NET LEASE AGREEMENT
THIS LEASE, made and entered into effective as of the
23rd day of December, 1997, by and between AEI Net Lease
Income & Growth Fund XIX Limited Partnership ("Fund XIX"), a
Minnesota limited partnership whose corporate general
partner is AEI Fund Management XIX, Inc., a Minnesota
corporation, AEI Real Estate Fund XV Limited Partnership
("Fund XV"), a Delaware limited partnership, whose corporate
general partner is AEI Fund Management 86-A, Inc., AEI Real
Estate Fund XVII Limited Partnership ("Fund XVII"), a
Minnesota limited partnership, whose corporate general
partner is AEI Fund Management XVII, Inc., and AEI Real
Estate Fund XVIII Limited Partnership ("Fund XVIII"), a
Minnesota limited partnership, whose corporate general
partner is AEI Fund Management XVIII, Inc., all of whose
principal business address is 1300 Minnesota World Trade
Center, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Lessor"), and Champps Entertainment, Inc., a Minnesota
corporation ("Lessee"), whose principal business address is
One Corporate Place, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇;
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of
real property and improvements located at ▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇, and
legally described in Exhibit "A", which is attached hereto
and incorporated herein by reference; and
WHEREAS, Lessee will be constructing the building and
improvements (together the "Building") on the real property
described in Exhibit "A", which Building is described in the
plans and specifications heretofore submitted to Lessor; and
WHEREAS, Lessee desires to lease said real property and
Building (said real property and Building hereinafter
referred to as the "Leased Premises"), from Lessor upon the
terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the Rents, terms,
covenants, conditions, and agreements hereinafter described
to be paid, kept, and performed by Lessee, Lessor does
hereby grant, demise, lease, and let unto Lessee, and Lessee
does hereby take and hire from Lessor and does hereby
covenant, promise, and agree as follows:
ARTICLE 1. LEASED PREMISES
Lessor hereby leases to Lessee, and Lessee leases and
takes from Lessor, the Leased Premises subject to the
conditions of this Lease.
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Twenty
(20) consecutive "Lease Years", as hereinafter defined,
commencing on December 23rd , 1997 ("Occupancy Date").
(B) The first "Lease Year" of the Term shall be for a
period of twelve (l2) consecutive calendar months from the
Occupancy Date. If the Occupancy Date shall be other than
the first day of a calendar month, the first "Lease Year"
shall be the period from the Occupancy Date to the end of
the calendar month of the Occupancy Date, plus the following
twelve (l2) calendar months. Each Lease Year after the
first Lease Year shall be a successive period of twelve
(l2) calendar months.
(C) The parties agree that once the Occupancy Date has
been established, upon the request of either party, a short
form or memorandum of this Lease will be executed for
recording purposes. That short form or memorandum of this
Lease will set forth the actual occupancy and termination
dates of the Term and optional Renewal Terms, as defined in
Article 28 hereof, and the existence of any right of first
refusal, and that said right shall terminate when the Lessee
shall lose right to possession or this Lease is terminated,
whichever occurs first.
ARTICLE 3. CONSTRUCTION OF IMPROVEMENTS
(A) Lessee warrants and agrees that the Building will
be constructed on the Leased Premises, and all other
improvements to the land, including the parking lot,
approaches, and service areas, will be constructed in all
material respects by Lessee substantially in accordance with
the plot, plans, and specifications heretofore submitted to
Lessor.
(B) Lessee warrants that the Building and all other
improvements to the land contemplated do comply with the
laws, ordinances, rules, and regulations of all state and
local governments.
(C) Lessee agrees to pay, if not already paid in full,
for all architectural fees and actual construction costs
relating to the Building and other related improvements on
the Leased Premises, in the past, present or future, which
shall include, but not be limited to, plans and
specifications, general construction, carpentry, electrical,
plumbing, heating, ventilating, air conditioning,
decorating, equipment installation, outside lighting,
curbing, landscaping, blacktopping, electrical sign hookup,
conduit and wiring from building, fencing, and parking
curbs, builder's risk insurance (naming Lessor, Lessee, and
contractor as co-insured), and all construction bonds for
improvements made by or at the direction of Lessee.
(D) Opening for business in the Leased Premises by
Lessee shall constitute an acceptance of the Leased Premises
and an acknowledgment by Lessee that the premises are in the
condition described under this Lease.
ARTICLE 4. RENT PAYMENTS
(A) Annual Rent Payable for the first, second, and
third Lease Years: Lessee shall pay to Lessor an annual
Base Rent of $105,771.24, which amount shall be payable in
advance on the first day of each month in equal monthly
installments of $2,296.12 to Lessor Fund XV, $2,296.12 to
Lessor Fund XVII, $2,111.02 to Lessor Fund XVIII, and
$2,111.01 to Lessor Fund XIX. If the first day of the Lease
Term is not the first day of a calendar month, then the
monthly Rent payable for that partial month shall be a
prorated portion of the equal monthly installment of Base
Rent.
(B) Annual Rent Payable beginning in the fourth,
seventh, tenth, thirteenth, sixteenth,nineteenth, and if
renewed according to the terms hereof, the twenty-second,
twenty-fifth, twenty-eighth, thirty-first, and thirty-fourth
Lease Year:
1. In the fourth and every third Lease Year
thereafter, the annual Base Rent due and payable shall
increase by an amount equal to the lesser of: a) Seven and
35/100 Percent (7.35%) of the Base Rent payable for the
immediately prior Lease Year, or b) The "CPI-U Percentage
Increase" of the Base Rent payable for the prior Lease Year.
"CPI-U" shall mean the Consumer Price
Index for All Urban Consumers, (all items), published by the
United States Department of Labor, Bureau of Labor
Statistics (BLS) (1982-84 equal 100), U.S. Cities Average,
or, in the event said index ceases to be published, by any
successor index recommended as a substitute therefor by the
United States Government or a comparable, nonpartisan
substitute reasonably designated by Lessor. If the BLS
changes the base reference period for the Price Index from
1982-84=100, the CPI-U Percentage Increase shall be
determined with the use of such conversion formula or table
as may be published by the BLS.
The term "CPI-U Percentage Increase"
shall mean the percentage increase in the CPI-U determined
by reference to the increase, if any, in the latest monthly
CPI-U issued prior to the first day of the Lease Year for
which Base Rent is being increased, over the CPI-U issued
for the same month in the third year prior (e.g., the
December CPI-U for the year 2000 over the December CPI-U for
the year 1997.) Said month's CPI-U shall be used even
though that CPI-U will not be for the month in which the
renewal term commences. In no event shall the CPI-U
Percentage Increase be less than zero.
(C) Overdue Payments.
Lessee shall pay interest on all overdue payments of
Rent or other monetary amounts due hereunder at the rate of
fifteen percent (15%) per annum or the highest rate allowed
by law, whichever is less, accruing from the date such Rent
or other monetary amounts were properly due and payable.
ARTICLE 5. INSURANCE AND INDEMNITY
(A) Lessee shall, throughout the Term or Renewal
Terms, if any, of this Lease, at its own cost and expense,
procure and maintain insurance which covers the Leased
Premises and improvements against fire, wind, and storm
damage (including flood insurance if the Leased Premises is
in a federally designated flood prone area) and such other
risks (including earthquake insurance, if the Leased
Premises is located in a federally designated earthquake
zone or in an ISO high risk earthquake zone) as may be
included in the broadest form of all risk, extended coverage
insurance as may, from time to time, be available in amounts
sufficient to prevent Lessor or Lessee from becoming a co-
insurer within the terms of the applicable policies. In any
event, the insurance shall not be less than one hundred
percent (100%) of the then insurable value, with such
commercially reasonable deductibles as Lessor may reasonably
require from time to time. Additionally, replacement cost
endorsements, vandalism endorsement, malicious mischief
endorsement, waiver of subrogation endorsement, waiver of co-
insurance or agreed amount endorsement (if available), and
Building Ordinance Compliance endorsement and Rent loss
endorsements (for a period of 90 days) must be obtained.
(B) Lessee agrees to place and maintain throughout the
Term or Renewal Terms, if any, of this Lease, at Lessee's
own expense, public liability insurance with respect to
Lessee's use and occupancy of said premises, including "Dram
Shop" or liquor liability insurance, if the same shall be or
become available in the State of Michigan, with initial
limits of at least $1,000,000 per occurrence/$3,000,000
general aggregate (inclusive of umbrella coverage), or such
additional amounts as Lessor shall reasonably require from
time to time.
