LEASE AGREEMENT
between
HOST FUNDING, INC.
and
CROSSROADS HOSPITALITY TENANT COMPANY, L.L.C.
October 15, 1995
LEASE AGREEMENT
THIS LEASE AGREEMENT (hereinafter called this "Lease"), made as of the 15th
day of October, 1995, by and between HOST FUNDING, INC., a Maryland corporation
(hereinafter called "Lessor") and CROSSROADS HOSPITALITY TENANT COMPANY, L.L.C.,
a Delaware limited liability company (hereinafter called "Lessee"), provides as
follows.
WITNESSETH:
, Lessor holds and owns clear and marketable title to a hotel commonly
known as the [Name of Hotel] ("Leased Property", as more fully described in
Section 1.1 hereof) and certain other hotel properties (hereinafter sometimes
referred to individually as a "Hotel" and collectively as the "Hotels") and is
entering into other similar leases (hereinafter sometimes referred to
individually as a "Lease" and collectively as the "Leases") with Lessee covering
the other Hotels.
In furtherance of the consummation of such series of transactions, Lessor
and Lessee wish to enter into this Lease and that certain Master Agreement,
dated of even date herewith (the "Master Agreement") by and among the Lessor,
the Lessee and Crossroads Hospitality Company, L.L.C. ("Crossroads Parent").
NOW, THEREFORE, Lessor, in consideration of the payment of rent by Lessee
and the other covenants and agreements to be performed by Lessee, and upon the
terms and conditions hereinafter stated, does hereby rent and lease unto Lessee,
and Lessee does hereby rent and lease from Lessor, the Leased Property.
SECTION 1.
1.1 LEASED PROPERTY. The Leased Property is comprised of Lessor's
interest in the following:
1.1.1 the land or ground leasehold interest described in Exhibit
"A" attached hereto and by reference incorporated herein (the "Land");
1.1.2 all buildings, structures and other improvements of every
kind including, but not limited to, alleyways and connecting tunnels, sidewalks,
utility pipes, conduits and lines (on-site and offsite), parking areas and
roadways appurtenant to such buildings and structures presently situated upon
the Land (collectively, the "Leased Improvements");
1.1.3 all easements, rights and appurtenances relating to the Land
and the Leased Improvements;
1.1.4 all equipment, machinery, fixtures, and other items of
property required or incidental to the use of the Leased Improvements as a
hotel, including all components thereof, now and hereafter permanently affixed
to or incorporated into the Leased Improvements, including, without limitation,
all furnaces, boilers, heaters, electrical 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, all of which to the
greatest extent permitted by law are hereby deemed by the parties hereto to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto (collectively, the "Fixtures");
1.1.5 all furniture and furnishings, Inventory and all other items
of personal property (excluding Inventory and other personal property owned by
Lessee) located on, and used in connection, with the operation of the Leased
Improvements as a hotel, together with all replacements, modifications,
alterations and additions thereto; and
1.1.6 all existing leases of space within the Leased Property
(including any security deposits or collateral held by Lessor pursuant thereto).
EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN, THE LEASED PROPERTY IS DEMISED IN
ITS PRESENT CONDITION WITHOUT REPRESENTATION OR WARRANTY BY LESSOR AND SUBJECT
TO THE RIGHTS OF PARTIES IN POSSESSION, AND TO THE EXISTING STATE OF TITLE
INCLUDING ALL COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND OTHER MATTERS
OF RECORD INCLUDING ALL APPLICABLE LEGAL REQUIREMENTS, THE LIEN OF FINANCING
INSTRUMENTS, MORTGAGES, DEEDS OF TRUST AND SECURITY DEEDS, AND INCLUDING OTHER
MATTERS WHICH WOULD BE DISCLOSED BY AN INSPECTION OF THE LEASED PROPERTY OR BY
AN ACCURATE SURVEY THEREOF.
1.2 TERM.
(A) The term of the Lease (the "Term") shall commence on the closing date
of the public offering described in the Form S-11 Registration Statement filed
by Lessor with the Securities and Exchange Commission on October___, 1995 (the
"Commencement Date") and shall end on the fifteenth annual anniversary of the
last day of the month in which the Commencement Date occurs, unless sooner
terminated in accordance with the provisions hereof. Because of the lack of
certainty of the actual date of the Commencement Date, the Lessor shall provide
to Lessee at least five (5) days prior written notice of the Commencement Date.
Notwithstanding the foregoing, if the Commencement Date does not occur on or
before December 31, 1995, the Lessee may terminate this Lease by providing to
the Lessor five (5) days prior written notice of termination.
(B) In addition to the other termination provisions contained in this
Lease and/or in the Master Agreement, the parties shall have the following
respective termination rights: The Lessor may terminate this Lease upon the
satisfaction by the Lessor of all of the following conditions: (a)
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the Lessor shall have sold the Leased Property to a third party that is not an
Affiliate, (b) the Lessor shall have provided to the Lessee at least ninety (90)
days prior written notice of termination, (c) if the obligations of the Lessor
shall not have been expressly assumed by a purchaser approved by the Lessee,
the Lessor shall have paid to the Lessee a lease cancellation fee (the "Lessor
Cancellation Fee") as more fully described on EXHIBIT "B" attached hereto and
made a part hereof, and (d) the Lessor shall have paid to the Lessee all of the
Negative Base Rent.
SECTION 2 - DEFINITIONS.
For all purposes of this Lease, except as otherwise expressly provided or
unless the context otherwise requires, (a) the terms defined in this Section
have the meanings assigned to them in this Section and include the plural as
well as the singular, (b) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted accounting
principles and the Uniform System as are at the time applicable, (c) all
references in this Lease to designated "Sections" and other subdivisions are to
the designated Sections and other subdivisions of this Lease, and (d) the words
"herein", "hereof" and "hereunder" and other words of similar import refer to
this Lease as a whole and not to any particular Section or other subdivision:
ADDITIONAL CHARGES: As defined in Section 3.5 of this Lease.
AFFILIATES: As used in this Lease the term "Affiliate" of a person shall
mean (a) any person that, directly or indirectly, controls or is controlled by
or is under common control with such person, (b) any other person that owns,
beneficially, directly or indirectly, five percent or more of the outstanding
capital stock, shares or equity interests of such person, or (c) any officer,
director, employee, partner or trustee of such person or any person controlling,
controlled by or under common control with such person (excluding trustees and
persons serving in similar capacities who are not otherwise an Affiliate of such
person). The term "person" means and includes individuals, corporations,
general and limited partnerships, stock companies or associations, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts, or other entities and governments and agencies and political
subdivisions thereof. For the purposes of this definition, "control" (including
the correlative meanings of the terms "controlled by" and "under common control
with"), as used with respect to any person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person, through the ownership of voting securities,
partnership interests or other equity interests.
AWARD: As defined in Section 15.1.3 of this Lease.
BASE MANAGEMENT FEE: An amount equal to six percent (6%) of Gross Revenues
(as defined in the Uniform System) which shall be an imputed amount retained by
Lessee as a management fee and charged as a Gross Operating Expense of the
Hotel. The amount of the Base Management Fee shall be calculated prior to any
deduction of Base Rent from Gross Revenues and shall be payable prior to the
payment of Percentage Rent.
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BASE RATE: The rate of interest announced publicly by Bank of America in
San Francisco, California from time to time, as such bank's base rate. If no
such rate is announced or becomes discontinued, then such other rate as Lessor
may reasonably designate.
BASE RENT: As defined in Section 3 of this Lease.
BREAK-EVEN THRESHOLD: Such amount of Gross Operating Revenues for the
Leased Property as set forth on Exhibit E attached hereto and made a part
hereof.
CAPITAL EXPENDITURE BUDGET: As defined in Section 40 of this Lease.
CAPITAL EXPENDITURE RESERVE ACCOUNT: As defined in Section 40 of this
Lease.
CERCLA: The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
CODE: The Internal Revenue Code of 1986, as amended.
COMMENCEMENT DATE: As defined in Section 1.2(A) of the Lease.
CONDEMNATION, CONDEMNOR: As defined in Section 15.1 of this Lease.
DATE OF TAKING: As defined in Section 15.1(2) of this Lease.
ENCUMBRANCE: As defined in Section 3.4 of this Lease.
ENVIRONMENTAL AUTHORITY: Any department, agency or other body or component
of any Government that exercises any form of jurisdiction or authority under any
Environmental Law.
ENVIRONMENTAL AUTHORIZATION: Any license, permit, order, approval,
consent, notice, registration, filing or other form of permission or
authorization required under any Environmental Law.
ENVIRONMENTAL LAWS: All applicable federal, state, local and foreign laws
and regulations relating to pollution of the environment (including without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata), including without limitation laws and regulations relating to
emissions, discharges, Releases or threatened Releases of Hazardous Materials or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials. Environmental
Laws include, but are not limited to CERCLA, FIFRA, RCRA, XXXX and TSCA.
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ENVIRONMENTAL LIABILITIES: Any and all obligations to pay the amount of
any judgment or settlement, the cost of complying with any settlement, judgment
or order for injunctive or other equitable relief, the cost of compliance or
corrective action in response to any notice, demand or request from an
Environmental Authority, the amount of any civil penalty or criminal fine, and
any court costs and reasonable amounts for attorneys' fees, fees for witnesses
and experts, and costs of investigation and preparation for defense of any claim
or any Proceeding, regardless of whether such Proceeding is threatened, pending
or completed, that may be or have been asserted against or imposed upon Lessor,
Lessee, any Predecessor, the Leased Property or any property used therein and
arising out of:
(a) Failure of Lessee, Lessor, any Predecessor or the Leased Property to
comply at any time with all Environmental Laws;
(b) Presence of any Hazardous Materials on, in, under, at or in any way
affecting the Leased Property;
(c) A Release at any time of any Hazardous Materials on, in, at, under in
any way affecting the Leased Property;
(d) Identification of Lessee, Lessor or any Predecessor as a potentially
responsible party under CERCLA or under any Environmental Law similar to CERCLA;
(e) Presence at any time of any above-ground and/or underground storage
tanks, as defined in RCRA or in any applicable Environmental Law on, in, at or
under the Leased Property or any adjacent site or facility; or
(f) Any and all claims for injury or damage to persons or property arising
out of exposure to Hazardous Materials originating or located at the Leased
Property, or resulting from operation thereof or any adjoining property.
EVENT OF DEFAULT: As defined in Section 16.1 of this Lease.
FACILITY: The hotel and/or other facility offering lodging and other
services or amenities being operated or proposed to be operated on the Leased
Property.
FAIR MARKET RENTAL: The fair market rental of the Leased Property means
the rental which a willing tenant not compelled to rent would pay a willing
landlord not compelled to lease for the use and occupancy of such Leased
Property pursuant to the Lease for the term in question, (a) assuming that
Lessee is not in default thereunder, and (b) determined in accordance with the
appraisal procedures set forth in Section 34 or in such other manner as shall be
mutually acceptable to Lessor and Lessee.
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FAIR MARKET VALUE: The fair market value of the Leased Property means an
amount equal to the price that a willing buyer not compelled to buy would pay a
willing seller not compelled to sell for such Leased Property, (a) assuming the
same is unencumbered by this Lease, (b) determined in accordance with the
appraisal procedures set forth in Section 34 or in such other manner as shall be
mutually acceptable to Lessor and Lessee, (c) assuming that such seller must pay
customary closing costs and title premiums, and (d) taking into account the
positive or negative effect on the value of the Leased Property attributable to
the interest rate, amortization schedule, maturity date, prepayment penalty and
other terms and conditions of any encumbrance that is assumed by the transferee.
In addition, in determining the Fair Market Value with respect to damaged or
destroyed Leased Property, such value shall be determined as if such Leased
Property had not been so damaged or destroyed.
FIFRA: The Federal Insecticide, Fungicide, and Rodenticide Act, as
amended.
FINANCIALS: For any Fiscal Year or other accounting period for Lessee,
statements of earnings and retained earnings and of changes in financial
position for such period and for the period from the beginning of the respective
fiscal year to the end of such period and the related balance sheet as at the
end of such period, together with the notes thereto, all in reasonable detail
and setting forth in comparative form the corresponding figures for the
corresponding period in the preceding Fiscal Year, and prepared in accordance
with generally accepted accounting principles and audited by independent
certified public accountants acceptable to Lessor in its sole discretion.
FISCAL YEAR: The 12-month period from January 1 to December 31.
FIXTURES: As defined in Section 1.1 of this Lease.
FRANCHISE AGREEMENT: Any franchise agreement or license agreement with a
franchisor under which the Facility is operated.
FF&E: All furniture, fixtures, equipment, wall coverings, and hotel
systems located at, or used in connection with the Leased Property, together
with all replacements therefor and additions thereto, including, without
limitation, (i) all equipment and systems required for the operation of kitchens
and bars, if any, laundry and dry cleaning facilities, (ii) office equipment,
(iii) dining room wagons, materials handling equipment, cleaning and engineering
equipment, (iv) telephone and computerized accounting systems and (v) vehicles.
GOVERNING STATE LAW: The laws of the State in which the Leased Property
is situated shall govern this Agreement.
GOVERNMENT: The United States of America, any state, district or territory
thereof, any foreign nation, any state, district, department, territory or other
political division thereof, or any political subdivision of any of the
foregoing.
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GROSS OPERATING EXPENSES: All expenses incurred in the ordinary course of
operating the Leased Property as defined in the Uniform System.
GROSS OPERATING PROFIT: The amount by which Gross Revenues exceeds Gross
Operating Expenses such calculation is more fully described in the Uniform
System.
GROSS REVENUES: All receipts, revenues, income and proceeds of sales of
every kind received by Tenant directly or indirectly from the operation of the
Leased Property as more fully described in the Uniform System.
HAZARDOUS MATERIALS: All chemicals, pollutants, contaminants, wastes and
toxic substances, including without limitation:
(a) Solid or hazardous waste, as defined in RCRA or in any Environmental
Law;
(b) Hazardous substances, as defined in CERCLA or in any Environmental
Law;
(c) Toxic substances, as defined in TSCA or in any Environmental Law;
(d) Insecticides, fungicides, or rodenticides, as defined in FIFRA or in
any Environmental Law; and
(e) Gasoline or any other petroleum product or byproduct, polychlorinated
biphenols, asbestos and urea formaldehyde.
IMPOSITIONS: Collectively, all taxes (including, without limitation, all
ad valorem, sales and use, single business, gross receipts, transaction
privilege, rent or similar taxes as the same relate to or are imposed upon
Lessee or its business conducted upon the Leased Property) assessments
(including, without limitation, all assessments for public improvements or
benefit, whether or not commenced or completed prior to the date hereof provided
that said improvements are completed within the Term and whether or not to be
completed within the Term), ground rents, water, sewer or other rents and
charges, excises, tax inspection, authorization and similar fees and all other
governmental charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in respect of the
Leased Property or the business conducted thereon by Lessee, (including all
interest and penalties thereon caused by any failure in payment by Lessee),
which at any time prior to, during or with respect to the Term hereof may be
assessed or imposed on or with respect to or be a lien upon (a) Lessor's
interest in the Leased Property, (b) the Leased Property, 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 by Lessee. Notwithstanding the foregoing or
anything otherwise contained in this definition of Impositions or elsewhere in
this Lease or in the Master Agreement shall be construed to require Lessee to
prepare tax returns or reports for, or pay (1) any tax based on net income
(whether
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denominated as a franchise or capital stock or other tax) imposed on Lessor or
any other person, or (2) any net revenue tax of Lessor or any other person, or
(3) any tax imposed with respect to the sale, exchange or other disposition by
Lessor of any Leased Property or the proceeds thereof, (4) any real estate or
personal property taxes imposed upon the Lessor's property including but not
limited to the Leased Property or (5) any single business, gross receipts
(including any tax on any rent received by Lessor from Lessee), transaction,
privilege or similar taxes as the same relate to or are imposed upon Lessor,
except to the extent that any tax, assessment, tax levy or charge that Lessee is
obligated to pay pursuant to the first sentence of this definition and that 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 (1) or (2) is
levied, assessed or imposed expressly in lieu thereof.
INDEMNIFIED PARTY: Either a Lessee Indemnified Party or a Lessor
Indemnified Party.
INDEMNIFYING PARTY: Any party obligated to indemnify an Indemnified Party
pursuant to Sections 8.3 or 23.1.
INSURANCE REQUIREMENTS: All terms of any insurance policy required by this
Lease and all requirements of the issuer of any such policy.
