which is attached hereto as Exhibit I.
---------
Course Revenue: Means all revenues received (whether by Tenant or any
--------------
subtenants, concessionaires or licensees) from or by reason of the operation of
the Facility, or any other use of the Leased Property, including revenues from
memberships (to the extent the membership was sold on or after the Commencement
Date), initiation fees (to the extent the membership was sold on or after the
Commencement Date), dues, greens fees, fees to reserve a tee time, golf-related
guest fees or golf cart rentals, golf-related surcharges, fees or other charges
paid to Tenant by sponsors of golf tournaments at the Leased Property (unless
the terms under which Tenant is paid by such sponsor do not comply with Section
-------
22.5. in which event the gross revenues received by such sponsor for the
----
tournament shall be included in Course Revenue), proceeds released from the
Holdback Account and paid to Tenant under the Holdback Agreement (as defined in
Section 23 of the Basic Lease Provisions) and proceeds of any business
----------
interruption or similar insurance actually received by Tenant; provided,
--------
however, that Course Revenues shall not include:
-------
A-2
(a) Other Revenue;
(b) Cash refunds or credits allowed on returns by customers;
(c) The amount of any city, county, state or federal sales or
excise tax on sales, which is both added to the selling price and
paid to the taxing authority by Tenant; and the amount of any
city, county, state, or federal admission tax or use tax, which
is paid to the relevant taxing authority by Tenant;
(d) The actual uncollectible amount of any check or bank draft
received by Tenant as payment for goods or services and returned
to Tenant from a customer's bank as being uncollectible, but only
after Tenant has made reasonable efforts to collect on the check;
(e) The actual uncollectible amount of any charge or credit
account incurred by Tenant for the sale of merchandise or
services; provided, however, that the credit was extended to the
-------- -------
customer by Tenant, and that reasonable efforts to collect said
account have been made;
(f) The actual uncollectible amount of any sale of merchandise
or services for which Tenant accepted a credit card; provided,
---------
however, that Tenant has made reasonable efforts to collect the
-------
debt after being notified by the issuing bank of the invalidity
or uncollectibility of the charge;
(g) Interest or other charges paid by customers for extension of
credit;
(h) Revenue or proceeds from sales or trade-ins of machinery,
vehicles, trade fixtures or personal property used in connection
with Tenant's operation of the Leased Property;
(i) The value of any merchandise, supplies or equipment
exchanged or transferred from or to other locations or businesses
of Tenant where such exchange or transfer is not made for the
purpose of avoiding a sale which would otherwise be made from or
at the Leased Property;
(j) Revenue, if any, from receipts in the form of refunds from
or the value of merchandise, supplies or equipment returned to
shippers, suppliers or manufacturers;
(k) Revenue, if any, from the amount of any cash or quantity
discounts received from sellers, suppliers or manufacturers;
(l) The amount of any gratuities paid or given by customers to
or for employees of Tenant;
A-3
(m) Receipts from the sales of uniforms or clothing required to
be worn by employees;
(n) Revenues from charging employees for meals served or
provided to employees of Tenant;
(o) Receipts from the sale of waste or scrap materials resulting
from Tenant's operations;
(p) Revenue received from any subtenant, concessionaire or
licensee, inasmuch as the gross revenue received by such
subtenant, concessionaire or licensee is otherwise included in
the definition of Course Revenue or Other Revenue;
(q) Gross revenue received by any sponsor of a golf tournament
at the Leased Property, provided that the terms under which
Tenant is paid surcharges, fees or other charges by such sponsor
comply with Section 22.5;
------------
(r) Receipts from the sales of supplies or inventory by Tenant
to subtenants, concessionaires, or licensees provided that such
sales are at Tenant's cost of such supplies or inventories with
no xxxx-up or premium; and
(s) Revenue received by any golf professional who is an employee
at the Facility for golf instruction services at the Facility
(excluding any golf school or golf seminar activities) provided
that Tenant receives no fee, xxxx-up or premium for such
services.
For purposes of this definition of Course Revenue, all references to
Tenant in clauses (a) through (s) above shall also include any subtenants,
concessionaires and licensees.