(C) Lessee agrees to notify Lessor in writing if
Lessee is unable to procure all or some part of the
aforesaid insurance. In the event Lessee fails to provide
all insurance required under this Lease, Lessor shall have
the right, but not the obligation, to procure such insurance
on Lessee's behalf, following five (5) business days written
notice to Lessee of Lessor's intent to do so (unless
insurance then in place would during such period, or already
has, lapsed, in which case no notice need be given) and
Lessee may obtain such insurance during said five day period
and not then be in default hereunder. If Lessor shall obtain
such insurance, Lessee will then, within five (5) business
days from receiving written notice, pay Lessor the amount of
the premiums due or paid, together with interest thereon at
the lesser of 15% per annum or the highest rate allowable by
law, which amount shall be considered Rent payable by Lessee
in addition to the Rent defined at Article 4 hereof.
(D) All policies of insurance provided for or
contemplated by this Article can be under Lessee's blanket
insurance coverage and shall name Lessor, Lessor's corporate
general partner, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as the general
partner of Lessor, and Lessee as additional insured and loss
payee, as their respective interests (as landlord and
lessee, respectively) may appear, and shall provide that the
policies cannot be canceled, terminated, changed, or
modified without thirty (30) days written notice to the
parties. In addition, all of such policies shall be in
place on or before the Occupancy Date and contain
endorsements by the respective insurance companies waiving
all rights of subrogation, if any, against Lessor. All
insurance companies providing coverages must be rated "A" or
better by Best's Key Rating Guide (the most current
edition), or similar quality under a successor guide if
Best's Key Rating shall cease to be published. Lessee
shall maintain legible copies of any and all policies and
endorsements required herein, to be made available for
Lessor's review and photocopy upon Lessor's reasonable
request from time to time. On the Occupancy Date and no
less than fifteen (15) business days prior to expiration of
such policies, Lessee shall provide Lessor with legible
copies of any and all renewal Certificates of Insurance
reflecting the above terms of the Policies (including
endorsements). Lessee agrees that it will not settle any
property insurance claims affecting the Leased Premises in
excess of $25,000 without Lessor's prior written consent,
such consent not to be unreasonably withheld or delayed.
Lessor shall consent to any settlement of an insurance claim
wherein Lessee shall confirm in writing with evidence
reasonably satisfactory to Lessor that Lessee has sufficient
funds available to complete the rebuilding of the Premises.
(E) Lessee shall defend, indemnify, and hold Lessor
harmless against any and all claims, damages, and lawsuits
arising after the Occupancy Date of this Lease and any
orders, decrees or judgments which may be entered therein,
brought for damages or alleged damages resulting from any
injury to person or property or from loss of life sustained
in or about the Leased Premises, unless such damage or
injury results from the intentional misconduct or the gross
negligence of Lessor and Lessee agrees to save Lessor
harmless from, and indemnify Lessor against, any and all
injury, loss, or damage, of whatever nature, to any person
or property caused by, or resulting from any act, omission,
or negligence of Lessee or any employee or agent of Lessee.
In addition, Lessee hereby releases Lessor from any and all
liability for any loss or damage caused by fire or any of
the extended coverage casualties, unless such fire or other
casualty shall be brought about by the intentional
misconduct or negligence of Lessor. In the event of any
loss, damage, or injury caused by the joint negligence or
willful misconduct of Lessor and Lessee, they shall be
liable therefor in accordance with their respective degrees
of fault.
(F) Lessor hereby waives any and all rights that it
may have to recover from Lessee damages for any loss
occurring to the Leased Premises by reason of any act or
omission of Lessee; provided, however, that this waiver is
limited to those losses for which Lessor is compensated by
its insurers, if the insurance required by this Lease is
maintained. Lessee hereby waives any and all right that it
may have to recover from Lessor damages for any loss
occurring to the Leased Premises by reason of any act or
omission of Lessor; provided, however, that this waiver is
limited to those losses for which Lessee is, or should be if
the insurance required herein is maintained, compensated by
its insurers.
ARTICLE 6. TAXES, ASSESSMENTS AND UTILITIES
(A) Lessee shall be liable and agrees to pay the
charges for all public utility services rendered or
furnished to the Leased Premises, including heat, water,
gas, electricity, sewer, sewage treatment facilities and the
like, all personal property taxes, real estate taxes,
special assessments, and municipal or government charges,
general, ordinary and extraordinary, of every kind and
nature whatsoever, which may be levied, imposed, or assessed
against the Leased Premises, or upon any improvements
thereon, at any time after the Occupancy Date of this Lease
for the period prior to the expiration of the term hereof,
or any Renewal Term, if exercised.
(B) Lessee shall pay all real estate taxes,
assessments for public improvements or benefits, and other
governmental impositions, duties, and charges of every kind
and nature whatsoever which shall or may, during the term of
this Lease, be charged, laid, levied, assessed, or imposed
upon, or become a lien or liens upon the Leased Premises or
any part thereof. Such payments shall be considered as Rent
paid by Lessee in addition to the Rent defined at Article 4
hereof. If due to a change in the method of taxation, a
franchise tax, Rent tax, or income or profit tax shall be
levied against Lessor in substitution for or in lieu of any
tax which would otherwise constitute a real estate tax, such
tax shall be deemed a real estate tax for the purposes
herein and shall be paid by Lessee; otherwise Lessee shall
not be liable for any such tax levied against Lessor.
(C) All real estate taxes, assessments for public
improvements or benefits, water rates and charges, sewer
rents, and other governmental impositions, duties, and
charges which shall become payable for the first and last
tax years of the term hereof shall be apportioned pro rata
between Lessor and Lessee in accordance with the respective
number of months during which each party shall be in
possession of the Leased Premises (or through the expiration
of the term hereof, if longer) in said respective tax years.
Lessee shall pay within 60 days of the expiration of the
term hereof Lessor's reasonable estimate of Lessee's pro-
rata share of real estate taxes for the last tax year of the
term hereof, based upon the last available tax ▇▇▇▇. Lessor
shall give Lessee notice of such estimated pro-rata real
estate taxes no later than 75 days from the end of the term
hereof. Upon receipt of the actual statement of real estate
taxes for such prorated period, Lessor shall either refund
to Lessee any over payment of the pro-rata Lessee
obligation, or shall assess and Lessee shall pay promptly
upon notice any remaining portion of the Lessee's pro-rata
obligation for such real estate taxes.
(D) Lessee shall have the right to contest or review
by legal proceedings or in such other manner as may be legal
(which, if instituted, shall be conducted solely at Lessee's
own expense) any tax, assessment for public improvements or
benefits, or other governmental imposition aforementioned,
upon condition that, before instituting such proceeding
Lessee shall pay (under protest) such tax or assessments for
public improvements or benefits, or other governmental
imposition, duties and charges aforementioned, unless such
payment would act as a bar to such contest or interfere
materially with the prosecution thereof and in such event
Lessee shall post with Lessor alternative security
reasonably satisfactory to Lessor. All such proceedings
shall be begun as soon as reasonably possible after the
imposition or assessment of any contested items and shall
be prosecuted to final adjudication with reasonable
dispatch. In the event of any reduction, cancellation, or
discharge, Lessee shall pay the amount that shall be finally
levied or assessed against the Leased Premises or
adjudicated to be due and payable, and, if there shall be
any refund payable by the governmental authority with
respect thereto, if Lessee has paid the expense of Lessor in
such proceedings, Lessee shall be entitled to receive and
retain the refund, subject, however, to apportionment as
provided during the first and last years of the term of this
Lease.
(E) Lessor, within sixty (60) days after notice to
Lessee if Lessee fails to commence such proceedings, may,
but shall not be obligated to, contest or review by legal
proceedings, or in such other manner as may be legal, and at
Lessor's own expense, any tax, assessments for public
improvements and benefits, or other governmental imposition
aforementioned, which shall not be contested or reviewed, as
aforesaid, by Lessee, and unless Lessee shall promptly join
with Lessor in such contest or review, Lessor shall be
entitled to receive and retain any refund payable by the
governmental authority with respect thereto.
(F) Lessor shall not be required to join in any
proceeding referred to in this Article,
unless in Lessee's reasonable opinion, the provisions of any
law, rule, or regulation at the time in effect shall require
that such a proceeding be brought by and/or in the name of
Lessor, in which event Lessor shall upon written request,
join in such proceedings or permit the same to be brought in
its name, all at no cost or expense to Lessor.
(G) Within thirty (30) days after Lessor notifies
Lessee in writing that Lessor has paid such amount, Lessee
shall also pay to Lessor, as additional Rent, the amount of
any sales tax, franchise tax, excise tax, on Rents imposed
by the State where the Leased Premises are located. At
Lessor's option, Lessee shall deposit with Lessor on the
first day of each and every month during the term hereof, an
amount equal to one-twelfth (1/12) of any estimated sales
tax payable to the State in which the property is situated
for Rent received by Lessor hereunder ("Deposit"). From
time to time out of such Deposit Lessor will pay the sales
tax to the State in which the property is situated as
required by law. In the event the Deposit on hand shall not
be sufficient to pay said tax when the same shall become due
from time to time, or the prior payments shall be less than
the current estimated monthly amounts, then Lessee shall pay
to Lessor on demand any amount necessary to make up the
deficiency. The excess of any such Deposit shall be
credited to subsequent payments to be made for such items.
