MASTER LEASE
THIS MASTER LEASE (this "Lease") is made as of October 19, 2000 (the
"Effective Date"), by and between PUBS PROPERTY, LLC, a Delaware limited
liability company ("Lessor"), whose address is c/o U.S. Realty Advisors, LLC,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and HOPS GRILL & BAR,
INC., a Florida corporation ("Lessee"), whose address is 0000 Xxxxx Xxxxx Xxxxx
Xxxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000.
W I T N E S S E T H :
THAT, in consideration of the mutual covenants and agreements herein
contained, Lessor and Lessee hereby covenant and agree as follows:
1. Certain Defined Terms. The following terms shall have the following
meanings for all purposes of this Lease:
"ADA" has the meaning set forth in Section 16.C.
"Additional Rental" has the meaning set forth in Section 5.C.
"Adjustment Date" means the first day of the month following the month in
which the first anniversary of the Effective Date occurs, and every anniversary
thereafter during the Lease Term (including the extension periods if Lessee
exercises its option pursuant to Section 27).
"Affiliate" means any Person which directly or indirectly controls, is
under common control with, or is controlled by any other Person. For purposes of
this definition, "controls", "under common control with" and "controlled by"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.
"Aggregate Assumed Base Annual Rental" means the aggregate amount of Base
Annual Rental required to be paid by Lessee during the Base Annual Rental
Period.
"Aggregate Fixed Charge Coverage Ratio" shall have the meaning set forth in
Section 8.A.
"Aggregate Rent Refund" means the positive difference, if any, between the
Aggregate Assumed Base Annual Rental and the CPI-Adjusted Rent.
"Applicable Regulations" means all applicable statutes, regulations, rules,
ordinances, codes, licenses, permits, orders and approvals of each Governmental
Authority having jurisdiction over Lessee and/or any of the Properties,
including, without limitation, all health, building, fire, safety and other
codes, ordinances and requirements and all applicable standards of the National
Board of Fire Underwriters and the ADA, in each case, as amended, and any
judicial or administrative interpretation thereof, including any judicial order,
consent, decree or judgment applicable to Lessee.
"Applicable Rent Reduction Percentage" means, with respect to any Property,
a fraction, the numerator of which shall be the Purchase Price for such
Property, and the denominator of which shall be the sum of the Purchase Price
for all of the Properties then subject to this Lease, including such Property.
"Approved Institution" means any domestic federal or state charted
commercial bank located in any of the cities listed on the attached Schedule IV
and having, at the time of selection, (i) a long-term deposit or long-term
unsecured debt rating of at least AA or its equivalent issued by Standard &
Poors Rating Group, Xxxxx'x Investors Service, Inc., any successor to such
agencies or any other nationally recognized credit rating agency, and (ii)
combined capital and surplus in excess of $100,000,000.00.
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"Average CPI Increase" means the CPI Increase divided by two.
"Base Annual Rental" means $3,402,030.24, subject to the increases provided
for in Section 5.B.
"Base Monthly Rental" means an amount equal to 1/12 of the applicable Base
Annual Rental.
"Business Day" means a day on which banks located in Phoenix, Arizona are
not required or authorized to remain closed.
"Code" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 et seq.,
as amended.
"Consent Agreement" means that certain Consent Agreement and Order, Docket
No. 00-AL-J-07-0315-CC, In Re: Food Service Permit No. 32-2545, regarding the
Property located at 0000 Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxxxx Xxxxxxxx signed on
July 31, 2000.
"CPI" means the Consumer Price Index which is designated for the applicable
month of determination as the United States City Average for All Urban
Consumers, All Items, Not Seasonally Adjusted, with a base period equaling 100
in 1993-1995, as published by the United States Department of Labor's Bureau of
Labor Statistics or any successor agency.
"CPI Adjusted Rent" means the aggregate amount of Base Annual Rental that
would have been paid during the entire Base Annual Rental Period had the Base
Annual Rental on each CPI Adjustment Date been increased over the Base Annual
Rental immediately preceding such CPI Adjustment Date by two and one-half times
the applicable CPI Increase.
"CPI Adjustment Date" means October 17, 2001, and every anniversary
thereafter during the Lease Term.
"CPI Increase" means the quotient (expressed as a percentage) of (a) the
positive difference, if any, between (i) the CPI for the month which is two
months prior to the applicable Adjustment Date and (ii) the CPI for the month
which is twenty-six months prior to such Adjustment Date (the "Base CPI"), and
(b) the Base CPI. In the event the statistics are not available or in the event
that publication of the CPI is modified or discontinued in its entirety, the CPI
Increase shall be determined on the basis of an index chosen by Lessor as a
comparable and recognized index of the purchasing power of the United States
consumer dollar published by the United States Department of Labor or other
governmental agency. In the event that the CPI contemplated herein is not
reported for the months required for the calculation set forth above, the
parties agree to utilize the CPI reported for the month(s) nearest preceding the
month(s) required for such calculation.
"Credit Agreement" means that certain Credit Agreement dated as of June 22,
1999 among Guarantor, Wachovia Bank, N.A., not in its individual capacity, but
in its capacity as agent for certain financial institutions, and such financial
institutions, as amended by agreements dated as of August 23, 1999, October 4,
1999, March 31, 2000, and October 13, 2000
"De Minimis Amounts" shall mean, with respect to any given level of
Hazardous Materials, that level or quantity of Hazardous Materials in any form
or combination of forms, the use, storage or release of which does not
constitute a violation of, or require regulation or remediation under, any
Environmental Laws and is customarily employed in the ordinary course of, or
associated with, similar businesses located in the states in which the
Properties are located.
"Default Rate" means 15% per annum or the highest rate permitted by law,
whichever is less.
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"Disclosures" has the meaning set forth in Section 8.C.
"Effective Date" has the meaning set forth in the Preamble.
"Environmental Insurer" means American International Specialty Lines
Insurance Company or such other insurer providing Environmental Policies
reasonably acceptable to Lessor.
"Environmental Laws" means any present and future federal, state and local
laws, statutes, ordinances, rules, regulations and the like, as well as common
law, relating to Hazardous Materials and/or the protection of human health or
the environment, by reason of a Release or a Threatened Release of Hazardous
Materials or relating to liability for or costs of Remediation or prevention of
Releases. "Environmental Laws" includes, but is not limited to, the following
statutes, as amended, any successor thereto, and any regulations, rulings,
orders or decrees promulgated pursuant thereto, and any state or local statutes,
ordinances, rules, regulations and the like addressing similar issues: the
Comprehensive Environmental Response, Compensation and Liability Act; the
Emergency Planning and Community Right-to-Know Act; the Hazardous Materials
Transportation Act; the Resource Conservation and Recovery Act (including but
not limited to Subtitle I relating to underground storage tanks); the Solid
Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances
Control Act; the Safe Drinking Water Act; the Occupational Safety and Health
Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide
and Rodenticide Act; the Endangered Species Act; the National Environmental
Policy Act; and the River and Harbors Appropriation Act. "Environmental Laws"
also includes, but is not limited to, any present and future federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law: conditioning transfer of property upon a negative declaration or
other approval of a Governmental Authority of the environmental condition of the
property; requiring notification or disclosure of Releases or other
environmental condition of any of the Properties to any Governmental Authority
or other person or entity, whether or not in connection with transfer of title
to or interest in property; imposing conditions or requirements relating to
Hazardous Materials in connection with permits or other authorization for lawful
activity; relating to nuisance, trespass or other causes of action related to
Hazardous Materials; and relating to wrongful death, personal injury, or
property or other damage in connection with the physical condition or use of any
of the Properties by reason of the presence of Hazardous Materials in, on, under
or above any of the Properties.
"Environmental Liens" has the meaning set forth in Section 16.D(ix).
"Environmental Policies" means the environmental insurance policy or
policies, as applicable, issued by Environmental Insurer to Lessor with respect
to the Properties, which Environmental Policies shall be in form and substance
satisfactory to Lessor in its sole discretion.
"Equipment Transfer Agreement" means that certain Equipment Transfer
Agreement dated as of October 17, 2000, among Pubs Property, LLC, First Security
Bank, National Association, SunTrust Bank, STI Credit Corporation, BancBoston
Leasing, Inc., and Southtrust Bank, N.A.
"Event of Default" has the meaning set forth in Section 23.
"Extended Term" means the period subsequent to the expiration of the
Primary Term which this Lease is actually in effect.
"FFCA Entities" means, collectively, Lender, Franchise Finance and any
Affiliate of Lender and Franchise Finance.
"FCCR Period" means the twelve month period of time immediately preceding
the date on which Lessee gives written notice to Lessor that Lessee is proposing
to substitute a Substitute Property as permitted by Section 56.A.
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"Fixed Charge Coverage Ratio" has the meaning set forth in Section
56.B(i)(2).
"Franchise Finance" means Franchise Finance Corporation of America, a
Delaware corporation, and its successors and assigns.
"GAAP" means generally accepted accounting principles consistently applied.
"Governmental Authority" means any governmental authority, agency,
department, commission, bureau, board, instrumentality, court or
quasi-governmental authority of the United States, the states in which the
Properties are located or any political subdivision thereof.
"Gross Sales" means the sales or other income arising from all business
conducted at all of the Properties by Lessee during the period of determination,
less sales tax and any amounts received from not-for-profit sales of all
non-food items approved for use in connection with promotional campaigns, if
any, for all of the Properties.
"Guarantor" means Avado Brands, Inc., a Georgia corporation.
"Guaranty" means that certain unconditional guaranty of payment and
performance dated as of the date of this Lease to be executed by Guarantor with
respect to the obligations of Lessee under this Lease, as the same may be
amended from time to time.
"Hazardous Materials" means (i) any toxic substance or hazardous waste,
substance, solid waste, or related material, or any pollutant or contaminant;
(ii) radon gas, asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment which contains
dielectric fluid containing levels of polychlorinated biphenyls in excess of
federal, state or local safety guidelines, whichever are more stringent, or any
petroleum product; (iii) any substance, gas, material or chemical which is or
may be defined as or included in the definition of "hazardous substances,"
"toxic substances," "hazardous materials," "hazardous wastes," "regulated
substances" or words of similar import under any Environmental Laws; and (iv)
any other chemical, material, gas or substance the exposure to or release of
which is or may be prohibited, limited or regulated by any Governmental
Authority that asserts or may assert jurisdiction over any of the Properties or
the operations or activity at any of the Properties, or any chemical, material,
gas or substance that does or may pose a hazard to the health and/or safety of
the occupants of any of the Properties or the owners and/or occupants of
property adjacent to or surrounding any of the Properties.
"Indemnified Parties" means Lessor, Environmental Insurer, Remainderman,
and Lender and their directors, officers, shareholders, trustees, beneficial
owners, partners, members, and any directors, officers, shareholders, trustees,
beneficial owners, partners, members of any beneficial owners, partners or
members of Lessor, Environmental Insurer, Remainderman or Lender, and all
employees, agents, servants, representatives, contractors, subcontractors,
affiliates, subsidiaries, participants, successors and assigns of any of the
foregoing, including, but not limited to, any successors by merger,
consolidation or acquisition of all or a substantial portion of the assets and
business of Lessor, Environmental Insurer, Remainderman or Lender, as
applicable.
"Lease Term" shall have the meaning described in Section 4.
"Lease Year" means the 12-month period commencing on the first day of the
calendar year or any other 12-month period as may be approved in writing by
Lessor after the commencement of the Lease Term and each successive 12-month
period thereafter.
"Lender" means FFCA Acquisition Corporation, a Delaware corporation, its
successors and assigns, any successor lender in connection with any loan secured
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by Lessor's interest in any of the Properties, and any servicer of any loan
secured by Lessor's interest in any of the Properties, including, without
limitation, Franchise Finance Corporation of America, a Delaware corporation.
"Lessee Entities" means, collectively, Lessee, Guarantor and all Affiliates
of Lessee and Guarantor.
"Letter of Credit" means a letter of credit substantially in the form
attached to this Lease as Exhibit B issued by an Approved Institution in
accordance with the terms of Section 23.A(ix)(2) of this Lease.
"Loan Agreement" means the Loan Agreement dated as of the date of this
Lease in effect between Lessor and Lender, as such agreement may be amended from
time to time and any and all replacements or substitutions thereof.
"Loan Documents" means, collectively, the Loan Agreement, the Notes, the
Mortgages and all other documents, instruments and agreements executed in
connection therewith or contemplated thereby, all as amended and supplemented
and any and all replacements or substitutions thereof.
"Loan Pool" has the meaning set forth in the Loan Agreement.
"Losses" means any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts,
damages, losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement and
damages of whatever kind or nature (including, without limitation, attorneys'
fees, court costs and other costs of defense).
"Maturity Date" means November 1, 2020.
"Maximum Allowed Annual Rental" means, for any fiscal year of Lessee in
which Lessee has failed to satisfy the Aggregate Fixed Charge Coverage Ratio
requirement, an amount equal to (x) the sum of Net Income, Depreciation and
Amortization, Interest Expense and Operating Lease Expense, less a corporate
overhead allocation in an amount equal to 5% of Gross Sales, divided by (y)
1.25.
"Memorandum" means the memorandum of master lease dated as of the date of
this Lease between Lessor and Lessee with respect to the Properties. A duplicate
original Memorandum will be executed and recorded in the applicable real
property records for each Property. Each Memorandum will contain exhibits with
the addresses and store identification numbers for all of the Properties and the
legal description for the applicable Property.
"Mortgages" means, collectively, the mortgages, deeds of trust or deeds to
secure debt, assignments of rents and leases, security agreements and fixture
filings dated as of even date herewith executed by Lessor for the benefit of
Lender with respect to the Properties, as such instruments may be amended,
restated and/or supplemented from time to time and any and all replacements or
substitutions thereof.
"Notes" means, collectively, the promissory notes dated as of the date of
this Lease executed by Lessor and payable to Lender with respect to the
Properties, as such notes may be amended, restated and/or substituted from time
to time.
"Other Agreements" means, collectively, all agreements and instruments now
or hereafter entered into between, among or by (1) any of the Lessee Entities,
and, or for the benefit of, (2) Lessor; provided, however, the term Other
Agreements shall not include this Lease and the other Sale-Leaseback Documents.
"Participation" means the granting of any participations in any document
evidencing loan obligations or any or all servicing rights with respect thereto.
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"Permitted Facility" means a Hops Restaurant Bar & Brewery restaurant or
such other restaurant concepts of Guarantor and its subsidiaries which are
approved by Lessor, such approval not to be unreasonably withheld, conditioned
or delayed.
"Person" means any individual, corporation, partnership, limited liability
company, trust, unincorporated organization, Governmental Authority or any other
form of entity.
"Personalty" means all machinery, appliances, furniture, equipment, trade
fixtures and other personal property from time to time situated on or used in
connection with the Properties, including, without limitation, the personal
property identified on Schedule II attached to this Lease; provided, however,
the term "Personalty" shall not include the HVAC, walk-in coolers, walk-in
freezers, supply fans, exhaust fans, air ducts, hoods, vents, built-in sinks,
built-in countertops, plumbing and electrical fixtures, sign poles and lighting
poles, all of which items are intended to be fixtures as such term is used
within the definition of "Properties".
"Prepayment Charges" means, for purposes of this Lease, an amount equal to
any prepayment premium or charge, yield maintenance payment, or other cost or
expense imposed on Lessor by the applicable Lender in connection with the
payment of the applicable Note(s) or promissory note(s) prior to the Maturity
Date.