Course Value: Means Course Cash Flow multiplied by the following
------------
multiples depending on the respective Fiscal Year:
first Fiscal Year (1996): 10 X
second Fiscal Year (1997): 10 X
third Fiscal Year (1998): 9 X
fourth Fiscal Year (1999): 8 X
fifth Fiscal Year (2000): 7.5X
sixth Fiscal Year (2001) and
each Fiscal Year thereafter: 7 X
Date of Taking: Means the date the Condemnor has the right to
--------------
possession of the property being condemned.
A-4
Distribution: Means any dividend, distribution, stock repurchase,
------------
recapitalization, affiliate loan or other similar transaction, other than
payment of sums necessary for Tenant's limited partners to pay federal and state
income taxes on Tenant's consolidated net income as permitted under Section 21
----------
of the Basic Lease Provisions, the effect of which is to reduce the Tangible Net
Worth.
Distribution Letter of Credit: Means a letter of credit which
-----------------------------
satisfies the requirements of Section 25.6.
------------
Distribution LC Amount: Means the amount, if any, by which the Course
----------------------
Value is less than $6,700,000, but in any event the Distribution LC Amount shall
be not less than 12 months of Base Rent.
Escalated: Means, as to any dollar amount and any date of
----------
determination, such amount as increased annually by the annual increase in the
Customer Price Index from the month in which the Commencement Date occurs to
the month in which the date of determination occurs.
Environmental Law: Means all applicable statutes, regulations, rules,
-----------------
ordinances, codes, licenses, permits, orders, demands, approvals, authorizations
and similar items of all governmental agencies, departments, commissions,
boards, bureaus or instrumentalities of the United States, states and political
subdivisions thereof and all applicable judicial, administrative and regulatory
decrees, judgments and orders relating to the protection of human health or the
environment as in effect on the Commencement Date or as thereafter amended,
including but not limited to those pertaining to reporting, licensing,
permitting, investigation, removal and remediation of emissions, discharges,
releases or threatened releases of "Hazardous Materials," substances,
pollutants, contaminants or hazardous or toxic substances, materials or wastes
whether solid, liquid or gaseous in nature, into the air, surface water, ground
water or land, or relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of substances, pollutants,
contaminants or hazardous or toxic substances, materials, or wastes, whether
solid, liquid or gaseous in nature, including: (x) the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. (S)(S) 9601 et
--
seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S)(S) 6901 et
--- --
seq.), the Clean Air Act (42 U.S.C. (S)(S) 7401 et seq.), the Federal Water
--- ------
Pollution Control Act (33 U.S.C. (S) 1251 et seq.), the Safe Drinking Water Act
------
(42 U.S.C. (S)(S) 300f et seq.), the Toxic Substances Control Act (15 U.S.C.
------
(S)(S) 2601 et seq.), the Endangered Species Act (16 U.S.C. (S)(S) 1531 et
------ --
seq.), the Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C.
---
(S)(S) 11001 et seq.), and (y) analogous state and local provisions.
------
Event of Default: As defined in Section 16.1.
---------------- ------------
Existing Instruments: Means: (i) the easements and other matters of
--------------------
record referenced in Schedule B to the Title Policy: (ii) the Holdback
Agreement: and (iii) the Membership Agreements.
Facility: As defined in the Basic Lease Provisions.
--------
A-5
Facility Mortgage: As defined in Section 13.1.
----------------- ------------
Facility Mortgagee: Means the holder or beneficiary of a Facility
------------------
Mortgage, if any, and only to the extent Landlord gives Tenant notice of the
identity and address of the Person.
Financial Covenants: As defined in Section 25.1.
------------------- ------------
Financial Quarter: The three-month periods (or applicable portions
-----------------
thereof) in any Fiscal Year from January 1 through March 31, April 1 through
June 30, July 1 through September 30 and October 1 through December 31.
Fiscal Year: As defined in the Basic Lease Provisions.
-----------
Fixed Charge Coverage Ratio: Means, for any period, the ratio of (A)
---------------------------
the sum of, without duplication (i) consolidated net income of Tenant excluding
any gains or losses in respect of dispositions plus (ii) provision for taxes
plus (iii) consolidated interest expense (including non-cash interest payments
or accruals and the interest component, if any, of lease obligations of Tenant
and its subsidiaries) plus (iv) all lease and rent obligations (including
percentage rent obligations) of Tenant and its subsidiaries plus (v) other
non-cash charges deducted from consolidated revenues in determining net income
for such period including depreciation and amortization (including amortization
of intangibles), over (B) the sum of (i) consolidated interest expenses of
Tenant and its subsidiaries for such period plus (ii) all lease and rent
obligations (including percentage rent obligations) of Tenant and its
subsidiaries for such period.
