GROUND LEASE AGREEMENT
----------------------
BY AND BETWEEN
THREE GROVE PARTNERS
AS LANDLORD
AND
LAKE GROVE FAMILY GOLF CENTERS, INC.,
AS TENANT
THE PONDS AT LAKE GROVE
TABLE OF CONTENTS
Page
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ARTICLE I....................................................................1
Section 1.01. Leased Premises....................................1
Section 1.02. Term...............................................1
Section 1.03. Use................................................1
ARTICLE II...................................................................2
Section 2.01. Base Rent..........................................2
Section 2.02. Percentage Rent....................................2
Section 2.03. Additional Rent....................................4
Section 2.04. Payment of Rent....................................4
ARTICLE III..................................................................5
Section 3.01. Impositions........................................5
Section 3.02. Payment of Impositions.............................6
Section 3.03. Direct Payment and Escrow..........................6
Section 3.04. Payment of Bills...................................6
ARTICLE IV...................................................................7
Section 4.01. Insurance..........................................7
Section 4.02. Evidence of Insurance..............................8
Section 4.03. Right of Landlord to Obtain Insurance..............8
Section 4.04. Indemnification....................................8
ARTICLE V....................................................................8
Section 5.01. Damage to Improvements.............................8
ARTICLE VI..................................................................10
Section 6.01. Alterations.......................................10
Section 6.02. Right to Remove/Demolish..........................11
Section 6.03. Rights to Continue................................11
Section 6.04. Liens; End of Term................................11
ARTICLE VII.................................................................12
Section 7.01. Sublease and Assignment...........................12
Section 7.02. Liens.............................................12
Section 7.03. New/Replacement Tenant............................12
Section 7.04. Estoppel Certificates.............................13
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ARTICLE VIII................................................................13
Section 8.01. Right of Refusal..................................13
ARTICLE IX..................................................................14
Section 9.01. Tenant Default....................................14
Section 9.02. Remedies..........................................15
Section 9.03. Additional Remedies; Damages......................16
ARTICLE X...................................................................18
Section 10.01. Notice Parties....................................18
Section 10.02. Right of Certain Notice Parties to Obtain
New Lease.......................................18
ARTICLE XI..................................................................19
Section 11.01. Condemnation......................................19
ARTICLE XII.................................................................20
Section 12.01. Peaceful Enjoyment................................20
Section 12.02. Title to Leased Premises..........................20
ARTICLE XIII................................................................20
Section 13.01. Landlord's Mortgagee..............................20
ARTICLE XIV.................................................................21
Section 14.01. Surrender.........................................21
ARTICLE XV..................................................................21
Section 15.01. Notices...........................................21
ARTICLE XVI.................................................................22
Section 16.01. Entire Agreement..................................22
ARTICLE XVII................................................................22
Section 17.01. Landlord Default..................................22
ARTICLE XVIII...............................................................23
Section 18.01. Actions Requiring Consent of Tenant's Mortgagee...23
ARTICLE XIX.................................................................23
Section 19.01. Governing Law.....................................23
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ARTICLE XX..................................................................23
Section 20.01. Compliance with Laws..............................23
Section 20.02. Hazardous Materials...............................23
ARTICLE XXI.................................................................24
Section 21.01. Attorney's Fees...................................24
ARTICLE XXII................................................................24
Section 22.01. Recording of Lease................................24
ARTICLE XXIII...............................................................24
Section 23.01. Brokers...........................................24
ARTICLE XXIV................................................................24
Section 24.01. Guaranty..........................................24
ARTICLE XXV.................................................................24
Section 25.01. No Merger of Estates..............................24
Attachments:
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EXHIBIT A: Leased Premises
EXHIBIT B: Permitted Exceptions
EXHIBIT C: Guaranty Agreement
EXHIBIT D: Non-Disturbance Agreement
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GROUND LEASE AGREEMENT
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THIS GROUND LEASE AGREEMENT (this "Lease") is made and entered into
effective as of the 1st day of June, 1997 (the "Effective Date"), by and
between THREE GROVE PARTNERS, a New York limited partnership (hereinafter
called "Landlord"), and LAKE GROVE FAMILY GOLF CENTERS, INC., a New York
corporation (hereinafter called "Tenant"), as follows:
ARTICLE I
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SECTION 1.01. LEASED PREMISES. Subject to the terms, provisions and
conditions hereinafter set forth, and in consideration of the covenants of
payment and performance stipulated herein, Landlord has leased, demised and let
and by these presents does hereby lease, demise and let unto Tenant, for the
uses described in Section 1.03, all those certain premises containing 42.9
acres situated on 000 Xxx Xxxxxxxx Xxxx in Suffolk County, New York, more
particularly described on Exhibit A attached hereto and for all purposes made a
part hereof and including all improvements and fixtures located thereon except
as specifically excluded below (the "Leased Premises").
TO HAVE AND TO HOLD the Leased Premises, together with any rights,
easements, privileges, both subterranean and vertical, and the appurtenances
and improvements thereunto attaching or in anywise belonging, unto Tenant, and
the successors in interest and permitted assigns of Tenant, for and during the
term hereinafter set forth.
Notwithstanding anything to the contrary herein, the Leased Premises
shall not include any property or improvements sold by Landlord and Purchased
by Tenant pursuant to that Asset Purchase Agreement dated of even date herewith
by and between Landlord and Tenant or any improvements hereafter added to the
Leased Premises, all of which shall be owned by Tenant during the term of this
Lease; provided that upon a termination or expiration of this Lease title to
all improvements then existing on the Leased Premises shall automatically pass
to Landlord.
SECTION 1.02. TERM. Unless sooner terminated under provisions hereof,
the initial term of this Lease (the "Term") shall be and continue in full force
and effect commencing on June 1, 1997 and continuing thereafter for, during and
until 11:59 p.m. on the date that is forty-five (45) years after June 1, 1997.
SECTION 1.03. USE. Tenant may use the Leased Premises for the
operation of a driving range, eighteen (18) hole executive golf course
containing approximately three thousand (3,000) yards, kitchen and/or
clubhouse, pro-shop and similar or related uses and/or purposes. The use of the
Leased Premises should at all times be in accordance with any certificate of
occupancy affecting the Leased Premises and all statutes, laws, codes, permits,
rules and regulations of any federal, state, municipal, or other governmental
agency or authority having jurisdiction over
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the Leased Premises or any part thereof, whether the same are in force on the
date hereof or may in the future be passed, enacted or directed, and Tenant
shall pay all costs, expenses, liabilities, losses, damages, fines, penalties,
claims and demands, including reasonable attorneys' fees, that may in any
manner arise out of or be imposed because of the failure of Tenant to comply
therewith.
ARTICLE II
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SECTION 2.01. BASE RENT. As consideration for the use and occupancy
of, and as rental for, the Leased Premises, Tenant promises and agrees to pay
Landlord, while this Lease remains in force and effect (the "Term"), and in the
manner hereinafter provided, annual lease rentals (the "Base Rent") in the
amount of $250,000 per Lease Year, which sums shall be paid in equal monthly
installments, in advance, on the first day of each calendar month during the
Term; provided, however, that if this Lease expires or terminates on other than
the last day of a calendar month, then the installments of Base Rent for such
month or months shall be prorated and the installment or installments so
prorated shall be paid in advance. Said installments for such prorated month or
months shall be calculated by multiplying the equal monthly installment by a
fraction, the numerator of which shall be the number of days of the term
occurring during said commencement or expiration month, as the case may be, and
the denominator of which shall be the number of days in said month. "Lease
Year" means a period of one (1) year, with the first (1st) Lease Year
commencing on June 1, 1997 and expiring on May 31, 1998 and with each
subsequent Lease Year commencing upon the expiration of the prior Lease Year.
SECTION 2.02. PERCENTAGE RENT. In addition to Base Rent, Tenant
promises and agrees to pay Landlord, while this Lease remains in force and
effect, and in the manner hereinafter provided, and subject to the terms,
provisions and conditions hereinafter set forth, percentage rent ("Percentage
Rent"), which sums shall be paid in quarter-annual installments on or before
the forty-fifth (45th) day after each calendar quarter for the prior calendar
quarter in accordance with the following:
(a) Percentage Rent for a calendar year shall be equal to ten percent
(10%) of the amount by which Gross Revenues, as hereinafter defined, for such
calendar year, minus Cost of Goods Sold, as hereinafter defined, exceeds
$2,000,000. Tenant shall not be obligated to pay Percentage Rent for a calendar
year until Gross Revenues for such calendar year, minus Cost of Goods Sold for
such calendar year, exceeds $2,000,000 and, thereafter Percentage Rent shall be
payable quarterly for such calendar year.
