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EXHIBIT 10.2
FORM OF
MASTER AGREEMENT TO LEASE
BETWEEN
CPT OPERATING PARTNERSHIP L.P., LANDLORD
AND
WACKENHUT CORRECTIONS CORPORATION, TENANT
DATED: ____________, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE I
SEPARATE LEASE AGREEMENTS; PREMISES AND TERM ..................... 1
1.01 Separate Lease Agreements .......................... 1
1.02 Leased Property .................................... 2
1.03 Term ............................................... 2
1.04 Holding Over ....................................... 3
1.05 Surrender .......................................... 3
1.06 Affiliates as Tenant ............................... 3
ARTICLE II
RENT ............................................................. 4
2.01 Base Rent .......................................... 4
2.02 Additional Rent .................................... 4
2.03 Other Additional Rent .............................. 5
2.04 Place(s) of Payment of Rent; Direct Payment
of Other Additional Rent ........................... 5
2.05 Net Lease .......................................... 5
2.06 No Termination, Abatement, Etc ..................... 5
ARTICLE III
IMPOSITIONS AND UTILITIES ........................................ 6
3.01 Payment of Impositions ............................. 6
3.02 Definition of Impositions .......................... 7
3.03 Utilities .......................................... 8
3.04 Escrow of Impositions .............................. 8
3.05 Discontinuance of Utilities ........................ 9
ARTICLE IV
INSURANCE ........................................................ 9
4.01 Property Insurance ................................. 9
4.02 Liability Insurance ................................ 10
4.03 Insurance Requirements ............................. 10
4.04 Replacement Cost ................................... 11
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4.05 Blanket Policy ..................................... 11
4.06 No Separate Insurance .............................. 12
4.07 Waiver of Subrogation .............................. 12
4.08 Mortgages .......................................... 12
ARTICLE V
INDEMNITY; HAZARDOUS SUBSTANCES .................................. 13
5.01 Tenant's Indemnification ........................... 13
5.02 Hazardous Substances or Materials .................. 13
5.03 Limitation of Landlord's Liability ................. 15
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES ................................... 15
6.01 Use of Leased Property ............................. 15
6.02 Acceptance of Leased Property ...................... 16
6.03 Conditions of Use and Occupancy .................... 16
6.04 Financial Statements and Other Information ......... 16
ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS .............. 17
7.01 Maintenance ........................................ 17
7.02 Compliance with Laws ............................... 17
7.03 Required Alterations ............................... 17
7.04 Mechanics' Liens ................................... 18
7.05 Replacements of Fixtures ........................... 18
ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTY ......................... 19
8.01 Tenant's Right to Construct ........................ 19
8.02 Scope of Right ..................................... 19
8.03 Cooperation of Landlord ............................ 20
8.04 Commencement of Construction ....................... 20
8.05 Rights in Tenant Improvements ...................... 21
8.06 Personal Property .................................. 21
8.07 Requirements for Personal Property ................. 21
8.08 Signs .............................................. 23
8.09 Financings of Capital Additions to a Leased Property 23
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ARTICLE IX
DEFAULTS AND REMEDIES ............................................ 25
9.01 Events of Default .................................. 25
9.02 Remedies ........................................... 27
9.03 Right of SetOff .................................... 29
9.04 Performance of Tenant's Covenants .................. 29
9.05 Interest on Past Due Payments ...................... 29
9.06 Litigation; Attorneys' Fees ........................ 29
9.07 Remedies Cumulative ................................ 30
9.08 Escrows and Application of Payments ................ 30
9.09 Power of Attorney .................................. 30
ARTICLE X
DAMAGE AND DESTRUCTION ........................................... 31
10.01 General ............................................ 31
10.02 Landlord's Inspection .............................. 32
10.03 Landlord's Costs ................................... 32
10.04 Rent Abatement ..................................... 32
10.05 Substantial Damage During Lease Term ............... 32
10.06 Damage Near End of Term ............................ 33
ARTICLE XI
CONDEMNATION ..................................................... 33
11.01 Definition ......................................... 33
11.02 Apportionment of Compensation ...................... 33
11.03 Effect on Lease Obligations ........................ 34
11.04 Condemnation Caused by Default of Tenant ........... 35
11.05 Restoration of Premises ............................ 35
11.06 Landlord's Inspection .............................. 36
ARTICLE XII
TENANT'S RIGHT OF FIRST REFUSAL .................................. 36
12.01 Rights of First Refusal ............................ 36
12.02 Restriction on Exercise of Purchase Refusal Right .. 37
ARTICLE XIII
ASSIGNMENT AND SUBLETTING; ATTORNMENT ............................ 37
13.01 Prohibition Against Subletting and Assignment ...... 37
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13.02 Changes of Control ................................. 38
13.03 Operating/Service Agreements ....................... 38
13.04 Permitted Subleases ................................ 39
13.05 Assignment ......................................... 39
13.06 REIT Limitations ................................... 40
13.07 Attornment ......................................... 40
ARTICLE XIV
ARBITRATION ...................................................... 40
14.01 Controversies ...................................... 40
14.02 Appointment of Arbitrators ......................... 41
14.03 Arbitration Procedure .............................. 41
14.04 Expenses ........................................... 41
14.05 Enforcement of the Arbitration Award ............... 41
ARTICLE XV
QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT, ESTOPPEL CERTIFICATES ................................ 42
15.01 Quiet Enjoyment .................................... 42
15.02 Landlord Mortgages; Subordination .................. 42
15.03 Attornment; NonDisturbance ......................... 42
15.04 Estoppel Certificates .............................. 43
ARTICLE XVI
MISCELLANEOUS .................................................... 44
16.01 Notices ............................................ 44
16.02 Advertisement of Leased Property ................... 44
16.03 Landlord's Access .................................. 44
16.04 Entire Agreement ................................... 45
16.05 Severability ....................................... 45
16.06 Captions and Headings .............................. 45
16.07 Governing Law ...................................... 45
16.08 Memorandum of Lease ................................ 45
16.09 Waiver ............................................. 45
16.10 Binding Effect ..................................... 45
16.11 Authority .......................................... 45
16.12 Transfer of Permits, Etc ........................... 46
16.13 Modification ....................................... 46
16.14 Incorporation by Reference ......................... 46
16.15 No Merger .......................................... 46
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16.16 Laches ............................................. 46
16.17 Waiver of Jury Trial ............................... 47
16.18 Permitted Contests ................................. 47
16.19 Construction of Lease .............................. 47
16.20 Counterparts ....................................... 48
16.21 Relationship of Landlord and Tenant ................ 48
16.22 Landlord's Status as a REIT ........................ 48
16.23 Sale of Real Estate Assets ......................... 48
16.24 Arbitration ........................................ 48
16.25 Liability of General Partner of Landlord ........... 49
16.26 Warranties ......................................... 49
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MASTER AGREEMENT TO LEASE
This Master Agreement to Lease ("Agreement") dated as of the ______ day
of _______________________, 1998 by and between CPT OPERATING PARTNERSHIP L.P.,
a Delaware limited partnership ("Landlord") and WACKENHUT CORRECTIONS
CORPORATION, a Florida corporation ("Tenant").
RECITALS
A. Tenant has concurrently conveyed to Landlord various properties upon
which Tenant engages in the business of the development and management of
correctional and detention facilities, which properties are listed on Schedule A
attached hereto (the "Real Estate Conveyance"), and Landlord and Tenant desire
to provide for the lease by Landlord back to the Tenant of such properties; and
B. Landlord may from time to time lease additional properties that
Landlord may acquire to Tenant; and
C. Landlord and Tenant desire that each of the properties listed on
Schedule A and each additional property that Landlord may lease to Tenant shall
be the subject of a separate and individual lease agreement describing said
property, the rent and various other terms of said lease (each such lease
agreement referred to individually as a "Lease,"and the property that is the
subject of an individual Lease being referred to as "Leased Property"); and
D. Landlord and Tenant desire to set forth in this Agreement certain
terms and conditions applicable to all Leases of all Leased Properties, except
as any individual Lease with respect to a particular Leased Property may
otherwise provide;
NOW, THEREFORE, in consideration of the premises and of their respective
agreements and undertakings herein and in each Lease, Landlord and Tenant agree
as follows:
ARTICLE I
SEPARATE LEASE AGREEMENTS; PREMISES AND TERM
1.01 SEPARATE LEASE AGREEMENTS. Landlord and Tenant are concurrently
entering into a separate Lease for each of the Leased Properties referred to in
Schedule A hereto, and may in the future enter into one or more additional
separate Leases for one or more additional Leased Properties. Except as
specifically set forth in a separate Lease, or any amendment, supplement,
schedule or exhibit thereto, all of the provisions of this Agreement shall be
deemed to be
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incorporated into and made a part of each such separate Lease made between the
Landlord as landlord (or Lessor) and the Tenant as tenant (or Lessee) during the
term of such separate Lease.
1.02 LEASED PROPERTY. Except as set forth in an individual Lease
(including any schedule or exhibit thereto), the property that is the subject of
each Lease and that shall be considered as leased by the Landlord to the Tenant
thereunder shall consist of:
(a) The land described in the Lease, together with all rights,
titles, appurtenant interests, covenants, licenses, privileges and benefits
thereto belonging, and any easements, rights-of-way, rights of ingress or egress
or other interests in, on, or to any land, highway, street, road or avenue, open
or proposed, in, on, across, in front of, abutting or adjoining such real
property including, without limitation, any strips and gores adjacent to or
lying between such real property and any adjacent real property (the "Land");
(b) All buildings, improvements, structures and Fixtures now located
or to be located or to be constructed on the Land, including, without
limitation, landscaping, parking lots and structures, roads, drainage and all
above ground and underground utility structures, and other so-called
"infrastructure" improvements (the "Improvements");
(c) All equipment, machinery, fixtures, and other items of real
and/or personal property, including all components thereof, located in, on or
used in connection with, and permanently affixed to or incorporated into, the
Improvements, including, without limitation, all furnaces, boilers, heaters,
electrical equipment, electronic security equipment, heating, plumbing,
lighting, ventilating, refrigerating, incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, and similar systems,
all of which, to the greatest extent permitted by law, are hereby deemed to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto (collectively the "Fixtures");
(d) All furniture, equipment, inventory and other personal property
identified on Schedule B attached hereto or in an individual Lease and
incorporated herein or therein by reference (collectively, the "Personal
Property"). For purposes hereof, Personal Property shall not include certain
proprietary property of Tenant as set forth on Schedule C.
The Land, Improvements, Fixtures and Personal Property are hereinafter referred
to as the "Leased Property."
SUBJECT, HOWEVER, to the easements, liens, encumbrances, restrictions,
agreements, and other title matters listed or specifically referred to in any
individual Lease ("Permitted Exceptions").
1.03 TERM. The term of each Lease shall be as set forth in the individual
Lease for a particular Leased Property (the "Term").
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1.04 HOLDING OVER. Should Tenant, without the express consent of
Landlord, continue to hold and occupy the Leased Property after the expiration
of the Term, such holding over beyond the Term and the acceptance or collection
of Rent by the Landlord shall operate and be construed as creating a tenancy
from month-to-month and not for any other term whatsoever. During any such
holdover period, Tenant shall pay to Landlord for each month (or portion
thereof) Tenant remains in the Leased Property one hundred fifty percent (150%)
of the Base Rent in effect on the expiration date. Said month-to-month tenancy
may be terminated by Landlord by giving Tenant thirty (30) days written notice,
and at any time thereafter Landlord may re-enter and take possession of the
Leased Property.
1.05 SURRENDER. Subject to Landlord's option to purchase Tenant's
personal property in accordance with Section 8.06 and except as a result of (i)
Tenant Improvements and Capital Additions (as such terms are defined in Section
8.01 hereof); (ii) normal and reasonable wear and tear (subject to the
obligation of Tenant to maintain the Leased Property in good order and repair
during the Term); and (iii) casualty, taking or other damage and destruction not
required to be repaired by Tenant, Tenant shall surrender and deliver up the
Leased Property, including all Personal Property and replacements thereof
required to be provided by Tenant pursuant to the terms of Sections 8.06 and
8.07 hereof, at the expiration or termination of the Term broom clean, free of
all Tenant's personal property (but not the Personal Property), and in good
order and condition.
1.06 AFFILIATES AS TENANT. Subject to the Landlord's reasonable right to
approve the terms of any subleases in accordance with the provisions of Article
XIII and the receipt by Landlord of such certifications and opinions of counsel
as Landlord may reasonably require, any Affiliate of Wackenhut Corrections
Corporation ("Wackenhut Corrections") may become a party to this Lease as a
Tenant (each as "alternate Tenant") with respect to an individual Leased
Property, and shall be liable (jointly and severally with Wackenhut Corrections)
for all obligations of a Tenant. The foregoing notwithstanding, (a) Wackenhut
Corrections shall remain fully liable for all obligations as Tenant with respect
to each Leased Property, and (b) Wackenhut Corrections shall have the right to
give any notice, consent or waiver, or to exercise any option permitted under
any Lease and to agree to any amendment or modification with respect to this
Lease or any individual Lease with respect to a Leased Property, as and on
behalf of the Lessee with respect to each such Leased Property (and each
alternate Tenant hereby grants to Wackenhut Corrections an irrevocable power of
attorney, coupled with an interest, to take any such actions) and any other
party to this Lease or to any related and associated agreements shall be fully
protected in relying on any such actions taken by Wackenhut Corrections or (with
respect to the applicable Leased Property) by any alternate Tenant. For purposes
of this Section, "Affiliate" shall mean any Person directly or indirectly
controlling, controlled by, or under common control with Wackenhut Corrections.
A "Person" as used herein shall mean and include natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, trusts,
banks, trust companies, land trusts, business trusts or other organizations,
whether or not legal entities, and governments and agencies and political
subdivisions thereof.
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ARTICLE II
RENT
2.01 BASE RENT. Unless otherwise provided in an individual Lease, Tenant
shall pay Landlord annual base rent for each Leased Property that is the subject
of a Lease without notice, demand, set-off or counterclaim in advance, in lawful
money of the United States of America in the amount specified therein (the "Base
Rent") for the Term in consecutive monthly installments payable in advance on
the Commencement Date of each Lease and thereafter on the first day of each
month during the Term, in accordance with the Base Rent Schedule set forth in or
attached to each individual Lease.
2.02 ADDITIONAL RENT. Beginning on the first day of the first month of
each Lease Year following the first Lease Year, the Tenant shall pay Landlord an
amount (the "Additional Rent") equal to a percentage of the prior Lease Year's
Total Rent (for purposes hereof, "Total Rent" is Base Rent plus the Additional
Rent for the prior Lease Year) determined as follows:
(a) for the second and third Lease Year of each Lease, Tenant shall
pay as Additional Rent an amount equal to the greater of: (i) the product of the
prior Lease Year's Total Rent multiplied by three percent (3%) or (ii) the
product of the prior Lease Year's Total Rent multiplied by the percentage
increase in the Cost of Living Increase (as defined below) from the first day of
the first month of the prior Lease Year to the first day of the first month of
the Lease Year in question, subject to a maximum annual adjustment to Additional
Rent for any Lease Year of four percent (4%) of the prior Lease Year's Total
Rent.
(b) for the fourth Lease Year and each Lease Year thereafter, Tenant
shall pay as Additional Rent an amount equal to the product of the prior Lease
Year's Total Rent multiplied by the percentage increase in the Cost of Living
Increase (as defined below) from the first day of the first month of the prior
Lease Year to the first day of the first month of the Lease Year in question,
subject to a maximum annual adjustment to Additional Rent for any Lease Year of
four percent (4%) of the prior Lease Year's Total Rent.
(c) the term "Lease Year" for purposes hereof means for each Lease
the twelve (12) month period during the Term commencing on the Commencement Date
or, if the Commencement Date is not the first day of a calendar month,
commencing on the first day of the first calendar month following the
Commencement Date, and each successive twelve month period thereafter during the
Term.
(d) The term "Consumer Price Index" for the purposes hereof shall
mean the Consumer Price Index for All Urban Consumers (1982-84 = 100) U.S. City
Average, All Items, as published by the Bureau of Labor Statistics of the United
States Department of Labor (the "Index"). If the Index is changed so that base
years of other than 1982-84 are used, the Index used herein shall be converted
in accordance with the conversion factor published by the Bureau of Labor
Statistics
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of the United States Department of Labor. If the Index is discontinued or
otherwise revised during the Term, such other government index or computation by
which Landlord and Tenant agree that the Index has been replaced, shall be used
by Landlord in order to obtain substantially the same result as would be
obtained if the Index had not been discontinued or revised; provided, however,
that if Landlord and Tenant cannot, in good faith, agree upon such replacement
index, Landlord shall, in its reasonable discretion, select the replacement
index.
(e) In no event shall Total Rent for any Lease Year of the Term, as
determined pursuant to this Section 2.02, be less than the amount of Total Rent
paid by Tenant for the immediately prior Lease Year.
2.03 OTHER ADDITIONAL RENT. In addition to Base Rent and Additional Rent,
Tenant shall pay all other amounts, liabilities, obligations and Impositions (as
hereinafter defined ) which Tenant assumes or agrees to pay under this Agreement
or any Lease and any fine, penalty, interest, charge and cost which may be added
for nonpayment or late payment of such items (collectively the "Other Additional
Rent").