Fixtures: Means all permanently affixed equipment, machinery,
--------
fixtures, and other items of real and/or personal property, including all
components thereof, now and hereafter local in, on or used in connection with
and permanently affixed to or incorporated into the Leased Improvements,
including all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigerating, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, all of which, to the
greatest extent permitted by law, are hereby deemed by the parties hereto to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but specifically excluding all items included
within the category of Tenant's Personal Property and any Tenant Improvements.
Full Replacement Cost: Means the actual replacement cost thereof from
---------------------
time to time including increased cost of construction endorsement, less
exclusions provided in the normal fire insurance policy.
Hazardous Material: Means any chemical substance.
------------------
(i) the presence of which requires investigation or remediation
under any federal, state or local statute, regulation, ordinance,
order, action or policy, administrative request or civil
complaint under any of the foregoing or under common law;
A-6
(ii) which is defined as a "hazardous waste" or "hazardous
substance" under any federal, state or local statute, regulation
or ordinance or amendments thereto as in effect as of the
Commencement Date, or as thereafter amended, including the
Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. (S)(S) 9601 et seq.) and/or the Resource
------
Conservation and Recovery Act (42 U.S.C. (S)(S) 6901 et seq.);
------
(iii) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous and as of the Commencement Date, or as thereafter
amended, is regulated by any governmental authority, agency,
department, commission, board, or instrumentality of the United
States, or any state or any political subdivision thereof having
or asserting jurisdiction over the Leased Property;
(iv) the presence of which on any of the Leased Property causes
a nuisance upon such Leased Property or to adjacent properties
or poses a hazard to the health or safety of persons on or about
any of the Leased Property;
(v) which, except as contained in building materials, contains
gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenyls (PCBs) or friable asbestos or friable
asbestos-containing materials or urea formaldehyde foam
insulation; or
(vi) radon gas.
Holdback Agreement: As defined in the Basic Lease Provisions.
------------------
Impartial Appraiser: As defined in Section 13.2.
------------------- ------------
Impositions: Means collectively:
-----------
(a) all taxes (including all real and personal property, ad
valorem, sales and use, single business, gross receipts,
transaction privilege, rent or similar taxes);
(b) assessments and levies (including all assessments for
public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be
completed within the Term);
(c) excises:
(d) fees (including license, permit, inspection, authorization
and similar fees): and
A-7
(e) all other governmental charges;
in each case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen, of every character in respect of the Leased Property
and/or the Rent (including all interest and penalties thereon due to any failure
in payment by Tenant), which at any time during or in respect of the Term hereof
may be assessed or imposed on or in respect of or be a lien upon (i) Landlord or
Landlord's interest in the Leased Property; (ii) the Leased Property or any part
thereof or any rent therefrom or any estate, right, title or interest therein;
or (iii) any operation, use or possession of, or sales from or activity
conducted on or in connection with the Leased Property or the leasing or use of
the Leased Property or any part thereof; provided, however, that Impositions
-------- -------
shall not include:
(aa) any tax based on net income (whether denominated as an
income, franchise, capital stock or other tax) imposed
on Landlord or any other Person other than Tenant;
(bb) any transfer, or net revenue tax of Landlord or any other
Person other than Tenant;
(cc) any tax imposed solely with respect to the sale, exchange
or other disposition by Landlord of any Leased Property or the
proceeds thereof; or
(dd) any tax imposed with respect to any principal or interest
on any indebtedness on the Leased Property.
Impound Charges: As defined in Section 16.10.
--------------- -------------
Impound Payment: As defined in Section 16.10.
--------------- -------------
Initial Base Rent: As defined in the Basic Lease Provisions.
-----------------
Insurance Requirements: All terms of any insurance policy required by
----------------------
this Lease and all requirements of the issuer of any such policy.
Land: As defined in Article 1.
---- ---------
Landlord: As defined in the preamble.