"Properties" means, collectively, (i) the parcels of real estate described
by address, Lessor Number and Unit Number in Exhibit A attached hereto and
legally described in Exhibit A-1 attached hereto, all rights, privileges and
appurtenances associated therewith, (ii) all buildings, structures, fixtures and
other improvements now or hereafter located on such real estate (whether or not
affixed to such real estate), and (iii) all Personalty owned by Lessor as of the
Effective Date and all Personalty conveyed to Lessor as contemplated by the
Security Agreement.
"Property" means any one of the Properties.
"Purchase Price" means, with respect to any Property, the amount of the
purchase price corresponding to such Property as set forth on Exhibit A to the
Sale-Leaseback Agreement, and in the aggregate the amount of $28,371,573.60.
"Questionnaires" means the environmental questionnaires completed by Lessee
with respect to each of the Properties and submitted to Environmental Insurer in
connection with the issuance of the Environmental Policies.
"Rejectable Offer" has the meaning set forth in Section 21.B.
"Rejectable Substitution Offer" has the meaning set forth in Section 56.A.
"Release" means any presence, release, deposit, discharge, emission,
leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous Materials.
"Rent Adjustment Amount" means an amount equal to the difference between
(x) the Base Annual Rental then in effect, and (y) the Maximum Allowed Annual
Rental.
"Remainderman" means Suds Remainder, LLC, a Delaware limited liability
company, which owns a remainder interest in the parcels of real estate described
by address, Lessor Number and Unit Number in Exhibit A attached hereto and
legally described in Exhibit A-1 attached hereto and all rights, privileges and
appurtenances associated therewith, together with its successors and assigns.
"Remediation" means any response, remedial, removal, or corrective action,
any activity to cleanup, detoxify, decontaminate, contain or otherwise remediate
any Hazardous Materials, any actions to prevent, cure or mitigate any Release,
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any action to comply with any Environmental Laws or with any permits issued
pursuant thereto, any inspection, investigation, study, monitoring, assessment,
audit, sampling and testing, laboratory or other analysis, or any evaluation
relating to any Hazardous Materials.
"Rent Factor" means the then current Base Annual Rental divided by the
aggregate Purchase Price.
"Sale-Leaseback Agreement" means that certain Sale-Leaseback Agreement
dated as of the date hereof among Lessor, Lessee and Guarantor with respect to
the Properties.
"Sale-Leaseback Documents" means the Sale-Leaseback Agreement, this Lease,
the Security Agreement, the Equipment Transfer Agreement and all other documents
executed in connection therewith or contemplated thereby.
"Securitization" means one or more sales, dispositions, transfers or
assignments by Lender or any Affiliate of Lender to a special purpose
corporation, trust or other entity identified by Lender or any Affiliate of
Lender of notes evidencing obligations to repay secured or unsecured loans owned
by Lender or any Affiliate of Lender (and, to the extent applicable, the
subsequent sale, transfer or assignment of such notes to another special purpose
corporation, trust or other entity identified by Lender or any Affiliate of
Lender), and the issuance of bonds, certificates, notes or other instruments
evidencing interests in pools of such loans, whether in connection with a
permanent asset securitization or a sale of loans in anticipation of a permanent
asset securitization. Each Securitization shall be undertaken in accordance with
all requirements which may be imposed by the investors or the rating agencies
involved in each such sale, disposition, transfer or assignment or which may be
imposed by applicable securities, tax or other laws or regulations, including,
without limitation, laws relating to Lender's status as a real estate investment
trust.
"Security Agreement" means that certain Conveyance and Security Agreement
dated as of the date of this Lease among Lessor, Guarantor and Lessee.
"Substitute Property" means one or more parcels of real estate substituted
for any of the Properties in accordance with the requirements of Section 56,
together with all rights, privileges and appurtenances associated therewith, and
all buildings, structures, fixtures and other improvements located thereon. For
purposes of clarity, where two or more parcels of real property comprise a
Substitute Property, such parcels shall be aggregated and deemed to constitute
the Substitute Property for all purposes of this Lease.
"Threatened Release" means a substantial likelihood of a Release which
requires action to prevent or mitigate damage to the soil, surface waters,
groundwaters, land, stream sediments, surface or subsurface strata, ambient air
or any other environmental medium comprising or surrounding any of the
Properties which may result from such Release.
"Title Company" means Lawyers Title Insurance Corporation, or such other
nationally recognized title insurance company reasonably acceptable to Lessor.
"Transfer" means any sale, transfer or assignment of any document
evidencing loan obligations, or any or all servicing rights with respect
thereto.
2. Demise of Properties. In consideration of the rentals and other sums to
be paid by Lessee and of the other terms, covenants and conditions on Lessee's
part to be kept and performed, Lessor hereby leases to Lessee, and Lessee hereby
takes and hires, the Properties. The Properties are leased to Lessee "AS IS" and
"WHERE IS" without representation or warranty by Lessor and subject to the
rights of parties in possession, to the existing state of title, any state of
facts which an accurate survey or physical inspection might reveal, and all
Applicable Regulations now or hereafter in effect. Lessee has examined each of
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the Properties and title to each of the Properties and has found all of the same
satisfactory for all of Lessee's purposes.
3. Characterization of Lease. A. Lessor and Lessee intend that:
(i) this Lease constitutes a single master lease of all, but not less than
all, of the Properties and that Lessor and Lessee have executed and delivered
this Lease with the understanding that this Lease constitutes a unitary,
unseverable instrument pertaining to all, but not less than all, of the
Properties, and that neither this Lease nor the duties, obligations or rights of
Lessee may be allocated or otherwise divided among the Properties by Lessee;
(ii) this Lease is a "true lease" and not a financing lease, capital lease,
mortgage, equitable mortgage, deed of trust, trust agreement, security agreement
or other financing or trust arrangement, and the economic realities of this
Lease are those of a true lease; and
(iii) the business relationship created by this Lease and any related
documents is solely that of a long-term commercial lease between landlord and
tenant and has been entered into by both parties in reliance upon the economic
and legal bargains contained herein.
X. Xxxxxx and Lessee acknowledge and agree that the Lease Term, including
any term extensions provided for in this Lease, is less than the remaining
economic life of each of the Properties.
C. Lessee waives any claim or defense based upon the characterization of
this Lease as anything other than a true lease and irrevocably waives any claim
or defense which asserts that the Lease is anything other than a true lease.
Lessee covenants and agrees that it will not assert that this Lease is anything
but a true lease. Lessee stipulates and agrees not to challenge the validity,
enforceability or characterization of the lease of the Properties as a true
lease and further stipulates and agrees that nothing contained in this Lease
creates or is intended to create a joint venture, partnership (either de jure or
de facto), equitable mortgage, trust, financing device or arrangement, security
interest or the like. Lessee shall support the intent of the parties that the
lease of the Properties pursuant to this Lease is a true lease and does not
create a joint venture, partnership (either de jure or de facto), equitable
mortgage, trust, financing device or arrangement, security interest or the like,
if, and to the extent that, any challenge occurs.
D. Lessee waives any claim or defense based upon the characterization of
this Lease as anything other than a master lease of all of the Properties and
irrevocably waives any claim or defense which asserts that the Lease is anything
other than a master lease. Lessee covenants and agrees that it will not assert
that this Lease is anything but a unitary, unseverable instrument pertaining to
the lease of all, but not less than all, of the Properties. Lessee stipulates
and agrees not to challenge the validity, enforceability or characterization of
the lease of the Properties as a unitary, unseverable instrument pertaining to
the lease of all, but not less than all, of the Properties. Lessee shall support
the intent of the parties that this Lease is a unitary, unseverable instrument
pertaining to the lease of all, but not less than all, of the Properties, if,
and to the extent that, any challenge occurs.
E. Lessee represents and warrants to Lessor that (i) the Base Annual Rental
is the fair market value for the use of the Properties and was agreed to by
Lessor and Lessee on that basis, and (ii) the execution, delivery and
performance by Lessee of this Lease does not constitute a transfer of all or any
part of the Properties.
F. The expressions of intent, the waivers, the representations and
warranties, the covenants, the agreements and the stipulations set forth in this
Section are a material inducement to Lessor entering into this Lease.
4. Lease Term. The Lease Term for all of the Properties shall commence as
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of the Effective Date and shall expire on November 30, 2020, unless terminated
sooner as provided in this Lease and as may be extended for four periods of five
years each as set forth in Section 27 below. The time period during which this
Lease shall actually be in effect is referred to herein as the "Lease Term."
5. Rental and Other Payments. A. If the Effective Date is a date other than
the first day of the month, Lessee shall pay Lessor on the Effective Date the
Base Monthly Rental prorated on the basis of the ratio that the number of days
from the Effective Date through the last day in the month containing the
Effective Date bears to the number of days in such month. Thereafter, on or
before the first day of each succeeding calendar month, Lessee shall pay Lessor
in advance the Base Monthly Rental.
B. Commencing on the first Adjustment Date and on each Adjustment Date
thereafter, the Base Annual Rental shall increase by an amount equal to the
product of the then-current Base Annual Rental multiplied by 1.2%. The increased
Base Annual Rental shall constitute the Base Annual Rental due and payable until
the next Adjustment Date.
C. All sums of money required to be paid by Lessee under this Lease which
are not specifically referred to as rent ("Additional Rental") shall be
considered rent although not specifically designated as such. Lessor shall have
the same remedies for nonpayment of Additional Rental as those provided herein
for the nonpayment of Base Annual Rental.
D. (i) Lessor hereby agrees that, to the extent that the Aggregate Assumed
Base Annual Rental exceeds the CPI-Adjusted Rent, Lessor shall be required to
pay Lessee the Aggregate Rent Refund in accordance with the provisions of this
Section 5.D. In no event shall Base Annual Rental be deemed reduced as of any
Adjustment Date from the Base Annual Rental which would have been payable during
the year immediately preceding such Adjustment Date. In addition, if the
Aggregate Assumed Base Annual Rental is less than or equal to the aggregate
CPI-Adjusted Rent, then no additional amounts shall be payable by Lessee to
Lessor and the payments of Base Annual Rental otherwise contemplated by this
Lease for the Primary Term shall become the final amounts payable as Base Annual
Rental for the Primary Term. Anything contained herein to the contrary
notwithstanding, in no event shall Lessor be required to pay the Aggregate Rent
Refund in the event of any termination of this Lease resulting from the
occurrence of an Event of Default or a rejection of this Lease in a bankruptcy
case involving Lessee.
(ii) Within thirty (30) days after the end of the Primary Term (other than
a termination resulting from the occurrence of an Event of Default or a
rejection of this Lease in a bankruptcy case involving Lessee), Lessor shall (x)
provide Lessee with a statement setting forth Lessor's calculation of the amount
of the Aggregate Rent Refund and each CPI Increase used in calculating the
Aggregate Rent Refund and (y) pay the Aggregate Rent Refund to Lessee; provided,
however, the obligation of Lessor to pay the Aggregate Rent Refund to Lessee
shall not excuse or reduce Lessee's obligation to pay any Base Annual Rental,
Annual Percentage Rental or Additional Rental payable in respect of the Primary
Term or, except as provided in subsection (iii) below, the Extended Term, or any
payment due in respect of any termination of this Lease or as a result of the
rejection of this Lease in a bankruptcy case involving Lessee, or any other
amount (including, without limitation, indemnification payments or damages)
payable hereunder during or with respect to the Primary Term or the Extended
Term, and Lessee shall not have any right to set-off the Aggregate Rent Refund
or any part thereof against its obligation to pay any such Base Annual Rental,
Annual Percentage Rental, Additional Rental, any payment due in respect of any
termination of this Lease or as a result of the rejection of this Lease in a
bankruptcy case involving Lessee, or any such other amount, except as provided
in subsection (iv) below. If this Lease is terminated as a result of an Event of
Default or if this Lease is rejected in a bankruptcy case involving Lessee, or
if an Event of Default shall have occurred and be continuing at the expiration
of the Primary Term, Lessor may, but shall not be required to, in exercising its
rights hereunder, use, apply or retain the whole or any part of the Aggregate
9
Rent Refund for the payment of any rent or other sum (including damages) to
which Lessor may be entitled by reason of such Event of Default or rejection.
(iii) In the event Lessee exercises its option to extend this Lease as set
forth in Section 27 below, Lessor may elect to apply the Aggregate Rent Refund,
if any, as a credit against the Base Annual Rental first accruing for the
Extended Term, until the balance of the Aggregate Rent Refund shall be reduced
to zero. Lessor shall evidence its election by giving notice thereof to Lessee
no later than the due date of the first installment of rent due in the first
Extended Term; provided, however, if Lessor fails to deliver such notice, Lessor
shall be deemed to have elected to so credit the Aggregate Rent Refund.
(iv) Notwithstanding anything contained herein to the contrary, the
obligation created by this Section 5.D shall be personal to Lessor and shall be
subordinate in all respects to the loans secured by the Mortgages. Without
limiting the generality of the preceding sentence, in the event that Lender
succeeds to the interest of Lessor in this Lease whether by a foreclosure of the
Mortgages or the delivery to Lender of deeds-in-lieu of foreclosure, the
preceding subsections of this Section 5.D shall be of no force or effect, Lender
shall have no obligation to pay Lessee the Aggregate Rent Refund, and Lessee
shall have no right to receive a credit for the Aggregate Rent Refund against
the Base Annual Rental due for the Extended Term.
6. Representations and Warranties of Lessor. The representations and
warranties of Lessor contained in this Section are being made to induce Lessee
to enter into this Lease and Lessee has relied and will continue to rely upon
such representations and warranties. Lessor represents and warrants to Lessee as
of the Effective Date as follows:
A. Organization, Authority and Status of Lessor. (i) Lessor has been duly
organized and is validly existing and in good standing under the laws of the
State of Delaware. All necessary corporate action has been taken to authorize
the execution, delivery and performance by Lessor of this Lease and the other
documents, instruments and agreements provided for herein.
(ii) The person who has executed this Lease on behalf of Lessor is duly
authorized so to do.
B. Enforceability. This Lease constitutes the legal, valid and binding
obligation of Lessor, enforceable against Lessor in accordance with its terms.
7. Representations and Warranties of Lessee. The representations and
warranties of Lessee contained in this Section are being made to induce Lessor
to enter into this Lease and Lessor has relied, and will continue to rely, upon
such representations and warranties. Lessee represents and warrants to Lessor as
of the Effective Date as follows:
A. Organization, Authority and Status of Lessee. (i) Lessee has been duly
organized or formed, is validly existing and in good standing under the laws of
its state of incorporation or formation and is qualified to do business in any
jurisdiction where such qualification is required. All necessary corporate
action has been taken to authorize the execution, delivery and performance by
Lessee of this Lease and of the other documents, instruments and agreements
provided for herein. Lessee is not a "foreign corporation", "foreign
partnership", "foreign trust", "foreign limited liability company" or "foreign
estate", as those terms are defined in the Internal Revenue Code and the
regulations promulgated thereunder. Lessee's United States tax identification
number is correctly set forth on the signature page of this Lease.
(ii) The person who has executed this Lease on behalf of Lessee is duly
authorized to do so.
B. Enforceability. This Lease constitutes the legal, valid and binding
obligation of Lessee, enforceable against Lessee in accordance with its terms.
10
C. Litigation. There are no suits, actions, proceedings or investigations
pending, or, to the best of its knowledge, threatened against or involving
Lessee, Guarantor or any of the Properties before any arbitrator or Governmental
Authority which might reasonably result in any material adverse change in the
contemplated business, condition, worth or operations of Lessee, Guarantor or
any of the Properties.
