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GROUND LEASE AGREEMENT
between
BRAZOS MARKETS DEVELOPMENT, L.P.
and
▇▇▇▇▇▇▇'▇ FOOD & DRUGS, INC.
and
▇▇▇▇▇▇▇'▇ FOOD MARKETS, INC.
Dated as of September 10, 1998
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THIS GROUND LEASE AGREEMENT HAS BEEN ASSIGNED AS SECURITY FOR
INDEBTEDNESS OF BRAZOS MARKETS DEVELOPMENT, L.P.
SEE SECTION 18.10
This Ground Lease Agreement has been manually executed in 6 counterparts,
numbered consecutively from 1 through 6, of which this is No. ________. To
the extent, if any, that this Ground Lease Agreement constitutes chattel
paper (as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction) no security interest in this Ground Lease
Agreement may be created or perfected through the transfer or possession of
any counterpart other than the original executed counterpart which shall be
the counterpart identified as counterpart No. 1.
TABLE OF CONTENTS
GROUND LEASE AGREEMENT
Page
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ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.1. DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.2. FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 1.3. RECITALS, TABLE OF CONTENTS, TITLES, AND HEADINGS . . . . . . . .7
Section 1.4. INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF LESSEE AND BRAZOS . . . . . . . . . . .7
Section 2.1. CORPORATE MATTERS . . . . . . . . . . . . . . . . . . . . . . . .7
Section 2.2. AUTHORIZATION; BINDING AGREEMENT. . . . . . . . . . . . . . . . .7
Section 2.3. POWER AND AUTHORITY . . . . . . . . . . . . . . . . . . . . . . .7
Section 2.4. CONSENTS, APPROVALS, AUTHORIZATIONS . . . . . . . . . . . . . . .8
Section 2.5. COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS . .8
Section 2.6. AGREEMENT FOR GROUND LEASE. . . . . . . . . . . . . . . . . . . .8
Section 2.7. PROPERTY LIENS. . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 2.8. BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 2.9. SUITABILITY OF PROPERTY . . . . . . . . . . . . . . . . . . . . .8
Section 2.10. EXISTENCE. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 2.11. PARTNERSHIP POWER. . . . . . . . . . . . . . . . . . . . . . . .9
Section 2.12. AUTHORIZATION AND APPROVALS. . . . . . . . . . . . . . . . . . .9
Section 2.13. ENFORCEABLE OBLIGATIONS. . . . . . . . . . . . . . . . . . . . .9
Section 2.14. PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 2.15. OTHER ASSETS AND LIABILITIES.. . . . . . . . . . . . . . . . . .9
ARTICLE III LEASE OF PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 3.1. LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 3.2. PROPERTY LEASING RECORD . . . . . . . . . . . . . . . . . . . . .9
Section 3.3. OWNERSHIP OF PROPERTY . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV DELIVERY AND ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.1. ACCEPTANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.2. PAYMENTS FINAL. . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.3. NO WARRANTIES OR REPRESENTATIONS. . . . . . . . . . . . . . . . 11
Section 4.4. QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.5. OTHER FINANCING REQUIREMENTS. . . . . . . . . . . . . . . . . . 12
ARTICLE V LEASE TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.1. LEASE TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.2. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VI RENT AND OTHER PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.1. BASIC RENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.2. OTHER AMOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.3. ADDITIONAL RENT . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.4. PAYMENT IN ADVANCE. . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.5. CREDIT AGREEMENT LOSSES . . . . . . . . . . . . . . . . . . . . 13
(i)
ARTICLE VII RESTRICTED USE; COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . 13
Section 7.1. INSURANCE REQUIREMENT AND LEGAL REQUIREMENT . . . . . . . . . . 13
Section 7.2. FILINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.3. COMPLIANCE WITH OTHER REQUIREMENTS. . . . . . . . . . . . . . . 13
Section 7.4. INSPECTION. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.5. NO LIENS; ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . 14
Section 7.6. INTERFERENCE. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7.7. DELIVERY OF INFORMATION . . . . . . . . . . . . . . . . . . . . 15
Section 7.8. EXECUTION OF DOCUMENTS. . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VIII MAINTENANCE OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.1. WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.2. COSTS AND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.3. PAYMENT OF TAXES. . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.4. ENVIRONMENTAL REPORT. . . . . . . . . . . . . . . . . . . . . . 16
Section 8.5. OBLIGATIONS OF BRAZOS . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IX INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9.1. LIABILITY AND PROPERTY DAMAGE . . . . . . . . . . . . . . . . . 16
Section 9.2. ADDITIONAL INSUREDS; NOTICE . . . . . . . . . . . . . . . . . . 17
Section 9.3. APPLICATION OF PROCEEDS OF LOSS OR SUBSTANTIAL TAKING . . . . . 17
Section 9.4. APPLICATION OF PROCEEDS OF OTHER THAN LOSS OR SUBSTANTIAL
TAKING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 9.5. INVESTMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 9.6. APPLICATION IN DEFAULT. . . . . . . . . . . . . . . . . . . . . 18
Section 9.7. CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 9.8. COVENANT TO KEEP INSURANCE IN FORCE . . . . . . . . . . . . . . 18
ARTICLE X INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 10.1. INDEMNIFIED PERSONS. . . . . . . . . . . . . . . . . . . . . . 18
Section 10.2. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 10.3. CONTINUING INDEMNIFICATION . . . . . . . . . . . . . . . . . . 19
Section 10.4. LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 10.5. LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE XI RENEWAL AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 11.1. LESSEE'S RIGHT TO TERMINATE. . . . . . . . . . . . . . . . . . 20
Section 11.2. BRAZOS' RIGHT TO TERMINATE . . . . . . . . . . . . . . . . . . 21
Section 11.3. RENEWAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 11.4. SALES TO THIRD PARTIES . . . . . . . . . . . . . . . . . . . . 22
Section 11.5. ADDITIONAL PAYMENTS. . . . . . . . . . . . . . . . . . . . . . 22
Section 11.6. TERMINATION OF GROUND LEASE. . . . . . . . . . . . . . . . . . 22
Section 11.7. SURRENDER OF PROPERTY. . . . . . . . . . . . . . . . . . . . . 23
ARTICLE XII PROCEDURE UPON SALE. . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE XIII EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 13.1. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . 23
Section 13.2. RIGHTS UPON DEFAULT. . . . . . . . . . . . . . . . . . . . . . 24
Section 13.3. EVENTS OF PROPERTY TERMINATION.. . . . . . . . . . . . . . . . 27
Section 13.4. BRAZOS' RIGHT UPON EVENT OF PROPERTY TERMINATION . . . . . . . 28
ARTICLE XIV LOSS OF OR DAMAGE TO PROPERTY. . . . . . . . . . . . . . . . . . . . . 28
Section 14.1. LESSEE'S RISK. . . . . . . . . . . . . . . . . . . . . . . . . 28
(ii)
Section 14.2. REPAIR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 14.3. PROPERTY DAMAGED BEYOND REPAIR . . . . . . . . . . . . . . . . 29
ARTICLE XV CONDEMNATION OF PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . 29
Section 15.1. TAKING OF SUBSTANTIALLY ALL OF A PROPERTY. . . . . . . . . . . 29
Section 15.2. TAKING OF LESS THAN SUBSTANTIALLY ALL OF A PROPERTY. . . . . . 29
Section 15.3. GRANT OF EASEMENTS . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XVI LEASEHOLD INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XVII PERMITTED CONTESTS. . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XVIII MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 18.1. SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 18.2. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 32
Section 18.3. MODIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 18.4. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 18.5. NO OFFSETS . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 18.6. NON-RECOURSE.. . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 18.7. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 18.8. USURY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 18.9. NO MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 18.10. SALE OR ASSIGNMENT BY BRAZOS. . . . . . . . . . . . . . . . . 36
Section 18.11. INCOME TAXES. . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 18.12. TRANSFER ON AS-IS BASIS . . . . . . . . . . . . . . . . . . . 36
Section 18.13. RIGHT TO PERFORM FOR LESSEE.. . . . . . . . . . . . . . . . . 37
Section 18.14. MERGER, CONSOLIDATION OR SALE OF ASSETS.. . . . . . . . . . . 37
Section 18.15. RULE AGAINST PERPETUITIES . . . . . . . . . . . . . . . . . . 37
Section 18.16. REEXECUTION.. . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 18.17. PURCHASE OR SALE OF FACILITY. . . . . . . . . . . . . . . . . 37
Section 18.18. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 18.19. INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . . 37
Section 18.20. EXECUTION IN COUNTERPARTS . . . . . . . . . . . . . . . . . . 37
Section 18.21. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . 37
Section 18.22. WAIVER OF LANDLORD'S LIENS. . . . . . . . . . . . . . . . . . 38
Section 18.23. BREAKAGE COSTS ARISING DUE TO BRAZOS DEFAULT. . . . . . . . . 38
Section 18.24. MEMORANDA OF LEASE. . . . . . . . . . . . . . . . . . . . . . 38
(iii)
List of Exhibits
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Exhibit A Schedule of Insurance
(iv)
GROUND LEASE AGREEMENT
THIS GROUND LEASE AGREEMENT (this "GROUND LEASE") is made and entered
into as of September 10, 1998, by and among BRAZOS MARKETS DEVELOPMENT, L.P.,
a Delaware limited partnership (referred to herein as "BRAZOS"), ▇▇▇▇▇▇▇'▇
FOOD & DRUGS, INC., a Delaware corporation, (referred to herein as "LESSEE")
and ▇▇▇▇▇▇▇'▇ FOOD MARKETS, INC., a Texas corporation (referred to herein as
"Lessee" or "Guarantor" as applicable).
W I T N E S S E T H:
WHEREAS, Brazos may hereafter acquire fee or leasehold interests in
certain parcels of real property; and
WHEREAS, on or about the date of this Ground Lease, Brazos and Lessee
entered into an Agreement for Ground Lease, providing for the acquisition by
Brazos of the fee or leasehold interests in such parcels of real property
from time to time; and
WHEREAS, Lessee wishes to lease or sublease such property under the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Brazos and Lessee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section I.1. DEFINED TERMS. For the purposes of this Ground Lease each
of the following terms shall have the meaning specified with respect thereto:
"ACQUIRED GROUND LEASE" means each ground lease entered into by Brazos
under which a leasehold interest in a Property is being leased to Brazos by
the owner of such Property.
"ACQUISITION COST" means, without duplication, for any Property, the sum
of (i) the amount of the advances under the Credit Agreement and Article III
of the Agreement for Ground Lease, and (ii) the advance of Brazos equity made
pursuant to Section 3.7 of the Agreement for Ground Lease with respect to
such Property.
"ADDITIONAL RENT" has the meaning set forth in SECTION 6.3 hereof.
"AFFILIATE" means any other person controlling, controlled by or under
direct or indirect common control with any Person. For the purposes of this
definition, "control," when used with respect to any specified Person, means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AGENT" means Chase Bank of Texas, National Association.
"AGREEMENT FOR GROUND LEASE" means the Agreement for Ground Lease, dated
of even date herewith, between Brazos and Lessee providing for the
acquisition of each Property, as it may be further amended, restated,
modified or supplemented, from time to time, in accordance with the terms
thereof.
"ASSIGNEE" means any lender or agent for a lender under the Credit
Agreement and each person, firm, corporation or other entity to which any
part of Brazos' interest under this Ground Lease or in any Property shall at
the time have been assigned, conditionally or otherwise, by Brazos in
accordance with SECTION 18.10 of this Ground Lease.
GROUND LEASE AGREEMENT - Page 1
"ASSIGNMENT" means each assignment or security agreement referred to in
SECTION 18.10 hereof between Brazos and a third party, pursuant to which
Brazos assigns or grants a security interest in any of its rights under this
Ground Lease to such third party, as from time to time amended.
"BASIC RENT" means, so long as any borrowings are outstanding under the
Credit Agreement with respect to any Property, for any applicable period, the
amount computed by multiplying the following:
(i) the Acquisition Cost of such Property outstanding on the preceding
Basic Rent Payment Date (if any) plus (calculated on a daily basis
from the date of any advance for such period) any advances added to
the Acquisition Cost during such period, by
(ii) the Brazos Margin (calculated as a monthly factor and, with respect
to advances during a month, a daily factor) for such period plus
the interest rate factor for interest accrued under the Credit
Agreement during such period with respect to outstanding advances
previously made and advances made during such period under (without
duplication) the Agreement for Ground Lease and the Credit
Agreement towards such Acquisition Cost.
"BASIC RENT PAYMENT DATE" means the applicable payment date under the
Credit Agreement for the applicable accrued interest.
"BRAZOS" means Brazos Markets Development, L.P. or any successor or
successors to all of its rights and obligations hereunder.
"BRAZOS MARGIN" means the margin specified and calculated in accordance
with the letter from Brazos to Lessee dated as of September 10, 1998,
designated therein as the "Brazos Margin Letter".
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on
which commercial banks in Dallas, Texas or New York City, New York are
authorized or required by law to close.
"CAPITAL LEASE" means a capital lease as determined in accordance with
GAAP.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONSENT" means each consent of Lessee or Guarantor to an Assignment,
pursuant to which, among other things, Lessee or Guarantor, as the case may
be, consents to the terms of such Assignment insofar as they relate to this
Ground Lease, as from time to time amended.
"CORPORATE CREDIT DOCUMENTS" means the Corporate Credit Documents as
defined in the Credit Agreement.
"CREDIT AGREEMENT" means the Credit Agreement dated of even date
herewith by and among Brazos, the Agent and the banks named therein for the
financing of the acquisition of Properties by Brazos in connection with the
Agreement for Ground Lease, as it may be amended, restated, modified or
supplemented, from time to time.
"CREDIT DOCUMENT" shall have the meaning ascribed to such term in the
Credit Agreement.
"EFFECTIVE DATE" means with respect to any Property, the date on which
such Property is leased hereunder by Brazos to Lessee, pursuant to SECTION
3.1 hereof, which date shall be set forth in the Property Leasing Record.
"ENVIRONMENTAL CLAIM" means any third party (including governmental
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree, consent agreement or notice of potential or actual
responsibility or violation (including claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating
to health or safety of employees) which seeks to impose liability under any
Environmental Law relating to any Property.
GROUND LEASE AGREEMENT - Page 2
"ENVIRONMENTAL LAW" means all Legal Requirements arising from, relating
to, or in connection with the Environment (as defined in 43 U.S.C. Section
9601(8) (1988)), health, or safety, including without limitation (i) the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, and (ii) Legal Requirements relating to (a) pollution,
contamination, injury, destruction, loss, protection, cleanup, reclamation or
restoration of the air, surface water, groundwater, land surface or
subsurface strata, or other natural resources; (b) solid, gaseous or liquid
waste generation, treatment, processing, recycling, reclamation, cleanup,
storage, disposal or transportation; (c) exposure to pollutants,
contaminants, hazardous materials or wastes; (d) the safety or health of
employees; or (e) the manufacture, processing, handling, transportation,
distribution in commerce, use, storage or disposal of hazardous, medical,
infectious, or toxic substances, materials or waste.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 13.1 hereof.
"EVENT OF PROPERTY TERMINATION" means any of the events specified in
SECTION 13.3.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and all regulations promulgated by the Securities and Exchange Commission
thereunder.
"EXCLUDED TAXES" shall mean each of the following taxes:
(a) Any federal, state or other estate, inheritance, income or
similar tax of Brazos or any of its partners (other than any gross receipts
tax referred to in CLAUSE (b) of SECTION 8.3 hereof, or tax measured by the
net income of Brazos or any of its partners (including without limitation the
earned surplus component of the Texas franchise tax); PROVIDED, HOWEVER, that
if at any time during the term of this Ground Lease, the method of taxation
shall be such that there shall be levied, assessed or imposed on Brazos, in
substitution for any other tax, assessment, charge or levy which Lessee is
required to pay pursuant to SECTION 8.3, a capital levy or other tax directly
on the rents received therefrom, or upon the value of any property or any
present or future improvement or improvements on any Property, then all such
taxes, assessments, levies or charges, or the part thereof so measured or
based, shall be payable by Lessee, but only to the extent such taxes would be
payable if the Property affected were the only property of Brazos, and Lessee
shall pay and discharge the same as provided herein.
(b) Any taxes imposed against or payable by Brazos or any of its
partners resulting from, or that would not have been imposed but for, the
gross negligence or willful misconduct of Brazos or its Affiliate or the
default by Brazos in the performance of its obligations hereunder, under any
other Lease Document or under the Credit Documents or the breach by Brazos of
its representations and warranties hereunder, under any other Lease Document
or under the Credit Documents.
(c) Taxes imposed on Brazos or any of its partners that result from
any voluntary sale, assignment, transfer or other disposition by Brazos of
its interest in any Property or any interest therein; PROVIDED, HOWEVER, any
transfer of the interest of Brazos hereunder arising as a result of an Event
of Property Termination or an Event of Default by Lessee hereunder or
otherwise in accordance with this Ground Lease shall not constitute a
voluntary transfer by Brazos.
(d) Taxes imposed on or with respect to or payable by Brazos or any
Affiliate thereof because Brazos or such Affiliate is not a United States
person within the meaning of Section 7701(a)(30) of the Internal Revenue Code
of 1986, as amended.
(e) Any interest, penalties or additions to taxes imposed on Brazos
or any of its partners that would not have been imposed or incurred but for
the failure of Brazos or any of its partners to file any return or other
document timely and in the form prescribed by law; PROVIDED, HOWEVER, that
this exclusion shall not apply if such failure is attributable to a failure
by Lessee to fulfill its obligations under this Ground Lease with respect to
such return.
(f) Taxes imposed on or with respect to or payable by Brazos that
would not have been imposed but for an amendment, supplement, modification,
consent or waiver to the Lease Documents or Credit Documents not initiated,
required or consented to by Lessee unless such amendment, supplement,
modification, consent or waiver (i) is necessary or appropriate to, and in
conformity with, any other amendment to any Lease Document or Credit Document
initiated
GROUND LEASE AGREEMENT - Page 3
or requested by or consented to by Lessee, (ii) arises due to, or in
connection with there having occurred, an Event of Default by Lessee, or
(iii) is required by the terms of the Credit Documents or is executed in
connection with any amendment to the Credit Documents required by law.
(g) any franchise tax or similar tax of Brazos or any of its partners
if Brazos or its partners (as the case may be) would have been subject to
such franchise tax in the absence of this transaction.
(h) Any tax imposed by its express terms in lieu of or in
substitution for any tax set forth in SUBPARAGRAPHS (a) through (g) above.
"FACILITY" means all improvements of whatever kind or character now or
hereafter located on, in or under or affixed to an individual Property,
including, without limitation, any utilities, paving, signage or lighting and
all additions, replacements and subsequent replacements thereof, together
with the FF&E installed in such Facility or other building, in which a fee or
leasehold interest has been or will be acquired by Brazos for the purpose of
entering into the Facilities Lease, but excluding all parcels of land on
which such Facility sits.
"FACILITIES LEASE" means, with respect to any Facility or FF&E, the
facilities lease by and between Brazos, as lessor, and Lessee, as lessee.
"FF&E" means fixtures that are permanently attached to the Property or
the Facility and that are necessary for the operation of the Facility for
general retail purposes, such as mechanical, electrical, plumbing, heating,
air conditioning and ventilating equipment and systems, but excluding Trade
Fixtures.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within
the United States accounting profession), which are applicable to the
circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GROUND LEASE" means this Ground Lease Agreement and each Property
Leasing Record.
"GUARANTOR" means ▇▇▇▇▇▇▇'▇ Food Markets, Inc., a Texas corporation.
"GUARANTY" means the Guaranty, dated of even date herewith, by and
between Guarantor and Brazos, as it may be further amended, restated,
modified or supplemented, from time to time, in accordance with the terms
thereof.