(b) "Gross Revenues" for a calendar year shall be all revenues
received by Tenant from the operation of the Leased Premises. Gross Revenues
shall include the Gross Revenues of sublessees of Tenant determined in the same
manner as for Tenant. Gross Revenues shall not include, and the following
amounts shall be deducted in determining Gross Revenues: (i) any federal,
state, or local taxes or municipal charges now or hereinafter imposed upon
either Tenant or its customers and whether or not collected and/or paid by
Tenant or its customers, (ii) receipts from sales of fixtures, furniture,
equipment or improvements, (iii) condemnation awards, insurance
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proceeds, loan proceeds or capital contributions, (iv) cash refunds or credits
allowed on returns by customers, (v) fees charged by golf professionals
functioning as independent contractors for teaching of golf lessons and
instruction, except to the extent Tenant receives any portion of such fees and
commissions, provided Tenant's practice of engaging such independent
contractors for such purposes at the Leased Premises is consistent with the
practice of engaging such independent contractors for such purposes at other
properties operated by affiliates of Tenant, (vi) refunds from or the value of
merchandise, supplies or equipment returned to shippers, suppliers or
manufacturers, (vii) volume discounts received from sellers, suppliers or
manufacturers, (viii) receipts from sale of uniforms or clothing required to be
worn by employees, (ix) revenues relating to any fund raising or charity
events, except to the extent such revenues actually received by Tenant from
such events, (x) any uncollectible check, bank draft or charge or credit amount
or other bad debt, (xi) interest or dividend income on investments, and (xii)
receipts from vending machines except to the extent of net revenues actually
received by Tenant.
(c) "Cost of Goods Sold" for a calendar year shall be the cost of
goods sold during such calendar year, including the cost of merchandise,
commissions paid on lessons and cost of food and beverages. Cost of Goods Sold
shall include the foregoing items incurred by sublessees of Tenant determined
in the same manner as for Tenant. Cost of Goods Sold shall take into account
any refunds under Section 2.02(b)(vi) and any discounts under Section
2.02(b)(vii). Except as provided in Sections 2.02(b) and 2.02(c), in no event
will labor or overhead costs be included in the determination of Costs of Goods
Sold.
(d) Percentage Rent shall be computed by Tenant on a cash basis for
each calendar year, provided Percentage Rent shall be payable on a quarterly
basis as provided above. Based on the annual financial statements provided for
below, Percentage Rent for the applicable calendar year shall be determined and
any overpayment or underpayment in Percentage Rent paid quarterly for such
calendar year shall be corrected, by Landlord refunding to Tenant any
overpayment or by Tenant paying to Landlord any underpayment, within thirty
(30) days after Tenant's delivery of such annual financial statements for such
calendar year.
(e) Percentage Rent, and the calculation thereof, including the
$2,000,000 breakpoint, shall be prorated for any partial year occurring during
the Term.
(f) Tenant shall (i) not later than forty-five (45) days following the
end of each calendar quarter during the Term, deliver to Landlord a written
statement certified by Tenant, showing Gross Revenues and the Cost of Goods
Sold during such calendar quarter and a statement of Percentage Rent payable
for the period covered by such statement; and (ii) not later than ninety (90)
days after the end of each calendar year or partial calendar year, deliver to
Landlord a statement of Gross Revenues and the Cost of Goods Sold during such
calendar year, or partial calendar year, and a statement of Percentage Rent
payable for the period covered by such statement certified by a certified
public accounting firm. Landlord shall keep all information received by
Landlord confidential, but may be disclosed in any legal proceedings.
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(g) Tenant will preserve for at least three (3) years at the Leased
Premises all original books and records disclosing information pertaining to
Gross Revenues and the Cost of Goods Sold and such other information respecting
Gross Revenues and the Cost of Goods Sold as Landlord reasonably requires,
including, but not limited to, cash register tapes, sales slips, sales checks,
gross income and sales tax returns, bank deposit records, sales journals and
other supporting data. Landlord and its agents shall have the right during
normal business hours after reasonable notice to examine and audit such books
and records preserved by Tenant provided Landlord shall not interfere with the
operation of Tenant's business and shall keep all information obtained
confidential. If such examination or audit discloses a liability for Percentage
Rent three percent (3%) or more in excess of the Percentage Rent paid by Tenant
for any period and at least $500.00 of Percentage Rent is owed as a result of
such audit, or if Tenant has failed to keep books and records sufficient to
allow for the reasonable completion of such an audit, Tenant shall promptly pay
Landlord the cost of said audit. Tenant shall, in any event, pay to Landlord
the amount of any deficiency in Percentage Rent which is disclosed by such
audit plus interest per annum at three percent (3%) over the prime rate
announced by Citibank, N.A. from time to time.
SECTION 2.03. ADDITIONAL RENT. (a) In addition to Base Rent and
Percentage Rent, Tenant agrees to pay and discharge as additional rent
("Additional Rent") all costs, expenses and other sums required to be paid by
Tenant under the terms of this Lease, and all other charges and expenses with
respect to the use and occupancy of the Leased Premises together with every
fine, penalty, interest and cost which may be added for non-payment or late
payment, whether or not any are specifically designated as "Additional Rent".
In the event of any non-payment of Percentage Rent or Additional Rent when due,
Landlord shall have all the rights and remedies provided for in this Lease, or
by law, for the non-payment of Base Rent. Notwithstanding the foregoing, Tenant
shall not be obligated to pay any amounts for which Landlord is liable, such as
Landlord's mortgage.
(b) Except as expressly provided to the contrary in this Lease, this
Lease is intended to be, and shall be construed as, an absolutely net lease,
whereby under all circumstances and conditions, the Base Rent and Percentage
Rent shall be a completely net return to Landlord; and Tenant shall pay, and
shall indemnify and hold harmless Landlord from and against, any and all
claims, losses, damages, expenses, costs, fines, penalties, liabilities,
obligations and charges whatsoever (including reasonable attorney's fees and
disbursements) which shall arise or be incurred, shall become due, or which
shall be based upon any act or omission by Tenant occurring during the Term,
with respect to or in connection with the Leased Premises or the ownership,
leasing, operation, management, maintenance, repair, rebuilding, use or
occupation of the Leased Premises, other than debt service payable under any
mortgage or any other obligation or liability arising from Landlord's acts or
omissions.
SECTION 2.04. PAYMENT OF RENT. The rentals described in Section 2.01,
Section 2.02, and Section 2.03 shall be in addition to all other payments to be
made by Tenant as herein provided and shall be paid to Landlord without notice
or demand and without abatement, deduction or set-off, except as may otherwise
be expressly provided in this Lease. If any of the rentals described in Section
2.01, Section 2.02, or Section 2.03 are not paid within five (5) days after the
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same are due, such past due payments shall bear interest from and after such
five (5) day period until paid at the rate of three percent (3%) per annum over
the prime rate announced by Citibank N.A.
from time to time.
ARTICLE III
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SECTION 3.01. IMPOSITIONS. (a) Except as otherwise provided in Section
3.01(b), Tenant will pay and discharge, as and when the same shall become due
and payable, without penalty, the following (collectively, the "Impositions"):
all real estate taxes, assessments, property taxes, privilege taxes, franchise
taxes, excise taxes, business and occupation taxes, gross sales taxes, gross
receipt taxes, occupational license taxes, and water and sewer charges,
including governmental impositions and charges of every kind and nature
whatsoever, whether extraordinary or ordinary, general or special, unforeseen
or foreseen, or similar or dissimilar to any of the foregoing which, with
respect to any period during the Term, shall be or become due and payable and
which:
(i) shall be levied, assessed or imposed on or against the
Leased Premises or any interest of Landlord or Tenant in
the Leased Premises or under this Lease;
(ii) shall be or become liens on or against the Leased Premises
or any interest of Landlord or Tenant in the Leased
Premises or under this Lease;
(iii) shall be levied, assessed or imposed on or against Tenant
or Landlord by reason of any actual or asserted engagement
by Tenant (but not Landlord), directly or indirectly, in
any business, occupation or other activity in connection
with the Leased Premises; or
(iv) shall be levied, assessed or imposed on in connection with
the ownership, leasing, operation, management, maintenance,
repair, rebuilding, use or occupancy of the Leased Premises
by Tenant.
(b) Nothing in this Lease shall require Tenant to pay any taxes,
assessments or other charges imposed by city, county, state or federal laws or
ordinances upon the income of Landlord, or upon the transfer or passing of any
interest owned by Landlord in the Leased Premises, generally known as income,
inheritance, estate, succession or transfer taxes, or any withholding, profit
or revenue tax or charge levied upon the rents payable to Landlord under the
terms of this Lease, or any franchise tax or license fee; provided, however,
that if at any time during the Term the methods of taxation shall be altered so
that in lieu of, as a supplement to, or a substitute for the whole or part of
any Imposition which Tenant has agreed to pay pursuant to this Section 3.01,
there shall be levied, assessed or imposed (i) a tax, assessment, levy,
imposition or charge, wholly or
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partially as a capital levy or otherwise, on the rents received under this
Lease or (ii) a license fee measured by the rent payable by Tenant under this
Lease, then Tenant shall pay the same.
SECTION 3.02. PAYMENT OF IMPOSITIONS. As additional rental during the
Term, Tenant will pay or cause to be paid, as and when the same shall become
due, all Impositions, except that:
(i) All Impositions for the fiscal year or tax year in which
the Term of this Lease commences, as well as during the
year in which the Term of this Lease expires or earlier
terminates, shall be apportioned so that the Tenant shall
pay its proportionate share of the Impositions which are
payable in the year in which the Term commences and in the
year in which the Term expires or earlier terminates, and
Landlord shall likewise pay its proportionate share.