D. Absence of Breaches or Defaults. Neither Lessee nor Guarantor is in
default under any document, instrument or agreement to which Lessee or Guarantor
is a party or by which Lessee, Guarantor, any of the Properties or any of
Lessee's or Guarantor's property is subject or bound. The authorization,
execution, delivery and performance of this Lease and the documents, instruments
and agreements provided for herein will not result in any breach of or default
under any document, instrument or agreement to which Lessee or Guarantor is a
party or by which Lessee, Guarantor, any of the Properties or any of Lessee's or
Guarantor's property is subject or bound. The authorization, execution, delivery
and performance of this Lease and the documents, instruments and agreements
provided for herein will not violate any applicable law, statute, regulation,
rule, ordinance, code, rule or order.
E. Liabilities of Lessor. Lessee is not liable for any indebtedness for
money borrowed by Lessor and has not guaranteed any of the debts or obligations
of Lessor.
8. Covenants. Lessee covenants to Lessor for so long as this Lease is in
effect as follows:
A. Aggregate Fixed Charge Coverage Ratio. Lessee shall maintain an
Aggregate Fixed Charge Coverage Ratio at all of the Properties of at least
1.25:1, as determined on the last day of each fiscal year of Lessee. For
purposes of this Lease, the term "Aggregate Fixed Charge Coverage Ratio" shall
mean with respect to the twelve month period of time immediately preceding the
date of determination, the ratio calculated for such period of time, each as
determined in accordance with GAAP, of (a) the sum of Net Income, Depreciation
and Amortization, Interest Expense and Operating Lease Expense, less a corporate
overhead allocation in an amount equal to 5% of Gross Sales, to (b) the sum of
the Operating Lease Expense and the Equipment Payment Amount.
For purposes of this Section, the following terms shall be defined as set
forth below:
"Capital Lease" shall mean any lease of any property (whether real,
personal or mixed) by Lessee with respect to one or more of the Properties which
lease would, in conformity with GAAP, be required to be accounted for as a
capital lease on the balance sheet of Lessee. The term "Capital Lease" shall not
include any operating lease or this Lease.
"Debt" shall mean as directly related to all of the Properties and the
period of determination (i) indebtedness of Lessee for borrowed money, (ii)
obligations of Lessee evidenced by bonds, indentures, notes or similar
instruments, (iii) obligations of Lessee to pay the deferred purchase price of
property or services, (iv) obligations of Lessee under leases which should be,
in accordance with GAAP, recorded as Capital Leases, and (v) obligations of
Lessee under direct or indirect guarantees in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (i) through (iv) above. The term
"Debt" shall not include Lessor's debt with respect to the Properties or
otherwise.
"Depreciation and Amortization" shall mean with respect to all of the
Properties the depreciation and amortization accruing during any period of
determination with respect to Lessee as determined in accordance with GAAP. The
term "Depreciation and Amortization" shall not include Lessor's depreciation and
amortization with respect to the Properties or otherwise.
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"Equipment Payment Amount" shall mean for any period of determination the
sum of all amounts payable during such period of determination under all (i)
leases entered into by Lessee for equipment located at one or more of the
Properties and (ii) all loans made to Lessee secured by Lessee's interest in the
equipment located at one or more of the Properties.
"Interest Expense" shall mean for any period of determination, the sum of
all interest accrued or which should be accrued in respect of all Debt of Lessee
allocable to one or more of the Properties and all business operations thereon
during such period (including interest attributable to Capital Leases), as
determined in accordance with GAAP.
"Net Income" shall mean with respect to all of the period of determination,
the net income or net loss of Lessee allocable to all of the Properties. In
determining the amount of Net Income, (i) adjustments shall be made for
nonrecurring gains and losses allocable to the period of determination, (ii)
deductions shall be made for, among other things, Depreciation and Amortization,
Interest Expense and Operating Lease Expense allocable to the period of
determination, and (iii) no deductions shall be made for (x) income taxes or
charges equivalent to income taxes allocable to the period of determination, as
determined in accordance with GAAP, or (y) corporate overhead expense allocable
to the period of determination.
"Operating Lease Expense" shall mean the expenses incurred by Lessee under
any operating leases with respect to one or more of the Properties (including
this Lease) and the business operations thereon during the period of
determination, as determined in accordance with GAAP.
B. Nonconsolidation Covenants. (i) Lessee will not assume liability for any
indebtedness for money borrowed by Lessor and does not, and will not, guarantee
any of the debts or obligations of Lessor. Lessee will not hold itself out as
being liable for any obligations or indebtedness of Lessor.
(ii) Lessee shall not and shall use its best efforts to cause its
affiliates not to hold Lessor out to the public or to any individual creditors
as being a unified entity with assets and liabilities in common with Lessee.
(iii) Lessee shall conduct its business so as not to mislead others as to
the separate identity of Lessor, and particularly will avoid the appearance of
conducting business on behalf of Lessor. Without limiting the generality of the
foregoing, no oral and written communications of Lessee, including, without
limitation, letters, invoices, purchase orders, contracts, statements and loan
applications, will be made in the name of Lessor which to the extent that to do
otherwise would materially bear upon the maintenance of Lessor's separate
identity.
(iv) Lessee will not act in Lessor's name.
(v) Where necessary and appropriate, Lessee shall disclose the independent
business status of Lessor to creditors of Lessee, if any.
(vi) The resolutions, agreements and other instruments of Lessee, if any,
underlying the transactions described in this Lease will be maintained by
Lessee.
(vii) All transactions between Lessee and Lessor will be no less fair to
each party than they could obtain on an arm's-length basis.
(viii) The books, records and accounts of Lessee shall at all times be
maintained in a manner permitting the assets and liabilities of Lessor to be
easily separated and readily ascertained from those of Lessee.
(ix) Lessee will not direct, or otherwise control, the ongoing business
decisions of Lessor.
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(x) Lessee will not file or cause to be filed a voluntary or involuntary
petition in bankruptcy on behalf of or against Lessor.
C. Securitization Covenants. (i) Lessee agrees to cooperate in good faith
with Lessor and Lender in connection with any Transfer, Participation and/or
Securitization of any of the Notes, Mortgages and/or any of the Loan Documents,
or any or all servicing rights with respect thereto, including, without
limitation, (i) providing such documents, financial and other data, and other
information and materials (the "Disclosures") which would typically be required
with respect to Lessee by a purchaser, transferee, assignee, servicer,
participant, investor or rating agency involved with respect to such Transfer,
Participation and/or Securitization, as applicable; provided, however, Lessee
shall not be required to make Disclosures of any confidential information or any
information which has not previously been made public unless required by
applicable federal or state securities laws; and (ii) amending the terms of this
Lease to the extent necessary so as to satisfy the requirements of purchasers,
transferees, assignees, servicers, participants, investors or selected rating
agencies involved in any such Transfer, Participation or Securitization, so long
as such amendments would not have a material adverse effect upon Lessee or the
transactions contemplated by this Lease.
(ii) Lessee consents to Lessor and Lender providing the Disclosures, as
well as any other information which Lessor and Lender may now have or hereafter
acquire with respect to the Properties or the financial condition of Lessee to
each purchaser, transferee, assignee, servicer, participant, investor or rating
agency involved with respect to such Transfer, Participation and/or
Securitization, as applicable. Lessee shall pay its own attorney fees and other
out-of-pocket expenses incurred in connection with the performance of its
obligations under this Section 8.C.
D. Net Worth Covenant. At all times during the Lease Term, Lessee shall
cause Guarantor to maintain a net book worth (including convertible preferred
stock) of at least $150,000,000.00, as determined in accordance with GAAP.
E. Compliance Certificate. Within 60 days after the end of each fiscal year
of Lessee, Lessee shall deliver to Lessor such compliance certificates as Lessor
may reasonably require in order to establish that Lessee is in compliance in all
material respects with all of the obligations, duties and covenants imposed on
Lessee pursuant to this Lease.
9. Rentals To Be Net to Lessor. The Base Annual Rental payable hereunder
shall be net to Lessor, so that this Lease shall yield to Lessor the rentals
specified during the Lease Term, and that all costs, expenses and obligations of
every kind and nature whatsoever relating to the Properties shall be performed
and paid by Lessee.
10. Taxes and Assessments. Lessee shall pay, prior to the earlier of
delinquency or the accrual of interest on the unpaid balance, all taxes and
assessments of every type or nature assessed against, imposed upon or arising
with respect to Lessor, any of the Properties, this Lease, the rental or other
payments due under this Lease during the Lease Term, including, without
limitation, the following:
A. All taxes and assessments upon any of the Properties or any part thereof
and upon any Personalty, whether belonging to Lessor or Lessee, or any tax or
charge levied in lieu of such taxes and assessments;
B. All taxes, charges, license fees and or similar fees imposed by reason
of the use of any of the Properties by Lessee; and
C. All excise, transaction, privilege, license, sales, use and other taxes
upon the rental or other payments due under this Lease, the leasehold estate of
either party or the activities of either party pursuant to this Lease.
Notwithstanding the foregoing, but without limiting the preceding
13
obligation of Lessee to pay all taxes which are imposed on the rental or other
payments due under this Lease, in no event will Lessee be required to pay any
net income taxes (i.e., taxes which are determined taking into account
deductions for depreciation, interest, taxes and ordinary and necessary business
expenses) or franchise taxes (unless imposed in lieu of other taxes that would
otherwise be the obligation of Lessee under this Lease) of Lessor, any transfer
taxes of Lessor, or any tax imposed with respect to the sale, exchange or other
disposition by Lessor, in whole or in part, of any of the Properties or Lessor's
interest in this Lease (other than transfer or recordation taxes imposed in
connection with the transfer of any of the Properties to Lessee, the
substitution of a Substitute Property or the termination of this Lease pursuant
to the provisions of this Lease).
All taxing authorities shall be instructed to send all tax and assessment
invoices to Lessee and Lessee shall promptly provide Lessor and Lender with
copies of all tax and assessment invoices received by Lessee. Upon request,
Lessee shall also provide Lessor and Lender with evidence that such invoices
were paid in a timely fashion. Lessee may, at its own expense, contest or cause
to be contested (in the case of any item involving more than $1,000.00, after
prior written notice to Lessor), by appropriate legal proceedings conducted in
good faith and with due diligence, the amount or validity or application, in
whole or in part, of any item specified in this Section or lien therefor,
provided that (i) such proceeding shall suspend the collection thereof from the
applicable Properties or any interest therein, (ii) neither such Properties nor
any interest therein would be in any danger of being sold, forfeited or lost by
reason of such proceedings, (iii) no Event of Default has occurred, and (iv)
Lessee shall have deposited with Lessor adequate reserves for the payment of the
taxes, together with all interest and penalties thereon, unless paid in full
under protest, or Lessee shall have furnished the security as may be required in
the proceeding or as may be required by Lessor to insure payment of any
contested taxes.
11. Utilities. Lessee shall contract, in its own name, for and pay when due
all charges for the connection and use of water, gas, electricity, telephone,
garbage collection, sewer use and other utility services supplied to the
Properties during the Lease Term. Under no circumstances shall Lessor be
responsible for any interruption of any utility service.
12. Insurance. Throughout the Lease Term, Lessee shall maintain with
respect to each of the Properties, at its sole expense, the following types and
amounts of insurance (which may be included under a blanket insurance policy if
all the other terms hereof are satisfied):
A. Insurance against loss, damage or destruction by fire and other
casualty, including theft, vandalism and malicious mischief, flood (for each of
the Properties which is in a location designated by the Federal Emergency
Management Administration as a Special Flood Hazard Area), earthquake (for each
of the Properties which is in an area subject to destructive earthquakes within
recorded history), boiler explosion (for each of the Properties with a boiler),
plate glass breakage, sprinkler damage (for each of the Properties which has a
sprinkler system), all matters covered by a standard extended coverage
endorsement, all matters covered by a special coverage endorsement commonly
known as an "all-risk" endorsement and such other risks as Lessor may reasonably
require, insuring each of the Properties for not less than 100% of their full
insurable replacement cost.
B. Business automobile liability insurance and commercial general liability
and property damage liability insurance, including a products liability clause,
covering Lessor, Remainderman and Lessee against bodily injury liability and
property damage liability, including liability arising out of the ownership,
maintenance, repair, condition or operation of the Properties or adjoining ways,
streets or sidewalks, to the extent sole negligence is found against Lessee and,
if applicable, insurance covering Lessor, Remainderman and Lessee against
liability arising from the sale of liquor, beer or wine on the Properties. The
commercial general liability policy provides contractual liability coverage as
14
defined under the "insured contract" definition of the policy and a
"severability of interest" clause or endorsement which precludes the insurer
from denying the claim of Lessee, Remainderman or Lessor because of the
negligence or other acts of the other, and shall be in amounts of not less than
$1,000,000 per occurrence with higher limits as Lessor or Remainderman may
reasonably require from time to time, and shall be of form and substance
satisfactory to Lessor and Remainderman.
C. Business income insurance or rental interruption insurance, as requested
by Lessor, equal to 100% of the Base Annual Rental for a period of not less than
12 months.
D. State Worker's compensation insurance in the statutorily mandated
limits, employer's liability insurance with limits not less than $500,000 or
such greater amount as Lessor or Remainderman may from time to time require and
such other insurance as may be necessary to comply with applicable laws.
E. Such other insurance as may from time to time be reasonably required by
Lessor, Remainderman or Lender in order to protect their respective interests
with respect to the Properties.
All insurance policies shall:
(i) Provide for a waiver of subrogation by the insurer as to claims against
Lessor, Remainderman, Lender and their respective employees and agents;
(ii) Respond as primary insurance to the extent the policies held by
indemnitee(s) are modified to provide that coverage under their respective
policies will be excess over any coverage available to them as an additional
insured under another policy;
(iii) Contain a standard mortgage clause endorsement in favor of Lender and
any other party designated by Lessor;
(iv) Provide that should any of the policies described herein be canceled
before the expiration date thereof, the insurer affording coverage will endeavor
to mail 30 days written notice to the certificate holder(s) named herein;
(v) Provide that the insurer shall not have the option to restore the
applicable Properties if Lessor or Lessee elects to terminate this Lease in
accordance with the terms hereof;
(vi) Be issued by insurance companies licensed to do business in the states
in which the Properties are located and which are rated A:VI or better by Best's
Insurance Guide or are otherwise approved by Lessor and Remainderman; and
(vii) Provide that the insurer shall not deny a claim nor shall the
insurance be cancelled, invalidated or suspended by any foreclosure or other
proceedings relating to any of the Properties or change in title to or ownership
of any of the Properties.
It is expressly understood and agreed that the foregoing minimum limits of
insurance coverage shall not limit the liability of Lessee for its acts or
omissions as provided in this Lease. All insurance policies (with the exception
of worker's compensation insurance to the extent not available under statutory
law), shall designate Lessor, Remainderman and Lender as additional insureds as
their interests may appear and shall be payable as set forth in Section 21
hereof. All such policies shall be written as primary policies, with deductibles
not to exceed 10% of the amount of coverage. Any other policies, including any
policy now or hereafter carried by Lessor, Remainderman or Lender, shall serve
as excess coverage. Lessee shall procure policies for all insurance for periods
of not less than one year and shall provide to Lessor, Remainderman and Lender
certificates of insurance or, upon the request of Lessor, Remainderman or
Lender, duplicate originals of insurance policies evidencing that insurance
satisfying the requirements of this Lease is in effect at all times. In the
15
event of any transfer by Lessor of Lessor's interest in any of the Properties or
any financing or refinancing of Lessor's interest in any of the Properties, or
by Remainderman of Remainderman's interest in any of the Properties, Lessee
shall, upon not less than ten (10) days' prior written notice, deliver to Lessor
and Remainderman or any Lender providing such financing or refinancing, as the
case may be, certificates of all insurance required to be maintained by Lessee
hereunder naming such transferee or such Lender, as the case may be, as an
additional insured to the extent required herein effective as of the date of
such transfer, financing or refinancing.