"INDEBTEDNESS" shall have the meaning ascribed to such term in the
Guaranty.
"INDEMNIFIED PERSON" has the meaning set forth in SECTION 10.1 hereof.
"INSURANCE REQUIREMENTS" means all requirements of this Ground Lease
with respect to insurance, all terms of any insurance policy covering or
applicable to any Property, all requirements of the issuer of any such
policy, all statutory requirements and all orders, rules, regulations and
other requirements of any governmental body related to insurance applicable
to any Property.
"LEASE DOCUMENT" shall have the meaning ascribed to such term in the
Credit Agreement.
"LEASE TERM" has the meaning set forth in SECTION 5.1 hereof.
GROUND LEASE AGREEMENT - Page 4
"LEGAL REQUIREMENTS" means all laws, judgments, decrees, ordinances and
regulations and any other governmental rules, orders and determinations and all
requirements having the force of law, now or hereinafter enacted, made or
issued, whether or not presently contemplated, and all agreements, covenants,
conditions and restrictions, applicable to each Property and/or the ownership,
operation or use thereof, including, without limitation, all requirements of the
Americans With Disabilities Act (P.L. 101-335) and environmental statutes,
compliance with which is required at any time during the Lease Term and any
Renewal Term, whether or not such compliance shall require structural,
unforeseen or extraordinary changes to any Property or the operation, occupancy
or use thereof.
"LESSEE" means with respect to this Ground Lease, ▇▇▇▇▇▇▇'▇ Food & Drugs,
Inc., a Delaware corporation and ▇▇▇▇▇▇▇'▇ Food Markets, Inc., a Texas
corporation, and, with respect to any particular Property, for all purposes of
such Property and with respect to all matters affecting such Property, shall
mean only the one foregoing entity which executes the Property Leasing Record
with respect to such Property. Accordingly, references in this Ground Lease to
the "Lessee" shall be construed in the context of such reference to mean, with
respect to each particular Property that is subject to this Ground Lease,
▇▇▇▇▇▇▇'▇ Food & Drugs, Inc. or ▇▇▇▇▇▇▇'▇ Food Markets, Inc., as the case may
be, as evidenced by a Property Leasing Record covering such particular Property
and shall not be construed to include any other entity or Lessee.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the same economic
effect as any of the foregoing).
"LIEN OF RECORD" means, with the exception of the Lien of a lender or a
lender's agent under a Credit Agreement, (i) any mechanics' or materialmen's
lien for which Lessee does not hold retainage or trapped funds in amounts
required by applicable law or which is not covered by an adequate payment bond
or is not the subject of a Permitted Contest, (ii) any lien securing the payment
of taxes, assessments, or governmental charges and levies which are due, payable
and delinquent, (iii) any judgment lien, or (iv) any other filed, recorded, or
docketed matter (whether or not the same shall constitute a Permitted
Encumbrance or be the subject of a Permitted Contest) which in the case of any
of the foregoing (a) is reasonably likely to result in a sale of an interest in
all or a portion of the Property for satisfaction of same, a loss, forfeiture,
reversion of title, or right of reentry with respect to any Property, or (b)
whether or not valid, is reasonably likely to interfere with the due and timely
payment of any sum payable or the exercise of any rights or the performance of
any of the duties or responsibilities of Lessee under this Agreement.
"MATERIAL ADVERSE EFFECT" means a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of the Guarantor and its Subsidiaries taken as a
whole; if, but only if, such material adverse change or such material adverse
effect has an economic effect (on an after tax basis) which exceeds an amount
equal to the greater of (i) fifteen percent (15%) of the consolidated
stockholders' equity (determined in accordance with GAAP) of the Guarantor at
the time of determination and (ii) $40,000,000.
"MATERIAL ADVERSE LEASE DOCUMENT EFFECT" means (a) a material impairment of
the ability of the Guarantor to perform its obligations under the Guaranty or of
the Lessee to perform its obligations under any Lease Document (as defined in
the Guaranty) or (b) a material adverse effect upon the legality, validity,
binding effect or enforceability in any material respect against the Guarantor
or the Lessee of, respectively, the Guaranty or any Lease Document (as defined
in the Guaranty) if, but only if, such material impairment or such material
adverse effect has an economic effect (on an after tax basis) which exceeds an
amount equal to the greater of (i) fifteen percent (15%) of the consolidated
stockholders' equity of the Guarantor at the time of determination and (ii)
$40,000,000.00.
"MAXIMUM RATE" has the meaning set forth in SECTION 18.8 hereof.
"PERMITTED CONTEST" means any good-faith contest permitted by and in
accordance with the terms of ARTICLE XVII.
"PERMITTED ENCUMBRANCES" means the following Liens and other matters
affecting the title or leasehold interest of any Property: (a) subject to the
terms of SECTION 7.5, mechanics' and materialmen's liens incurred in good
GROUND LEASE AGREEMENT - Page 5
faith in the ordinary course of business and securing obligations that are
junior to any Liens of Assignee not exceeding $250,000 for any Property and
$2,000,000 in the aggregate which are not yet due or which are subject to a
Permitted Contest; (b) Liens securing the payment of taxes, assessments and
governmental charges or levies, either not delinquent or subject to a
Permitted Contest; (c) zoning and planning restrictions, subdivision and
platting restrictions, easements, rights-of-way, licenses, reservations,
covenants, conditions, waivers, restrictions on the use of property,
encroachments, encumbrances on or irregularities of title which do not, in
Lessee's reasonable judgment, materially impair (i) the intended use of the
Property by Lessee or (ii) the Value of any Property; (d) the lien created
contemporaneously with the acquisition of such Property pursuant to, and
securing the obligations under, a Credit Agreement; (e) any mechanics' or
materialmen's lien for which Lessee holds retainage or trapped funds in
amounts required by and in accordance with applicable law; (f) outstanding
mineral interests; and (g) any other or additional matters; PROVIDED that
such other or additional matters shall be approved in writing by Brazos and
Agent, whose approval shall not be unreasonably withheld or delayed.
"PERSON" means an individual, partnership, corporation, business trust,
joint venture, joint stock company, trust, unincorporated association or
Governmental Authority or other entity of whatever nature.
"POTENTIAL DEFAULT" means any event which, but for the lapse of time, or
giving of notice, or both, would constitute an Event of Default.
"POTENTIAL PROPERTY TERMINATION" means any event which, but for the lapse
of time, or giving of notice, or both, would constitute an Event of Property
Termination.
"PROPERTY" means any and all parcels of land leased or to be leased
hereunder and when leased, evidenced by Property Leasing Records and the
respective easements, rights and appurtenances relating to such parcels of land,
but excluding all Facilities.
"PROPERTY LEASING RECORD" means an instrument evidencing the ground lease
or sublease of a Property under this Ground Lease, as prepared and executed by
Brazos, as lessor or sublessor, accepted and executed by Lessee, as lessee or
sublessee in such form as Lessee, Brazos and Agent may approve.
"RENEWAL TERM" has the meaning set forth in SECTION 11.3(a) hereof.
"REPORTS" has the meaning set forth in SECTION 8.4 hereof.
"RESIDUAL GUARANTY" means the "Residual Guaranty" as defined in the Credit
Agreement.
"RESPONSIBLE OFFICER" means any officer of any Guarantor or any officer of
a Lessee other than a Guarantor designated as such by a Responsible Officer of
any Guarantor.
"SUBSIDIARY" means with respect to any Person, any corporation of which
voting control or more than fifty percent (50%) of the outstanding capital stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether at such time capital stock of any
other class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency) is at the time directly or indirectly owned
by such Person. With respect to each Lessee, "SUBSIDIARY" shall include any
Subsidiary of such Lessee.
"SURETY INSTRUMENTS" means all letters of credit (including standby),
bankers' acceptances, bank guarantees, shipside bonds, surety bonds and similar
instruments.
"TITLE POLICY" means, with respect to any Property, the owner policy of
title insurance issued to Brazos as the insured thereunder covering the interest
of Brazos in and to such Property.
"TRADE FIXTURES" means all removable furniture, equipment and other
personal property that are installed for Lessee's use of the Facility as a
supermarket or for other purposes from time to time operated by Lessee,
including without limitation counters, racks, refrigerators and freezers,
cashier's stands, cash registers, display cases and signs.
GROUND LEASE AGREEMENT - Page 6
"UNEARNED RENT" means any Basic Rent paid by Lessee with respect to a
Property and attributable to a period after the termination of this Ground Lease
as to such Property including, without limitation, upon purchase of such
Property by Lessee or sale of such Property to a third person pursuant to the
terms hereof.
"UNECONOMIC NOTICE" has the meaning set forth in SECTION 12.1 hereof.
"UNECONOMIC PROPERTY" has the meaning set forth in SECTION 12.1 hereof.
"VALUE" has the meaning set forth in the Agreement for Ground Lease.
Section I.2. FORMS. All forms specified by the text hereof or by
reference to exhibits attached hereto shall be substantially as set forth
herein, subject to such changes by Brazos and Lessee by mutual consent that do
not alter the substantive rights of the parties hereto or of the Assignees or as
may be required by applicable laws hereafter enacted.
Section I.3. RECITALS, TABLE OF CONTENTS, TITLES, AND HEADINGS. The terms
and phrases used in the recitals of this Ground Lease have been included for
convenience of reference only and the meaning, construction, and interpretation
of such words and phrases for purposes of this Ground Lease shall be determined
solely by reference to SECTION 1.1 hereof. The table of contents, titles, and
headings of the Articles and Sections of this Ground Lease have been inserted
for convenience of reference only and are not to be considered a part hereof and
shall not in any way modify or restrict any of the terms or provisions hereof
and shall not be considered or given any effect in construing this Ground Lease
or any provision hereof or in ascertaining intent, if any question of intent
should arise.
Section I.4. INTERPRETATION. Unless the context requires otherwise, words
of the masculine gender shall be construed to include correlative words of the
feminine and neuter genders and vice versa, and words of the singular number
shall be construed to include correlative words of the plural number and vice
versa. This Ground Lease, and all the terms and provisions hereof, shall be
liberally construed to effect the purposes set forth herein and to sustain the
validity of this Ground Lease.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF LESSEE AND BRAZOS
Brazos represents and warrants to Lessee on the date of this Ground Lease
with respect to SECTIONS 2.10 to 2.15 and Lessee represents and warrants to
Brazos on the date of this Ground Lease with respect to SECTIONS 2.1 to 2.4 and
as of the date the relevant Property is leased pursuant to this Ground Lease
with respect to SECTIONS 2.1 to 2.9 (it being understood that all
representations and warranties in this ARTICLE II with respect to a Property
shall refer to the Property then being leased pursuant to the terms of this
Ground Lease) the following:
Section II.1. CORPORATE MATTERS. Lessee has full corporate power and
authority to own and operate its properties and to conduct its business as
presently conducted and full corporate power, authority to execute, deliver and
perform its obligations under this Ground Lease, the Agreement for Ground Lease
and any Consent.
Section II.2. AUTHORIZATION; BINDING AGREEMENT. This Ground Lease has
been duly authorized, executed and delivered by Lessee and, assuming the due
authorization, execution and delivery of this Ground Lease by Brazos, this
Ground Lease is a legal, valid and binding obligation of Lessee, enforceable
against Lessee, subject, as to enforceability, to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
GROUND LEASE AGREEMENT - Page 7
Section II.3. POWER AND AUTHORITY. The consummation of the transactions
herein contemplated and the performance and observance of Lessee's obligations
under this Ground Lease and any Consent have been duly authorized by all
necessary corporate action on the part of Lessee. The execution, delivery and
performance by Lessee of this Ground Lease and any Consent will not result in
any violation of any term of the certificate of incorporation or the by-laws of
Lessee, do not require approval of the board of directors or shareholders of
Lessee or the approval or consent of any trustee or holders of Indebtedness of
Lessee except such as have been obtained prior to the date hereof and will not
conflict with or result in a breach of any terms or provisions of, or constitute
a default under, or result in the creation or imposition of any Lien (other than
a Lien on any Property as may be contemplated herein) upon any property or
assets of Lessee under, any indenture, mortgage or other agreement or instrument
to which Lessee is a party or by which it or any of its property is bound where
such breach or default, singly or in the aggregate, would have a Material
Adverse Effect or would, in the reasonable judgment of Lessee, materially impair
the ability of Lessee to perform its obligations under the Agreement for Ground
Lease, this Ground Lease, the Facilities Lease or the Agreement for Facilities
Lease referred to in the Facilities Lease or the Consent executed by Lessee of
even date herewith, or under any existing applicable law, rule, regulation,
license, judgment, order or decree of any Governmental Authority or court having
jurisdiction over Lessee or any of its activities or properties.
Section II.4. CONSENTS, APPROVALS, AUTHORIZATIONS. There are no consents,
licenses, orders, authorizations or approvals of, or notices to or registrations
with, any Governmental Authority which are required in connection with the valid
execution, delivery and performance of this Ground Lease that have not been
obtained or made, except such permits and licenses as Lessee will be required to
obtain for the occupancy, use or operation of a Property and which, in the
ordinary course of business, are not obtained until just prior to the
commencement of such occupancy, use or operation, and any such consents,
licenses, orders, authorizations, approvals, notices and registrations that have
been obtained or made are in full force and effect.
Section II.5. COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE
REQUIREMENTS. The operation, use and physical condition of the Property comply
with the Insurance Requirements and Lessee will not do or permit any act or
thing which is contrary in any material respect (as determined in Lessee's
reasonable judgment) to any Legal Requirements, or which might materially
impair, in the reasonable judgment of Lessee, other than in the normal use
thereof, the Value or the usefulness of any Property; PROVIDED, in each case,
that Lessee shall not be required to comply with any Legal Requirements if (a)
in the case of Legal Requirements with respect to laws affecting the
environment, Lessee acts diligently to cure such non-compliance upon becoming
aware of it and (b) in every case, such non-compliance, individually or in the
aggregate, (i) would not subject any Property to sale, forfeiture or loss, as a
result of failure to comply therewith, (ii) would not cause either Brazos or any
Assignee to incur (x) civil liability which, in the reasonable judgment of
Brazos or Agent is not adequately indemnified (Lessee's obligations under
ARTICLE X of this Ground Lease shall be deemed to be adequate indemnification if
no Event of Default, Event of Property Termination, Potential Default or
Potential Property Termination exists and if such civil liability is reasonably
likely to be less than $500,000 per Property and $2,000,000 in the aggregate),
or (y) any criminal liability as a result of failure to comply therewith, (iii)
is permitted under the provisions of the Acquired Ground Lease, if any, on such
Property, and (iv) is consistent with business practices normal in the industry
of Lessee or the practices of Lessee with respect to properties owned by Lessee.
Section II.6. AGREEMENT FOR GROUND LEASE. Each Property leased pursuant
to the Agreement for Ground Lease was acquired and leased in accordance with the
terms of the Agreement for Ground Lease. The representations and warranties of
Lessee in the Agreement for Ground Lease are true and correct on and as of the
date made, except as to such matters as would not, in the reasonable judgment of
Lessee, impair the Lessee's abilities to perform its obligations under this
Ground Lease.
Section II.7. PROPERTY LIENS. Except as specifically disclosed by Lessee
in writing to Brazos or except as set forth in the Title Policy for such
Property, to the best of Lessee's knowledge, no Property is subject to a Lien of
Record, and, to the best of Lessee's knowledge, no Property is subject to any
other Lien, except for Permitted Encumbrances previously disclosed in writing to
Brazos.
Section II.8. BROKERAGE. Except as may be contemplated by the Ground
Lease or approved by Lessee, no brokerage or other similar fee, commission or
compensation to real estate brokers or agents is to be paid by Brazos in
connection with this Ground Lease, and Lessee hereby indemnifies Brazos against
any claims for brokerage fees or
GROUND LEASE AGREEMENT - Page 8
commissions and agrees to pay all expenses incurred by Brazos in connection
with the defense of any action or proceeding brought to collect any such
brokerage fees or commissions, provided such claim is made through or under
Lessee.
Section II.9. SUITABILITY OF PROPERTY. To the best of Lessee's actual
knowledge, each Property is suitable as determined by Lessee in its sole
discretion (including, without limitation, ground conditions, utilities, and
condition of title) for the intended use of the Property under the Ground Lease.
Section II.10. EXISTENCE. Brazos is a limited partnership duly formed and
validly existing under the laws of the State of Delaware and is in good standing
and qualified to do business in each jurisdiction where its ownership or lease
of property or conduct of its business requires such qualification and where a
failure to be qualified would, in the reasonable judgment of Brazos, impair the
ability of Brazos to perform its obligations under this Agreement. The General
Partner (as defined in the Credit Agreement) is a corporation duly organized, in
good standing, and validly existing under the laws of Delaware and in good
standing and qualified to do business in each jurisdiction where its ownership
or lease of property or conduct of its business requires such qualification and
where a failure to be qualified would, in the reasonable judgment of Brazos,
impair the ability of Brazos to perform its obligations under this Agreement.
Section II.11. PARTNERSHIP POWER. The execution, delivery, and performance
by Brazos of this Agreement and the consummation of the transactions
contemplated hereby are within Brazos's partnership powers, have been duly
authorized by all necessary partnership action, do not contravene Brazos's
agreement of limited partnership or any law or any contractual restriction
binding on or affecting Brazos, and will not result in or require the creation
or imposition of any lien not contemplated by this Agreement or the Credit
Agreement.
Section II.12. AUTHORIZATION AND APPROVALS. No authorization or approval
or other action by, and no notice to or filing with, any Governmental Authority
is required for the due execution, delivery and performance by Brazos of this
Agreement or the consummation of the transactions contemplated by this Agreement
that have not been obtained or made, subject to the provisions of SECTION 2.4
hereof.
Section II.13. ENFORCEABLE OBLIGATIONS. Brazos has duly executed and
delivered this Agreement, and this Agreement is the legal, valid, and binding
obligation of Brazos enforceable against Brazos in accordance with its terms
subject, as to enforceability, to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
Section II.14. PROCEEDINGS. There is no pending or, to the best knowledge
of Brazos after due inquiry, threatened action or proceeding affecting Brazos
before any court, Governmental Authority or arbitrator, which would, in the
reasonable judgment of Brazos, have an adverse impact on the Value or intended
use of a Property or which would affect the legality, validity, binding effect
or enforceability of this Agreement.
Section II.15. OTHER ASSETS AND LIABILITIES. Brazos has no material
assets other than the Properties and Facilities owned and to be acquired
pursuant to the Lease Documents and the commitments of its limited partners to
make capital contributions to Brazos, has no material liabilities other than
pursuant to the Lease Documents and the Credit Documents, and has incurred no
Indebtedness other than pursuant to the Credit Documents.
ARTICLE III
LEASE OF PROPERTY
Section III.1. LEASE. Subject to the definitions, terms and conditions
hereof, Brazos hereby leases to Lessee, and Lessee hereby leases from Brazos
pursuant to this Ground Lease, or sublease in the case of an Acquired Ground
Lease, any Property, when Brazos makes an advance under the Agreement for Ground
Lease with respect to such Property and such Property is acquired under the
Agreement for Ground Lease, or if no advance is made with respect to a Property
under an Acquired Ground Lease, when Brazos enters into such Acquired Ground
Lease. The Effective Date of the lease or sublease of each Property shall be
the date of the initial advance with respect to such Property under the
Agreement for Ground Lease or the Effective Date of any Acquired Ground Lease.
GROUND LEASE AGREEMENT - Page 9
Section III.2. PROPERTY LEASING RECORD.