2.04 PLACE(S) OF PAYMENT OF RENT; DIRECT PAYMENT OF OTHER ADDITIONAL
RENT. The Base Rent, Additional Rent and Other Additional Rent are hereinafter
referred to as "Rent."Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Agreement, in any Lease or
by statute or otherwise in the case of nonpayment of the Rent. Tenant shall make
all payments of Base Rent and Additional Rent at Landlord's principal place of
business or as Landlord may otherwise from time to time direct in writing, and
all payments of Other Additional Rent directly to the person or persons to whom
such amount is owing at the time and times when such payments are due, and shall
give to Landlord such evidence of such direct payments as Landlord shall
reasonably request.
2.05 NET LEASE. Each Lease shall be deemed and construed to be an
"absolute net lease" or "triple net lease,"and Tenant shall pay all Rent,
Impositions, and other charges and expenses in connection with each Leased
Property throughout the Term, without abatement, deduction or set-off.
2.06 NO TERMINATION, ABATEMENT, ETC. Except as otherwise specifically
provided in this Agreement or a particular Lease, Tenant shall remain bound by
this Agreement or such Lease in accordance with its terms. Except as otherwise
specifically provided in this Agreement or a particular Lease, Tenant shall not,
without the prior written consent of Landlord, modify, surrender or terminate
the Agreement or such Lease, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent. Except
as specifically provided in this Agreement or a particular Lease, the
obligations of Landlord and Tenant shall not be affected by reason of (i) the
lawful or unlawful prohibition of, or restriction upon, Tenant's use of the
Leased Property, or any part thereof, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title; (ii) any claim which Tenant has or might have against Landlord
or by reason of any default or breach of any warranty by Landlord under this
Agreement or a particular Lease or any other agreement between Landlord and
Tenant, or to which
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Landlord and Tenant are parties; (iii) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceeding affecting Landlord or any assignee or transferee of
Landlord; or (iv) any other cause, whether similar or dissimilar to any of the
foregoing, other than a discharge of Tenant from any such obligations as a
matter of law. Except as otherwise specifically provided in this Agreement or a
particular Lease, and to the maximum extent permitted by law, Tenant hereby
specifically waives all rights, including but not limited to any rights under
any statute relating to rights of tenants in any state in which any Leased
Property is located, arising from any occurrence whatsoever, which may now or
hereafter be conferred upon it by law (a) to modify, surrender or terminate any
Lease or quit or surrender the Leased Property or any portion thereof; or (b)
entitling Tenant to any abatement, reduction, suspension or deferment of the
Rent or other sums payable by Tenant hereunder. The obligations of Landlord and
Tenant hereunder shall be separate agreements and the Rent and all other sums
shall continue to be payable in all events unless the obligations to pay the
same shall be terminated pursuant to the express provisions of this Agreement or
a particular Lease or by termination of this Agreement or a particular Lease
other than by reason of an Event of Default.
ARTICLE III
IMPOSITIONS AND UTILITIES
3.01 PAYMENT OF IMPOSITIONS. Subject to the adjustments set forth herein,
Tenant shall pay, as Other Additional Rent, all Impositions (as hereinafter
defined) that may be levied or become a lien on the Leased Property or any part
thereof at any time (whether prior to or during the Term), without regard to
prior ownership of said Leased Property, before the same becomes delinquent.
Tenant shall furnish to Landlord on an annual basis copies of official receipts
or other satisfactory proof evidencing such payments. Tenant's obligation to pay
such Impositions shall be deemed absolutely fixed upon the date such Impositions
become a lien upon the Leased Property or any part thereof. Tenant, at its
expense, shall prepare and file all tax returns and reports in respect of any
Imposition as may be required by governmental authorities, provided, Landlord
shall be responsible for the preparation and filing of any such tax returns or
reports in respect of any real or personal property owned by Landlord. Tenant
shall be entitled to any refund due from any taxing authority if no Event of
Default (as hereinafter defined) shall have occurred hereunder and be
continuing. Landlord shall be entitled to any refund from any taxing authority
if an Event of Default has occurred and is continuing. Any refunds retained by
Landlord due to an Event of Default shall be applied as provided in Section
9.08. Landlord and Tenant shall, upon request of the other, provide such data as
is maintained by the party to whom the request is made with respect to the
Leased Property as may be necessary to prepare any required returns and reports.
In the event governmental authorities classify any property covered by this
Lease as personal property, Landlord and Tenant shall file all personal property
tax returns in such jurisdictions where it may legally so file with respect to
their respective owned personal property. Landlord, to the extent it possesses
the same, and Tenant, to the extent it possess the same, will provide the other
party, upon request, with cost and depreciation records necessary for filing
returns for any property so classified as personal
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property. Where Landlord is legally required to file personal property tax
returns, Tenant will be provided with copies of assessment notices indicating a
value in excess of the reported value in sufficient time for Tenant to file a
protest. Tenant may, upon notice to Landlord, at Tenant's option and at Tenant's
sole cost and expense, protest, appeal, or institute such other proceedings as
Tenant may deem appropriate to effect a reduction of real estate or personal
property assessments and Landlord, at Tenant's expense as aforesaid, shall fully
cooperate with Tenant in such protest, appeal, or other action. Tenant shall
provide Landlord copies of all materials filed or presented in connection with
any such proceeding. Tenant shall promptly reimburse Landlord for all personal
property taxes paid by Landlord upon receipt of xxxxxxxx accompanied by copies
of a xxxx therefor and payments thereof which identify the personal property
with respect to which such payments are made. Impositions imposed in respect to
the tax-fiscal period during which the Term commences and terminates shall be
adjusted and prorated between Landlord and Tenant on a per diem basis, with
Tenant being obligated to pay its pro rata share from and including the
Commencement Date to and including the expiration or termination date of the
Term, whether or not such Imposition is imposed before or after such
commencement or termination, and Tenant's obligation to pay its prorated share
thereof shall survive such termination.
Tenant shall also pay to Landlord a sum equal to the amount which
Landlord may be caused to pay of any privilege tax, sales tax, gross receipts
tax, rent tax, occupancy tax or like tax (excluding any income tax payable with
respect to Landlord's business operations), hereinafter levied, assessed, or
imposed by any federal, state, county or municipal governmental authority, or
any subdivision thereof, upon or measured by rent or other consideration
required to be paid by Tenant under this Agreement.
3.02 DEFINITION OF IMPOSITIONS. "Impositions" means, collectively, (i)
taxes (including without limitation, all real estate and personal property ad
valorem (whether assessed as part of the real estate or separately assessed as
unsecured personal property, sales and use, business or occupation, single
business, gross receipts, transaction, privilege, rent or similar taxes, but not
including income or franchise or excise taxes payable with respect to Landlord's
receipt of Rent); (ii) assessments (including without limitation, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed within the
Term); (iii) ground rents, water, sewer or other rents and charges, excises, tax
levies, and fees (including without limitation, license, permit, inspection,
authorization and similar fees); (iv) to the extent they may become a lien on
the Leased Property all taxes imposed on Tenant's operations of the Leased
Property including without limitation, employee withholding taxes, income taxes
and intangible taxes; (v) any taxes arising out of or incurred as a result of
any sale, transfer, assignment or other disposition by Tenant of its interest in
the Leased Property or this Agreement, whether or not permitted under this
Agreement; and (vi) all other governmental charges, in each case whether general
or special, ordinary or extraordinary, or foreseen or unforseen, of every
character in respect of the Leased Property or any part thereof and/or the Rent
(including all interest and penalties thereon due to any failure in payment by
Tenant), which at any time prior to, during or in respect of the Term hereof may
be assessed or imposed on or in respect of or be a lien upon (a) Landlord or
Landlord's interest in the Leased Property or any part thereof; (b) the Leased
Property
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or any part thereof or any rent therefrom or any estate, right, title or
interest therein; or (c) any occupancy, operation, use or possession of, or
sales from, or activity conducted on, or in connection with the Leased Property
or the leasing or use of the Leased Property or any part thereof. Tenant shall
not, however, be required to pay (i) any tax based on net income (whether
denominated as a franchise or capital stock or other tax) imposed on Landlord;
or (ii) any income, franchise, transfer, documentary stamp, intangible, gross
receipts, inheritance, devolution, gift, estate, payroll, stamp act, or
reassessment or supplemental assessments of ad valorem real or personal property
taxes due to the sale, transfer, assignment, or other disposition of the title,
estate or interest of Landlord in the Leased Property or this Agreement;
provided, however, that if any tax, assessment, tax levy or charge which Tenant
is obligated to pay pursuant to the first sentence of this definition and which
is in effect at any time during the Term hereof is totally or partially
repealed, and a tax, assessment, tax levy or charge set forth in clause (i) or
(ii) immediately above is levied, assessed or imposed expressly in lieu thereof
Tenant shall then pay such tax, levy, or charge set forth in said clause (i) or
(ii).
3.03 UTILITIES. Tenant shall contract for, in its own name, and will pay,
as Other Additional Rent all taxes, assessments, charges/deposits, and bills for
utilities, including without limitation charges for water, gas, oil, sanitary
and storm sewer, electricity, telephone service, trash collection, and all other
utilities which may be charged against the occupant of the Improvements during
the Term. Tenant shall at all times maintain that amount of heat necessary to
ensure against the freezing of water lines. Tenant hereby agrees to indemnify
and hold Landlord harmless from and against any liability or damages to the
utility systems and the Leased Property that may result from Tenant's failure to
maintain sufficient heat in the Improvements.
3.04 ESCROW OF IMPOSITIONS. In the event Tenant persistently fails to
timely pay Impositions with respect to any Leased Facility, then, upon thirty
(30) days written notice from Landlord to Tenant, Tenant shall thereafter
deposit with Landlord on the first day of each month during the remaining Term
hereof and any extended Term, a sum equal to one-twelfth (1/12th) of the
Impositions assessed against such Leased Property which sums shall be used by
Landlord toward payment of such Impositions. If, at the end of any applicable
tax year, any such funds held by Landlord are insufficient to make full payment
of taxes or other Impositions for which such funds are held, Tenant, on demand,
shall pay to Landlord any additional funds necessary to pay and discharge the
obligations of Tenant pursuant to the provisions of this section. If, however,
at the end of any applicable tax year, such funds held by Landlord are in excess
of the total payment required to satisfy taxes or other Impositions for which
such funds are held, Landlord shall apply such excess amounts to Tenant's tax
and Imposition escrow fund for the next tax year. If any such excess exists
following the expiration or earlier termination of any Lease, and subject to
Section 9.08 below, Landlord shall promptly refund such excess amounts to
Tenant. The receipt by Landlord of the payment of such Impositions by and from
Tenant shall only be as an accommodation to Tenant and the taxing authorities,
and shall not be construed as rent or income to Landlord, Landlord serving, if
at all, only as a conduit for delivery purposes. All such deposits by Tenant
shall be held in an interest-bearing account with one or more national banks
having total assets of not less than $1,000,000,000, with all interest thereon
accruing in favor of Tenant. In lieu of making escrow
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deposits as aforesaid, Tenant may elect to provide Landlord with a letter of
credit, or a payment bond, in the face amount of one year's Impositions on the
subject Leased Property, issued by a national bank or reputable bonding or
surety company, in all respects reasonably acceptable to Landlord. Said letter
of credit or payment bond shall be drawable or callable, as the case may be,
upon Tenant's failure to timely pay any such Impositions, for the sole purpose
of providing the funds necessary to pay such Impositions, and shall otherwise be
in form and substance reasonably satisfactory to Landlord.
For purposes hereof, "persistently fails to timely pay Impositions" shall
mean failure to timely pay any Imposition with respect to any Leased Premises in
any two (2) Lease Years in any five (5) consecutive Lease Year Period,
notwithstanding Tenant's subsequent payment of such Impositions.
3.05 DISCONTINUANCE OF UTILITIES. Landlord will not be liable for damages
to person or property or for injury to, or interruption of, business for any
discontinuance of utilities nor will such discontinuance in any way be construed
as an eviction of Tenant or cause an abatement of Rent or operate to release
Tenant from any of Tenant's obligations under this Lease.
ARTICLE IV
INSURANCE
4.01 PROPERTY INSURANCE. Tenant shall, at Tenant's expense, keep the
Improvements, Fixtures, and other components of the Leased Property insured
against the following risks:
(a) Loss or damage by fire, vandalism and malicious mischief,
earthquake, sprinkler leakage and all other physical loss perils commonly
covered by "All Risk" insurance in an amount not less than one hundred percent
(100%) of the then full replacement cost thereof (as hereinafter defined). Such
policy shall include an agreed amount endorsement if available at a reasonable
cost. Such policy shall also include endorsements for contingent liability for
operation of building and zoning laws, demolition costs, and increased cost of
construction.
(b) Loss or damage by explosion of steam boilers, pressure vessels,
or similar apparatus, now or hereafter installed on the Leased Property, in
commercially reasonable amounts acceptable to Landlord.
(c) Loss of rent under a rental value or business interruption
insurance policy covering risk of loss during the first six (6) months of
reconstruction necessitated by the occurrence of any hazards described in
Sections 4.01(a) or 4.01(b), above, and which causes an abatement of Rent as
provided in Article X hereof, in an amount sufficient to prevent Landlord or
Tenant from becoming a co-insurer, containing endorsements for extended period
of indemnity and premium
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adjustment, and written with an agreed amount clause, if the insurance provided
for in this clause (c) is available.
(d) If the Land is located in whole or in part within a designated
flood plain area, loss or damage caused by flood in commercially reasonable
amounts acceptable to Landlord.
(e) Loss or damage commonly covered by blanket crime insurance
including employee dishonesty, loss of money orders or paper currency,
depositor's forgery, and loss of property accepted by Tenant for safekeeping, in
commercially reasonable amounts acceptable to Landlord.
(f) In connection with any repairs or rebuilding by Tenant under
Article X hereof, Tenant shall maintain (or cause its contractor to maintain)
appropriate builder's risk insurance covering any loss or casualty to the
subject Improvements during the course of such repairs or rebuilding.
4.02 LIABILITY INSURANCE. Tenant shall, at Tenant's expense, maintain
liability insurance against the following:
(a) Claims for personal injury or property damage commonly covered
by comprehensive general liability insurance with endorsements for blanket,
contractual, personal injury, owner's protective liability, real property, fire
damage, legal liability, broad form property damage, and extended bodily injury,
with commercially reasonable amounts for bodily injury and property damage
acceptable to Landlord, but with a combined single limit of not less than Five
Million Dollars ($5,000,000.00) per occurrence and Ten Million Dollars
($10,000,000.00) in the aggregate. At Landlord's request, such $5,000,000.00 and
$10,000,000.00 minimum requirements shall be increased by up to four percent
(4%) per year.
(b) Claims commonly covered by worker's compensation insurance for
all persons employed by Tenant on the Leased Property. Such worker's
compensation insurance shall be in accordance with the requirements of all
applicable local, state, and federal law.
4.03 INSURANCE REQUIREMENTS. The following provisions shall apply to all
insurance coverages required hereunder:
(a) The carriers of all policies shall have a Best's Rating of
"A-"or better and a Best's Financial Category of XII or larger and shall be
authorized to do insurance business in the state in which the Leased Property is
located.
(b) Tenant shall be the "named insured" and Landlord and any
mortgagee of Landlord shall be an "additional named insured" on each liability
insurance policy required under Section 4.01, except that if such coverage is
under a blanket policy, Landlord and its mortgagee shall each be designated an
"additional named insured" only with respect to the particular Leased
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Property covered under any such policy or policies and the operations and
services conducted thereon. Landlord and any mortgagee of Landlord shall be
designated "loss payee" or "mortgagee loss payee" on each property insurance
policy required under Section 4.02 except that if such coverage is under a
blanket insurance policy, each shall be designated a "loss payee" or "mortgagee
loss payee" only with respect to the particular Leased Property covered
thereunder.
(c) Tenant shall deliver to Landlord certificates or policies
showing the required coverages and endorsements. The policies of insurance shall
provide that the policy may not be canceled or not renewed, and no material
change or reduction in coverage may be made, without at least thirty (30) days'
prior written notice to Landlord.
(d) The policies shall contain a severability of interest and/or
cross-liability endorsement, providing that the acts or omissions of Tenant will
not invalidate the Landlord's coverage, and providing that Landlord shall not be
responsible for payment of premiums.
(e) All loss adjustment shall require the written consent of
Landlord and Tenant, as their interests may appear.
(f) At least ten (10) days prior to the expiration of each policy,
Tenant shall deliver to Landlord a certificate showing renewal of such policy
and payment of the annual premium therefor.
Landlord shall have the right to review the insurance coverages required
hereunder with Tenant from time to time with respect to such insurance coverages
required hereunder from time to time, to obtain the input of third party
professional insurance advisors (at Landlord's expense) with respect to such
insurance coverages, and to consult with Tenant in Tenant's annual review and
renewal of such insurance coverages. All insurance coverages hereunder shall be
in such form, substance and amounts as are customary or standard in Tenant's
industry.
4.04 REPLACEMENT COST. The term "full replacement cost" means the actual
replacement cost thereof from time to time including increased cost of
construction, with no reductions or deductions. If, as reasonably determined by
Landlord after consultation with Landlord's third party professional insurance
advisors, there has been an increase in the replacement cost of the
Improvements, then, upon request of Landlord, Tenant shall, not later than
thirty (30) days after the anniversary of each applicable insurance policy,
adjust the amount of the replacement cost endorsement to reflect any such
increase. If Tenant makes any Permitted Alterations (as hereinafter defined) to
the Leased Property, Landlord may have such full replacement cost redetermined
at any time after such Permitted Alterations are made, regardless of when the
full replacement cost was last determined.
4.05 BLANKET POLICY. Tenant may carry the insurance required by this
Article under a blanket policy of insurance, provided that the coverage afforded
Tenant will not be reduced or
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diminished or otherwise be different from that which would exist under a
separate policy meeting all of the requirements of this Agreement.