(ii) Where any Imposition is permitted by law to be paid in
installments, Tenant may pay such Imposition in
installments as and when such installments become due;
provided, however, that the amount of all installments of
any such Impositions which are to become due and payable
after the expiration or earlier termination of the Term
shall not be apportioned (except as provided in subsection
(i) hereof).
Landlord represents and warrants to Tenant that the Leased Premises
constitute a separate and distinct tax lot for real estate tax purposes.
SECTION 3.03. DIRECT PAYMENT AND ESCROW. Tenant shall pay all such
Impositions to be paid by it directly to the taxing authority; provided that,
upon request of Landlord, Tenant will deposit with Landlord a sum equal to the
Impositions against the Leased Premises for the current year, in monthly
installments prorated on a monthly basis due at the time Base Rent is payable
hereunder sufficient to allow Landlord to pay, prior to delinquency, the next
maturing Impositions. All amounts so deposited with Landlord shall be held in
trust by Landlord for the payment of such Impositions, shall not be commingled
with Landlord's other funds, and shall be deposited in an interest bearing
account. If Landlord is collecting such deposits, Landlord shall pay the
Impositions when due. If Tenant makes payments of Impositions directly to the
applicable authority, Tenant shall deliver to Landlord evidence of such timely
payment within fifteen (15) days of such payment.
SECTION 3.04. PAYMENT OF BILLS. Tenant shall fully and promptly pay
all gas, heat, light, power, telephone, water, sewer and drainage charges and
other charges by public utilities of every kind for services furnished to the
improvements located on the Leased Premises for Tenant's use during the term of
this Lease.
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ARTICLE IV
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SECTION 4.01. INSURANCE. Tenant shall, at its sole cost and expense:
(a) Keep all Improvements, fixtures and equipment and other property
on, in or appurtenant to the Leased Premises, or used in connection with the
operation and maintenance of the Leased Premises, and all replacements,
alterations and additions of or to the foregoing insured for the benefit of
Landlord, any mortgagee of the Leased Premises, and any other party designated
by Landlord, as their respective interests may appear, against all risk of loss
or damage, including loss or damage by fire and other perils included in the
so-called "extended coverage endorsement", vandalism and malicious mischief,
collapse, lightning, windstorm, hail, explosion, riot, riot attending a strike,
civil commotion, aircraft, vehicles, smoke, and water damage and against such
other risks as are normally or customarily insured against by owners or
operators of similar properties or as Landlord may from time to time reasonably
request, and containing Replacement Cost, Agreed Amount and Demolition and
Increased Cost due to Ordinance endorsements. Such coverage shall be in amounts
at all times sufficient to prevent Landlord or Tenant from becoming a
co-insurer under the terms of the applicable policies, but in any event in
amounts not less than the full replacement value of the improvements. Tenant
shall cause full replacement value to be determined from time to time at the
request of Landlord, but not more frequently than once every four (4) years, by
an insurance appraisal or other valuation method reasonably acceptable to
Landlord;
(b) If a sprinkler system is located in the Leased Premises or any
buildings located thereon, provide sprinkler leakage insurance in amounts
reasonably satisfactory to Landlord;
(c) Provide a Glass and Boiler and Machinery Broad Form insurance
policy covering explosion in respect of steam and pressure boilers and similar
apparatus, if any, located on the Leased Premises in an amount equal to the
full replacement value of insurable improvements upon the Leased Premises;
(d) Provide comprehensive general liability and broad form property
damage insurance, written on an occurrence basis, including elevator, machinery
and contractual liability insurance protecting and indemnifying Landlord,
Tenant and others having an insurable interest, against any and all claims
(including all costs and expenses of defending against same) for personal
injury, disease or death and for damage or injury to or destruction of property
(including loss of the use) occurring on, in or about the Leased Premises, or
any adjoining streets, alleys, passageways, sidewalks, gutters, curbs, vaults
or vault spaces appurtenant to the Leased Premises, which insurance shall have
a combined single limit of not less than $_________ and umbrella coverage of
not less than $_________. The insurance carried pursuant to this paragraph
shall include coverage for contractual liability, owners' protective liability,
independent contractors' liability and completed operations liability with a
personal injury endorsement covering claims arising out of title arrest, false
imprisonment, libel, slander, wrongful eviction, discrimination and invasion of
privacy;
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(e) Provide automobile liability insurance in amounts reasonably
satisfactory to Landlord covering all vehicles operated, or owned by Tenant in
connection with the Leased Premises;
(f) Provide business interruption insurance in amounts and covering
risks typically insured by Tenant or its affiliates; and
(g) Provide workers' compensation insurance to the extent required by
applicable law.
SECTION 4.02. EVIDENCE OF INSURANCE. Tenant shall deliver to Landlord
duly executed certificates of insurance and copies of the applicable insurance
policies reflecting Tenant's maintenance of the insurance required under
Section 4.01 of this Lease. The insurance required under such sections shall be
cancelable only upon at least sixty (60) days prior written notice to Landlord.
SECTION 4.03. RIGHT OF LANDLORD TO OBTAIN INSURANCE. In the event of
the failure of Tenant to maintain insurance required by this Article IV,
Landlord may give notice of such failure to Tenant, and if such failure
continues for ten (10) days after such notice, Landlord may at its election
(but shall not be obligated to) procure such insurance as may be necessary to
comply with the above requirements, and Tenant agrees to repay the cost of same
to Landlord on demand, with interest thereon at three percent (3%) per annum
plus the prime rate announced by Citibank, N.A., from time to time until paid.
SECTION 4.04. INDEMNIFICATION. Tenant agrees to indemnify and hold
Landlord harmless from all liability and claims for any damage to person or
property arising in connection with the Leased Premises after the date hereof,
except that environmental liabilities shall be covered by Section 20.02. Except
as otherwise expressly provided in this Lease to the contrary, Tenant shall not
be liable to Landlord, or to Landlord's agents, servants or employees for any
damage to person or property caused by the negligence or intentional torts of
Landlord, or its agents, servants or employees, and Landlord agrees to
indemnify and hold Tenant harmless from all liability and claims for any such
damage.
ARTICLE V
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SECTION 5.01. DAMAGE TO IMPROVEMENTS. (a) If any improvements located
at the Leased Premises shall be destroyed or damaged by any cause whatsoever,
Tenant shall promptly so notify Landlord and shall, at its sole cost and
expense, to the extent of the net amount of any insurance proceeds (the
"Insurance Proceeds") available for the purpose, restore, repair, replace or
rebuild the same as nearly as possible to its condition and character
immediately prior to the damage or destruction, or, at Tenant's option, to its
condition and character as of the Effective Date. Such restoration, repairs,
replacements or rebuilding (collectively, "Casualty Restoration") shall be
commenced promptly and prosecuted to completion with reasonable diligence. All
insurance
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proceeds shall be made available by Landlord for the payment of the cost of the
Casualty Restoration. Notwithstanding the foregoing, if damage or destruction
occurs within the last two (2) years of the Term, Tenant may elect not to
restore or repair, but instead may elect to raze such improvements and pay to
Landlord any casualty insurance proceeds receivable by Tenant in excess of the
costs incurred to raze such improvements.
(b) No destruction of or damage to the Leased Premises, or to any
improvement, furniture, furnishings, fixtures, equipment or other property
shall permit Tenant to surrender this Lease or shall relieve Tenant from its
liability to pay the full Base Rent, Percentage Rent and Additional Rent
payable under this Lease or from any of its other obligations under this Lease.
Tenant waives any rights now or hereafter conferred upon it by statute or
otherwise to quit or surrender this Lease or the Leased Premises or to any
suspension, abatement or reduction of any rent on account of any such
destruction or damage.
(c) All Insurance Proceeds paid on account of any damage or
destruction, less the actual cost, fees and expenses, if any, incurred by
Landlord and Tenant in connection with the adjustment of the loss or the
collection of the award (collectively, the "Deposited Funds") shall be
deposited with an escrow agent reasonably acceptable to Landlord and Tenant,
provided that such escrow agent shall agree in writing that it will apply the
Deposited Funds in accordance with the provisions of this Lease. If and so long
as Tenant is not in default under this Lease and is conducting the Casualty
Restoration (a "Restoration") in accordance with this Lease, the Deposited
Funds shall be paid out from time to time as the Restoration progresses, upon
the written request of Tenant, which request shall be accompanied by the
following:
(i) A certificate signed by the architect or engineer in charge of the
Restoration, reasonably satisfactory to Landlord, dated not more than fifteen
(15) days prior to such request, setting forth:
(A) that the sum then requested either has been paid by Tenant or
is justly due to contractors, sub-contractors, materialmen, engineers,
architects or other persons who have rendered services or furnished materials
for the work specified, and stating that no part of such expenditures has been
or is being made the basis of any previous or then pending request for the
withdrawal of the Deposited Funds;
(B) a brief description of the services and materials;
(C) that, except for the amount described in paragraph (i)(A),
there is no outstanding indebtedness known to the persons signing such
certificate, after due inquiry, which is then due for labor, materials, or
services in connection with the Restoration, and
(D) that the cost, as estimated by the persons signing such
certificate, of the work required to complete the Restoration does not exceed
the amount of the remaining Deposited Funds, plus any amount deposited by
Tenant to defray the expenses of Restoration;
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(ii) Lien waivers, title insurance endorsements or such other
evidence, reasonably satisfactory to Landlord, to the effect that there has not
been filed with respect to the Leased Premises, any vendor's, mechanic's,
laborer's, materialman's or other lien which has not been discharged of record,
except such as will be discharged by payment of the amount then requested; and
(iii) Such other documentation regarding the Restoration as Landlord
shall reasonably require.