(a) The lease of each Property shall be evidenced by a Property Leasing
Record. Each Property Leasing Record shall give a full legal description of the
Property covered thereby, the Acquisition Cost of such Property, the Lease Term
for such Property, the location of such Property and such other details as
Brazos, Lessee and any Assignee may from time to time agree. Lessee shall
provide to Brazos the information necessary to describe in the Property Leasing
Record the Property, except that Brazos shall provide, pursuant to the terms
hereof, the Acquisition Cost and the Lease Term. Execution and delivery by
Lessee of a Property Leasing Record shall constitute (i) acknowledgment by
Lessee that the Property specified in such Property Leasing Record has been
delivered to Lessee in acceptable condition and has been accepted for lease
hereunder by Lessee as of the Effective Date of the Property Leasing Record,
(ii) acknowledgment by Lessee that the Property specified in such Property
Leasing Record is subject to all of the covenants, terms and conditions of this
Ground Lease, and (iii) certification by Lessee that the representations and
warranties of Lessee contained in ARTICLE II of this Ground Lease are true and
correct on and as of the Effective Date of the Property Leasing Record as though
made on and as of such date, except as to such matters as would not, in the
reasonable judgment of Lessee, materially impair the Lessee's abilities to
perform its obligations under this Ground Lease and that there exists on such
date no Event of Default, Event of Property Termination, Potential Default or
Potential Property Termination.
(b) Upon the making of additional advances for a Property, Brazos and
Lessee shall execute an updated Property Leasing Record to reflect the change in
Acquisition Cost for such Property caused by such advance.
(c) Upon the release or disposition of a Property or any portion
thereof and the application of proceeds therefrom in accordance with the Credit
Agreement, Brazos and Lessee shall execute an updated Property Leasing Record to
reflect the change in Acquisition Cost for such Property caused by such release
or disposition.
Section III.3. OWNERSHIP OF PROPERTY.
(a) It is the intent of the parties hereto that: (i) this Ground Lease
constitutes an "operating lease" pursuant to Statement of Financial Accounting
Standards No. 13, as amended, for purposes of Lessee's financial reporting, and
(ii) for purposes of federal, state and local income or franchise taxes and for
any other tax imposed on or measured by income, the transaction contemplated
hereby is a financing arrangement and preserves ownership in the Property to the
Lessee. Nevertheless, the Lessee acknowledges and agrees that neither the
Agent, Brazos nor any Assignee has made any representations or warranties to the
Lessee concerning the tax, accounting or legal characteristics of the Credit
Agreement and Lease Documents (as defined in the Credit Agreement) and that the
Lessee has obtained and relied upon such tax, accounting and legal advice
concerning the Credit Agreement and Lease Documents (as defined in the Credit
Agreement) as it deems appropriate.
(b) Anything to the contrary notwithstanding, Brazos and the Lessee
intend and agree that with respect to the nature of the transactions evidenced
by this Ground Lease in the context of the exercise of remedies under the Credit
Agreement and Lease Documents, including, without limitation, in the case of any
insolvency or receivership proceedings or a petition under the United States
bankruptcy laws or any other applicable insolvency laws or statute of the United
States of America or any state or commonwealth thereof affecting the Lessee,
Brazos, or any Assignee or any enforcement or collection actions, (i) the
transactions evidenced by this Ground Lease are loans made by Brazos and the
Agent as unrelated third party lenders to the Lessee secured by the Property,
(ii) the obligations of the Lessee under this Ground Lease to pay Basic Rent and
Additional Rent or other amounts in connection with a purchase of the Property
pursuant to this Ground Lease shall be treated as payments of interest on and
principal of, respectively, loans from Brazos and the Assignees to the Lessee,
and (iii) this Ground Lease grants a security interest and mortgage or deed of
trust or lien, as the case may be, in the Property to Brazos and the Assignees
to secure the Lessee's performance under and payment of all amounts under this
Ground Lease and the Credit Agreement and Lease Documents (as defined in the
Credit Agreement).
(c) Specifically, without limiting the generality of SUBSECTION (b) of
this Section, Brazos and the Lessee further intend and agree that, for the
purpose of securing the Lessee's obligations for the repayment of the
above-described loans from Brazos and the Agent to the Lessee, (i) this Lease
shall also be deemed to be a security agreement and financing statement
within the meaning of Article 9 of the Uniform Commercial Code (and
specifically, a
GROUND LEASE AGREEMENT - Page 10
construction mortgage, as said term is defined in Section 9.313(a)(3) of the
Uniform Commercial Code) and a real property mortgage or deed of trust; (ii)
the conveyance provided for in ARTICLE III shall be deemed to be a grant by
the Lessee to Brazos and the Assignees of a mortgage lien and security
interest in all of the Lessee's right, title and interest in and to the
Property and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, investments, securities or other property, whether in
the form of cash, investments, securities or other property (it being
understood that Lessee hereby mortgages and warrants and grants a security
interest in the Property to Brazos and the Assignees to secure such loans);
(iii) the possession by Brazos or any of its agents of notes and such other
items of property as constitute instruments, money, negotiable documents or
chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9.305 of the
Uniform Commercial Code; and (iv) notifications to Persons holding such
property, and acknowledgments, receipts or confirmations from financial
intermediaries, bankers or agents (as applicable) of the Lessee shall be
deemed to have been given for the purpose of perfecting such security
interest under applicable law. Brazos and the Lessee shall, to the extent
consistent with this Ground Lease, take such actions and execute, deliver,
file and record such other documents, financing statements, mortgages and
deeds of trust as may be necessary to ensure that, if this Ground Lease were
deemed to create a security interest in the Property in accordance with this
Section, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and will be maintained as
such throughout the term of this Ground Lease or any renewal hereof as
provided in SECTION 5.1.
(d) Notwithstanding anything to the contrary contained in any of the
Lease Documents, the Trade Fixtures are not the property of Brazos and are not
covered by this Lease, and Brazos shall not grant any Lien covering the Trade
Fixtures.
Section III.4. BRAZOS COVENANTS. In the absence of an Event of Default
which is continuing beyond the applicable grace or curative periods, Brazos
agrees as follows: (i) it will not engage any broker in connection with the
purchase or sale of any Facility or FF&E without Lessee's prior written consent;
(ii) within ninety (90) days after the end of Brazos' fiscal year, Brazos will
provide to each Lessee its unaudited balance sheet dated as of the end of its
fiscal year, prepared in accordance with GAAP, certified by an officer of the
General Partner of Brazos; (iii) Brazos will provide such additional financial
information regarding Brazos or any Property (to the extent such Property
information is maintained by Brazos) as may be reasonably requested by Lessee;
(iv) Brazos shall comply with all of its obligations under the Credit Documents,
except to the extent that compliance is prevented by any failure on the part of
Lessee to perform its obligations under the Lease Documents; (v) Brazos shall
not acquire or own any material assets other than the Properties and Facilities
to be acquired pursuant to the Lease Documents and the commitment of its limited
partner to make capital contributions to Brazos; (vi) Brazos will not engage in
any business other than the ownership and leasing of the Properties and
Facilities to be acquired pursuant to the Lease Documents; and (vii) Brazos will
not incur any Indebtedness or other material obligations other than those
pursuant to the Credit Documents and the Lease Documents.
ARTICLE IV
DELIVERY AND ACCEPTANCE
Section IV.1. ACCEPTANCE. Lessee shall accept Property acquired by
purchase or lease pursuant to the Agreement for Ground Lease. Brazos shall not
be liable to Lessee for any failure to obtain, or delay in obtaining, any
Property or any delay in the delivery of title or possession thereof to Lessee,
unless such failure or delay is caused by the gross negligence or willful
misconduct of Brazos.
Section IV.2. PAYMENTS FINAL. Each payment of Basic Rent, Additional Rent
and any other amount due hereunder made by Lessee shall be final, and Lessee,
without waiving any other remedies it may have, will not seek or have any right
to recover all or any part of such payment from Brazos or any Assignee for any
reason whatsoever, except as expressly provided herein. The making of payments
under this Ground Lease by Lessee (including payments pursuant to ARTICLE X)
shall not be deemed to be a waiver of any claim or claims that Lessee may assert
against Brazos or any other person. Brazos agrees to repay Lessee amounts paid
to Brazos to the extent such payments were in error and are not required by the
various terms and provisions of this Ground Lease.
Section IV.3. NO WARRANTIES OR REPRESENTATIONS. Notwithstanding any other
provision contained in this Ground Lease, it is specifically understood and
agreed that except as otherwise expressly provided herein, neither Brazos
GROUND LEASE AGREEMENT - Page 11
nor any Assignee nor any Affiliate of either, nor anyone acting on behalf of
any of them makes any warranties or representations hereunder or has any
responsibility to disclose any relevant information hereunder, or has any
other responsibility or duty hereunder, nor, except as expressly set forth in
SECTIONS 3.3 and 18.11 of this Ground Lease, has Brazos or any Assignee or
any Affiliate of either, or anyone acting on behalf of any of them made any
covenants or undertakings, as to the accounting treatment to be accorded
Lessee or as to the U.S. Federal or any state income or any other tax
consequences, if any, to Lessee as a result of or by virtue of the
transactions contemplated by this Ground Lease.
Section IV.4. QUIET ENJOYMENT. During the Lease Term or Renewal Term, if
any, of any Property hereunder and so long as no Event of Default, Event of
Property Termination, Potential Default or Potential Property Termination shall
have occurred and be continuing, Brazos covenants that as between Brazos and
Lessee, Lessee shall have the right to quiet enjoyment of the Property on the
terms and conditions provided in this Ground Lease without any interference from
Brazos or any party claiming by, through or under Brazos. Lessee agrees to
attorn to any Assignee in the event such Assignee succeeds to Brazos' interest
in the Property, and Lessee will not hold the Assignee responsible for Brazos'
obligations incurred in the period prior to the succession of the Assignee to
Brazos' interest.
Section IV.5. OTHER FINANCING REQUIREMENTS. If Brazos is required by the
Agent pursuant to the terms of the Credit Agreement to provide an appraisal or
other evidence of the value of a Property to the Agent under the Credit
Agreement, Lessee agrees to provide such appraisal or other evidence to Brazos
at Lessee's sole cost and expense.
ARTICLE V
LEASE TERM
Section V.1. LEASE TERM. The "LEASE TERM" with respect to any Property
leased hereunder shall commence on the Effective Date for such Property and
shall end on September 10, 2003. The lease of any Property may be renewed for
thirty-five (35) renewal terms of one year each, pursuant to, and in accordance
with, SECTION 11.3. The Lease Term or any Renewal Term may be terminated
earlier pursuant to ARTICLES XI, XIII, XIV or XV hereof.
Section V.2. TERMINATION. Notwithstanding anything contained in this
ARTICLE V or ARTICLE XI, this Ground Lease shall terminate on September 10,
2038, unless earlier terminated.
ARTICLE VI
RENT AND OTHER PAYMENTS
Section VI.1. BASIC RENT. Lessee hereby agrees to pay Brazos on each
Basic Rent Payment Date, Basic Rent for the period ending on such Basic Rent
Payment Date. Such Basic Rent shall be due and payable on the later of the
applicable Basic Rent Payment Date or two Business Days after Brazos shall have
given Lessee written notice of the amount of the Basic Rent due with respect to
each Property for such Basic Rent Payment Date. Brazos agrees to communicate
with Lessee in a timely manner and to otherwise cooperate fully with Lessee
concerning all matters and decisions which affect or which could minimize the
amount of Basic Rent payable hereunder. Upon receipt by Brazos of any notice
from Agent pursuant to Section 2.1(b) of the Credit Agreement relating to any
adjustments under Section 2.1(b) under the Credit Agreement, Brazos will advise
Lessee by written notice of such adjustments and the amount of any Basic Rent
which may be due from Lessee or the amount of any credit which may be applied by
Lessee to the Basic Rent payable by Lessee on the next Basic Rent Payment Date.
Brazos agrees that Basic Rent payable hereunder shall be reduced by the amount
of any such credit adjustment. Lessee agrees to pay any additional Basic Rent
which is owing due to such adjustments within five (5) Business Days of receipt
of such written notice from Brazos.
Section VI.2. OTHER AMOUNTS. Except as otherwise specifically provided in
this Ground Lease, Lessee hereby agrees to pay within thirty (30) days of
written demand all amounts (other than Basic Rent and amounts which are payable
on demand or pursuant to ARTICLES X-XV) due hereunder, including, without
limitation, all amounts payable to any Indemnified Person pursuant to ARTICLE X
hereof.
GROUND LEASE AGREEMENT - Page 12
Section VI.3. ADDITIONAL RENT. Lessee shall pay to Brazos from time to
time, on demand, as additional rent ("ADDITIONAL RENT") (i) subject to Section
5.3 of the Agreement for Facilities Lease, amounts required to reimburse Brazos
for its costs and expenses (not previously included in Basic Rent) incurred in
acquiring, financing and leasing the Property and to the extent legally
enforceable, interest on each overdue amount not paid by Lessee to Brazos as
provided in this Ground Lease from the date such overdue amount was due until
paid at the per annum rate of interest equal to the most recent rate of interest
calculated pursuant to the Credit Agreement or as reasonably established by
Agent in the absence of any borrowing under the Credit Agreement, plus two
percent (2%). Lessee shall also pay to Brazos on demand an amount equal to any
reasonable expenses and attorneys' fees incurred by Brazos in collecting such
unpaid sums and enforcing the obligations for such unpaid sums.
Section VI.4. PAYMENT IN ADVANCE. Basic Rent and Additional Rent and any
other amount payable by Lessee to Brazos shall be paid sufficiently in advance
of the date due to assure that immediately available funds in the full amount
due are available on the date due, to such account of Brazos at such bank, or,
with the consent of Agent, to such account of such other person at such bank, or
otherwise as Brazos may from time to time designate in writing.
Section VI.5. CREDIT AGREEMENT LOSSES. In addition to all other payment
obligations hereunder, if the lease for any Property is terminated for any
reason other than a default by Brazos prior to the end of the Lease Term or, if
applicable, Renewal Term, then Lessee shall pay to Brazos within five (5)
Business Days after receipt of the billing statement referred to below an
additional amount compensating Brazos for all penalties, costs and expenses
(including reasonable out-of-pocket costs and expenses) as are incurred by
Brazos under the Credit Agreement in connection with such termination and as are
set forth in a billing statement sent by Brazos to Lessee containing the
calculation thereof in reasonable detail.
ARTICLE VII
RESTRICTED USE; COMPLIANCE WITH LAWS
Section VII.1. INSURANCE REQUIREMENT AND LEGAL REQUIREMENT. So long as no
Event of Default or Event of Property Termination shall have occurred and be
continuing beyond any applicable grace or curative period, Lessee may use the
Property in the regular course of its business for any lawful purpose. Without
limiting the generality of the foregoing, Lessee may offer for sale at the
Facilities such products and services as Lessee from time to time offers at any
other stores operated by Lessee or any Affiliate of Lessee. Lessee will not do
or permit any act or thing which is contrary to any Insurance Requirement or
which is contrary to any Legal Requirement, which would, in the reasonable
judgment of Lessee, other than in the normal use thereof, materially impair the
Value or usefulness of any Property; PROVIDED, that Lessee shall not be required
to comply with any Legal Requirements to the extent provided in SECTION 2.5 of
this Ground Lease.
Section VII.2. FILINGS. Lessee shall promptly and duly execute, deliver,
file and record, at Lessee's expense, all such documents, statements, filings
and registrations, and take such further action as Brazos or any Assignee shall
from time to time reasonably request in order to establish, perfect and maintain
Brazos' or such Assignee's title to and interest in the Property and any
Assignee's interest in this Ground Lease or any Property as against Lessee or
any third party in any applicable jurisdiction.
Section VII.3. COMPLIANCE WITH OTHER REQUIREMENTS. Lessee shall use every
precaution which is commercially reasonable and which is usually employed by
corporations engaged in a business which involves owning or operating similar
property to prevent loss or damage to Property and to prevent injury to third
persons or property of third persons. Lessee shall cooperate fully with Brazos
and all insurance companies providing insurance pursuant to ARTICLE IX hereof in
the investigation and defense of any claims or suits arising from the ownership,
use, or occupancy of the Property; PROVIDED that nothing contained in this
SECTION 7.3 shall be construed as imposing on Brazos any duty to investigate or
defend any such claims or suits. Lessee shall comply and shall use commercially
reasonable efforts to cause all persons using or occupying Property to comply
with all Insurance Requirements and Legal Requirements regarding acquiring,
titling, registering, leasing, insuring, using, occupying, operating and
disposing of Property, and, if applicable, the licensing of operators thereof;
provided, that Lessee shall not be required to comply with any Legal
Requirements to the extent provided in SECTION 2.5 of this Ground Lease.
GROUND LEASE AGREEMENT - Page 13
Section VII.4. INSPECTION. Brazos or any Assignee or any authorized
representative of either may, upon five (5) Business Days advance notice, during
reasonable business hours and subject to Lessee's normal safety and security
rules and procedures, from time to time, inspect Property and deeds,
registration certificates, certificates of title and related documents covering
Property wherever the same may be located, but neither Brazos nor any Assignee
shall have any duty to make any such inspection. Neither Brazos nor any
Assignee shall incur any liability or obligation by reason of making any
inspection unless and to the extent such party causes damage to any of the
Property or any other person during the course of such inspection. All
inspections shall be at Brazos' or Assignee's own risk.
GROUND LEASE AGREEMENT - Page 14
Section VII.5. NO LIENS; ASSIGNMENT AND SUBLETTING. Lessee shall not
permit or suffer to exist on any Property any Lien, other than Liens which are
the subject of a Permitted Contest, Permitted Encumbrances and Liens placed
thereon by, or arising from, Brazos' own actions or those of any Assignee or
Affiliate of Brazos and in all such cases, approved by Lessee (PROVIDED, that
any Liens of Record, other than Liens placed thereon by, or arising from,
Brazos' own actions or those of any Assignee or Affiliate of Brazos and in all
such cases, approved by Lessee, may not exceed an aggregate amount of
$2,5000,000 with respect to the aggregate of the Properties and Facilities, and
an aggregate amount of $250,000 with respect to each Property and related
Facility), nor may it assign any right or interest herein or in any Property.
Notwithstanding anything to the contrary contained herein, provided that no
Event of Default has occurred and is then continuing beyond any applicable grace
or curative period, Lessee shall have the right, without the prior written
consent of Brazos or any Assignee, to assign this Lease to any Affiliate of
Lessee, and to sublease all or any portion of any one or more Properties to any
Person for any legal use and may otherwise relinquish possession of Property to
any contractor for use in performing work for Lessee; PROVIDED that such
assignment, sublease or relinquishment of possession shall in no way affect the
obligations of Lessee or the rights of Brazos hereunder and with respect to the
Property. Any sublease by Lessee shall be expressly subordinate to this Ground
Lease. Brazos and Assignee shall have the present and continuing right to
collect and enjoy all rents and other sums of money payable under any such
sublease, and Lessee hereby irrevocably assigns such rents and other sums to
Brazos and Assignee for the benefit and protection of Brazos and Assignee for
all amounts due to Brazos and Assignee under this Ground Lease; PROVIDED that
unless an Event of Default shall have occurred and be continuing hereunder
beyond any applicable grace or curative period, Lessee shall be entitled to
collect and enjoy such rents and other sums. Lessee shall, within thirty (30)
days after the execution of any such sublease, deliver a conformed copy thereof
to Brazos and Agent. Nothing contained in this Ground Lease shall be construed
as constituting the consent or request of Brazos, express or implied, to or for
the performance by any contractor, laborer, materialman or vendor of any labor
or services or for the furnishing of any materials for any construction,
alteration, addition, repair or demolition of or to any Property or any part
thereof. Notice is hereby given that Brazos and Agent will not be liable for
any labor, services or materials furnished or to be furnished to Lessee, or to
anyone holding any Property or any part thereof through or under Lessee, and
that no mechanics' or other liens for any such labor, services or materials
shall attach to or affect the interest of Brazos or Assignee in and to the
Property.