4.06 NO SEPARATE INSURANCE. Tenant shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required in
this Article, or increase the amounts of any then existing insurance pertaining
to a particular Leased Property by securing an additional policy or additional
policies with respect to such Leased Property, unless all parties having an
insurable interest in the subject matter of the insurance, including Landlord
and any mortgagees, are included therein as additional named insureds or loss
payees, the loss is payable under said insurance in the same manner as losses
are payable under this Agreement, and such additional insurance is not
prohibited by the existing policies of insurance. Tenant shall immediately
notify Landlord of the taking out of such separate insurance or the increasing
of any of the amounts of the existing insurance by securing an additional policy
or additional policies. The term "mortgages" as used in this Agreement includes
Deeds of Trust and the term "mortgagees" includes trustees and beneficiaries
under a Deed of Trust.
4.07 WAIVER OF SUBROGATION. Each party hereto hereby waives any and every
claim which arises or may arise in its favor and against the other party hereto
during the Term or any extension or renewal thereof, for any and all loss of, or
damage to, any of its property located within or upon, or constituting a part
of, the Leased Property, which loss or damage is covered by valid and
collectible insurance policies, to the extent that such loss or damage is
recoverable under such policies. Said mutual waiver shall be in addition to, and
not in limitation or derogation of, any other waiver or release contained in
this Lease with respect to any loss or damage to property of the parties hereto.
Inasmuch as the said waivers will preclude the assignment of any aforesaid claim
by way of subrogation (or otherwise) to an insurance company (or any other
person), each party hereto agrees immediately to give each insurance company
which has issued to it policies of insurance, written notice of the terms of
said mutual waivers, and to have such insurance policies properly endorsed, if
necessary, to prevent the invalidation of said insurance coverage by reason of
said waivers, so long as such endorsement is available at a reasonable cost.
4.08 MORTGAGES. The following provisions shall apply if Landlord now or
hereafter places a mortgage on the Leased Property or any part thereof: (i)
Tenant shall obtain a standard form of mortgage clause insuring the interest of
the mortgagee; (ii) Tenant shall deliver evidence of insurance to such
mortgagee; (iii) loss adjustment shall require the consent of the mortgagee; and
(iv) Tenant shall obtain such other coverages and provide such other information
and documents as may be reasonably required by the mortgagee.
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ARTICLE V
INDEMNITY; HAZARDOUS SUBSTANCES
5.01 TENANT'S INDEMNIFICATION. Subject to Section 4.07 and other than for
circumstances involving Landlord's gross negligence or intentional misconduct,
Tenant hereby agrees to indemnify and hold harmless Landlord, its agents, and
employees from and against any and all demands, claims, causes of action, fines,
penalties, damages (including consequential damages), losses, liabilities
(including strict liability), judgments, and expenses (including, without
limitation, attorneys' fees, court costs, and the costs set forth in Section
9.06) incurred in connection with or arising from: (i) the use, condition,
operation or occupancy of each Leased Property; (ii) any activity, work, or
thing done, or permitted or suffered by Tenant in or about the Leased Property;
(iii) any acts, omissions, or negligence of Tenant or any person claiming under
Tenant, or the contractors, agents, employees, invitees, or visitors of Tenant
or any such person; (iv) any claim of any person incarcerated, held or detained
in the Leased Premises, including claims alleging breach or violation of such
person's civil or legal rights; (v) any breach, violation, or nonperformance by
Tenant or any person claiming under Tenant or the employees, agents,
contractors, invitees, or visitors of Tenant or of any such person, of any term,
covenant, or provision of this Agreement or any Lease or any law, ordinance, or
governmental requirement of any kind; (vi) any injury or damage to the person,
property or business of Tenant, its employees, agents, contractors, invitees,
visitors, or any other person entering upon the Leased Property under the
express or implied invitation of Tenant; and (vii) and any accident, injury to
or death of persons or loss of damage to any item of property occurring at the
Leased Property. If any action or proceeding is brought against Landlord, its
employees, or agents by reason of any such claim, Tenant, upon notice from
Landlord, will defend the claim at Tenant's expense with counsel reasonably
satisfactory to Landlord. In the event Landlord reasonably determines that its
interests and the interests of Tenant in any such action or proceeding are not
substantially the same and that Tenant's counsel cannot adequately represent the
interests of Landlord therein, Landlord shall have the right to hire separate
counsel in any such action or proceeding and the reasonable costs thereof shall
be paid for by Tenant.
5.02 HAZARDOUS SUBSTANCES OR MATERIALS. If the Leased Property was owned
or operated by Tenant prior to the date Landlord acquired such Leased Property,
then Tenant warrants and represents to Landlord as of the date of this Agreement
the following: (a) no Hazardous Materials (as hereinafter defined) have been
installed, used, generated, manufactured, treated, handled, refined, produced,
processed, stored or disposed of, or otherwise present in, on or under the
Property by or to Tenant's knowledge; (b) no activity has been undertaken on the
Leased Property by Tenant or to Tenant's knowledge which would cause (i) the
Leased Property to become a hazardous waste treatment, storage or disposal
facility within the meaning of, or otherwise bring the Leased Property within
the ambit of any Hazardous Materials Law (as hereinafter defined), (ii) a
release or threatened release of Hazardous Materials from the Leased Property
within the meaning of, or otherwise bring the Leased Property within the ambit
of, any Hazardous Materials Law or (iii) the discharge of Hazardous Materials
into any watercourse, body of surface or subsurface water or wetland, or the
discharge into the atmosphere of any Hazardous Materials which would require a
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permit under any Hazardous Materials Law; (c) no activity has been undertaken
with respect to the Leased Property by Tenant or to Tenant's knowledge which
would cause a violation or support a claim under any Hazardous Materials Law;
(d) no investigation, administrative order, litigation or settlement with
respect to any Hazardous Materials is in existence with respect to the Leased
Property, nor, to Tenant's knowledge, is any of the foregoing threatened; (e) no
notice has been received by Tenant from any entity, governmental body or
individual claiming any violation of any Hazardous Materials Law, or requiring
compliance with any Hazardous Materials Law, or demanding payment or
contribution for environmental damage or injury to natural resources; (f) Tenant
has not obtained and, to Tenant's knowledge, is not required to obtain, and
Tenant has no knowledge of any reason Landlord will be required to obtain, any
permits, licenses, or similar authorizations to occupy, operate or use the
Improvements or any part of the Leased Property by reason of any Hazardous
Materials Law. Notwithstanding the representations made herein, such
representations are and shall be deemed to be limited by the matters detailed in
any Phase I Preliminary Site Assessment or other environmental report obtained
by or provided to Landlord prior to the date of this Agreement.
During the Term, Tenant shall not, either with or without negligence,
permit the release or other escape onto or from the Leased Property of any
Hazardous Substances, or allow the storage or use of such substances or
materials on the Leased Property in any manner not sanctioned by law and by the
standards prevailing in the industry for the storage and use of such substances
or materials. Subject to the provisions of Section 16.03, Landlord or any
representatives or agents of Landlord may inspect the Leased Property from time
to time to determine compliance by Tenant with the environmental representations
and covenants set forth in this Section 5.02, and Tenant will cooperate with
such inspections.
Without limitation, "Hazardous Substances" for the purpose of this
Section 5.02 shall include any substances regulated by any local, state or
federal law relating to environmental conditions and industrial hygiene,
including, without limitation, the Resource Conservation and Recovery Act of
1976 ("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("XXXX"), the Hazardous Materials Transportation
Act, the Federal Water Pollution Control Act, the Clean Air Act, the Clean Water
Act, the Toxic Substances Control Act, the Safe Drinking Water Act, and all
similar federal, state and local environmental statutes, ordinances and the
regulations, orders, or decrees now or hereafter promulgated thereunder
(collectively, "Hazardous Materials Law"). Notwithstanding the foregoing, Tenant
anticipates using, storing and disposing of certain hazardous substances in
connection with operation of correctional or detention facilities which are not
in violation of the foregoing laws. Such substances include, but are not limited
to the following: medical wastes, diesel fuel, maintenance and janitorial
supplies, and waste from reprographic activities. Upon request by Landlord,
Tenant shall submit to Landlord annual reports regarding Tenant's use, storage,
and disposal of any of the foregoing materials, said reports to include
information regarding continued hazardous materials inspections, personal
interviews, and federal, state and local agency listings. In addition, Tenant
shall execute affidavits, representations and the like from time to time at
Landlord's request concerning Tenant's best
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knowledge and belief regarding the presence or absence of Hazardous Materials on
the Leased Property. Other than for circumstances involving Landlord's gross
negligence or intentional misconduct, Tenant shall indemnify and hold harmless
Landlord from and against all liabilities (including punitive damages), costs
and expenses (including reasonable attorneys' fees) imposed upon or asserted
against the Landlord or the Leased Property on account of any applicable
federal, state or local law, ordinance, regulation, order, permit, decree or
similar items relating to hazardous substances, human health or the environment
(collectively, "Environmental Laws") (irrespective of whether there has occurred
any violation of any Environmental Law ), in respect of the Leased Property,
including (a) liability for response costs and for costs of removal and remedial
action incurred by the United States Government, any state or local governmental
unit to any other person or entity, or damages from injury to or destruction or
loss of natural resources, including the reasonable costs of assessing such
injury, destruction or loss, incurred pursuant to any Environmental Law, (b)
liability for costs and expenses of abatement, investigation, removal,
remediation, correction or clean-up, fines, damages, response costs or penalties
which arise from the provisions of any Environmental Law, (c) liability for
personal injury or property damage arising under any statutory or common-law
tort theory, including damages assessed for the maintenance of a public or
private nuisance or for carrying on of a dangerous activity or (d) by reason of
a breach of an environmental representation or warranty given by Tenant to
Landlord.
5.03 LIMITATION OF LANDLORD'S LIABILITY. Landlord, its agents and
employees, will not be liable for any loss, injury, death, or damage (including
consequential damages) to persons, property, or Tenant's business occasioned by
theft, act of God, public enemy, injunction, riot, strike, insurrection, war,
court order, requisition, order of governmental body or authority, fire,
explosion, falling objects, steam, water, rain or snow, leak or flow of water
(including water from the elevator system), rain or snow from any Leased
Property or into any Leased Property or from the roof, street, subsurface or
from any other place, or by dampness or from the breakage, leakage, obstruction,
or other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, or lighting fixtures of the Leased Property, or from construction,
repair, or alteration of the Leased Property or from any acts or omissions of
any other occupant or visitor of the Leased Property, or from the presence or
release of any hazardous substance or material on or from the Leased Property or
from any other cause beyond Landlord's control.
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES
6.01 USE OF LEASED PROPERTY. Each Leased Property shall be used and
occupied exclusively as a correctional or detention facility together with uses
related or incidental to the operation of a correctional or detention facility
or required pursuant to any governmental operating agreement or sublease or any
other purpose for which the Leased Property is being used at the Commencement
Date of the Term, and for no other purpose without the prior written consent of
the Landlord. Tenant shall obtain and maintain all approvals, licenses, and
consents needed to use and
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operate each Leased Property for such purposes. Tenant shall promptly deliver to
Landlord complete copies of surveys, examinations, certification and licensure
inspections, compliance certificates, and other similar reports issued to Tenant
by any governmental agency for the use and occupancy of the Leased Property.
6.02 ACCEPTANCE OF LEASED PROPERTY. Except as otherwise specifically
provided in this Agreement or in any individual Lease, Tenant acknowledges that
(i) Tenant and its agents have had an opportunity to inspect the Leased
Property; (ii) Tenant has found the Leased Property fit for Tenant's use; (iii)
delivery of the Leased Property to Tenant is in an "as-is" condition; (iv)
Landlord is not obligated to make any improvements or repairs to the Leased
Property; and (v) the roof, walls, foundation, heating, ventilating, air
conditioning, telephone, sewer, electrical, mechanical, utility, plumbing, and
other portions of the Leased Property are in good working order. Tenant waives
any claim or action against Landlord with respect to the condition of the Leased
Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR
USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO
QUALITY OR THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
6.03 CONDITIONS OF USE AND OCCUPANCY. Tenant agrees that during the Term
it shall use and keep the Leased Property in a careful, safe and proper manner;
not injure, overload, deface, damage or otherwise commit any nuisance or suffer
any waste thereon; not use or occupy the Leased Property for any unlawful
purposes; not use or occupy the Leased Property or permit the same to be used or
occupied, for any purpose or business deemed extra hazardous on account of fire
or otherwise; keep the Leased Property in such repair and condition as may be
required by the local board of health, or other city, state or federal
authorities, free of all cost to Landlord; not permit any acts to be done which
will cause the cancellation, invalidation, or suspension of any insurance
policy; and permit Landlord and its agents to enter upon the Leased Property at
all reasonable times after notice to Tenant to examine the condition thereof.
6.04 FINANCIAL STATEMENTS AND OTHER INFORMATION. Within ten (10) days
following Tenant's filing of quarterly and annual reports with the Securities
and Exchange Commission, Tenant shall deliver to Landlord copies of such
reports. Tenant shall provide Landlord at the same time Tenant provides copies
of its quarterly and annual reports as aforesaid (or more often as may be
reasonably requested by Landlord in writing), the following additional financial
information for each calendar quarter hereafter, with respect to each Leased
Property: gross revenues, average occupancy rates and total cash flow (i.e.,
operating income plus depreciation and amortization plus Base Rent plus
Additional Rent hereunder). Tenant shall include, with the delivery of such
annual and quarterly reports, a certification of any officer of the Tenant as to
whether any Event of Default (as hereinafter defined) has occurred or is
continuing under a Lease or whether any event has occurred under a Lease which
would, with the lapse of time, giving of notice or both, constitute an Event of
Default. Tenant shall also deliver to Landlord such additional financial
information as
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Landlord may reasonably request, provided the same is of a type normally
maintained by Tenant or can be obtained without undue cost or burden on Tenant's
personnel and does not constitute information which Tenant reasonably determines
to be proprietary or confidential. Additionally, upon Landlord's request, Tenant
shall provide Landlord with copies of Tenant's annual capital expenditure
budgets for each Leased Property and any reports generated by Tenant regarding
maintenance and repairs of the Leased Property.
ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS
7.01 MAINTENANCE. Tenant shall maintain each Leased Property in good
order, repair and appearance, and repair each Leased Property, including without
limitation, all interior and exterior, structural and nonstructural repairs and
replacements to the roof, foundations, exterior walls, building systems, HVAC
systems, parking areas, sidewalks, water, sewer and gas connections, pipes, and
mains. Tenant shall pay as Other Additional Rent the full cost of maintenance,
repairs, and replacements. Tenant shall maintain all drives, sidewalks, parking
areas, and lawns on or about the Leased Property in a clean and orderly
condition, free of accumulations of dirt, rubbish, snow and ice. Tenant shall
permit Landlord or any representatives or agents of Landlord to inspect the
Leased Property as provided in Section 16.03 and shall implement all reasonable
suggestions of the Landlord as to the maintenance and replacement of the Leased
Property.
7.02 COMPLIANCE WITH LAWS. Tenant shall comply with all laws, ordinances,
orders, rules, regulations, and other governmental requirements relating to the
use, condition, or occupancy of each Leased Property, whether now or hereafter
enacted and in force including without limitation, (i) licensure requirements
for operation as a correctional or detention facility or any other use permitted
hereunder, (ii) requirements of any board of casualty insurance underwriters or
insurance service office for any other similar body having jurisdiction over the
Leased Property, and (iii) all zoning and building codes and Environmental Laws.
At Landlord's request, from time to time, Tenant shall deliver to Landlord
copies of certificates or permits evidencing compliance with such laws,
including without limitation, copies of the correctional or detention facility
licenses, certificates of occupancy and building permits. Tenant shall promptly
provide Landlord with copies of any notice from any governmental authority
alleging any non-compliance by Tenant or any Leased Property with any of the
foregoing requirements and such evidence as Landlord may reasonably require of
Tenant's remediation thereof. Tenant hereby agrees to defend, indemnify and hold
Landlord harmless from and against any loss, liability (including strict
liability), claim, damage (including consequential damages), cost and expense
(including attorneys' fees) resulting from any failure by Tenant to comply with
any laws, ordinances, rules, regulations, and other governmental requirements.
7.03 REQUIRED ALTERATIONS. Tenant shall, at Tenant's sole cost and
expense, make any additions, changes, improvements or alterations to each Leased
Property, including structural
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alterations, which may be required by any governmental authorities, including
those required to continue licensure requirements as a correctional or detention
facility, whether such changes are required by Tenant's use, changes in the law,
ordinances, or governmental regulations, defects existing as of the date of this
Lease, or any other cause whatsoever. Tenant shall provide prior written notice
to Landlord of any changes to each Leased Property pursuant to this Section 7.03
which involve changes to the structural integrity of such Leased Property or
materially affect the operational capabilities or rated capacity of the Leased
Property. All such additions, changes, improvements or alterations shall be
deemed to be a Tenant Improvement and shall comply with all laws requiring such
alterations and with the provisions of Section 8.01.
7.04 MECHANICS' LIENS. Tenant shall have no authority to permit or create
a lien against Landlord's interest in the Leased Property, and Tenant shall post
notices or file such documents as may be required to protect Landlord's interest
in the Leased Property against liens. Tenant hereby agrees to defend, indemnify,
and hold Landlord harmless from and against any mechanics' liens against the
Leased Property by reason of work, labor services or materials supplied or
claimed to have been supplied on or to the Leased Property. Tenant shall
immediately remove, bond-off, or otherwise obtain the release of any mechanics'
lien filed against the Leased Property. Tenant shall pay all expenses in
connection therewith, including without limitation, damages, interest, court
costs and reasonable attorneys' fees.