INVENTORY: All "Inventories of Merchandise" and "Inventories of Supplies"
as defined in the Uniform System of Accounts for Hotels (8th Revised Edition,
1986) as published by the Hotel Association of New York City, Inc., as same may
hereafter be revised.
LAND: As defined in Section 1.
LEASE: This Lease.
LEASED IMPROVEMENTS: LEASED PROPERTY: Each as defined in Section 1.
LEGAL REQUIREMENTS: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Property or the maintenance,
construction, use or alteration thereof (whether by Lessee or otherwise),
whether or not hereafter enacted and in force, including (a) all laws, rules or
regulations pertaining to the environment, occupational health and safety and
public health, safety or welfare, and (b) any laws, rules or regulations that
may (1) require repairs, modifications or alterations in or to the Leased
Property, or (2) in any way adversely affect the use and enjoyment thereof; and
all permits, licenses and authorizations and regulations relating thereto and
all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Lessee (other than encumbrances
created by Lessor without the consent of Lessee), at any time in force affecting
the Leased Property.
LESSEE: The Lessee designated on this Lease and its permitted successors
and assigns.
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LESSEE INDEMNIFIED PARTY: Lessee, any Affiliate of Lessee, any other
Person against whom any claim for indemnification may be asserted hereunder as a
result of a direct or indirect ownership interest (including a stockholder's
interest or partnership interest) in Lessee, the officers, directors,
stockholders, employees, agents and representatives of Lessee and any partner,
corporate stockholder, agent, or representative of Lessee, and the respective
heirs, personal representatives, successors and assigns of any such officer,
director, partner, stockholder, employee, agent or representative.
LESSOR: The Lessor designated on this Lease and its successors and
assigns.
LESSOR INDEMNIFIED PARTY: Lessor, any Affiliate of Lessor, any other
Person against whom any claim for indemnification may be asserted hereunder as a
result of a direct or indirect ownership interest (including a stockholder's or
partnership interest) in Lessor, the officers, directors, stockholders,
employees, agents and representatives of the general partner of Lessor and any
partner, agent, or representative of Lessor, and the respective heirs, personal
representatives, successors and assigns of any such officer, director, partner,
stockholder, employee, agent or representative.
MINIMUM PRICE: The sum of (a) the equity in the Leased Property at the
time of acquisition of the Leased Property by Lessor (i.e., that portion of the
acquisition price of the Leased Property paid by Lessor in cash and/or the
original exchange value of its common shares) as more fully described on Exhibit
I attached hereto and made a part hereof, plus (b) other capital expenditures on
the Leased Property by Lessor after the date hereof, plus (c) the unpaid
principal balance of all encumbrances against the Leased Property at the time of
purchase of the Leased Property by Lessee, less (x) all proceeds received by
Lessor from any financing or refinancing of the Leased Property after the date
hereof (after payment of any debt refinanced and net of any costs and expenses
incurred in connection with such financing or refinancing, including, without
limitation, loan points, commitment fees and commissions and legal fees) and (y)
the net amount (after deduction of all reasonable legal fees and other costs and
expenses, including without limitation expert witness fees, incurred by Lessor
in connection with obtaining any such proceeds or award) of all insurance
proceeds received by Lessor andAwards received by Lessor from any Partial Taking
of the Leased Property that are not applied to restoration.
NEGATIVE BASE RENT. To the extent that at any time during the first four
(4) years after the Commencement Date the Property Cash Flow from the Leased
Property is less than the Base Rent, then Lessee will be allowed to accrue the
difference as Negative Base Rent. The Negative Base Rent shall be cumulative
but shall not bear interest.
NOTICE: A notice given pursuant to Section 33 of this Lease.
OFFICER'S CERTIFICATE: A certificate of Lessee signed by the chief
financial officer or another officer authorized so to sign by the board of
directors or by-laws of Lessee, or any other person whose power and authority to
act has been authorized by delegation in writing by any such officer.
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OVERDUE RATE: On any date, a rate equal to the Base Rate plus 2% per
annum, but in no event greater than the maximum rate then permitted under
applicable law.
PAYMENT DATE: Any due date for the payment of any installment of Base
Rent.
PERCENTAGE RENT: As defined in Section 3.1(b) of this Lease.
PERSON: Any Government, natural person, corporation, partnership or other
legal entity.
PREDECESSOR: Any Person whose liabilities arising under any Environmental
Law have or may have been retained or assumed by Lessee, either contractually or
by operation of law, relating to the Leased Property.
PRIMARY INTENDED USE: As defined in Section 7.2.2 of this Lease.
PROCEEDING: Any judicial action, suit or proceeding (whether civil or
criminal), any administrative proceeding (whether formal or informal), any
investigation by a governmental authority or entity (including a grand jury),
and any arbitration, mediation or other non-judicial process for dispute
resolution.
PROPERTY CASH FLOW: Gross Operating Profit (as defined in the Uniform
System) less capital expenditures and the amount of the imputed Base Management
Fee and property insurance required pursuant to Section 13 hereof..
RCRA: The Resource Conservation and Recovery Act, as amended.
REAL ESTATE TAXES: All real estate taxes, including general and special
assessments, if any, which are imposed upon the Land, and any improvements
thereon.
REJECTABLE OFFER PRICE: An amount equal to the greater of (a) the Fair
Market Value, determined as of the applicable purchase date, or (b) the Minimum
Price.
RELEASE: A "Release" as defined in CERCLA or in any Environmental Law,
unless such Release has been properly authorized and permitted in writing by all
applicable Environmental Authorities or is allowed by such Environmental Law
without authorizations or permits.
RENT: Collectively, the Base Rent, Percentage Rent, and Additional
Charges.
XXXX: The Superfund Amendments and Reauthorization Act of 1986, as
amended.
STATE: The State or Commonwealth of the United States in which the Leased
Property is located.
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TAKING: A taking or voluntary conveyance during the Term hereof of all or
part of the Leased Property, or any interest therein or right accruing thereto
or use thereof, as the result of, or in settlement of, any Condemnation or other
eminent domain proceeding affecting the Leased Property whether or NOT the same
shall have actually been commenced.
TERM: As defined in Section 1.2(A) of this Lease.
TSCA: The Toxic Substances Control Act, as amended.
UNECONOMIC FOR ITS PRIMARY INTENDED USE: A state or condition of the
Facility such that in the good faith judgment of Lessee, reasonably exercised
and evidenced by the resolution of the board of directors or other governing
body of Lessee, the Facility cannot be operated on a commercially practicable
basis for its Primary Intended Use, taking into account, among other relevant
factors, the number of usable rooms and projected revenues and changes in the
Competitive Set of the Leased Property, such that Lessee intends to, and shall,
complete the cessation of operations from the Leased Facility. For purposes of
this Lease, the term "Competitive Set" shall mean [TO BE AGREED UPON FOR EACH
SPECIFIC HOTEL].
UNIFORM SYSTEM: Shall mean the Uniform System of Accounts for Hotels (8th
Revised Edition, 1986) as published by the Hotel Association of New York City,
Inc., as same may hereafter be revised.
UNSUITABLE FOR ITS PRIMARY INTENDED USE: A state or condition of the
Facility such that, in the good faith judgment of Lessee, reasonably exercised
and evidenced by the resolution of the board of directors or other governing
body of Lessee, due to casualty damage or loss through Condemnation, the
Facility cannot function as an integrated hotel facility consistent with
standards applicable to a well maintained and operated hotel.
SECTION 3.
3.1 RENT. Lessee will pay to Lessor in lawful money of the United States
of America which shall be legal tender for the payment of public and private
debts, in immediately available funds, at Lessor's address set forth in Section
33 hereof or at such other place or to such other Person, as Lessor from time to
time may designate in a Notice, all Base Rent, Percentage Rent and Additional
Charges, during the Term, as follows:
(A) BASE RENT: Beginning with the second calendar month after the
Commencement Date, in consecutive monthly installments, on or before the tenth
day of each calendar month of the Term ("Base Rent") an amount corresponding to
the amounts set forth on EXHIBIT D attached hereto and made a part hereof;
provided, however, that the first and last monthly
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payments of Base Rent shall be pro-rated as to any partial month (subject to
adjustment as provided in Sections 5.2, 14.5, 15.3, 15.5, and 15.6); and
(B) PERCENTAGE RENT: For each Fiscal Year during the Term commencing
with the Fiscal Year beginning January 1, 1996, Tenant shall pay percentage
rent (based upon the R Gross Rrevenues of the Leased Property in excess of the
Break-Even Threshold and the amounts necessary to offset Negative Base Rent)
("Percentage Rent") on a quarterly basis within twenty (20) days after the end
of each calendar quarter an amount calculated in accordance with the formula
set forth on EXHIBIT E attached hereto and made a part hereof.
(C) OFFICER'S CERTIFICATES: Additionally, an Officer's Certificate
shall be delivered to Lessor quarterly, together with such quarterly Percentage
Rent payment, setting forth the calculation of such rent payment for such
quarter within 20 days after each of the first three quarters of each Fiscal
Year (or part thereof) in the Term. Such quarterly payments shall be based on
the formula set forth on EXHIBIT E.
In addition, on or before March 31 of each year, commencing with March 31,
1996, Lessee shall deliver to Lessor an Officer's Certificate reasonably
acceptable to Lessor setting forth the computation of the actual Percentage Rent
that accrued for each quarter of the Fiscal Year that ended on the immediately
preceding December 31 and shall pay Percentage Rent to Lessor, if due and
payable, for the last quarter of the applicable Fiscal Year. Additionally, if
the annual Percentage Rent due and payable for any Fiscal Year (as shown in the
applicable Officer's Certificate) exceeds the amount actually paid as Percentage
Rent by Lessee for such year, Lessee also shall pay such excess to Lessor at the
time such certificate is delivered. If the Percentage Rent actually due and
payable for such Fiscal Year is shown by such certificate to be less than the
amount actually paid as Percentage Rent for the applicable Fiscal Year, Lessor
shall reimburse such amount to Lessee.
The obligation to pay Percentage Rent shall survive the expiration or
earlier termination of the Term, and a final reconciliation, taking into
account, among other relevant adjustments, any adjustments which are accrued
after such expiration or termination date but which related to Percentage Rent
accrued prior to such termination date, and Lessee's good faith best estimate of
the amount of any unresolved contractual allowances, shall be made not later
than two years after such expiration or termination date, but Lessee shall
advise Lessor within 60 days after such expiration or termination date of
Lessee's best estimate at that time of the approximate amount of such
adjustments, which estimate shall not be binding on Lessee or have any legal
effect whatsoever.
Notwithstanding the foregoing, the Lessor acknowledges and agrees that the
Lessee shall return and pay the Base Management Fee as a Gross Operating Expense
and deduction from Gross Operating Revenues used in the calculation of the
Break-Even Threshold.
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3.2 CONFIRMATION OF PERCENTAGE RENT. Lessee shall utilize, or cause to be
utilized, an accounting system for the Leased Property in accordance with its
usual and customary practices, and in accordance with generally accepted
accounting principles and the Uniform System, that will accurately record all
data necessary to compute Percentage Rent, and Lessee shall retain, for at least
four years after the expiration of each Fiscal Year (and in any event until the
reconciliation described in Section 3.1(c) for such Fiscal Year has been made),
reasonably adequate records conforming to such accounting system showing all
data necessary to compute Percentage Rent for the applicable Fiscal Years.
Lessor, at its expense (except as provided hereinbelow), shall have the right
from time to time by its accountants or representatives to audit the information
that formed the basis for the data set forth in any Officer's Certificate
provided under Section 3.1(c) and, in connection with such audits, to examine
all Lessee's records (including supporting data and sales and excise tax
returns) reasonably required to verify Percentage Rent, subject to any
prohibitions or limitations on disclosure of any such data under Legal
Requirements. If any such audit discloses a deficiency in the payment of
Percentage Rent, and either Lessee agrees with the result of such audit or the
matter is otherwise determined or compromised, Lessee shall forthwith pay to
Lessor the amount of the deficiency, as finally agreed or determined. If any
such audit discloses that the Percentage Rent actually due from Lessee for any
Fiscal Year exceed those reported by Lessee by more than 10%, Lessee shall pay
the cost of such audit and examination. Any proprietary information obtained by
Lessor pursuant to the provisions of this Section shall be treated as
confidential, except that such information may be used, subject to appropriate
confidentiality safeguards, in any litigation between the parties and except
further that Lessor may disclose such information to prospective lenders for the
Leased Property. The obligations of Lessee contained in this Section shall
survive the expiration or earlier termination of this Lease.
3.3 ANNUAL BUDGET. The Lessee shall submit the Annual Budget for 1996 to
the Lessor by December 31, 1995. Thereafter, not later than sixty (60) days
prior to the commencement of each Fiscal Year, Lessee shall submit the Annual
Budget to Lessor. The Annual Budget for 1996 shall contain the following:
(a) Lessee's reasonable estimate of Gross Revenues (including room
rates), gross operating expenses, and gross operating profits for the
forthcoming Fiscal Year itemized on schedules prepared by Lessee, as same may be
revised or replaced from time to time by Lessee and approved by Lessor, together
with the assumptions, in narrative form, forming the basis of such schedules.
(b) The Capital Expenditure Budget described in Section 40 hereof.
(c) A cash flow projection.
(d) A narrative description of the program for advertising and
marketing the Leased Property for the forthcoming Fiscal Year containing a
detailed budget itemization of the proposed advertising expenditures by category
and the assumptions, in narrative form forming the basis of such budget
itemization.
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Notwithstanding the foregoing, if Lessor and Lessee are unable to agree
upon the Annual Budget or any details thereof, the final Annual Budget shall be
determined by arbitration in accordance with the provisions of SECTION 42
hereof, it being understood that only those details, line items or portions of
the Annual Budget which are in dispute shall be the subject of such arbitration.
Pending the conclusion of any such arbitration proceeding, the Annual Budget for
all purposes under this Lease shall be the Annual Budget for the prior Fiscal
Year, modified by increasing the Lease expenses by a factor of ten percent
(10%). Lessor and Lessee agree that arbitration shall be the sole procedure for
resolving any dispute regarding the Annual Budget. Lessee shall diligently
pursue all feasible measures to enable the Leased Property to adhere to the
Annual Budget, provided, however, Lessor acknowledges and agrees that Lessee
will not be responsible for any variances from the Annual Budget.
3.4 BOOKS AND RECORDS. Lessee shall keep full and adequate books of
account and other records reflecting the results of operation of the Leased
Property on an accrual basis, all in accordance with the Uniform System and
generally accepted accounting principles and the obligations of Lessee under
this Lease Agreement. The books of account and all other records relating to or
reflecting the operation of the Leased Property shall be kept either at the
Leased Property or at Lessee's offices in Orlando, Florida and/or Pittsburgh,
Pennsylvania and shall be available to Lessor and its representatives and its
auditors or accountants, at all reasonable times for examination, audit,
inspection, and transcription. All of such books and records pertaining to the
Leased Property including, without limitation, books of account, guest records
and front office records, at all times shall be the property of Lessor and shall
not be removed from the Leased Property or Lessor's offices by Lessee without
Lessor's Approval. For at least seven (7) years after the termination of this
Lease upon the prior written approval of Lessor which shall not be unreasonably
withheld or delayed, the Lessor shall provide to Lessee access to all such books
and records during reasonable business hours and upon reasonable notice.. [moved
to end of Section 3.4]
3.5 ADDITIONAL CHARGES. In addition to the Base Rent and Percentage Rent,
(a) Lessee also will pay and discharge as and when due and payable all other
amounts, liabilities, obligations and Impositions that Lessee agrees to pay
under this Lease, and (b) in the event of any failure on the part of Lessee to
pay any of those items referred to in clause (a) of this Section 3.5, Lessee
also will promptly pay and discharge every fine, penalty, interest and cost that
may be added for non-payment or late payment of such items (the items referred
to in clauses (a) and (b) of this Section 3.5 being additional rent hereunder
and being referred to herein collectively as the "Additional Charges"), and
Lessor shall have all legal, equitable and contractual rights, powers and
remedies provided either in this Lease or by statute or otherwise in the case of
non-payment of the Additional Charges as in the case of non-payment of the Base
Rent and Percentage Rent. Subject to the other terms and conditions of this
Lease, if any installment of Base Rent, Percentage Rent or Additional Charges
(but only as to those Additional Charges that are payable directly to Lessor)
shall not be paid on its due date, Lessee will pay Lessor on demand, as
Additional Charges, a late charge (to the extent permitted by law) computed at
the Overdue Rate on the amount of such installment, from the due date of such
installment to the date of payment thereof. To the extent that Lessee pays any
Additional Charges to Lessor pursuant to any requirement of this Lease, Lessee
shall be relieved of its obligation to pay
14
such Additional Charges to the entity to which they would otherwise be due and
Lessor shall pay same from monies received from Lessee.