In the event a Lien or other matter affecting title to Property arises and
such Lien or other matter is a Lien or other matter with respect to which Brazos
is entitled to make a claim under the terms of a Title Policy covering such
Property, Brazos shall be obligated to remove or discharge, or pay to Lessee,
the amount incurred by Lessee in removing and discharging such Lien or other
matter to the extent (and only to the extent) of any proceeds, damages or other
amounts paid to Brazos under a Title Policy (the "TITLE POLICY PROCEEDS"). In
that connection, if such Lien or other matter is discovered, Brazos, upon
Lessee's reasonable request and at Lessee's expense, will make such claims or
institute such proceedings as are appropriate under the terms of such Title
Policy to cause the Title Insurer to either remove such Lien or other matter or
pay any Title Policy Proceeds payable under the Title Policy in respect of such
Lien or other matter. Lessee agrees to indemnify and hold Brazos harmless from
and against all liability, cost and expense which Brazos may sustain or incur in
making any such claim or instituting any such proceeding. In the event that
Brazos is paid any Title Policy Proceeds as a result of such claim or proceeding
prior to the time that Lessee discharges such Lien or other matter, Brazos shall
apply the Title Policy Proceeds to the payment of amounts necessary to remove
and discharge such Lien or other matter to the extent of such proceeds. In the
event that Brazos is paid any Title Policy Proceeds after Lessee discharges such
Lien or other matter, then Brazos agrees to reimburse Lessee to the extent (and
only to the extent) of any proceeds, damages or other amounts paid to Brazos
under a Title Policy for any amounts paid by Lessee to remove or discharge any
such Lien or other matter, including, without limitation, expenses incurred by
Lessee in causing such Lien or other matter to be removed or discharged or
incurred by Lessee under the foregoing indemnity. Any Title Policy Proceeds
exceeding the foregoing amounts shall be paid to Lessee. Any claim by Lessee
against Brazos in accordance with the foregoing provisions shall be strictly
limited to the amount of any Title Policy Proceeds actually paid to Brazos.
GROUND LEASE AGREEMENT - Page 15
Section VII.6. INTERFERENCE. If any Lien or charge of any kind or any
judgment, decree or order of any court or other governmental authority
(including, without limitation, any state or local tax lien affecting the
Property), whether or not valid but exclusive of any Lien granted by Brazos
contrary to the provisions of this Ground Lease, shall be asserted or entered
which is reasonably likely to interfere with the due and timely payment of any
sum payable or the exercise of any of the rights or the performance of any of
the duties or responsibilities under this Ground Lease, Lessee shall, upon
obtaining knowledge thereof or upon receipt of notice to that effect from Brazos
or Agent, promptly take such action as may be necessary to prevent or terminate
such interference.
Section VII.7. DELIVERY OF INFORMATION. Lessee shall deliver to Brazos
and Agent (i) promptly after a Responsible Officer obtains knowledge of any
Event of Default or Potential Default, a certificate of a Responsible Officer
specifying the nature and period of existence of such Event of Default or
Potential Default, and what action, if any, Lessee has taken, is taking, or
proposes to take with respect thereto, and (ii) promptly after Lessee obtains
knowledge of any and all Liens other than Permitted Encumbrances on any Property
or other matter which may, in the reasonable judgment of Lessee, materially
adversely affect the Value of a Property or the intended use of a Property, a
detailed statement describing each such Lien or other matter. Brazos shall
deliver to Lessee, the information and notices provided by Brazos pursuant to
Section 5.6 of the Credit Agreement (other than 5.6(g)) simultaneously with
delivering such information to Agent.
Section VII.8. EXECUTION OF DOCUMENTS. Lessee hereby agrees that neither
it nor Guarantor will take or permit to be taken any action on the part of
either of them pursuant to SECTION 8.5 of this Ground Lease and the powers
granted by Brazos thereunder, if such action would cause a Default (as defined
in the Credit Agreement) under the Credit Agreement.
ARTICLE VIII
MAINTENANCE OF PROPERTY
Section VIII.1. WARRANTIES. Brazos, so long as no Event of Default or
Event of Property Termination shall have occurred and be continuing, hereby
assigns and agrees to make available to Lessee any and all rights Brazos may
have under any vendor's warranties or undertakings with respect to the Property.
If any Event of Default or Event of Property Termination shall have occurred and
be continuing beyond the expiration of any applicable grace or curative period,
the assignment of such rights from Brazos to Lessee shall be deemed to be
terminated, except to the extent that such Event of Default or Event of Property
Termination is the result of a breach of any vendor's warranties or
undertakings, in which case the foregoing assignment will remain in full force
and effect and Lessee will be allowed a reasonable period of time to pursue such
vendor and to cure the Event of Default or Event of Property Termination.
Section VIII.2. COSTS AND EXPENSES. Subject to the provisions of Section
5.2 of the Agreement for Ground Lease, Lessee shall pay all costs, expenses,
fees and charges incurred in connection with the ownership, use or occupancy of
any Property during the Lease Term and Renewal Term, if any, thereof, including,
without limitation, any rent under an Acquired Ground Lease. Except as
otherwise provided in ARTICLE XII hereof, Lessee shall at all times, at its own
expense, and subject to reasonable wear and tear, keep the Property in good
operating order, repair, condition and appearance. The foregoing undertaking to
maintain Property in good repair shall apply regardless of the cause
necessitating repair, regardless of the availability or adequacy of insurance or
condemnation proceeds and regardless of whether Lessee has possession of the
Property, and as between Brazos and Lessee all risks of damage to the Property
are assumed by Lessee. With respect to any Property, the undertaking to
maintain in good repair shall include, without limitation, all common area
maintenance including, without limitation, removal of dirt, snow, ice, rubbish
and other obstructions and maintenance of sidewalks and landscaping in the
ordinary course of Lessee's business. Lessee hereby agrees to indemnify and
hold Brazos and any Assignee harmless from and against all costs, expenses,
claims, losses, damages, fines or penalties, including reasonable counsel fees,
arising out of or due to Lessee's failure to fulfill its obligations under this
SECTION 8.2.
Section VIII.3. PAYMENT OF TAXES. With respect to any Property, except
for Excluded Taxes, Lessee shall make all required reports to the appropriate
taxing authorities and shall pay: (i) all taxes, assessments, (which may be
amortized over the maximum period permitted by Law) levies, fees, water and
sewer rents and charges, and all other
GROUND LEASE AGREEMENT - Page 16
governmental, quasi-governmental and non-governmental charges, general and
special (which may be amortized over the maximum period permitted by Law),
ordinary and extraordinary, foreseen and unforeseen, which are, at any time
during the Lease Term or any Renewal Term hereof, imposed or levied upon or
assessed against (A) the Property, (B) any Basic Rent, any Additional Rent or
other sum payable hereunder or (C) this Ground Lease, the leasehold estate
hereby created, or which arises in respect of the ownership, operation,
occupancy, possession or use of the Property, (ii) all gross receipts or
similar taxes (i.e., taxes based upon gross income which fail to take into
account all customary deductions (e.g., depreciation and interest) relating
to the Property) imposed or levied upon, assessed against or measured by any
Basic Rent, or any Additional Rent or other sum payable hereunder, (iii) all
transfer, sales, value added, use and similar taxes at any time levied,
assessed or payable on account of the acquisition, leasing or use of the
Property, (iv) all charges of utilities and communications services serving
the Property and (v) subject to the exclusions in the definition of "Excluded
Taxes", all franchise taxes and state registration fees or charges levied by
any state in which Brazos is domiciled or in which any Facility or FF&E is
located. Lessee will furnish to Brazos, promptly after demand therefor and
when made available by the taxing authorities, proof of payment of all items
referred to above, the payment of which is the responsibility of Lessee. If
any such assessments may legally be paid in installments, Lessee may pay or
permit to be paid such assessment in installments. So long as, in the
reasonable opinion of Lessee's counsel, Lessee shall have reasonable grounds
to contest the existence, amount, applicability or validity of any tax Lessee
is required to pay pursuant to this Ground Lease, Lessee may contest such tax
pursuant to the provisions of ARTICLE XVII of this Ground Lease so long as
reserves deemed adequate under GAAP therefor are maintained therefor by
Lessee.
Section VIII.4. ENVIRONMENTAL REPORTS. At any reasonable time and from
time-to-time, upon reasonable notice, Lessee shall furnish Brazos a report or
reports (the "REPORTS") prepared by a qualified independent consultant, at the
expense of Lessee, concerning the condition and status of any Property in
respect of any Environmental Laws; PROVIDED that the party requesting such
reports (either Brazos or the Assignee) has demonstrable evidence that such
Property may be adversely affected by a hazardous substance, a hazardous waste
or an Environmental Claim not adequately addressed in any environmental
assessment previously delivered to Brazos or any Assignee in connection with
such Property.
Section VIII.5. OBLIGATIONS OF BRAZOS. Brazos agrees to promptly deliver
to Lessee all notices, bills, invoices or reports received by Brazos which
relate to any Property. Further, as owner of a Property or owner of the
leasehold estate of an Acquired Ground Lease, Brazos shall execute all such
documents and take all such actions as shall be necessary or as shall reasonably
be requested by Lessee or Guarantor in order to allow Lessee to develop,
construct, use, operate and/or maintain the Property efficiently or otherwise in
a manner consistent with the purposes for which Lessee acquired an interest in
the Property, including, without limiting the generality of the foregoing,
execution of any architectural contracts, construction contracts, applications
or permits or other documents relating to any construction activities or other
operations or activities on or sought to be undertaken on the Property and
execution of easements, licenses or other such documents relating to the
Property. Brazos hereby appoints Guarantor and Lessee as its agent and
attorney-in-fact in connection with executing all such documents and taking all
such actions described in the sentence directly above. Also, Brazos shall
furnish Lessee or Guarantor promptly upon request with any powers of attorney or
other documents necessary or appropriate to enable Lessee or Guarantor to take
all such actions or execute all such documents on behalf of Brazos as described
in this paragraph. Any power of attorney granted under or pursuant to this
SECTION 8.5 is and shall be coupled with an interest and irrevocable.
GROUND LEASE AGREEMENT - Page 17
ARTICLE IX
INSURANCE
Section IX.1. LIABILITY AND PROPERTY DAMAGE. Lessee shall, at its sole
cost and expense, including through self-insurance, maintain such liability and
property damage insurance with respect to all Property and insurance against
loss or damage to all Property of the types usually carried by corporations
engaged in the same or a similar business, of similar size as Lessee, and owning
similar property and which cover risks of the kind customarily insured against
by such corporations and such other insurance as may be required by law or as
may be reasonably requested by Brazos for purposes of assuring compliance with
this ARTICLE IX, including, without limitation, the insurance described on the
Schedule of Insurance attached hereto as EXHIBIT "A". Such insurance shall be
written by financially sound and reputable companies which are legally qualified
to issue such insurance. Lessee may, at its cost and expense, prosecute any
claim against any insurer or contest any settlement proposed by any insurer, and
Lessee may bring any such prosecution or contest in the name of Brazos, Lessee,
or both, and Brazos will join therein at Lessee's request; PROVIDED that Lessee
shall indemnify Brazos against any losses, costs or expenses (including
reasonable attorneys' fees) which Brazos may incur in connection with such
prosecution or contest. Notwithstanding the foregoing, Lessee at its sole
option, may choose to self-insure in whole or in part (through deductibles or
otherwise) for any liabilities or damages which are otherwise to be covered by
insurance as described herein.
Section IX.2. ADDITIONAL INSUREDS; NOTICE. Any policies of insurance
other than Workers' Compensation and Employers' Liability Insurance, carried in
accordance with this ARTICLE IX and any policies taken out in substitution or
replacement for any such policies (i) shall name Brazos and Assignee as
additional insureds, as their respective interests may appear (but without
imposing upon any such person any obligation imposed on the insured, including,
without limitation, the liability to pay the premium for any such policy), (ii)
shall have attached to the All Risk direct physical damage policy, a lender's
loss payable endorsement for the benefit of Brazos and Assignee as loss payees
and (iii) shall provide that as against Brazos and Assignee the insurers shall
waive any rights of subrogation. Lessee shall request the insurers to give
thirty (30) days advance written notice to Brazos and its assigns of any
cancellation of any insurance to be maintained under this Article. Lessee shall
give a copy to Brazos and any Assignee of any notice received by Lessee
regarding the cancellation or other termination of the insurance included in the
Schedule of Insurance attached hereto as EXHIBIT "A". Each liability policy (A)
shall be primary without right of contribution from any other insurance which is
carried by Brazos with respect to its interest as such in the Property and (B)
shall expressly provide that all of the provisions thereof, except the limits of
liability, shall operate in the same manner as if there were a separate policy
covering each insured. Any insurance required to be maintained pursuant to
this Lease may, at Lessee's option, be maintained, in whole or in part, as part
of blanket insurance policies covering the Property and other properties of
Lessee.
Section IX.3. APPLICATION OF PROCEEDS OF LOSS OR SUBSTANTIAL TAKING. Any
insurance or condemnation proceeds received as the result of the occurrence of
(i) any event of loss described in SECTION 14.3 hereof or (ii) any event of
substantial Taking described in SECTION 15.1 shall be paid to Agent on behalf of
Brazos, and disposed of as contemplated by SECTION 14.3 hereof.
Section IX.4. APPLICATION OF PROCEEDS OF OTHER THAN LOSS OR SUBSTANTIAL
TAKING. As between Lessee and Brazos, if any insurance or condemnation proceeds
received as a result of any loss or Taking, other than a loss described in
SECTION 14.3 or an event of substantial Taking described in SECTION 15.1, is
less than $250,000, it is agreed that such proceeds will be paid to Lessee to be
used for repairs, replacement, reconstruction or restoration in accordance with
the terms of SECTIONS 14.2 and 15.2 hereof. If the proceeds equal or exceed
$250,000, then the proceeds shall be deposited in a special purpose account held
by Assignee, to be used only for the purpose set forth in this paragraph, and
Lessee shall be entitled (i) to receive the amounts so deposited against
certificates, invoices or bills in form reasonably satisfactory to Brazos and
Agent, delivered to Brazos and Assignee from time to time as such work or repair
progresses, and (ii) to direct the investment of the amounts so deposited as
provided in SECTION 9.5. Notwithstanding the foregoing, so long as no Event of
Default has occurred and is then continuing beyond any applicable grace or
curative period, any insurance or condemnation proceeds received as a result of
any loss or Taking, other than a loss to which SECTION 14.3 applies or an event
of substantial Taking described in SECTION 15.1, shall be paid to Lessee and
used by Lessee for repairs, replacement, reconstruction or restoration of the
affected Property so as to place the same in good operating order, repair,
condition and appearance. Any moneys remaining in the aforesaid account after
final payment for repairs has been made shall be paid to Lessee.
GROUND LEASE AGREEMENT - Page 18
Section IX.5. INVESTMENT. Agent, at Lessee's instruction, shall invest
the amounts deposited with Agent pursuant to SECTION 9.4 in the following:
(i) direct obligations of the United States Government;
(ii) interest-bearing time deposits at, or obligations of, any Assignee;
(iii) commercial paper supported by a letter of credit issued by any
Assignee; or
(iv) money market mutual funds that invest only in government
obligations or repurchase agreements secured by government
obligations.
Such investments shall mature in such amounts and on such dates so as to provide
that amounts shall be available on the draw dates sufficient to pay the amounts
requested by and due to Lessee. Any interest earned on investments of such
funds shall be paid to Lessee. Brazos and Agent shall not be liable for any
loss resulting from the liquidation of each and every such investment and Lessee
shall be liable for such loss, if any.
Section IX.6. APPLICATION IN DEFAULT. Any amount referred to in SECTIONS
9.3 or 9.4 which is payable to Lessee shall not be paid to Lessee or, if it has
been previously paid to Lessee and not applied by Lessee as provided in SECTIONS
9.3 or 9.4, shall not be retained by Lessee, if at the time of such payment an
Event of Default or Event of Property Termination shall have occurred and be
continuing beyond any applicable grace or curative period. In such event, all
such amounts shall be paid to and held by Brazos as security for the obligations
of Lessee hereunder or, at Brazos' option, applied by Brazos toward payment of
any of such obligations of Lessee at the time due hereunder as Brazos may elect.
At such time as there shall not be continuing any Event of Default or Event of
Property Termination, all such amounts at the time held by Brazos in excess of
the amount, if any, which Brazos shall have elected to apply as above provided
shall be applied as provided in SECTIONS 9.3 or 9.4.
Section IX.7. CERTIFICATES. Subject to Lessee's right to self-insure as
set forth hereinabove, on or before the execution of this Ground Lease, and
annually on or before the anniversary of the date of this Ground Lease, Lessee
will furnish to Brazos and Agent certificates or other evidence reasonably
acceptable to Brazos and Agent certifying that the insurance then carried and
maintained on each Property complies with the terms hereof.
Section IX.8. COVENANT TO KEEP INSURANCE IN FORCE. Subject to Lessee's
right to self insure as set forth above, Lessee covenants that it will not use
or occupy any Property or permit the use or occupancy of any Property at a time
when the insurance required by this ARTICLE IX is not in force with respect to
such Property.
ARTICLE X
INDEMNITIES
Section X.1. INDEMNIFIED PERSONS. Lessee shall indemnify and hold
harmless Brazos, each general and limited partner of Brazos, any Assignee, any
successor or successors, and any Affiliate of each of them, and their respective
officers, directors, incorporators, shareholders, partners (general and limited,
including without limitation, the general and limited partners of Brazos),
employees, agents and servants (each of the foregoing, an "INDEMNIFIED PERSON")
from and against all liabilities, losses, obligations, claims, damages,
penalties, causes of action, suits, costs and expenses (including, without
limitation, reasonable attorneys' and accountants' fees and expenses) or
judgments of any nature relating to or in any way arising out of:
(a) Except as provided in Section 7.5 with respect to claims under a
Title Policy, the acquisition, title on acquisition, rejection, possession,
titling, retitling, registration, reregistration, custody by Lessee of title and
registration documents, ownership, use, non-use, misuse, lease, operation,
repair, control or disposition of any Property leased or subleased or to be
leased or subleased hereunder, (i) except to the extent that such costs are
included in the Acquisition Cost of such Property and (ii) except for any
general administrative expenses of Brazos;
GROUND LEASE AGREEMENT - Page 19
(b) The assertion of any claim or demand based upon any infringement or
alleged infringement of any right, by or in respect of any Property; PROVIDED,
HOWEVER, that upon request of Lessee, Brazos will make available to Lessee
Brazos' rights under any similar indemnification arising from any vendor's
warranties or undertakings with respect to any Property;
(c) All taxes, assessments and charges that Lessee is obligated to pay
pursuant to SECTION 8.3 above;
(d) Any violation or alleged violation (other than an alleged violation
alleged by Brazos or the Assignee) by Lessee of this Ground Lease or of any
contracts or agreements to which Lessee is a party or by which it is bound or
any laws, rules, regulations, orders, writs, injunctions, decrees, consents,
approvals, exemptions, authorizations, licenses and withholdings of objection,
of any governmental or public body or authority and all other Legal
Requirements, including, without limitation, any Legal Requirements with respect
to the environment or the regulation of hazardous materials or substances, or
any breach of a representation or warranty by Lessee under this Ground Lease;
(e) Any Environmental Claim or requirement of Environmental Law
concerning or relating to any Property, or the operations or business in respect
of any Property, other than any Environmental Claim resulting from the gross
negligence or willful misconduct of Brazos or the Assignee; or
(f) Any claim against Brazos' title or Assignee's interest in any
Property to the extent such claim is not fully paid by a Title Policy as
provided in Section 7.5.