If a default or an event of default shall occur under the
terms of this Lease, Lessor may, at its option, without
being required so to do, apply any Deposit on hand to cure
such default, in such order and manner as Lessor may elect.
ARTICLE 7. PROHIBITION ON ASSIGNMENTS AND SUBLETTING;
TAKE-BACK RIGHTS
(A) Except as otherwise expressly provided in this
Article, Lessee shall not, without obtaining the prior
written consent of Lessor, in each instance:
1. assign or otherwise transfer this Lease,
or any part of Lessee's right, title or interest therein;
2. sublet all or any part of the Leased
Premises or allow all or any part of the Leased Premises to
be used or occupied by any other Persons (herein defined as
a Party other than Lessee, be it a corporation, a
partnership, an individual or other entity); or
3. mortgage, pledge or otherwise encumber
this Lease, or the Leased Premises.
(B) For the purposes of this Article:
1. the transfer of voting control of any
class of capital stock of any corporate Lessee or sublessee,
or the transfer voting control of the total interest in any
other person which is a Lessee or sublessee, however
accomplished, whether in a single transaction or in a series
of related or unrelated transactions, shall be deemed an
assignment of this Lease, or of such sublease, as the case
may be;
2. an agreement by any other Person,
directly or indirectly, to assume Lessee's obligations under
this Lease shall be deemed an assignment;
3. any Person to whom Lessee's interest
under this Lease passes by operation of law, or otherwise,
shall be bound by the provisions of this Article;
4. each material modification, amendment
or extension or any sublease to which Lessor has previously
consented shall be deemed a new sublease; and
5. Lessee shall present the signed consent
to such assignment and/or subletting from any guarantors of
this Lease, such consent to be in form and substance
reasonably satisfactory to Lessor.
Lessee agrees to furnish to Lessor within five (5)
business days following demand at any time such information
and assurances as Lessor may reasonably request that neither
Lessee, nor any previously permitted sublessee or assignee,
has violated the provisions of this Article.
(C) If Lessee agrees to assign this Lease or to sublet
all or any portion of the Leased Premises, Lessee shall,
prior to the effective date thereof (the "Effective Date"),
deliver to Lessor executed counterparts of any such
agreement and of all ancillary agreements with the proposed
assignee or sublessee, as applicable. If Lessee shall fail
to do so, and shall have surrendered possession of the
Leased Premises in violation of its duty of prior notice and
failed to obtain Lessor's prior consent (if and where
required herein), and, if in such event, Lessor in its sole
discretion (except as otherwise specifically limited herein)
shall not consent to a proposed sublease or assignment,
Lessor shall then have all of the following rights, any of
which Lessor may exercise by written notice to Lessee given
within thirty (30) days after Lessor receives the
aforementioned documents:
1. with respect to a proposed assignment of
this Lease, the right to terminate this Lease on the
Effective Date as if it were the Expiration Date of this
Lease;
2. with respect to a proposed subletting of
the entire Leased Premises, the right to terminate this
Lease on the Effective Date as if it were the Expiration
Date; or
3. with respect to a proposed subletting
of less than the entire Leased Premises, the right to
terminate this Lease as to the portion of the Leased
Premises affected by such subletting on the Effective Date,
as if it were the Expiration Date, in which case Lessee
shall promptly execute and deliver to Lessor an appropriate
modification of this Lease in form satisfactory to Lessor in
all respects.
4. with respect to a proposed subletting
or proposed assignment of this Lease, impose such conditions
upon Lessor's consent as Lessor shall determine in its sole
discretion.
(D) If Lessor exercises any of its options under
Article 7(C) above, (and if Lessor shall impose conditions
upon its consent and Lessee shall fail to meet any
conditions Lessor may impose upon its consent), Lessor may
then lease the Leased Premises or any portion thereof to
Lessee's proposed assignee or sublessee, as the case may be,
without liability whatsoever to Lessee.
(E) Notwithstanding anything above to the contrary,
Lessor agrees to consent to any assignment or sublease all
or any portion of the Lessee's interests herein to Unique
Casual Restaurants, Inc., or a franchisee or licensee in
good standing of Champps Entertainment Inc, for the Champps
restaurant concept, provided Lessor is given prior written
notice of such sublease or assignment, accompanied by a copy
of such sublease or assignment, and the consents of Lessee
and Guarantors (such consent to be in form and substance
satisfactory to Lessor) to such assignment or sublet,
affirming their continued liability hereunder (or under
their guaranty, respectively).
Lessor agrees that its consent to any other proposed
assignment or sublet shall not be unreasonably withheld or
delayed, provided Lessor is given prior written notice of
such sublease or assignment, accompanied by a copy of such
sublease or assignment, and the consents of Lessee and
Guarantors (such consent to be in form and substance
satisfactory to Lessor) to such assignment or sublet,
affirming their continued liability hereunder (or under
their guaranty, respectively).
(F) Notwithstanding anything above to the contrary,
the Lessee's interest herein shall not be assignable in any
manner in accordance with the terms hereof unless and until
the termination of the Development Financing Agreement as
set forth in Article 35 hereof.
ARTICLE 8. REPAIRS AND MAINTENANCE
(A) Lessee covenants and agrees to keep and maintain
in good order, condition and repair the interior and
exterior of the Leased Premises during the term of the
Lease, or any renewal terms, and further agrees that Lessor
shall be under no obligation to make any repairs or perform
any maintenance to the Leased Premises. Lessee covenants
and agrees that it shall be responsible for all repairs,
alterations, replacements, or maintenance of, including but
without limitation to or of: The interior and exterior
portions of all doors; door checks and operators; windows;
plate glass; plumbing; water and sewage facilities;
fixtures; electrical equipment; interior walls; ceilings;
signs; roof; structure; interior building appliances and
similar equipment; heating and air conditioning equipment;
and any equipment owned by Lessor and leased to Lessee
hereunder, as itemized on Exhibit B attached hereto and
incorporated herein by reference; and further agrees to
replace any of said equipment when necessary. Lessee
further agrees to be responsible for, at its own expense,
snow removal, lawn maintenance, landscaping, maintenance of
the parking lot (including parking lines, seal coating, and
blacktop surfacing), and other similar items.
(B) If Lessee refuses or neglects to commence or
complete repairs promptly and adequately, after prior
written notice as required under Article 16(B) (except in
cases of emergency to prevent waste or preserve the safety
and integrity of the Leased Premises, in which case no
notice need be given), Lessor may cause such repairs to be
made, but shall not be required to do so, and Lessee shall
pay the cost thereof to Lessor within five (5) business days
following demand. It is understood that Lessee shall pay
all expenses and maintenance and repair during the term of
this Lease. If Lessee is not then in default hereunder,
Lessee shall have the right to make repairs and improvements
to the Leased Premises without the consent of Lessor if such
repairs and improvements do not exceed Fifty Thousand
Dollars ($50,000.00), provided such repairs or improvements
do not affect the structural integrity of the Leased
Premises. Any repairs or improvements in excess of Fifty
Thousand Dollars ($50,000.00) or affecting the structural
integrity of the Leased Premises may be done only with the
prior written consent of Lessor, such consent not to be
unreasonably withheld or delayed. All alterations and
additions to the Leased Premises shall be made in accordance
with all applicable laws and shall remain for the benefit of
Lessor, except for Lessee's moveable trade fixtures. In the
event of making such alterations as herein provided, Lessee
further agrees to indemnify and save harmless Lessor from
all expense, liens, claims or damages to either persons or
property or the Leased Premises which may arise out of or
result from the undertaking or making of said repairs,
improvements, alterations or additions, or Lessee's failure
to make said repairs, improvements, alterations or
additions.
ARTICLE 9. COMPLIANCE WITH LAWS AND REGULATIONS
Lessee will comply with all statutes, ordinances,
rules, orders, regulations and requirements of all federal,
state, city and local governments, and with all rules,
orders and regulations of the applicable Board of Fire
Underwriters which affect the use of the improvements.
Lessee will comply with all easements, restrictions, and
covenants of record against or affecting the Leased Premises
and any franchise or license agreements required for
operation of the Leased Premises in accordance with Article
14 hereof.
ARTICLE 10. SIGNS
Lessee shall have the right to install and maintain a
sign or signs advertising Lessee's business, provided that
the signs conform to law, and further provided that the sign
or signs conform specifically to the written requirements of
the appropriate governmental authorities.