(d) Tenant shall, prior to the commencement of the Restoration,
furnish to Landlord an estimate of the total cost of the Restoration certified
by the architect or engineer in charge of the Restoration. If such cost
estimate or any subsequent estimate shall show that the cost of completing the
Restoration is in excess of the amount of the Deposited Funds then available,
Tenant shall promptly deposit with the holder of the Deposited Funds an amount
equal to such excess. The amount so deposited shall be included in the
Deposited Funds for all purposes of this Article V.
(e) Upon compliance by Tenant with the foregoing provisions of this
Article, the holder of the Deposited Funds shall pay to Tenant or the persons
named in the certificate referred to in Section 5.01(c)(i), from the Deposited
Funds, an amount equal to ninety percent (90%) of the cost of the Restoration
which is evidenced by the request. At the completion of the Restoration, the
balance of the Deposited Funds, to the extent of and as required to complete
the payment of Restoration costs, shall be paid to Tenant and Tenant shall
provide to Landlord reasonable evidence that the Restoration has been paid for
in full.
(f) If the amount of any Deposited Funds shall exceed the entire cost
of the Casualty Restoration, such excess, upon completion of the Casualty
Restoration, shall be paid to and retained by Tenant.
(g) If prior to the completion of any Restoration, this Lease shall
terminate or expire for any reason other than by reason of an Event of Default,
then Landlord shall have the right to receive and retain any Deposited Funds to
the extent that they shall not have been applied to the payment or
reimbursement of the costs and expenses of the Restoration, and Tenant shall
thereupon be discharged from any and all obligations to complete such
Restoration provided said Insurance Proceeds are sufficient to complete such
Restoration.
ARTICLE VI
----------
SECTION 6.01. ALTERATIONS. Tenant shall have the right, from time to
time, to make, at its sole cost and expense, additions, alterations and changes
in or to the improvements that are located upon the Leased Premises without
Landlord's consent as long as such additions, alterations and changes (a) are
determined by Tenant to be necessary or appropriate for the conduct of its
business on the Leased Premises, (b) will not diminish the value of the Leased
Premises in any
-10-
material respect, (c) are constructed in compliance with all applicable laws,
ordinances and similar requirements, and (d) are consistent with the permitted
uses of the Leased Premises. Tenant shall deliver copies of plans and
specifications, if any, for all additions, alterations and changes to Landlord
within thirty (30) days after completion of the work.
SECTION 6.02. RIGHT TO REMOVE/DEMOLISH. Tenant shall have the right,
from time to time, to remove or demolish any improvements now or hereafter
situated on the Leased Premises without the prior written consent of Landlord
as long as such demolition either (a) is necessary to the commencement of
alterations, additions or changes permitted under Section 6.01 or (b) will not
diminish the value of the Leased Premises in any material respect.
SECTION 6.03. RIGHTS TO CONTINUE. The demolition and removal of any
then existing improvements and the construction of new improvements by Tenant
upon the Leased Premises at any time or times pursuant to the terms hereof
shall not exhaust the rights of Tenant to do the same at any future time or
times during the Term, and Tenant may exercise the rights granted to it in
Section 6.01 and 6.02 at any time or times and from time to time during the
Term.
SECTION 6.04. LIENS; END OF TERM. Tenant shall have no right,
authority or power to bind Landlord, or any interest of Landlord in the Leased
Premises, for any claim for labor or material or for any other charge or
expense incurred in the erection and construction of any improvements, or any
change, alteration or addition thereto, nor to render such Leased Premises
liable to any lien or right of lien for any labor or material, and Tenant shall
in no way be considered as the agent of Landlord in the construction, erection
or operation of any improvements. Upon the termination of this Lease, whether
by expiration of the Term or by reason of default on the part of Tenant, or for
any other reason whatsoever, all improvements then located on the Leased
Premises shall then merge with the freehold estate and become the property of
Landlord as a part of the realty, free and clear of any burdens placed upon
Tenant's leasehold estate.
SECTION 6.05. MAINTENANCE AND REPAIR. Tenant shall, at its sole cost
and expense, and subject to its rights as provided in Sections 5.01, 6.01 and
6.02, take good care of the Leased Premises and keep the Leased Premises and
all components of the Leased Premises, including the roof and foundations of
all buildings and improvements now or hereafter located on the Leased Premises,
in good and safe order and condition. Tenant shall neither commit nor permit
any waste or injury to the Leased Premises, and shall, at Tenant's sole cost
and expense, promptly make all needed repairs, restorations and replacements,
interior and exterior, structural and nonstructural, ordinary and
extraordinary, foreseen and unforeseen, in and to any improvements, equipment
and personal property now or hereafter erected or installed in or on the Leased
Premises, including vaults, sidewalks, curbs, water, sewer and gas connections,
meters, pipes and mains, and all other fixtures and equipment now or hereafter
belonging to, adjoining or connected with the Leased Premises or used in its
operations. All repairs, restorations and replacements shall be of good quality
sufficient for the proper maintenance and operation of the Leased Premises and
at least
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equivalent in quality to the original work or the property replaced and shall
be constructed and installed in compliance with all legal requirements.
ARTICLE VII
-----------
SECTION 7.01. SUBLEASE AND ASSIGNMENT. At any time during the Term,
Tenant shall have and is hereby granted the right freely to sublet all or any
portion of the Leased Premises, subject to the use limitations contained in
this Lease. Tenant shall have the right to assign this Lease to any affiliate
of Tenant or to any entity that purchases all or substantially all of the
assets of Tenant without Landlord's approval or consent. A transfer of less
than a controlling interest in Tenant shall not be deemed an assignment
hereunder requiring Landlord's consent or approval. All other assignments of
Tenant's interest in the leasehold estate created hereby, subject to Section
7.02, may be made only with Landlord's approval or consent, which will not be
unreasonably withheld. Tenant also shall furnish to Landlord a copy of such
instrument of assignment and assumption as herein provided. No such assignment
or subletting by Tenant shall relieve Tenant of any covenants or obligations
under this Lease and Tenant shall remain fully liable hereunder.
SECTION 7.02. LIENS. Notwithstanding anything to the contrary in this
Lease, Tenant shall have the right to assign this Lease to any leasehold
mortgagee or to the designee or nominee of such leasehold mortgagee, without
the consent of Landlord and without the necessity of compliance with Article
VII hereof, in the event leasehold mortgagee or its designee or nominee shall
acquire ownership of the leasehold estate created hereby, either following
foreclosure of the leasehold mortgage or in liquidation of the indebtedness and
in lieu of foreclosure thereof. In such event, leasehold mortgagee or its
designee or nominee shall have the further right, without the consent of
Landlord, to further assign this Lease and upon such assignment leasehold
mortgagee shall be released from the obligations of this Lease thereafter
arising. Subject to the provisions of this Article, any purchase money
leasehold mortgage accepted in connection therewith shall enjoy all rights,
powers and privileges granted herein to a leasehold mortgage. No mortgage,
pledge, lien or encumbrance shall in any way affect or encumber Landlord's fee
title and estate in and to the Leased Premises. As a condition to any such
assignee's assumption of the Lease, all defaults capable of being cured
(excluding bankruptcy of Tenant for example) must be cured.
SECTION 7.03. NEW/REPLACEMENT TENANT. Landlord and Tenant agree that
if leasehold mortgagee shall elect to exercise its rights under the leasehold
mortgage, it is in the mutual best interests of Landlord, Tenant and leasehold
mortgagee that a replacement tenant be promptly located to assume the
obligations of Tenant under this Lease or to become tenant under a new lease
under Section 10.02 hereof, and to serve as the operator of the recreational
facility at the Leased Premises. Accordingly, and in such event, Landlord
agrees to cooperate with leasehold mortgagee by not unreasonably withholding
its consent to any new tenant (whether a nominee of leasehold mortgagee or
otherwise) proposed by leasehold mortgagee to assume unconditionally tenant's
obligations hereunder or as a new tenant under a new lease made under
-12-
Section 10.02 hereof or as the purchaser of Tenant's leasehold estate under a
proceeding to foreclose the leasehold mortgage. Such replacement tenant's
unconditional assumption of this Lease shall not operate as a release of
Tenant's obligations hereunder. As a condition to any such assignee's
assumption of the Lease, all defaults capable of being cured (excluding
bankruptcy of Tenant for example) must be cured. Landlord agrees to consent to
and recognize the granting to leasehold mortgagee by a replacement tenant or
new tenant of a security interest in such tenant's personal property used and
located and the Leased Premises. Landlord further agrees to subordinate
unconditionally any lien, charge or encumbrance at any time held by it in such
personal property to the lien therein in favor of leasehold mortgagee and
agrees that leasehold mortgagee may, without notice to or consent of Landlord,
enter upon the Leased Premises from time to time to inspect and or maintain or
remove any or all of such personal property.