13. Tax and Insurance Impound. Upon the occurrence of an Event of Default
resulting from the failure of Lessee to perform any monetary obligation due
under this Lease, including, without limitation, the failure to pay Base Annual
Rental, Additional Rental and/or taxes, assessments and/or insurance premiums as
contemplated by this Lease, Lessor may require Lessee to pay to Lessor sums
which will provide an impound account (which shall not be deemed a trust fund)
for paying up to the next one year of taxes, assessments and/or insurance
premiums for each of the Properties. Upon such requirement, Lessor will estimate
the amounts needed for such purposes and will notify Lessee to pay the same to
Lessor in equal monthly installments, as nearly as practicable, in addition to
all other sums due under this Lease. Should additional funds be required at any
time, Lessee shall pay the same to Lessor on demand. Lessee shall advise Lessor
of all taxes and insurance bills which are due and shall cooperate fully with
Lessor in assuring that the same are paid timely. Lessor may deposit all
impounded funds in accounts insured by any federal or state agency and may
commingle such funds with other funds and accounts of Lessor. Interest or other
gains from such funds, if any, shall be the sole property of Lessor. In the
event of any default by Lessee, Lessor may apply all impounded funds against any
sums due from Lessee to Lessor. Lessor shall give to Lessee an annual accounting
showing all credits and debits to and from such impounded funds received from
Lessee.
14. Payment of Rental and Other Sums. All rental and other sums which
Lessee is required to pay hereunder shall be the unconditional obligation of
Lessee and shall be payable in full when due without any setoff, abatement,
deferment, deduction or counterclaim whatsoever. Upon execution of this Lease,
Lessee shall establish arrangements whereby payments of the Base Monthly Rental
and impound payments, if any, are transferred by wire or other means directly
from Lessee's bank account to such account as Lessor may designate. Any
delinquent payment (that is, any payment not made within five calendar days
after the date when due) shall, in addition to any other remedy of Lessor, incur
a late charge of 5% (which late charge is intended to compensate Lessor for the
cost of handling and processing such delinquent payment and should not be
considered interest) and bear interest at the Default Rate, such interest to be
computed from and including the date such payment was due through and including
the date of the payment; provided, however, in no event shall Lessee be
obligated to pay a sum of late charge and interest higher than the maximum legal
rate then in effect.
15. Use. Except as set forth below, each of the Properties shall be used
solely for the operation of a Permitted Facility in accordance with the
standards of operations then in effect on a system-wide basis, and for no other
purpose. Lessee shall occupy the Properties promptly following the Effective
Date and, except as set forth below and except during periods when any of the
Properties is untenantable by reason of fire or other casualty or condemnation
(provided, however, during all such periods while any of the Properties is
untenantable, Lessee shall strictly comply with the terms and conditions of
Section 21 of this Lease), Lessee shall at all times during the Lease Term
occupy each of the Properties and shall diligently conduct its business on each
of the Properties as a Permitted Facility. Lessee may cease diligent operation
of business at any of the Properties for a period not to exceed 90 days and may
do so only once with respect to each Property within any five-year period during
the Lease Term. If Lessee does discontinue operation as permitted by this
Section, Lessee shall (i) give written notice to Lessor within 10 days after
Lessee elects to cease operation, (ii) provide adequate protection and
16
maintenance of any such Properties during any period of vacancy and (iii) pay
all costs necessary to restore such Properties to their condition on the day
operation of the business ceased at such time as such Properties are reopened
for Lessee's business operations or other substituted use approved by Lessor as
contemplated below. Notwithstanding anything herein to the contrary, Lessee
shall pay the Base Monthly Rental on the first day of each month during any
period in which Lessee discontinues operation.
Lessee shall not, by itself or through any assignment, sublease or other
type of transfer, convert any of the Properties to a use other than a Permitted
Facility during the Lease Term without Lessor's consent, which consent shall not
be unreasonably withheld or delayed. Lessor may consider any or all of the
following in determining whether to grant its consent, without being deemed to
be unreasonable: (i) whether the rental paid to Lessor would be equal to or
greater than the anticipated rental assuming continued existing use, (ii)
whether the proposed rental to be paid to Lessor is reasonable considering the
converted use of the Properties and the customary rental prevailing in the
community for such use, (iii) whether the converted use will be consistent with
the highest and best use of the Properties, and (iv) whether the converted use
will increase Lessor's risks or decrease the value of the Properties.
16. Compliance with Laws, Restrictions, Covenants and Encumbrances. A.
Lessee's use and occupation of each of the Properties, and the condition
thereof, shall, at Lessee's sole cost and expense, comply fully with all
Applicable Regulations and all restrictions, covenants and encumbrances of
record with respect to each of the Properties. In addition to the other
requirements of this Section, Lessee shall, at all times throughout the Lease
Term, comply with all Applicable Regulations.
B. Lessee will not permit any act or condition to exist on or about any of
the Properties which will increase any insurance rate thereon, except when such
acts are required in the normal course of its business and Lessee shall pay for
such increase.
C. Without limiting the generality of the other provisions of this Section,
Lessee agrees that it shall be responsible for complying in all respects with
the Americans with Disabilities Act of 1990, as such act may be amended from
time to time, and all regulations promulgated thereunder (collectively, the
"ADA"), as it affects the Properties, including, but not limited to, making
required "readily achievable" changes to remove any architectural or
communications barriers, and providing auxiliary aides and services within the
Properties. Lessee further agrees that any and all alterations made to the
Properties during the Lease Term will comply with the requirements of the ADA.
All plans for alterations which must be submitted to Lessor under the provisions
of Section 18 must include a statement from a licensed Architect or Engineer
certifying that they have reviewed the plans, and that the plans comply with all
applicable provisions of the ADA. Any subsequent approval or consent to the
plans by Lessor shall not be deemed to be a representation of Lessor's part that
the plans comply with the ADA, which obligation shall remain with Lessee. Lessee
agrees that it will defend, indemnify and hold harmless the Indemnified Parties
from and against any and all Losses caused by, incurred or resulting from
Lessee's failure to comply with its obligations under this Section.
D. Lessee represents and warrants to Lessor and Environmental Insurer as of
the Effective Date, except as disclosed in the Questionnaires, as follows:
(i) None of the Properties nor Lessee are in violation of, or subject to,
any pending or threatened investigation or inquiry by any Governmental Authority
or to any remedial obligations under any Environmental Laws, and this
representation and warranty would continue to be true and correct following
disclosure to the applicable Governmental Authorities of all relevant facts,
conditions and circumstances, if any, pertaining to the Properties.
(ii) No permits, licenses or similar authorizations to construct, occupy,
operate or use any buildings, improvements, fixtures and equipment forming a
17
part of any of the Properties by reason of any Environmental Laws have been
obtained or are required to be obtained.
(iii) No Hazardous Materials have been used, handled, manufactured,
generated, produced, stored, treated, processed, transferred, disposed of or
otherwise Released in, on, under, from or about any of the Properties, except in
De Minimis Amounts.
(iv) The Properties do not contain Hazardous Materials, other than in De
Minimis Amounts, or underground storage tanks.
(v) There is no threat of any Release migrating to any of the Properties.
(vi) There is no past or present non-compliance with Environmental Laws, or
with permits issued pursuant thereto, in connection with any of the Properties.
(vii) Lessee has not received any written or oral notice or other
communication from any person or entity (including but not limited to a
Governmental Authority) relating to Hazardous Materials or Remediation thereof,
of possible liability of any person or entity pursuant to any Environmental Law,
other environmental conditions in connection with any of the Properties, or any
actual or potential administrative or judicial proceedings in connection with
any of the foregoing.
(viii) Lessee has truthfully and fully provided to Lessor, in writing, any
and all information relating to environmental conditions in, on, under or from
the Properties that is known to Lessee and that is contained in Lessee's files
and records, including but not limited to any reports relating to Hazardous
Materials in, on, under or from any of the Properties.
(ix) All uses and operations on or of the Properties, whether by Lessee or
any other person or entity, have been in compliance with all Environmental Laws
and permits issued pursuant thereto; there have been no Releases in, on, under
or from any of the Properties, except in De Minimis Amounts; there are no
Hazardous Materials in, on, or under any of the Properties, except in De Minimis
Amounts; and the Properties have been kept free and clear of all liens and other
encumbrances imposed pursuant to any Environmental Law (the "Environmental
Liens"). Lessee has not allowed any tenant or other user of any of the
Properties to do any act that materially increased the dangers to human health
or the environment, posed an unreasonable risk of harm to any person or entity
(whether on or off the Properties), impaired the value of any of the Properties,
is contrary to any requirement of any insurer, constituted a public or private
nuisance, constituted waste, or violated any covenant, condition, agreement or
easement applicable to any of the Properties.
E. Lessee covenants to Lessor and Environmental Insurer during the Lease
Term that: (i) the Properties shall not be in violation of or subject to any
investigation or inquiry by any Governmental Authority or to any remedial
obligations under any Environmental Laws. If any such investigation or inquiry
is initiated, Lessee shall promptly notify Lessor; (ii) all uses and operations
on or of each of the Properties, whether by Lessee or any other person or
entity, shall be in compliance with all Environmental Laws and permits issued
pursuant thereto; (iii) there shall be no Releases in, on, under or from any of
the Properties, except in De Minimis Amounts; (iv) there shall be no Hazardous
Materials in, on, or under any of the Properties, except in De Minimis Amounts;
(v) Lessee shall keep each of the Properties free and clear of all Environmental
Liens, whether due to any act or omission of Lessee or any other person or
entity; (vi) Lessee shall, at its sole cost and expense, fully and expeditiously
cooperate in all activities pursuant to subsection F below, including but not
limited to providing all relevant information and making knowledgeable persons
available for interviews; (vii) Lessee shall, at its sole cost and expense,
perform any environmental site assessment or other investigation of
environmental conditions in connection with any of the Properties as may be
reasonably requested by Lessor (including but not limited to sampling, testing
and analysis of soil, water, air, building materials and other materials and
18
substances whether solid, liquid or gas), and share with Lessor and
Environmental Insurer the reports and other results thereof, and Lessor,
Environmental Insurer and the other Indemnified Parties shall be entitled to
rely on such reports and other results thereof; (viii) Lessee shall, at its sole
cost and expense, comply with all reasonable written requests of Lessor to (1)
reasonably effectuate Remediation of any condition (including but not limited to
a Release) in, on, under or from any of the Properties; (2) comply with any
Environmental Law; (3) comply with any directive from any Governmental
Authority; and (4) take any other reasonable action necessary or appropriate for
protection of human health or the environment; (ix) Lessee shall not do or allow
any tenant or other user of any of the Properties to do any act that materially
increases the dangers to human health or the environment, poses an unreasonable
risk of harm to any person or entity (whether on or off any of the Properties),
impairs or may impair the value of any of the Properties, is contrary to any
requirement of any insurer, constitutes a public or private nuisance,
constitutes waste, or violates any covenant, condition, agreement or easement
applicable to any of the Properties; and (x) Lessee shall immediately notify
Lessor in writing of (A) any presence of Releases or Threatened Releases in, on,
under, from or migrating towards any of the Properties; (B) any non-compliance
with any Environmental Laws related in any way to any of the Properties; (C) any
actual or potential Environmental Lien; (D) any required or proposed Remediation
of environmental conditions relating to any of the Properties; and (E) any
written or oral notice or other communication of which Lessee becomes aware from
any source whatsoever (including but not limited to a Governmental Authority)
relating in any way to Hazardous Materials or Remediation thereof, possible
liability of any person or entity pursuant to any Environmental Law, other
environmental conditions in connection with any of the Properties, or any actual
or potential administrative or judicial proceedings in connection with anything
referred to in this Section.
X. Xxxxxx, Lender, Environmental Insurer and any other person or entity
designated by Lessor, including but not limited to any receiver, any
representative of a Governmental Authority, and any environmental consultant,
shall have the right, but not the obligation, to enter upon the Properties at
all reasonable times (including, without limitation, in connection with any
Securitization, Participation or Transfer or in connection with a proposed sale
or conveyance of any of the Properties or a proposed financing or refinancing
secured by any of the Properties or in connection with the exercise of any
remedies set forth in this Lease, the Mortgages or the other Loan Documents, as
applicable) to assess any and all aspects of the environmental condition of the
Properties and its use, including but not limited to conducting any
environmental assessment or audit (the scope of which shall be determined in the
sole and absolute discretion of the party conducting the assessment) and taking
samples of soil, groundwater or other water, air, or building materials, and
conducting other invasive testing; provided, however, that any such persons
(except in emergencies) shall use reasonable efforts to undertake any such
assessments or investigations so as to minimize the impact on Lessee's business
operations at the Properties. Lessee shall cooperate with and provide access to
Lessor, Lender, Environmental Insurer and any other person or entity designated
by Lessor. Any such assessment and investigation shall be at Lessee's sole cost
and expense.
G. Lessee shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless each of the Indemnified Parties for, from and against
any and all Losses (excluding Losses suffered by an Indemnified Party directly
arising out of such Indemnified Party's gross negligence or willful misconduct;
provided, however, that the term "gross negligence" shall not include gross
negligence imputed as a matter of law to any of the Indemnified Parties solely
by reason of the Lessor's interest in any of the Properties or Lessor's failure
to act in respect of matters which are or were the obligation of Lessee under
this Lease) and costs of Remediation (whether or not performed voluntarily),
engineers' fees, environmental consultants' fees, and costs of investigation
(including but not limited to sampling, testing, and analysis of soil, water,
air, building materials and other materials and substances whether solid, liquid
or gas) imposed upon or incurred by or asserted against any Indemnified Parties,
19
and directly or indirectly arising out of or in any way relating to any one or
more of the following: (i) any presence of any Hazardous Materials in, on,
above, or under any of the Properties; (ii) any past or present Release or
Threatened Release in, on, above, under or from any of the Properties; (iii) any
activity by Lessee, any person or entity affiliated with Lessee or any other
tenant or other user of any of the Properties in connection with any actual,
proposed or threatened use, treatment, storage, holding, existence, disposition
or other Release, generation, production, manufacturing, processing, refining,
control, management, abatement, removal, handling, transfer or transportation to
or from any of the Properties of any Hazardous Materials at any time located in,
under, on or above any of the Properties; (iv) any activity by Lessee, any
person or entity affiliated with Lessee or any other tenant or other user of any
of the Properties in connection with any actual or proposed Remediation of any
Hazardous Materials at any time located in, under, on or above any of the
Properties, whether or not such Remediation is voluntary or pursuant to court or
administrative order, including but not limited to any removal, remedial or
corrective action; (v) any past, present or threatened non-compliance or
violations of any Environmental Laws (or permits issued pursuant to any
Environmental Law) in connection with any of the Properties or operations
thereon, including but not limited to any failure by Lessee, any person or
entity affiliated with Lessee or any other tenant or other user of any of the
Properties to comply with any order of any Governmental Authority in connection
with any Environmental Laws; (vi) the imposition, recording or filing or the
threatened imposition, recording or filing of any Environmental Lien encumbering
any of the Properties; (vii) any administrative processes or proceedings or
judicial proceedings in any way connected with any matter addressed in this
Section; (viii) any past, present or threatened injury to, destruction of or
loss of natural resources in any way connected with any of the Properties,
including but not limited to costs to investigate and assess such injury,
destruction or loss; (ix) any acts of Lessee, any person or entity affiliated
with Lessee or any other tenant or user of any of the Properties in arranging
for disposal or treatment, or arranging with a transporter for transport for
disposal or treatment, of Hazardous Materials owned or possessed by Lessee, any
person or entity affiliated with Lessee or any other tenant or user of any of
the Properties, at any facility or incineration vessel owned or operated by
another person or entity and containing such or similar Hazardous Materials; (x)
any acts of Lessee, any person or entity affiliated with Lessee or any other
tenant or user of any of the Properties, in accepting any Hazardous Materials
for transport to disposal or treatment facilities, incineration vessels or sites
selected by Lessee, any person or entity affiliated with Lessee or any other
tenant or user of any of the Properties, from which there is a Release, or a
Threatened Release of any Hazardous Materials which causes the incurrence of
costs for Remediation; (xi) any personal injury, wrongful death, or property
damage arising under any statutory or common law or tort law theory, including
but not limited to damages assessed for the maintenance of a private or public
nuisance or for the conducting of an abnormally dangerous activity on or near
any of the Properties; and (xii) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations pursuant to this Section.