--------
Landlord's Encumbrance: As defined in Section 24.1.
---------------------- ------------
Landlord's Personal Property: As defined in Article 1.
---------------------------- ---------
Lease: As defined in the preamble.
-----
Leased Improvements: As defined in Article 1.
------------------- ---------
A-8
Leased Property: As defined in Article 1.
--------------- ---------
Legal Requirements: All federal, state, county, municipal and other
------------------
governmental statutes, laws (including the Americans with Disabilities Act and
any Environmental Laws), rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Property or the
construction, use or alteration thereof, whether now or hereafter enacted and in
force, including any which may (i) require repairs, modifications or alterations
in or to the Leased Property; (ii) in any way adversely affect the use and
enjoyment thereof, and all permits, licenses and authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments, either of record or known to Tenant (other than
encumbrances created by Landlord without the consent of Tenant), at any time in
force affecting the Leased Property; or (iii) require the cleanup or other
treatment of any Hazardous Material.
Letter of Credit: Means a letter of credit which satisfies the
----------------
requirements of Section 25.3 and 25.4.
------------ ----
Letter of Credit Amount: Means, for any Fiscal Year, an amount equal
-----------------------
to one year of Base Rent for such Fiscal Year. Notwithstanding the previous
sentence, if Tenant is not required to post the Letter of Credit because Tenant
has satisfied the Financial Covenants in accordance with Section 25.1, and
------------
thereafter Tenant fails to satisfy the Financial Covenants in accordance with
Section 25.1 such that Tenant is required to re-post the Letter of Credit, the
------------
Letter of Credit Amount shall be reduced from an amount equal to one year of
Base Rent to an amount equal to six months of Base Rent as long as: (i) the Rent
Coverage Ratio is not less than 1.25 to 1.0: and (ii) the Fixed Charge Coverage
Ratio is greater than 1.1 to 1.0.
Membership Agreements: As defined in the Basic Lease Provision.
---------------------
Net From Operations: Means, for any period, Total Revenue minus the
-------------------
sum of: (a) the cost of goods sold at the Leased Property, plus (b) all
operating expenses (including all equipment and capital lease costs, property
taxes and corporate administrative expenses of Tenant in an amount equal to four
percent of the Total Revenue, but excluding Rent, Capital Expenditures and
depreciation) associated with the operation of the Leased Property.
Officer's Certificate: A certificate of Tenant signed by an officer
---------------------
authorized to so sign by the board of directors or by-laws.
Other Leased Properties: Mean the properties leased to Tenant or an
-----------------------
Affiliate of Tenant by Landlord or an Affiliate of Landlord, and listed on
Exhibit C attached hereto.
---------
Other Property Leases: Mean the other leases entered into between
---------------------
Landlord or an Affiliate of Landlord and Tenant or an Affiliate of Tenant
relating to Tenant's use of the Other Leased Properties.
Other Revenue: Means all revenue received (whether by Tenant or any
-------------
subtenants, concessionaires or licensees) from or by reason of the Leased
Property relating to (i) the operation of snack bars, restaurants, bars and
banquet operations, (ii) golf and tennis
A-9
professionals' shops on the Leased Property, (iii) parking, (iv) fitness
centers, (v) tennis facilities, (vi) day care, (vii) non-golf related guest fees
and related surcharges, (viii) locker rentals, (ix) bag storage, (x) video
games, (xi) vending machines and (xii) fees or other charges paid to Tenant by
providers of golf lessons (unless the terms under which Tenant is paid by such
provider do not comply with Section 22.5, in which event the gross revenue
------------
received by such provider shall be included in Other Revenue); but excluding:
-------------
(1) the items described in clauses (b) through (s) of the definition of Course
Revenue (for purposes of this definition of Other Revenue, all references to
Tenant in clauses (a) through (s) of the definition of Course Revenue shall also
include any subtenants, concessionaires and licensees) and (2) gross revenue
received by any provider of golf lessons, provided that the terms under which
Tenant is paid fees or other charges by such provider comply with Section 22.5.
------------
Overdue Rate: On any date, a rate equal to 2 1/2% above the Prime
------------
Rate, but in no event greater than the maximum rate then permitted under
applicable law.