ARTICLE 11. SUBORDINATION
(A) Lessor reserves the right and privilege to subject
and subordinate this Lease at all times to the lien of any
mortgage or mortgages now or hereafter placed upon Lessor's
interest in the Leased Premises and on the land and
buildings of which said premises are a part, or upon any
buildings hereafter placed upon the land of which the Leased
Premises are a part, provided such mortgagee shall execute
its standard form, commercially reasonable subordination,
attornment and non-disturbance agreement. Lessor also
reserves the right and privilege to subject and subordinate
this Lease at all times to any and all advances to be made
under such mortgages, and all renewals, modifications,
extensions, consolidations, and replacements thereof,
provided such mortgagee shall execute its standard form,
commercially reasonable subordination, attornment and non-
disturbance agreement.
(B) Lessee covenants and agrees to execute and
deliver, upon demand, such further instrument or instruments
subordinating this Lease on the foregoing basis to the lien
of any such mortgage or mortgages as shall be desired by
Lessor and any proposed mortgagee or proposed mortgagees,
provided such mortgagee shall execute its standard form,
commercially reasonable subordination, attornment and non-
disturbance agreement.
ARTICLE l2. CONDEMNATION OR EMINENT DOMAIN
(A) If the whole of the Leased Premises are taken by
any public authority under the power of eminent domain, or
by private purchase in lieu thereof, then this Lease shall
automatically terminate upon the date possession is
surrendered, and Rent shall be paid up to that day. If any
part of the Leased Premises shall be so taken as to render
the remainder thereof materially unusable in the opinion of
a licensed third party arbitrator reasonably approved by
Lessor and Lessee, for the purposes for which the Leased
Premises were leased, then Lessor and Lessee shall each have
the right to terminate this Lease on thirty (30) days notice
to the other given within ninety (90) days after the date of
such taking. In the event that this Lease shall terminate
or be terminated, the Rent shall, if and as necessary, be
paid up to the day that possession was surrendered.
(B) If any part of the Leased Premises shall be so
taken such that it does not materially interfere with the
business of Lessee, then Lessee shall, with the use of the
condemnation proceeds to be made available by Lessor, but
otherwise at Lessee's own cost and expense, restore the
remaining portion of the Leased Premises to the extent
necessary to render it reasonably suitable for the purposes
for which it was leased. Lessee shall make all repairs to
the building in which the Leased Premises is located to the
extent necessary to constitute the building a complete
architectural unit. Provided, however, that such work shall
not exceed the scope of the work required to be done by
Lessee in originally constructing such building unless
Lessee shall demonstrate to Lessor's reasonable satisfaction
the availability of funds to complete such work. Provided,
further, the cost thereof to Lessor shall not exceed the
proceeds of its condemnation award, all to be done without
any adjustments in Rent to be paid by Lessee. This lease
shall be deemed amended to reflect the taking in the legal
description of the Leased Premises.
(C) All compensation awarded or paid upon such total
or partial taking of the Leased Premises shall belong to and
be the property of Lessor without any participation by
Lessee, whether such damages shall be awarded as
compensation for diminution in value to the leasehold or to
the fee of the premises herein leased. Nothing contained
herein shall be construed to preclude Lessee from
prosecuting any claim directly against the condemning
authority in such proceedings for: Loss of business; damage
to or loss of value or cost of removal of inventory, trade
fixtures, furniture, and other personal property belonging
to Lessee; provided, however, that no such claim shall
diminish or otherwise adversely affect Lessor's award or the
award of any fee mortgagee.
ARTICLE 13. RIGHT TO INSPECT
Lessor reserves the right to enter upon, inspect and
examine the Leased Premises at any time during business
hours, after reasonable notice to Lessee, and Lessee agrees
to allow Lessor free access to the Leased Premises to show
the premises. Upon default by Lessee or at any time within
ninety (90) days of the expiration or termination of the
Lease, Lessee agrees to allow Lessor to then place "For
Sale" or "For Rent" signs on the Leased Premises. Lessor
and Lessor's representatives shall at all times while upon
or about the Leased Premises observe and comply with
Lessee's reasonable health and safety rules, regulations,
policies and procedures. Lessor agrees to indemnify and
hold Lessee, its successors, assigns, agents and employees
from and against any liability, claims, demands, cause of
action, suits and other litigation or judgements of every
kind and character, including injury to or death of any
person or persons, or trespass to, or damage to, or loss or
destruction of, any property, whether real or personal, to
the extent resulting from the negligence or willful
misconduct or Lessor or Lessor's representatives while upon
or about the Leased Premises.
ARTICLE 14. EXCLUSIVE USE
(A) After the Occupancy Date, Lessee expressly agrees
and warrants that the Leased Premises will be used
exclusively as a Champps Restaurant or other casual dining
sit-down restaurant. In any other such case, after
obtaining Lessor's prior written consent, such consent not
to be unreasonably withheld or delayed, Lessee may conduct
any lawful business from the Leased Premises. Lessee
acknowledges and agrees that any other use without the prior
written consent of Lessor will constitute a default under
and a violation and breach of this Lease. Lessee agrees:
To open for business within a reasonable period of time
after completion of construction of the contemplated
Improvements; to operate all of the Leased Premises during
the Term or Renewal Terms during regular and customary hours
for businesses similar to the permitted exclusive use stated
herein, unless prevented from doing so by causes beyond
Lessee's control or due to remodeling; and to conduct its
business in a professional and reputable manner.
(B) If the Leased Premises are not operated as a
Champps Restaurant or other casual dining sit-down
restaurant or other permitted use hereunder, or remain
closed for thirty (30) consecutive days (unless such closure
results from reasons beyond Lessee's reasonable control) and
in the event Lessee fails to pay Rent when due or fulfill
any other obligation hereunder, then Lessee shall be in
default hereunder and Lessor may, at its option, cancel this
Lease by giving written notice to Lessee or exercise any
other right or remedy that Lessor may have; provided,
however, that closings shall be reasonably permitted for
replacement of trade fixtures or during periods of repair
after destruction or due to remodeling.
ARTICLE 15. DESTRUCTION OF PREMISES
If, during the term of this Lease, the Leased Premises
are totally or partially destroyed by fire or other
elements, within a reasonable time (but in no event longer
than one hundred eighty (180) days and subject to the
provisions herein below), Lessee shall repair and restore
the improvements so damaged or destroyed as nearly as may be
practical to their condition immediately prior to such
casualty. All rents payable by Lessee shall be abated
during the period of repair and restoration to the extent
that Lessor shall be compensated by the proceeds of the rent
loss insurance required to be maintained by Lessee
hereunder.
Provided Lessee is not in default hereunder (and
retains according to the terms hereof the right to rebuild)
with the Lessor's prior written consent, which consent shall
not be unreasonably withheld or delayed, Lessee shall have
the right to promptly and in good ▇▇▇▇▇ ▇▇▇▇▇▇ and adjust
any claim under such insurance policies with the insurance
company or companies on the amounts to be paid upon the
loss. The insurance proceeds shall be used to reimburse
Lessee for the cost of rebuilding or restoration of the
Leased Premises. Risk that the insurance company shall be
insolvent or shall refuse to make insurance proceeds
available shall be with Lessee. The Leased Premises shall be
so restored or rebuilt so as to be of at least equal value
and substantially the same character as prior to such damage
or destruction. If the insurance proceeds are less than
Fifty Thousand Dollars ($50,000), they shall be paid to
Lessee for such repair and restoration. If the insurance
proceeds are greater than or equal to Fifty Thousand Dollars
($50,000), they shall be deposited by Lessee and Lessor into
a customary construction escrow at a nationally recognized
title insurance company, or at Lessee's option, with Lessor
("Escrowee") and shall be made available from time to time
to Lessee for such repair and restoration. Such proceeds
shall be disbursed in conformity with the terms and
conditions of a commercially reasonable construction loan
agreement. Lessee shall, in either instance, deliver to
Lessor or Escrowee (as the case may be) satisfactory
evidence of the estimated cost of completion together with
such architect's certificates, waivers of lien, contractor's
sworn statements and other evidence of cost and of payments
as the Lessor or Escrowee may reasonably require and
approve. If the estimated cost of the work exceeds One
Hundred Thousand Dollars ($100,000), all plans and
specifications for such rebuilding or restoration shall be
subject to the reasonable approval of Lessor.
Any insurance proceeds remaining with Escrowee after
the completion of the repair or restoration shall be paid to
Lessor to reduce the sum of monies expended by Lessor to
acquire its interest in the Lease Premises and rent
hereunder shall be reduced by 10.5% of such amount.
If the proceeds from the insurance are insufficient,
after review of the bids for completion of such
improvements, or should become insufficient during the
course of construction, to pay for the total cost of repair
or restoration, Lessee shall, prior to commencement of work,
demonstrate to Escrowee and Lessor's reasonable
satisfaction, the availability of such funds necessary to
completion construction and Lessee shall deposit the same
with Escrowee for disbursement under the construction escrow
agreement.