SECTION 7.04. ESTOPPEL CERTIFICATES. Landlord and Tenant shall, from
time to time, without additional consideration, execute and deliver (x) an
estoppel certificate consisting of statements, if true (and if not true,
setting forth the true state of facts as Landlord or Tenant views them), that
(i) this Lease is in full force and effect, with rental paid through the date
of such estoppel; (ii) this Lease has not been modified or amended; (iii)
Landlord and Tenant are not then in default; (iv) Tenant and Landlord have
fully performed all of Tenant's and Landlord's obligations thereunder; and (v)
such other statements as reasonably may be required by Tenant or by Tenant's
mortgagee, or by Landlord or by Landlord's mortgagee, and (y) and such further
certificates and instruments of a similar nature setting forth factual matters
and/or evidencing the agreement of Landlord or Tenant to the mortgage or other
hypothecation by the Tenant or Landlord of the interest created hereby as may
be reasonably requested by Tenant or any mortgagee of Tenant or Landlord or any
mortgagee of Landlord.
ARTICLE VIII
------------
SECTION 8.01. RIGHT OF REFUSAL. Landlord hereby grants to Tenant a
right of first refusal (the "Right of Refusal") during the Term to purchase the
fee simple title to the Leased Premises, including all rights, title, and
interest of Landlord under this Lease, upon the terms, provisions, and
conditions of this Section 8.01. Landlord shall not convey, assign or otherwise
transfer the fee simple title to the Leased Premises or any portion thereof to
any third party without first complying with the provisions of this Section
8.01. If during the Term Landlord receives a bona fide written offer from an
independent third party to purchase all or a portion of the Leased Premises
from Landlord (any such offer being referred to herein as an "Offer"), then
Landlord shall offer to Tenant in writing (the "Refusal Notice") the right to
purchase the Leased Premises or the applicable portion thereof on the terms set
forth in the Offer. The Refusal Notice shall include a copy of the Offer.
Tenant shall exercise its Right of Refusal, if at all, by written notice to
Landlord within ten (10) days after the date the Refusal Notice is received by
Tenant (the "Refusal Election Period"). If Tenant does not exercise its Right
of Refusal prior to the expiration of the Refusal Election Period, Tenant shall
be deemed to have not exercised the Right of Refusal and Landlord may
thereafter sell all or the applicable portion of the Leased Premises on the
terms set forth in the Offer to the party that submitted the Offer without
regard to Tenant's rights under
-13-
this Section 8.01; provided, however, that if Landlord does not consummate any
such sale within one hundred eighty (180) days after the end of the Refusal
Election Period, then Landlord may not consummate any such sale without again
making an offer to Tenant as contemplated by this Section 8.01. Nothing
contained in this Section 8.01 limits or impairs Tenant's other rights
hereunder as tenant of the Leased Premises for the Term.
ARTICLE IX
----------
SECTION 9.01. TENANT DEFAULT. This Lease and the term and estate
granted by this Lease are subject to the limitation that if any one or more of
the following events (each, an "Event of Default") shall occur:
(a) Tenant shall default in the payment when due of any Base Rent,
Percentage Rent, or Additional Rent, and Tenant shall fail to remedy such
default within ten (10) days after notice by Landlord to Tenant of such
default;
(b) Tenant shall default in the observance or performance of any term,
covenant or condition of this Lease on Tenant's part to be observed or
performed (other than the covenants for the payment of Base Rent, Percentage
Rent and Additional Rent) and Tenant shall fail to remedy such default within
thirty (30) days after notice by Landlord to Tenant of such default, or if such
default is of such a nature that it cannot reasonably be remedied within thirty
(30) days, Tenant shall not proceed in good faith and with due diligence to
remedy and correct such default and such default is not, in fact, cured on or
before one hundred eighty (180) days after such notice of said default has been
given to Tenant;
(c) Tenant shall file a voluntary petition in bankruptcy or shall be
adjudicated a bankrupt or insolvent or shall file any petition or answer
seeking any reorganization, arrangement, liquidation, dissolution or similar
relief under the present or any future federal bankruptcy act or any other
present or future applicable federal, state or other statute or law (foreign or
domestic) (collectively, the "Bankruptcy Laws") or shall make an assignment for
the benefit of creditors or shall seek or consent to or acquiesce in the
appointment of any trustee, custodian, receiver or liquidator of Tenant or of
all or any part of Tenant's property;
(d) Any proceeding is commenced seeking a reorganization, arrangement,
liquidation, dissolution of Tenant or similar relief under Bankruptcy Laws or
shall make an assignment for the benefit of creditors or shall seek or consent
to or acquiesce in the appointment of any trustee, custodian, receiver or
liquidator of Tenant or all or any part of Tenant's property, without the
consent or acquiescence of Tenant, and such preceding shall not have been
vacated or otherwise discharged within sixty (60) days after the commencement
of a proceeding, or any execution or attachment shall be issued against Tenant
or any of Tenant's property pursuant to which the Leased Premises shall be
taken or occupied or attempted to be taken or occupied;
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(e) Tenant shall abandon the Leased Premises and fail to operate its
business at the Leased Premises for a period in excess of thirty (30)
consecutive days, unless such failure to operate results from casualty,
condemnation, adverse weather conditions, alterations or demolition, or any
other factor beyond Tenant's reasonable control;
(f) Any default by Tenant, after the giving of notice and the
expiration of applicable cure periods under the lease dated May 13, 1994,
between Landlord, as landlord, and Leisure Complexes, Inc., as tenant;
then in any of such events Landlord may give to Tenant notice ("Termination
Notice") of Landlord's intention to terminate this Lease and the Term at the
expiration of ten (10) days from the date of the giving of the Termination
Notice, this Lease and the Term shall terminate upon the expiration of ten (10)
days with the same effect as if that day were the expiration of this Lease, but
Tenant shall remain liable as set forth in this Article.
An Event of Default arising from a default in the payment of rent
shall not, unless Landlord so elects, create a conditional limitation under
this Lease. On the occurrence of such an Event of Default, Landlord may elect
to commence a summary proceeding for failure to pay rent or a plenary action
for the recovery of unpaid rent rather than seeking a termination of this Lease
on the basis of conditional limitation.
SECTION 9.02. REMEDIES. If this Lease shall terminate as provided in
this Article IX, then:
(a) Landlord and Landlord's agents may, after the date of termination,
re-enter the Leased Premises, without notice, either by summary proceeding or
by any other applicable action or proceeding, or by force or otherwise (without
being liable to indictment, prosecution or damages), and may repossess the
Leased Premises and dispossess Tenant and any other persons from the Leased
Premises and remove any and all of its or their property and effects from the
Leased Premises, without liability for damage, and in no event shall re-entry
be deemed an acceptance of surrender of this Lease; and
(b) Landlord may relet the Leased Premises from time to time, either
in the name of Landlord or otherwise, to such tenant or tenants, for such term
or terms ending before, on or after the expiration of this Lease, at such
rental or rentals and on such other conditions, which may include concessions
and free rent periods, as Landlord, in it sole discretion, may determine.
Landlord shall have no obligation to relet the Leased Premises and shall not be
liable for refusal or failure to relet the Leased Premises, or, in the event of
any such reletting, for refusal or failure to collect any rent due upon any
such reletting, and no such refusal or failure shall operate to relieve Tenant
of any liability under this Lease or otherwise to affect any such liability.
Landlord may make any repairs, replacements, alterations, additions,
improvements, decorations and other physical changes in the Leased Premises as
Landlord, in its sole discretion, considers advisable or necessary
-15-
in connection with any reletting, without relieving Tenant of any liability
under this Lease or otherwise affecting any such liability.