Partner Distributions: As defined in the Basic Lease Provision.
---------------------
Person: Means and includes natural persons, corporations, limited
------
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts, Indian tribes or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
Primary Intended Use: Means the operation of a public golf course,
--------------------
consisting of the Facility, and other activities customarily associated with or
incidental to the operation of the Facility, including, without limitation, sale
or rental of golf-related merchandise at a golf professional's shop, furnishing
of lessons by a golf professional, operation of a driving range, operation of a
clubhouse and restaurant, and sale of food and beverages, including liquor
sales.
Prime Rate: On any date, a rate equal to the annual rate on such date
----------
announced by Citibank, N.A. to be its prime rate or base rate for 90-day
unsecured loans to its corporate borrowers of the highest credit standing but in
no event greater than the maximum rate then permitted under applicable law.
Programs: As defined in Section 3.7.2.
-------- -------------
Purchase Agreement: As defined in the Basic Lease Provisions.
------------------
Related Rights: As defined in Article 1.
-------------- ---------
Rent: Collectively, the Base Rent, Additional Rent and Additional
----
Charges, as defined in Article 3.
---------
Rent Coverage Ratio: Means, for any period, the ratio of (A) Net From
-------------------
Operations over (B) Rent for such period.
Replacement Water Rights: Means Water Rights that provide water supply
------------------------
and transportation at a quantity, price and priority which at the time of their
acquisition are not less
A-10
favorable in any material respect to the holder of the Water Rights than the
quantity, price and priority of the Water Rights which will be replaced by such
Replacement Water Rights.
State: The State or Commonwealth in which the Leased Property is
-----
located.
Tangible Net Worth: Means the total book value of the assets of Tenant
------------------
(on a consolidated basis) (excluding intangibles, goodwill, patents, trademarks,
trade names, organizational expense and loans to affiliates) less all
liabilities.
Tenant: As defined in the preamble.
------
Tenant Improvement: As defined in Section 10.1
------------------ ------------
Tenant's Original Water Rights: As defined in Section 6.7.2.
------------------------------ -------------
Tenant-Owned Names: As defined in Section 26.21.
------------------ -------------
Tenant's Personal Property: All machinery, equipment, furniture,
--------------------------
furnishings, movable walls or partitions, phone system, computers or trade
fixtures or other personal property, and consumable inventory and supplies,
owned by Tenant and used or useful in Tenant's business on the Leased Property,
including all items of furniture, furnishings, equipment, supplies and
inventory, kitchen fixtures, bar equipment, flatware, lawn mowers and other
gardening tools, tractors and other motorized vehicles and golf carts.
Tenant's Properties: As defined in Section 3.7.1.
------------------- -------------
Term: As defined in the Basic Lease Provisions.
----
Title Policy: As defined in the Basic Lease Provisions.
------------
Total Revenue: Course Revenue plus Other Revenue.
-------------
Unavoidable Delays: Delays due to strikes, lockouts, inability to
------------------
procure materials, power failure, acts of God, earthquake, governmental
restrictions, enemy action, civil commotion, fire, unavoidable casualty or other
causes beyond the control of the party responsible for performing an obligation
hereunder, provided that lack of funds shall not be deemed a cause beyond the
-------------
control of either party hereto unless such lack of funds is caused by the
failure of the other party hereto to perform any obligations of such party,
under this Lease.
Unsuitable For Its Primary Intended Use: A state or condition of the
---------------------------------------
Facility such that in the good faith judgment of Tenant, reasonably exercised,
the Facility cannot be operated on a commercially practicable basis for its
Primary Intended Use.
Water Rights: Means any rights for the supply or transportation of
------------
water to the Leased Property owned from time to time by Landlord or Tenant,
including Tenant's Original Water Rights and the Replacement Water Rights.
A-11
Interpretation. The foregoing defined terms include the plural as well
--------------
as the singular. "Including" and variants thereof shall be deemed to mean
"including without limitation." All accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally accepted
accounting principles as at the time applicable. All references in this Lease to
designated "Articles," "Sections" and other subdivisions are to the designated
Articles, Sections and other subdivisions of the Detailed Lease Provisions
unless otherwise indicated. The words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Lease as a whole and not to any
particular Article, Section or other subdivision.
A-12