7.05 REPLACEMENTS OF FIXTURES. Tenant shall not remove Fixtures from any
Leased Property except to replace the Fixtures by other similar items of equal
quality and value. Items being replaced by Tenant may be removed and shall
become the property of Tenant and items replacing the same shall be and remain
the property of the Landlord. Tenant shall execute, upon written request from
Landlord, any and all documents necessary to evidence Landlord's ownership of
the Fixtures and replacements therefor. Tenant may finance replacements for the
Fixtures by equipment lease or by a security agreement and financing statement;
provided, however, that for any item of Fixtures or Personal Property having a
cost greater than or equal to Twenty Thousand Dollars ($20,000.00), Tenant may
not finance replacements by security agreement or equipment lease unless (i)
Landlord has consented to the terms and conditions of the equipment lease or
security agreement, including, without limitation, the amount to be financed and
the amortization schedule regarding the principal amount of any such financing;
(ii) the equipment lessor or lender has entered into a nondisturbance agreement
with the Landlord upon terms and conditions acceptable to Landlord, including
without limitation, the following: (a) Landlord shall have the right (but not
the obligation) to assume such security agreement or equipment lease upon the
occurrence of an Event of Default by Tenant under any Lease; (b) the equipment
lessor or lender shall notify Landlord of any default by Tenant under the
equipment lease or security agreement and give Landlord a reasonable opportunity
to cure such default; and (c) Landlord shall have the right to assign its rights
under the equipment lease, security agreement, or nondisturbance agreement; and
(iii) Tenant shall, within thirty (30) days after receipt of an invoice from
Landlord, reimburse Landlord for all costs and expenses incurred in reviewing
and approving the equipment lease, security agreement, and nondisturbance
agreement, including without limitation, reasonable attorneys' fees and costs.
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ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTY
8.01 TENANT'S RIGHT TO CONSTRUCT. During the Term of this Agreement, so
long as no Event of Default shall have occurred and be continuing as to the
Leased Property that is the subject of such improvements, Tenant may make
Capital Additions (as defined herein), or other alterations, additions, changes
and/or improvements to any Leased Property as deemed necessary or useful to
operate the Leased Property as a correctional or detention facility or other
approved use (the "Primary Intended Use") (individually, a "Tenant
Improvement,"or collectively, "Tenant Improvements"). "Capital Additions" shall
mean the construction of one or more new buildings or one or more additional
structures annexed to any portion of any of the Improvements on a particular
Leased Property, which are constructed on any parcel of land or portion of the
Land of a particular Leased Property during the Term of any individual Lease,
including the construction of a new floor, or the repair, replacement,
restoration, remodeling or rebuilding of the Improvements or any portion thereof
on any Leased Property which are not normal, ordinary or recurring to maintain
the Leased Property. Except as otherwise agreed to by Landlord in writing, any
such Tenant Improvement shall be made at Tenant's sole expense and shall become
the property of Landlord upon termination of this Lease. Unless made on an
emergency basis to prevent injury to person or property, Tenant will submit
plans to Landlord for Landlord's prior approval, such approval not to be
unreasonably withheld or delayed, for any Tenant Improvement which is not a
Capital Addition and which has a cost of more than $500,000 or a cost which,
when aggregated with the costs of all such Tenant Improvements for any
individual Leased Facility in the same Lease Year, would cause the total costs
of all such Tenant Improvements to exceed $1,000,000. Such $500,000 and
$1,000,000 amounts shall be increased by four percent (4%) per annum,
cumulatively for each subsequent Lease Year. Additionally, in connection with
any Tenant Improvement, including any Capital Addition, Tenant shall provide
Landlord with copies of any plans and specification therefor, Tenant's budget
relating thereto, any required government permits or approvals, any construction
contracts or agreements relating thereto, and any other information relating to
such Tenant Improvement as Landlord shall reasonably request.
8.02 SCOPE OF RIGHT. Subject to Section 8.01 herein and Section 7.03
concerning required alterations, at Tenant's cost and expense, Tenant shall have
the exclusive right to:
(a) seek any governmental approvals, including building
permits, licenses, conditional use permits and any certificates of need that
Tenant requires to construct any Tenant Improvement;
(b) erect upon the Leased Property such Tenant Improvements as
Tenant deems desirable including but not limited to new facilities or expansions
to existing facilities;
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(c) make additions, alterations, changes and improvements in
any Tenant Improvement so erected; and
(d) engage in any other lawful activities that Tenant
determines are necessary or desirable for the development of the Leased Property
in accordance with its Primary Intended Use;
provided, however, Tenant shall not make any Tenant Improvement which would, in
Landlord's reasonable judgment, impair the value or Primary Intended Use of any
Leased Property without Landlord's prior written consent and provided, further
that Tenant shall not be permitted to create a mortgage, lien or any other
encumbrance on any individual Leased Property without Landlord's prior written
consent.
8.03 COOPERATION OF LANDLORD. Landlord shall cooperate with Tenant and
take such actions, including the execution and delivery to Tenant of any
applications or other documents, reasonably requested by Tenant in order to
obtain any governmental approvals sought by Tenant which have either been
approved by Landlord or for which Landlord's approval is not required to
construct any Tenant Improvement within ten (10) business days following the
later of (a) the date Landlord receives Tenant's request together with all
information reasonably requested by Landlord regarding the Tenant's
Improvements, or (b) the date of delivery of any such application or document to
Landlord together with all information reasonably requested by Landlord
regarding the Tenant's Improvements, so long as the taking of such action,
including the execution of said applications or documents, shall be without cost
to Landlord (or if there is a cost to Landlord, such cost shall be reimbursed by
Tenant), and will not cause Landlord to be in violation of any law, ordinance or
regulation.
8.04 COMMENCEMENT OF CONSTRUCTION. Tenant agrees that:
(a) Tenant shall diligently seek all governmental approvals
relating to the construction of any Tenant Improvement;
(b) Once Tenant begins the construction of any Tenant
Improvement, Tenant shall diligently prosecute any such construction to
completion in accordance with applicable insurance requirements and the laws,
rules and regulations of all governmental bodies or agencies having jurisdiction
over the Leased Property;
(c) Landlord shall have the right at any time and from time to
time to post and maintain upon the Leased Property such notices as may be
necessary to protect Landlord's interest from mechanics' liens, materialmen's
liens or liens of a similar nature;
(d) Tenant shall not suffer or permit any mechanics' liens or
any other claims or demands arising from the work of construction of any Tenant
Improvement to be enforced against the Leased Property or any part thereof, and
Tenant agrees to hold Landlord and said Leased
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Property free and harmless from all liability from any such liens, claims or
demands, together with all costs and expenses in connection therewith;
(e) All work shall be performed in a good and workmanlike
manner consistent with standards in the industry; and
(f) Subject to Section 8.09 in the case of Capital Additions,
Tenant shall not secure any construction or other financing for the Tenant
Improvements which is secured by a portion of the Leased Property without
Landlord's prior written consent, and any such financing (i) shall not exceed
the cost of the Tenant Improvements, (ii) shall be subordinate to any mortgage
or encumbrance now existing or hereinafter created by Landlord with respect to
the Leased Property, and (iii) shall be limited solely to Tenant's interest in
the Leased Property that is the subject of the improvements.
8.05 RIGHTS IN TENANT IMPROVEMENTS. Notwithstanding anything to the
contrary in this Lease, all Tenant Improvements constructed pursuant to Section
8.01 (other than a Capital Addition purchased or financed by Landlord), any and
all subsequent additions thereto and alterations and replacements thereof, shall
be the sole and absolute property of Tenant during the Term of the particular
Lease. Upon the expiration or early termination of any Lease, all such Tenant
Improvements shall become the property of Landlord. Without limiting the
generality of the foregoing, Tenant shall be entitled to all federal and state
income tax benefits associated with any Tenant Improvement (other than a Capital
Addition purchased or financed by Landlord) during the Term of this Agreement.
8.06 PERSONAL PROPERTY. Tenant shall install, place, and use on the
Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Fixtures as may be required to effectively
operate the Leased Property as a correctional or detention facility or other
permitted use or as Tenant may, from time to time, deem necessary or useful to
operate the Leased Property as a correctional or detention facility. Upon
expiration or earlier termination of a Lease, Landlord shall have the option
(exercisable upon at least thirty (30) days notice to Tenant prior to such
expiration or termination) to purchase all or a part of such personal property
(except for Tenant's proprietary property described on Exhibit C) at net book
value as shown on Tenant's books and records. Landlord agrees, however, that
such option to purchase may be subject to a governmental entity's superior right
to acquire all or a portion of such personal property of Tenant under the terms
of its prison operating agreement with Tenant.
8.07 REQUIREMENTS FOR PERSONAL PROPERTY. Tenant shall comply with all
of the following requirements in connection with Personal Property:
(a) With respect to each Leased Property, Tenant shall notify
Landlord within one hundred twenty (120) days after each Lease Year of any
additions, substitutions, or replacements of an item of Personal Property at
such Leased Property which individually has a cost of more than $25,000.00 per
item or an aggregate cost of more than $100,000 for similar items of Personal
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Property purchased in one or more lots and shall furnish Landlord with such
other information as Landlord may reasonably request from time to time.
(b) The Personal Property shall be installed in a good and
workmanlike manner, in compliance with all governmental laws, ordinances, rules,
and regulations and all insurance requirements, and be installed free and clear
of any mechanics' liens.
(c) Tenant shall, at Tenant's sole cost and expense, maintain,
repair, and replace the Personal Property.
(d) Tenant shall, at Tenant's sole cost and expense, keep
Personal Property insured against loss or damage by fire, vandalism and
malicious mischief, sprinkler leakage, and other physical loss perils commonly
covered by fire and extended coverage, boiler and machinery, and difference in
conditions insurance in an amount not less than one hundred percent (100%) of
the then full replacement cost thereof. Tenant shall use the proceeds from any
such policy for the repair and replacement of Personal Property. The insurance
shall meet the requirements of Section 4.03.
(e) Tenant shall pay all taxes applicable to Personal
Property.
(f) If Personal Property is damaged or destroyed by fire or
any other case, Tenant shall promptly repair or replace Personal Property unless
Tenant is entitled to and elects to terminate the Lease pursuant to Section
10.05.
(g) Unless an Event of Default (or any event which, with the
giving of notice of lapse of time, or both, would constitute an Event of
Default) has occurred and remains uncured beyond any applicable grace period,
Tenant may remove Personal Property from the Leased Property from time to time
provided that (i) the items removed are not required to operate the Leased
Property as a licensed correctional or detention facility or other permitted use
(unless such items are being replaced by Tenant); and (ii) Tenant repairs any
damage to the Leased Property resulting from the removal of Personal Property.
(h) Tenant shall remove any of Tenant's personal property, but
not any Personal Property, upon the termination or expiration of the Lease
(unless and to the extent the same shall be purchased by Landlord pursuant to
Section 8.06) and shall repair any damage to the Leased Property resulting from
the removal of Tenant's personal property. If Tenant fails to remove Tenant's
personal property within ninety (90) days after the termination or expiration of
the Lease, then Tenant shall be deemed to have abandoned Tenant's personal
property, Tenant's personal property shall become the property of Landlord, and
Landlord may remove, store and dispose of Tenant's personal property. In such
event, Tenant shall have no claim or right against Landlord for such property or
the value thereof regardless of the disposition thereof by Landlord. Tenant
shall pay Landlord, upon demand, all expenses incurred by Landlord in removing,
storing, and disposing of Tenant's personal property and repairing any damage
caused by such removal. Tenant's obligations hereunder shall survive the
termination or expiration of the Lease.
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(i) Tenant shall perform its obligations under any equipment
lease or security agreement for Personal Property.
8.08 SIGNS. Tenant may, at its own expense, erect and maintain
identification signs at the Leased Property, provided such signs comply with all
laws, ordinances, and regulations. On the termination or expiration of a Lease,
Tenant shall, within thirty (30) days after notice from Landlord, remove the
signs and repair any damage to the Leased Property resulting from such removal.
8.09 FINANCINGS OF CAPITAL ADDITIONS TO A LEASED PROPERTY.
(a) Landlord may, but shall be under no obligation to, provide
or arrange construction, permanent or other financing for a Capital Addition
proposed to be made to any Leased Property by Tenant. Within thirty (30) days of
receipt of such a request by Tenant, Landlord shall notify Tenant as to whether
it will finance the proposed Capital Addition and, if so, the terms and
conditions upon which it would do so, including the terms of any amendment to an
individual Lease or a new lease agreement for such proposed Capital Addition.
(b) If Landlord agrees to finance the proposed Capital
Addition of Tenant, Tenant shall provide Landlord with the following:
(i) all customary or other required loan documentation which
may be required;
(ii) any information, certificates, licenses, permits or
documents requested by either Landlord or any lender with whom Landlord has
agreed or may agree to provide financing which are necessary to confirm that
Tenant will be able to use the Capital Addition upon completion thereof in
accordance with the Primary Intended Use (as defined in Section 8.01), including
all required, federal, state or local government licenses and approvals;
(iii) a certificate from Tenant's architect, setting forth in
reasonable detail the projected (or actual, if available) cost of the proposed
Capital Addition;
(iv) an amendment to this Lease, or a new lease agreement,
duly executed and acknowledged, in form and substance satisfactory to Landlord
and Tenant, and containing such provisions as may be necessary or appropriate,
including without limitation, any appropriate changes in the legal description
of the Land, the Rent, and other changes with respect to the Capital Addition;
(v) a deed conveying title to Landlord to any land acquired
for the purpose of constructing the Capital Addition, free and clear of any
liens or encumbrances except those approved by Landlord and, both prior to and
following completion of the Capital Addition, an as-built survey thereof
satisfactory to Landlord;
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(vi) endorsements to any outstanding policy of title
insurance covering the Leased Property or a supplemental policy of title
insurance covering the Leased Property satisfactory in form and substance to
Landlord (a) updating the same without any additional exceptions, except as may
be permitted by Landlord; and (b) increasing the coverage thereof by an amount
equal to the fair market value of the Capital Addition;
(vii) if required by Landlord, (a) an owner's policy of title
insurance insuring fee simple title to any land conveyed to Landlord pursuant to
subparagraph (v), free and clear of all liens and encumbrances except those
approved by Landlord and (b) a lender's policy of title insurance satisfactory
in form and substance to Landlord and any lending institution advancing a
portion of the cost of the Capital Addition;
(viii) if required by Landlord, upon completion of the Capital
Addition, an M.A.I. appraisal of the Leased Property indicating that the value
of the Leased Property upon completion of the Capital Addition exceeds the fair
market value of the Leased Property prior thereto by an amount not less than
ninety-five percent (95%) of the cost of such Capital Addition; and
(ix) such other certificates (including, but not limited to,
endorsements, increasing the insurance coverage, if any, at the time required),
documents, opinions of counsel, appraisals, surveys, certified copies of duly
adopted resolutions of the board of directors of Tenant authorizing the
execution and delivery of any amendment to an individual Lease or new lease
agreement and any other instruments as may be reasonably required by Landlord
and any lending institution advancing any portion of the cost of the Capital
Addition.
(c) Upon making a request to finance a Capital Addition,
whether or not such financing is actually consummated, Tenant shall pay or agree
to pay, upon demand, all reasonable costs and expenses of Landlord and any
lending institution which has committed to finance such Capital Addition which
have been paid or incurred by them in connection with the financing of the
Capital Addition, including, but not limited to, (i) the fees and expenses of
their respective counsel, (ii) all printing expenses, (iii) the amount of any
filing, registration and recording taxes and fees, (iv) documentary stamp taxes,
if any, (v) title insurance charges, appraisal fees, if any, rating agency fees,
if any, (vi) commitment fees, if any, and (vii) costs of obtaining regulatory
and governmental approvals for the construction, operation, use or occupancy of
the Capital Addition.
(d) (i) If Landlord and Tenant are unable to agree on the
terms of the financing of a Capital Addition by Landlord, Tenant may undertake
the cost of any such Capital Addition and seek construction, permanent or other
financing from other sources.
(ii) In the event Tenant shall construct any
Capital Addition and shall have obtained construction, permanent or other
financing in connection therewith from sources other than Landlord, as set forth
in the foregoing Section 8.09(d)(i), Landlord shall have the option to acquire
such Capital Addition for a period of one (1) year following the date Tenant
first receives inmates or detainees in such Capital Addition ("Service
Commencement Date"). The price at which
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Landlord may acquire such Capital Addition shall be an amount equal to 105% (or
such lower percentage as may be agreed to by the Tenant) of the aggregate costs
related to the acquisition, development, design, construction, equipment and
start-up of such Capital Addition, which in the case of goods or services
provided by the Tenant, will not exceed the costs which would be paid therefor
if purchased from a third party in an arm's-length transaction ("Tenant's
Cost"). Landlord's exercise of such option shall require Landlord to acquire
such Capital Addition on such terms and conditions as Landlord and Tenant shall
reasonably agree, which shall be generally consistent with the terms and
conditions of Landlord's initial acquisition of the related Leased Property from
Tenant. Upon such acquisition, Landlord shall lease such Capital Addition to
Tenant on the terms and conditions set forth herein, and Landlord and Tenant
shall execute a new Lease, or an amendment to the existing Lease, with respect
thereto. In such case, the Base Rent shall be the fair market rental value of
the Capital Addition, as reasonably and mutually determined by Landlord and
Tenant or, if Landlord and Tenant fail to agree, as determined through
arbitration in accordance with Section 16.24. Regardless of whether the
foregoing option is exercised, all Capital Additions shall become the property
of Landlord upon the expiration or termination of this Lease.