SECTION 9.03. ADDITIONAL REMEDIES; DAMAGES. If this Lease shall
terminate as provided in this Article IX, then:
(a) Tenant shall pay to Landlord all Base Rent, Percentage Rent and
Additional Rent to the date of termination;
(b) Landlord shall be entitled to retain all monies, if any, paid by
Tenant to Landlord, whether as Base Rent, Percentage Rent, Additional Rent,
Security Deposit or otherwise, but such monies shall be credited by Landlord
against any Base Rent, Percentage Rent, or Additional Rent due at the time of
such termination or, at Landlord's option, against any damages payable by
Tenant;
(c) Tenant shall be liable for and shall pay to Landlord, as damages,
any deficiency between the Base Rent, Percentage Rent and Additional Rent
payable for the period which otherwise would have constituted the unexpired
portion of the Term (conclusively presuming the Percentage Rent and Additional
Rent to be equal to the annual average of the Percentage Rent and Additional
Rent payable for the three (3) years immediately preceding such termination or
re-entry) and the net amount, if any, of rents ("Net Rent") collected under any
reletting for any part of such period or under any subleases with subtenants
which attorn to Landlord, after first deducting from the rents collected all of
Landlord's expenses in connection with the termination of this Lease or
Landlord's re-entry upon the Leased Premises and in connection with such
reletting including all repossession costs, advertising costs, brokerage
commissions, legal expenses, attorneys' fees, architect's fees, alteration
costs and other expenses of preparing the Leased Premises for such reletting;
(d) Any deficiency under Section 9.03(c) shall be paid in monthly
installments by Tenant on the days specified in this Lease for the payment of
installments of Base Rent. Landlord shall be entitled to recover from Tenant
each monthly deficiency as the same shall arise and no suit to collect the
amount of the deficiency for any month shall prejudice Landlord's right to
collect the deficiency for any prior or subsequent month by a similar
proceeding. Alternatively, suits for the recovery of such deficiencies may be
brought by Landlord from time to time at its election;
(e) Whether or not Landlord shall have collected any monthly
deficiencies, Landlord shall be entitled to recover from Tenant, and Tenant
shall pay Landlord, on demand, as and for liquidated and agreed final damages
and not as a penalty, a sum equal to the amount by which the Base Rent,
Percentage Rent and Additional Rent payable for the period to the Expiration
Date from the latest of the date of termination of this Lease or the date
through which monthly deficiencies shall have been paid in full (conclusively
presuming the Percentage Rent and Additional Rent to be equal to the annual
average of the Percentage Rent and Additional Rent payable for the three (3)
years immediately preceding such termination) exceeds the then fair and
reasonable rental
-16-
value of the Leased Premises (including all improvements thereon) for the same
period, both discounted at the rate of 8% per annum to present worth. If,
before presentation of proof of such liquidated damages to any court or
tribunal, the Leased Premises, or any part thereof, shall have been relet by
Landlord for the period which otherwise would have constituted the unexpired
portion of the Term, or any part thereof, the amount of rent upon such
relenting shall be deemed, prima facie, to be the fair and reasonable rental
value for the part or the whole of the premises (as the case may be) so relet
during the term of the reletting;
(f) In no event shall Tenant be entitled (i) to receive any excess of
Net Rent over the sums payable by Tenant to Landlord under, this Article IX or
(ii) in any suit for the collection of damages pursuant to this Article IX to a
credit in respect of any Net Rent from a reletting except to the extent that
such Net Rent is actually received by Landlord prior to the commencement of
such suit;
(g) All of the right, title, estate and interest of Tenant in and to
(i) the Leased Premises, (ii) all buildings, improvements, equipment, fixtures,
machinery and supplies on the Leased Premises, (iii) all rents, issues and
profits of the Leased Premises and the buildings and improvements at the Leased
Premises whether then accrued or to accrue, (iv) all insurance policies and all
insurance proceeds paid or payable and (v) any undisbursed balance of the
Deposited Funds shall automatically terminate and the right, title, estate and
interest of Tenant, its successors in interest and assigns in and to all such
property shall belong to the Landlord, without further action on the part of
either party and without cost or charge to Landlord; and
(h) Landlord shall be entitled to possession of the Leased Premises
free from any estate or interest of Tenant.
In the event of any breach by Tenant or any persons claiming through
or under Tenant of any of the agreements, terms, covenants or conditions
contained in this Lease, Landlord shall be entitled to enjoin such breach and
shall have the right to invoke any right and remedy allowed at law or in equity
or by statute or otherwise.
Tenant, on its own behalf and on behalf of all persons claiming
through or under Tenant, including all creditors, waives any and all rights and
privileges under law which Tenant and all such persons may then have to (a)
redeem the Leased Premises, (b) re-enter or repossess the Leased Premises, or
(c) restore the operation of this Lease, after Tenant shall have been
dispossessed by a judgment or by warrant of any court or judge of competent
jurisdiction, or after any re-entry by Landlord upon expiration or termination
of this Lease and the Term, whether such dispossess, re-entry, expiration or
termination shall be by operation of law or pursuant to the provisions of this
Lease. The words "re-enter" and "re-entry" as used in this Lease shall not be
deemed to be restricted to their technical legal meanings.
If suit shall be brought for recovery of possession of the Leased
Premises, for the recovery of Base Rent, Percentage Rent or Additional Rent or
any other amount due under the
-17-
provisions of this Lease, or because of any Event of Default, Tenant shall pay
to Landlord all expenses incurred for the suit, including, without limitation,
reasonable attorneys' fees and disbursements.
Landlord and Tenant waive trial by jury in any action, proceeding or
counterclaim brought by either of the parties against the other in any in
matter arising out of or in any way connected with this Lease, the relationship
of Landlord and Tenant, Tenant's use or occupancy of the Leased Premises, any
claim of injury or damage, and any emergency statutory or any other statutory
remedy. Tenant shall not interpose any counterclaim or counterclaims in a
summary proceeding or in any action based on non-payment by Tenant of Base
Rent, Percentage Rent or Additional Rent, unless failure to interpose the
counterclaim would preclude Tenant asserting in a separate action the claim
which is the subject of the counterclaim.
ARTICLE X
---------
SECTION 10.01. NOTICE PARTIES. As used herein, "Notice Party" means
any person or entity (a) which is a mortgagee who holds a mortgage which
burdens all or any part of Tenant's leasehold interest under this Lease or any
improvements upon the Leased Premises which are owned by Tenant, and (b) whose
name and address for notice purposes has been furnished by Tenant to Landlord.
Landlord shall give each Notice Party a duplicate copy of any and all notices
of default or other notices in writing which Landlord may give or serve upon
Tenant pursuant to the terms of this Lease, and any such notice shall not be
effective until said duplicate copy is given to such Notice Party. A different
address may be designated by such Notice Party by written notice delivered to
Landlord from time to time. Any such Notice Party may, at its option, at any
time before the rights of Tenant shall have been forfeited to the Landlord as
provided for in this Lease, cure in full any default by Tenant under this
Lease, any such cure in full shall be as effective to prevent a forfeiture of
the rights of Tenant hereunder as the same would have been if done and
performed by Tenant instead of by any such Notice Party. In no event shall
Landlord be required to accept from a Notice Party partial cure of any default
by Tenant under this Lease and no Notice Party shall have any rights on account
of such partial cure, even if accepted by Landlord.
No such mortgagee or trustee of the rights and interests of Tenant
hereunder shall be or become liable to Landlord as an assignee of this Lease
until such time as said mortgagee or trustee shall by foreclosure or other
appropriate proceedings in the nature thereof, or as the result of any other
action or remedy provided for by such mortgagee or deed of trust, or by proper
conveyance from Tenant, either acquire the rights and interests of Tenant under
the terms of this Lease or actually take possession of the Leased Premises,
whichever occurs earlier, and such liability of said mortgagee or trustee shall
terminate upon such mortgagee's or trustee's assigning such rights and
interests to another party or relinquishing such possession, as the case may
be.
SECTION 10.02. RIGHT OF CERTAIN NOTICE PARTIES TO OBTAIN NEW LEASE.
Upon termination of this Lease pursuant to Section 9.02, the Notice Party, if
any, who holds a first lien on Tenant's leasehold estate under this Lease or
any improvements upon the Leased Premises shall have
-18-
the option, upon written notice to Landlord given not later than ten (10) days
after receipt of written notice from Landlord of such termination, to elect to
receive, in its own name or in the name of its nominee, from Landlord a new
lease of the Leased Premises for the unexpired balance of the Term, on the same
terms and conditions as in this Lease set forth, and Landlord agrees to execute
such lease provided:
(i) the Notice Party shall forthwith cure any default of
Tenant; and
(ii) the Notice Party or its nominee shall thereafter observe
and perform all covenants and conditions in said lease
contained on the part of Tenant to be observed and
performed.
Any such new lease, by virtue of the recording of this Lease or a memorandum
thereof, shall have priority equal to this Lease.
ARTICLE XI
----------
SECTION 11.01. CONDEMNATION. If all of the Leased Premises shall be
taken for any public or quasi-public use under any statute, or by right of
eminent domain, or if any part of the Leased Premises shall be so taken and the
part not so taken shall be insufficient in the reasonable judgment of Tenant
for the operation of the Leased Premises as a golf course (a "Total Taking"),
then, in either of such events, when possession of the Leased Premises shall
have been taken by the condemning authority, the Term, and all rights of Tenant
under this Lease, shall the immediately terminate, and the Base Rent,
Percentage Rent and any Additional Rent shall be apportioned and paid to the
date of such termination.
If a part of the Leased Premises shall be so taken, and the remainder
of the Leased Premises shall be sufficient in the reasonable judgment of Tenant
for the operation of the Leased Premises as a golf course (a "Partial Taking"),
then this Lease shall continue in full force and effect, and Tenant shall, at
its sole cost and expense, but to the extent of the net amount of any
condemnation award for the Leased Premises so taken (the "Condemnation Award")
available for such purpose, restore, repair, replace or rebuild the same as
nearly as possible to the condition existing prior to the Partial Taking. Such
restoration, repairs, replacements or rebuilding (collectively, "Condemnation
Restoration") shall be commenced promptly and prosecuted to completion with
reasonable diligence. The Condemnation Award shall be made available for the
payment of the cost of the Condemnation Restoration in the same manner as
provided in Article V. Any excess of the Condemnation Award after payment of
the Condemnation Restoration shall be paid to Landlord.
In the event of any taking as above described, Landlord shall be
entitled to all awards, damages, and compensation for such taking except as
such awards may be separately designated for
-19-
loss of income due to interruption of Tenant's business, loss to improvements
or any award specifically designated to compensate Tenant for any of its loss.