H. The obligations of Lessee and the rights and remedies of Lessor under
the foregoing subsections D through G shall survive the termination, expiration
and/or release of this Lease.
17. Condition of Properties; Maintenance. Lessee, at its own expense, will
maintain all parts of each of the Properties in good repair and sound condition,
except for ordinary wear and tear, and will take all action and will make all
structural and non-structural, foreseen and unforeseen and ordinary and
extraordinary changes and repairs which may be required to keep all parts of
each of the Properties in good repair and sound condition. Lessee waives any
right to (i) require Lessor to maintain, repair or rebuild all or any part of
any of the Properties or (ii) make repairs at the expense of Lessor, pursuant to
any Applicable Regulations at any time in effect.
18. Waste; Alterations and Improvements. Lessee shall not commit actual or
20
constructive waste upon any of the Properties. Lessee shall not alter the
exterior, structural, plumbing or electrical elements of any of the Properties
in any manner without the consent of Lessor, which consent shall not be
unreasonably withheld or conditioned (it being understood and agreed that to the
extent Lessor is required to obtain the approval of Lender with respect to any
such alterations, Lessor shall in no event be deemed to have unreasonably
withheld Lessor's approval thereof if Lender shall not have given its approval
if required); provided, however, Lessee may undertake nonstructural alterations
to any of the Properties costing less than $50,000.00 without Lessor's consent.
If Lessor's consent is required hereunder and Lessor consents to the making of
any such alterations, the same shall be made according to plans and
specifications approved by Lessor and subject to such other conditions as Lessor
shall require. All alterations shall be made by Lessee at Lessee's sole expense
by licensed contractors and in accordance with all applicable laws governing
such alterations. Any work at any time commenced by Lessee on any of the
Properties shall be prosecuted diligently to completion, shall be of good
workmanship and materials and shall comply fully with all the terms of this
Lease. Upon completion of any alterations, Lessee shall promptly provide Lessor
with (i) evidence of full payment to all laborers and materialmen contributing
to the alterations, (ii) an architect's certificate certifying the alterations
to have been completed in conformity with the plans and specifications, (iii) a
certificate of occupancy (if the alterations are of such a nature as would
require the issuance of a certificate of occupancy), and (iv) any other
documents or information reasonably requested by Lessor. Any addition to or
alteration of any of the Properties shall automatically be deemed a part of the
Properties and belong to Lessor, and Lessee shall execute and deliver to Lessor
such instruments as Lessor may require to evidence the ownership by Lessor of
such addition or alteration. Lessee shall execute and file or record, as
appropriate, a "Notice of Non-Responsibility," or any equivalent notice
permitted under applicable law in the states where the applicable Properties are
located.
19. Indemnification. Lessee shall indemnify, protect, defend and hold
harmless each of the Indemnified Parties from and against any and all Losses
(excluding Losses suffered by an Indemnified Party arising out of the gross
negligence or willful misconduct of such Indemnified Party; provided, however,
that the term "gross negligence" shall not include gross negligence imputed as a
matter of law to any of the Indemnified Parties solely by reason of the Lessor's
interest in any of the Properties or Lessor's failure to act in respect of
matters which are or were the obligation of Lessee under this Lease) caused by,
incurred or resulting from Lessee's operations of or relating in any manner to
any of the Properties, whether relating to their original design or
construction, latent defects, alteration, maintenance, use by Lessee or any
person thereon, supervision or otherwise, or from any breach of, default under,
or failure to perform, any term or provision of this Lease by Lessee, its
officers, employees, agents or other persons, or to which any Indemnified Party
is subject because of Lessor's or Remainderman's interest in any of the
Properties, including, without limitation, Losses arising from (1) any accident,
injury to or death of any person or loss of or damage to property occurring in,
on or about any of the Properties or portion thereof or on the adjoining
sidewalks, curbs, parking areas, streets or ways, (2) any use, non-use or
condition in, on or about, or possession, alteration, repair, operation,
maintenance or management of, any of the Properties or any portion thereof or on
the adjoining sidewalks, curbs, parking areas, streets or ways, (3) any
representation or warranty made herein by Lessee, in any certificate delivered
in connection herewith or in any other agreement to which Lessee is a party or
pursuant thereto being false or misleading in any material respect as of the
date of such representation or warranty was made, (4) performance of any labor
or services or the furnishing of any materials or other property in respect to
any of the Properties or any portion thereof, (5) any taxes, assessments or
other charges which Lessee is required to pay under Section 10, (6) any lien,
encumbrance or claim arising on or against any of the Properties or any portion
thereof under any Applicable Regulation or otherwise which Lessee is obligated
hereunder to remove and discharge, or the failure to comply with any Applicable
Regulation, (7) the claims of any invitees, patrons, licensees or subtenants of
21
all or any portion of any of the Properties or any Person acting through or
under Lessee or otherwise acting under or as a consequence of this Lease or any
sublease, (8) any act or omission of Lessee or its agents, contractors,
licensees, subtenants or invitees, (9) any contest referred to in Section 10,
(10) the sale of liquor, beer or wine on any of the Properties, and (11) the
Consent Agreement. It is expressly understood and agreed that Lessee's
obligations under this Section shall survive the expiration or earlier
termination of this Lease for any reason.
20. Quiet Enjoyment. So long as Lessee shall pay the rental and other sums
herein provided and shall keep and perform all of the terms, covenants and
conditions on its part herein contained, Lessee shall have, subject and
subordinate to Lessor's rights herein, the right to the peaceful and quiet
occupancy of the Properties. Notwithstanding the foregoing, however, in no event
shall Lessee be entitled to bring any action against Lessor to enforce its
rights hereunder if an Event of Default shall have occurred and be continuing.
21. Condemnation or Destruction. A. In the event of a taking of all or any
part of any of the Properties for any public or quasi-public purpose by any
lawful power or authority by exercise of the right of condemnation or eminent
domain or by agreement between Lessor, Lessee and those authorized to exercise
such right ("Taking") or the commencement of any proceedings or negotiations
which might result in a Taking or any damage to or destruction of any of the
Properties or any part thereof (a "Casualty"), Lessee will promptly give written
notice thereof to Lessor, generally describing the nature and extent of such
Taking, proceedings, negotiations or Casualty and including copies of any
documents or notices received in connection therewith. Thereafter, Lessee shall
promptly send Lessor copies of all correspondence and pleadings relating to any
such Taking, proceedings, negotiations or Casualty.
B. In the event of (i) a Taking of the whole of any of the Properties,
other than for temporary use, (ii) a Taking of substantially all of any of the
Properties (other than for temporary use) that results in Lessee making a good
faith determination that the restoration and continued use of the remainder of
such Property as a Permitted Facility would be uneconomic (each of (i) and (ii),
a "Total Taking"), or (iii) a Casualty of substantially all of any of the
Properties that results in Lessee making a good faith determination that the
restoration and continued use of such Property as a Permitted Facility would be
uneconomic (a "Total Casualty"), Lessor shall be entitled to receive the entire
award, insurance proceeds or payment in connection therewith without deduction
for any estate vested in Lessee by this Lease. Lessee hereby expressly assigns
to Lessor all of its right, title and interest in and to every such award,
insurance proceeds or payment and agrees that Lessee shall not be entitled to
any award, insurance proceeds or payment for the value of Lessee's leasehold
interest in this Lease. Lessee shall be entitled to claim and receive any award
or payment from the condemning authority expressly granted for the taking of
Personalty (other than Personalty owned by Lessor), the interruption of its
business and moving expenses, but only if such claim or award does not adversely
affect or interfere with the prosecution of Lessor's claim for the Total Taking
or otherwise reduce the amount recoverable by Lessor for the Total Taking.
Lessee shall be entitled to claim and receive any insurance proceeds with
respect to the Personalty (other than Personalty owned by Lessor), the
interruption of its business and moving expenses, but only if such claim or
proceeds does not adversely affect or interfere with the prosecution of Lessor's
claim for the Total Casualty or otherwise reduce the amount recoverable by
Lessor for the Total Casualty.
In the event of a Total Taking or Total Casualty, Lessee shall have the
right to terminate this Lease with respect to the applicable Property by notice
(the "Termination Notice") given to Lessor not later than 30 days after the
Total Taking or Total Casualty, as applicable. The Termination Notice must: (i)
specify a date on which this Lease with respect to such Property shall
terminate, which date shall be the last day of a calendar month occurring not
earlier than 120 days and not later than 150 days after the delivery of such
notice (the "Early Termination Date"); (ii) contain a certificate executed by
22
the president, chief financial officer or treasurer of Lessee which (X)
describes the Total Taking or Total Casualty, (Y) represents and warrants that
either the whole of such Property has been taken, or that substantially all of
such Property has been taken and Lessee has determined in good faith that the
restoration and continued use of the remainder of such Property as a Permitted
Facility would be uneconomic, or that substantially all of such Property has
been damaged or destroyed and Lessee has determined in good faith that the
restoration and continued use of such Property as a Permitted Facility would be
uneconomic, and (Z) contains a covenant by Lessee that neither Lessee or any
Affiliate of Lessee will use such Property for a period of 2 years following the
Early Termination Date; and (iii) if the Early Termination Date shall occur
prior to the commencement of any extension options which may be exercised
pursuant to Section 27, contain either (X) an irrevocable rejectable written
offer (the "Rejectable Offer") of Lessee to purchase Lessor's interest in such
Property and in the net award for such Total Taking or net insurance proceeds
for such Total Casualty, as applicable, after deducting all costs, fees and
expenses incident to the collection thereof (the "Net Award") on the Early
Termination Date for a purchase price equal to the Stipulated Loss Value (as
defined below) for such Property, or (Y) a Rejectable Substitution Offer to
substitute a Substitute Property satisfying the applicable requirements of
Section 56.A for such Property and Lessor's interest in the Net Award. As used
herein, the term "Stipulated Loss Value" shall mean the sum of (a) the product
of the percentage specified on Schedule I attached hereto which corresponds to
the Early Termination Date multiplied by the Purchase Price for such Property,
plus (b) all Base Annual Rental, Additional Rental and other sums and
obligations then due and payable under this Lease, plus, (c) in the event of a
Total Casualty only, the Prepayment Charge. In the event of a termination of
this Lease with respect to a Property pursuant to this Section 21.B which does
involve the acceptance (or deemed acceptance) of a Rejectable Substitution
Offer, the Base Annual Rental then in effect shall be reduced by an amount equal
to the product of (x) the Applicable Rent Reduction Percentage for such
Property, and (y) the Base Annual Rental then in effect.
If the Early Termination Date shall occur prior to the commencement of any
extension options which may be exercised pursuant to Section 27, Lessor shall
have 90 days from the delivery of the Termination Notice to deliver to Lessee
written notice of its election to either accept or reject any Rejectable Offer
or Rejectable Substitution Offer contained in the Termination Notice. Lessor's
failure to deliver such notice within such time period shall be deemed to
constitute Lessor's acceptance of the applicable Rejectable Offer or Rejectable
Substitution Offer. If the Mortgage corresponding to such Property is still
outstanding, any rejection of the Rejectable Offer or Rejectable Substitution
Offer by Lessor shall not be effective unless it is consented to in writing by
the Lender.
If Lessor accepts the Rejectable Offer or is deemed to have accepted the
Rejectable Offer or if any rejection of the Rejectable Offer by Lessor is not
consented to in writing by the Lender, then, on the Early Termination Date,
Lessor shall sell and convey, and Lessee shall purchase for the purchase price
described above, Lessor's interest in such Property and the Net Award. Lessee's
obligations under this Lease with respect to such Property shall not be
terminated until the applicable Stipulated Loss Value, the Prepayment Charges
and all Base Annual Rental, Additional Rental and other sums and obligations
then due and payable under this Lease are paid in full. Upon such payment, (i)
Lessor shall convey such Property to Lessee "as-is" by quit-claim deed, subject
to all matters of record (except for the Mortgage corresponding to such Property
and any other consensual liens granted by Lessor other than those granted by
Lessor at the request of Lessee), and without representation or warranty, and
(ii) all obligations of either party hereunder with respect to such Property
shall cease as of the Early Termination Date, provided, however, Lessee's
obligations to Lessor under any indemnification provisions of this Lease with
respect to such Property (including, without limitation, Sections 16 and 19) and
Lessee's obligations to pay any sums (whether payable to Lessor or a third
party) accruing under this Lease with respect to such Property prior to the
Early Termination Date shall survive the termination of this Lease with respect
23
to such Property. This Lease shall, however, continue in full force and effect
with respect to all other Properties.
If Lessor accepts the Rejectable Substitution Offer or is deemed to have
accepted the Rejectable Substitution Offer or if any rejection of the Rejectable
Substitution Offer by Lessor is not consented to in writing by the Lender, then,
on the Early Termination Date, Lessee shall complete such substitution, subject,
however, to the satisfaction of each of the applicable terms and conditions set
forth in this Section 56. Upon such substitution (i) Lessee shall be entitled to
claim and receive the Net Award and (ii) all obligations of either party
hereunder with respect to the Property being replaced shall cease as of the
Early Termination Date, provided, however, Lessee's obligations to Lessor under
any indemnification provisions of this Lease with respect to such Property
(including, without limitation, Sections 16 and 19) and Lessee's obligations to
pay any sums (whether payable to Lessor or a third party) accruing under this
Lease with respect to such Property prior to the Early Termination Date shall
survive the termination of this Lease with respect to such Property. This Lease
shall, however, continue in full force and effect with respect to all other
Properties.
Lessee shall be solely responsible for the payment of all costs and
expenses incurred in connection with the conveyance of a Property to Lessee
pursuant to this Section 21, including, without limitation, to the extent
applicable, the cost of title insurance, survey charges, stamp taxes, mortgage
taxes, transfer fees, escrow and recording fees, taxes imposed on Lessor as a
result of such conveyance, taxes imposed in connection with the transfer of a
Property to Lessee or the termination of this Lease with respect to a Property
pursuant to the provisions of this Section 21, Lessee's attorneys' fees and the
reasonable attorneys' fees and expenses of counsel to Lessor and Lender.