3.6 NET LEASE PROVISION. Subject to the other provisions contained within
this Lease and the Lessee's express rights to abatement of Rent, the Rent shall
be paid absolutely net to Lessor, so that this Lease shall yield to Lessor the
full amount of the installments of Rent throughout the Term, all as more fully
set forth in Section 5, but subject to any other provisions of this Lease that
expressly provide for adjustment or abatement of Rent or other charges or
expressly provide that certain expenses or maintenance shall be paid or
performed by Lessor.
SECTION 4
4.1 PAYMENT OF IMPOSITIONS. Subject to Section 12 relating to permitted
contests, Lessee will pay, or cause to be paid, all Impositions (excluding Real
Estate Taxes and personal property taxes imposed upon the Leased Property and
all of the Lessor's other property) before any fine, penalty, interest or cost
may be added for non-payment, such payments to be made directly to the taxing or
other authorities where feasible, and will promptly furnish to Lessor copies of
official receipts or other satisfactory proof evidencing such payments. Lessee'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. If any such Imposition may, at the option of the taxpayer, lawfully be
paid in installments (whether or not interest shall accrue on the unpaid balance
of such Imposition), Lessee may exercise the option to pay the same (and any
accrued interest on the unpaid balance of such Imposition) in installments and
in such event, shall pay such installments during the Term hereof (subject to
Lessee's right of contest pursuant to the provisions of Section 12) as the same
respectively become due and before any fine, penalty, premium, further interest
or cost may be added thereto. Lessor, at its expense, shall, to the extent
required or permitted by applicable law, prepare and file all tax returns in
respect of Lessor's net income, gross receipts, sales and use, single business,
transaction privilege, rent, ad valorem, franchise taxes, Real Estate Taxes and
taxes on its capital stock, and Lessee, at its expense, shall, to the extent
required or permitted by applicable laws and regulations, prepare and file all
other tax returns and reports in respect of any Imposition as may be required by
governmental authorities and pay all amounts due pursuant to such filings and
reports. If any refund shall be due from any taxing authority in respect of any
Imposition paid by Lessee, the same shall be paid over to or retained by Lessee
if no Event of Default shall have occurred hereunder and be continuing. If an
Event of Default shall have occurred and be continuing, any such refund shall be
paid over to or retained by Lessor. Any such funds retained by Lessor due to an
Event of Default shall be applied as provided in Section 16. Lessor and Lessee
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. Lessor shall file all
personal property tax returns, including tax payments, in such jurisdictions
where it is legally required
15
to so file. Lessor will maintain and prepare all cost and depreciation records
necessary for filing returns for any property so classified as personal
property. Where Lessor is legally required to file personal property tax
returns, Lessor shall provide Lessee with copies of assessment notices in
sufficient time for Lessee to file a protest.
4.2 NOTICE OF IMPOSITIONS. Lessor shall give prompt Notice to Lessee of
all Impositions payable by Lessee hereunder of which Lessor at any time has
knowledge, provided that Lessor's failure to give any such Notice shall in no
way diminish Lessee's obligations hereunder to pay such Impositions, but such
failure shall obviate any default hereunder for a reasonable time after Lessee
receives Notice of any Imposition which it is obligated to pay during the first
taxing period applicable thereto.
4.3 ADJUSTMENT OF IMPOSITIONS. Impositions imposed in respect of the
tax-fiscal period during which the Term terminates shall be adjusted and
prorated between Lessor and Lessee, whether or not such Imposition is imposed
before or after such termination, and Lessee's obligation to pay its prorated
share thereof after termination shall survive such termination.
4.4 UTILITY CHARGES. After the Commencement Date, Lessee will be solely
responsible for maintaining utility services to the Leased Property and will pay
or cause to be paid all charges for electricity, gas, oil, water, sewer and
other utilities used in the Leased Property after the Commencement Date and
during the Term; provided, however, Lessor shall provide to lessee any and all
amounts necessary as security deposits to obtain such utility service.
4.5 INSURANCE PREMIUMS. Lessee will pay or cause to be paid all premiums
for the insurance coverages required to be maintained by it under Section 13.
4.6 FRANCHISE FEES. Lessee will pay or cause to be paid all franchise
fees due and owing in accordance with the terms and conditions of the Franchise
Agreement.
SECTION 5.
5.1 NO TERMINATION, ABATEMENT, ETC. Except as otherwise specifically
provided in this Lease, and except for loss of the Franchise Agreement solely by
reason of any action or inaction by Lessor, Lessee, to the extent permitted by
law, shall remain bound by this Lease in accordance with its terms and shall
neither take any action without the written consent of Lessor to modify,
surrender or terminate the same, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of the Rent, or set off against the Rent.
5.2 ABATEMENT PROCEDURES. In the event of a Partial Taking as described
in Section 15.5 and/or a Temporary Taking as described in Section 15.6, the
Lease shall not terminate, but the Base Rent shall be abated in the manner and
to the extent that is fair, just and equitable to both Lessee and Lessor, taking
into consideration, among other relevant factors, the number of usable rooms,
the amount of square footage, or the revenues affected by such Partial Taking
and/or a Temporary Taking and the allocation to the parties of any Award. If
Lessor and Lessee are unable to agree upon the amount of such abatement within
30 days after such Partial Taking and/or Temporary Taking,
16
the matter may be submitted by either party to arbitration in accordance with
the provisions of Section 42 hereof for resolution.
SECTION 6
6.1 OWNERSHIP OF THE LEASED PROPERTY. Lessee acknowledges that the Leased
Property is the property of Lessor and that Lessee has only the right to the
possession and use of the Leased Property upon the terms and conditions of this
Lease.
6.2 LESSEE'S PERSONAL PROPERTY. Lessee will acquire and maintain
throughout the Term such Inventory as is required to operate the Leased Property
in the manner contemplated by this Lease. Lessee may (and shall as provided
hereinbelow), at its expense, install, affix or assemble or place on any parcels
of the Land or in any of the Leased Improvements, any items of personal property
(including Inventory) owned by Lessee. Lessee, at the commencement of the Term,
and from time to time thereafter, shall provide Lessor with an accurate list of
all such items of Lessee's personal property (collectively, the "Lessee's
Personal Property"). Lessee may, subject to the first sentence of this Section
6.2 and the conditions set forth below, remove any of Lessee's Personal Property
set forth on such list at any time during the Term or upon the expiration or any
prior termination of the Term. All of Lessee's Personal Property, other than
Inventory, not removed by Lessee within sixty (60) days following the
expiration or earlier termination of the Term shall be considered abandoned by
Lessee and may be appropriated, sold, destroyed or otherwise disposed of by
Lessor without first giving Notice thereof to Lessee, without any payment to
Lessee and without any obligation to account therefor. Lessee will, at its
expense, restore the Leased Property to the condition required by Section 9.1.3,
including repair of all damage to the Property caused by the removal of Lessee's
Personal Property, whether effected by Lessee or Lessor. Notwithstanding the
foregoing, upon the expiration or earlier termination of the Term, Lessee shall
sell and Lessor, or its designee, shall purchase all Inventory on hand at the
Leased Property at the time of such expiration or termination for a sale price
equal to the fair market value of such Inventory, as evidenced by invoices,
receipts, or other reasonable documentation. Lessee may make such financing
arrangements, title retention agreements, leases or other agreements with
respect to the Lessee's Personal Property as it sees fit provided that Lessee
first advises Lessor of any such arrangement and such arrangement expressly
provides that in the event of Lessee's default thereunder, Lessor (or its
designee) may assume Lessee's obligations and rights under such arrangement.
6.3 LESSOR'S REPRESENTATIONS. Lessor represents and warrants that (a)
Lessor has good, clear and marketable title to the Leased Property, (b) Lessor
has full authority to grant to the Lessee the leasehold interest described in
this Lease, (c) the Leased Property is free from any material defects and (d)
the Leased Property is zoned, and all governmental approvals have been obtained,
for the current uses of the Leased Property as a hotel. In addition, Lessor
agrees to deliver to Lessee a current title report on the Leased Property
verifying the accuracy of the representations contained in this Section 6.3.
17
6.4 BALANCE SHEET ON COMMENCEMENT AND TERMINATION OF LEASE. Upon the
Commencement Date, the Lessor shall deliver possession of the Leased Property
along with levels of cash on hand of not less than $___________, inventory,
working capital, capital funds, sufficient equipment and other assets
satisfactory to the Lessee as of the Commencement Date for the Leased Property.
The Lessor shall deliver to the Lessee a balance sheet and financial statements
for the Leased Property balanced to the satisfaction of the Lessee as of such
Commencement Date. The Lessor shall certify that all such financial statements
are prepared in accordance with the Uniform System and Generally Accepted
Accounting Principles and completely and accurately reflect the financial
position of the Leased Property in all material respects. Lessor agrees to
indemnify, defend and hold harmless Lessee for any and all claims, liabilities,
damages, actions, costs and expenses (including attorneys fees) arising prior to
the Commencement Date regardless of whether such claims, liabilities, damages,
actions, costs and expenses are disclosed in the financial statements delivered
by Lessor to Lessee. In addition, Lessor shall terminate or satisfy all
obligations under all equipment and space leases and satisfy all outstanding
payables at the Leased Property as of the Commencement Date. Upon the
termination of the Lease, the Lessee shall assign to the Lessor all assets and
liabilities (including but not limited to all liabilities pursuant to service
contracts and leases) and Lessor shall execute instruments, reasonably requested
by Lessee, evidencing such assumption of liabilities by the Lessor.
Section 6.5 Lessee represents and warrants that (a) Lessee is a validly
existing limited liability company organized under the laws of the State of
Delaware and is qualified to do business in all states in which it is required
to so qualify due to the nature of its business activities and (b) Lessee has
the requisite power and authority to enter into this Lease.
Section 6.6 LESSOR'S LIEN. So long as the Guaranty (as such term is
defined in the Master Agreement) remains in full force and effect and to the
fullest extent permitted by applicable law, Lessor is granted a lien and
security interest on all Lessee's personal property now or hereinafter placed in
or upon the Leased Property, and such lien and security interest shall remain
attached to such lessee's Personal Property until payment in full of all Rent
and satisfaction of all of Lessee's obligations hereunder; provided, however,
Lessor shall subordinate its lien and security interest to that of any non-
Affiliate of Lessee which finances such Lessee's Personal Property or any non-
affiliate conditional seller of such Lessee's Personal Property, the terms and
conditions of such subordination to be satisfactory to lessor in the exercise of
reasonable discretion. Lessee shall, upon the request of Lessor, execute such
financing statements or other documents or instruments reasonably requested by
Lessor to perfect the lien and security interest herein granted.
SECTION 7.
7.1 CONDITION OF THE LEASED PROPERTY. Lessee acknowledges receipt and
delivery of possession of the Leased Property. Lessee has examined and
otherwise has knowledge of the condition of the Leased Property and has found
the same to be satisfactory for its purposes hereunder. In addition, to the
extent permitted by law, Lessor hereby grants to Lessee the right to proceed
against any Predecessor in title for breaches of warranties or representations
or for latent defects in the Leased Property. Lessor shall fully cooperate with
Lessee in the prosecution of any
18
such claim, in Lessor's or Lessee's name. Without limiting the Lessor's
representations and warranties contained in this Lease or in the Master
Agreement, the Lessor reiterates its disclaimer of warranty contained in Section
1.1.6 hereof.
7.2 USE OF THE LEASED PROPERTY.
7.2.1 Lessee covenants that it will proceed with all due diligence
and will exercise its diligent efforts to maintain all approvals needed to use
and operate the Leased Property and the Facility under applicable local, state
and federal law.
7.2.2 Lessee shall use or cause to be used the Leased Property
only as a hotel facility, and for such other uses as may be necessary or
incidental to such use or such other use as otherwise approved by Lessor (the
"Primary Intended Use"). Lessee shall not use the Leased Property or any
portion thereof for any other use without the prior written consent of Lessor
which consent may be granted, denied or conditioned in Lessor's sole discretion.
No use shall be made or permitted to be made and no act shall be done or
permitted to be done of, or on, the Leased Property, which will cause the
cancellation or increase the premium of any insurance policy covering the Leased
Property or any part thereof (unless another adequate policy satisfactory to
Lessor is available and Lessee pays any premium increase), nor shall Lessee sell
or permit to be kept, used or sold in or about the Leased Property any article
which may be prohibited by law or fire underwriter's regulations. Lessee shall,
at its sole cost, comply with all of the requirements pertaining to the Leased
Property of any insurance board, association, organization or company necessary
for the maintenance of insurance, as herein provided, covering the Leased
Property and Lessee's Personal Property.
7.2.3 Subject to the provisions of Sections 14, 15, 21 and 22,
Lessee covenants and agrees that during the Term it will (1) operate
continuously the Leased Property as a hotel facility, (2) keep in full force and
effect and comply with all the provisions of Franchise Agreements, if any (3)
not terminate or amend Franchise Agreements, if any, without the prior written
consent of Lessor which shall not be unreasonably withheld or delayed, and (4)
maintain appropriate certifications and licenses for such use.
7.2.4 Lessee shall not commit or suffer to be committed any waste
on the Leased Property, or in the Facility, nor shall Lessee cause or permit any
nuisance thereon.
7.2.5 Lessee shall neither suffer nor permit the Leased Property
or any portion thereof, to be used in such a manner as (1) might reasonably
tend to impair Lessor's title thereto or to any portion thereof, or (2) may
reasonably make possible a claim or claims of adverse usage or adverse
possession by the public, as such, or of implied dedication of the Leased
Property or any portion thereof, except as necessary in the ordinary and prudent
operation of the Facility on the Leased Property.
19
7.2.6 Except as may be agreed upon in writing in advance by the
parties, neither the Lessor nor any of its Affiliates shall own, or have any
interest in, any hotel or motel property that is within a five mile radius of
the Leased Property. In addition, neither the Lessor nor any of its Affiliates
shall operate or manage any hotel or motel property that is within a five mile
radius of any hotel or motel property in which Lessee or an Affiliate of Lessee
has an interest on the date Lessor would otherwise commence owning, possessing
an interest in, operating or managing such property. Other than hotels or
motels owned, managed, operated or in which Lessee has an interest as of the
Commencement Date, the Lessee agrees that it shall not manage, operate or own
any interest in any hotel or motel property that is within a five (5) mile
radius of the Leased Property.
7.3 LESSOR TO GRANT EASEMENTS. Lessor will, from time to time, so long as
no Event of Default has occurred and is continuing, at the request of Lessee and
at Lessee's cost and expense (but subject to the approval of Lessor, which
approval shall not be unreasonably withheld or delayed), (a) grant easements and
other rights in the nature of easements with respect to the Leased Property to
third parties, (b) release existing easements or other rights in the nature of
easements which are for the benefit of the Leased Property, (c) dedicate or
transfer unimproved portions of the Leased Property for road, highway or other
public purposes, (d) execute petitions to have the Leased Property annexed to
any municipal corporation or utility district, (e) execute amendments to any
covenants and restrictions affecting the Leased Property, and (f) execute and
deliver to any person any instrument appropriate to confirm or effect such
grants, releases, dedications, transfers, petitions and amendments (to the
extent of its interest in the Leased Property), but only upon delivery to Lessor
of an Officer's Certificate stating that such grant, release, dedication,
transfer, petition or amendment is not detrimental to the proper conduct of the
business of Lessee on the Leased Property and does not materially reduce the
value of the Leased Property.
SECTION 8.
8.1 COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS, ETC. Subject to
8.3.2 below and Section 12 relating to permitted contests, Lessee, at its
expense, will promptly (a) materially comply with all applicable Legal
Requirements and Insurance Requirements in respect of the use, operation,
maintenance, repair and restoration of the Leased Property, and (b) procure,
maintain and comply with all appropriate licenses and other authorizations
required for any use of the Leased Property and Lessee's Personal Property
then being made, and for the proper erection, installation, operation and
maintenance of the Leased Property or any part thereof.