Section X.2. PAYMENTS. Subject to the terms of Section 10.5, Lessee shall
forthwith upon demand reimburse any Indemnified Person for any sum or sums
expended with respect to any of the items set forth in SECTION 10.1 or, upon
request from any Indemnified Person, shall pay such amounts directly. Any
payment made to or on behalf of any Indemnified Person pursuant to this ARTICLE
X shall be increased to such amount as will, after taking into account all
actual increases in taxes imposed with respect to the accrual or receipt of such
payment (as the same may be increased pursuant to this sentence), equal the
amount of the payment, reduced by the amount of any savings in such taxes
actually realized by the Indemnified Person as a result of the payment or
accrual of the amounts in respect of which the payment to or on behalf of the
Indemnified Person hereunder is made. To the extent that Lessee in fact
indemnifies any Indemnified Person under the indemnity provisions of this Ground
Lease, Lessee shall be subrogated to such Indemnified Person's rights in the
affected transaction and shall have a right to determine the settlement of
claims therein.
Section X.3. CONTINUING INDEMNIFICATION. The indemnities contained in
this ARTICLE X shall not be affected by and shall survive any termination of
this Ground Lease as a whole or in respect of any Property leased hereunder as
to all matters arising prior to such termination or any failure or refusal of
Lessee to accept any Property acquired pursuant to the Agreement for Ground
Lease.
Section X.4. LIMITATIONS.
(a) Notwithstanding any provisions of this ARTICLE X to the contrary,
Lessee shall not indemnify and hold harmless any Indemnified Person against
liabilities, losses, obligations, claims, damages, penalties, causes of action,
suits, costs and expenses to the extent arising from the gross negligence (as
between such Indemnified Person or an Affiliate of such Indemnified Person and
Lessee) or willful misconduct (as between such Indemnified Person or an
Affiliate of such Indemnified Person and Lessee) of such Indemnified Person, but
shall otherwise indemnify any Indemnified Person against its own negligence, or
against any consequential damages or loss of profit or loss of any fees to
Brazos (except to the extent specified in the letter from Brazos to Lessee dated
as of September 10, 1998, designated therein as the "Brazos Margin Letter").
(b) Brazos and Lessee agree that the terms of any state Law which may
affect the rights of Brazos and Lessee under this ARTICLE X may be set forth in
the Memorandum of Ground Lease for the affected Property and shall apply as
though set forth in full in this Ground Lease. Brazos agrees to release the
Memorandum of Lease for any Property upon payment of all amounts and
satisfaction of all obligations owing as of the date of sale with respect to
such Property.
GROUND LEASE AGREEMENT - Page 20
Section X.5. LITIGATION. If any claim, action, proceeding or suit is
brought against an Indemnified Person with respect to which Lessee would be
required to indemnify such Indemnified Person, such Indemnified Person, with
reasonable promptness, shall cause written notice of the assertion of such claim
or the commencement of such proceeding or litigation to be given to Lessee but
failure to so notify Lessee shall not relieve Lessee from any liability
hereunder unless, in the reasonable judgment of Lessee, Lessee is actually and
materially prejudiced thereby and then only to the extent thereof. Upon receipt
of such notice, Lessee shall have the right to assume the defense thereof,
including the employment at its expense of counsel; PROVIDED that Lessee shall
not have such right, to the extent that such Indemnified Person shall deliver to
Lessee a written notice waiving the benefits of the indemnification of such
Indemnified Person provided by this ARTICLE X in connection with such claim,
action, proceeding or suit. Notwithstanding the foregoing, if (i) (A) any
claim, action, proceeding or suit is brought against an Indemnified Person who
is an individual, (B) the action threatens to restrain or adversely affect the
conduct of the business of the Indemnified Person, but not the business of
Brazos' ownership of the Property under this Agreement, and (C) the claim,
action, proceeding or suit seeks damages of more than $500,000, or (ii)
independent counsel to an Indemnified Person shall conclude that there may be
defenses available to the Indemnified Person which may conflict with those
available to Lessee, Lessee shall not have the right to assume the defense of
any such action on behalf of the Indemnified Person if such Indemnified Person
chooses to defend such action (with counsel reasonably acceptable to Lessee),
and all reasonable costs, expenses and attorneys' fees incurred by the
Indemnified Person in defending such action shall be borne by Lessee; provided
however, if there is more than one (1) Indemnified Person having a right to
defend such action as aforesaid, the obligation of Lessee to pay the fees and
expenses of such Indemnified Persons shall be limited to one (1) firm of
attorneys. Notwithstanding the assumption of its defense by Lessee pursuant to
this SECTION 10.5, any Indemnified Person shall have the right to employ
separate counsel and to participate in its defense, but the fees and expenses of
such counsel shall be borne by the Indemnified Person. In addition, Lessee will
not be liable for any settlement of any claim, action, proceeding or suit unless
Lessee has consented thereto in writing. Any decision by an Indemnified Person
to employ its own counsel rather than counsel selected by Lessee (whether or not
at Lessee's expense) shall in no way affect any rights of such Indemnified
Person otherwise arising under this ARTICLE X.
ARTICLE XI
RENEWAL AND TERMINATION
Section XI.1. LESSEE'S RIGHT TO TERMINATE.
(a) Regardless of whether any Potential Default, Potential Property
Termination, Event of Default or Event of Property Termination has occurred and
is continuing, with respect to all Properties, Lessee shall have the right, at
any time during the Lease Term or any Renewal Term, upon not less than fifteen
(15) days' written notice to Brazos and Assignee, to terminate, on any date
specified in such notice, this Ground Lease with respect to all Properties, and
either (i) purchase or cause its designee to purchase all Properties, for cash
at their respective Acquisition Cost less any Unearned Rent, together with all
other amounts then due and payable by Lessee to Brazos hereunder or (ii) with
the prior written consent of both Brazos and Agent, arrange, at its own cost and
expense, for all Properties, to be sold for cash pursuant to SECTION 11.4 and
with the consequences therein provided, except that such sale must occur on the
date stipulated in the written notice contemplated by this SECTION 11.1.
(b) In addition to Lessee's right to terminate this Ground Lease with
respect to all Properties pursuant to subsection (a) above, so long as no Event
of Default or Event of Property Termination (other than an Event of Property
Termination with respect to the Property to be purchased pursuant to this
subsection (b)) has occurred and is continuing beyond any applicable grace or
curative period, Lessee shall have the right, at any time during the Lease Term
or any Renewal Term, upon not less than fifteen (15) days' written notice to
Brazos and Assignee, to terminate on any date specified in such notice this
Ground Lease with respect to any one or more Property (each such Property
specified in such notice being herein called a "PURCHASED PROPERTY"), but not
with respect to the remaining Properties, subject to the following terms and
conditions:
(i) On the effective date of such termination with respect to the
Purchased Property, Lessee or its designee shall purchase the
Purchased Property for cash equal to the Acquisition Cost less any
Unearned Rent with respect to the applicable Property and
simultaneously purchase the Facility located on such Purchased
Property (or the leasehold interest in such Facility in the case of
an
GROUND LEASE AGREEMENT - Page 21
Acquired Facilities Lease, as defined in the Facilities Lease)
for the Acquisition Cost (as defined in the Facilities Lease) of
such Facility or Acquired Facilities Lessee.
(ii) The conditions of either subsection (iii), (iv) or (v) below have
been satisfied.
(iii) In the good faith judgment of Lessee, the Purchased Property shall
have become uneconomic for continued use and occupancy by Lessee
(such Property being hereinafter sometimes called an "UNECONOMIC
PROPERTY") and Lessee shall have delivered to Brazos and Assignee
a written notice (an "UNECONOMIC NOTICE") containing a certificate
of an officer of Lessee stating that Lessee has determined that
such Property has become uneconomic for continued use and occupancy
by Lessee. If Lessee terminates this Ground Lease with respect to
an Uneconomic Property, neither Lessee nor any Affiliate of Lessee
shall have the right, for the period commencing six (6) months and
ending one (1) year following the date of the purchase of such
Economic Property, to use such Uneconomic Property for the
operation of a retail store by Lessee or such Affiliate.
(iv) In addition to the right to terminate this Ground Lease with
respect to an Uneconomic Property, Lessee shall have the right to
terminate this Ground Lease with respect to Properties with respect
to which the attributable Acquisition Costs are no more than twenty
percent (20%) of the aggregate Acquisition Costs for all Properties
then covered by this Ground Lease.
(v) In addition to Lessee's right to terminate this Ground Lease with
respect to an Uneconomic Property pursuant to subsection (iii)
above, or to terminate pursuant to subsection (iv), Lessee shall
have the right to terminate this Ground Lease with respect to any
one or more Properties provided that Lessee has delivered to Brazos
and the Assignee, on or prior to the notice of termination with
respect to such Properties, an appraisal or appraisals, in form and
substance reasonably satisfactory to Brazos and the Assignee,
reflecting that the aggregate fair market value of all Properties
that will remain subject to this Ground Lease after such
termination and all Facilities that will remain subject to the
Facilities Lease after such termination (assuming completion of all
such Facilities) is no less than the aggregate Acquisition Costs of
the remaining Properties and Acquisition Costs (as defined in the
Facilities Lease) of the remaining Facilities (including any such
Acquisition Costs reasonably expected to be advanced to cause the
completion of the remaining Facilities).
Section XI.2. BRAZOS' RIGHT TO TERMINATE. Brazos shall have the right
upon ninety (90) days' prior written notice to Lessee, to terminate the Ground
Lease of all Properties as of a Basic Rent Payment Date stipulated in such
notice if at any time: (1) by reason of a nexus between a state or local taxing
jurisdiction and any Property or the activities of any user (other than Brazos)
of the Property, Brazos incurs, or, in its reasonable judgment, in the future
would incur, a state or local tax for which Brazos is not indemnified, and
which, in its reasonable good faith judgment, renders the Ground Lease
uneconomic, unless Lessee agrees to indemnify Brazos from such state or local
tax; or (2) the Agreement for Ground Lease or any other instrument relating to
this Ground Lease shall be deemed to require the payment or deemed to permit the
collection of interest in excess of the Maximum Rate and any such interest in
excess of such Maximum Rate cannot be spread and allocated either to the
preceding or subsequent periods in which such excess interest is to be paid or
collected pursuant to SECTION 18.8 of this Ground Lease. In the event of a
termination of this Ground Lease with respect to all Properties pursuant to this
SECTION 11.2, Lessee shall either (i) purchase or cause its designee to
purchase, on the Basic Rent Payment Date or other date stipulated in the written
notice contemplated by this SECTION 11.2, all Properties for cash at their
respective Acquisition Cost less any Unearned Rent or (ii) with the prior
written consent of both Brazos and Agent arrange, at its own cost and expense,
for all Properties to be sold for cash pursuant to SECTION 11.4 and with the
consequences therein provided, except that such sale must occur on the Basic
Rent Payment Date or other date stipulated in the written notice contemplated by
this SECTION 11.2.
GROUND LEASE AGREEMENT - Page 22
Section XI.3. RENEWAL.
(a) Provided that Lessee has theretofore given notice to Brazos and
Agent of Lessee's desire to renew this Lease, not later than nine months prior
to the end of the Lease Term or six months prior to the end of a Renewal Term,
if any, as applicable, Brazos, with the consent of Agent, shall give notice to
Lessee as to whether it desires to renew the lease with respect to all
Properties and the terms and conditions (including the rental amounts) of any
such renewal. Not later than six months prior to the end of the Lease Term or
four months prior to the end of a Renewal Term, as applicable, Lessee shall give
notice to Brazos as to whether it will renew or not renew the lease for each
Property for which Brazos has offered to renew the lease. Failure of Lessee to
give such notice shall be deemed an election not to renew the lease. If the
parties elect to renew the Lease Term as set forth above, Brazos will use
commercially reasonable efforts to obtain financing, on terms and conditions
consistent with the Credit Agreement and partnership agreement of Brazos
otherwise acceptable to Brazos and Lessee, for the Renewal Term. So long as (i)
no Event of Default or Event of Property Termination has occurred and is
continuing beyond any applicable grace or curative period, (ii) Brazos shall
have received a commitment for financing on terms satisfactory to Brazos and
Lessee through the last day of the Renewal Term (as defined below) from the
Agent under the Credit Agreement or from a third party, and (iii) Lessee shall
elect to renew this Lease, this Lease shall be renewed for a term (the "RENEWAL
TERM") equal to one year commencing on the first day of the calendar month
following the last day of the Lease Term or Renewal Term, as applicable,
thereof; PROVIDED, HOWEVER, the Lease Term or Renewal Term, as applicable, shall
not be renewed if on the first day of the new Renewal Term the lender(s) fails
to fund under its commitment pursuant to the terms of such commitment for any
reason. Lessee may give advance notice of its intention to renew this Ground
Lease with respect to all Properties for successive Renewal Terms. Upon
acceptance by Brazos and Agent of such successive Renewal Terms, Lessee shall be
bound by such renewals for the entire period of successive Renewal Terms. Upon
the request of Lessee, but subject to the other provisions of this SECTION 11.3,
any Renewal Term may be five (5) years, rather than one (1) year.
(b) If this Ground Lease is not being renewed, Lessee shall, at its
option, either (i) purchase or cause its designee to purchase all Properties for
cash at their Acquisition Cost (less any Unearned Rent) during the period from
one (1) month before the end of the Lease Term or Renewal Term, as applicable,
to five (5) Business Days before the end of the Lease Term or Renewal Term, as
applicable or (ii) arrange, at its own cost and expense, for all Properties to
be sold for cash pursuant to SECTION 11.4 and with the consequences therein
provided during the period from six (6) months before the end of the Lease Term
or Renewal Term, as applicable, to one (1) month before the end of the Lease
Term or Renewal Term, as applicable. With respect to Property for which the
lease is not being renewed, not later than eight months prior to the end of the
Lease Term or four months prior to the end of the Renewal Term, as applicable,
Lessee shall give notice to Brazos of its election to either purchase or sell
such Property to a third party. Any notice given by Lessee pursuant to the
preceding sentence shall be irrevocable, except that Lessee may revoke the
election to have a Property sold to a third party if Lessee purchases such
Property.
Section XI.4. SALES TO THIRD PARTIES.
(a) If Lessee exercises its right to arrange for a sale of a Property
to a third party pursuant to SECTIONS 11.1, 11.2 or 11.3, Brazos shall receive
the proceeds of sale and:
(i) if the proceeds of sale are greater than the Acquisition
Cost of the Property sold less any Unearned Rent, Brazos
shall pay to Lessee the amount by which such proceeds exceed
such Acquisition Cost less any Unearned Rent; and
(ii) if the proceeds of sale are equal to or less than the
Acquisition Cost of the Property sold less any Unearned
Rent, Lessee shall pay to Brazos an amount equal to (A) such
Acquisition Cost less (B) the proceeds of such sale plus any
Unearned Rent.
For purposes of this SECTION 11.4, in connection with the sale of a Property
"PROCEEDS OF SALE" shall mean the aggregate proceeds from the sale of such
Property without reduction for any amounts paid by Lessee.
(b) All payments and credits referred to in PARAGRAPH (a) above shall
be made on the date of the sale of such Property, and the parties shall account
to each other for such payments and credits. In consideration for the receipt
GROUND LEASE AGREEMENT - Page 23
by Brazos of the proceeds of sale and all other amounts then due and owing
hereunder, Brazos shall transfer title to such Property to the purchaser at the
sale designated by Lessee free of any Lien created by or under the Credit
Agreement or granted by Brazos contrary to the provisions of this Ground Lease,
pursuant to a special warranty deed. In the event of a sale pursuant to this
SECTION 11.4, neither Lessee nor any Affiliate of Lessee shall purchase the
Property. Any Property sold to a third party pursuant to this PARAGRAPH (b)
shall, unless SECTION 11.4 (a)(i) applies, be free of any Liens (exclusive of
any Lien granted by Brazos contrary to the provisions of this Ground Lease) at
the time of sale, including Liens which would otherwise be Permitted
Encumbrances if such Liens would reduce the value to the purchaser of such
Property; PROVIDED HOWEVER, Lessee shall have the option to obtain affirmative
title insurance, if available, to insure over such Lien or to make other
arrangements acceptable to such purchaser.
(c) If a Property and all Facilities thereon are sold to the same third
party, the proceeds of sale shall be allocated prorata between such Property and
Facility based on the Acquisition Cost of such Property and the Acquisition Cost
(as defined in the Facilities Lease) of such Facility.
Section XI.5. ADDITIONAL PAYMENTS. In connection with any purchase or
sale of a Property under this ARTICLE XI, on or before the date such purchase or
sale occurs, Lessee shall pay to Brazos, in addition to any purchase price
payable, all Basic Rent payable, any Additional Rent, all amounts owing under
SECTION 11.4, and other amounts owing hereunder to the date of such sale. In
the event a Property is the subject of an Acquired Ground Lease and this Ground
Lease is not being renewed or is being terminated as provided in this ARTICLE XI
with respect to such Property, the Lessee shall assume all of Brazos'
obligations under such Acquired Ground Lease as of the end of the term or the
date of termination of this Ground Lease with respect to such Property and this
Ground Lease shall terminate with respect to such Property.
Section XI.6. TERMINATION OF GROUND LEASE. Upon receipt by Brazos of the
purchase price payable in connection with any sale or purchase of any Property
under this ARTICLE XI, together with all additional payments required under
SECTION 11.5 with respect to such Property, this Ground Lease shall terminate
with respect to such Property.
Section XI.7. SURRENDER OF PROPERTY. Subject to the provisions of this
ARTICLE XI and ARTICLES XII, XIII, XIV and XV hereof, upon termination of the
lease of any Property hereunder, Lessee shall surrender such Property to Brazos.
GROUND LEASE AGREEMENT - Page 24
ARTICLE XII
PROCEDURE UPON SALE
The following procedure shall apply to each sale of a Property to Lessee or
its designee:
(a) The closing of such sale and purchase shall occur on the date
specified in the written notice of one party to the other regarding
such sale, or on the next Business Day if the date designated in
such notice is not a Business Day.
(b) At such closing, Lessee or its designee shall pay to Brazos and the
Agent the Acquisition Cost and all other amounts then due and owing
hereunder with respect to the Purchased Property, less any Unearned
Rent with respect to the Purchased Property.
(c) At such closing, the Lessee or its designee shall assume all of
Brazos' obligations under any Acquired Ground Lease with respect to
such Purchased Property.
(d) At such closing, Brazos shall deliver or shall cause to be
delivered to Lessee or its designee the following:
(i) A Special Warranty Deed conveying to the Lessee or its
designee the applicable Purchased Property, free and clear
of any Liens arising under the Credit Agreement or created
by Brazos contrary to the provisions of this Ground Lease
and any other encumbrances other than Permitted
Encumbrances.
(iii) An assignment of warranties to Lessee or its designee
affecting all or any portion of the Purchased Property.
(iv) To the extent necessary to convey title in accordance with
CLAUSE (i) above, releases of all Liens (including
termination statements with respect to any UCC financing
statements) covering the Purchased Property, executed by the
holders of such Liens or their duly authorized agent.
ARTICLE XIII
EVENTS OF DEFAULT
Section XIII.1. EVENTS OF DEFAULT. Any of the following events of default
shall constitute an "EVENT OF DEFAULT" and shall give rise to the rights on the
part of Brazos described in SECTION 13.2 hereof:
(a) FAILURE TO MAKE PAYMENTS. Failure of Lessee to pay amounts due to
Brazos at the time of any scheduled sale of a Property hereunder, failure of
Lessee to pay Basic Rent for more than five (5) Business Days after such payment
is due pursuant to ARTICLE VI hereof or failure of Lessee to pay any other
amount payable by Lessee hereunder when due which failure continues for more
than ten (10) Business Days after written demand for such payment.
(b) FAILURE TO MAINTAIN INSURANCE. Subject to Lessee's rights to self
insure hereunder, failure of Lessee to maintain the insurance required by
ARTICLE IX hereof, or default in the performance of the covenant contained in
SECTION 9.4 hereof which failure or default continues for more than thirty (30)
days after any lapse of insurance or such default.