ARTICLE XII
-----------
SECTION 12.01. PEACEFUL ENJOYMENT. Subject to all of the terms and
provisions of this Lease, Landlord covenants and warrants that Tenant, on
paying the rental and other payments herein provided and performing and
observing all of its covenants and agreements herein contained and provided,
shall and may peaceably and quietly have, hold, occupy, use and enjoy, and
shall have the full, exclusive and unrestricted use and enjoyment of, the
Leased Premises during the Term.
SECTION 12.02. TITLE TO LEASED PREMISES. Landlord covenants to Tenant
that Landlord owns good and marketable title to the Leased Premises, subject
only to the matters listed on Exhibit B attached hereto and made a part hereof,
to the extent the same are valid and in force and effect as to the Leased
Premises, and Landlord agrees to warrant and forever defend the title to the
Leased Premises against the claims of any and all persons whomsoever lawfully
(or otherwise) claiming the same or any part thereof.
ARTICLE XIII
------------
SECTION 13.01. LANDLORD'S MORTGAGEE. Any and all mortgages on the fee
title or reversionary interest of Landlord in the Leased Premises shall be
subject and subordinate to this Lease; provided, however, that Tenant hereby
agrees that this Lease is subject and subordinate to mortgages where the
holders of such mortgages deliver to Tenant a non-disturbance agreement in the
form attached hereto as Exhibit D, provided, however, that nothing contained
herein shall restrict or otherwise impair the right of Landlord to transfer,
convey, sell, mortgage or otherwise deal with the fee to the Leased Premises or
affect the right of Landlord to assign this Lease and the rental and other sums
payable hereunder as further collateral security for any such fee mortgage or
otherwise, and Tenant agrees to honor any such assignment from and after
receipt of an executed copy thereof; and Tenant further agrees that while any
such mortgage or other encumbrance is in force, and if Tenant shall have been
given written notice thereof and the name and address of the mortgagee and/or
trustee, Tenant shall give said mortgagee or trustee a duplicate copy of any
and all notices of default or other notices in writing which Tenant may give or
serve upon Landlord pursuant to the terms of this Lease, and any such notice
shall not be effective until said duplicate copy is given to such mortgagee or
trustee. A different address may be designated by such mortgagee or trustee by
written notice delivered to Tenant from time to time. Any such mortgagee and/or
trustee may, at its option, at any time before any rights of the Tenant shall
have accrued as a result of any default of Landlord hereunder, make any payment
or do any other act or thing required of the Landlord by the terms of this
Lease; and all payments so made and all things so done or performed by any such
mortgagee and/or trustee shall be as effective to prevent accrual of any rights
of Tenant hereunder as the same would have been if done
-20-
and performed by the Landlord instead of by any such mortgagee or trustee. No
such mortgagee or trustee of the rights and interests of the Landlord hereunder
shall be or become liable to Tenant as an assignee of this Lease until such
time as said mortgagee or trustee shall by foreclosure or other appropriate
proceedings in the nature thereof, or as the result of any other action or
remedy provided for by such mortgagee or deed of trust, or by proper conveyance
from Landlord, acquire the rights and interests of the Landlord under the terms
of this Lease, and such liability of said mortgagee or trustee shall terminate
upon such mortgagee's or trustee's assigning such rights and interests to
another party. This Lease shall be conditioned upon all existing mortgagees
giving non-disturbance agreements in the form attached hereto as Exhibit D.
ARTICLE XIV
-----------
SECTION 14.01. SURRENDER. Tenant shall, on or before the expiration of
this Lease or on the sooner termination of this Lease, peaceably and quietly
leave and surrender to Landlord the Leased Premises, in good condition,
reasonable wear and tear excepted, together with all improvements upon the
Leased Premises as of termination (subject to Sections 5.01, 6.01 and 6.02),
except for Tenant's movable furniture, movable personal property or movable
trade fixtures. All property removable by Tenant pursuant to this Article XIV
which shall not be removed by Tenant on or before the date when Tenant shall
vacate and surrender the Leased Premises shall be deemed abandoned by Tenant.
If Tenant remains in possession of the Leased Premises after the termination of
this Lease, Tenant, at the option of Landlord, shall be deemed to be occupying
the Leased Premises as a Tenant from month to month, at a monthly rental equal
to three (3) times the monthly installment of Base Rent payable during the last
month of the Lease Term and subject to all the other conditions, provisions and
obligations of this Lease, including the obligation to pay Percentage Rent and
Additional Rent.
ARTICLE XV
----------
SECTION 15.01. NOTICES. All notices, demands, requests, consents or
other communications ("Notices") which either party may desire or be required
to give to the other hereunder shall be in writing and shall be delivered by
hand, overnight express carrier, or sent by registered or certified mail,
return receipt requested, postage prepaid, in either event, addressed to the
parties at their respective addresses as follows:
If to Landlord, to: Three Grove Partners
000 Xxx Xxxxxxxx Xxxx
Xxxx Xxxxx, XX
Attention: Xxxx Xxxxxxx
With copy to: Ruskin, Moscou, Xxxxx & Faltischek, P.C.
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
-21-
If to Tenant, to: Family Golf Centers, Inc.
000 Xxxxxxxxxxx Xxxx, Xxxxx 000X
Xxxxxxxx, XX 00000
Attention: General Counsel
Notices given in the manner aforesaid shall be deemed to have been given three
(3) business days after the day so mailed, the day after delivery to any
overnight express carrier and on the day so delivered by hand. Either party
shall have the right to change its address(es) for the receipt of Notices to
the other party in either manner aforesaid. Any Notice required or permitted to
be given by either party may be given by that party's attorney.
ARTICLE XVI
-----------
SECTION 16.01. ENTIRE AGREEMENT. This agreement embodies the entire
contract between the parties hereto relative to the subject matter hereof. No
variations, modifications or changes herein or hereof shall be binding upon any
party hereto unless such are in writing and executed by both Landlord and
Tenant. No waiver or waivers of any breach or default or any breaches or
defaults by either party of any term, condition or liability of or performance
by the other party of any duty or obligation hereunder, including without
limitation, the acceptance by Landlord or payment by Tenant of any rentals at
any time or in any manner other than as herein provided shall be deemed a
waiver thereof, nor shall any such waiver or waivers be deemed or construed to
be a waiver or waivers of subsequent breaches or defaults of any kind,
character or description under any circumstances. If any term or provision of
this Lease, or the application thereof to any person or circumstance, shall to
any extent be invalid or unenforceable, the remainder of this Lease, or the
application of such provision to persons or circumstances other than those as
to which it is invalid or unenforceable, shall not be affected thereby, and
each provision of this Lease shall be valid and shall be enforceable to the
extent permitted by law.
ARTICLE XVII
------------
SECTION 17.01. LANDLORD DEFAULT. In the event Landlord defaults in
undertaking the performance of any of Landlord's covenants or obligations
herein contained for a period of thirty (30) days next following the date on
which Landlord receives written notice given by Tenant to Landlord as provided
herein asserting such default of Landlord, Tenant shall have the right (but
shall not be obligated), at Tenant's sole election, to perform Landlord's
covenants or obligations which Tenant asserts to be in default, at the expense
of Landlord, and to make claim against Landlord for an amount equal to the cost
incurred by Tenant in so doing, together with interest thereon at the rate of
three percent (3%) per annum plus the prime rate announced by Citibank, N.A.
from time to time from the date incurred by Tenant until repaid by Landlord.
-22-
ARTICLE XVIII
-------------
SECTION 18.01. ACTIONS REQUIRING CONSENT OF TENANT'S MORTGAGEE. After
execution and delivery of a leasehold mortgage by the Tenant and the receipt by
Landlord of a true copy thereof, this Lease may not be modified, amended,
canceled, surrendered, or terminated other than pursuant to its express
provisions by agreement between Landlord and Tenant without the prior written
consent of leasehold mortgagee.
ARTICLE XIX
-----------
SECTION 19.01. GOVERNING LAW. This Lease shall be governed by the laws
of the State of New York, and the covenants contained herein shall be deemed
performable in Suffolk County, New York. The proper venue for any suit brought
in connection with this Lease shall be the appropriate local, state or federal
court in Suffolk County, New York.
ARTICLE XX
----------
SECTION 20.01. COMPLIANCE WITH LAWS. As used in this Lease, "Legal
Requirements" shall mean any applicable law, statute, ordinance, order, rule,
regulation, decree or requirement of a Governmental Authority, and
"Governmental Authority" shall mean the United States, the state, county, city
and political subdivisions in which the Leased Premises are located or which
exercise jurisdiction over the Leased Premises, and any agency, department,
commission, board, bureau or instrumentality of any of them which exercise
jurisdiction over the Leased Premises. Throughout the Term, at Tenant's own
cost and expense, Tenant shall conform to and substantially comply with all
Legal Requirements affecting the Leased Premises.
SECTION 20.02. HAZARDOUS MATERIALS. As used in this Lease, "Hazardous
Materials shall mean any substances, materials or wastes subject to regulation
by Legal Requirements from time to time in effect concerning hazardous, toxic
or radioactive materials; and "Release" shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, or disposing into the environment (including the abandonment
or discarding of barrels, containers and other closed receptacles).