8.2 LEGAL REQUIREMENT COVENANTS. Subject to Section 8.3.2 below, Lessee
covenants and agrees that the Leased Property and Lessee's Personal Property
shall not be used for any unlawful purpose, and that Lessee shall not permit or
suffer to exist any unlawful use of the Leased Property by others. Lessee shall
acquire and maintain all appropriate licenses, certifications, permits and other
authorizations and approvals required to operate the Leased Property in its
customary manner for the Primary Intended Use, and any other lawful use
conducted on the Leased Property as may be permitted from time to time
hereunder. Lessee further covenants and agrees that Lessee's use of the Leased
Property and maintenance, alteration, and operation of the same, and all parts
thereof,
20
shall at all times conform to all Legal Requirements, unless the same are
finally determined by a court of competent jurisdiction to be unlawful (and
Lessee shall cause all such sub-tenants, invitees or others so to comply with
all Legal Requirements). Lessee may, however, upon prior Notice to Lessor,
contest the legality or applicability of any such Legal Requirement or any
licensure or certification decision if Lessee maintains such action in good
faith, with due diligence, without prejudice to Lessor's rights hereunder, and
at Lessee's sole expense. If by the terms of any such Legal Requirement
compliance therewith pending the prosecution of any such Proceeding may legally
be delayed without the incurrence of any lien, charge or liability of any kind
against the Facility or Lessee's leasehold interest therein and without
subjecting Lessee or Lessor to any liability, civil or criminal, for failure so
to comply therewith, Lessee may delay compliance therewith until the final
determination of such Proceeding. If any lien, charge or civil or criminal
liability would be incurred by reason of any such delay, Lessee, on the prior
written consent of Lessor, which consent shall not be unreasonably withheld, may
nonetheless contest as aforesaid and delay as aforesaid provided that such delay
would not subject Lessor to criminal liability and Lessee both (a) furnishes to
Lessor security reasonably satisfactory to Lessor against any loss or injury by
reason of such contest or delay, and (b) prosecutes the contest with due
diligence and in good faith.
8.3 ENVIRONMENTAL COVENANTS. Lessor and Lessee (in addition to, and not
in diminution of, Lessee's covenants and undertakings in Sections 8.1 and 8.2
hereof) covenant and agree as follows:
8.3.1 At all times hereafter until such time as all liabilities,
duties or obligations of Lessee to the Lessor under the Lease have been
satisfied in full, Lessee shall fully comply with all Environmental Laws
applicable to the Leased Property and the operations thereon. Lessee agrees to
give Lessor prompt written notice of (1) all Environmental Liabilities; (2) all
pending, threatened or anticipated Proceedings, and all notices, demands,
requests or investigations, relating to any Environmental Liability or relating
to the issuance, revocation or change in any Environmental Authorization
required for operation of the Leased Property; (3) all Releases at, on, in,
under or in any way affecting the Leased Property, or any Release known by
Lessee at, on, in or under any property adjacent to the Leased Property; and (4)
all facts, events or conditions that could reasonably lead to the occurrence of
any of the above-referenced matters.
8.3.2 Lessor hereby agrees to defend, indemnify and hold harmless
any and all Lessee Indemnified Parties from and against any and all
Environmental Liabilities other than Environmental Liabilities which were caused
by the grossly negligent acts or grossly negligent failures to act of Lessee. As
a condition precedent to the effectiveness of this Lease, the Lessor shall
deliver to the Lessee Phase I environmental studies regarding the Leased
Property performed by an engineering firm acceptable to Lessee and stating that
the Leased Property is in compliance with all applicable Environmental Laws to
the satisfaction of Lessee.
8.3.3 Lessee hereby agrees to defend, indemnify and hold harmless
any and all Lessor Indemnified Parties from and against any and all
Environmental Liabilities caused by the acts or grossly negligent failures to
act of Lessee.
21
8.3.4 If any Proceeding is brought against any Indemnified Party
in respect of an Environmental Liability with respect to which such Indemnified
Party may claim indemnification under either Section 8.3.2 or 8.3.3, the
Indemnifying Party, upon request, shall at its sole expense resist and defend
such Proceeding, or cause the same to be resisted and defended by counsel
designated by the Indemnified Party and approved by the Indemnifying Party,
which approval shall not be unreasonably withheld; provided, however, that such
approval shall not be required in the case of defense by counsel designated by
any insurance company undertaking such defense pursuant to any applicable policy
of insurance. Each Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel will be at the sole expense of such
Indemnified Party unless such counsel has been approved by the Indemnifying
Party, which approval shall not be unreasonably withheld. The Indemnifying
Party shall not be liable for any settlement of any such Proceeding made without
its consent, which shall not be unreasonably withheld, but if settled with the
consent of the Indemnifying Party, or if settled without its consent if its
consent shall be unreasonably withheld, or if there be a final, nonappealable
judgment for an adversary party in any such Proceeding, the Indemnifying Party
shall indemnify and hold harmless the Indemnified Parties from and against any
liabilities incurred by such Indemnified Parties by reason of such settlement or
judgment.
8.3.5 At any time any Indemnified Party has reason to believe
circumstances exist which could reasonably result in an Environmental Liability,
upon reasonable prior written notice to Lessee stating such Indemnified Party's
basis for such belief, an Indemnified Party shall be given immediate access to
the Leased Property (including, but not limited to, the right to enter upon,
investigate, drill xxxxx, take soil borings, excavate, monitor, test, cap and
use available land for the testing of remedial technologies), Lessee's
employees, and to all relevant documents and records regarding the matter as to
which a responsibility, liability or obligation is asserted or which is the
subject of any Proceeding; provided that such access may be conditioned or
restricted as may be reasonably necessary to ensure compliance with law and the
safety of personnel and facilities or to protect confidential or privileged
information. All Indemnified Parties requesting such immediate access and
cooperation shall endeavor to coordinate such efforts to result in as minimal
interruption of the operation of the Leased Property as practicable.
8.3.6 The indemnification rights and obligations provided for in
this Section 8 shall be in addition to any indemnification rights and
obligations provided for elsewhere in this Lease.
8.3.7 The indemnification rights and obligations provided for in
this Section 8 shall survive the termination of this Agreement.
For purposes of this Section 8.3, all amounts for which any Indemnified
Party seeks indemnification shall be computed net of (a) any actual income tax
benefit resulting therefrom to such Indemnified Party, (b) any insurance
proceeds received (net of tax effects) with respect thereto, and (c) any amounts
recovered (net of tax effects) from any third parties based on claims the
Indemnified Party has against such third parties which reduce the damages that
would otherwise be sustained; provided that in all cases, the timing of the
receipt or realization of insurance proceeds
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or income tax benefits or recoveries from third parties shall be taken into
account in determining the amount of reduction of damages. Each Indemnified
Party agrees to use its reasonable efforts to pursue, or assign to Lessee or
Lessor, as the case may be, any claims or rights it may have against any third
party which would materially reduce the amount of damages otherwise incurred by
such Indemnified Party.
Notwithstanding anything to the contrary contained in this Agreement, if
Lessor shall become entitled to the possession of the Leased Property by virtue
of the termination of the Lease or repossession of the Leased Property, then
Lessor may assign its indemnification rights under Section 8.3 of this Agreement
(but not any other rights hereunder) to any Person to whom the Lessor
subsequently transfers the Leased Property, subject to the following conditions
and limitations, each of which shall be deemed to be incorporated into the terms
of such assignment, whether or not specifically referred to therein:
(1) The indemnification rights referred to in this Section may be
assigned only if a known Environmental Liability then exists or if a Proceeding
is then pending or, to the knowledge of Lessee or Lessor, then threatened with
respect to the Leased Property;
(2) Such indemnification rights shall be limited to Environmental
Liabilities relating to or specifically affecting the Leased Property; and
(3) Any assignment of such indemnification rights shall be limited to
the immediate transferee of Lessor, and shall not extend to any such
transferee's successors or assigns.
SECTION 9.
9.1 MAINTENANCE AND REPAIR.
9.1.1 Lessee will keep the Leased Property and all private
roadways, sidewalks and curbs appurtenant thereto that are under Lessee's
control, including windows and plate glass, parking lots, mechanical, electrical
and plumbing systems and equipment (including conduit and ductware), and
non-load bearing interior walls, in good order and repair, except for ordinary
wear and tear, and, except as otherwise provided in Section 9.1.2, Section 14,
Section 15 or Section 40, with reasonable promptness, make all necessary and
appropriate repairs, replacements, and improvements thereto of every kind and
nature, whether interior or exterior, ordinary or extraordinary, foreseen or
unforeseen or arising by reason of a condition existing prior to the
commencement of the Term of this Lease (concealed or otherwise), or required by
any governmental agency having jurisdiction over the Leased Property, except as
to the structural elements of the Leased Improvements. Lessee, however, shall
be permitted to prosecute claims against Lessor's Predecessor(s) in title for
breach of any representation or warranty or for any latent defects in the Leased
Property to be maintained by Lessee unless Lessor is already diligently pursuing
such a claim. All repairs shall, to the extent reasonably achievable, be at
least equivalent in quality to the original work. Lessee will not take or
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omit to take any action, the taking or omission of which might materially impair
the value or the usefulness of the Leased Property or any part thereof for its
Primary Intended Use.
9.1.2 In addition, Lessor shall be required to bear the cost of
maintaining any underground utilities and the structural elements of the Leased
Improvements, including the roof of the Facility unless caused by the negligent
acts or willful misconduct of Lessee.
9.1.3 Nothing contained in this Lease and no action or inaction by
lessor shall be construed as (1) constituting the request of Lessor, expressed
or implied, to any contractor, subcontractor, laborer, materialman or vendor to
or for the performance of any labor or services or the furnishing of any
materials or other property for the construction, alteration, addition, repair
or demolition of or to the Leased Property or any part thereof, or (2) giving
Lessee any right, power or permission to contract for or permit the performance
of any labor or services or the furnishing of any materials or other property in
such fashion as would permit the making of any claim against Lessor in respect
thereof or to make any agreement that may create, or in any way be the basis for
any right, title, interest, lien, claim or other encumbrance upon the estate of
Lessor in the Leased Property, or any portion thereof.
9.1.4 Lessee will, upon the expiration or prior termination of the
Term, vacate and surrender the Leased Property to Lessor in the substantially
same condition in which the Leased Property was originally received from Lessor,
except as repaired, rebuilt, restored, altered or added to as permitted or
required by the provisions of this Lease and except for ordinary wear and tear
(subject to the obligation of Lessee under Section 9.1.1 hereof to maintain the
Leased Property in good order and repair, as would a prudent owner, during the
entire Term of the Lease), or damage by casualty or Condemnation (subject to the
obligations of Lessee to restore or repair as set forth in the Lease.)
9.2 ENCROACHMENTS, RESTRICTIONS, ETC. If any of the Leased Improvements,
at any time, materially encroach upon any property, street or right-of-way
adjacent to the Leased Property, or violate the agreements or conditions
contained in any lawful restrictive covenant or other agreement affecting the
Leased Property, or any part thereof, or impair the rights of others under any
easement or right-of-way to which the Leased Property is subject, then promptly
upon the request of Lessor or at the behest of any person affected by any such
encroachment, violation or impairment, provided that Lessee was not responsible
for such encroachment violations or impairments then Lessor shall, at its
expense, subject to its right to contest the existence of any encroachment,
violation or impairment and in such case, in the event of an adverse final
determination, either (a) obtain valid and effective waivers or settlements of
all claims, liabilities and damages resulting from each such encroachment,
violation, or impairment, whether the same shall affect Lessor or Lessee, or (b)
make such changes in the Leased Improvements, and take such other actions as
Lessee in the good faith exercise of its judgment deems reasonably practicable
to remove such encroachment, and to end such violation or impairment, including,
if necessary, the alteration, of any of the Leased Improvements, and in any
event take all such actions as may be necessary in order to be able to continue
the operation of the Leased Improvements for the Primary Intended Use
substantially in the manner and
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to the extent the Leased Improvements were operated prior to the assertion of
such violation, impairment or encroachment. Any such alteration shall be made
in conformity with the applicable requirements of Section 10. Lessee's
obligations under this Section 9.2 shall be in addition to and shall in no way
discharge or diminish any obligation of any insurer under any policy of title or
other insurance held by Lessor. Should Lessee be responsible for said
encroachment violation or impairment then the requirements of (a) and (b) as
specified above shall apply to Lessee, and not Lessor or Lessee.
SECTION 10.
10.1 ALTERATIONS. Using funds in the Capital Expenditure Reserve Account
or such other funds provided by Lessor pursuant to Section 40 hereof, Lessee
shall have the right to make additions, modifications or improvements to the
Leased Property from time to time as Lessee, in its discretion, may deem to be
desirable for its permitted uses and purposes, provided that such action will
not significantly alter the character or purposes or significantly detract from
the value or operating efficiency thereof and will not significantly impair the
revenue-producing capability of the Leased Property or adversely affect the
ability of the Lessee to comply with the provisions of this Lease. Lessee
agrees not to make any material alterations to the Leased Property without the
prior written consent of the Lessor, which consent shall not be unreasonably
withheld or delayed.
10.2 SALVAGE. All materials which are scrapped or removed in connection
with the making of repairs required by Section 9 or 10 shall be or become the
property of Lessor.
10.3 JOINT USE AGREEMENTS. If Lessee constructs additional improvements
that are connected to the Leased Property or share maintenance facilities, HVAC,
electrical, plumbing or other systems, utilities, parking or other amenities,
the parties shall enter into a mutually agreeable cross-easement or joint use
agreement to make available necessary services and facilities in connection with
such additional improvements, to protect each of their respective interests in
the properties affected, and to provide for separate ownership, use, and/or
financing of such improvements.
SECTION 11.
11.1 LIENS. Subject to the provision of Section 12 relating to permitted
contests, Lessee will not directly or indirectly create or allow to remain and
will promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however, (a) this
Lease, (b) the matters, if any, included as exceptions in the title policy
insuring Lessor's interest in the Leased Property, (c) restrictions, liens and
other encumbrances which are consented to in writing by Lessor or any easements
granted pursuant to the provisions of Section 7.3 of this Lease, (d) liens
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for those taxes upon Lessor which Lessee is not required to pay hereunder, (e)
subleases permitted by Section 24 hereof, (f) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so long as (1) the same are
not yet payable or are payable without the addition of any fine or penalty, or
(2) such liens are in the process of being contested as permitted by Section 12,
(g) liens of mechanics, laborers, materialmen, suppliers or vendors for sums
either disputed or not yet due provided that (1) the payment of such sums shall
not be postponed under any related contract for more than 60 days after the
completion of the action giving rise to such lien and such reserve or other
appropriate provisions as shall be required by law or generally accepted
accounting principles shall have been made therefor, or (2) any such liens are
in the process of being contested as permitted by Section 12 hereof, (h) any
liens which are the responsibility of Lessor pursuant to the provisions of
Section 35 of this Lease and (i) any liens created or allowed, directly or
indirectly, by the actions or inactions of Lessor.
SECTION 12.
12.1 PERMITTED CONTESTS. Lessee shall have the right to contest the amount
or validity of any Imposition to be paid by Lessee or any Legal Requirement or
Insurance Requirement or any lien, attachment, levy, encumbrance, charge or
claim ("Claims") not otherwise permitted by Section 11, by appropriate legal
proceedings in good faith and with due diligence (but this shall not be deemed
or construed in any way to relieve, modify or extend Lessee's covenants to pay
or its covenants to cause to be paid any such charges at the time and in the
manner as in this Section provided), on condition, however, that such legal
proceedings shall not operate to relieve Lessee from its obligations hereunder
and shall not cause the sale or risk the loss of the Leased Property, or any
part thereof, or cause Lessor or Lessee to be in default under any mortgage,
deed of trust or security deed encumbering the Leased Property or any interest
therein. Lessor agrees to join in any such proceedings if the same be required
to legally prosecute such contest of the validity of such Claims; provided,
however, that Lessor shall not thereby be subjected to any liability for the
payment of any costs or expenses in connection with any proceedings brought by
Lessee; and Lessee covenants to indemnify and hold harmless Lessor from any such
costs or expenses. Lessee shall be entitled to any refund of any Claims and
such charges and penalties or interest thereon which have been paid by Lessee or
paid by Lessor and for which Lessor has been fully reimbursed. In the event
that Lessee fails to pay any Claims when due or to provide the security therefor
as provided in this paragraph and to diligently prosecute any contest of the
same, Lessor may, upon ten days advance Notice to Lessee, pay such charges
together with any interest and penalties and the same shall be repayable by
Lessee to Lessor as Additional Charges at the next Payment Date provided for in
this Lease. Provided, however, that should Lessor reasonably determine that the
giving of such Notice would risk loss to the Leased Property or cause damage to
Lessor, then Lessor shall give such Notice as is practical under the
circumstances. Lessor reserves the right to contest any of the Claims at its
expense not pursued by Lessee. Lessor and Lessee agree to cooperate in
coordinating the contest of any claims.