GROUND LEASE AGREEMENT - Page 25
(c) OTHER DEFAULTS. Lessee shall default in the performance or
observance of any other term, covenant, condition or obligation contained in
this Ground Lease or any Consent and such default shall (i) continue for thirty
(30) days after written notice shall have been given to Lessee by Brazos or any
Assignee specifying such default and requiring such default to be remedied or
(ii) if such default is of a nature that it is not capable of being cured within
such 30-day period, Lessee shall not have diligently commenced curing such
default and proceeded diligently and in good faith thereafter to complete curing
such default.
(d) BANKRUPTCY. (i) The entry of a decree or order for relief in
respect of Lessee by a court having jurisdiction in the premises in an
involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of Lessee or of any substantial part
of Lessee's property, or ordering the winding up or liquidation of Lessee's
affairs, and the continuance of any such decree or order unstayed and in effect
for a period of sixty (60) consecutive days; or (ii) the general suspension or
discontinuance of Lessee's business operations, its insolvency (however
evidenced) or its admission of insolvency or bankruptcy, or the commencement by
Lessee of a voluntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or the consent by it to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of Lessee or of any substantial part of
its property, or the making by it of an assignment for the benefit of creditors,
or the failure of Lessee generally to pay its debts as such debts become due, or
the taking of corporate action by Lessee in furtherance of any such action.
(e) PAYMENT OF OBLIGATIONS. A default or event of default which
remains uncured for any applicable grace or curative period, the effect of which
is to permit the holder or holders of any Indebtedness of Lessee, or a trustee
or agent on behalf of such holder or holders, to cause such Indebtedness to
become due prior to its stated maturity shall occur under the provisions of any
instrument evidencing Indebtedness in excess of $20,000,000 of Lessee (or under
the provisions of any agreement pursuant to which such instrument was issued).
(f) MISREPRESENTATIONS. Any representation or warranty made by Lessee
in this Ground Lease or any Consent or which is contained in any certificate,
document or financial or other statement furnished under or in connection with
this Ground Lease proves to be false or misleading in any material respect when
made or deemed made and which has a Material Adverse Effect.
(g) DEFAULT UNDER LEASE DOCUMENTS. An Event of Default (as defined in
the Agreement for Ground Lease, Agreement for Facilities Lease or Facilities
Lease) shall occur under the Agreement for Ground Lease, Agreement for
Facilities Lease or Facilities Lease, respectively, and be continuing beyond any
applicable grace or curative period.
(h) OTHER AGREEMENTS. Lessee shall default in any material respect in
the performance or observance of any material term, covenant, condition or
obligation contained in any other material written agreement executed by Lessee
with or for the benefit of Brazos or Agent and such default shall not have been
cured within any applicable grace or cure period and which would reasonably be
expected to have a Material Adverse Lease Document Effect.
(i) UNAUTHORIZED ASSIGNMENT. Any assignment by Lessee of any interest
in this Ground Lease other than in accordance with the terms of this Ground
Lease.
(j) DEFAULT UNDER THE GUARANTY. An "Event of Default" (as defined in
the Guaranty) under the Guaranty shall occur and be continuing beyond any
applicable grace or curative period.
(l) DEFAULT UNDER CORPORATE CREDIT DOCUMENTS. The occurrence of any
breach, failure of performance, default, event of default or terminating event
with regard to either Lessee or Guarantor under any of the Corporate Credit
Documents, which remains uncured beyond any applicable grace or cure period, the
effect of which is to permit the holders of any Indebtedness thereunder, or an
agent on behalf of such holder or holders, to cause the Indebtedness evidenced
by the Corporate Credit Documents to become due prior to its stated maturity.
GROUND LEASE AGREEMENT - Page 26
Section XIII.2. RIGHTS UPON DEFAULT. Upon the occurrence and continuation
of any Event of Default Brazos or any Assignee may in its discretion declare
this Ground Lease to be in default and may, in its discretion, do any one or
more of the following:
(a) Prior to the exercise of any other remedy, terminate this Ground
Lease as of any date, in which event, Lessee shall have the right and shall be
required as to all Property other than Property which is the subject of an
Acquired Ground Lease, to purchase all of the Property at a price equal to the
Acquisition Cost of such Property and as to all Property which is the subject
of an Acquired Ground Lease, assume all obligations of Brazos under such
Acquired Ground Lease. In connection with any such purchase under this SECTION
13.2, on the Basic Rent Payment Date or other date upon which such purchase
shall occur, Lessee shall pay to Brazos, in addition to such Acquisition Cost,
all Basic Rent payable and any Additional Rent and other amount owing hereunder
with respect to such Property up to the date of such sale, and reasonable
attorneys' fees and expenses and other costs incurred by Brazos by reason of
such Event of Default and exercise of Brazos' rights under this SECTION 13.2.
Any Unearned Rent shall be credited against Lessee's payment obligations under
the foregoing sentences and the balance, if any, shall be refunded to Lessee.
Upon payment of the amount set forth in the foregoing sentences, Brazos shall
transfer all Property to Lessee free of any Lien created pursuant to the Credit
Agreement, and this Ground Lease shall terminate without further obligation or
liability of Brazos or Lessee except where such liability is expressly provided
to survive the termination of this Ground Lease; PROVIDED, HOWEVER, in no event
shall Lessee be liable for any further damages arising out of the occurrence of
such Event of Default.
(b) If and only if Lessee fails to pay the amounts set forth in
subparagraph (a) above, Brazos or any Assignee may, in its discretion, do any
one or more of the following:
(1) Sell any Property or Brazos' interest in any Acquired Ground
Lease (with or without the concurrence or request of Lessee);
(2) Hold, use, occupy, lease or keep idle any or all Property as
Brazos in its sole discretion may determine, without any duty to
account to Lessee with respect to any such action or inaction or
for any proceeds thereof;
(3) Exercise any other right or remedy which may be available
under applicable law and in general proceed by appropriate judicial
proceedings, either at law or in equity, to enforce the terms
hereof or to recover damages for the breach hereof; and
(4) Declare an Event of Property Termination as to any or all
Properties leased hereunder.
Suit or suits for the recovery of any default in the payment of any sum due
hereunder may be brought by Brazos from time to time at Brazos' election, and
nothing herein contained shall be deemed to require Brazos to await the date
whereon this Ground Lease or the term hereof would have expired by limitation
had there been no such default by Lessee or no such termination or cancellation.
The receipt of any payments under this Ground Lease by Brazos with
knowledge of any breach of this Ground Lease by Lessee or of any default by
Lessee in the performance of any of the terms, covenants or conditions of this
Ground Lease, shall not be deemed to be a waiver of any provision of this Ground
Lease.
No receipt of moneys by Brazos from Lessee after the termination or
cancellation hereof in any lawful manner shall reinstate, continue or extend the
Lease Term or any Renewal Term, or affect any notice theretofore given to
Lessee, or operate as a waiver of the right of Brazos to enforce the payment of
Basic Rent or Additional Rent or other charges payable hereunder, or operate as
a waiver of the right of Brazos to recover possession of any Property by proper
suit, action, proceedings or remedy; it being agreed that, after the service of
notice to terminate or cancel this Ground Lease, and the expiration of the time
therein specified, if the default has not been cured in the meantime, or after
the commencement of suit, action or summary proceedings or of any other remedy,
or after a final order, warrant or judgment for the possession of the Property,
Brazos may demand, receive and collect any moneys payable hereunder, without in
any manner affecting such notice, proceedings, suit, action, order, warrant or
judgment; and any and all such
GROUND LEASE AGREEMENT - Page 27
moneys so collected shall be deemed to be payments on account for the use,
operation and occupation of the Property, or at the election of Brazos, on
account of Lessee's liability hereunder. Acceptance of the keys to any
Property, or any similar act, by Brazos, or any agent or employee, during the
term hereof, shall not be deemed to be an acceptance of a surrender of any
Property unless Brazos shall consent thereto in writing.
If, after an Event of Default shall have occurred, Lessee fails to
surrender promptly after written request by Brazos or converts or destroys any
Property, Lessee shall be liable to Brazos for all Basic Rent and Additional
Rent then due and payable with respect to such Property, all other amounts
payable under this Ground Lease, the Acquisition Cost of such Property as of the
date of such request, conversion or destruction and all losses, damages and
expenses (including, without limitation, attorneys' fees and expenses) sustained
by Brazos by reason of such Event of Default and the exercise of Brazos'
remedies with respect thereto.
If, after an Event of Default Brazos repossesses any Property,
notwithstanding any termination of this Ground Lease, Lessee shall be liable for
and Brazos may recover from Lessee all Basic Rent accrued and any Additional
Rent owing with respect to such Property to the date of such repossession, all
other amounts payable under this Ground Lease, and all losses, damages and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) sustained by Brazos by reason of such Event of Default and the
exercise of Brazos' remedies with respect thereto. In addition, Brazos may sell
Brazos' interest in any Property upon any terms that Brazos deems satisfactory,
free of any rights of Lessee or any person claiming through or under Lessee. In
the event of such sale, in addition to the amounts payable under the first
sentence of this paragraph, Brazos shall be entitled to recover from Lessee, as
liquidated damages, and not as a penalty, an amount equal to the Acquisition
Cost of any Property so sold, minus the sum of any Unearned Rent plus the net
proceeds of such sale (deducting from such Unearned Rent and the gross proceeds
of such sale any reasonable legal expenses, commissions, sales taxes or other
costs or expenses associated with such sale) received by Brazos; PROVIDED,
HOWEVER, if the proceeds of such sale plus any Unearned Rent are in excess of
the amount payable to Brazos pursuant hereto, such excess shall be the property
of Lessee.
Subject to the availability of such remedy under applicable law and subject
to the provisions of Section 13.2(a) above, Brazos may (i) sell all or any part
of the Property at public or private sale, as Brazos may determine, free and
clear of any rights of the Lessee and without any duty to account to the Lessee
with respect to such action or inaction or any proceeds with respect thereto
(except to the extent required by clause (ii) below if Brazos shall elect to
exercise its rights thereunder) in which event the Lessee's obligation to pay
Basic Rent hereunder for periods commencing after the date of such sale shall be
terminated or proportionately reduced, as the case may be; and (ii) if Brazos
shall so elect, demand that the Lessee pay to Brazos, and the Lessee shall pay
to Brazos, on the date of such sale, as liquidated damages for loss of a bargain
and not as a penalty (the parties agreeing that Brazos' actual damages would be
difficult to predict, but the aforementioned liquidated damages represent a
reasonable approximation of such amount) (in lieu of Basic Rent due for periods
commencing on or after the Basic Rent Payment Date coinciding with such date of
sale (or, if the sale date is not a Basic Rent Payment Date, the Basic Rent
Payment Date next preceding the date of such sale)), an amount equal to (A) the
excess, if any, of (1) the Acquisition Cost calculated as of such Basic Rent
Payment Date (including all Rent due and unpaid to and including such Basic Rent
Payment Date), over (2) the net proceeds of such sale, if any (that is, after
deducting all costs and expenses incurred by Brazos, the Agent and Assignees
incident to such conveyance, including, without limitation, repossession costs,
brokerage commissions, prorations, transfer taxes, fees and expenses for
counsel, title insurance fees, survey costs, recording fees, and any repair or
alteration costs); plus (B) any and all additional damages, costs and expense of
Brazos, the Agent and Assignees under the Ground Lease; plus (C) interest at the
overde rate specified in SECTION 6.3 hereof on the foregoing amount from such
Basic Rent Payment Date until the date of payment.
Brazos may exercise any other right or remedy that may be available to it
under applicable law, or proceed by appropriate court action (legal or
equitable) to enforce the terms hereof or to recover damages for the breach
hereof. Separate suits may be brought to collect any such damages for any
period(s), and such suits shall not in any manner prejudice the right of Brazos,
the Agent and Assignees to collect any such damages for any subsequent
period(s), or Brazos may defer any such suit until after the expiration of the
Lease Term, in which event such suit shall be deemed not to have accrued until
the expiration of the Lease Term.
In the event that a court of competent jurisdiction rules that this Ground
Lease constitutes a mortgage, deed of trust or other secured financing as is the
intent of the parties pursuant to SECTION 3.3, and subject to the availability
of such remedy under applicable law, then Brazos and the Lessee agree that the
Lessee hereby grants, bargains, sells,
GROUND LEASE AGREEMENT - Page 28
transfers, assigns and conveys unto the trustee named as such in the Lien
granted by Brazos to Agent, as trustee and herein referred to as "trustee",
and his successors (Brazos hereby reserving the right to from time to time,
with or without cause and at Lessor's sole discretion, by instrument in
writing, substitute a successor or successors to trustee, which instrument,
executed by Brazos duly acknowledged and recorded in the office of the
recorder of the county or counties where the Property is situated, shall be
conclusive proof of proper substitution of such successor, who shall,
without conveyance from trustee or any successor trustee to trustee, succeed
to all his title, estate, rights, powers and duties), in trust a lien and
security interest against all of Lessee's interest in and to the Property, to
have and to hold the Property, together with all and singularly the rights,
hereditaments, and appurtenances in any way appertaining or belonging
thereto, unto such trustee and such trustee's successor or substitute in such
trust, and such trustee's and its or his successors and assigns, in trust,
and that, upon the occurrence of any Event of Default such trustee, at the
direction of Brazos, may proceed with foreclosure, and in such event such
trustee, at the direction of Brazos, is hereby authorized and empowered, and
it shall be such trustee's special duty, upon such request of Brazos, acting
upon a request from the Agent or Assignees, to sell the Property, or any part
thereof, to the highest bidder or bidders for cash or credit, as directed by
Brazos, acting upon a request from the Agent or Assignees, at the location at
the county courthouse specified by the commissioner's court in the county in
the state wherein the Property then subject to the lien hereof is situated
or, if no such location is specified by the commissioner's court, then at the
location specified in such trustee's notice of such sale to the Lessee;
PROVIDED, that if the Property is situated in more than one county, then such
sale of the Property, or part thereof, may be made in any county in the state
wherein any part of the Property then subject to the lien hereof is situated.
Any such sale shall be made at public outcry between the hours of ten
o'clock (10:00) A.M. and four o'clock (4:00) P.M. on the first (1st) Tuesday
in any month. Written or printed notice of such sale shall be posted at the
courthouse door in the county, or if more than one, then in each of the
counties, wherein the Property then subject to the lien hereof is situated.
Such notice shall designate the county where the Property, or part thereof,
will be sold and the earliest time at which the sale will occur, and such
notice shall be posted at least twenty-one (21) days prior to the date of
sale. Such notice shall also be filed with the county clerk in the county,
or if more than one, then in each of the counties wherein the Property is
located. Trustee shall, at least twenty-one (21) days preceding the date of
sale, serve written notice of the proposed sale by certified mail on each
debtor obligated to pay the Acquisition Cost and other obligations secured
hereby according to the records of the Agent and Assignees. After such sale,
Brazos shall make to the purchaser or purchasers thereunder good and
sufficient assignments, deed, bills of sale, and other instruments, in the
name of Brazos, conveying the Property, or part thereof, so sold to the
purchaser or purchasers with general warranty of title by Brazos. Any
proceeds of any such sale shall be applied in accordance with applicable law.
The sale of a part of the Property shall not exhaust the power of sale, but
sales may be made from time to time until the Acquisition Cost and other
obligations secured hereby are paid and performed in full. It shall not be
necessary to have present or to exhibit at any such sale any of the personal
property. Upon the occurrence of a Lease Event of Default, Brazos, in lieu
of or in addition to exercising any power of sale hereinabove given, may
proceed by a suit or suits in equity or at law, whether for a foreclosure
hereunder, or for the sale of the Property, or against the Lessee on a
recourse basis for the Acquisition Cost, or the specific performance of any
covenant or agreement herein contained or in aid of the execution of any
power herein granted, or for the appointment of a receiver pending any
foreclosure hereunder or the sale of the Property, or for the enforcement of
any other appropriate legal or equitable remedy.
No remedy referred to in this SECTION 13.2 is intended to be exclusive,
but, subject to the provisions of Section 13.2(a) above, each shall be
cumulative and in addition to any other remedy referred to above or otherwise
available to Brazos at law or in equity, and the exercise in whole or in part by
Brazos of any one or more of such remedies shall not preclude the simultaneous
or later exercise by Brazos of any or all such other remedies, subject to the
provisions of Section 13.2(a) above. No waiver by Brazos of any Event of
Default hereunder shall in any way be, or be construed to be, a waiver of any
future or subsequent Event of Default.
With respect to the termination of this Ground Lease as to any Property as
a result of an Event of Default, Lessee hereby waives service of any notice of
intention to re-enter. Lessee hereby waives any and all rights to recover or
regain possession of any Property or to reinstate this Ground Lease as permitted
or provided by or under any statute, law or decision now or hereafter in force
and effect.
Section XIII.3. EVENTS OF PROPERTY TERMINATION. The occurrence of any of
the following shall constitute an Event of Property Termination with respect to
a Property:
GROUND LEASE AGREEMENT - Page 29
(a) UNSATISFACTORY TITLE. If at any time title to any Property
is not satisfactory to Brazos or Agent by reason of any Lien or other
defect not disclosed in writing or contained in the Title Policy for such
Property at the time of any advance (even though the same may have existed
at the time of any such advance), except the Permitted Encumbrances, and
such Lien, encumbrance or other defect would, in the reasonable judgment of
Lessee, have a material adverse effect on the Value or usefulness of the
Property and is not corrected to the satisfaction of Brazos and Agent
within one hundred eighty (180) days after written notice to Lessee unless
such defect would, in the reasonable judgment of Lessee, cause a loss or
forfeiture of title to a Property or the loss of priority of any Lien for
the benefit of Agent, in which case such defect shall be cured immediately
and prior to any such loss of title or priority.
(b) NON-COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. If Lessee
fails to comply with any requirement of any Governmental Authority with
respect to such Property and such non-compliance results, in the reasonable
judgment of Lessee, in a material adverse affect on the Value of the
Property or to contest such requirement by means of a Permitted Contest
under ARTICLE XVII (i) within thirty (30) days after notice in writing of
such requirement shall have been given to Lessee by such Governmental
Authority or by Brazos or Assignee, or (ii) if such requirement is of a
nature that it cannot be completely complied with within such 30-day
period, if Lessee shall fail after such notice either diligently to
commence complying with such requirement or to proceed thereafter with
reasonable diligence and in good faith to comply with such requirement;
PROVIDED, HOWEVER, that Lessee shall in any event comply with such
requirement prior to the date on which such Property may be seized or sold
as a result of such non-compliance.
(c) DEFAULT UNDER ACQUIRED GROUND LEASE. Lessee shall default
after the expiration of all applicable cure periods under an Acquired
Ground Lease or as may be allowed under local Law in the observance or
performance of any term, covenant or condition of the Acquired Ground Lease
relating to such Property on the part of Brazos, as tenant thereunder, to
be observed or performed, unless any such observance or performance shall
have been waived or not required by the landlord under the Acquired Ground
Lease, or if any one or more of the events referred to in the Acquired
Ground Lease shall occur which would cause the Acquired Ground Lease to
terminate without notice or action by the landlord thereunder or which
would entitle the landlord under the Acquired Ground Lease to terminate the
Acquired Ground Lease and the term thereof by the giving of notice to
Brazos, as tenant thereunder, or if the Acquired Ground Lease shall be
terminated or canceled for any reason or under any circumstance whatsoever,
or if any of the terms, covenants or conditions of the Acquired Ground
Lease shall in any manner be modified, changed, supplemented, altered or
amended in any respect without the consent of Brazos.