ARTICLE IX
DEFAULTS AND REMEDIES
9.01 EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of Rent, or
any other monetary obligation payable by Tenant to Landlord under a Lease,
within fifteen (15) days after notice of nonpayment from Landlord;
(b) Tenant fails to observe and perform any other covenant,
condition or agreement under this Agreement or a Lease to be performed by Tenant
(except those described in Section 9.01(a) of this Agreement) and such failure
continues for a period of thirty (30) days after written notice thereof is given
to Tenant by Landlord; or if, by reason of the nature of such default, the same
cannot with due diligence be remedied within said thirty (30) days, such failure
will not be deemed to continue if Tenant proceeds promptly and with due
diligence to remedy the failure and diligently completes the remedy thereof on a
best efforts basis; provided, however, said cure period will not extend beyond
thirty (30) days if the facts or circumstances giving rise to the default are
creating a further harm to Landlord or the Leased Property and Landlord makes a
good faith determination that Tenant is not undertaking remedial steps that
Landlord would cause to be taken if such Lease were then to terminate;
(c) If Tenant: (a) admits in writing its inability to pay its
debts generally as they become due, (b) files a petition in bankruptcy or a
petition to take advantage of any insolvency act, (c) makes an assignment for
the benefit of its creditors, (d) is unable to pay its debts as they mature,
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(e) consents to the appointment of a receiver of itself or of the whole or any
substantial part of its property, or (f) files a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state thereof;
(d) If Tenant, on a petition in bankruptcy filed against it,
is adjudicated as bankrupt or a court of competent jurisdiction enters an order
or decree appointing, without the consent of Tenant, a receiver of Tenant of the
whole or substantially all of its property, or approving a petition filed
against it seeking reorganization or arrangement of Tenant under the federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state thereof, and such judgment, order or decree is not vacated
or set aside or stayed within ninety (90) days from the date of the entry
thereof;
(e) If the estate or interest of Tenant in any Leased Property
or any part thereof is levied upon or attached in any proceeding and the same is
not vacated or discharged within the later of ninety (90) days after
commencement thereof or thirty (30) days after receipt by Tenant of notice
thereof from Landlord (unless Tenant is contesting such lien or attachment in
accordance with this Agreement);
(f) Any representation or warranty made by Tenant (or an
Affiliate of Tenant in cases where a Lease is executed by such Affiliate) in the
Agreement or any Lease or in any certificate, demand or request made pursuant to
any Lease proves to be incorrect, in any material respect and any adverse effect
on Landlord of any such misrepresentation or breach of warranty has not been
corrected to Landlord's satisfaction within thirty (30) days after Tenant
becomes aware of, or is notified by the Landlord of the fact of, such
misrepresentation or breach of warranty;
(g) A default by Tenant (or an Affiliate of Tenant in cases
where a Lease is executed by such Affiliate) in any payment of principal or
interest on any obligations for borrowed money having a principal balance of
Twenty-Five Million Dollars ($25,000,000) or more in the aggregate (excluding
obligations which are limited in recourse to specific property of Tenant
provided that such property is not a substantial portion of the assets of Tenant
and excluding any debt which is denominated as "subordinated debt"), or in the
performance of any other provision contained in any instrument under which any
such obligation is created or secured (including the breach of any covenant
thereunder), if an effect of such default is that the holder(s) of such
obligation cause such obligation to become due prior to its stated maturity; or
(h) A final, non-appealable judgment or judgments for the
payment of money in excess of Ten Million Dollars ($10,000,000) in the aggregate
not fully covered (excluding deductibles) by insurance is rendered against
Tenant (or an Affiliate of Tenant in cases where a Lease is executed by such
Affiliate) and the same remains undischarged, unvacated, unbonded or unstayed
for a period of one hundred twenty (120) consecutive days or if the holder of
such judgment proceeds to enforce the judgment against Tenant.
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Notwithstanding the foregoing, an Event of Default under the foregoing
subsections (a), (c), (d), (g) and (h) shall constitute an Event of Default
under all of the Leases and an Event of Default under the foregoing subsections
(b), (e) and (f) shall constitute an Event of Default only with respect to the
specific Lease and Leased Property to which such Event of Default applies.
Provided, (i) with respect to the Events of Default under the foregoing
subsections (b), (e) and (f) or (ii) with respect to a default by Tenant which
is not cured within the applicable grace period under any Operating Contracts
(as hereinafter defined) in effect with respect to 50% or more of the inmate
beds at an individual Leased Premises (each a "Nonmonetary Default"), if such
Nonmonetary Default shall at any time be applicable to Leased Properties
which, in the aggregate, represent a combined acquisition cost equal to the
lesser of (x) twenty five percent (25%) of the acquisition cost for all of the
Leased Properties or (y) $150,000,000, then such Nonmonetary Default shall
constitute an Event of Default under all of the Leases.
9.02 REMEDIES. To the extent any Event of Default is applicable only to
a specific Lease or Leases, or a specific Leased Property or Leased Properties
(in accordance with Section 9.01 above), the remedies set forth herein shall be
exercisable solely with respect to such Lease or Leases, or Leased Property or
Leased Properties, and shall not be exercisable with respect to any other Leases
or Leased Property. To the extent any Event of Default constitutes an Event of
Default under all of the Leases (in accordance with Section 9.01 above), the
remedies set forth herein shall be exercisable with respect to all of the Leases
and all of the Leased Properties. Subject to the foregoing provisions, Landlord
may exercise any one or more of the following remedies upon the occurrence of an
Event of Default:
(a) Landlord may terminate the applicable Lease, exclude
Tenant from possession of the subject Leased Property and use reasonable efforts
to lease such Leased Property to others which shall consist of soliciting offers
to lease from at least two private or governmental owners or operators of
correctional or detention facilities. If any Lease is terminated pursuant to the
provisions of this subparagraph (a), Tenant will remain liable to Landlord for
damages in an amount equal to the Rent and other sums which would have been
owing by Tenant under such Lease for the balance of the Term if the Lease had
not been terminated, less the net proceeds, if any, of any re-letting of the
subject Leased Property by Landlord subsequent to such termination, after
deducting all Landlord's expenses in connection with such re-letting, including
without limitation, the expenses set forth in Section 9.02(b)(2) below. Landlord
will be entitled to collect such damages from Tenant monthly on the days on
which the Rent and other amounts would have been payable under the subject Lease
if such Lease had not been terminated and Landlord will be entitled to receive
such damages from Tenant on each such day. Alternatively, at the option of
Landlord, if such Lease is terminated, and at any time thereafter, Landlord will
be entitled, in lieu of proceeding to collect damages on a monthly basis as set
forth in the preceding sentence, to recover from Tenant (a) all unpaid Rent then
due and payable, and (b) the worth at the time of the award (as hereafter
defined) of the Rent which would have been due and payable from the date of
termination through the Expiration Date as if the Lease had not been terminated.
The "worth at the time of award" of the amount referred to in clause (b) is
computed at "present value" using New York Prime Rate. For purposes of this
Agreement, "New York Prime Rate" shall mean that rate of interest identified as
prime or national prime by the Wall Street Journal, or if not published or
found, then the rate of interest charged by the American bank with the greatest
number of assets on ninety (90) day unsecured notes to its preferred customers.
For the purpose of determining unpaid Rent under clause
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(b), the Rent reserved in the Lease will be deemed to be the sum of the
following: (i) the Base Rent computed pursuant to Section 2.01; (ii) the
Additional Rent computed pursuant to Section 2.02; and (iii) the Other
Additional Rent computed pursuant to Section 2.04. Such computation of
Additional Rent or Other Additional Rent shall be based on the Additional Rent
and Other Additional Rent paid for the Lease Year preceding the date of
termination, increased by four (4%) percent per year thereafter. Following
payments by Tenant of the foregoing amounts, Landlord shall deliver and pay over
to Tenant all rent, income, and other proceeds of any nature realized from the
sale, lease or other disposition or utilization of the Leased Premises, if any,
actually received by Landlord, up to the amounts so paid by Tenant less
Landlord's reasonably incurred costs and expenses of maintaining and re-leasing
or selling the Leased Premises.
(b) (i) Without demand or notice, Landlord may re-enter and
take possession of the applicable Leased Property or any part of such Leased
Property; and repossess such Leased Property as of the Landlord's former estate;
and expel the Tenant and those claiming through or under Tenant from such Leased
Property; and, remove the effects of both or either, without being deemed guilty
of any manner of trespass and without prejudice to any remedies for arrears of
Rent or preceding breach of covenants or conditions. If Landlord elects to
re-enter, as provided in this paragraph (b) or if Landlord takes possession of
such Leased Property pursuant to legal proceedings or pursuant to any notice
provided by law, Landlord may, from time to time, without terminating the
subject Lease, re-let such Leased Property or any part of such Leased Property,
either alone or in conjunction with other portions of the Improvements of which
such Leased Property are a part, in Landlord's name but for the account of
Tenant, for such term or terms (which may be greater or less than the period
which would otherwise have constituted the balance of the Term of this Lease)
and on such terms and conditions (which may include concessions of free rent,
and the alteration and repair of such Leased Property) as Landlord, in its
uncontrolled discretion, may determine. Landlord may collect and receive the
Rents for such Leased Property. Landlord will not be responsible or liable for
any failure to re-let such Leased Property, or any part of such Leased Property,
or for any failure to collect any Rent due upon such re-letting. No such
re-entry or taking possession of such Leased Property by Landlord will be
construed as an election on Landlord's part to terminate this Lease unless a
written notice of such intention is given to Tenant. No notice from Landlord
under this Lease or under a forcible entry and detainer statute or similar law
will constitute an election by Landlord to terminate this Lease unless such
notice specifically says so. Landlord reserves the right following any such
re-entry or re-letting, or both, to exercise its right to terminate this Lease
by giving Tenant such written notice, and, in that event such Lease will
terminate as specified in such notice.
(ii) If Landlord elects to take possession of
such Leased Property according to this subparagraph (b) without terminating such
Lease, Tenant will pay Landlord (i) the Rent, Additional Rent and other sums
which would be payable under such Lease if such repossession had not occurred,
less (ii) the net proceeds, if any, of any re-letting of such Leased Property
after deducting all of Landlord's expenses incurred in connection with such
re-letting, including without limitation, all repossession costs, brokerage
commissions, legal expense, attorneys' fees, expense of employees, alteration,
remodeling, repair costs, and expense of preparation for such re-letting.
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If, in connection with any re-letting, the new Lease term extends beyond the
existing Term or such Leased Property covered by such re-letting includes areas
which are not part of such Leased Property, a fair apportionment of the Rent
received from such re-letting and the expenses incurred in connection with such
re-letting will be made in determining the net proceeds received from such
re-letting. In addition, in determining the net proceeds from such re-letting
over the term of the Lease, any rent concessions will be apportioned over the
term of the new Lease. Tenant will pay such amounts to Landlord monthly on the
days on which the Rent and all other amounts owing under this Agreement or such
Lease would have been payable if possession had not been retaken, and Landlord
will be entitled to receive the rent and other amounts from Tenant on each such
day.
(c) Landlord may re-enter the applicable Leased Property and
have, repossess and enjoy such Leased Property as if such Lease had not been
made, and in such event, Tenant and its successors and assigns shall remain
liable for any contingent or unliquidated obligations or sums owing at the time
of such repossession.
(d) Landlord may take whatever action at law or in equity as
may appear necessary or desirable to collect the Rent and other amounts payable
under the applicable Lease then due and thereafter to become due, or to enforce
performance and observance of any obligations, agreements or covenants of Tenant
under such Lease.
9.03 RIGHT OF SET-OFF. Landlord may, and is hereby authorized by
Tenant, at any time and from time to time, after advance notice to Tenant, to
set-off and apply any and all sums held by Landlord, including all sums held in
any escrow for Impositions, any indebtedness of Landlord to Tenant, and any
claims by Tenant against Landlord, against any obligations of Tenant under this
Agreement or any Lease and against any claims by Landlord against Tenant,
whether or not Landlord has exercised any other remedies hereunder. The rights
of Landlord under this Section are in addition to any other rights and remedies
Landlord may have against Tenant.
9.04 PERFORMANCE OF TENANT'S COVENANTS. Except in cases of emergency,
in which event Landlord may proceed without notice, Landlord may perform any
obligation of Tenant which Tenant has failed to perform within ten (10) days
after Landlord has sent a written notice to Tenant informing it of its specific
failure (provided no such notice shall be required if such failure is covered
under the provisions of Section 9.01). Tenant shall reimburse Landlord on
demand, as Other Additional Rent, for any expenditures thus incurred by Landlord
and shall pay interest thereon at the New York Prime Rate (as herein defined).
9.05 INTEREST ON PAST DUE PAYMENTS. Any payment not made by Tenant for
more than five (5) days after written notice of nonpayment from Landlord shall
bear interest at the rate of one percent (1%) per month from the due date
thereof through the date such payment is actually received by Landlord.
9.06 LITIGATION; ATTORNEYS' FEES. Within ten (10) days after Tenant has
knowledge of any material litigation or other proceeding that may be instituted
against Tenant , against any Leased
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Property to secure or recover possession thereof, or that may affect the title
to or the interest of Landlord in such Leased Property, Tenant shall give
written notice thereof to Landlord. Within thirty (30) days of Landlord's
presentation of an invoice, Tenant shall pay all reasonable costs and expenses
incurred by Landlord in enforcing or preserving Landlord's rights under this
Agreement and each Lease, whether or not an Event of Default has actually
occurred or has been declared and thereafter cured, including without
limitation, (i) the fees, expenses, and costs of any litigation, receivership,
administrative, bankruptcy, insolvency or other similar proceeding; (ii)
reasonable attorney, paralegal, consulting and witness fees and disbursements;
and (iii) the expenses, including without limitation, lodging, meals, and
transportation, of Landlord and its employees, agents, attorneys, and witnesses
in preparing for litigation, administrative, bankruptcy, insolvency or other
similar proceedings and attendance at hearings, depositions, and trials in
connection therewith. All such costs, charges and fees as incurred shall be
deemed to be Other Additional Rent under this Agreement. For purposes hereof,
"material litigation" instituted against Tenant shall be determined in
accordance with then applicable GAAP accounting standards.
9.07 REMEDIES CUMULATIVE. The remedies of Landlord herein are
cumulative to and not in lieu of any other remedies available to Landlord at law
or in equity. The use of any one remedy shall not be taken to exclude or waive
the right to use any other remedy.
9.08 ESCROWS AND APPLICATION OF PAYMENTS. As security for the
performance of its obligations hereunder, Tenant hereby assigns to Landlord all
its right, title and interest in and to all monies escrowed with Landlord under
this Agreement or under any Lease and all deposits with utility companies,
taxing authorities, and insurance companies; provided, however, that Landlord
shall not exercise its rights hereunder until an Event of Default has occurred.
Any payments received by Landlord under any provisions of this Agreement or
under any Lease during the existence, or continuance of an Event of Default
shall be applied to Tenant's obligations in the order which Landlord may
determine.
9.09 POWER OF ATTORNEY. Tenant hereby irrevocably and unconditionally
appoints Landlord, or Landlord's authorized officer, agent, employee or
designee, as Tenant's true and lawful attorney-in-fact, to act, after an Event
of Default, for Tenant in Tenant's name, place, and stead, and for Tenant's and
Landlord's use and benefit, to execute, deliver and file all applications and
any and all other necessary documents or things, to effect a transfer,
reinstatement, renewal and/or extension of any and all licenses and other
governmental authorizations issued to Tenant in connection with Tenant's
operation of any Leased Property, and to do any and all other acts incidental to
any of the foregoing. Tenant irrevocably and unconditionally grants to Landlord
as its attorney-in-fact full power and authority to do and perform, after an
Event of Default, every act necessary and proper to be done in the exercise of
any of the foregoing powers as fully as Tenant might or could do if personally
present or acting, with full power of substitution, hereby ratifying and
confirming all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and is
irrevocable prior to the full performance of the Tenant's obligations under this
Agreement and each Lease.
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ARTICLE X
DAMAGE AND DESTRUCTION
10.01 GENERAL. Tenant shall notify Landlord if any of the Leased
Property is damaged or destroyed by reason of fire or any other cause. Tenant
shall promptly repair, rebuild, or restore the Leased Property, at Tenant's
expense, so as to make the Leased Property at least equal in value to the Leased
Property existing immediately prior to such occurrence and as nearly similar to
it in character as is practicable and reasonable. Tenant will begin such repairs
or rebuilding and will prosecute the repairs and rebuilding to completion with
diligence, subject, however, to strikes, lockouts, acts of God, embargoes,
governmental restrictions, and other causes beyond Tenant's reasonable control.
Landlord will make available to Tenant the net proceeds of any fire or other
casualty insurance paid to Landlord for any such repair or rebuilding after
deduction of any costs of collection, including attorneys' fees. Before
beginning such repairs or rebuilding, or letting any contracts in connection
with such repairs or rebuilding which are estimated to exceed in the aggregate
$150,000 (which amount shall be increased by four percent (4%) per annum
cumulatively for each subsequent Lease Year) ("Substantial Repairs"), Tenant
will submit for Landlord's approval, which approval Landlord will not
unreasonably withhold or delay, complete and detailed plans and specifications
for such Substantial Repairs. Payment on account of Substantial Repairs will be
made, as work satisfactorily progresses, against properly certified vouchers of
a competent architect in charge of the work and approved by Landlord. Prior to
commencing Substantial Repairs, Tenant shall deliver to Landlord for Landlord's
approval a schedule setting forth the estimated monthly draws for such work.