SECTION 13.
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13.1 INSURANCE COVERAGE. Lessee shall provide and maintain insurance
sufficient to furnish to Lessor and Lessee reasonable and adequate protection in
the management and operation of the Leased Property. Such insurance shall
provide coverage for fire and extended coverage, worker's compensation, general
liability and business interruption (for such length of time as would be
required with the exercise of due diligence and dispatch to rebuild, repair or
replace such part of the Leased Property as has been destroyed or damaged), all
as more particularly set forth on the attached EXHIBIT F. All insurance shall
be in the name of Lessor and Lessee as the insureds and shall contain riders and
endorsements adequately protecting the interests of Lessee and Lessor as they
may appear including, without limitation, provisions for at least twenty (20)
days' notice to Lessee and Lessor of cancellation or of any material change
therein. Prior to the Commencement Date and the commencement of each Fiscal
Year thereafter, Lessee shall furnish Lessor with certificates evidencing the
insurance coverages required pursuant to EXHIBIT F and with evidence of the
payment of premiums therefor.
13.2 WAIVER OF SUBROGATION - LESSOR ASSUMES RISK OF ADEQUACY. Lessee shall
have all policies of insurance provide that the insurance company will have no
right of subrogation against either party hereto, their agents or employees.
Other than insurance coverages required to be provided by Lessee pursuant to
this Lease, Lessor assumes all risks in connection with the adequacy of any
insurance or self-insurance program, and subject to the provisions of SECTION 23
hereof, waives any claim against Lessee for any liability, costs or expenses
arising out of any uninsured claim, in part or in full, of any nature
whatsoever.
SECTION 14.
14.1 INSURANCE PROCEEDS. Subject to the provisions of Section 14.6, all
proceeds payable by reason of any loss or damage to the Leased Property, or any
portion thereof, and insured under any policy of insurance required by Section
13 of this Lease shall be paid to Lessor and held in trust by Lessor in an
interest-bearing account, shall be made available, if applicable, for
reconstruction or repair, as the case may be, of any damage to or destruction of
the Leased Property, or any portion thereof, and, if applicable, shall be paid
out by Lessor from time to time for the reasonable costs of such reconstruction
or repair upon satisfaction of the reasonable terms and conditions specified by
Lessor. Any excess proceeds of insurance remaining after the completion of the
restoration or reconstruction of the Leased Property shall be paid to Lessee.
If neither Lessor nor Lessee is required or elects to repair and restore, and
the Lease is terminated without purchase by Lessee as described in Sections
14.2, 14.3, 14.5 and 14.7 hereof, all such insurance proceeds shall be retained
by Lessor. If this Lease terminates in accordance with this Section 14.1,
Lessor shall have no obligation to pay the Lease Cancellation Fee so long as the
Lessee receives payment of the full amount of outstanding Negative Base Rent out
of the insurance proceeds. All salvage resulting from any risk covered by
insurance shall belong to Lessor.
14.2 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION COVERED BY
INSURANCE.
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Except as provided in Section 14.6, if during the Term the Leased
Property is totally or partially destroyed by a risk covered by the insurance
described in Section 13 and the Facility thereby is rendered Unsuitable for its
Primary Intended Use, Lessee shall, at Lessee's option, either (a) restore the
Facility to substantially the same condition as existed immediately before the
damage or destruction and otherwise in accordance with the terms of the Lease,
(b) offer to acquire the Leased Property from Lessor for a purchase price equal
to the Rejectable Offer Price of the Leased Property, or (c) give Lessor written
notice of a termination of the Lease. If Lessee restores the Facility, the
insurance proceeds shall be paid out by Lessor from time to time for the
reasonable costs of such restoration and any excess proceeds remaining after
such restoration shall be paid to Lessee. If Lessee acquires the Leased
Property, Lessee shall receive the insurance proceeds. If Lessor does not
accept Lessee's offer so to purchase the Leased Property within 90 days, Lessee
may withdraw its offer to purchase the Leased Property and, if so withdrawn,
Lessee may terminate the Lease with respect to the Leased Property without
further liability hereunder and Lessor shall be entitled to retain all insurance
proceeds. Likewise, if Lessee gives Lessor written notice of a termination, as
set forth in clause (c) above, then Lessee may terminate the Lease with respect
to the Leased Property without further liability hereunder and Lessor shall be
entitled to retain all insurance proceeds. If this Lease terminates pursuant to
this Section 14.2, the Lessee shall pay all Rent due through the date of such
termination.
14.3 Except as provided in Section 14.6, if during the Term the Leased
Property is partially destroyed by a risk covered by the insurance described in
Section 13, but the Facility is not thereby rendered Unsuitable for its Primary
Intended Use, Lessee shall, using such insurance proceeds, restore the Facility
to substantially the same condition as existed immediately before the damage or
destruction and otherwise in accordance with the terms of the Lease. Such
damage or destruction shall not terminate this Lease; provided, however, that if
Lessee cannot within a reasonable time obtain all necessary government
approvals, including building permits, licenses and conditional use permits,
after diligent efforts to do so, to perform all required repair and restoration
work and to operate the Facility for its Primary Intended Use in substantially
the same manner as that existing immediately prior to such damage or destruction
and otherwise in accordance with the terms of the Lease, Lessee may (a) give
lessor written Notice of termination of the Lease or (b) offer to purchase the
Leased Property for a purchase price equal to the Rejectable Offer Price of the
Leased Property determined without regard to such damage or destruction. If
Lessee makes such offer and Lessor does not accept the same, Lessee shall
withdraw such offer to purchase the Leased Property and, if so withdrawn, Lessee
may terminate the Lease with respect to the Leased Property without further
liability hereunder and Lessor shall be entitled to retain all insurance
proceeds. If Lessee restores the Facility, the insurance proceeds shall be paid
out by Lessor from time to time for the reasonable costs of such restoration,
and any excess proceeds remaining after such restoration shall be paid to
Lessee. If this Lease terminates pursuant to this Section 14.3, the Lessee
shall pay all Rent due through the date of such termination.
14.4 If Lessor accepts Lessee's offer to purchase the Leased Property under
this Section, this Lease shall terminate as to the Leased Property upon payment
of the purchase price, and Lessor
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shall remit to Lessee all insurance proceeds pertaining to the Leased Property
being held in trust by Lessor.
14.5 RECONSTRUCTION IN THE EVENT OF DAMAGE OR DESTRUCTION NOT COVERED BY
INSURANCE. Except as provided in Section 14.6, if during the Term the
Facility is totally or materially destroyed by a risk not covered by the
insurance described in Section 13, whether or not such damage or destruction
renders the Facility Unsuitable for its Primary Intended Use, Lessee at its
option shall either (a) using the Capital Expenditure Reserves or funds
provided by Lessor pursuant to Section 40 hereof without any obligation on the
part of Lessor to provide funds in excess of those in the Capital Reserve
Account, restore the Facility to substantially the same condition it was in
immediately before such damage or destruction and such damage or destruction
shall not terminate this Lease, or (b) offer to purchase the Leased Property for
a purchase price equal to the Rejectable Offer Price of the Leased Property
without regard to such damage or destruction; provided, however, the term and
conditions contained in Section 43 hereof shall supersede this Section 14.5(b)
if applicable, or (c) give Lessor written notice of a termination of the Lease.
If such damage or destruction is not material, Lessee shall restore the Facility
to substantially the same condition as existed immediately before the damage or
destruction and otherwise in accordance with the terms of the Lease using the
FF&E Reserves or funds provided by Lessor pursuant to Section 40 hereof. If
Lessor does not accept Lessee's offer so to purchase the Leased Property within
90 days, Lessee may withdraw its offer to purchase the Leased Property and, if
so withdrawn, Lessee may terminate the Lease with respect to the Leased Property
without further liability hereunder. Likewise, if Lessee gives Lessor written
notice of a termination, as set forth in clause (c) above, then Lessee may
terminate the Lease with respect to the Leased Property without further
liability hereunder and Lessor shall be entitled to retain all insurance
proceeds. If this Lease terminates pursuant to this Section 14.5, the Lessee
shall pay all Rent due through the date of such termination.
14.6 LESSEE'S PROPERTY. All insurance proceeds payable by reason of any
loss of or damage to any of Lessee's Personal Property shall be paid to Lessee;
provided, however, no such payments shall diminish or reduce the insurance
payments otherwise payable to or for the benefit of Lessor hereunder.
14.7 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of Section
14.2 or 14.3 appearing to the contrary, if damage to or destruction of the
Facility rendering the Facility unsuitable for its Primary Intended Use occurs
during the last 24 months of the Term, then Lessee shall have the right to
terminate this Lease by giving written notice to Lessor within 30 days after the
date of damage or destruction, whereupon all accrued Rent shall be paid
immediately, and this Lease shall automatically terminate five days after the
date of such notice.
SECTION 15.
15.1 DEFINITIONS.
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15.1.1 "Condemnation" means a Taking resulting from (1) the
exercise of any governmental power, whether by legal proceedings or otherwise,
by a Condemnor, and (2) a voluntary sale or transfer by Lessor to any Condemnor,
either under threat of condemnation or while legal proceedings for condemnation
are pending.
15.1.2 "Date of Taking" means the date the Condemnor has the right
to possession of the property being condemned.
15.1.3 "Award" means all compensation, sums or anything of value
awarded, paid or received on a total, partial or temporary Condemnation.
15.1.4 "Condemnor" means any public or quasi-public authority, or
private corporation or individual, having the power of Condemnation.
15.2 PARTIES' RIGHTS AND OBLIGATIONS. If during the Term there is any
Condemnation of all or any part of the Leased Property or any interest in this
Lease, the rights and obligations of Lessor and Lessee shall be determined by
this Section 15.
15.3 TOTAL TAKING. If title to the fee of the whole of the Leased Property
is condemned by any Condemnor, subject to the provisions of Section 15.7, this
Lease shall cease and terminate as of the Date of Taking by the Condemner. If
title to the fee of less than the whole of the Leased Property is so taken or
condemned, which nevertheless renders the Leased Property Unsuitable or
Uneconomic for its Primary Intended Use, Lessee and Lessor shall each have the
option, by Notice to the other, at any time prior to the Date of Taking, to
terminate this Lease as of the Date of Taking.
If this Lease terminates in accordance with this Section 15.3, Lessor shall have
no obligation to pay the Lease Cancellation Fee so long as the Lessee receives
payment of the full amount of outstanding Negative Base Rent out of the Award.
Upon such date, if such Notice has been given, this Lease shall thereupon cease
and terminate. All Base Rent, Percentage Rent and Additional Charges paid or
payable by Lessee hereunder shall be apportioned as of the Date of Taking, and
Lessee shall promptly pay Lessor such amounts. In the event of any such
termination, the provisions of Section 15.7 shall apply.
15.4 ALLOCATION OF AWARD. The total Award made with respect to the Leased
Property or for loss of rent, or for Lessor's loss of business beyond the Term,
shall be solely the property of and payable to Lessor. Any Award made for loss
of business during the remaining Term, if any, for the taking of Lessee's
Personal Property, or for removal and relocation expenses of Lessee in any such
proceedings shall be the sole property of and payable to Lessee. In any
Condemnation proceedings Lessor and Lessee shall each seek its Award in
conformity herewith, at its respective expense; provided, however, neither party
shall initiate, prosecute or acquiesce in any proceedings that may result in a
diminution of any Award payable to the other party.
15.5 PARTIAL TAKING. If title to less than the whole of the Leased
Property is condemned, and the Leased Property is still suitable for its Primary
Intended Use, and not Uneconomic for its
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Primary Intended Use, and if Lessee or Lessor are is entitled but elects not to
terminate this Lease as provided in Section 15.3, Lessee at its cost shall with
all reasonable dispatch restore the untaken portion of any Leased Improvements
so that such Leased Improvements constitute a complete architectural unit of the
same general character and condition (as nearly as may be possible under the
circumstances) as the Leased Improvements existing immediately prior to the
Condemnation. Lessor shall contribute to the cost of restoration that part of
its Award specifically allocated to such restoration, if any, together with
severance and other damages awarded for the taken Leased Improvements; provided,
however, that the amount of such contribution shall not exceed such cost.
15.6 TEMPORARY TAKING. If the whole or any part of the Leased Property or
of Lessee's interest under this Lease is condemned by any Condemner for its
temporary use or occupancy, this Lease shall not terminate by reason thereof,
and Lessee shall either (a) using the FF&E Reserve or funds provided by Lessor
pursuant to Section 40 hereof without any obligation on the part of Lessor to
provide funds in excess of those in the Capital Reserve Account, restore the
Facility to substantially the same condition it was in immediately before such
taking and such taking shall not terminate this Lease, or (b) offer to purchase
the Leased Property for a purchase price equal to the Rejectable Offer Price of
the Leased Property without regard to such taking, or (c) give Lessor written
notice of termination of the Lease. If such taking is not material, Lessee
shall restore the Facility to substantially the same condition as existed
immediately preceding the taking and otherwise in accordance with the terms of
this Lease using the FF&E Reserve or funds provided by Lessor pursuant to
Section 40 hereof.
If restoration is required hereunder, Lessor shall contribute to the cost of
such restoration that portion of its entire Award that is specifically allocated
to such restoration in the judgment or order of the court, if any, and Lessee
shall fund the balance of such costs (out of the FF&E Reserve or other funds
provided by Lessor pursuant to Section 40 hereof) in advance of restoration in a
manner reasonably satisfactory to Lessor and in an amount not to exceed any
Award.
15.7 LESSEE'S OFFER. In the event of the termination of this Lease as
provided in Section 15.3, Lessee may offer to acquire the Leased Property from
Lessor for a purchase price equal to the Rejectable Offer Price of the Leased
Property without regard to such Taking and, if accepted, Lessee shall receive
the entire Award. If Lessor does not accept Lessee's offer to purchase the
Leased Property, Lessee shall withdraw its offer to purchase the Leased Property
and, if so withdrawn, Lessee may terminate the Lease with respect to the Leased
Property without further liability hereunder, except for payment of Rent as
provided in the penultimate sentence of Section 15.3 or for matters which by
their express terms survive termination of this Lease and Lessor shall be
entitled to retain the Award except as provided in Section 15.4.
SECTION 16.
16.1 EVENTS OF DEFAULT. If any one or more of the following events
(individually, an "Event of Default") occurs:
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16.1.1 if an Event of Default occurs under any of the Leases
between Lessor and Lessee or any Affiliate of Lessee; or
16.1.2 if Lessee fails to make payment of the Base Rent when the
same becomes due and payable for a period of ten days after receipt by the
Lessee of Notice from the Lessor thereof;
16.1.3 if Lessee fails to make payment of quarterly Percentage
Rent when the same becomes due and payable and such condition continues for a
period of thirty (30) days after the end of the applicable Fiscal Year;
16.1.4 if either party fails to observe or perform any term,
covenant or condition of this Lease and such failure is not cured by such party
within a period of 30 days after receipt by such party of Notice thereof from
the other party, unless such failure cannot with due diligence be cured within a
period of 30 days, in which case it shall not be deemed an Event of Default if
such party proceeds promptly and with due diligence to cure the failure and
diligently completes the curing thereof provided, however, in no event shall
such cure period extend beyond 90 days after such Notice; or
16.1.5 if either party shall file a petition in bankruptcy or
reorganization for an arrangement pursuant to any federal or state bankruptcy
law or any similar federal or state law, or shall be adjudicated a bankrupt or
shall make an assignment for the benefit of creditors or shall admit in writing
its inability to pay its debts generally as they become due, or if a petition or
answer proposing the adjudication of either party as a bankrupt or its
reorganization pursuant to any federal or state bankruptcy law or any similar
federal or state law shall be filed in any court and such party shall be
adjudicated a bankrupt and such adjudication shall not be vacated or set aside
or stayed within 60 days after the entry of an order in respect thereof, or if a
receiver of such party or of the whole or substantially all of the assets of
such party shall be appointed in any proceeding brought by either party or if
any such receiver, trustee or liquidator shall be appointed in any proceeding
brought against such party and shall not be vacated or set aside or stayed
within 60 days after such appointment; or
16.1.6 if either party is liquidated or dissolved, or begins
proceedings toward such liquidation or dissolution, or, in any manner, permits
the sale or divestiture of substantially all of its assets; or
16.1.7 if the estate or interest of either party in the Leased
Property or any part thereof is voluntarily or involuntarily transferred,
assigned, conveyed, levied upon or attached in any proceeding (unless such party
is contesting such lien or attachment in good faith in accordance with Section
12 hereof); or
16.1.8 if, except as a result of damage, destruction or a partial,
total or temporary Condemnation, either party voluntarily ceases operations on
the Leased Property for a period in excess of 30 days;
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16.1.9 if, Lessee does not maintain the minimum net worth
requirements as default of the parties under any of the conditions contained in
the Master Agreement;
16.1.10 if, an event of default has been declared by the franchisor
under any Franchise Agreement with respect to the Facility on the Leased
Premises as a result of any action or failure to act by either party or any
Person with whom either party contracts for management services at the Facility;
or
16.1.11 if, either party fails to perform any of the terms or
conditions contained in the Master Agreement.
then, and in any such event, the other party may exercise one or more
remedies available to it herein or at law or in equity, including but not
limited to its right to terminate this Lease by giving the other party not less
than ten days' Notice of such termination.