Provided, further, that should the Leased Premises be
damaged or destroyed to the extent of fifty (50%) percent of
its value or such that Lessee cannot carry on business as a
casual dining restaurant without (in the opinion of a
licensed third party architect reasonably approved by Lessor
and Lessee) being closed for more than sixty (60) days
(which duration of closure may be established by Lessee by
the affidavit of the approved independent third party
architect as to the estimated time of repair) during the
last two (2) years of the remaining term of this Lease or
any of the option terms of this Lease, if any further
options to renew remain, Lessee may elect within 30 days of
such damage, to then exercise at least one (1) option to
renew this Lease so that the remaining term of the Lease is
not less than five (5) years in order to be entitled to such
insurance proceeds for restoration or rebuilding. Absent
such election, this Lease shall terminate upon Lessor's
receipt of funds at least equal to the estimated cost of
such repair or restoration.
ARTICLE 16. ACTS OF DEFAULT
Each of the following shall be deemed a default by
Lessee and a breach of this Lease:
(A) Failure to pay the Rent or any
monetary obligation herein reserved, or any part thereof
when the same shall be due and payable. Interest and late
charges for failure to pay Rent when due shall accrue from
the first date such Rent was due and payable; provided,
however, Lessee shall have five (5) business days after
written notice from Lessor within which to cure the failure
to pay the Rent or any monetary obligation herein reserved.
(B) Failure to do, observe, keep
and perform any of the other terms, covenants, conditions,
agreements and provisions in this Lease to be done,
observed, kept and performed by Lessee; provided, however,
that Lessee shall have Thirty (30) days after written notice
from Lessor within which to cure such default, or such
longer time as may be reasonably necessary if such default
cannot reasonably be cured within Thirty (30) days, if
Lessee is diligently pursuing a course of conduct that in
Lessor's reasonable opinion is capable of curing such
default, but in any event such longer time shall not exceed
120 days after written notice from Lessor of the default
hereunder.
(C) The abandonment of the
premises by Lessee, the adjudication of Lessee as a
bankrupt, the making by Lessee of a general assignment for
the benefit of creditors, the taking by Lessee of the
benefit of any insolvency act or law, the appointment of a
permanent receiver or trustee in bankruptcy for Lessee
property, or the appointment of a temporary receiver which
is not vacated or set aside within sixty (60) days from the
date of such appointment; provided, however, that the
foregoing shall not constitute events of default so long as
Lessee continues to otherwise satisfy its obligations
(including but not limited to the payment of Rent)
hereunder.
ARTICLE 17. TERMINATION FOR DEFAULT
In the event of any uncured default by Lessee and at
any time thereafter, Lessor may serve a written notice upon
Lessee that Lessor elects to terminate this Lease. This
Lease shall then terminate on the date so specified as if
that date had been originally fixed as the expiration date
of the term herein granted, provided, however, that Lessee
shall have continuing liability for future rents for the
remainder of the original term and any exercised renewal
term as set forth in Article 19, notwithstanding any earlier
termination of the Lease hereunder (except where Lessee has
exercised a right to terminate where granted herein),
preserving unto Lessor the benefit of its bargained-for
rental payments.
ARTICLE 18. LESSOR'S RIGHT OF RE-ENTRY
In the event that this Lease shall be terminated as
hereinbefore provided, or by summary proceedings or
otherwise, or in the event of an uncured default hereunder
by Lessee, or in the event that the premises or any part
thereof, shall be abandoned by Lessee and Rent shall not be
paid or other obligations (including but not limited to
repair and maintenance obligations) of Lessee hereunder
shall not be met, then Lessor or its agents, servants or
representatives, may immediately or at any time thereafter,
re-enter and resume possession of the premises or any part
thereof, and remove all persons and property therefrom,
either by summary dispossess proceedings or by a suitable
action or proceeding at law, or by force or otherwise
without being liable for any damages therefor, except for
damages resulting from Lessor's negligence or willful
misconduct. Notwithstanding anything above to the contrary,
if Lessee is still in possession of the Leased Premises,
Lessor agrees to use such legal proceedings (summary or
otherwise) prescribed by law to regain possession of the
Leased Premises.
ARTICLE 19. LESSEE'S CONTINUING LIABILITY
(A) Should Lessor elect to re-enter as provided in
this Lease or should it take possession pursuant to legal
proceedings or pursuant to any notice provided for by law,
Lessor shall undertake commercially reasonable efforts to
mitigate Lessee's continuing liability hereunder as such
efforts may be prescribed by law or statute (which shall
include listing the Leased Premises with a licensed
commercial real estate broker and securing the property
against waste, but shall not otherwise include the
expenditure of Lessor's funds, unless the same be required
by law or statute), and in addition, Lessor may either (i)
terminate this Lease or (ii) it may from time to time,
without terminating the contractual obligation of Lessee to
pay Rent under this Lease, make such alterations and repairs
as may be necessary to relet the Leased Premises or any part
thereof for the remainder of the original Term or any
exercised Renewal Terms, at such Rent or Rents, and upon
such other terms and conditions as Lessor in its sole
discretion may deem advisable. Termination of Lessee's
right to possession by Court Order shall be sufficient
evidence of the termination of Lessee's possessory rights
under this Lease, and the filing of such an Order shall be
notice of the termination of Lessee's Right of First Refusal
as set forth in any Memorandum of Lease of record.
(B) Upon each such reletting, without termination of
the contractual obligation of Lessee to pay Rent under this
Lease, all Rents received by Lessor shall be applied as
follows:
1. First, to the payment of any
indebtedness other than Rent due hereunder from Lessee to
Lessor;
2. Second, to the payment of any
costs and expenses of such reletting, including brokerage
fees and attorney's fees and of costs of such alterations
and repairs;
3. Third, to the payment of Rent and
other monetary obligations due and unpaid hereunder;
4. Finally, the residue, if any,
shall be held by Lessor and applied in payment of future
Rent as the same may become due and payable hereunder.
If such Rents received from such reletting during any month
are less than that to be paid during that month by Lessee
hereunder, Lessee shall pay any such deficiency to Lessor.
Such deficiency shall be calculated and paid monthly. No
such re-entry or taking possession of such Leased Premises
by Lessor shall be construed as an election on its part to
terminate Lessee's contractual obligations under this Lease
respecting the payment of rent and obligations for the costs
of repair and maintenance unless a written notice of such
intention be given to Lessee.
(C) Notwithstanding any such reletting without
termination, Lessor may at any time thereafter elect to
terminate this Lease for any uncured breach.
(D) In addition to any other remedies Lessor may have
with this Article 19, Lessor may recover from Lessee all
damages it may incur by reason of any uncured breach,
including: The cost of recovering and reletting the Leased
Premises; reasonable attorney's fees; and, the present value
(discounted at a rate of 8% per annum) of the excess of the
amount of Rent and charges equivalent to Rent reserved in
this Lease for the remainder of the Term over the then
reasonable Rent value of the Leased Premises (or the actual
Rents receivable by Lessor, if relet), (the Lessee bearing
the burden of proof to demonstrate the amount of rental loss
for the same period, that through reasonable efforts to
mitigate damages, could have been avoided) for the remainder
of the Term, all of which amounts shall be immediately due
and payable from Lessee to Lessor in full. In the event
that the Rent obtained from such alternative or substitute
tenant is more than the Rent which Lessee is obligated to
pay under this Lease, then such excess shall be paid to
Lessor provided that Lessor shall credit such excess against
the outstanding obligations of Lessee due pursuant hereto, if any.
(E) It is the object and purpose of this Article 19
that Lessor shall be kept whole and shall suffer no damage
by way of non-payment of Rent or by way of diminution in
Rent. Lessee waives and will waive all rights to trial by
jury in any summary proceedings or in any action brought to
recover Rent herein which may hereafter be instituted by
Lessor against Lessee in respect to the Leased Premises.
Lessee hereby waives any rights of re-entry it may have or
any rights of redemption or rights to redeem this Lease upon
a termination of this Lease.
ARTICLE 20. PERSONALTY, FIXTURES AND EQUIPMENT
(A) All building fixtures, building machinery, and
building equipment used in connection with the operation of
the Leased Premises including, but not limited to, heating,
electrical wiring, lighting, ventilating, plumbing, walk-in
refrigerators/coolers, walk-in freezers, air conditioning
systems, and the equipment owned by Lessor and leased to
Lessee hereunder as specifically set forth on Exhibit B
attached hereto and incorporated herein by reference shall
be the property of Lessor. All other trade fixtures and all
other articles of personal property owned by Lessee shall
remain the property of Lessee.
(B) Lessee shall furnish and pay for any and all
equipment, furniture, trade fixtures, and signs, except for
such items, if any, described in Article 20(A) above, as
owned by Lessor. Lessee agrees that Lessor shall have a
lien on all Lessee's equipment, furniture, trade fixtures,
furnishings, and signs as security for the performance of
and compliance with this Lease, subject to the rights of any
bona fide third party's security interest in such property.