If Lessor rejects the Rejectable Offer or Rejectable Substitution Offer and
such rejection is consented to by Lender or if the Early Termination Date shall
occur after the commencement of any extension options exercised pursuant to
Section 27, then (i) the Net Award shall be paid to and belong to Lessor, (ii)
on the Early Termination Date, Lessee shall pay to Lessor all Base Annual
Rental, Additional Rental and other sums and obligations then due and payable
under this Lease, and (iii) all obligations of either party hereunder shall
cease as of the Early Termination Date with respect to the applicable Property,
provided, however, Lessee's obligations to Lessor with respect to such Property
under any indemnification provisions of this Lease with respect to such Property
(including, without limitation, Sections 16 and 19) and Lessee's obligations to
pay any sums (whether payable to Lessor or a third party) accruing under this
Lease with respect to such Property prior to the Early Termination Date shall
survive the termination of this Lease. This Lease shall, however, continue in
full force and effect with respect to all other Properties.
C. In the event of a Taking of all or any part of any of the Properties for
a temporary use ("Temporary Taking"), this Lease shall remain in full force and
effect without any reduction of Base Annual Rental, Additional Rental or any
other sum payable hereunder. Except as provided below, Lessee shall be entitled
to the entire award for a Temporary Taking, whether paid by damages, rent or
otherwise, unless the period of occupation and use by the condemning authorities
shall extend beyond the date of expiration of this Lease, in which case the
award made for such Taking shall be apportioned between Lessor and Lessee as of
the date of such expiration. At the termination of any such Temporary Taking,
Lessee will, at its own cost and expense and pursuant to the terms of Section 18
above, promptly commence and complete the restoration of the Property affected
by such Temporary Taking; provided, however, Lessee shall not be required to
restore such Property if the Lease Term shall expire prior to, or within one
year after, the date of termination of such Temporary Taking, and in such event
Lessor shall be entitled to recover all damages and awards arising out of the
failure of the condemning authority to repair and restore such Property at the
expiration of such Temporary Taking.
D. In the event of a Taking which is not a Total Taking or a Temporary
24
Taking ("Partial Taking") or of a Casualty which is not a Total Casualty (a
"Partial Casualty"), all awards, compensation or damages shall be paid to
Lessor, and Lessor shall have the option to (i) terminate this Lease with
respect to the Property affected, provided that Lessor shall have obtained
Lender's prior written consent, by notifying Lessee within 60 days after Lessee
gives Lessor notice of such Partial Casualty or that title has vested in the
taking authority or (ii) continue this Lease in effect, which election may be
evidenced by either a notice from Lessor to Lessee or Lessor's failure to notify
Lessee that Lessor has elected to terminate this Lease with respect to such
Property within such 60-day period. Lessee shall have a period of 60 days after
Lessor's notice that it has elected to terminate this Lease with respect to such
Property during which to elect to continue this Lease with respect to such
Property on the terms herein provided. If Lessor elects to terminate this Lease
with respect to such Property and Lessee does not elect to continue this Lease
with respect to such Property or shall fail during such 60-day period to notify
Lessor of Lessee's intent to continue this Lease with respect to such Property,
then this Lease shall terminate with respect to such Property as of the last day
of the month during which such period expired. Lessee shall then immediately
vacate and surrender such Property, all obligations of either party hereunder
with respect to such Property shall cease as of the date of termination
(provided, however, Lessee's obligations to Lessor under any indemnification
provisions of this Lease with respect to such Property (including, without
limitation, Sections 16 and 19) and Lessee's obligations to pay Base Annual
Rental, Additional Rental and all other sums (whether payable to Lessor or a
third party) accruing under this Lease with respect to such Property prior to
the date of termination shall survive such termination) and Lessor may retain
all such awards, compensation or damages. The Lease shall continue in full force
and effect with respect to all other Properties. If Lessor elects not to
terminate this Lease with respect to such Property, or if Lessor elects to
terminate this Lease with respect to such Property but Lessee elects to continue
this Lease with respect to such Property, then this Lease shall continue in full
force and effect on the following terms: (i) all Base Annual Rental, Additional
Rental and other sums and obligations due under this Lease shall continue
unabated, and (ii) Lessee shall promptly commence and diligently prosecute
restoration of such Property to the same condition, as nearly as practicable, as
prior to such Partial Taking or Partial Casualty as approved by Lessor. Lessor
shall promptly make available in installments as restoration progresses an
amount up to but not exceeding the amount of any award, compensation or damages
received by Lessor after deducting all costs, fees and expenses incident to the
collection thereof (the "Net Restoration Amount"), upon request of Lessee
accompanied by evidence reasonably satisfactory to Lessor that such amount has
been paid or is due and payable and is properly a part of such costs and that
Lessee has complied with the terms of Section 18 above in connection with the
restoration. Lessor shall be entitled to keep any portion of the Net Restoration
Amount which may be in excess of the cost of restoration, subject to the rights
of Lender under the documents evidencing the Loans, and Lessee shall bear all
additional costs, fees and expenses of such restoration in excess of the Net
Restoration Amount. If this Lease is terminated with respect to any Property as
a result of a Partial Casualty, simultaneously with such termination Lessee
shall pay Lessor an amount equal to the insurance deductible applicable to such
Partial Casualty.
E. Any loss under any property damage insurance required to be maintained
by Lessee shall be adjusted by Lessor and Lessee. Any award relating to a Total
Taking or a Partial Taking shall be adjusted by Lessor. Notwithstanding the
foregoing or any other provisions of this Section to the contrary, if at the
time of any Taking or any Casualty or at any time thereafter Lessee shall be in
default under this Lease and such default shall be continuing, Lessor is hereby
authorized and empowered but shall not be obligated, in the name and on behalf
of Lessee and otherwise, to file and prosecute Lessee's claim, if any, for an
award on account of such Taking or for insurance proceeds on account of such
Casualty and to collect such award or proceeds and apply the same, after
deducting all costs, fees and expenses incident to the collection thereof, to
the curing of such default and any other then existing default under this Lease
and/or to the payment of any amounts owed by Lessee to Lessor under this Lease,
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in such order, priority and proportions as Lessor in its discretion shall deem
proper.
F. Notwithstanding the foregoing, nothing in this Section 21 shall be
construed as limiting or otherwise adversely affecting the representations,
warranties, covenants and characterizations set forth in Lease, including,
without limitation, those provisions set forth in Section 3 of this Lease.
22. Inspection. Lessor and its authorized representatives shall have the
right, upon giving reasonable advance notice, to enter any of the Properties or
any part thereof at reasonable times and inspect the same and make photographic
or other evidence concerning Lessee's compliance with the terms of this Lease.
Lessee hereby waives any claim for damages for any injury or inconvenience to or
interference with Lessee's business, any loss of occupancy or quiet enjoyment of
any of the Properties and any other loss occasioned by such entry so long as
Lessor shall have used reasonable efforts not to unreasonably interrupt Lessee's
normal business operations. Lessee shall keep and maintain at the Properties or
Lessee's corporate headquarters full, complete and appropriate books of account
and records of Lessee's business relating to the Properties in accordance with
GAAP. Lessee's books and records shall be open for inspection at reasonable
times and upon reasonable notice by Lessor, Lender and their respective auditors
or other authorized representatives and shall show such information as is
reasonably necessary to determine compliance with Lessor's obligations under the
Loan Documents.
23. Default, Remedies and Measure of Damages. A. Each of the following
shall be an event of default under this Lease (each, an "Event of Default"):
(i) If any representation or warranty of Lessee set forth in this Lease is
false in any material respect, or if Lessee renders any statement or account
which is false in any material respect;
(ii) If any rent or other monetary sum due under this Lease is not paid
within five days from the date when due; provided, however, notwithstanding the
occurrence of such an Event of Default, Lessor shall not be entitled to exercise
its remedies set forth below unless and until Lessor shall have given Lessee
notice thereof and a period of five days from the delivery of such notice shall
have elapsed without such Event of Default being cured;
(iii) If Lessee fails to pay, prior to delinquency, any taxes, assessments
or other charges, the failure of which to pay will result in the imposition of a
lien against any of the Properties or the rental or other payments due under
this Lease or a claim against Lessor, unless Lessee is contesting such taxes,
assessments or other charges in accordance with the provisions of Section 10 of
this Lease;
(iv) If Lessee or Guarantor becomes insolvent within the meaning of the
Code, files or notifies Lessor that it intends to file a petition under the
Code, initiates a proceeding under any similar law or statute relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts
(collectively, hereinafter, an "Action"), becomes the subject of either a
petition under the Code or an Action which is not dissolved within 90 days after
filing, or is not generally paying its debts as the same become due;
(v) If Lessee vacates or abandons any of the Properties other than in
accordance with the provisions of Section 15 of this Lease;
(vi) If Lessee fails to observe or perform any of the other covenants
(except with respect to a breach of the Aggregate Fixed Charge Coverage Ratio,
which breach is addressed in subitem (ix) below), conditions or obligations of
this Lease; provided, however, if any such failure does not involve the payment
of any monetary sum, is not willful or intentional, does not place any rights or
property of Lessor in immediate jeopardy, and is within the reasonable power of
Lessee to promptly cure after receipt of notice thereof, all as determined by
Lessor in its reasonable discretion, then such failure shall not constitute an
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Event of Default hereunder, unless otherwise expressly provided herein, unless
and until Lessor shall have given Lessee notice thereof and a period of 30 days
shall have elapsed, during which period Lessee may correct or cure such failure,
upon failure of which an Event of Default shall be deemed to have occurred
hereunder without further notice or demand of any kind being required. If such
failure cannot reasonably be cured within such 30 day period, as determined by
Lessor in its reasonable discretion, and Lessee is diligently pursuing a cure of
such failure, then Lessee shall have a reasonable period to cure such failure
beyond such 30 day period, which shall in no event exceed 90 days after
receiving notice of such failure from Lessor. If Lessee shall fail to correct or
cure such failure within such 90-day period, an Event of Default shall be deemed
to have occurred hereunder without further notice or demand of any kind being
required;
(vii) If there is an "Event of Default" or a breach or default, after the
passage of all applicable notice and cure or grace periods, under any other
Sale-Leaseback Document or any of the Other Agreements;
(viii) If a final, nonappealable judgment is rendered by a court against
Lessee which has a material adverse effect on either the ability to conduct
business at any of the Properties for its intended use or Lessee's ability to
perform its obligations under this Lease, or is in the amount of $100,000.00 or
more, and in either event is not discharged or provision made for such discharge
within 60 days from the date of entry thereof;
(ix) If there is a breach of the Aggregate Fixed Charge Coverage Ratio
requirement and Lessor shall have given Lessee notice thereof, Lessee shall cure
such breach within a period of 30 days from the delivery of such notice by
either:
(1) prepaying Base Monthly Rental in an amount (the "Prepayment Amount")
equal to the product of (x) the aggregate Purchase Price for all of the
Properties then subject to this Lease multiplied by (y) a fraction, the
numerator of which is the Rent Adjustment Amount and the denominator is the Base
Annual Rental then in effect. In the event that Lessee prepays the Base Monthly
Rental in an amount equal to the Prepayment Amount, then the Base Monthly Rental
commencing on the next scheduled payment date following such prepayment shall be
reduced in an amount equal to the product of (A) the Rent Adjustment Amount
divided by 12, and (B) .95; or
(2) delivering to Lessor a letter of credit in favor of Lessor (or, at
Lessor's written direction, in favor of, or as designated by, Lender) in the
form attached to this Lease as Exhibit B issued by an Approved Institution (the
"Letter of Credit") in an amount equal to the lesser of (x) the Prepayment
Amount and (y) an amount equal to the product of (aa) the Rent Adjustment Amount
divided by 12 and (bb) the number of months remaining in the Initial Term;
provided, however, Lessee may not provide a Letter of Credit to cure a breach of
the Aggregate Fixed Charge Coverage Ratio requirement if the aggregate amount of
all Letters of Credit delivered to Lessor exceeds the Base Annual Rental. Such
Letter of Credit shall be maintained in effect until the cure of the breach of
the Aggregate Fixed Charge Coverage Ratio which was the basis for the Letter of
Credit being provided. If:
(x) an Event of Default shall have occurred, Lessor shall have the right to
present such Letter of Credit for payment and apply such proceeds toward the
Base Annual Rental then due and payable under this Lease, or
(y) a substitute or replacement Letter of Credit issued by an Approved
Institution for such Letter of Credit in the amount of such Letter of Credit is
not provided to Lessor at least 30 days prior to the scheduled expiration date
of such Letter of Credit, Lessor shall have the right to present such Letter of
Credit for payment at any time within such 30 day period and the proceeds of
such Letter of Credit shall be held by Lessor as security for the payment of the
Base Annual Rental due and payable under this Lease.
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The Letter of Credit shall provide that Lessor can only present the Letter
of Credit for payment as contemplated by the preceding subitems (x) and (y).
Upon Lessee's cure of the Aggregate Fixed Charge Coverage Ratio breach which was
the basis for such Letter of Credit being provided, Lessor shall release the
Letter of Credit to the Approved Institution or, if Lessor is holding the
proceeds of such Letter of Credit, deliver such proceeds to Lessee.
Notwithstanding the foregoing, if, within a 30 day period after the
delivery of Lessor's written notice to Lessee of Lessee's breach of the
Aggregate Fixed Charge Coverage Ratio requirement, Lessee provides evidence
satisfactory to Lessor that the Aggregate Fixed Charge Coverage Ratio is at
least 1.25:1 for the twelve calendar month period immediately preceding the
delivery to Lessor of such evidence, no Event of Default shall be deemed to have
occurred as a result of such breach of the Aggregate Fixed Charge Coverage Ratio
requirement;
(x) If Lessee shall fail to maintain insurance in accordance with the
requirements of Section 12 of this Lease; or
(xi) If Lessee shall breach its obligations under the Consent Agreement and
such breach shall result in a cessation of business at the Property which is the
subject of the Consent Agreement.
B. Upon the occurrence of an Event of Default, with or without notice or
demand, except the notice prior to default required under certain circumstances
by subsection A. above or such other notice as may be required by statute and
cannot be waived by Lessee (all other notices being hereby waived), Lessor shall
be entitled to exercise, at its option, concurrently, successively, or in any
combination, all remedies available at law or in equity, including without
limitation, any one or more of the following:
(i) To terminate this Lease, whereupon Lessee's right to possession of the
Properties shall cease and this Lease, except as to Lessee's liability, shall be
terminated.
(ii) To reenter and take possession of any or all of the Properties, any or
all Personalty owned by Lessee located on or at any of the Properties and, to
the extent permissible, all franchises, licenses, area development agreements,
permits and other rights or privileges of Lessee pertaining to the use and
operation of any or all of the Properties and to expel Lessee and those claiming
under or through Lessee, without being deemed guilty in any manner of trespass
or becoming liable for any loss or damage resulting therefrom, without resort to
legal or judicial process, procedure or action. No notice from Lessor hereunder
or under a forcible entry and detainer statute or similar law shall constitute
an election by Lessor to terminate this Lease unless such notice specifically so
states. If Lessee shall, after default, voluntarily give up possession of any of
the Properties to Lessor, deliver to Lessor or its agents the keys to any of the
Properties, or both, such actions shall be deemed to be in compliance with
Lessor's rights and the acceptance thereof by Lessor or its agents shall not be
deemed to constitute a termination of this Lease. Lessor reserves the right
following any reentry and/or reletting to exercise its right to terminate this
Lease by giving Lessee written notice thereof, in which event this Lease will
terminate as specified in said notice.