If litigation is commenced with respect to any alleged default under
this Lease, the prevailing party in such litigation shall receive, in addition
to its damages incurred, such sum as the court shall determine as its reasonable
attorneys' fees, and all costs and expenses incurred in connection therewith.
16.2 SURRENDER. If an Event of Default by the Lessee occurs (and the
event giving rise to such Event of Default by the Lessee has not been cured
within the curative period relating thereto as set forth in Section 16.1) and is
continuing, whether or not this Lease has been terminated pursuant to Section
16.1, Lessee shall, if requested by Lessor so to do, immediately surrender to
Lessor the Leased Property including, without limitation, any and all books,
records, files, licenses, permits and keys relating thereto, and quit the same
and Lessor may enter upon and repossess the Leased Property by reasonable force,
summary proceedings, ejectment or otherwise, and may remove Lessee and all other
persons and any and all personal property from the Leased Property, subject to
rights of any hotel guests and to any requirement of law.
16.3 DAMAGES. Lessee shall forthwith pay to Lessor, as and for liquidated
and agreed current damages for Lessee's default or early termination of the
Lease, the Termination Fee defined in the Master Agreement.
SECTION 17. Intentionally Deleted.
SECTION 18.
LESSOR'S RIGHT TO CURE LESSEE'S DEFAULT. If Lessee fails to make any
payment or to perform any act required to be made or performed under this Lease
including, without limitation, Lessee's
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failure to comply with the terms of any Franchise Agreement, and fails to cure
the same within the relevant time periods provided in Section 16.1, Lessor,
without waiving or releasing any obligation of Lessee, and without waiving or
releasing any obligation or default, may (but shall be under no obligation to)
at any time thereafter make such payment or perform such act for the account and
at the expense of Lessee, and may, to the extent permitted by law, enter upon
the Leased Property for such purpose and take all such action as, in Lessor's
opinion, may be necessary or appropriate therefor. No such entry shall be
deemed an eviction of Lessee. All sums so paid by Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case to the extent permitted by law) so incurred, together
with a late charge thereon (to the extent permitted by law) at the Overdue Rate
from the date on which such sums or expenses are paid or incurred by Lessor,
shall be paid by Lessee to Lessor on demand. The obligations of Lessee and
rights of Lessor contained in this Article shall survive the expiration or
earlier termination of this Lease.
SECTION 19.
PROVISIONS RELATING TO PURCHASE OF THE LEASED PROPERTY. If Lessee
purchases the Leased Property from Lessor pursuant to the terms and conditions
of this Lease, Lessor and Lessee shall have first entered into a purchase and
sale agreement mutually agreed upon by Lessor and Lessee.
SECTION 20.
20.1 PERSONAL PROPERTY LIMITATION. Anything contained in this Lease to the
contrary notwithstanding, the average of the adjusted tax bases of the items of
personal property that are leased to the Lessee under this Lease at the
beginning and at the end of any Fiscal Year shall not exceed 15% of the average
of the aggregate adjusted tax bases of the Leased Property at the beginning and
at the end of such Fiscal Year. This Section 20.1 is intended to ensure that
the Rent qualifies as "rents from real property", within the meaning of Section
856(d) of the Code, or any similar or successor provisions thereto, and shall be
interpreted in a manner consistent with such intent
20.2 SUBLEASE RENT LIMITATION. Anything contained in this Lease to the
contrary notwithstanding, Lessee shall not sublet the Leased Property on any
basis such that the rental to be paid by the sublessee thereunder would be
based, in whole or in part, on either (a) the income or profits derived by the
business activities of the sublessee, or (b) any other formula (if as a result
of such a sublease based on (a) and/or (b) above, any portion of the Rent would
fail to qualify as "rents from real property" within the meaning of Section
856(d) of the Code, or any similar or successor provision thereto).
20.3 SUBLEASE TENANT LIMITATION. Anything contained in this Lease to the
contrary notwithstanding, Lessee shall not sublease the Leased Property to any
Person in which Lessor, owns, directly or indirectly, a 10% or more interest,
within the meaning of Section 856(d)(2)(B) of the Code, or any similar or
successor provisions thereto.
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20.4 LESSEE OWNERSHIP LIMITATION. Anything contained in this Lease to the
contrary notwithstanding, neither Lessee nor an Affiliate of the Lessee shall
acquire, directly or indirectly, a 10% or more interest in Lessor, within the
meaning of Section 856(d)(2)(B) of the Code, or any similar or successor
provision thereto.
20.5 LESSEE OFFICER AND EMPLOYEE LIMITATION. Anything contained in this
Lease to the contrary notwithstanding, none of the officers or employees of the
Lessee (or any Person who furnishes or renders services to the tenants of the
Leased Property, or manages or operates the Leased Property) shall be officers
or employees of Lessor, (or any Person who serves as an advisor of Lessor). In
addition, if a Person serves as both (a) a director of the Lessee (or any Person
who furnishes or renders services to the tenants of the Leased Property, or
manages or operates the Leased Property), and (b) a director and officer (or
employee) of Lessor, (or any Person who serves as an advisor of Lessor) that
Person shall not receive any compensation for serving as a director of the
Lessee (or any Person who furnishes or renders services to the tenants of the
Leased Property, or manages or operates the Leased Property).
20.6 PAYMENTS TO AFFILIATES. Notwithstanding anything contained in this
Lease to the contrary, the Lessee shall make no payments to Affiliates as Gross
Operating Expenses unless set forth in the Annual Budget or otherwise agreed to
by Lessor.
SECTION 21.
21.1 HOLDING OVER. If Lessee for any reason remains in possession of the
Leased Property after the expiration or earlier termination of the Term, such
possession shall be as a tenant at sufferance during which time Lessee shall pay
as rental each month two times the aggregate of (a) one-twelfth of the aggregate
Base Rent and Percentage Rent payable with respect to the last Fiscal Year of
the Term, (b) all Additional Charges accruing during the applicable month, and
(c) all other sums, if any, payable by Lessee under this Lease with respect to
the Leased Property. During such period, Lessee shall be obligated to perform
and observe all of the terms, covenants and conditions of this Lease, but shall
have no rights hereunder other than the right, to the extent given by law to
tenancies at sufferance, to continue its occupancy and use of the Leased
Property. Nothing contained herein shall constitute the consent, express or
implied, of Lessor to the holding over of Lessee after the expiration or earlier
termination of this Lease.
SECTION 22.
22.1. RISK OF LOSS. During the Term, except as otherwise specified
herein, the risk of loss or of decrease in the enjoyment and beneficial use of
the Leased Property in consequence of the damage or destruction thereof by fire,
the elements, casualties, thefts, riots, wars or otherwise, or in consequence of
foreclosures, attachments, levies or executions (other than those caused by
Lessee and those claiming from, through or under Lessee) is assumed by Lessor,
and, in the absence of gross negligence, willful misconduct or breach of this
Lease by Lessee, Lessee shall in no event be
35
answerable or accountable therefor; provided, however, nothing contained in this
Section 22.1 shall entitle the Lessee to any abatement of Rent unless expressly
provided for in this Lease.
SECTION 23.
23.1 INDEMNIFICATION. Notwithstanding the existence of any insurance, and
without regard to the policy limits of any such insurance or self-insurance, but
subject to Section 8, Lessor will protect, indemnify, hold harmless and defend
Lessee ("Indemnified Parties") from and against all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses), imposed upon or
incurred by or asserted against Lessee Indemnified Parties by reason of: (a)
any Impositions that are the obligations of Lessor pursuant to the applicable
provisions of this Lease, (b) any failure on the part of Lessor to perform or
comply with any of the terms of this Lease, (c) any liability, action, claim,
damage, cost or expense arising prior to the Commencement Date of this Lease,
and (d) the gross negligence, willful misconduct or fraud by Lessor.
Lessee shall, indemnify, hold harmless and defend Lessor Indemnified
Parties from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses imposed upon or incurred by or
asserted against Lessor Indemnified Parties as a result of (a) the gross
negligence, willful misconduct or fraud by Lessee arising in connection with
this Lease, (b) any failure on the part of Lessee to perform or comply with any
of the terms of this Lease, (c) any Impositions that are the obligations of
Lessor pursuant to the applicable provisions of this Lease, and (d) any
liability, action, claim, damage, cost or expense arising prior to the
Commencement Date of this Lease.
Any amounts that become payable by an Indemnifying Party under this Section
shall be paid within ten days after liability therefor on the part of the
Indemnifying Party is determined by litigation or otherwise, and if not timely
paid, shall bear a late charge (to the extent permitted by law) at the Overdue
Rate from the date of such determination to the date of payment. An
Indemnifying Party, at its expense, shall contest, resist and defend any such
claim, action or proceeding asserted or instituted against the Indemnified
Party. The Indemnified Party, at its expense, shall be entitled to participate
in any such claim, action, or proceeding, and the Indemnifying Party may not
compromise or otherwise dispose of the same without the consent of the
Indemnified Party, which may not be unreasonably withheld. Nothing herein shall
be construed as indemnifying a Lessor Indemnified Party against its own grossly
negligent acts or omissions or willful misconduct.
Lessee's or Lessor's liability for a breach of the provisions of this
Section shall survive any termination of this Lease.
SECTION 24.
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24.1 SUBLETTING AND ASSIGNMENT BY LESSEE. Subject to the provisions of
Section 20 and Section 24.2 so long as a Default does not exist on the part of
the Lessee and any other express conditions or limitations set forth herein,
Lessee may, in its sole discretion (a) assign this Lease or sublet all or any
part of the Leased Property to an Affiliate of Lessee or any person or entity
with, or into whom, Lessee merges or consolidates, or (b) sublet any retail or
restaurant portion of the Leased Improvements in the normal course of the
Primary Intended Use; provided that any subletting to any party other than an
Affiliate of Lessee shall not individually as to any one such subletting, or in
the aggregate, materially diminish the actual or potential Percentage Rent
payable under this Lease. In the case of a subletting, the sublessee shall
comply with the provisions of Section 24.2, and in the case of an assignment,
the assignee shall assume in writing and agree to keep and perform all of the
terms of this Lease on the part of Lessee to be kept and performed and shall be,
and become, jointly and severally liable with Lessee for the performance
thereof. Notwithstanding the above, Lessee may assign the Lease to an
Affiliate without the consent of Lessor; provided that any such assignee assumes
in writing and agrees to keep and perform all of the terms of the Lease on the
part of Lessee to be kept and performed and shall be and become jointly and
severally liable with Lessee for the performance thereof. In case of either an
assignment or subletting made during the Term, Lessee shall remain primarily
liable, as principal rather than as surety, for the prompt payment of the Rent
and for the performance and observance of all of the covenants and conditions to
be performed by Lessee hereunder. An original counterpart of each such sublease
and assignment and assumption, duly executed by Lessee and such sublessee or
assignee, as the case may be, in form and substance satisfactory to Lessor,
shall be delivered promptly to Lessor. The Lessee shall have the right to
assign this Lease to an unaffiliated third party transferee if such transferee
has a net worth in excess of one million dollars ($1,000,000); provided,
however, that (i) the Lessee must give Lessor forty five (45) days written
notice of such assignment; (ii) such unaffiliated third party transferee shall
assume all the Lessee's obligations and rights under this Lease;(iii) the Lessee
and/or the unaffiliated third party transferee must pay any and all outstanding
Rent owed to Lessor; and (iv) such unaffiliated third party transferree must
acknowledge in writing that any and all references to Negative Base Rent shall
be deemed deleted herefrom.
24.2 ATTORNMENT. Lessee shall insert in each sublease permitted under
Section 24.1 provisions to the effect that (a) such sublease is subject and
subordinate to all of the terms and provisions of this Lease and to the rights
of Lessor hereunder, (b) if this Lease terminates before the expiration of such
sublease, the sublessee thereunder will, at Lessor's option, attorn to Lessor
and waive any right the sublessee may have to terminate the sublease or to
surrender possession thereunder as a result of the termination of this Lease,
and (c) if the sublessee receives a written Notice from Lessor or Lessor's
assignees, if any, stating that an uncured Event of Default exists under this
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 Lessor or Lessor's
assignees, if any, as the case may be, shall be credited against the amounts
owing by Lessee under this Lease.
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24.3 SUBLETTING AND ASSIGNMENT BY LESSOR. Other than in accordance with
Section 1.2(B), Lessor shall not assign this Lease to any other person or entity
without the prior written approval of Lessee.
SECTION 25.
OFFICER'S CERTIFICATES; FINANCIAL STATEMENTS: LESSOR'S ESTOPPEL
CERTIFICATES AND COVENANTS.
(a) At any time and from time to time upon not less than 20 days
Notice by Lessor, Lessee will furnish to Lessor an Officer's Certificate
certifying that this Lease is unmodified and in full force and effect (or that
this Lease is in full force and effect as modified and setting forth the
modifications), the date to which the Rent has been paid, whether to the
knowledge of Lessee there is any existing default or Event of Default exists
thereunder by Lessor or Lessee, and such other information as may be reasonably
requested by Lessor. Any such certificate furnished pursuant to this Section
may be relied upon by Lessor, any lender and any prospective purchaser of the
Leased Property.
(b) Lessee will furnish the following statements to Lessor:
(1) with reasonable promptness, such information respecting the
financial condition and affairs of Lessee including audited financial
statements prepared by Coopers & Xxxxxxx, L.L.C. or such other certified
independent accounting firm as may be approved by Lessor, as Lessor may
reasonably request from time to time, provided, however that in the absence
of special and/or nonrecurring circumstances Lessee shall only be required
to furnish audited financial information to Lessor no more than once per
Fiscal Year; and
(2) the most recent Financials of Lessee within 25 days after
each quarter of any Fiscal Year (or, in the case of the final quarter in
any Fiscal Year, the most recent audited Financials of Lessee within 60
days); and
(3) or about the 15th day of each month, a detailed profit and
loss statement for the Leased Property for the preceding month, a balance
sheet for the Leased Property as of the end of the preceding month, and a
detailed accounting of Gross Revenues for the Leased Property for the
preceding month, each in form acceptable to Lessor.
(4) on an annual basis, copies of all reports submitted to
governmental authorities and agencies (including but not limited to reports
relating to sales, use and occupancy taxes) and any franchisor.
(c) At any time and from time to time upon not less than 20 days
notice by Lessee, Lessor will furnish to Lessee or to any person designated by
Lessee an estoppel certificate certifying that this Lease is unmodified and in
full force and effect (or that this Lease is in full force and effect as
modified and setting forth the modifications), the date to which Rent has been
paid,
38
whether to the knowledge of Lessor there is any existing default or Event of
Default on Lessee's part hereunder, and such other information as may be
reasonably requested by Lessee.
Notwithstanding the foregoing, the costs of such audit shall be paid for
as an operating expense and deducted from Gross Revenues except as otherwise
stated herein.
SECTION 26.
LESSOR'S RIGHT TO INSPECT. Lessee shall permit Lessor and its authorized
representatives as frequently as reasonably requested by Lessor to inspect the
Leased Property and Lessee's accounts and records pertaining thereto and make
copies thereof, during usual business hours upon reasonable advance notice,
subject only to any business confidentiality requirements reasonably requested
by Lessee.
SECTION 27.
NO WAIVER. No failure by Lessor or Lessee to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
SECTION 28.