Provided Lessee is not in default hereunder, Lessor will
agree that its interest in the personal property of Lessee
will be subordinated to financing which may exist or which
Lessee may cause to exist in the future on that same
personal property.
(C) At the end of the term of this Lease, the property
described at Article 20(B) above, after written notice to
Lessor given at least ten (10) business days prior to any
proposed removal, may be removed from the Leased Premises by
Lessee regardless of whether or not such property is
attached to the Leased Premises so as to constitute a
"fixture" within the meaning of the law; however, all
damages and repairs to the Leased Premises which may be
caused by the removal of such property shall be paid for by
Lessee.
ARTICLE 21. LIENS
Lessee shall not do or cause anything to be done
whereby the Leased Premises may be encumbered by any
mechanic's or other liens. Whenever and as often as any
mechanic's or other lien is filed against said Leased
Premises purporting to be for labor or materials furnished
or to be furnished to Lessee, Lessee shall remove the lien
of record by payment or by bonding with a surety company
authorized to do business in the state in which the property
is located, within forty-five (45) days from the date of the
filing of said mechanic's or other lien and delivery of
notice thereof to Lessee. Should Lessee fail to take the
foregoing steps within said forty-five (45) day period (or
in any event, prior to the expiration of the time within
which Lessee may bond over such lien to remove it as a lien
upon the Leased Premises), Lessor shall have the right,
among other things, to pay said lien without inquiring into
the validity thereof, and Lessee shall forthwith reimburse
Lessor for the total expense incurred by it in discharging
said lien as additional Rent hereunder.
ARTICLE 22. NO WAIVER BY LESSOR EXCEPT IN WRITING
No agreement to accept a surrender of the Leased
Premises or termination of this Lease shall be valid unless
in writing signed by Lessor. The delivery of keys to any
employee of Lessor or Lessor's agents shall not operate as a
termination of the Lease or a surrender of the premises.
The failure of Lessor to seek redress for violation of any
rule or regulation, shall not prevent a subsequent act,
which would have originally constituted a violation, from
having all the force and effect of an original violation.
Neither payment by Lessee or receipt by Lessor of a lesser
amount than the Rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated Rent. Nor
shall any endorsement or statement on any check nor any
letter accompanying any check or payment as Rent be deemed
an accord and satisfaction. Lessor may accept such check or
payment without prejudice to Lessor's right to recover the
balance of such Rent or pursue any other remedy provided in
this Lease. This Lease contains the entire agreement
between the parties, and any executory agreement hereafter
made shall be ineffective to change it, modify it or
discharge it, in whole or in part, unless such executory
agreement is in writing and signed by the party against whom
enforcement of the change, modification or discharge is
sought.
ARTICLE 23. QUIET ENJOYMENT
Lessor covenants that Lessee, upon paying the Rent set
forth in Article 4 and all other sums herein reserved as
Rent and upon the due performance of all the terms,
covenants, conditions and agreements herein contained on
Lessee's part to be kept and performed, shall have, hold and
enjoy the Leased Premises free from molestation, eviction,
or disturbance by Lessor, or by any other person or persons
lawfully claiming the same, and that Lessor has good right
to make this Lease for the full term granted, including
renewal periods.
ARTICLE 24. BREACH - PAYMENT OF COSTS AND ATTORNEYS' FEES
Each party agrees to pay and discharge all reasonable
costs, and actual attorneys' fees, including but not limited
to attorney's fees incurred at the trial level and in any
appellate or bankruptcy proceeding, and expenses that shall
be incurred by the prevailing party in enforcing the
covenants, conditions and terms of this Lease or defending
against an alleged breach, including the costs of reletting.
Such costs, attorneys fees, and expenses if incurred by
Lessor shall be considered as Rent as due and owing in
addition to any Rent defined in Article 4 hereof.
ARTICLE 25. ESTOPPEL CERTIFICATES
Either party to this Lease will, at any time, upon not
less than ten (10) business days prior request by the other
party, execute, acknowledge and deliver to the requesting
party a statement in writing, executed by an executive
officer of such party, certifying that: (a) this Lease is
unmodified (or if modified then disclosure of such
modification shall be made); (b) this Lease is in full force
and effect; (c) the date to which the Rent and other charges
have been paid; and (d) to the knowledge of the signer of
such certificate that the other party is not in default in
the performance of any covenant, agreement or condition
contained in this Lease, or if a default does exist,
specifying each such default of which the signer may have
knowledge. It is intended that any such statement delivered
pursuant to this Article may be relied upon by any
prospective purchaser or mortgagee of the Leased Premises or
any assignee of such mortgagee or a purchaser of the
leasehold estate.
ARTICLE 26. FINANCIAL STATEMENTS
During the term of this Lease, Lessee will, within
ninety (90) days after the end of Lessee's fiscal year,
furnish its financial statements to Lessor. Lessee's
financial statements shall include, at a minimum, a
consolidated balance sheet and statement of operations, and
do not need to be prepared by an independent certified
public accountant, but shall be prepared in conformity with
generally accepted accounting principles (hereafter "GAAP")
and be represented and warranted in writing as true and
correct by the chief financial officer or other authorized
officer of Lessee. Additionally, during the term of the
Lease, Lessee will within forty-five (45) days from the end
of each quarter of each fiscal year, furnish Lessor with
Lessee's financial statements and operating statements of
the Leased Premises for such quarter. Lessor shall have the
right to require such financial statements and operating
statements on a monthly basis after the occurrence of a
default. Said quarterly (or monthly, if requested by
Lessor) statements do not need to be prepared by an
independent certified public accountant, but shall be
represented and warranted in writing as true and correct by
the chief financial officer or other authorized officer of
Lessee. The financial statements shall conform to GAAP, and
include, at a minimum, a balance sheet and statement of
operations.
ARTICLE 27. MORTGAGE
Lessee does hereby agree to make reasonable
modifications of this Lease requested by any Mortgagee of
record from time to time, provided such modifications are
not substantial and do not increase any of the Rents or
obligations of Lessee under this Lease or substantially
modify any of the business elements of this Lease.
ARTICLE 28. OPTION TO RENEW
If this Lease is not previously canceled or terminated
and if Lessee has materially complied with and performed all
of the covenants and conditions in this Lease after
applicable cure periods and is not currently in default,
then Lessee shall have the option to renew this Lease upon
the same conditions and covenants contained in this Lease
for Three (3) consecutive periods of Five (5) years each
(singularly "Renewal Term"). Rent during the Twenty-Second,
Twenty-Fifth, Twenty-Eighth, Thirty-First, and Thirty-Fourth
Lease Year of the Renewal Term shall increase by the lesser
of Seven and Thirty-Five One Hundredths Percent (7.35%) of
the Rent payable for the preceding Lease Year, or the CPI-U
Percentage Increase, as defined in Article 4 hereof.
The first Renewal Term will commence on the day
following the date the original Term expires and successive
Renewal Terms would commence on the day following the last
day of the then expiring Renewal Term. Except as otherwise
provided in Article 15 hereof, Lessee must give ninety (90)
days written notice to Lessor of its intent to exercise this
option prior to the expiration of the original Term of this
Lease or any Renewal Term, as the case may be.
ARTICLE 29. MISCELLANEOUS PROVISIONS
(A) All written notices shall be given to Lessor or
Lessee by certified mail or nationally recognized overnight
mail. Notices to either party shall be addressed to the
person and address given on the first page hereof. Lessor
and Lessee may, from time to time, change these addresses by
notifying each other of this change in writing. Notices of
overdue Rent may be sent to Lessee by regular, special
delivery, or nationally recognized overnight mail.
(B) The terms, conditions and covenants contained in
this Lease and any riders and plans attached hereto shall
bind and inure to the benefit of Lessor and Lessee and their
respective successors, heirs, legal representatives, and
assigns.
(C) This Lease shall be governed by and construed
under the laws of the State where the Leased Premises are situate.
(D) In the event that any provision of this Lease
shall be held invalid or unenforceable, no other provisions
of this Lease shall be affected by such holding, and all of
the remaining provisions of this Lease shall continue in
full force and effect pursuant to the terms hereof.
(E) The Article captions are inserted only for
convenience and reference, and are not intended, in any way,
to define, limit, describe the scope, intent, and language
of this Lease or its provisions.
(F) In the event Lessee remains in possession of the
premises herein leased after the expiration of this Lease
and without the execution of a new lease and without
Lessor's written permission, Lessee shall be deemed to be
occupying said premises as a tenant from month-to-month,
subject to all the conditions, provisions, and obligations
of this Lease insofar as the same can be applicable to a
month-to-month tenancy except that the monthly installment
of Rent shall be One Hundred Fifty percent (150%) the amount
due on the last month prior to such expiration.