Section XIII.4. BRAZOS' RIGHT UPON EVENT OF PROPERTY TERMINATION. If any
Event of Property Termination with respect to a Property shall occur, Brazos
may, with Agent's approval, as liquidated damages and not as a penalty, require
Lessee to purchase such Property on the next Basic Rent Payment Date or on any
other date agreed upon by Brazos and Lessee at a price equal to the Acquisition
Cost for such Property (less any Unearned Rent) by giving written notice of such
required purchase or require Lessee to assume all obligations of Brazos under an
Acquired Ground Lease by giving written notice of such required assumption. Any
such notice shall be given no less than thirty (30) days in advance of the
required purchase date. In connection with any such purchase under this SECTION
13.4, on the Basic Rent Payment Date or any other date upon which such purchase
shall occur, Lessee shall pay to Brazos, in addition to such Acquisition Cost
payable, all Basic Rent payable and any Additional Rent and other amounts owing
hereunder with respect to such Property up to the date of sale. At the time of
such sale, Lessee shall be required to pay to Brazos the obligations, costs,
losses, damages, and expenses (including, without limitation, reasonable
attorneys' fees and expenses) sustained by Brazos by reason of such Event of
Property Termination and exercise of Brazos' rights under this SECTION 13.4.
Upon payment in full of all such amounts, Brazos shall transfer all of Brazos'
right, title and interest in and to the Property to Lessee free and clear of any
Lien created pursuant to the Credit Agreement.
ARTICLE XIV
LOSS OF OR DAMAGE TO PROPERTY
Section XIV.1. LESSEE'S RISK. Lessee hereby assumes all risk of loss of
or damage to Property, however caused. No loss of or damage to any Property
shall impair any obligation of Lessee under this Ground Lease, which
GROUND LEASE AGREEMENT - Page 30
shall continue in full force and effect with respect to any lost or damaged
Property. Notwithstanding anything to the contrary contained in this
Facilities Lease, Lessee does not assume the risk of loss or damage to
Properties caused by the gross negligence or willful misconduct of Brazos or
any Assignee.
Section XIV.2. REPAIR. In the event of damage of any kind whatsoever to
any Property (unless the same is determined by Lessee to be damaged beyond
repair as provided in SECTION 14.3 hereof) Lessee, at its own cost and expense,
but subject to the provisions of SECTION 9.4 hereof, shall place the same in
good operating order, repair, condition and appearance.
Section XIV.3. PROPERTY DAMAGED BEYOND REPAIR. If more than fifty percent
(50%) of a Property is unusable for sixty (60) days or more, or if the cost of
repair exceeds fifty percent (50%) of the Acquisition Cost, or if any Property
is seized, confiscated, rendered unfit for use or if any improvements thereon
are destroyed or damaged beyond repair (in the reasonable judgment of Lessee),
or if the use of the Property by Lessee or the use of any improvement by the
party entitled thereto in the ordinary course of business is prevented by the
act of any third person or persons or governmental instrumentality for a period
exceeding ninety (90) days (other than an act which is a Taking which is
substantial as described in SECTION 15.1 of this Ground Lease), or if the
Acquired Ground Lease applicable to such Property is terminated due to casualty,
or if such Property is attached (other than on a claim against Brazos as to
which Lessee is not obligated to indemnify Brazos) and the attachment is not
removed within ninety (90) days, or if a Taking which is substantial as
described in SECTION 15.1 shall occur, then in any such event, (i) Lessee shall
promptly notify Brazos and Assignee in writing of such event, (ii) on the Basic
Rent Payment Date following such event, unless such Basic Rent Payment Date
occurs within thirty (30) days of such event, in which case on the next Basic
Rent Payment Date or other date agreed to by Brazos and Lessee, Lessee shall pay
to Brazos an amount equal to the Acquisition Cost of such Property (after
deducting any Unearned Rent and any insurance proceeds received by Brazos in
respect of such event or the net amount after Brazos' expenses of proceeds to
Brazos from any award or sale made in connection with a Taking); PROVIDED that
insurance or net Taking proceeds, if any, received by Brazos in excess of the
Acquisition Cost of the affected Property (less any Unearned Rent) shall be paid
by Brazos to Lessee, (iii) the Lease Term or Renewal Term of such Property shall
continue until the date on which Brazos receives payment from Lessee of the
amount payable pursuant to this SECTION 14.3 and the Basic Rent and any
Additional Rent and other amounts then owing hereunder with respect to the
affected Property, and shall thereupon terminate with respect to the affected
Property and (iv) Brazos shall on such Basic Rent Payment Date or such other
date transfer title to such Property to Lessee free of any Lien created pursuant
to the Credit Agreement or created by Brazos contrary to the provisions of this
Ground Lease, and Lessee shall be subrogated to Brazos' rights in the affected
transaction. Notwithstanding the foregoing, if more than fifty percent (50%) of
a Property is unusable for sixty (60) days or more, or if the cost of repair
exceeds fifty percent (50%) of the Acquisition Cost, or if the use of any
Property by Lessee in the ordinary course of business is prevented by the act of
any third person or persons or governmental instrumentality for a period
exceeding ninety (90) days, and Lessee gives notice to Brazos agreeing that this
Lease shall remain in effect with respect to the affected Property
notwithstanding such conditions, and agrees to repair and restore the affected
Property to a good operating order, repair, condition and appearance, the
provisions of this SECTION 14.3 shall not apply.
ARTICLE XV
CONDEMNATION OF PROPERTY
Section XV.1. TAKING OF SUBSTANTIALLY ALL OF A PROPERTY. If Lessee or
Brazos shall receive notice that the use, occupancy or title to all or
substantially all of a Property is to be taken, requisitioned or sold in, by or
on account of eminent domain proceedings or other action by any person or
authority having the power of eminent domain (such events collectively referred
to as a "TAKING"), and such Taking is substantial, then the Lease Term or
Renewal Term shall terminate as provided in SECTION 14.3. A Taking shall be
deemed substantial if the remainder of the Property is unusable for Lessee's
ordinary business purposes or the Acquired Ground Lease applicable to such
Property is terminated as a result of such Taking.
Section XV.2. TAKING OF LESS THAN SUBSTANTIALLY ALL OF A PROPERTY. If
less than substantially all of a Property is subject to a Taking, then this
Ground Lease shall continue in effect as to the portion of the Property not
taken and Lessee, at its own cost and expense, but subject to the provisions of
SECTION 9.4 hereof, shall place the same in good operating order, repair,
condition and appearance. Brazos and Lessee each hereby waives any statutory or
common law
GROUND LEASE AGREEMENT - Page 31
right allowing either of them to petition any court to terminate this Ground
Lease in the event of a Taking of less than substantially all of the Property.
Section XV.3. GRANT OF EASEMENTS. So long as no Event of Default or Event
of Property Termination hereunder has occurred and is continuing beyond any
applicable grace or curative period, Lessee shall have the right (i) to grant
easements and dedications for the benefit of any Property or which, in the
reasonable judgment of Lessee, are deemed necessary for Lessee's use of the
Property; (ii) voluntarily to dedicate or convey, as required, portions of any
Property for road, highway and other public purposes as required in the good
faith judgment of Lessee in order to obtain or maintain the use of all or part
of a Property for the purposes intended by Lessee; and (iii) voluntarily to
execute petitions to have any Property or a portion thereof annexed to any
municipality or included within any utility, highway or other improvement or
service district. If Lessee receives any monetary consideration for such
easement or dedication, Lessee shall be entitled to retain such consideration,
subject to applying same to any restoration costs. Lessee shall have the right
and the power to exercise the above power to grant without the joinder of
Brazos, except that Brazos will cooperate, at Lessee's expense, as necessary and
join in the execution of any appropriate instrument. As a condition precedent
to Lessee's exercise of any of Lessee's powers under this Article, Lessee shall
give Brazos ten (10) days' prior written notice of the proposed action. Upon
the giving of such notice, Lessee shall be deemed to have certified that such
action will not adversely affect either the market value of such Property or the
use of such Property for its intended purpose, will not affect Brazos' or any
Assignee's ability to exercise its rights and remedies under this Ground Lease
and that Lessee undertakes to remain obligated under this Ground Lease to the
same extent as if Lessee had not exercised its powers under this Article and
Lessee will perform all obligations under such instrument and shall prepare all
required documents and provide all other instruments and certficates as Brazos
may reasonably request.
ARTICLE XVI
LEASEHOLD INTERESTS
The following provisions relate to each lease (an "ACQUIRED GROUND LEASE")
under which a leasehold interest in a Property is being subleased to Lessee
hereunder:
(a) This Ground Lease is subject and subordinate to all of the terms,
covenants, provisions, conditions and agreements contained in each Acquired
Ground Lease and the matters to which the Acquired Ground Lease is subject and
subordinate.
(b) Lessee hereunder covenants and agrees to perform and to observe all
of the terms, covenants, provisions, conditions and agreements of the underlying
Acquired Ground Lease on Brazos' part as lessee thereunder to be performed and
observed including, without limitation, payment of all rent, additional rent and
other amounts payable by Brazos as lessee under the Acquired Ground Lease, to
the end that all things shall be done which are necessary to keep unimpaired the
rights of Brazos as lessee under the Acquired Ground Lease. Each of the parties
hereto agree to promptly provide the other with copies of any notices or other
information received in writing from any landlord under an Acquired Ground
Lease.
(c) Lessee covenants and agrees that it will not do or cause to be done
or suffer or permit any act or thing to be done which would or might cause such
Acquired Ground Lease or the rights of Brazos as lessee thereunder to be
canceled, terminated or forfeited or which would make Lessee or Brazos liable
for any losses, costs, liabilities, damages, claims, penalties or other
expenses. Brazos covenants and agrees, subject to any limitations on its rights
and obligations hereunder, that it will not do or cause to be done or knowingly
suffer or knowingly permit any act or thing to be done without notice to Lessee
which would or might cause such Acquired Ground Lease or the rights of Brazos as
lessee thereunder to be canceled, terminated or forfeited or which would make
Lessee or Brazos liable for any losses, costs, liabilities, damages, claims,
penalties or other expenses.
(d) Lessee covenants and agrees pursuant to ARTICLE X hereof to
indemnify and hold harmless Brazos and any Assignee from and against any and all
liability, loss, damage, suits, penalties, claims and demands of every kind and
nature (including, without limitation, reasonable attorneys' fees and expenses)
by reason of Lessee's failure to comply with any Acquired Ground Lease or the
provisions of this ARTICLE XVI.
GROUND LEASE AGREEMENT - Page 32
(e) Brazos and Lessee agree that any services which are required to be
provided or repairs or restorations which are required to be made in accordance
with the provisions of such Acquired Ground Lease by the lessor thereunder will
be provided and made by such lessor, and Brazos shall have no obligation to
provide any such services or to make any such repairs or restorations. Brazos
shall in no event be liable to Lessee nor shall the obligations of Lessee
hereunder be impaired or the performance thereof excused because of any failure
or delay on the part of the lessor under the Acquired Ground Lease in providing
such services or making such restorations or repairs and such failure or delay
shall not constitute a basis for any claim against Brazos or any offset against
any amount payable to Brazos under this Ground Lease.
(f) If Brazos' interest under any Acquired Ground Lease shall expire,
terminate or otherwise be extinguished, the Ground Lease of the Property to
which such Acquired Ground Lease relates shall thereupon terminate as provided
in this paragraph. Upon such expiration, termination or extinguishment (i) on
the Basic Rent Payment Date next succeeding such event, Lessee shall pay to
Brazos an amount equal to the Acquisition Cost of such Property less any
Unearned Rent and (ii) the Lease Term or Renewal Term of such Property shall
continue until the date on which Brazos receives payment from Lessee of the
amount payable pursuant to this paragraph (f) and of all Basic Rent payable and
any Additional Rent and other amounts owing hereunder, and shall then terminate
upon the payment of such amounts and Brazos shall assign to Lessee the rights,
if any, of Brazos under such Acquired Ground Lease.
(g) The aggregate of the Acquisition Costs attributable to Properties
covered by an Acquired Ground Lease and with respect to which a leasehold
interest in such Property is being subleased to Lessee hereunder and the
Acquisition Costs (as defined in the Facilities Lease) attributable to
Facilities covered by an Acquired Facilities Lease (as defined in the Facilities
Lease) and with respect to which a leasehold interest in such Facility is being
subleased to Lessee hereunder (including any Acquisition Costs reasonably
expected to be advanced to cause the completion of such Facilities) shall not,
unless the Agent and the Majority Banks shall otherwise consent in writing,
exceed fifteen percent (15%) of the then current aggregate Acquisition Costs for
all Properties and Acquisition Costs (as defined in the Facilities Lease) for
all Facilities (including any Acquisition Costs reasonably expected to be
advanced to cause the completion of any Facilities).
GROUND LEASE AGREEMENT - Page 33
ARTICLE XVII
PERMITTED CONTESTS
(a) Lessee shall not be required, nor shall Brazos have the right, to
pay, discharge or remove any tax, assessment, levy, fee, rent, charge, Lien or
encumbrance, or to comply or cause any Property to comply with any Legal
Requirements applicable to any Property or the occupancy, use or operation
thereof, so long as no Event of Default or Event of Property Termination exists
(and continues beyond any applicable grace or curative period) under this Ground
Lease with respect to any Property, and, in the opinion of Lessee's counsel,
Lessee shall have reasonable grounds to contest, and shall be diligently
contesting, the existence, amount, applicability or validity thereof by
appropriate proceedings, which proceedings (i) would not, in the reasonable
judgment of Lessee, subject any Property or any Basic Rent or any Additional
Rent to sale, forfeiture or loss, as a result of failure to comply therewith,
(ii) shall not affect the payment of any Basic Rent or any Additional Rent or
other sums due and payable hereunder, (iii) unless any criminal liability could
result from a failure to comply therewith, would not cause either Brazos or any
Assignee to incur civil liability which, in the sole judgment of Brazos or any
Assignee, is not adequately indemnified (Lessee's obligations under ARTICLE X of
this Ground Lease shall be deemed to be adequate indemnification if no Event of
Default, Event of Property Termination, Potential Default or Potential Property
Termination exists, and continues beyond any applicable grace or curative
period, and if such civil liability is reasonably likely to be less than
$1,000,000 per Property and $2,000,000 in the aggregate for all Properties),
(iv) shall be permitted under the provisions of the Acquired Ground Lease, if
any, on such Property, (v) if involving taxes, shall suspend the collection of
such taxes, and (vi) shall be permitted under and be conducted in accordance
with the provisions of any other instrument to which Lessee or the Property is
subject and shall not constitute a default thereunder. Lessee shall conduct all
such contests in good faith and with due diligence and shall promptly after the
final determination (including appeals) of such contest, pay and discharge all
amounts which shall be determined to be payable therein. Notwithstanding
anything in this paragraph (a) to the contrary, Lessee shall not be obligated to
actively contest any mechanics' or materialmens' Lien or claim which does not
exceed $500,000; PROVIDED that the failure to so contest does not violate
clauses (i)-(iv) or (vi) above; PROVIDED FURTHER, that such Lien is junior to
any Lien of an Assignee on such Property, and PROVIDED FURTHER, that Lessee
shall in any event diligently contest and defend against the enforcement of any
such Lien or claim in good faith and with due diligence and shall promptly,
after the final determination (including appeals of such contest), pay and
discharge all amounts which shall be determined to be payable therein.
(b) At least ten (10) days prior to the commencement thereof, Lessee
shall notify Brazos and Agent in writing of any such proceeding in which the
amount in contest exceeds $500,000, and shall describe such proceeding in
reasonable detail. If a taxing authority or subdivision thereof proposes an
additional assessment or levy of any tax for which Lessee is obligated to
reimburse Brazos under this Ground Lease, or if Brazos is notified of the
commencement of an audit or similar proceeding which could result in such an
additional assessment, then Brazos shall in a timely manner notify Lessee in
writing of such proposed levy or proceeding.
ARTICLE XVIII
MISCELLANEOUS
Section XVIII.1. SURVIVAL. All agreements, indemnities, representations
and warranties, and the obligation to pay Additional Rent contained in this
Ground Lease shall survive the expiration or other termination hereof.
Section XVIII.2. ENTIRE AGREEMENT. This Ground Lease and the Property
Leasing Records covering Property leased pursuant hereto and the instruments,
documents or agreements referred to herein constitute the entire agreement
between the parties and no representations, warranties, promises, guarantees or
agreements, oral or written, express or implied, have been made by any party
hereto with respect to this Ground Lease or the Property, except as provided
herein or therein.
Section XVIII.3. MODIFICATIONS. This Ground Lease may not be amended,
modified or terminated, nor may any obligation hereunder be waived orally, and
no such amendment, modification, termination or waiver shall be effective for
any purpose unless it is in writing and is signed by the party against whom
enforcement thereof is sought. A waiver on one occasion shall not be construed
to be a waiver with respect to any other occasion.
GROUND LEASE AGREEMENT - Page 34
Section XVIII.4. GOVERNING LAW. THIS GROUND LEASE SHALL WITH RESPECT TO
EACH PROPERTY IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH SUCH PROPERTY IS LOCATED,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. ANY PROVISION
OF THIS GROUND LEASE WHICH IS PROHIBITED BY LAW OR UNENFORCEABLE IN ANY
JURISDICTION SHALL, AS TO SUCH JURISDICTION, BE INEFFECTIVE TO THE EXTENT OF
SUCH PROHIBITION OR UNENFORCEABILITY WITHOUT INVALIDATING THE REMAINING
PROVISIONS HEREOF, AND THE PARTIES HERETO SHALL NEGOTIATE IN GOOD FAITH
APPROPRIATE MODIFICATIONS TO REFLECT SUCH CHANGES AS MAY BE REQUIRED BY LAW,
AND, AS NEARLY AS POSSIBLE, TO PRODUCE THE SAME ECONOMIC EFFECTS AS THE
PROVISION WHICH IS PROHIBITED OR UNENFORCEABLE; AND ANY SUCH PROHIBITION OR
UNENFORCEABILITY IN ANY JURISDICTION SHALL NOT INVALIDATE OR RENDER
UNENFORCEABLE SUCH PROVISION IN ANY OTHER JURISDICTION. TO THE EXTENT PERMITTED
BY APPLICABLE LAW, LESSEE AND BRAZOS HEREBY WAIVE ANY PROVISION OF LAW WHICH
RENDERS ANY PROVISION HEREOF PROHIBITED OR UNENFORCEABLE IN ANY RESPECT.
Section XVIII.5. NO OFFSETS. The obligations of Lessee to pay all amounts
payable pursuant to this Ground Lease (including specifically and without
limitation amounts payable due under ARTICLES VI and X hereof) shall be absolute
and unconditional under any and all circumstances of any character, and such
amounts shall be paid without notice, demand, defense, setoff, deduction or
counterclaim and without abatement, suspension, deferment, diminution or
reduction of any kind whatsoever, except as herein expressly otherwise provided.
The obligation of Lessee to lease and pay Basic Rent, Additional Rent or any
other amounts for any and all Property is without any warranty or
representation, express or implied, as to any matter whatsoever on the part of
Brazos or any Assignee or any Affiliate of either, or anyone acting on behalf of
any of them.