REMEDIES CUMULATIVE. To the extent permitted by law, each legal, equitable
or contractual right, power and remedy of Lessor or Lessee now or hereafter
provided either in this Lease or by statute or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power and remedy and
the exercise or beginning of the exercise by Lessor or Lessee of any one or more
of such rights, powers and remedies shall not preclude the simultaneous or
subsequent exercise by Lessor or Lessee of any or all of such other rights,
powers and remedies.
SECTION 29.
ACCEPTANCE OF SURRENDER. No surrender to Lessor of the Leased Property or
any part thereof, or of any interest therein, shall be valid or effective unless
agreed to and accepted in writing by Lessor and no act by Lessor or any
representative or agent of Lessor, other than such a written acceptance by
Lessor, shall constitute an acceptance of any such surrender.
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SECTION 30.
NO MERGER OF TITLE. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same person or
entity may acquire, own or hold, directly or indirectly: (a) this Lease or the
leasehold estate created hereby or any interest in this Lease or such leasehold
estate, and (b) the fee estate in the Leased Property.
SECTION 31.
CONVEYANCE BY LESSOR. If Lessor or any successor owner of the Leased
Property conveys the Leased Property in accordance with the terms hereof other
than as security for a debt, and the grantee or transferee of the Leased
Property expressly assumes all obligations of Lessor hereunder arising or
accruing from and after the date of such conveyance or transfer, Lessor or such
successor owner, as the case may be, shall thereupon be released from all future
liabilities and obligations of Lessor under this Lease arising or accruing from
and after the date of such conveyance or other transfer as to the Leased
Property and all such future liabilities and obligations shall thereupon be
binding upon the new owner; provided, however, that in the event of such a
conveyance by Lessor, Lessee may offset against the Base Rent otherwise due
hereunder an amount equal to the annual increases in property taxes incurred by
Lessee solely by reason of said conveyance from Lessor to successor owner.
SECTION 32.
QUIET ENJOYMENT. So long as Lessee pays all Rent as the same becomes due
and complies with all of the terms of this Lease and performs its obligations
hereunder, in each case within the applicable grace periods, if any, Lessee
shall peaceably and quietly have, hold and enjoy the Leased Property for the
Term hereof, free of any claim or other action by Lessor or anyone claiming by,
through or under Lessor, but subject to all liens and encumbrances subject to
which the Leased Property was conveyed to Lessor or hereafter consented to by
Lessee or provided for herein. Notwithstanding the foregoing, Lessee shall have
the right by separate and independent action to pursue any claim it may have
against Lessor as a result of a breach by Lessor of the covenant of quiet
enjoyment contained in this Section.
SECTION 33.
NOTICES. All notices, demands, requests, consents, approvals and other
communications ("Notice" or "Notices") hereunder shall be in writing and
personally served or mailed (by registered or certified mail, return receipt
requested and postage prepaid), addressed to Lessor at its principal
40
office, as indicated in the signature page hereof, Attention: President, and
addressed to Lessee as indicated in the signature page hereof, or to such other
address or addresses as either party may hereafter designate. Personally
delivered Notice shall be effective upon receipt, and Notice given by mail shall
be complete at the time of deposit in the U.S. Mail system, but any prescribed
period of Notice and any right or duty to do any act or make any response within
any prescribed period or on a date certain after the service of such Notice
given by mail shall be extended five days.
SECTION 34.
APPRAISERS. If it becomes necessary to determine the Fair Market Value or
Fair Market Rental of the Leased Property for any purpose of this Lease, the
party required or permitted to give Notice of such required determination shall
include in the Notice the name of a person selected to act as appraiser on its
behalf. Within 10 days after Notice, Lessor (or Lessee, as the case may be)
shall by Notice to Lessee (or Lessor, 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) with at least five years experience in the State
appraising property similar to the Leased Property, shall, within 45 days after
the date of the Notice appointing the first appraiser, proceed to appraise the
Leased Property to determine the Fair Market Value or 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 shall have been so appointed, then the determination of such
appraiser shall be final and binding upon the parties. To the extent consistent
with sound appraisal practice as then existing at the time of any such
appraisal, such appraisal shall be made on a basis consistent with the basis on
which the Leased Property was appraised for purposes of determining its Fair
Market Value at the time the Leased Property was acquired by Lessor. If two
appraisers are appointed and if the difference between the amounts so determined
does not exceed 5%, then the Fair Market Value or Fair Market Rental shall be an
amount equal to 50% of the sum of the amounts so determined. If the difference
between the amounts so determined exceeds 5%, then such two appraisers shall
have 20 days to appoint a third appraiser. If no such appraiser shall have been
appointed within such 20 days or within 90 days of the original request for a
determination of Fair Market Value or Fair Market Rental, whichever is earlier,
either Lessor or Lessee may apply to any court having jurisdiction to have such
appointment made by such court. Any appraiser appointed by the original
appraisers or by such court shall be instructed to determine the Fair Market
Value or Fair Market Rental within 45 days after appointment of such appraiser.
Thereafter, the three (3) appraisals shall be reviewed and the determination of
the appraiser which differs most in the terms of dollar amount from the
determinations of the other two appraisers shall be excluded, and 50% of the sum
of the remaining two determinations shall be final and binding upon Lessor and
Lessee as the Fair Market Value or Fair Market Rental of the Leased Property, as
the case may be. 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
except as otherwise provided by applicable law. Lessor and Lessee shall each
pay the fees and expenses of the appraiser appointed by it and each shall pay
one-half of the fees and expenses of the
41
third appraiser and one-half of all other costs and expenses incurred in
connection with each appraisal. In the event that the Lessor and the Lessee
agree upon a single appraiser, the Lessee and the Lessor shall each pay one-half
of the fees and expenses of such appraiser.
SECTION 35.
35.1 LESSOR MAY GRANT LIENS. Without the consent of Lessee, Lessor may,
subject to the terms and conditions set forth below in these Sections 16, 16.1
and 35.1, from time to time, directly or indirectly, create or otherwise cause
to exist any lien, encumbrance or title retention agreement ("Encumbrance") upon
the Leased Property, or any portion thereof or interest therein, whether to
secure any borrowing or other means of financing or refinancing. Any such
Encumbrance shall (a) contain the right to prepay (whether or not subject to a
prepayment penalty); (b) provide that it is subject to the rights of Lessee
under this Lease; (c) contain the Agreement by the holder of the Encumbrance
that it will (1) give Lessee the same notice, if any, given to of Lessor of any
default or acceleration of any obligation underlying any such Encumbrance or any
sale in foreclosure under such Encumbrance, (2) permit Lessee to cure any such
default on Lessor's behalf within any applicable cure period, and Lessee shall
be reimbursed by Lessor for any and all costs incurred in effecting such cure,
including without limitation out-of-pocket costs incurred to effect any such
cure (including reasonable attorneys' fees) and (3) permit Lessee to appear by
its representative and to bid at any sale in foreclosure made with respect to
any such Encumbrance. Upon the request of Lessor, Lessee shall subordinate this
Lease to the lien of a new mortgage on the Leased Property, on the condition
that the proposed mortgagee executes a non-disturbance and attornment agreement
recognizing this Lease, and agreeing, for itself and its successors and assigns,
to comply with the provisions of this Section 35.
35.2 LESSEE'S RIGHT TO CURE. Subject to the provisions of Sections 16,
16.1 and 35.3, if Lessor breaches any covenant to be performed by it under this
Lease, Lessee, after Notice to and demand upon Lessor, without waiving or
releasing any obligation hereunder, and in addition to all other remedies
available to Lessee, may (but shall be under no obligation at any time
thereafter to) make such payment or perform such act for the account and at the
expense of Lessor. All sums so paid by Lessee and all costs and expenses
(including, without limitation, reasonable attorneys' fees) so incurred,
together with interest thereon at the Overdue Rate from the date on which such
sums or expenses are paid or incurred by Lessee, shall be paid by Lessor to
Lessee on demand or, following entry of a final, nonappealable judgment against
Lessor for such sums, may be offset by Lessee against the Base Rent payments
next accruing or coming due. The rights of Lessee hereunder to cure and to
secure payment from Lessor in accordance with this Section 35.2 shall survive
the termination of this Lease with respect to the Leased Property.
35.3 BREACH BY LESSOR. If a Default exists on the part of
Lessor, Lessee, without waiving or releasing any obligations hereunder, and in
addition to all other remedies available to Lessee at law or in equity, may
purchase the Leased Property from Lessor for a purchase price equal to the then
Fair Market Value. If Lessee elects to purchase the Property it shall deliver a
Notice thereof to Lessor specifying a settlement date to occur not less than 90
days subsequent to the date
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of such Notice on which it shall purchase the Leased Property, and the same
shall be thereupon conveyed in accordance with the provisions of Section 19.
SECTION 36.
36.1 MISCELLANEOUS. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Lessee or Lessor
arising prior to any date of termination of this Lease shall survive such
termination. If any term or provision of this Lease or any application thereof
is invalid or unenforceable, the remainder of this Lease and any other
application of such term or provisions shall not be affected thereby. If any
late charges or any interest rate provided for in any provision of this Lease
are based upon a rate in excess of the maximum rate permitted by applicable law,
the parties agree that such charges shall be fixed at the maximum permissible
rate. Neither this Lease nor any provision hereof may be changed, waived,
discharged or terminated except by a written instrument in recordable form
signed by Lessor and Lessee. All the terms and provisions of this Lease shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. The headings in this Lease are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Lease shall be governed by and construed in accordance
with the laws of the State, but not including its conflicts of laws rules.
36.2 TRANSFER OF LICENSES. Upon the expiration or earlier termination of
the Term, Lessee shall use diligent and good faith efforts (i) to transfer to
Lessor or Lessor's nominee all licenses, equipment leases, operating permits and
other governmental authorizations and all service contracts, including contracts
with governmental or quasi-governmental entities, that may be necessary for the
operation of the Facilities (collectively, "Licenses"), or (ii) if such transfer
is prohibited by law or Lessor otherwise elects, to cooperate with Lessor or
Lessor's nominee in connection with the processing by Lessor or Lessor's nominee
of any applications for, all Licenses; provided, in either case, that the costs
and expenses of any such transfer or the processing of any such application
shall be paid by Lessor or Lessor's nominee. In addition, Lessee agrees to use
diligent and good faith efforts to assist Lessor in obtaining any consents
necessary for the assignment of the Franchise Agreement. Lessor and Lessee agree
to execute whatever instruments are necessary to effect the assumption by the
Lessor of all such licenses, equipment leases, operating permits and service
contracts.
36.3 WAIVER OF PRESENTMENT, ETC.. Lessee waives all presentments, demands
for payment and for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, and notices of acceptance and waives all notices
of the existence, creation, or incurring of new or additional obligations,
except as expressly granted herein, and except as expressly provided in Section
16 herein.
SECTION 37.
43
MEMORANDUM OF LEASE. Lessor and Lessee shall promptly upon the request of
either enter into a short form memorandum of this Lease, in form suitable for
recording under the laws of the State. Lessee shall pay all costs and expenses
of recording such memorandum of this Lease.
SECTION 38.
LESSOR'S OBLIGATION TO PURCHASE ASSETS OF LESSEE. Effective on not less
than 90 days prior Notice given at any time within 180 days before the
expiration of the Term, but not later than 90 days prior to such expiration, or
upon such shorter Notice period as shall be appropriate if this Lease is
terminated prior to its expiration date, Lessor shall purchase and/or assume all
(but not less than all) of the assets and liabilities of Lessee, tangible and
intangible, relating to the Leased Property (other than this Lease), at the
expiration or termination of this Lease for an amount (payable in cash on the
expiration date of this Lease) equal to the fair market value thereof as
appraised in conformity with Section 34, except that the appraisers need not be
members of the American Institute of Real Estate Appraisers, but rather shall be
appraisers having at least ten years experience in valuing similar assets.
Notwithstanding any such purchase, Lessor shall obtain no rights to any trade
name or logo owned, licensed or used by the Lessee in connection with the Leased
Property or the Franchise unless a separate agreement as to such use is executed
by the applicable parties.
SECTION 39.
COMPLIANCE WITH FRANCHISE AGREEMENT. On or before the Commencement Date,
the Lessor shall deliver to the Lessee any existing Franchise Agreement
applicable to the Leased Property along with an estoppel certificate from the
franchisor certifying, among other things, that no default exists under the
Franchise Agreement, the current physical condition of the Leased Property
satisfies the current quality standards of the franchisor and that all franchise
fees and other payments or obligations of the current franchisee under the
Franchise Agreement are current. It is the intent of the parties hereto that
Lessee shall comply in every respect with the provisions of the Franchise
Agreement so as to avoid any default thereunder during the term of this
Agreement. Lessor and Lessee agree to cooperate fully with each other in the
event it becomes necessary to obtain a Franchise Agreement extension or
modification or a new franchise for the property.
SECTION 40.
CAPITAL EXPENDITURES AND RESERVES
(A) INITIAL CAPITAL PROJECTS. On or before the Commencement Date, the
Lessor will complete, or provide to Lessee sufficient funds to complete, all
capital projects described in the existing capital expenditure budgets more
fully described in EXHIBIT "G" attached hereto and made a part hereof.
44
(B) Not later than sixty (60) days prior to the commencement of each
fiscal year, Lessee shall submit to Lessor for Lessor's approval pursuant to the
provisions of Section 3.3 hereof, a Capital Expenditure Budget as part of
Lessee's submission to Lessor of the Annual Budget. The Capital Expenditure
Budget shall include without limitation, the expenditures required, necessary
and/or anticipated for the repair, replacement or refurbishment of carpet, soft
goods, FF&E and structural and mechanical items, alterations to the Leased
Property (but only in accordance with Section 10.1 hereof, reconstruction in the
event of damages or destruction of the Leased Property (but only in accordance
with Section 14 hereof), restoration pursuant to a Taking (but only in
accordance with Section 15 of this Lease), other required or desirable capital
improvements to the Leased Property or any of the components, other required or
desired working capital, and such other items characterized as capital
expenditures under the Uniform System (excluding, however, items required to be
maintained at Lessor's cost pursuant to Section 9.1.2 of this Lease. Lessee
shall maintain a separate interest bearing account referred to as the Capital
Expenditure Reserve Account from which all costs and expenses reflected in an
approved Capital Expenditure Budget should be paid. Lessor shall, on or before
the Commencement Date, fund into the Capital Expenditure Reserve Account an
amount equal to $100.00 per room contained within the Leased Property. Lessor
will have no further funding obligations with regard to any Capital Expenditure
Budget and/or the Capital Expenditure Reserve Account whatsoever, except as
specifically otherwise set forth in this Section 40 or in this Lease. Within
twenty (20) days after the end of each calendar quarter of each fiscal year
hereof, commencing with the calendar quarter ending December 31 and within ___
days after the end of each succeeding quarter thereafter during the Term hereof,
Lessee shall, out of Property Cash Flow from the Lease Property, fund into the
Capital Expenditure Reserve Account, an amount equal to $125.00 per room
contained within the Leased Property; provided, this amount will be increased
annually by the percentage increase of the average daily room rate for the
Leased Property. Irrespective of any future increases or decreased in the
average daily room rate for the Leased Premises during the Term hereof, Lessee
must each quarter during the Term hereof fund into the Capital Expenditure
Reserve Account a minimum of $125.00 per room contained within the Leased
Premises, BUT, Lessee shall never be required to fund into the Capital
Expenditure Reserve Account more than $250.00 per room per quarter. Lessee
understands and agrees that after the approval by Lessor of any annual Capital
Expenditure Budget, no monies can be expended from the Capital Expenditure
Reserve Account for the applicable year which were not reflected in that year's
annual Capital Expenditure Budget (or if such expenditures were reflected on the
applicable budget, but were underestimated) without the prior written consent of
Lessor, which will not be unreasonably withheld or delayed. Lessee agrees
during the Term hereof to provide to Lessor monthly reports as to the
expenditures made from the Capital Expenditure Reserve Account for the
operations of the Leased Property for the immediately preceding month. Lessee
further agrees and does hereby grant to Lessor, to secure the full and complete
performance by Lessee of its obligations under this Lease, grant to Lessor a
security interest in the Capital Expenditure Reserve Account, and, upon default
by Lessee under this Lease or termination of this Lease, the Capital Expenditure
Reserve Account and the proceeds therefrom shall, at Lessor's option, be
delivered to Lessor. Lessor and Lessee hereby approve the Capital Expenditure
Budget for the calendar year 1996 for the Leased Property attached hereto as
EXHIBIT "H" and made a part hereof.
45
SECTION 41.