Landlord will contribute to payments on account of Substantial Repairs out of
the insurance proceeds an amount equal to the proportion that the total net
amount received by Landlord from insurers bears to the total estimated cost of
the rebuilding or repairing, multiplied by the payment by Tenant on account of
such work. Landlord may, however, withhold ten percent (10%) from each payment
on account of Substantial Repairs until (i) the work of repairing or rebuilding
is completed and proof has been furnished to Landlord that no lien or liability
has attached or will attach to the Leased Property or to Landlord in connection
with such repairing or rebuilding, (ii) Tenant has obtained a certificate of use
and occupancy (or its functional equivalent) for the portion of the Leased
Premises repaired or rebuilt and (iii) if Tenant has an agreement with any
governmental authority for the detention of inmates at such Leased Property
which requires such governmental authority to approve such repairs or
rebuilding, such approval shall have been obtained. Upon the completion of
rebuilding or repairing and the furnishing of such proof, the balance of the net
proceeds of such insurance payable to Tenant on account of such repairing or
rebuilding will be paid to Tenant. Tenant will obtain and deliver to Landlord a
temporary or final certificate of occupancy before the Leased Property is
reoccupied for any purpose. Tenant shall complete all such repairs or rebuilding
free and clear of mechanic's or other liens, and in accordance with the building
codes and all applicable laws, ordinances, regulations, or orders of any state,
municipal, or other public authority affecting the repairs or rebuilding, and
also in accordance with all requirements of the insurance rating organization,
or similar body. Any remaining proceeds of insurance after such restoration will
be Tenant's property.
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10.02 LANDLORD'S INSPECTION. During the progress of Substantial
Repairs, Landlord and its architects and engineers may, from time to time,
inspect the Leased Property and will be furnished, if required by them, with
copies of all plans, shop drawings, and specifications relating to such repairs
or rebuilding. Tenant will keep all plans, shop drawings, and specifications
available, and Landlord and its architects and engineers may examine them at all
reasonable times. If, during such repairs or rebuilding, Landlord and its
architects and engineers determine that the repairs or rebuilding are not being
done in accordance with the approved plans and specifications, Landlord will
give prompt notice in writing to Tenant, specifying in detail the particular
deficiency, omission, or other respect in which Landlord claims such repairs or
rebuilding do not accord with the approved plans and specifications. Upon the
receipt of any such notice, Tenant will cause corrections to be made to any
deficiencies, omissions, or such other respect. Tenant's obligations to supply
builder's risk insurance, according to Article IV, will be applicable to any
repairs or rebuilding under this Section.
10.03 LANDLORD'S COSTS. Tenant shall, within thirty (30) days after
receipt of an invoice from Landlord, pay the reasonable costs, expenses, and
fees of any architect or engineer employed by Landlord to review any plans and
specifications and to supervise and approve any construction, or for any
services rendered by such architect or engineer to Landlord as contemplated by
any of the provisions of this Agreement, or for any services performed by
Landlord's attorneys in connection therewith; provided, however, that Landlord
will consult with Tenant and notify Tenant of the estimated amount of such
expenses.
10.04 RENT ABATEMENT. In the event that the provisions of Section 10.01
above shall become applicable, the Rent, real estate taxes and other Impositions
shall be abated or reduced proportionately during any period in which, by reason
of such damage or destruction, there is substantial interference with the
operation of the business of Tenant in the Leased Property, having regard to the
extent to which Tenant may be required to discontinue its business in the Leased
Property, and such abatement or reduction shall continue for the period
commencing with such destruction or damage and ending with the substantial
completion (defined below) by Tenant of such work or repair and/or
reconstruction. In the event that only a portion of any Leased Property is
rendered untenantable or incapable of such use, the Base Rent and all real
estate taxes and other Impositions payable hereunder shall be reduced on a pro
rata basis in the same proportion as the number of inmate or patient beds in the
Leased Property after the damage or destruction bears to the number of inmate or
patient beds in the Leased Property immediately prior thereto. For purposes of
this paragraph, substantial completion shall occur upon the earlier of (i) nine
(9) months from the date of the first disbursement of insurance proceeds, or
(ii) the issuance of a certificate of occupancy for the Leased Property.
Notwithstanding any other provision hereof, such rental abatement shall be
limited to the amount of any rental or business interruption insurance proceeds
actually received by Landlord.
10.05 SUBSTANTIAL DAMAGE DURING LEASE TERM. Provided Tenant has fully
complied with Section 4.01 hereof (including actually maintaining in effect
rental value insurance or business interruption insurance provided for in clause
(c) thereof) if, at any time during the Term of the
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particular Lease, the Leased Property is so damaged by fire or otherwise that
more than fifty percent (50%) of the inmate beds at the Leased Property are
rendered unusable, Tenant may, within sixty (60) days after such damage, give
notice of its election to terminate the Lease subject to the particular Leased
Property and, subject to the further provisions of this Section, such Lease will
cease on the tenth (10th ) day after the delivery of such notice. If the Lease
is so terminated, Tenant will have no obligation to repair, rebuild or replace
the Leased Property, but will have the obligation to pay to Landlord upon demand
the amount of any deductible or uninsured loss arising in connection therewith
and the entire insurance proceeds will belong to Landlord. If the Lease is not
so terminated, Tenant shall rebuild the Leased Property in accordance with
Section 10.01.
10.06 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of
Section 10.01 to the contrary, if damage to or destruction of the Leased
Property occurs during the last twenty-four (24) months of the Term, and if such
damage or destruction cannot be fully repaired and restored within six (6)
months immediately following the date of loss, either party shall have the right
to terminate this Lease by giving notice to the other within thirty (30) days
after the date of damage or destruction, in which event Landlord shall be
entitled to retain the insurance proceeds and Tenant shall pay to Landlord on
demand the amount of any deductible or uninsured loss arising in connection
therewith; provided, however, that any such notice given by Landlord shall be
void and of no force and effect if Tenant exercises an available option to
extend the Term pursuant to provisions of the Lease for such Leased Property
within thirty (30) days following receipt of such termination notice.
ARTICLE XI
CONDEMNATION
11.01 DEFINITION. For purposes of this Agreement, the term
"Condemnation" shall mean the permanent or temporary taking of the Leased
Property, or any portion thereof, by right of eminent domain, or by conveyance
made in response to a threat of the exercise of such right, or by conveyance in
settlement of eminent domain litigation.
11.02 APPORTIONMENT OF COMPENSATION. In the event of Condemnation of
the Leased Property, or any part thereof, Landlord shall be entitled to all
compensation payable by the condemning authority under applicable law for (i)
the real property, or part thereof taken, (ii) for all improvements thereto
which are taken (except Tenant Improvements which are not Capital Additions
purchased or financed by Landlord and then, only the portion of any award
therefor allocable to the remaining Term of the Lease), (iii) for all severance
damages to the remainder property caused by the Condemnation, including
severance damages to the Fixtures and the Personal Property and (iv) attorneys
fees, expert fees and costs. Tenant shall be entitled to all compensation
payable by the condemning authority under applicable law for (i) personal
property of Tenant, trade fixtures of Tenant and Tenant Improvements taken
(subject to the limitations set forth above), (ii) the value of Tenant's
leasehold interest, (iii) business damages suffered by Tenant and (iv) attorneys
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fees, expert fees and costs. The foregoing notwithstanding, in the event of a
temporary taking by Condemnation for a period of six (6) months or less,
compensation payable by the condemning authority shall be payable solely to the
Tenant, subject to Tenant having paid to Landlord all rent payable under the
Lease for the period of the temporary taking. In the event the condemning
authority is not required under applicable law to pay compensation for an
element of damage or loss suffered by a party hereto, that party shall, to that
extent, be without a remedy, unless otherwise expressly and specifically
provided herein, it being the intent of the parties that, in the absence of an
express and specific agreement to the contrary, no party hereto shall be
obligated to compensate the other for any damage or loss suffered as a
consequence of Condemnation which is not compensable by the condemning authority
under applicable law. No party shall have the right to negotiate a settlement of
any claim for compensation made or possessed by another party, nor may any party
enter into an agreement with a condemning authority which waives or limits,
expressly or implicitly, the entitlement of another party to full compensation
in accordance with the provisions hereof.
11.03 EFFECT ON LEASE OBLIGATIONS.
(a) Total Taking. In the event of Condemnation of the entire
Leased Property, the Lease shall remain in effect, with the condemning authority
taking the Leased Property subject to the Lease, unless the condemning authority
shall have condemned the leasehold interest of Tenant. In the event of
condemnation of the entire Leased Property and the leasehold interest of Tenant,
the parties shall be relieved from continuing performance under the Lease to the
extent performance is rendered impractical or impossible, or is deemed excused
as a matter of law, and Tenant shall be relieved from payment of Rent or other
charges as of the date of change of ownership due to Condemnation. The parties
shall perform those obligations accruing under the Lease prior to the change in
ownership, including payment of Rent and other charges which become payable
prior to the change in ownership. To the extent Rent has been paid in advance,
Landlord shall refund to the Tenant a prorated portion thereof based on the
number of days of Tenant's occupancy under the Lease for the rental period in
question, compared to the number of days in the rental period for which Rent was
paid in advance.
(b) Partial Taking. In the event the Condemnation is of a
portion of the Leased Property, or of an easement or similar interest in the
Leased Property, the obligations of the parties under the Lease shall be
unaffected unless the effect of the Condemnation is to render the Leased
Property Unsuitable for its Primary Intended Use. The Leased Property shall be
deemed Unsuitable for its Primary Intended Use if the state or condition of the
Leased Property has been so affected by the Condemnation that, in the good faith
judgment of Tenant, reasonably exercised, the Leased Property cannot be operated
on a commercially practicable basis as a correctional or detention facility. If
Condemnation renders the Leased Property Unsuitable for its Primary Intended
Use, Tenant may terminate the Lease as of the date of the taking, or as of the
date of loss of occupancy of the condemned portion (if the date for vacating the
premises is different from the date of taking), or within thirty (30) days
following either the date of taking or the date of loss of occupancy of the
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condemned portion. Termination of the Lease hereunder shall not affect the
apportionment of compensation as otherwise agreed hereinabove.
(c) Temporary Taking. In the event all or any part of the
Leased Property is temporarily condemned for a period of six (6) months or less,
the parties shall be relieved from their obligations under the Lease only to the
extent performance is rendered impracticable or impossible and Tenant shall
remain obligated to pay rent to Landlord for the period of such temporary
taking. In the event of such a temporary taking, the entire amount of
compensation payable for the temporary taking, whether paid by the condemning
authority as damages, rent or otherwise, shall be payable to Tenant, subject to
Tenant having paid to Landlord all rent payable under the Lease for the period
of the said temporary taking.
11.04 CONDEMNATION CAUSED BY DEFAULT OF TENANT. In the event
Condemnation is the result of Tenant having defaulted in performance of Tenant's
obligations under the Lease including Tenant's obligation to maintain the Leased
Property or having defaulted under Tenant's operating agreement with the
applicable governmental authority whether or not the same constitutes a default
hereunder, Tenant shall be liable for any damage or loss suffered by Landlord
which is not compensated by the condemning authority.
11.05 RESTORATION OF PREMISES. If there is a partial taking of any
Leased Property and the subject Lease remains in full force and effect pursuant
to Section 11.02, Landlord shall furnish to Tenant the amount of the Award
payable to Landlord, as provided herein, in order for Tenant to accomplish all
necessary restoration. If Tenant receives an Award under Section 11.05, Tenant
shall repair or restore any Tenant Improvements up to but not exceeding the
amount of the Award payable to Tenant therefor. Before beginning such
restoration, or letting any contracts in connection with such restoration,
Tenant will submit for Landlord's approval, which approval Landlord will not
unreasonably withhold or delay, complete and detailed plans and specifications
for such restoration. Promptly after receiving Landlord's approval of the plans
and specifications, Tenant will begin such restoration and will prosecute the
repairs and rebuilding to completion with diligence, subject, however, to
strikes, lockouts, acts of God, embargoes, governmental restrictions, and other
causes beyond Tenant's reasonable control. Landlord will make available to
Tenant the net proceeds of any Award paid to Landlord for such restoration,
after deduction of any costs of collection, including attorneys' fees. Payment
will be made against properly certified vouchers of a competent architect in
charge of the work and approved by Landlord. Prior to commencing the
restoration, Tenant shall deliver to Landlord for Landlord's approval a schedule
setting forth the estimated monthly draws for such work. Landlord may, however,
withhold ten percent (10%) from each payment until the work of restoration is
completed and proof has been furnished to Landlord that no lien or liability has
attached or will attach to the Leased Property or to Landlord in connection with
such restoration. Upon the completion of restoration and the furnishing of such
proof, the balance of the Award will be paid to Tenant. Tenant will obtain and
deliver to Landlord a temporary or final certificate of occupancy before the
Leased Property is reoccupied for any purpose. Tenant shall complete such
restoration free and clear of mechanic's or other liens, and in accordance with
the building codes and all applicable laws, ordinances, regulations, or orders
of any state, municipal, or other public
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authority affecting the restoration, and also in accordance with all
requirements of the insurance rating organization, or similar body. Any
remaining proceeds of the Award after such restoration will be Tenant's
property.
11.06 LANDLORD'S INSPECTION. During the progress of such restoration,
Landlord and its architects and engineers may, from time to time, inspect the
Leased Property and will be furnished, if required by them, with copies of all
plans, shop drawings, and specifications relating to such restoration. Tenant
will keep all plans, shop drawings, and specifications available, and Landlord
and its architects and engineers may examine them at all reasonable times. If,
during such restoration, Landlord and its architects and engineers determine
that the restoration is not being done in accordance with the approved plans and
specifications, Landlord will give prompt notice in writing to Tenant,
specifying in detail the particular deficiency, omission, or other respect in
which Landlord claims such restoration does not accord with the approved plans
and specifications. Upon the receipt of any such notice, Tenant will cause
corrections to be made to any deficiencies, omissions, or such other respect.
Tenant's obligations to supply insurance, according to Article IV, will be
applicable to any restoration under this Section.
ARTICLE XII
TENANT'S RIGHT OF FIRST REFUSAL
12.01 RIGHTS OF FIRST REFUSAL. Subject to the terms and conditions set
forth in this Section 12.01 and provided that no Event of Default with respect
to the subject Leased Property has occurred and is continuing at such time or at
the expiration of this Agreement or the individual Lease, Tenant shall have a
right of first refusal (the "Purchase Refusal Right") to purchase any Leased
Property (including any Leased Property owned by an Affiliate [as defined in
Section 1.06 hereof] of Landlord). If during the Term and for a period of ninety
(90) days following termination of any Lease (other than as a result of the
exercise by Landlord of its rights or remedies under this Agreement), Landlord
or any Affiliate of Landlord receives a bona fide third party offer to Transfer
any Leased Property, then, prior to accepting such third party offer, Landlord
shall send written notice and a copy thereof to Tenant ("Landlord's Notice").
Tenant shall have thirty (30) days after receipt of Landlord's Notice to
exercise Tenant's Purchase Refusal Right, by giving Landlord written notice
thereof. Failure of Tenant to exercise the Purchase Refusal Right within such
time period set forth above shall be deemed to extinguish the Purchase Refusal
Right for a period of one hundred eighty (180) days. Thereafter, prior to the
expiration of such one hundred eighty (180) days, Landlord or its Affiliates may
Transfer such Leased Property provided however, that the Transfer of the Leased
Property is at a price equal to or greater than the price contained in the
Landlord's Notice, and otherwise consistent in all material respects with the
terms and conditions set forth in Landlord's Notice. Tenant's Purchase Refusal
Right shall revive in the event that Landlord fails to Transfer the Leased
Property within said one hundred eighty (180) days. In the event that Tenant
elects to exercise the Purchase Refusal Right and to acquire the Leased Property
thereby, (a) Tenant shall acquire such Leased Property on the same terms and
conditions and subject to all time periods
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and other limitations as provided in Landlord's Notice (provided, however,
Tenant shall in all events have not less than one hundred twenty (120) days to
close its acquisition of the Leased Property following its written notice
exercising its Purchase Refusal Right), and (b) concurrently with such
acquisition, the Lease of such Leased Property shall terminate (but Tenant shall
remain liable to pay any accrued Rent due and payable on the closing date with
respect to such Leased Property and all indemnifications and other provisions
that survive the expiration of the individual Lease or of this Agreement shall
continue in effect), and this Agreement shall be appropriately amended to
reflect the termination of such Lease.
Notwithstanding the foregoing provisions, the Purchase Refusal Right
shall not be applicable to any Transfer of a Leased Property to any Affiliate of
Landlord, so long as such Affiliate acquires such Leased Property subject to the
Purchase Refusal Right.
A "Transfer" is any direct or indirect sale, conveyance or other
disposition, including any transfer of a controlling ownership interest in any
owning partnership, limited liability company or corporation, and including any
lease with a term in excess of five (5) years.