(G) If any installment of Rent (whether lump sum,
monthly installments, or any other
monetary amounts required by this Lease to be paid by Lessee
and deemed to constitute Rent hereunder) shall not be paid
when due, or non-monetary default shall remain uncured after
the expiration of any applicable cure period, Lessor shall
have the right to charge Lessee a late charge of $250.00 per
month for each month that any amount of Rent installment
remains unpaid or non-monetary default shall go uncured
after the first such occurrence in any 12 month period.
Said late charge shall commence after such installment is
due or non-monetary default goes uncured after the
expiration of any applicable cure period and continue until
said installment, interest and all accrued late charges are
paid in full or such non-monetary default is cured.
(H) Any part of the Leased Premises may be conveyed by
Lessor for private or public non-exclusive easement purposes
at any time, provided such easement does not interfere with
the access to the Leased Premises, visibility, or operations
of the business of Lessee. In such event Lessor shall, at
its own cost and expense, restore the remaining portion of
the Leased Premises to the extent necessary to render it
reasonably suitable for the purposes for which it was
leased, all to be done without adjustments in Rent to be
paid by Lessee. All proceeds from any conveyance of an
easement shall belong solely to Lessor.
(I) For the purpose of this Lease, the term "Rent"
shall be defined as Rent under Article 4, and any other
monetary amounts required by this Lease to be paid by
Lessee.
(J) Lessee agrees to cooperate with Lessor to allow
Lessor to obtain and use at Lessor's expense promotional
photographs of the Leased Premises, to the extent permitted
by Lessee's franchisor or licensor.
ARTICLE 30. REMEDIES
NON-EXCLUSIVITY. Notwithstanding anything contained
herein it is the intent of the parties that the rights and
remedies contained herein shall not be exclusive but rather
shall be cumulative along with all of the rights and
remedies of the parties which they may have at law or
equity.
ARTICLE 31. HAZARDOUS MATERIALS INDEMNITY
Lessee covenants, represents and warrants to Lessor,
its successors and assigns, (i) that it has not used or
permitted and will not use or permit the Leased Premises to
be used, whether directly or through contractors, agents or
tenants, and to the best of Lessee's knowledge and except as
disclosed to Lessor in writing, the Leased Premises has not
at any time been used for the generating, transporting,
treating, storage, manufacture, emission of, or disposal of
any dangerous, toxic or hazardous pollutants, chemicals,
wastes or substances as defined in the Federal Comprehensive
Environmental Response Compensation and Liability Act of
1980 ("CERCLA"), the Federal Resource Conservation and
Recovery Act of 1976 ("RCRA"), or any other federal, state
or local environmental laws, statutes, regulations,
requirements and ordinances ("Hazardous Materials"); (ii)
that there have been no investigations or reports involving
Lessee, or the Leased Premises by any governmental authority
which in any way pertain to Hazardous Materials (iii) that
the operation of the Leased Premises has not violated and is
not currently violating any federal, state or local law,
regulation, ordinance or requirement governing Hazardous
Materials; (iv) that the Leased Premises is not listed in
the United States Environmental Protection Agency's National
Priorities List of Hazardous Waste Sites nor any other list,
schedule, log, inventory or record of Hazardous Materials or
hazardous waste sites, whether maintained by the United
States Government or any state or local agency; and (v) that
the Leased Premises will not contain any formaldehyde, urea
or asbestos, except as may have been disclosed in writing to
Lessor by Lessee at the time of execution and delivery of
this Lease. Lessee agrees to indemnify and reimburse
Lessor, its successors and assigns, for:
(a) any breach of these representations and
warranties, and
(b) any loss, damage, expense or cost arising out of or
incurred by Lessor which is the result of a breach of,
misstatement of or misrepresentation of the above covenants,
representations and warranties, and
(c) any and all liability of any kind whatsoever which
Lessor may, for any cause and at any time, sustain or incur
by reason of Hazardous Materials discovered on the Leased
Premises during the term hereof or placed or released on the
Leased Premises by Lessee;
together with all attorneys' fees, costs and disbursements
incurred in connection with the defense of any action
against Lessor arising out of the above. These covenants,
representations and warranties shall be deemed continuing
covenants, representations and warranties for the benefit of
Lessor, and any successors and assigns of Lessor and shall
survive expiration or sooner termination of this Lease. The
amount of all such indemnified loss, damage, expense or
cost, shall bear interest thereon at the lesser of 15% or
the highest rate of interest allowed by law and shall become
immediately due and payable in full on demand of Lessor, its
successors and assigns.
ARTICLE 32. ESCROWS
Upon a default by Lessee which is uncured after the
expiration of any applicable notice and cure period, or upon
the request of Lessor's Mortgagee, if any, Lessee shall
deposit with Lessor on the first day of each and every
month, an amount equal to one-twelfth (1/12th) of the
estimated annual real estate taxes, assessments and
insurance (if the insurance is to be purchased by Lessor)
("Charges") due on the Leased Premises, or such higher
amounts reasonably determined by Lessor as necessary to
accumulate such amounts to enable Lessor to pay all charges
due and owing at least thirty (30) days prior to the date
such amounts are due and payable. From time to time out of
such deposits Lessor will, upon the presentation to Lessor
by Lessee of the bills therefor, pay the Charges or at
Lessee's option, will upon presentation of receipted bills
therefor, reimburse Lessee for such payments made by Lessee.
In the event the deposits on hand shall not be sufficient to
pay all of the estimated Charges when the same shall become
due from time to time or the prior payments shall be less
than the currently estimated monthly amounts, then Lessee
shall pay to Lessor on demand any amount necessary to make
up the deficiency. The excess of any such deposits shall be
credited to subsequent payments to be made for such items.
If a default or an event of default shall occur under the
terms of this Lease, Lessor may, at its option, without
being required so to do, apply any Deposit on hand to cure
the default, in such order and manner as Lessor may elect.
ARTICLE 33. NET LEASE
Notwithstanding anything contained herein to the
contrary it is the intent of the parties
hereto that this Lease shall be a net lease and that the
Rent defined pursuant to Article 4 should be a net Rent paid
to Lessor. Any and all other expenses including but not
limited to, maintenance, repair, insurance, taxes, and
assessments, shall be paid by Lessee.
ARTICLE 34. RIGHT OF FIRST REFUSAL
Lessor, for itself, its successors and assigns, hereby
gives and grants to Lessee a right of first refusal (the
"Right of First Refusal") to purchase the Leased Premises,
subject to the following terms and conditions:
(A) Duration of Right of First Refusal. The Right of
First Refusal and all rights and privileges of Lessee
hereunder shall be in force for the term of this Lease until
the expiration of Lessee's right to possession.
(B) Manner of Exercising Right of First Refusal. If
Lessor ("Selling Lessor") shall
desire to sell all or any portion of its interest in the
Leased Premises (subject to the terms of this Lease),
Selling Lessor shall give Lessee written notice of Selling
Lessor's intention to sell Selling Lessor's interest
(partial or whole) in the Leased Premises. Such notice
("Lessor's Notice") shall give Selling Lessor's name and
address and state a price at which Selling Lessor intends to
sell and will sell a specified portion or all of its
interest in the fee simple to the Leased Premises. If
Lessee shall fail to exercise its Right of First Refusal as
set forth herein, the terms of Article 34(E) shall apply.
For twenty (20) business days following the giving of such
notice, Lessee shall have the option to purchase such
portion of the fee interest of the Selling Lessor as set
forth in Lessor's Notice at the price in cash stated in the
Lessor's Notice. A written notice in substantially the
following form, addressed to Selling Lessor and signed by
Lessee and given, in accordance with the provisions of
Article 29(A) hereof, within the period for exercising the
Right of First Refusal, submitted with a bank cashier's
check or money order payable to the order of Selling Lessor
in the amount of $5,000.00 (the "▇▇▇▇▇▇▇ Money") shall be an
effective exercise of Lessee's Right of First Refusal, to
wit:
(date)
"We hereby exercise the Right of First Refusal to purchase
such portion of the fee interest of the Selling Lessor (as
set forth in Lessor's Notice) in the property commonly known
as Champps, Troy, Michigan, pursuant to the Right of First
Refusal contained in that certain Net Lease Agreement
between us pertaining to said premises."
(C) Terms of Sale if Right of First Refusal Exercised.
Upon Lessee's exercise of the Right of First Refusal in
accordance with the provisions of subparagraph (B) hereof,
Selling Lessor shall be obligated to sell and convey by
recordable general warranty deed, good and indefeasible
title to its interest in the Leased Premises (or such
portion thereof as set forth in Lessor's Notice) subject
only to the matters affecting title which were of record at
the time Selling Lessor came into title to the Leased
Premises and those matters which Lessee created, suffered or
permitted to accrue during the term hereof, and Lessee shall
be obligated to purchase such Lessor's interest upon the
following terms and conditions:
(i) Price. The price "Purchase
Price" at which Selling Lessor shall sell and Lessee shall
purchase the Leased Premises shall be the price stated in
Lessor's Notice.