Tenant is accepting the Leased Premises, in their as-is condition,
subject only to the express representations and warranties of Landlord
contained in this Lease. Notwithstanding the foregoing, Tenant is not releasing
any rights of contribution against Landlord or any third parties nor is Tenant
agreeing to assume or indemnify Landlord against any claims arising out of the
presence, suspected presence, Release, or suspected Release of Hazardous
Materials prior to, or existing as of, the date hereof. Tenant shall indemnify,
protect, defend (with counsel reasonably approved by Landlord) and hold
Landlord, and the officers, directors, shareholders, employees and agents of
Landlord, harmless from any and all obligations, claims, administrative
proceedings, judgments, damages, fines, costs and liabilities, including
reasonable attorneys' fees incurred, that arise directly or indirectly from or
in connection with the presence, suspected
-23-
presence, Release, or suspected Release of Hazardous Materials arising or
accruing after the Effective Date.
ARTICLE XXI
-----------
SECTION 21.01. ATTORNEY'S FEES. If either party hereto commences legal
proceedings against the other party hereto with respect to this Lease, and if
such commencing party prevails in such proceedings, then the non-prevailing
party shall pay the prevailing party's reasonable legal fees and costs of suit.
ARTICLE XXII
------------
SECTION 22.01. RECORDING OF LEASE. Tenant may not record this Lease in
the real property records of Suffolk County, New York. At the request of either
party hereto, both parties hereto shall execute and acknowledge a memorandum of
this Lease to be recorded in the real property records of Suffolk County, New
York, in a form and of a content reasonably acceptable to Landlord and Tenant,
and at the expense of the requesting party, containing such terms as may be
necessary to place third parties on notice of Tenant's rights under this Lease.
ARTICLE XXIII
-------------
SECTION 23.01. BROKERS. Each party hereto warrants and represents that
it has not dealt with a broker or intermediary entitled to any compensation in
connection with this Lease or Tenant's use of the Leased Premises. Each party
hereby agrees to hold the other party, its officers, directors, shareholders,
affiliates, employees, agents and representatives harmless from any and all
claims, liabilities, costs and expenses (including reasonable attorneys' fees)
arising from any claim for any commissions or other fees by any other broker or
agent acting or purporting to have acted on behalf of such party.
ARTICLE XXIV
------------
SECTION 24.01. GUARANTY. Family Golf Centers, Inc., has executed a
Guaranty Agreement of even date herewith in the form attached hereto as Exhibit
C to guaranty to Landlord certain of Tenant's obligations hereunder as more
particularly described therein.
ARTICLE XXV
-----------
SECTION 25.01. NO MERGER OF ESTATES. There shall be no merger of the
leasehold estate created by this Lease with the fee estate in the Leased
Premises or any part thereof by reason of the fact that the same person may own
or hold (i) the leasehold estate created by this Lease or any interest in such
leasehold estate and (ii) the fee estate in the Leased Premises or any part
thereof or any interest in such fee estate; and no such merger shall occur
unless and until all persons, including any leasehold mortgagee, having an
interest in (1) the leasehold estate created by this Lease, and
-24-
(2) the fee estate in the Leased Premises, shall join in a written instrument
effecting such merger and duly record the same.
IN WITNESS WHEREOF, this Lease is made and entered into in multiple
original counterparts as of the date and year first above written.
THREE GROVE PARTNERS, a New York limited
partnership
By: Grayside Partners, Inc., a New York
corporation, general partner
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
LAKE GROVE FAMILY GOLF CENTERS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
-25-
EXHIBIT C
---------
GUARANTY AGREEMENT
------------------
Section 1. Guaranty. For value received, FAMILY GOLF CENTERS, INC., a
Delaware corporation ("Guarantor"), hereby absolutely and unconditionally
guarantees to THREE GROVE PARTNERS, a New York limited partnership
("Beneficiary"), and its successors or assigns, the full, prompt and faithful
payment and performance of each and every obligation of LAKE GROVE FAMILY GOLF
CENTERS, INC., a New York corporation ("Tenant"), under the Lease Agreement
between Beneficiary, as landlord, and Tenant, as tenant, relating to the lease
of certain property located at 000 Xxx Xxxxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx
Xxxxxx, Xxx Xxxx (as the same may have been or may be amended, extended or
modified from time to time, the "Lease"). As used in this Guaranty Agreement
(this "Guaranty"), "Guaranteed Obligations" means all obligations of Tenant
guaranteed by Guarantor in this Section 1.
Section 2. Term. The obligations of Guarantor as to the Guaranteed
Obligations shall continue in full force and effect against Guarantor until
Guarantor has performed the Guaranteed Obligations as set forth herein. This
Guaranty covers any and all of the Guaranteed Obligations, whether presently
outstanding or arising subsequent to the date hereof. This Guaranty is binding
upon and enforceable against Guarantor and the assigns and successors of
Guarantor.
Section 3. Representation and Warranty of Guarantor. Guarantor hereby
represents and warrants to Beneficiary that Guarantor has received, or will
receive, direct or indirect benefit from the making of this Guaranty.
Section 4. Waiver of Rights. Guarantor hereby waives (a) notice of
acceptance hereof; (b) grace, demand, presentment and protest with respect to
the Guaranteed Obligations or to any instrument, agreement or document
evidencing or creating same; (c) notice of grace, demand, presentment and
protest; (d) notice of non-payment or other defaults, of intention to
accelerate and of acceleration of the Guaranteed Obligations; (e) notice of
and/or any right to consent or object to the assignment of any interest in the
Lease or the Guaranteed Obligations; (f) notice of the renewal, extension,
amendment and/or modification of any of the terms and provisions of the Lease;
(g) notice of the filing of suit and diligence by Beneficiary in collection or
enforcement of the Guaranteed Obligations; and (h) any other notice regarding
the Guaranteed Obligations.
Section 5. Primary Liability of Guarantor. The liability of Guarantor
shall not be impaired, reduced or in any way affected by: (a) Beneficiary's
failure, refusal, or neglect to collect or enforce the Guaranteed Obligations,
by way of, without limitation, any indulgence, forbearance, compromise,
settlement or waiver of performance which may be extended to Tenant by
Beneficiary or agreed upon by Beneficiary and Tenant; or (b) any termination of
the Lease to the extent that Tenant thereafter continues to be liable. This
Guaranty constitutes a primary obligation of Guarantor. This is an absolute,
unconditional, irrevocable and continuing guaranty of payment and performance
and not of collection and is in no way conditioned upon any attempt to collect
from
C-1
Tenant or upon any other event or contingency. Guarantor agrees that
Beneficiary is not required, as a condition to establishing Guarantor's
liability hereunder, to proceed against any person (including, without
limitation, Tenant or any other guarantor). Guarantor hereby expressly waives
any right or claim to force Beneficiary to proceed first against Tenant or any
other guarantor as to any of the Guaranteed Obligations or other obligations of
Tenant, and agrees that no delay or refusal of Beneficiary to exercise any
right or privilege which Beneficiary has or may have against Tenant, whether
arising from any documents executed by Tenant, any common law, applicable
statute or otherwise, shall operate to impair the liability of Guarantor
hereunder. The obligations of Guarantor hereunder shall not be reduced,
impaired or in any way affected by: (a) receivership, insolvency, bankruptcy or
other proceedings affecting Tenant or any of Tenant's assets; (b) receivership,
insolvency, bankruptcy or other proceedings affecting Guarantor or any of
Guarantor's assets; and (c) any allegation of fraud, failure of consideration,
forgery or other defense, whether or not known to Beneficiary (even though
rendering all or any part of the Guaranteed Obligations void or unenforceable
or uncollectible as against Tenant or any other guarantor). This Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Guaranteed Obligations is rescinded or must otherwise
be returned by Beneficiary upon the insolvency, bankruptcy or reorganization of
Tenant or otherwise.
Section 6. Place of Performance; Attorneys' Fees. All payments to be
made and obligations to be performed hereunder shall be paid or performed in
the location for payment or performance (as applicable) set forth in the Lease.
If it becomes necessary for Beneficiary to enforce this Guaranty by legal
action, Guarantor hereby waives the right to be sued in the county or state of
such Guarantor's residence and agrees to submit to the jurisdiction and venue
of the appropriate federal, state or other governmental court in Suffolk
County, New York. Guarantor unconditionally agrees to pay Beneficiary's
collection expenses, including, without limitation, court costs and reasonable
attorneys' fees if enforcement hereof is placed in the hands of an attorney,
including, but expressly not limited to, enforcement by suit or through
probate, bankruptcy or any judicial proceedings.
Section 7. Applicable Law. This Guaranty shall be governed by and
construed in accordance with the laws of the United States of America and the
State of New York, and is intended to be performed in accordance with and as
permitted by such laws.
Section 8. Entire Agreement. This Guaranty constitutes the entire
agreement of the parties with respect to the subject matter hereof, and all
prior correspondence, memoranda, agreements or understandings (written or oral)
with respect hereto are merged into and superseded by this Guaranty. This
Guaranty may not be changed, modified, discharged or terminated in any manner
other than by an agreement in writing signed by Guarantor and Beneficiary.
Section 9. Severability. In case any one or more of the provisions
contained in this Guaranty shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the other provisions
contained herein shall not in any way be affected or impaired thereby.
C-2
EXECUTED as of the day of , 1997.
GUARANTOR:
FAMILY GOLF CENTERS, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
C-3
EXHIBIT D
---------
NON-DISTURBANCE AGREEMENT
-------------------------
D-1