12.02 RESTRICTION ON EXERCISE OF PURCHASE REFUSAL RIGHT.
Notwithstanding any other provision of this Article XII, Landlord shall not be
required to Transfer any Leased Property, or any portion thereof, which is a
real estate asset as defined in Section 856(c) (5) (B), or functionally
equivalent successor provision, of the Code, to Tenant if Landlord's counsel
advises Landlord that such Transfer may not qualify as a sale of property
described in Section 857(b) (6) (C), or functionally equivalent successor
provision of the Code. If Landlord determines not to Transfer such property
pursuant to the above sentence, Tenant's right, if any, to acquire any or all of
such property shall continue and be exercisable, upon and subject to all
applicable terms and conditions set forth in this Lease, at such time as the
transaction, upon the advise of Landlord's tax counsel, would qualify as a sale
of property described in Section 857(b) (6) (C) of the Code, or functionally
equivalent successor provision, and until such time Tenant shall lease the
Leased Property for the lesser of the rent otherwise called for in the Lease or
fair market rental. If the Transfer of the Leased Property is delayed pursuant
to this section, Landlord will use its reasonable best efforts to Transfer such
Leased Property to Tenant as soon as practicable in the next calendar year.
ARTICLE XIII
ASSIGNMENT AND SUBLETTING; ATTORNMENT
13.01 PROHIBITION AGAINST SUBLETTING AND ASSIGNMENT. Subject to
Sections 13.03, 13.04 and 7.05, Tenant shall not, without the prior written
consent of Landlord (which consent Landlord may grant or withhold in its sole
and absolute discretion), sublease, assign, mortgage, pledge, hypothecate,
encumber or otherwise transfer (except to an Affiliate of Tenant) this Agreement
or any Lease or any interest herein or therein, or all or any part of the Leased
Property, or suffer or permit any Lease or the leasehold estate created thereby
or any other rights arising under any Lease to be
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assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in whole
or in part, whether voluntarily, involuntarily or by operation of law. For
purposes of this Section 13.01, an assignment of any Lease shall be deemed to
include any Change of Control of Tenant, as if such Change of Control were an
assignment of the Lease. No assignment shall in any way impair the continuing
primary liability of Tenant hereunder.
13.02 CHANGES OF CONTROL. A Change of Control requiring the consent of
Landlord shall mean:
(a) the issuance and/or sale by Tenant of a Controlling (which
shall mean, as applied to any Person, the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise) interest in Tenant to a Person other than an Affiliate of Tenant,
other than in either case a distribution to the public pursuant to an effective
registration statement under the Securities Act of 1933, as amended (a
"Registered Offering") or a distribution by any stockholder of Tenant to such
stockholders' owners or shareholders;
(b) the sale, conveyance or other transfer of all or
substantially all of the assets of Tenant (whether by operation of law or
otherwise); or
(c) any transaction pursuant to which Tenant is merged with or
consolidated into another entity (other than an entity owned and Controlled by
an Affiliate of Tenant), and Tenant is not the surviving entity.
13.03 OPERATING/SERVICE AGREEMENTS.
(a) Permitted Agreements. Tenant shall, without Landlord's
prior approval, be permitted to enter into certain operating/service agreements
(or amendments thereto) for portions of any Leased Property to various licensees
in connection with Tenant's operation of correctional or detention facilities as
is customarily associated with or incidental to the operation of such Leased
Property, which agreements may be in the nature of a sublease agreement,
provided such agreements or any amendments thereto are consistent with the
requirements of this Section 13.03.
(b) Terms of Agreements. Each operating/service agreement
concerning any of the Leased Property shall be subject and subordinate to the
provisions of the applicable Lease. No agreement made as permitted by Section
13.03(a) shall affect or reduce any of the obligations of Tenant hereunder, and
all such obligations shall continue in full force and effect as if no agreement
had been made. No agreement shall impose any additional obligations on Landlord
under the applicable Lease.
(c) Copies. Tenant shall, within ten (10) days after the
execution and delivery of any operating/service agreement or any amendment
thereto permitted by Section 13.03(a), deliver a duplicate original thereof to
Landlord.
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(d) Assignment of Rights in Agreements. As security for
performance of its obligations under each Lease, Tenant hereby grants, conveys
and assigns to Landlord all right, title and interest of Tenant in and to all
operating/service agreements now in existence or hereinafter entered into for
any or all of the applicable Leased Property, and all extensions, modifications
and renewals thereof and all rents, issues and profits therefrom, to the extent
the same are assignable by Tenant. Landlord hereby grants to Tenant a license to
collect and enjoy all rents and other sums of money payable under any such
agreement concerning any of such Leased Property; provided, however, that
Landlord shall have the absolute right at any time after the occurrence and
continuance of an Event of Default upon notice to Tenant and any vendors or
licensees to revoke said license and to collect such rents and sums of money and
to retain the same. Tenant shall not (i) after the occurrence and continuance of
an Event of Default, consent to, cause or allow any material modification or
alteration of any of the terms, conditions or covenants of any of the agreements
or the termination thereof, without the prior written approval of Landlord nor
(ii) accept any rents or other prepaid sums (other than customary security
deposits) more than ninety (90) days in advance of the accrual thereof nor
permit anything to be done, the doing of which, nor omit or refrain from doing
anything, the omission of which, will or could be a breach of or default in the
terms of any of the agreements or otherwise fail to timely perform all of its
obligations thereunder.
(e) Licenses, Etc. For purposes of this Section 13.03, the
operating/service agreements shall mean any licenses, concession arrangements,
or other arrangements relating to the possession or use of all or any part of
any Leased Property but specifically excluding any facility operating agreement
or other agreement for the housing or detention of inmates or detainees.
13.04 PERMITTED SUBLEASES. Landlord acknowledges that from time to
time Tenant intends to respond to requests for proposal ("RFP's") from
governmental entities seeking a contract for the housing or detention of
inmates or detainees at the Leased Premises ("Operating Contract"). Landlord
agrees to cooperate with Tenant in promptly reviewing any RFP which requires
that a sublease or a right to assume a sublease be granted to the governmental
entity in connection with the proposed award of an Operating Contract and
will not unreasonably withhold or delay consent thereto provided the terms of
such agreements, including any amendments thereto, are in accordance with the
requirements of Section 13.03(b), (c) and (d) and Section 13.07. If the terms
of such sublease or rights to assume a sublease do not comply with all of the
provisions of Section 13.03(b) and Section 13.07 but are nonetheless
acceptable to Landlord, in the exercise of Landlord's sole discretion, Landlord
agrees to execute and deliver, at Tenant's request, a nondisturbance and
attornment agreement in favor of such governmental entity, in form reasonably
satisfactory to Landlord. The provisions of this Section 13.04 shall apply to
any amendments to any sublease to which Landlord has previously granted its
consent or provided a nondisturbance agreement. Tenant agrees that an Operating
Contract or any amendment to an Operating Contract shall be deemed a sublease
for purposes of this Section 13.04 if such Operating Contract contains
provisions (whether or not set forth in a separate sublease agreement) granting
the governmental entity a right to use or occupy the Leased Premises or to
designate a successor operator to Tenant in the event of termination of
Tenant's rights under such Operating Contract. Tenant agrees to deliver to
Landlord copies of all Operating Contracts in effect with respect to any Leased
Premises, together with any amendments thereof and any notices of termination or
default received from the relevant contracting governmental entities,
regardless of whether any such Operating Contract is deemed a sublease
hereunder.
13.05 ASSIGNMENT. No assignment or sublease shall in any way impair the
continuing primary liability of Tenant hereunder, and no consent to any
assignment or sublease in a particular instance shall be deemed to be a waiver
of the prohibition set forth in Article XIII. Any assignment shall be solely of
Tenant's entire interest in the subject Lease. Any assignment, sublease or other
transfer of all or any portion of Tenant's interest in any Lease in
contravention of Article XIII shall be voidable at Landlord's option.
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13.06 REIT LIMITATIONS. Anything contained in this Agreement to the
contrary notwithstanding, Tenant shall not (i) sublet or assign any Leased
Property or any Lease on any basis such that the rental or other amounts to be
paid by the sublessee or assignee thereunder would be based, in whole or in
part, on the income or profits derived by any person of the Leased Property or
by the business activities of the sublessee or assignee; (ii) sublet or assign
any Leased Property or any Lease to any person that Landlord owns, directly or
indirectly (by applying constructive ownership rules set forth in Section
856(d)(5) of the Code), a ten percent (10%) or greater interest as defined by
Section 856(d)(2)(B) of the Code; or (iii) sublet or assign any Leased Property
or any Lease in any other manner or otherwise derive any income which could
cause any portion of the amounts received by Landlord pursuant to any Lease or
any sublease to fail to qualify as "rents from real property" within the meaning
of Section 856(d) of the Code, or which could cause any other income received by
Landlord to fail to qualify as income described in Section 856(c) (2) of the
Code. The requirements of this Section 13.05 shall likewise apply to any further
subleasing by any subtenant.
13.07 ATTORNMENT. Unless otherwise agreed by Landlord under Section
13.04, Tenant shall insert in each sublease entered into after the date hereof
provisions to the effect that (a) such sublease is subject and subordinate to
all of the terms and provisions of the applicable Lease (including this
Agreement) and to the rights of Landlord hereunder, (b) in the event such Lease
shall terminate before the expiration of such sublease, the sublessee thereunder
will, at Landlords' option, attorn to Landlord and waive any right the sublessee
may have to terminate the sublease or to surrender possession thereunder, as a
result of the termination of such Lease (except that such waiver of a right of
termination shall not be required in connection with an Operating Contract that
is deemed a sublease for purposes of Section 13.04) (c) a concurrent copy of any
notice of default required or permitted to be given under the Sublease will be
given to Landlord, (d) any amendment to said sublease to Landlord's prior
consent in accordance with the provisions of Section 13.03 and Section 13.04, as
applicable, and (e) in the event the sublessee receives a written notice from
Landlord or Landlord's assignees, if any, stating that Tenant is in default
under such Lease, the sublessee shall thereafter be obligated to pay all rentals
accruing under said sublease directly to the party giving such notice, or as
such party may direct. All rentals received from the sublessee by Landlord or
Landlord's assignees, if any, as the case may be, shall be credit against the
amounts owing by Tenant under such Lease.
ARTICLE XIV
ARBITRATION
14.01 CONTROVERSIES. Except with respect to the payment of Rent
hereunder, which shall be subject to the provisions of Section 9.02, in the case
a controversy arises between the parties as to any of the requirements of this
Agreement or of any individual Lease or the performance thereunder which the
parties are unable to resolve, the parties agree to waive the remedy of
litigation (except for extraordinary relief in an emergency situation) and agree
that such controversy or controversies shall be determined by arbitration as
hereafter provided in this Article.
14.02 APPOINTMENT OF ARBITRATORS. The party or parties requesting
arbitration shall serve upon the other a demand therefor, in writing, specifying
in detail the controversy and matter(s) to
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be submitted to arbitration. The selection of arbitrators shall be conducted
pursuant to the rules for resolution of commercial disputes promulgated by the
American Arbitration Association. The party or parties giving notice shall
request a listing of available arbitrators from the American Arbitration
Association, and each party shall respond in the selection process within
fifteen (15) days after each receipt of such listings until a panel of three (3)
arbitrators has been designated. If either party fails to respond within fifteen
(15) days, it is agreed that the American Arbitration Association may make such
selections as are necessary to complete the panel of three (3) arbitrators.
14.03 ARBITRATION PROCEDURE. Within fifteen (15) days after the
selection of the arbitration panel, the arbitrators shall give written notice to
each party as to the time and the place of each meeting, which shall be held in
West Palm Beach, Florida, at which the parties may appear and be heard, which
shall be no later than sixty (60) days after certification of the arbitration
panel. The parties waive the applicability of rules of evidence or rules of
procedure in the proceedings. The applicable rules shall be those in effect at
the time for the resolution of commercial disputes promulgated by the American
Arbitration Association. Notwithstanding the foregoing, the substantive law
governing the arbitration shall be the laws of the State of Florida. The
arbitrators shall take such testimony and make such examination and
investigations as the arbitrators reasonably deem necessary. The decision of the
arbitrators shall be in writing signed by a majority of the panel which decision
shall be final and binding upon the parties to the controversy; provided,
however, in rendering their decisions and making awards, the arbitrators shall
not add to, subtract from or otherwise modify the provisions of this Agreement.
14.04 EXPENSES. The expenses of the arbitration shall be assessed by
the arbitrators and specified in the written decision. In the absence of a
determination or assessment of expenses of the arbitration procedure in the
award, all of the expenses of such arbitration shall be divided equally between
Landlord and Tenant. Each party in interest shall be responsible for and pay the
fees, costs and expenses of its own counsel, unless the arbitration award
provides for an assessment of reasonable attorneys' fees and costs.
14.05 ENFORCEMENT OF THE ARBITRATION AWARD. There shall be no appeal
from the decision of the arbitrators, and upon the rendering of an award, any
party thereto may file the arbitrators' decision in the United States District
Court for the Southern District of Florida or any other court of competent
jurisdiction for enforcement as provided by applicable law.
ARTICLE XV
QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT, ESTOPPEL CERTIFICATES
15.01 QUIET ENJOYMENT. So long as Tenant performs all of its
obligations under this Agreement and each Lease, Tenant's possession of the
Leased Property will not be disturbed by or through Landlord.
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15.02 LANDLORD MORTGAGES; SUBORDINATION. Subject to Section 15.03,
without the consent of Tenant, Landlord may, from time to time, directly or
indirectly, create or otherwise cause to exist any lien, encumbrances or title
retention agreement on the Leased Properties, or any portion thereof or any
interest therein, whether to secure any borrowing or other means of financing or
refinancing. So long as Landlord obtains a nondisturbance agreement in
accordance with Section 15.03, this Agreement and each Lease and Tenant's rights
under this Agreement and each Lease shall be subordinate to any ground lease or
underlying lease, first mortgage, first deed of trust, or other first lien
against any Leased Property, together with any renewal, consolidation,
extension, modification or replacement thereof, which now or at any subsequent
time affects any Leased Property or any interest of Landlord in any Leased
Property, except to the extent that any such instrument expressly provides that
this Agreement and each Lease is superior. This provision will be
self-operative, and no further instrument or subordination will be required in
order to effect it. However, Tenant shall execute, acknowledge and deliver to
Landlord, at any time and from time to time upon demand by Landlord, such
documents as may be requested by Landlord or any mortgagee or any holder of any
mortgage or other instrument described in this Section, to confirm or effect any
such subordination. If Tenant fails or refuses to execute, acknowledge, and
deliver any such document within twenty (20) days after written demand, Landlord
may execute, acknowledge and deliver any such document on behalf of Tenant as
Tenant's attorney-in-fact. Tenant hereby constitutes and irrevocably appoints
Landlord, its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any documents described in this
Section. This power of attorney is coupled with an interest and is irrevocable.
15.03 ATTORNMENT; NON-DISTURBANCE. If any holder of any mortgage,
indenture, deed of trust, or other similar instrument described in Section 15.02
succeeds to Landlord's interest in any Leased Property, Tenant will pay to such
holder all Rent subsequently payable under the subject Lease. Tenant shall, upon
request of anyone succeeding to the interest of Landlord, automatically become
the tenant of, and attorn to, such successor in interest without changing such
Lease. The successor in interest will not be bound by (i) any payment of Rent
for more than one (1) month in advance; (ii) any amendment or modification of
such Lease made without its written consent, provided such party shall first
have afforded Tenant with written notice of its interest, including an address
to which the required request for written consent may be sent; (iii) any claim
against Landlord arising prior to the date on which the successor succeeded to
Landlord's interest; or (iv) any claim or offset of Rent against the Landlord.
Upon request by Landlord or such successor in interest and without cost to
Landlord or such successor in interest, Tenant will execute, acknowledge and
deliver an instrument or instruments confirming the attornment. If Tenant fails
or refuses to execute, acknowledge and deliver any such instrument within twenty
(20) days after written demand, then Landlord or such successor in interest will
be entitled to execute, acknowledge, and deliver any document on behalf of
Tenant as Tenant's attorney-in-fact. Tenant hereby constitutes and irrevocably
appoints Landlord, its successors and assigns, as Tenant's attorney-in-fact to
execute, acknowledge, and deliver on behalf of Tenant any such document. This
power of attorney is coupled with an interest and is irrevocable.
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Landlord shall use reasonable efforts to obtain a non-disturbance
agreement from any such party referred to above which provides that in the event
such party succeeds to Landlord's interest under the Lease and provided that no
Event of Default by Tenant exists, such party will not disturb Tenant's
possession, use or occupancy of the Leased Property in accordance with the
provisions of this Agreement.
15.04 ESTOPPEL CERTIFICATES. At the request Tenant, Landlord shall
execute, acknowledge, and deliver an estoppel certificate, in recordable form,
in favor of the Tenant or any lender or purchaser of Tenant, as the case may be,
pertaining to matters reasonably and customarily requested in such certificates.
In the case of such estoppel certificates requested of Tenant by Landlord or any
mortgagee or purchaser of the Leased Property, Tenant shall execute, acknowledge
and deliver an estoppel certificate, in recordable form, in favor of Landlord or
any mortgagee or purchaser of any Leased Property certifying the following: (i)
that the subject Lease is unmodified and in full force and effect, or if there
have been modifications that the same is in full force and effect as modified
and stating the modifications; (ii) the date to which Rent and other charges
have been paid; (iii) that Tenant is not in default nor is there any fact or
condition which, with notice or lapse of time, or both, would constitute a
default, if that be the case, or specifying any existing default; (iv) that
Tenant has accepted and occupies such Leased Property; (v) that Tenant has no
defenses, set-offs, deductions, credits, or counterclaims against Landlord, if
that be the case, or specifying such that exist; (vi) that the Landlord has no
outstanding construction or repair obligations; and (vii) such other information
as may reasonably be requested by the Landlord or any mortgagee or purchaser.