(ii) Closing. Closing shall be
sixty (60) days after the expiration of the twenty days
within which Lessee may exercise its Right of First Refusal,
unless the parties mutually agree otherwise. The Purchase
Price less credit for the ▇▇▇▇▇▇▇ Money and any other
credits to which Lessee is entitled hereunder shall be
tendered in cash or other certified funds by Lessee at
Closing.
(iii) Evidence of Title. Not
less than ten (10) days prior to closing, Selling Lessor
shall obtain a commitment for an ALTA owner's policy of
title insurance dated within thirty (30) days of the closing
date, issued by a nationally recognized title insurance
company selected by Selling Lessor (the "Title Company") in
the amount of the Purchase Price determined pursuant to
subparagraph (C)(i) above, naming Lessee as the proposed
insured, and covering the fee simple title to the Leased
Premises, and showing Selling Lessor vested with good title
to portion of the Leased Premises being sold, subject only
to the matters affecting title which were of record at the
time Selling Lessor came into title to the Leased Premises
and those matters which Lessee created, suffered or
permitted to accrue during the term hereof. Such title
commitment shall be conclusive evidence of good title. If
Lessee shall make objection to the marketability of title,
Selling Lessor shall have no obligation to make title
marketable, but may withdraw Lessor's notice of intent to
market the Premises.
(iv) Prorations. Selling Lessor
shall pay the cost of the aforesaid title policy and any and
all state and municipal taxes imposed by law on the transfer
of the title to the Leased Premises, or the transaction
pursuant to which such transfer occurs. Water, sewer and
other utility charges, if any, which are not metered,
driveway permit charges, if any, general real estate taxes,
and other similar items, shall be adjusted ratably as of the
Closing, except to the extent otherwise settled between the
parties pursuant to other provisions of this Lease. A
prorated portion of the Rent prepaid by Lessee for the month
of closing shall be credited toward the Purchase Price and
Lessee shall be given a credit for rent prepaid for any
period after the month in which the Closing occurs.
Otherwise, Lessee shall not receive a credit against the
Purchase Price for Rent paid hereunder.
(v) Escrow Closing. At the
election of Selling Lessor or Lessee upon notice to the
other party not less than five (5) days prior to the
Closing, this sale shall be closed through an escrow with
the Title Company, in accordance with the general provisions
of the usual form of Deed and Money Escrow Agreement then is
use by said company, with such special provisions inserted
in the escrow agreement as may be required to conform with
this agreement. Upon the creation of such an escrow,
anything herein to the contrary notwithstanding, paying of
the purchase price and delivery of the deed shall be made
through the escrow. The cost of the escrow shall be divided
equally between the Selling Lessor and Lessee. If for any
reason other than Lessee's default, the transaction fails to
close, the ▇▇▇▇▇▇▇ Money shall be returned to Lessee
forthwith.
(vi) Remedies on Default. If
Lessee defaults under the provisions of this subparagraph
34(C), Selling Lessor shall have the right to annul the
provisions of this paragraph 34 by giving Lessee notice of
such election, provided that Selling Lessor has first
notified Lessee of such default and Lessee has failed to
cure the same within ten (10) days after such notice. Upon
Selling Lessor's notice of annulment in accordance herewith,
the ▇▇▇▇▇▇▇ Money shall be forfeited and paid to Selling
Lessor as liquidated damages, which shall be Selling
Lessor's sole and exclusive remedy. If Selling Lessor
defaults under the provisions of this subparagraph 34(C) and
fails to cure such default within ten (10) days after being
notified of the same by Lessee, then in such event, (i) the
▇▇▇▇▇▇▇ Money at Lessee's election and immediately upon its
demand shall be returned to Lessee, which return shall not,
however, in any way release or absolve Selling Lessor from
its obligations hereunder and (ii) Lessee shall be entitled
to all remedies (both legal and equitable) the law (both
statutory and decisional) of the state in which the Leased
Premises are situated provides without first having to
tender the balance of the purchase price as a condition
precedent thereof and without having to make any election of
such remedies.
(D) Effect of Right of First Refusal on Lease. If the
Right of First Refusal is exercised by Lessee and is
exercisable in Lessor's Notice as to the entire fee simple,
this Lease shall continue in full force and effect until the
Closing hereinabove specified. If the Right of First
Refusal is exercised only as to all of an undivided portion
of the fee simple to the Leased Premises, the Lease shall
remain in full force and effect without merger or
termination of this Lease because of such purchase. If for
any reason such Closing fails to occur, this Lease shall
continue in full force and effect, except that if the
provisions of this paragraph 34 are annulled by Selling
Lessor, in accordance with subparagraph 34(C)(vi), by reason
of a default by Lessee, this Lease shall continue but
without the provisions of this paragraph 34 being a part
hereof.
(E) If Lessee fails to exercise its Right of First
Refusal, Selling Lessor shall be free to sell all or any
portion of its interest in the Leased Premises for six
months following the expiration of the twenty days within
which Lessee may exercise its Right of First Refusal,
provided that the Selling Lessor giving such Lessor's Notice
shall sell its interest (or a portion thereof) for a price
equal to or greater than the price (or the pro-rata portion
thereof if a portion of the Selling Lessor's interest in the
Leased Premises is sold) set forth in Lessor's Notice. This
Right of First Refusal shall survive any sale of the Leased
Premises and shall apply to any subsequent sale or potential
sale by Lessor or its successors and assigns.
ARTICLE 35. DEVELOPMENT FINANCING AGREEMENT
The parties hereto hereby acknowledge that the terms
hereof are subject to and shall in the event of conflicts be
controlled by that certain Development Financing Agreement
of even date herewith, until such Agreement is terminated in
accordance with its terms.
ARTICLE 36. COUNTERPART EXECUTION
This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and
all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, Lessor and Lessee have respectively
signed and sealed this Lease as of the day and year first
above written.
LESSEE: CHAMPPS ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇
Its: Sr. VP
STATE OF MASSACHUSETTS )
)SS.
COUNTY OF ESSEX )
The foregoing instrument was acknowledged before me
this 16th day of December, 1997, by ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇,
▇▇, as Sr. VP of Champps Entertainment, Inc. on behalf of
said corporation.
/s/ ▇▇▇▇ Beanchette
Notary Public
Lessor's signature appears on the following pages
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED
PARTNERSHIP
By: AEI Fund Management XIX, Inc.
By: /s/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
STATE OF MINNESOTA )
)SS.
COUNTY OF ▇▇▇▇▇▇ )
The foregoing instrument was acknowledged before me the
23rd day of December, 1997, by ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ , the President
of AEI Fund Management XIX, Inc., a Minnesota corporation,
corporate general partner of AEI Net Lease Income & Growth
Fund XIX Limited Partnership, on behalf of said limited partnership.
/s/ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇
Notary Public
[notary seal]
AEI REAL ESTATE FUND XV LIMITED PARTNERSHIP
By: AEI Fund Management 86-A, Inc.
By: /s/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
STATE OF MINNESOTA )
)SS.
COUNTY OF ▇▇▇▇▇▇ )
The foregoing instrument was acknowledged before me
the 23rd day of December, 1997, by ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, the President
of AEI Fund Management 86-A, Inc., a Minnesota corporation, corporate
general partner of AEI Real Estate Fund XV Limited Partnership, on behalf
of said limited partnership.
/s/ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇
Notary Public
[notary seal]
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
By: AEI Fund Management XVII, Inc.
By: /s/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
STATE OF MINNESOTA )
)SS.
COUNTY OF ▇▇▇▇▇▇ )
The foregoing instrument was acknowledged before me
the 23rd day of December, 1997, by ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, the
President of AEI Fund Management XVII, Inc., a
Minnesota corporation, corporate general partner of AEI Real
Estate Fund XVII Limited Partnership, on behalf of said
limited partnership.
/s/ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇
Notary Public
[notary seal]
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
By: AEI Fund Management XVIII, Inc.
By: /s/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
STATE OF MINNESOTA )
)SS.
COUNTY OF ▇▇▇▇▇▇ )
The foregoing instrument was acknowledged before me
the 23rd day of December, 1997, by ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, the
President of AEI Fund Management XVIII, Inc., a
Minnesota corporation, corporate general partner of AEI Real
Estate Fund XVIII Limited Partnership, on behalf of said
limited partnership.
/s/ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇
Notary Public
[notary seal]
Exhibit A
Lot 1, Big Beaver Park Condominium, a condominium, created
by Master Deed dated August 12, 1997, and recorded in
Oakland County Recorder's Office in Liver 17559, Page 647,
Oakland County, Michigan.
Exhibit B
None