FORCE MAJEURE. Notwithstanding anything contained herein to the contrary,
both the Lessor and the Lessee shall be excused from performance of all terms
and conditions under this Lease (including the Lessee's obligation to pay Base
Rent) in the event of any act of God, acts of war, acts of terrorism, civil
disturbance, labor strikes, governmental action (including condemnation
proceedings), or other causes beyond the reasonable control of Lessor or Lessee
(including, but not limited to, changes in the competitive set of any Leased
Property or in the market in which the Leased Property is located) which have a
significant adverse effect upon the financial performance of the Leased
Property. Lessee agrees to make good faith efforts to provide to Lessor as much
advance notice of such events as practical if Lessee has actual knowledge that
such an event likely will occur. If such a force majeure event occurs, the
Lessor and Lessee shall negotiate in good faith to agree upon a new rental
structure to reflect the adverse effect upon the financial performance of the
Leased Property. If the Lessor and the Lessee cannot agree upon a new rental
structure within thirty (30) days after the occurrence of a force majeure event,
the Lessee shall have the option to terminate the Lease without the payment of
any termination fee. Notwithstanding anything contained herein to the contrary,
the termination by the Lessee of the Lease pursuant to a force majeure event
described in this Section 41 shall not be deemed to be an exercise by the Lessee
of the Initial Without Cause Termination Right.
SECTION 42
ARBITRATION. In the event a dispute should arise concerning the
interpretation or application of any of the provisions of this Agreement, the
parties agree the dispute shall be submitted to arbitration of the American
Arbitration Association, except as modified by this SECTION 42. The Arbitration
Tribunal shall be formed of three (3) Arbitrators each of which shall have at
least five (5) years' experience in hotel operation, management or ownership,
one (1) to be appointed by each party and the third (3rd) to be appointed by the
American Arbitration Association. The arbitration shall take place in
Pittsburgh, Pennsylvania, and shall be conducted in the English language. The
arbitration award shall be final and binding upon the parties hereto and subject
to no appeal, and shall deal with the question of costs of arbitration and all
matters related thereto. Judgment upon the award rendered may be entered into
any court having jurisdiction, or applications may be made to such court for an
order of enforcement.
SECTION 43
RIGHT OF FIRST REFUSAL. If Lessor shall have received a bona fide offer to
purchase the Leased Property, and Lessor desires to sell the Leased Property
pursuant to the terms of such offer, Lessor shall give written notice thereof to
Lessor, stating the name and full identity of the prospective purchaser,
including the names and addresses of the owners of the capital stock,
partnership interests or other proprietary interests of such prospective
purchaser, if such information is reasonably
46
available to Lessor, the price, and all other terms and conditions of such
proposed sale, together with all other information with respect thereto which is
requested by Lessee and reasonably available to Lessor. Within thirty (30) days
after receipt by Lessee of such Notice from Lessor, Lessee shall elect by
written notice to Lessor one of the following alternatives:
(A) To purchase the Leased Property or to purchase the stock at the same
price and upon the same terms and conditions as those set forth in the Notice
from Lessor to Lessee. In such event, Lessor and Lessee shall promptly enter
into an agreement for sale at the price and on terms consistent with such notice
from Lessor to Lessee.
(B) To consent to such sale and to the assignment of the Agreement to such
purchaser, if such sale is in fact consummated; provided, however, that
concurrently with the consummation of such sale, the purchaser shall in writing
under an assumption agreement in form and substance reasonably satisfactory to
Lessee assume and agree to perform and comply in accordance with the terms of
this Lease. An executed copy of said assumption agreement shall be promptly
delivered by Lessor to Lessee. Lessor shall give to Lessee not less than thirty
(30) days Notice of the date on which such sale is to be consummated in order
to give Lessee an opportunity to be present.
(C) To refuse consent to such offer to purchase; provided, however, such
consent shall not be unreasonably withheld if such prospective purchaser is, in
Lessee's judgment, financially capable and sufficiently reputable to enable such
prospective purchaser to perform the terms and conditions of this Lease. If
Lessee shall withhold its consent to any such purchase and Lessor shall
nonetheless consummate such transaction, Lessee shall be entitled to immediately
terminate the Lease and all obligations of Lessee shall immediately cease.
SECTION 44
Unless otherwise expressly stated herein, any reference to a required
consent or approval by either the Lessor or the Lessee shall be deemed to refer
to an approval or consent which shall not be unreasonably withheld or delayed.
IN WITNESS WHEREOF, the parties have executed this Lease by their duly
authorized officers as of the date first above written.
LESSOR
HOST FUNDING, INC.,
a Maryland corporation
By:______________________________
Title:_____________________________
47
LESSEE
CROSSROADS HOSPITALITY TENANT
COMPANY, L.L.C.
a Delaware limited liability company
By:______________________________
Title:_____________________________
48
EXHIBIT LIST
Exhibit D Base Rent Section 3.1(A)
Exhibit E Percentage Rent Section 3.1(B)
49
EXHIBIT D BASE RENT SCHEDULE
MINER POPLAR XXXXXX- ROCK SAN
BLUFF SET FALLS DIEGO
ANNUAL BASE RENT $265,300 $202,000 $112,300 $200,500 $250,000
AVERAGE MONTHLY BASE RENT $22,108 $16,833 $9,358 $16,708 $20,833
MONTHLY BASE RENT
PAYMENT SCHEDULE
JANUARY $16,581 $12,626 $7,019 $12,531 $14,583
FEBRUARY $16,581 $12,626 $7,019 $12,531 $14,583
MARCH $16,581 $12,626 $7,019 $12,531 $14,583
APRIL $22,108 $16,833 $9,358 $16,708 $20,833
MAY $22,108 $16,833 $9,358 $16,708 $20,833
JUNE $22,108 $16,833 $9,358 $16,708 $20,833
JULY $30,952 $23,567 $13,102 $23,392 $28,125
AUGUST $30,952 $23,567 $13,102 $23,392 $28,125
SEPTEMBER $30,952 $23,567 $13,102 $23,392 $28,125
OCTOBER $18,792 $14,308 $7,955 $14,202 $19,792
NOVEMBER $18,792 $14,308 $7,955 $14,202 $19,792
DECEMBER $18,792 $14,308 $7,955 $14,202 $19,792
TOTAL BASE RENT PAID $265,300 $202,000 $112,300 $200,500 $250,000
BASE RENT INCLUDES PROPERTY TAXES
EXHIBIT E - PERCENTAGE RENT SCHEDULE (SOMMERSET)
For each Fiscal Year during the Term commencing with the Fiscal Year
beginning January 1, 1996, Lessee shall pay to Lessor percentage rent
("Percentage Rent") on a quarterly basis within twenty (20) days after the end
of each calendar quarter in an amount calculated by the following formula:
The amount equal to the Percentage Rent Gross Revenues Computation
LESS
An amount equal to the cumulative Percentage Rent paid for the
applicable Fiscal Year through the calendar quarter for which this
calculation is being made
EQUALS
Percentage Rent payable for the applicable calendar quarter.
For the purposes of this formula, the Percentage Rent Gross Revenues
Computation is an amount equal to the total of (a) 32% of the first $200,000 of
cumulative Gross Revenues for the applicable Fiscal Year through the calendar
quarter for which the calculation is being made in excess of $410,000 (the
"Break-Even Threshold"), and (b) 35% of all amounts of cumulative Gross Revenues
for the applicable Fiscal Year through the calendar quarter for which this
calculation is being made in excess of $610,000.
It is understood and agreed that if at any time during the first four (4)
years after the Commencement Date, Lessee has, through appropriate Officer's
Certificate, certified that Lessee has or is incurring Negative Base Rent, then
fifty percent (50%) of the amount calculated above as Percentage Rent shall be
applied to Negative Base Rent until Negative Base Rent is paid in full and the
remaining fifty percent (50%) shall be paid by Lessee to Lessor as Percentage
Rent. Notwithstanding anything contained in the immediately preceding sentence
or in this Lease to the contrary, Lessee acknowledges and agrees that if at any
time during the first four (4) years after the Commencement date Negative Base
Rent has been paid in full and at all times after such first four (4) year
period. Lessee shall not be allowed to use any portion of the Percentage Rent,
as calculated above, to offset and/or pay the Negative Base Rent, but, rather,
all such Percentage Rent as calculated above, shall be paid in full to Lessor.
EXHIBIT E - PERCENTAGE RENT SCHEDULE (ROCK FALLS)
For each Fiscal Year during the Term commencing with the Fiscal Year
beginning January 1, 1996, Lessee shall pay to Lessor percentage rent
("Percentage Rent") on a quarterly basis within twenty (20) days after the end
of each calendar quarter in an amount calculated by the following formula:
The amount equal to the Percentage Rent Gross Revenues Computation
LESS
An amount equal to the cumulative Percentage Rent paid for the
applicable Fiscal Year through the calendar quarter for which this
calculation is being made
EQUALS
Percentage Rent payable for the applicable calendar quarter.
For the purposes of this formula, the Percentage Rent Gross Revenues
Computation is an amount equal to the total of (a) 28.75% of the first $200,000
of cumulative Gross Revenues for the applicable Fiscal Year through the calendar
quarter for which the calculation is being made in excess of $580,000 (the
"Break-Even Threshold"), and (b) 35% of all amounts of cumulative Gross Revenues
for the applicable Fiscal Year through the calendar quarter for which this
calculation is being made in excess of $780,000. For the purposes of this
calculation, the Break-Even Threshold shall be increased by 3% per Fiscal Year
during the Term hereof.
It is understood and agreed that if at any time during the first four (4)
years after the Commencement Date, Lessee has, through appropriate Officer's
Certificate, certified that Lessee has or is incurring Negative Base Rent, then
fifty percent (50%) of the amount calculated above as Percentage Rent shall be
applied to Negative Base Rent until Negative Base Rent is paid in full and the
remaining fifty percent (50%) shall be paid by Lessee to Lessor as Percentage
Rent. Notwithstanding anything contained in the immediately preceding sentence
or in this Lease to the contrary, Lessee acknowledges and agrees that if at any
time during the first four (4) years after the Commencement date Negative Base
Rent has been paid in full and at all times after such first four (4) year
period, Lessee shall not be allowed to use any portion of the Percentage Rent,
as calculated above, to offset and/or pay the Negative Base Rent, but, rather,
all such Percentage Rent, as calculated above, shall be paid in full to Lessor.
EXHIBIT E - PERCENTAGE RENT SCHEDULE (SAN DIEGO)
For each Fiscal Year during the Term commencing with the Fiscal Year
January 1, 1996, Lessee shall pay to Lessor percentage rent
("Percentage Rent") on a quarterly basis within twenty (20) days after the end
of each calendar quarter in an amount calculated by the following formula:
The amount equal to the Percentage Rent Gross Revenues Computation
LESS
An amount equal to the cumulative Percentage Rent paid for the
applicable Fiscal Year through the calendar quarter for which this
calculation is being made
EQUALS
Percentage Rent payable for the applicable calendar quarter.
For the purposes of this formula, the Percentage Rent Gross Revenues
Computation is an amount equal to the total of (a) 30% of the first $100,000 of
cumulative Gross Revenues for the applicable Fiscal Year through the calendar
quarter for which the calculation is being made in excess of $1,050,000 (the
"Break-Even Threshold"), and (b) 40% of all amounts of cumulative Gross Revenues
for the applicable Fiscal Year through the calendar quarter for which this
calculation is being made in excess of $1,150,000. For the purposes of this
calculation, the Break-Even Threshold shall be increased by 3% per Fiscal Year
during the Term hereof.
It is understood and agreed that if at any time during the first four
(4) years after the Commencement Date, Lessee has, through appropriate
Officer's Certificate, certified that Lessee has or is incurring Negative
Base Rent, then fifty percent (50%) of the amount calculated above as
Percentage Rent shall be applied to Negative Base Rent until Negative Base
Rent is paid in full and the remaining fifty percent (50%) shall be paid by
Lessee to Lessor as Percentage Rent. Notwithstanding anything contained in
the immediately preceding sentence or in this Lease to the contrary, Lessee
acknowledges and agrees that if at any time during the first four (4) years
after the Commencement date Negative Base Rent has been paid in full and at
all times after such first four (4) year period, Lessee shall not be allowed
to use any portion of the Percentage Rent, as calculated above, to offset
and/or pay the Negative Base Rent, but, rather, all such Percentage Rent, as
calculated above, shall be paid in full to Lessor.
EXHIBIT E - PERCENTAGE RENT SCHEDULE (MINER)
For each Fiscal Year during the Term commencing with the Fiscal Year
January 1, 1996, Lessee shall pay to Lessor percentage rent
("Percentage Rent") on a quarterly basis within twenty (20) days after the end
of each calendar quarter in an amount calculated by the following formula:
The amount equal to the Percentage Rent Gross Revenues Computation
LESS
An amount equal to the cumulative Percentage Rent paid for the
applicable Fiscal Year through the calendar quarter for which this
calculation is being made
EQUALS
Percentage Rent payable for the applicable calendar quarter.
For the purposes of this formula, the Percentage Rent Gross Revenues
Computation is an amount equal to the total of (a) 35% of the first $200,000
of cumulative Gross Revenues for the applicable Fiscal Year through the calendar
quarter for which the calculation is being made in excess of $660,000 (the
"Break-Even Threshold"), and (b) 40% of all amounts of cumulative Gross Revenues
for the applicable Fiscal Year through the calendar quarter for which this
calculation is being made in excess of $860,000. For the purposes of this
calculation, the Break-Even Threshold shall be increased by 2% per Fiscal Year
during the Term hereof.
It is understood and agreed that if at any time during the first four (4)
years after the Commencement Date, Lessee has, through appropriate Officer's
Certificate, certified that Lessee has or is incurring Negative Base Rent, then
fifty percent (50%) of the amount calculated above as Percentage Rent shall be
applied to Negative Base Rent until Negative Base Rent is paid in full and the
remaining fifty percent (50%) shall be paid by Lessee to Lessor as Percentage
Rent. Notwithstanding anything contained in the immediately preceding sentence
or in this Lease to the contrary, Lessee acknowledges and agrees that if at any
time during the first four (4) years after the Commencement date Negative Base
Rent has been paid in full and at all times after such first four (4) year
period, Lessee shall not be allowed to use any portion of the Percentage Rent,
as calculated above, to offset and/or pay the Negative Base Rent, but, rather,
all such Percentage Rent, as calculated above, shall be paid in full to Lessor.
EXHIBIT E - PERCENTAGE RENT SCHEDULE (POPLAR BLUFF)
For each Fiscal Year during the Term commencing with the Fiscal Year
beginning January 1, 1996, Lessee shall pay to Lessor percentage rent
("Percentage Rent") on a quarterly basis within twenty (20) days after the end
of each calendar quarter in an amount calculated by the following formula:
The amount equal to the Percentage Rent Gross Revenues Computation
LESS
An amount equal to the cumulative Percentage Rent paid for the
applicable Fiscal Year through the calendar quarter for which this
calculation is being made
EQUALS
Percentage Rent payable for the applicable calendar quarter.
For the purposes of this formula, the Percentage Rent Gross Revenues
Computation is an amount equal to the total of (a) 35% of the first $200,000
of cumulative Gross Revenues for the applicable Fiscal Year through the calendar
quarter for which the calculation is being made in excess of $555,000 (the
"Break-Even Threshold"), and (b) 37% of all amounts of cumulative Gross Revenues
for the applicable Fiscal Year through the calendar quarter for which this
calculation is being made in excess of $655,000. For the purposes of this
calculation, the Break-Even Threshold shall be increased by 2% per Fiscal Year
during the Term hereof.
It is understood and agreed that if at any time during the first four (4)
years after the Commencement Date, Lessee has, through appropriate Officer's
Certificate, certified that Lessee has or is incurring Negative Base Rent, then
fifty percent (50%) of the amount calculated above as Percentage Rent shall be
applied to Negative Base Rent until Negative Base Rent is paid in full and the
remaining fifty percent (50%) shall be paid by Lessee to Lessor as Percentage
Rent. Notwithstanding anything contained in the immediately preceding sentence
or in this Lease to the contrary, Lessee acknowledges and agrees that if at any
time during the first four (4) years after the Commencement date Negative Base
Rent has been paid in full and at all times after such first four (4) year
period, Lessee shall not be allowed to use any portion of the Percentage Rent,
as calculated above, to offset and/or pay the Negative Base Rent, but, rather,
all such Percentage Rent, as calculated above, shall be paid in full to Lessor.