Any purchaser or mortgagee may rely on this estoppel certificate. If Tenant
fails to deliver the estoppel certificates to Landlord within ten (10) days
after the request of the Landlord, then Tenant shall be deemed to have certified
that (a) such Lease is in full force and effect and has not been modified, or
that such Lease has been modified as set forth in the certificate delivered to
Tenant; (b) Tenant has not prepaid any Rent or other charges except for the
current month; (c) Tenant has accepted and occupies such Leased Property; (d)
Landlord is not in default nor is there any fact or condition which, with notice
or lapse of time, or both, would constitute a default; (e) Landlord has no
outstanding construction or repair obligation; and (f) Tenant has no defenses,
set-offs, deductions, credits, or counterclaims against Landlord. Tenant hereby
irrevocably appoints Landlord as Tenant's attorney-in-fact to execute,
acknowledge and deliver on Tenant's behalf any estoppel certificate which Tenant
does not object to within twenty (20) days after Landlord sends the certificate
to Tenant. This power of attorney is coupled with an interest and is
irrevocable.
ARTICLE XVI
MISCELLANEOUS
16.01 NOTICES. Landlord and Tenant hereby agree that all notices,
demands, requests, and consents (hereinafter "Notices") required to be given
pursuant to the terms of this Lease shall be in writing and shall be addressed
as follows:
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If to Tenant: Wackenhut Corrections Corporation
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xx. Xxxxxx X. Xxxxx
With a copy to: Akerman, Senterfitt & Xxxxxx, P.A.
Xxx X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. March, Esq.
If to Landlord: CPT Operating Partnership, L.P.
0000 Xxxxxxxxx Xxxxx
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xx. Xxxxxxx X. Xxxxx
With a copy to: Josias, Goren, Cherof, Xxxxx and Xxxxx, P.A.
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
and shall be served by (i) personal delivery, (ii) certified mail, return
receipt requested, postage prepaid, or (iii) nationally recognized overnight
courier. All notices shall be deemed to be given upon the earlier of actual
receipt or three (3) days after mailing, or one (1) business day after deposit
with the overnight courier. Any Notices meeting the requirements of this Section
shall be effective, regardless of whether or not actually received. Landlord or
Tenant may change its notice address at any time by giving the other party
Notice of such change.
16.02 ADVERTISEMENT OF LEASED PROPERTY. In the event the parties hereto
have not executed a renewal lease of any Leased Property within one (1) year
prior to the expiration of the Term, then Landlord or its agent shall have the
right to enter such Leased Property at all reasonable times and in accordance
with Section 16.03 for the purpose of exhibiting such Leased Property to others.
16.03 LANDLORD'S ACCESS. Landlord shall have the right to enter upon
the Leased Property, upon reasonable prior notice to Tenant, for purposes of
inspecting the same and assuring Tenant's compliance with this Agreement
provided, any such entry by Landlord shall be subject to all rules, guidelines
and procedures prescribed by Tenant in connection therewith. Landlord shall not
be allowed entry to the Leased Premises unless accompanied by such of Tenant's
personnel as Tenant shall require.
16.04 ENTIRE AGREEMENT. This Agreement and the individual Leases
contain the entire agreement between Landlord and Tenant with respect to the
subject matter hereof and thereof. No
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representations, warranties, and agreements have been made by Landlord except as
set forth in this Agreement and the Leases.
16.05 SEVERABILITY. If any term or provision of this Agreement or any
Lease is held or deemed by Landlord to be invalid or unenforceable, such holding
shall not affect the remainder of this Agreement or any Lease and the same shall
remain in full force and effect, unless such holding substantially deprives
Tenant of the use of the Leased Property or Landlord of the Rents therefor, in
which event the Lease for such Leased Property shall forthwith terminate as if
by expiration of the Term.
16.06 CAPTIONS AND HEADINGS. The captions and headings are inserted
only as a matter of convenience and for reference and in no way define, limit or
describe the scope of this Agreement or the intent of any provision hereof.
16.07 GOVERNING LAW. This Agreement and each of the Leases shall be
construed under the laws of the State of Florida.
16.08 MEMORANDUM OF LEASE. Landlord and Tenant agree that a record of
this Agreement or any Lease may be recorded by either party in a memorandum of
lease approved by Landlord and Tenant with respect to each Leased Property.
16.09 WAIVER. No waiver by either party of any condition or covenant
herein contained, or of any breach of any such condition or covenant, shall be
held or take to be a waiver of any subsequent breach of such covenant or
condition, or to permit or excuse its continuance or any future breach thereof
or of any condition or covenant, nor shall the acceptance of Rent by Landlord at
any time when Tenant is in default in the performance or observance of any
condition or covenant herein be construed as a waiver of such default, or of
Landlord's right to terminate this Agreement or any Lease or exercise any other
remedy granted herein on account of such existing default.
16.10 BINDING EFFECT. This Agreement and each Lease will be binding
upon and inure to the benefit of the heirs, successors, personal
representatives, and permitted assigns of Landlord and Tenant.
16.11 AUTHORITY. The persons executing this Agreement or any Lease on
behalf of Tenant warrant that (i) Tenant has the power and authority to enter
into this Agreement or such Lease; (ii) Tenant is qualified to do business in
the state in which the Leased Property is located; and (iii) they are authorized
to execute this Agreement and each Lease on behalf of Tenant. Tenant shall, at
the request of Landlord, provide evidence satisfactory to Landlord confirming
these representation.
16.12 TRANSFER OF PERMITS, ETC. Upon the expiration or earlier
termination of the Term of any Lease (whether pursuant to the provisions of this
Agreement or of such Lease), Tenant shall, at the option of Landlord, transfer
to and relinquish to Landlord or Landlord's nominee and cooperate with Landlord
or Landlords' nominee in connection with the processing by Landlord or
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such nominee of all licenses, operating permits, and other governmental
authorization and all contracts, including without limitation, the correctional
or detention facility license, and any other contracts with governmental or
quasi-governmental entities which may be necessary or appropriate for the
operation by Landlord or such nominee of the subject Leased Property for the
purposes of operating a correctional or detention facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Landlord or Landlord's nominee; and provided
further that any management agreement, facility operating agreement or other
agreement for the housing or detention of inmates shall be expressly excluded.
Any such permits, licenses, certificates and contracts which are held in
Landlord's name now or at the termination of such Lease shall remain the
property of Landlord. To the extent permitted by law, Tenant hereby irrevocably
appoints Landlord, its successors and assigns and any nominee or nominees
specifically designated by Landlord or any successor or assign as Tenant's
attorney-in-fact to execute, acknowledge, deliver and file all documents
appropriate to such transfer or processing of any such application on behalf of
Tenant; this power of attorney is coupled with an interest and is irrevocable.
16.13 MODIFICATION. This Agreement and any Lease may only be modified
by a writing signed by both Landlord and Tenant.
16.14 INCORPORATION BY REFERENCE. All schedules and exhibits referred
to in this Agreement are incorporated into this Agreement, and all schedules and
exhibits referred to in any Lease (as well as the provisions of this Agreement,
except to the extent specifically excluded from or inconsistent with the terms
of such Lease) are incorporated into such Lease.
16.15 NO MERGER. The surrender of this Agreement or of any Lease by
Tenant or the cancellation of this Agreement or of any Lease by agreement of
Tenant and Landlord or the termination of this Agreement or of any Lease on
account of Tenant's default will not work a merger, and will, at Landlord's
option, except as otherwise expressly provided, terminate any subleases or
operate as an assignment to Landlord of any subleases. Landlord's option under
this paragraph will be exercised by notice to Tenant and all known subtenants of
any applicable Leased Property.
16.16 LACHES. No delay or omission by either party hereto to exercise
any right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
16.17 WAIVER OF JURY TRIAL. To the extent that there is any claim by
one party against the other that is not to be settled by arbitration as provided
in Article XIV hereof, Landlord and Tenant waive trial by jury in any action,
proceeding or counterclaim brought by either of them against the other on all
matters arising out of this Agreement or the use and occupancy of the Leased
Property (except claims for personal injury or property damage).
16.18 PERMITTED CONTESTS. Tenant, on its own or on Landlord's behalf
(or in Landlord's name), but at Tenant's expense, may contest, by appropriate
legal proceedings conducted in good
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faith and with due diligence, the amount or validity or application, in whole or
in part, of any Imposition or any legal requirement or insurance requirement or
any lien, attachment, levy, encumbrance, charge or claim provided that (i) in
the case of an unpaid Imposition, lien, attachment, levy, encumbrance, charge or
claim, the commencement and continuation of such proceedings shall suspend the
collection thereof from Landlord and from the Leased Property; (ii) neither the
Leased Property nor any Rent therefrom nor any part thereof or interest therein
would be in any immediate danger of being sold, forfeited, attached or lost;
(iii) in the case of a legal requirement, Landlord would not be in any immediate
danger of civil or criminal liability for failure to comply therewith pending
the outcome of such proceedings; (iv) in the event that any such contest shall
involve a sum of money or potential loss in excess of Fifty Thousand Dollars
($50,000.00), Tenant shall deliver to Landlord and its counsel an opinion of
Tenant's counsel to the effect set forth in clauses (i), (ii) and (iii), to the
extent applicable; (v) in the case of a legal requirement and/or an Imposition,
lien, encumbrance, or charge, Tenant shall give such reasonable security as may
be demanded by Landlord to insure ultimate payment of the same and to prevent
any sale or forfeiture of the affected Leased Property or the Rent by reason of
such nonpayment or noncompliance; provided, however, the provisions of this
Section shall not be construed to permit Tenant to contest the payment of Rent
(except as to contests concerning the method of computation or the basis of levy
of any Imposition) or any other sums payable by Tenant to Landlord hereunder;
(vi) in the case of an insurance requirement, the coverage required by Article
IV shall be maintained; and (vii) if such contest be finally resolved against
Tenant, Tenant shall, as Other Additional Rent due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or comply with the applicable legal requirement or insurance
requirement. Landlord, at Tenant's expense, shall execute and deliver to Tenant
such authorizations and other documents as may be reasonably required in any
such contest, and, if reasonably requested by Tenant or if Landlord so desires,
Landlord shall join as a party therein. Tenant hereby agrees to indemnify and
save Landlord harmless from and against any liability, cost or expense of any
kind that may be imposed upon Landlord in connection with any such contest and
any loss resulting therefrom.
16.19 CONSTRUCTION OF LEASE. This Agreement and each of the Leases for
Leased Properties have been reviewed by Landlord and Tenant and their respective
professional advisors. Landlord, Tenant, and their advisors believe that this
Agreement and such Leases are the product of all their efforts, that they
express their agreement, and agree that they shall not be interpreted in favor
of either Landlord or Tenant or against either Landlord or Tenant merely because
of any party's efforts in preparing such documents.
16.20 COUNTERPARTS. This Agreement and each Lease may be executed in
duplicate counterparts, each of which shall be deemed an original hereof or
thereof.
16.21 RELATIONSHIP OF LANDLORD AND TENANT. The relationship of Landlord
and Tenant is the relationship of lessor and lessee. Landlord and Tenant are not
partners, joint venturers, or associates.
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16.22 LANDLORD'S STATUS AS A REIT. Tenant acknowledges that Landlord
intends to elect to be taxed as a real estate investment trust ("REIT") under
the Code. Tenant shall not do anything which would adversely affect Landlord's
status as a REIT. Tenant hereby agrees to modifications of this Agreement which
do not materially adversely affect Tenant's rights and liabilities if such
modifications are required to retain or clarify Landlord's status as a REIT.
16.23 SALE OF REAL ESTATE ASSETS. Notwithstanding any other provision
of this Agreement or of any Lease, Landlord shall not be required to sell or
transfer Leased Property, or any portion thereof, which is a real estate asset
as defined in Section 856(c)(6) of the Code, to Tenant if Landlord's counsel
advises Landlord that such sale or transfer may not be a sale of property
described in Section 857(b)(6)(C) of the Code. If Landlord determines not to
sell such property pursuant to the above sentence, Tenant's right, if any, to
purchase the Leased Property shall continue and be exercisable at such time as
the transaction, upon the advice of Landlord's counsel, would be a sale of
property described in Section 857(b)(6)(C) of the Code.
16.24 ARBITRATION. If it becomes necessary to determine the fair market
rental of a Capital Addition in connection with the exercise by the Landlord of
an option to purchase with respect thereto, the Landlord and Tenant shall
attempt to agree upon a single appraiser to make such determination within
thirty (30) days after a demand for arbitration has been made by either the
Landlord or Tenant. If the Landlord and Tenant are unable to agree upon a single
arbitrator within thirty (30) days thereafter, then the party giving the notice
of demand for arbitration shall give notice to the other of a person selected to
act as appraiser on its behalf. Within ten (10) days after such notice, the
Landlord (or Tenant, as the case may be) shall by notice to the Tenant (or the
Landlord, as the case may be) appoint a second person as appraiser on its
behalf. The appraisers thus appointed, each of whom must be a member of the
American Institute of Real Estate Appraisers (or any successor organization
thereto) and experienced in appraising correction and detention facilities (or
reasonably similar facilities), shall, within forty-five (45) days after the
date of the notice appointing the first appraiser, proceed to appraise the
relevant Capital Addition to determine the fair market rental thereof as of the
relevant date (giving effect to the impact, if any, of inflation from the date
of their decision to the relevant date); provided, however, that if only one
appraiser has been so appointed, or if two appraisers have been so appointed but
only one such appraiser has made such determination within the later to occur of
ten (10) business days following the delivery of such appraisal to the other
party or fifty (50) days after the making of Tenant's or Landlord's request,
then the determination of such appraiser shall be final and binding upon the
parties. If two appraisers have been appointed and have made their
determinations within the respective requisite periods set forth above and if
the difference between the amounts so determined does not exceed ten percent
(10%) of the lesser of such amounts, then the fair market rental shall be an
amount equal to fifty percent (50%) of the sum of the amounts so determined. If
the difference between the amounts so determined exceeds ten percent (10%) of
the lesser of such amounts, then such two appraisers shall have twenty (20) days
to appoint a third appraiser. If no such appraiser has been appointed within
such twenty (20) days or within ninety (90) days of the original request for a
determination of fair market value or fair market rental, whichever is earlier,
either Landlord or Tenant may apply to any court having jurisdiction to have
such appointment made by such court. Any appraiser appointed
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by the original appraisers or by such court shall be instructed to determine the
fair market rental within forty-five (45) days after appointment of such
appraiser. The determination of the appraiser which differs most in terms of
dollar amount from the determinations of the other two appraisers shall be
excluded, and the average of the sum of the remaining two determinations shall
be final and binding upon Landlord and Tenant as the fair market rental of the
Capital Addition. This provision for determining by appraisal shall be
specifically enforceable to the extent such remedy is available under applicable
law, and any determination hereunder shall be final and binding upon the parties
and judgment may be entered upon such determination in any court having
jurisdiction of the matter. The Landlord and Tenant shall each pay the fees and
expenses of the appraiser appointed by it and each shall pay one-half (1/2) of
the fees and expenses of the third appraiser and one-half (1/2) of all other
costs and expenses incurred in connection with each appraisal.
16.25 LIABILITY OF GENERAL PARTNER OF LANDLORD. Tenant acknowledges
that Landlord has disclosed that the general partner of Landlord (the "General
Partner") is a Maryland business trust formed pursuant to a Declaration of
Trust, as amended, a copy of which is duly filed with the Department of
Assessments and Taxation of the State of Maryland, which provides that no
trustee, officer, shareholder, employee or agent of the General Partner shall be
held personally liable under any written instrument creating an obligation of,
or claim against, the General Partner and that all persons dealing with the
General Partner, in any way, shall look only to the assets of the General
Partner for the payment of any sum or the performance of any obligation. Tenant
agrees that any liability of the General Partner or any trustee, officer,
shareholder, employee or agent acting on behalf of the General Partner arising
out of this Agreement or the performance by Landlord of its obligations
hereunder is limited to the assets of the General Partner in accordance with the
above Declaration of Trust.
16.26 WARRANTIES. Notwithstanding the assignment to Landlord of the
construction and manufacturers' warranties with respect to the Leased Property
or any Capital Addition in connection with the acquisition thereof from Tenant,
Landlord shall cooperate with Tenant in Tenant's enforcement, at Tenant's sole
cost and expense, of any express or implied warranties or guaranties of
workmanship or materials given by contractors, subcontractors, architects,
draftsmen, materialmen or manufacturers that guarantee or warrant against
defective design, workmanship or materials in connection with the construction
of, or any alteration or improvement to, the Leased Premises. Landlord will
execute such documents as Tenant may reasonably require in order to evidence the
authority of Tenant to enforce such guaranties and warranties in Landlord's name
or on Landlord's behalf.
IN WITNESS WHEREOF, the parties hereto have executed this Lease or
caused the same to be executed by their respective duly authorized officers as
of the date first set forth above.
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WITNESSES: CPT OPERATING PARTNERSHIP L.P.
By: Correctional Properties Trust, its
general partner
By:
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PRINT NAME OF WITNESS BELOW: Xxxxxxx X. Xxxxx, President
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----------------------------------
PRINT NAME OF WITNESS BELOW:
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WACKENHUT CORRECTIONS
CORPORATION
By:
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PRINT NAME OF WITNESS BELOW: Xxxxxx Xxxxx, Vice Chairman of the Board
----------------------------------
----------------------------------
PRINT NAME OF WITNESS BELOW:
----------------------------------
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SCHEDULE A
THE FACILITIES
Location
Facility Name (City, State)
------------- -------------
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SCHEDULE B
PERSONAL PROPERTY
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SCHEDULE C
[TENANT'S PROPRIETARY PROPERTY]
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