(iii) To seize all Personalty owned by Lessee located on or at any or all
of the Properties and cause the same to be stored in a public warehouse or
elsewhere at Lessee's sole expense, without becoming liable for any loss or
damage resulting therefrom and without resorting to legal or judicial process,
procedure or action.
(iv) To bring an action against Lessee for any damages sustained by Lessor
or any equitable relief available to Lessor.
(v) To relet any or all of the Properties or any part thereof for such term
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or terms (including a term which extends beyond the original Lease Term), at
such rentals and upon such other terms as Lessor, in its sole discretion, may
determine, with all proceeds received from such reletting being applied to the
rental and other sums due from Lessee in such order as Lessor may, in it sole
discretion, determine, which other sums include, without limitation, all
repossession costs, brokerage commissions, attorneys' fees and expenses,
employee expenses, alteration, remodeling and repair costs and expenses of
preparing for such reletting. Except to the extent required by applicable law,
Lessor shall have no obligation to relet any of the Properties or any part
thereof and shall in no event be liable for refusal or failure to relet any of
the Properties or any part thereof, or, in the event of any such reletting, for
refusal or failure to collect any rent due upon such reletting, and no such
refusal or failure shall operate to relieve Lessee of any liability under this
Lease or otherwise to affect any such liability. Lessor reserves the right
following any reentry and/or reletting to exercise its right to terminate this
Lease by giving Lessee written notice thereof, in which event this Lease will
terminate as specified in said notice.
(vi) (x) To recover from Lessee all rent and other monetary sums then due
and owing under this Lease and (y) to accelerate and recover from Lessee all
rent and other monetary sums scheduled to become due and owing under this Lease
after the date of such breach for the entire original scheduled Lease Term.
(vii) To recover from Lessee all costs and expenses, including attorneys'
fees, court costs, expert witness fees, costs of tests and analyses, travel and
accommodation expenses, deposition and trial transcripts, copies and other
similar costs and fees, paid or incurred by Lessor as a result of such breach,
regardless of whether or not legal proceedings are actually commenced.
(viii) To immediately or at any time thereafter, and with or without
notice, at Lessor's sole option but without any obligation to do so, correct
such breach or default and charge Lessee all costs and expenses incurred by
Lessor therein. Any sum or sums so paid by Lessor, together with interest at the
then existing maximum legal rate, but not higher than 15% per annum, shall be
deemed to be Additional Rental hereunder and shall be immediately due from
Lessee to Lessor. Any such acts by Lessor in correcting Lessee's breaches or
defaults hereunder shall not be deemed to cure said breaches or defaults or
constitute any waiver of Lessor's right to exercise any or all remedies set
forth herein.
(ix) To immediately or at any time thereafter, and with or without notice,
except as required herein, set off any money of Lessee held by Lessor under this
Lease against any sum owing by Lessee or Guarantor hereunder.
(x) To seek any equitable relief available to Lessor, including, without
limitation, the right of specific performance.
All powers and remedies given by this Section to Lessor, subject to
applicable law, shall be cumulative and not exclusive of one another or of any
other right or remedy or of any other powers and remedies available to Lessor
under this Lease, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements of Lessee contained in
this Lease, and no delay or omission of Lessor to exercise any right or power
accruing upon the occurrence of any Event of Default shall impair any other or
subsequent Event of Default or impair any rights or remedies consequent thereto.
Every power and remedy given by this Section or by law to Lessor may be
exercised from time to time, and as often as may be deemed expedient, by Lessor,
subject at all times to Lessor's right in its sole judgment to discontinue any
work commenced by Lessor or change any course of action undertaken by Lessor.
If Lessee shall fail to observe or perform any of its obligations under
this Lease or in the event of an emergency, then, without waiving any Event of
Default which may result from such failure or emergency, Lessor may, but without
any obligation to do so, take all actions, including, without limitation, entry
upon any or all of the Properties to perform Lessee's obligations, immediately
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and without notice in the case of an emergency and upon five days written notice
to Lessee in all other cases. All expenses incurred by Lessor in connection with
performing such obligations, including, without limitation, reasonable
attorneys' fees and expenses, together with interest at the Default Rate from
the date any such expenses were incurred by Lessor until the date of payment by
Lessee, shall constitute Additional Rental and shall be paid by Lessee to Lessor
upon demand.
24. Liens; Mortgages, Subordination, Nondisturbance and Attornment.
Lessor's interest in this Lease and/or any of the Properties shall not be
subordinate to any liens or encumbrances placed upon any of the Properties by or
resulting from any act of Lessee, and nothing herein contained shall be
construed to require such subordination by Lessor. Lessee shall keep the
Properties free from any liens for work performed, materials furnished or
obligations incurred by Lessee. NOTICE IS HEREBY GIVEN THAT, EXCEPT AS OTHERWISE
CONSENTED TO BY LESSOR PURSUANT TO SECTION 26, LESSEE IS NOT AUTHORIZED TO PLACE
OR ALLOW TO BE PLACED ANY LIEN, MORTGAGE, DEED OF TRUST, SECURITY INTEREST OR
ENCUMBRANCE OF ANY KIND UPON ALL OR ANY PART OF ANY OF THE PROPERTIES OR
LESSEE'S LEASEHOLD INTEREST THEREIN, AND ANY SUCH PURPORTED TRANSACTION WHICH IS
NOT APPROVED BY LESSOR SHALL BE VOID. FURTHERMORE, ANY SUCH PURPORTED
TRANSACTION SHALL BE DEEMED A TORTIOUS INTERFERENCE WITH LESSOR'S RELATIONSHIP
WITH LESSEE AND LESSOR'S OWNERSHIP OF THE PROPERTIES.
This Lease at all times shall automatically be subordinate to the Mortgages
and to the lien of any and all ground leases, mortgages, trust deeds and deeds
to secure debt now or hereafter placed upon any of the Properties by Lessor, and
Lessee covenants and agrees to execute and deliver, upon demand, such further
instruments subordinating this Lease to the lien of the Mortgages and any or all
such ground leases, mortgages, trust deeds or deeds to secure debt as shall be
desired by Lessor, or any present or proposed mortgagees or lenders under trust
deeds or deeds to secure debt, upon the condition that Lessee shall have the
right to remain in possession of the Properties under the terms of this Lease,
notwithstanding any default in the Mortgages or any or all such ground leases,
mortgages, trust deeds or deeds to secure debt or after foreclosure of any or
all such Mortgages, mortgages, trust deeds or deeds to secure debt or
termination of any or all such ground leases, so long as Lessee is not in
default under any of the covenants, conditions and agreements contained in this
Lease.
If any mortgagee, receiver, Lender or other secured party elects to have
this Lease and the interest of Lessee hereunder be superior to any of the
Mortgages or any such ground lease, mortgage, trust deed or deed to secure debt
and evidences such election by notice given to Lessee, then this Lease and the
interest of Lessee hereunder shall be deemed superior to any such Mortgage,
ground lease, mortgage, trust deed or deed to secure debt, whether this Lease
was executed before or after such Mortgage, ground lease, mortgage, trust deed
or deed to secure debt and in that event such mortgagee, receiver, Lender or
other secured party shall have the same rights with respect to this Lease as if
it had been executed and delivered prior to the execution and delivery of such
Mortgage, ground lease, mortgage, trust deed or deed to secure debt and had been
assigned to such mortgagee, receiver, Lender or other secured party.
Although the foregoing provisions shall be self-operative and no future
instrument of subordination shall be required, upon request by Lessor, Lessee
shall execute and deliver whatever instruments may be required for such
purposes, and in the event Lessee fails so to do within 10 days after demand,
Lessee does hereby make, constitute and irrevocably appoint Lessor as its agent
and attorney-in-fact and in its name, place and stead so to do, which
appointment shall be deemed coupled with an interest.
In the event any purchaser or assignee of Lender at a foreclosure sale
acquires title to any of the Properties, or in the event Lender or any assignee
otherwise succeeds to the rights of Lessor as landlord under this Lease, Lessee
shall attorn to Lender or such purchaser or assignee, as the case may be (a
"Successor Lessor"), and recognize the Successor Lessor as lessor under this
30
Lease, and this Lease shall continue in full force and effect as a direct lease
between the Successor Lessor and Lessee, provided that the Successor Lessor
shall only be liable for any obligations of the lessor under this Lease which
accrue after the date that such Successor Lessor acquires title. The foregoing
provision shall be self operative and effective without the execution of any
further instruments.
Lessee shall give written notice to any lender of Lessor having a recorded
lien upon any of the Properties or any part thereof of which Lessee has been
notified of any breach or default by Lessor of any of its obligations under this
Lease simultaneously with the giving of such notice to Lessor, and Lessee shall
give such lender at least 60 days beyond any notice period to which Lessor might
be entitled to cure such default before Lessee may exercise any remedy with
respect thereto. Upon request by Lessor, Lessee shall also provide Lessee's most
recent audited financial statements to Lessor or any such lender and certify the
continuing accuracy of such financial statements in such manner as Lessor or
such lender may request.
25. Estoppel Certificate. A. At any time, and from time to time, Lessee
shall, promptly and in no event later than 10 days after a request from Lessor
or Lender, execute, acknowledge and deliver to Lessor or Lender a certificate in
the form supplied by Lessor, Lender or any present or proposed mortgagee or
purchaser designated by Lessor, certifying: (i) that Lessee has accepted the
Properties (or, if Lessee has not done so, that Lessee has not accepted the
Properties, and specifying the reasons therefor); (ii) that this Lease is in
full force and effect and has not been modified (or if modified, setting forth
all modifications), or, if this Lease is not in full force and effect, the
certificate shall so specify the reasons therefor; (iii) the commencement and
expiration dates of the Lease Term, including the terms of any extension options
of Lessee; (iv) the date to which the rentals have been paid under this Lease
and the amount thereof then payable; (v) whether there are then any existing
defaults by Lessor in the performance of its obligations under this Lease, and,
if there are any such defaults, specifying the nature and extent thereof; (vi)
that no notice has been received by Lessee of any default under this Lease which
has not been cured, except as to defaults specified in the certificate; (vii)
the capacity of the person executing such certificate, and that such person is
duly authorized to execute the same on behalf of Lessee; (viii) that neither
Lessor nor Lender has actual involvement in the management or control of
decision making related to the operational aspects or the day-to-day operations
of the Properties; and (ix) any other information reasonably requested by
Lessor, Lender or such present or proposed mortgagee or purchaser.
B. If Lessee shall fail or refuse to sign a certificate in accordance with
the provisions of this Section within 10 days following a request by Lessor,
Lessee irrevocably constitutes and appoints Lessor as its attorney-in-fact to
execute and deliver the certificate to any such third party, it being stipulated
that such power of attorney is coupled with an interest and is irrevocable and
binding; provided, however, that Lessor's execution and delivery of such
certificate on behalf of Lessee shall not cure any default arising by reason of
Lessee's failure to execute and deliver such certificate.
26. Assignment; Subletting. A. Lessor shall have the right to sell or
convey all, but not less than all, of the Properties or to assign its right,
title and interest as Lessor under this Lease in whole, but not in part. In the
event of any such sale or assignment other than a security assignment, provided
Lessee receives written notice that such purchaser or assignee has assumed all
of Lessor's obligations under this Lease, Lessee shall attorn to such purchaser
or assignee and Lessor shall be relieved, from and after the date of such
transfer or conveyance, of liability for the performance of any obligation of
Lessor contained herein, except for obligations or liabilities accrued prior to
such assignment or sale.
B. Lessee acknowledges that Lessor has relied both on the business
experience and creditworthiness of Lessee and upon the particular purposes for
which Lessee intends to use the Properties in entering into this Lease. Without
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the prior written consent of Lessor: (i) Lessee shall not assign, transfer,
convey, pledge or mortgage this Lease or any interest therein, whether by
operation of law or otherwise; (ii) no interest in Lessee shall be assigned,
transferred, conveyed, pledged or mortgaged, whether by operation of law or
otherwise, including, without limitation, a dissolution of Lessee or a transfer
of any of the voting stock of Lessee; and (iii) Lessee shall not sublet all or
any part of any of the Properties. It is expressly agreed that Lessor may
withhold or condition such consent based upon such matters as Lessor may in its
reasonable discretion determine, including, without limitation, the experience
and creditworthiness of any assignee, the assumption by any assignee of all of
Lessee's obligations hereunder by undertakings enforceable by Lessor, payment to
Lessor of any rentals owing under a sublease which are in excess of the rentals
owing hereunder, the transfer to any assignee of all necessary licenses and
franchises to continue operating the Properties for the purposes herein
provided, receipt of such representations and warranties from any assignee as
Lessor may request, including such matters as its organization, existence, good
standing and finances and other matters, whether or not similar in kind. At the
time of any assignment of this Lease which is approved by Lessor, the assignee
shall assume all of the obligations of Lessee under this Lease pursuant to
Lessor's standard form of assumption agreement. No such assignment nor any
subletting of any of the Properties shall relieve Lessee of its obligations
respecting this Lease. Any assignment, transfer, conveyance, pledge or mortgage
in violation of this paragraph shall be voidable at the sole option of Lessor.
C. Notwithstanding the foregoing, but subject to the conditions set forth
in the following sentence, Lessee shall have the right to sublease, without the
consent of Lessor or Lender: (i) any of the Properties to a wholly-owned
subsidiary or Affiliate of Lessee, and (ii) any aggregate of four of the
Properties at any time (in addition to the Properties subleased pursuant to the
preceding item (i)), subject to the following conditions:
(1) no Event of Default shall have occurred and be continuing;
(2) any such sublease shall be subordinate to this Lease and Lessee shall
remain liable under this Lease notwithstanding such sublease; and
(3) the Properties subject to such subleases shall be used as Permitted
Facilities and shall otherwise be operated and maintained in accordance with the
terms and conditions of this Lease.
Within 10 days after the execution of each such sublease, Lessee shall
provide Lessor with a notice of such sublease and a photocopy of the fully
executed sublease.
27. Option To Extend; New Lease. A. Lessee, provided it is not in default
hereunder at the time of exercise or at the expiration of the Lease Term or, if
applicable, the preceding extension of the Lease Term, shall have the option to
continue this Lease in effect for up to four additional successive periods of
five years each in accordance with the terms and provisions of this Lease then
in effect, except that the Base Annual Rental during each extension period shall
be an amount equal to the Base Annual Rental in effect at the end of the then
Lease Term or preceding renewal period, as the case may be, increased by 1.2%
for the first year and each succeeding year of the applicable renewal term.
Lessee shall exercise the first extension option by giving notice to Lessor
of Lessee's intention to do so not later than May 31, 2020. If the first
extension option is exercised by Lessee, Lessee shall exercise the second
extension option by giving notice to Lessor of Lessee's intention to do so not
later than February 28, 2025. If the first two extension options are exercised,
Lessee shall exercise the third extension option by giving notice to Lessor of
Lessee's intention to do so not later than February 28, 2030. If the first three
extension options are exercised, Lessee shall exercise the fourth extension
option by giving notice to Lessor of Lessee's intention to do so not later than
February 28, 2035.