NEITHER BRAZOS NOR ANY ASSIGNEE NOR ANY AFFILIATE OF EITHER, NOR ANYONE
ACTING ON BEHALF OF ANY OF THEM, MAKES ANY REPRESENTATION OR WARRANTY OF ANY
KIND WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, AS TO THE
SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR USE, MERCHANTABILITY,
CONFORMITY TO SPECIFICATION, ENVIRONMENTAL CONDITION (INCLUDING THE PRESENCE OR
ABSENCE OF HAZARDOUS MATERIALS), OR ANY OTHER CHARACTERISTIC, OF ANY PROPERTY,
OR AS TO WHETHER ANY PROPERTY OR THE OWNERSHIP, USE, OCCUPANCY OR POSSESSION
THEREOF COMPLIES WITH ANY LAWS, RULES, REGULATIONS OR REQUIREMENTS OF ANY KIND.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, AS BETWEEN BRAZOS AND
LESSEE, ANY ASSIGNEE OR ANY INDEMNIFIED PERSON, AND TO THE EXTENT ALLOWED BY
LAW, LESSEE ASSUMES ALL RISKS AND WAIVES ANY AND ALL DEFENSES, SET-OFFS,
DEDUCTIONS, COUNTERCLAIMS (OR OTHER RIGHTS), EXISTING OR FUTURE, TO ITS
OBLIGATION TO PAY BASIC RENT, ADDITIONAL RENT AND ALL OTHER AMOUNTS PAYABLE
HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY RELATING TO:
(a) THE SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR USE,
MERCHANTABILITY, CONFORMITY TO SPECIFICATION, OR ANY OTHER QUALITY OR
CHARACTERISTIC OF ANY PROPERTY, LATENT OR NOT;
(b) ANY SET-OFF, COUNTERCLAIM, RECOUPMENT, ABATEMENT, DEFENSE OR OTHER
RIGHT TO WITHHOLD THE PAYMENT OF BASIC RENT, ADDITIONAL RENT OR OTHER AMOUNTS
HEREUNDER WHICH LESSEE MAY HAVE AGAINST BRAZOS, ANY ASSIGNEE, OR ANY INDEMNIFIED
PERSON FOR ANY REASON WHATSOEVER ARISING OUT OF THIS OR ANY OTHER TRANSACTION OR
MATTER;
(c) EXCEPT AS PROVIDED IN SECTION 7.5 OF THIS GROUND LEASE WITH RESPECT
TO CLAIMS UNDER A TITLE POLICY, ANY DEFECT IN TITLE OR OWNERSHIP OF ANY PROPERTY
OR ANY TITLE ENCUMBRANCE NOW OR HEREAFTER EXISTING WITH RESPECT TO THE PROPERTY;
GROUND LEASE AGREEMENT - Page 35
(d) ANY FAILURE OR DELAY IN DELIVERY OR ANY LOSS OR DESTRUCTION OF, OR
DAMAGE TO, ANY PROPERTY, IN WHOLE OR IN PART, OR CESSATION OF THE USE OR
POSSESSION OF ANY PROPERTY BY LESSEE FOR ANY REASON WHATSOEVER AND OF WHATEVER
DURATION, OR ANY CONDEMNATION, CONFISCATION, REQUISITION, SEIZURE, PURCHASE,
TAKING OR FORFEITURE OF ANY PROPERTY, IN WHOLE OR IN PART;
(e) ANY INABILITY OR ILLEGALITY WITH RESPECT TO THE USE, OWNERSHIP,
OCCUPANCY OR POSSESSION OF THE PROPERTY BY LESSEE;
(f) ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR PROCEEDING BY
OR AGAINST LESSEE, GUARANTOR OR BRAZOS;
(g) ANY FAILURE TO OBTAIN, OR EXPIRATION, SUSPENSION OR OTHER
TERMINATION OF, OR INTERRUPTION TO, ANY REQUIRED LICENSES, PERMITS, CONSENTS,
AUTHORIZATIONS, APPROVALS OR OTHER LEGAL REQUIREMENTS;
(h) THE INVALIDITY OR UNENFORCEABILITY OF THIS GROUND LEASE OR ANY
OTHER INFIRMITY HEREIN OR ANY LACK OF POWER OR AUTHORITY OF BRAZOS OR LESSEE TO
ENTER INTO THIS GROUND LEASE; OR
(i) ANY OTHER CIRCUMSTANCES OR HAPPENING WHATSOEVER, WHETHER OR NOT
SIMILAR TO ANY OF THE FOREGOING.
LESSEE HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHTS WHICH IT MAY NOW HAVE OR WHICH AT ANY TIME HEREAFTER MAY BE CONFERRED
UPON IT, BY STATUTE OR OTHERWISE, TO TERMINATE, CANCEL, QUIT, RESCIND OR
SURRENDER THIS GROUND LEASE EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS HEREOF.
Section XVIII.6. NON-RECOURSE. Brazos' obligations hereunder are intended
to be the limited obligations of the limited partnership and of the corporation
which is the general partner thereof. Notwithstanding any other provision of
this Ground Lease, Lessee agrees that the personal liability of Brazos and the
partners comprising Brazos shall be strictly and absolutely limited to the
Properties and no recourse for the payment of any amount due under this Ground
Lease or any other agreement contemplated hereby, or for any claim based thereon
or otherwise in respect thereof, shall be had against any other assets of the
limited partnership or of the general or of any limited partner of Brazos or any
incorporator, shareholder, officer, director or Affiliate (past, present or
future) of such general partner or limited partner, or of any Affiliate of
either, or of any successor corporation to any corporate general partner or any
corporate limited partner of Brazos, it being understood that Brazos is a
limited partnership entering into the transactions involved in and relating to
this Ground Lease on the express understanding aforesaid. Notwithstanding the
foregoing provisions of this SECTION 18.6, nothing contained in this Lease shall
be construed to prevent enforcement of specific performance of Brazos'
obligations hereunder or prevent recourse against Brazos (i) for Brazos' failure
to convey any Property to Lessee or its designee in accordance with the
provisions of this Ground Lease, or to obtain a release of any Lien created
pursuant to the Credit Agreement or created by Brazos contrary to the provisions
of this Ground Lease covering any Property so purchased, (ii) for Brazos'
failure to make an advance with respect to Acquisition Costs as and when Lessee
is entitled to such advance, (iii) for Brazos' failure to make insurance
proceeds or condemnation awards available to Lessee as and when Lessee is
entitled to such amounts pursuant to this Lease, (iv) for Brazos' breach of its
representations in SECTION 2.15 hereof, (v) for Brazos' failure to comply with
the provisions of SECTION 3.4(v), (vi) AND (vii), SECTION 18.10 or
SECTION 18.14, or (vi) for fraud perpetrated by Brazos.
Section XVIII.7. NOTICES.
(a) All notices, consents, requests, approvals, demands and other
communications provided for herein shall be in writing (including telecopy
communications) and mailed, telecopied, sent by overnight courier or delivered:
GROUND LEASE AGREEMENT - Page 36
If to Brazos:
Brazos Markets Development, L.P.
c/o Brazos Markets Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent or Assignee:
Chase Bank of Texas, National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Liddell, Sapp, Zivley, Hill & ▇▇▇▇▇▇, L.L.P.
3400 Chase Tower
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lessee:
▇▇▇▇▇▇▇'▇ Food & Drugs, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇'▇ Food Markets, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copies to:
Randall's Properties, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
GROUND LEASE AGREEMENT - Page 37
and
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
2300 First City Tower
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or, in the case of any party hereto, such other address or telecopy number as
such party may hereafter specify for such purpose by notice to the other parties
given in accordance with the provisions of this Section.
All communications shall be effective three Business Days after the date
when mailed by certified mail, return receipt requested postage prepaid to any
party at its address specified above, or upon receipt if telecopied to any party
to the telecopy number set forth above, or upon receipt if delivered personally
to any party at its address specified above.
A copy of each communication shall be sent to any Assignee at such address
as such Assignee may specify by written notice to Brazos and Lessee.
(b) Brazos shall within five (5) Business Days give to Lessee a copy of
all notices received by Brazos pursuant to any Credit Agreement or any Acquired
Ground Lease and any other notices received with respect to any Property.
Section XVIII.8. USURY. No provision of this Ground Lease, the Agreement
for Ground Lease or any other instrument relating to this Ground Lease, shall
require the payment or permit the collection of interest in excess of the
maximum non-usurious interest rate under applicable law (the "MAXIMUM RATE").
If any excess interest in such respect is so provided for, or shall be
adjudicated to be so provided for, the provisions of this SECTION 18.8 shall
govern, and neither Lessee nor its successors or assigns shall be obligated to
pay the amount of such interest to the extent it is in excess of the Maximum
Rate. In determining the Maximum Rate, any interest shall be spread over the
term of the Ground Lease to the extent permitted by applicable U.S. Federal or
state law, notwithstanding the actual time for the payment of any rent or other
amounts hereunder. It is expressly stipulated and agreed to be the intent of
Brazos and Lessee at all times to comply with applicable state law governing the
Maximum Rate or the amount of interest payable pursuant to this Ground Lease (or
applicable U.S. Federal law to the extent that it permits Brazos to contract
for, charge, take, reserve or receive a greater amount of interest than under
state law). If the applicable law is ever judicially interpreted so as to
render usurious any amount called for under the Ground Lease, the Agreement for
Ground Lease or any of the other documents relating to this Ground Lease or any
amount contracted for, charged, taken, reserved or received with respect to this
Ground Lease, or if Brazos' exercise of any option contained herein or in any
other document to accelerate the payment of amounts required hereunder results
in Lessee having paid any interest in excess of that permitted by applicable
law, then it is Brazos' and Lessee's intent that all excess amounts theretofore
collected by Brazos be credited on the remaining balance of payments due
hereunder (or, if all amounts due hereunder have been or would thereby be paid
in full, refunded to Lessee) and the provisions of this Ground Lease shall
immediately be deemed reformed and the amounts thereafter collectible hereunder
reduced, without the necessity of the execution of any new documents, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and under any other document relating
hereto. If at any time the amount of any interest for a year, would, but for
thi SECTION 18.8, exceed the amount of interest that would have been accrued
during such year if the Maximum Rate had from time to time been in effect, the
total interest payable for such year shall be limited to the amount that would
have been accrued if the Maximum Rate had from time to time been in effect, and
to the fullest extent permitted by applicable law, such excess shall be (i)
spread and allocated to the preceding periods in which the interest paid was
less than the interest that would have been accrued at the Maximum Rate or (ii)
spread and allocated to subsequent periods in which the total payments on
account of interest are less than the interest that would have accrued at the
Maximum Rate.
GROUND LEASE AGREEMENT - Page 38
Section XVIII.9. NO MERGER. There shall be no merger of this Ground Lease
or of the leasehold estate hereby created with the fee estate in any Property by
reason of the fact that the same person acquires or holds, directly or
indirectly, this Ground Lease or the leasehold estate hereby created or any
interest herein or in such leasehold estate as well as the fee estate in any
Property or any interest in such fee estate.
Section XVIII.10. SALE OR ASSIGNMENT BY BRAZOS. Brazos shall not sell,
mortgage or encumber or assign or otherwise grant any Lien upon its right,
title, interest or obligations in a Property or under this Ground Lease, except
that Brazos shall have the right to finance the acquisition and ownership of the
Property by selling, assigning or granting a security interest to the Assignee
pursuant to the Credit Documents in (i) its right, title and interest in this
Ground Lease and (ii) any or all amounts due from Lessee or any third party
under this Ground Lease as provided in the Credit Agreement; PROVIDED that any
such sale, assignment or grant of a security interest shall be subject to the
rights and interests of Lessee under this Ground Lease. In addition, Brazos
shall, at the time each Property or Facility is acquired by Brazos, execute and
deliver to Lessee a Deed of Trust and Security Agreement (each, a "PURCHASE DEED
OF TRUST") covering the applicable Property and/or Facility and granting to
Lessee a Lien covering such Property and/or Facility to secure performance of
Brazos' obligations pursuant to ARTICLE XII hereof. Each Purchase Deed of Trust
shall be subordinate to any Liens created pursuant to the Credit Documents in
favor of the Assignee covering the applicable Property and/or Facility.
Section XVIII.11. INCOME TAXES. Brazos agrees that it will not file any
Federal, state or local income tax returns during the Lease Term or Renewal
Term, if any, with respect to any Property that are inconsistent with the
treatment of Lessee as owner of such Property for Federal, state and local
income tax purposes.
Section XVIII.12. TRANSFER ON AS-IS BASIS. In connection with any sale of
Property pursuant to this Ground Lease, when Brazos transfers title, such
transfer shall be on an as-is, non-installment sale basis, without warranty by,
or recourse to, Brazos, but free of the Lien created by a Credit Agreement and
any Lien created by Brazos contrary to the terms of this Ground Lease.
Section XVIII.13. RIGHT TO PERFORM FOR LESSEE.
(a) If an Event of Default occurs by reason of the failure of Lessee to
perform or comply with any of its covenants or agreements contained in this
Ground Lease and continues beyond any applicable grace or curative period,
Brazos may, upon notice to Lessee but without waiving or releasing any
obligations or default, itself perform or comply with such covenant or
agreement, and the amount of the reasonable expenses of Brazos incurred in
connection with such performance or compliance, shall be payable by Lessee, not
later than ten (10) Business Days after written notice by Brazos.
(b) Without in any way limiting the obligations of Lessee hereunder,
Lessee hereby irrevocably appoints Brazos as its agent and attorney at the time
at which Lessee is obligated to deliver possession of any Property to Brazos, to
demand and take possession of such Property in the name and on behalf of Lessee
from whomsoever shall be at the time in possession thereof.
Section XVIII.14. MERGER, CONSOLIDATION OR SALE OF ASSETS.
(a) Brazos may not consolidate with or merge into any other Person or
sell all or substantially all of its assets to any Person.
(b) The terms and provisions of this Ground Lease shall be binding upon
and inure to the benefit of Brazos and Lessee and their respective successors
and assigns.
Section XVIII.15. RULE AGAINST PERPETUITIES. The parties hereto do not
intend any interest created by this Ground Lease to be a perpetuity or to be
subject to invalidation under the perpetuities rule, however, if the rule is to
be applied, then the perpetuities period shall be twenty-one (21) years after
the last to die of the currently living great-grandchildren and/or grandchildren
of ▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇.
GROUND LEASE AGREEMENT - Page 39
Section XVIII.16. REEXECUTION. The parties hereto shall reexecute this
Ground Lease to the extent necessary to make this Ground Lease enforceable under
the laws of any State in which a Property is located.
Section XVIII.17. PURCHASE OR SALE OF FACILITY. Notwithstanding anything
to the contrary herein, Lessee shall not have the right to purchase any Property
or arrange for the sale of any Property to a third party unless, simultaneous
with such purchase or sale, any Facility located on such Property is purchased
by Lessee or sold to a third party.
Section XVIII.18. SEVERABILITY. In case one or more provisions of this
Ground Lease shall be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected or impaired thereby.
Section XVIII.19. INTENTIONALLY OMITTED.
Section XVIII.20. EXECUTION IN COUNTERPARTS. This Ground Lease may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
Section XVIII.21. CONFIDENTIALITY. Brazos agrees to use reasonable
efforts to keep confidential all information of a confidential nature received
by it from Lessee pursuant to this Ground Lease; PROVIDED, HOWEVER, that such
information may be disclosed: (i) to directors, officers, employees, agents,
representatives or outside counsel of Brazos or of the Agent or any Bank or any
Affiliate of any Bank under any Credit Agreement; (ii) to any auditor,
government official or examiner; (iii) pursuant to any subpoena or other court
order or otherwise as may be required by applicable law; or (iv) to any assignee
of or participant in, or prospective assignee of or participant in, any Bank's
Advances or its Commitment or any part thereof under any Credit Agreement who,
in each case, agrees in writing to be bound by the terms of this Section; and
PROVIDED FURTHER, that no confidentiality obligation shall attach to any
information which (1) is or becomes publicly known, through no wrongful act on
the part of any Person who shall have received such information, (2) is
rightfully received by such Person from a third party, (3) is independently
developed by such Person, or (4) is explicitly approved for release by Lessee.
Section XVIII.22. WAIVER OF LANDLORD'S LIENS. Brazos hereby waives,
relinquishes and discharges all liens and rights (statutory, contractual,
consensual or otherwise) that Brazos may have on any personal property or trade
fixtures of Lessee of any kind, and all additions, accessions and substitutions
thereto. This clause shall be self-operative and no other instrument of waiver
need be required by any lienholder of such property or trade fixtures. In
confirmation of such waiver, however, Brazos shall, at Lessee's request, execute
promptly any appropriate certificate or instrument that Lessee may reasonably
request.
Section XVIII.23. BREAKAGE COSTS ARISING DUE TO BRAZOS DEFAULT.
Notwithstanding anything to the contrary set forth herein or in any of the other
Lease Documents, Lessee shall not have any obligation to pay or to reimburse
Brazos for the payment of breakage costs payable under Section 2.8 of the Credit
Agreement which arise solely by reason of an acceleration of the maturity of the
Obligations (as defined in the Credit Agreement) following an Event of Default
(as defined in the Credit Agreement) unless an Event of Default (as herein
defined) then exists hereunder which is continuing beyond the expiration of any
applicable grace or curative period.
Section XVIII.24. MEMORANDA OF LEASE. Brazos and Lessee each agrees,
promptly upon request by the other party hereto or by Agent, to execute
Memoranda of Lease in recordable form and otherwise in form and substance
satisfactory to Brazos, Lessee and Agent, for all Properties.
GROUND LEASE AGREEMENT - Page 40
IN WITNESS WHEREOF, Brazos and Lessee have caused this Ground Lease to be
executed and delivered by their duly authorized officers as of the day and year
first above written.
BRAZOS MARKETS DEVELOPMENT, L.P.,
a Delaware limited partnership
By: BRAZOS MARKETS MANAGEMENT, INC.,
a Delaware corporation, its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President
GROUND LEASE AGREEMENT - Page 41
▇▇▇▇▇▇▇'▇ FOOD & DRUGS, INC.,
a Delaware corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
▇▇▇ ▇▇▇▇▇▇, Senior Vice President-Finance,
Secretary and Treasurer
▇▇▇▇▇▇▇'▇ FOOD MARKETS, INC.,
a Texas corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-------------------------------------------
▇▇▇ ▇▇▇▇▇▇, Senior Vice President-Finance,
Secretary and Treasurer
GROUND LEASE AGREEMENT - Page ▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on the 8th day of September,
1998 by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President of BRAZOS MARKETS
MANAGEMENT, INC., a Delaware corporation, the General Partner of BRAZOS MARKETS
DEVELOPMENT, L.P., a Delaware limited partnership, on behalf of said corporation
and said limited partnership.
/s/ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
[SEAL]
GROUND LEASE AGREEMENT - Page 43
[SEAL]
STATE OF TEXAS )
)
COUNTY OF ▇▇▇▇▇▇ )
This instrument was acknowledged before me on the 14th day of September,
1998 by ▇▇▇ ▇▇▇▇▇▇, the Senior Vice President-Finance, Secretary and Treasurer
of ▇▇▇▇▇▇▇'▇ FOOD & DRUGS, INC., a Delaware corporation, on behalf of said
corporation.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
My commission expires: 9-17-02 Name of Notary Printed:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
[SEAL]
STATE OF TEXAS )
)
COUNTY OF ▇▇▇▇▇▇ )
This instrument was acknowledged before me on the 14th day of September,
1998 by ▇▇▇ ▇▇▇▇▇▇, the Senior Vice President-Finance, Secretary and Treasurer
of ▇▇▇▇▇▇▇'▇ FOOD MARKETS, INC., a Texas corporation, on behalf of said
corporation.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
My commission expires: Name of Notary Printed:
9-17-02 /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------ ---------------------------
GROUND LEASE AGREEMENT - Page 44
EXHIBIT A
SCHEDULE OF INSURANCE
1. All risk direct physical damage insurance for the Property and all
improvements, equipment and structures located thereon in the amounts and
subject to the deductibles and self-insurance provisions that are applicable
under like insurance coverage maintained by Lessee for similar property and
equipment owned, leased or held by Lessee and which are approved by Agent in its
reasonable discretion.
2. Commercial general liability insurance, including, without
limitation, coverage for legal liability against claims for bodily injury, death
or property damage, occurring on, in or about each Property and the
improvements, equipment and structures located thereon, in the minimum amount of
$1,000,000 combined single limit per occurrence for bodily injury and property
damage, $2,000,000 annual aggregate. Liability coverage may be subject to such
deductibles as may be usual and customary for Lessee to carry in its normal
course of business.
3. Workers' compensation and employers' liability insurance covering
Lessee's employees in such amount as is required by law, or if permissible under
state law, any legally appropriate alternative providing substantially similar
compensation for injured workers.
GROUND LEASE AGREEMENT - Page 45