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B. In addition, provided no Event of Default shall have occurred and be
continuing, Lessee shall also have the right, by notice delivered to Lessor not
later than November 30, 2019, to enter into a new master lease with Lessor, to
commence at the end of the Initial Term, for not less than nineteen (19) of the
Properties. In the event Lessee elects to enter into such new master lease, the
Base Annual Rental under such new master lease shall equal the product of (i)
the aggregate Purchase Price for the Properties included within such new master
lease, and (ii) the Rent Factor, subject to further increases consistent with
Section 5.B. Such new master lease shall be for a five year primary term, have
three (3) five-year renewal options and otherwise be on the same terms and
conditions as this Lease. Lessee shall be solely responsible for the payment of
all costs and expenses incurred in connection with the execution of such new
master lease, including, without limitation, Lessee's attorneys' fees and
reasonable attorneys' fees and expenses of counsel to Lessor and Lender.
28. Right of First Offer to Purchase Properties. If, during the Interim
Term or the Lease Term, Lessor desires to sell its interest in the Properties,
as a result of a third-party offer or expression of interest from a third party
(which may be solicited by Lessor and with no requirement that an offer actually
be made by such third party) and provided no Event of Default has occurred and
is continuing, Lessor shall give Lessee the right to purchase such interest (the
"Interest") for a price determined by Lessor and set forth in a notice (the
"ROFO Notice") given to Lessee. Lessee shall have thirty (30) days to elect in
writing to acquire such Interest at such price. Lessee's silence shall be deemed
a rejection of its right to acquire such Interest. Any such election by Lessee
shall only be effective if accompanied by Lessee's payment to Lessor of a cash
down payment equal to 10% of such price. If Lessee timely and properly elects to
acquire such Interest, the closing shall take place within one hundred and
twenty (120) days after the ROFO Notice. The balance of the purchase price shall
be paid in cash at closing. If Lessee does not timely elect to acquire such
Interest, Lessor shall be free to sell the Interest to any other Person,
provided that, if Lessor intends to sell the Interest at a price less than 95%
of the price described in the ROFO Notice, Lessor shall give Lessee written
notice, setting forth such lower purchase price (if applicable), and Lessee
shall have thirty (30) days to elect in writing to purchase the Interest at such
lower purchase price (if applicable). The right of first offer granted by this
Section shall not survive the expiration or earlier termination of this Lease or
the purchase of the Properties by a third party after Lessee's failure to
exercise such right or Lessee's waiver thereof. Furthermore, the right of first
offer granted by this Section shall not apply to a foreclosure of the Mortgage
or the delivery to Lender of a deed-in-lieu of foreclosure and shall not survive
any such foreclosure or delivery of a deed-in-lieu of foreclosure. Upon the
termination of this right of first offer, Lessee shall execute such instruments
as may be reasonably required by Lessor to provide constructive notice of the
termination thereof.
29. Notices. All notices, consents, approvals or other instruments required
or permitted to be given by either party pursuant to this Lease shall be in
writing and given by (i) hand delivery, (ii) facsimile, (iii) express overnight
delivery service or (iv) certified or registered mail, return receipt requested,
and shall be deemed to have been delivered upon (a) receipt, if hand delivered,
(b) transmission, if delivered by facsimile, (c) the next Business Day, if
delivered by express overnight delivery service, or (d) the third Business Day
following the day of deposit of such notice with the United States Postal
Service, if sent by certified or registered mail, return receipt requested.
Notices shall be provided to the parties and addresses (or facsimile numbers, as
applicable) specified below:
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If to Lessee: Hops Grill & Bar, Inc.
0000 Xxxxx Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxx, XX 00000
Attention:
Xx. Xxxx Xxxxxxx
Senior Vice President
for Finance
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Love, Xxxxxxxx, Xxxxxx & Xxxxxxxx, P.A.
Xxxx Xxxxxx Xxx 00000
000 Xxxx Xxxxxxxxxx Xxxxxx (29601)
Xxxxxxxxxx, XX 00000
Attention:
Xxxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lessor: Pubs Property, LLC
c/o U.S. Realty Advisors LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention:
Xx. Xxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above. No such notices, consents, approvals or other communications
shall be valid unless Lender receives a duplicate original thereof at the
following address:
Xxxxxx X. Xxxxx, Esq.
Executive Vice President, General
Counsel and Secretary
FFCA Acquisition Corporation
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address or such other person as Lender may from time to time
specify to Lessor and Lessee in a notice delivered in the manner provided above.
Lessee agrees to promptly deliver to Lessor copies of all notices received
by Lessee with respect to the Consent Agreement.
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30. Holding Over. If Lessee remains in possession of any of the Properties
after the expiration of the term hereof, Lessee, at Lessor's option and within
Lessor's sole discretion, may be deemed a tenant on a month-to-month basis and
shall continue to pay rentals and other sums in the amounts herein provided,
except that the Base Monthly Rental shall be automatically doubled, and to
comply with all the terms of this Lease; provided that nothing herein nor the
acceptance of rent by Lessor shall be deemed a consent to such holding over.
Lessee shall defend, indemnify, protect and hold the Indemnified Parties
harmless from and against any and all Losses resulting from Lessee's failure to
surrender possession upon the expiration of the Lease Term, including, without
limitation, any claims made by any succeeding lessee.
31. Personalty; Removal of Lessee Property. A. Lessor and Lessee
acknowledge and agree that Lessor has accepted legal title to all Personalty
located at or on the Properties as of the Effective Date, other than the Subject
Equipment (as defined in the Security Agreement), and upon the exchange of the
Collateral (as defined in the Security Agreement) for the Subject Equipment in
accordance with the terms and conditions of the Security Agreement, Lessor will
hold legal title to all Personalty located at or on the Properties. Lessee
shall, upon Lessor's acceptance of legal title to the Personalty, execute and
deliver to Lessor for filing all applicable financing statements. Lessee shall
at all times keep the Personalty in good order, repair and condition and shall
promptly replace any Personalty that from time to time may become obsolete,
dilapidated, badly worn or in a state of disrepair. Lessee may dispose of the
Personalty located at or on the Properties only if it is replaced with new
Personalty having comparable quality and utility to the replaced Personalty.
Lessee shall take no action which would encumber, dilute or cloud Lessor's title
or interest in the Personalty located at or on the Properties. In furtherance of
the foregoing, Lessee grants to Lessor a security interest in Lessee's right,
title and interest, if any, in the Personalty.
B. Lessee agrees that, at such time as the existing prohibition contained
in the Credit Agreement against Lessee granting a landlord's lien and/or
security interest in Lessee's assets (the "Negative Pledge") is no longer in
effect, Lessor shall, upon transferring to Lessee legal title to the Personalty
in accordance with subsection C below, have a landlord's lien against and
security interest in the Personalty, which landlord's lien and security interest
shall secure the payment of all rental and other charges payable by Lessee to
Lessor under the terms hereof and all other obligations of Lessee to Lessor
under this Lease. Lessee further agrees to execute and deliver to Lessor from
time to time such financing statements and other documents as Lessor may then
deem appropriate or necessary to perfect such landlord's lien and security
interest.
C. At such time as the Negative Pledge is no longer in effect, provided no
Event of Default shall have occurred and be continuing, Lessor agrees, at
Lessee's sole cost and expense, to transfer to Lessee legal title to the
Personalty held by Lessor for no consideration, provided that upon such transfer
Lessor shall have a landlord's lien against and security interest in such
Personalty, which landlord's lien and security interest shall secure the payment
of all rental and other charges payable by Lessee to Lessor under the terms
hereof and all other obligations of Lessee to Lessor under this Lease. Lessee
further agrees to execute and deliver to Lessor from time to time such financing
statements and other documents as Lessor may then deem appropriate or necessary
to perfect such landlord's lien and security interest.
D. In the event the Negative Pledge continues through the expiration of the
Lease Term, at the expiration of the Lease Term, if Lessee is not then in breach
hereof, Lessor agrees, at Lessee's sole cost and expense, to transfer to Lessee
legal title to the Personalty held by Lessor for no consideration, and Lessee
may remove the Personalty and all personal property owned by Lessee from the
Properties and title to the Personalty shall be deemed vested in Lessee. Lessee
shall repair any damage caused by such removal and shall leave the Properties
broom clean and in good and working condition and repair inside and out. Any
property of Lessee left on the Properties on the tenth day following the
35
expiration of the Lease Term shall be deemed abandoned and shall automatically
and immediately become the property of Lessor.
E. In furtherance of subsections C and D above, it is the intention of the
parties that Lessee shall be deemed the tax owner of the Personalty and Lessor
shall not be entitled to any depreciation or other deductions relating thereto.
Lessee shall pay, on an After Tax Basis (as defined below), all federal, state
and local income, asset or other taxes, if any, which may be imposed upon Lessor
by reason of the transfer of legal title of the Personalty to Lessor. For the
purposes of the foregoing, the term "After Tax Basis" shall mean, with respect
to any payment by Lessee to Lessor in respect of any federal, state or local
income, asset or other taxes payable by Lessor by reason of the transfer of
legal title of the Personalty to Lessor, an amount sufficient to hold Lessor
harmless from all actual federal, state and local income, asset or other taxes
on account of such payment assuming Lessor does not have the benefit of any net
operating losses, net capital losses or other deductions.
32. Financial Statements. Within 45 days after the end of each fiscal
quarter and within 120 days after the end of each fiscal year of Lessee, Lessee
shall deliver to Lessor and Lender (i) complete financial statements of Lessee
including a balance sheet, profit and loss statement, statement of cash flows
and all other related schedules for the fiscal period then ended; and (ii)
income statements for the business at each of the Properties. All such financial
statements shall be prepared in accordance with GAAP and shall be certified to
be accurate and complete by Lessee (or the Treasurer or other appropriate
officer of Lessee). Lessee understands that Lessor and Lender will rely upon
such financial statements and Lessee represents that such reliance is
reasonable. In the event that Lessee's property and business at the Properties
is ordinarily consolidated with other business for financial statement purposes,
such financial statements shall be prepared on a consolidated basis showing
separately the sales, profits and losses, assets and liabilities pertaining to
each of the Properties with the basis for allocation of overhead of other
charges being clearly set forth. The financial statements delivered to Lessor
and Lender need not be audited, but Lessee shall deliver to Lessor and Lender
copies of any audited financial statements of Lessee which may be prepared, as
soon as they are available.
33. Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, acts of God, enemy or hostile governmental action, civil commotion,
fire or other casualty beyond the control of the party obligated to perform
shall excuse the performance by such party for a period equal to any such
prevention, delay or stoppage, except the obligations imposed with regard to
rental and other monies to be paid by Lessee pursuant to this Lease and any
indemnification obligations imposed upon Lessee under this Lease.
34. Time Is of the Essence. Time is of the essence with respect to each and
every provision of this Lease in which time is a factor.
35. Lessor's Liability. Notwithstanding anything to the contrary provided
in this Lease, it is specifically understood and agreed, such agreement being a
primary consideration for the execution of this Lease by Lessor, that (i) there
shall be absolutely no personal liability on the part of Lessor, its successors
or assigns and the trustees, members, partners, shareholders, officers,
directors, employees and agents of Lessor and its successors or assigns, to
Lessee with respect to any of the terms, covenants and conditions of this Lease,
(ii) Lessee waives all claims, demands and causes of action against the
trustees, members, partners, shareholders, officers, directors, employees and
agents of Lessor and its successors or assigns in the event of any breach by
Lessor of any of the terms, covenants and conditions of this Lease to be
performed by Lessor, and (iii) Lessee shall look solely to the Properties for
the satisfaction of each and every remedy of Lessee in the event of any breach
by Lessor of any of the terms, covenants and conditions of this Lease to be
performed by Lessor, or any other matter in connection with this Lease or the
Properties, such exculpation of liability to be absolute and without any
exception whatsoever.
36
36. Consent of Lessor. (a) Unless specified otherwise herein, Lessor's
consent to any request of Lessee may be conditioned or withheld in Lessor's sole
discretion. Lessor shall have no liability for damages resulting from Lessor's
failure to give any consent, approval or instruction reserved to Lessor,
Lessee's sole remedy in any such event being an action for injunctive relief.
(b) It is understood and agreed that to the extent Lessor is required to
obtain the consent, approval, agreement or waiver of Lender with respect to a
matter for which Lessor's approval has been requested under this Lease, Lessor
shall in no event be deemed to have unreasonably withheld Lessor's consent,
approval, agreement or waiver thereof if Lender shall not have given its
approval if required.
37. Waiver and Amendment. No provision of this Lease shall be deemed waived
or amended except by a written instrument unambiguously setting forth the matter
waived or amended and signed by the party against which enforcement of such
waiver or amendment is sought. Waiver of any matter shall not be deemed a waiver
of the same or any other matter on any future occasion. No acceptance by Lessor
of an amount less than the monthly rent and other payments stipulated to be due
under this Lease shall be deemed to be other than a payment on account of the
earliest such rent or other payments then due or in arrears nor shall any
endorsement or statement on any check or letter accompanying any such payment be
deemed a waiver of Lessor's right to collect any unpaid amounts or an accord and
satisfaction.
38. Successors Bound. Except as otherwise specifically provided herein, the
terms, covenants and conditions contained in this Lease shall bind and inure to
the benefit of the respective heirs, successors, executors, administrators and
assigns of each of the parties hereto.
39. No Merger. The voluntary or other surrender of this Lease by Lessee, or
a mutual cancellation thereof, shall not result in a merger of Lessor's and
Lessee's estates, and shall, at the option of Lessor, either terminate any or
all existing subleases or subtenancies, or operate as an assignment to Lessor of
any or all of such subleases or subtenancies.
40. Captions. Captions are used throughout this Lease for convenience of
reference only and shall not be considered in any manner in the construction or
interpretation hereof.
41. Severability. The provisions of this Lease shall be deemed severable.
If any part of this Lease shall be held unenforceable by any court of competent
jurisdiction, the remainder shall remain in full force and effect, and such
unenforceable provision shall be reformed by such court so as to give maximum
legal effect to the intention of the parties as expressed therein.
42. Characterization. A. It is the intent of the parties hereto that the
business relationship created by this Lease and any related documents is solely
that of a long-term commercial lease between landlord and tenant and has been
entered into by both parties in reliance upon the economic and legal bargains
contained herein. None of the agreements contained herein, is intended, nor
shall the same be deemed or construed, to create a partnership between Lessor
and Lessee, to make them joint venturers, to make Lessee an agent, legal
representative, partner, subsidiary or employee of Lessor, nor to make Lessor in
any way responsible for the debts, obligations or losses of Lessee.
X. Xxxxxx and Lessee acknowledge and warrant to each other that each has
been represented by independent counsel and has executed this Lease after being
fully advised by said counsel as to its effect and significance. This Lease
shall be interpreted and construed in a fair and impartial manner without regard
to such factors as the party which prepared the instrument, the relative
bargaining powers of the parties or the domicile of any party. Whenever in this
Lease any words of obligation or duty are used, such words or expressions shall
have the same force and effect as though made in the form of a covenant.
37
43. Easements. During the Lease Term Lessor shall have the right to grant
utility easements on, over, under and above any of the Properties without the
prior consent of Lessee, provided that such easements will not materially
interfere with Lessee's long-term use of such Properties, or with the operation
of Lessee's business on the Premises.
44. Bankruptcy. A. As a material inducement to Lessor executing this Lease,
Lessee acknowledges and agrees that Lessor is relying upon (i) the financial
condition and specific operating experience of Lessee and Lessee's obligation to
use each of the Properties specifically in accordance with system-wide
requirements imposed from time to time on Permitted Facilities, (ii) Lessee's
timely performance of all of its obligations under this Lease notwithstanding
the entry of an order for relief under the Code for Lessee and (iii) all
defaults under this Lease as to all Properties being cured promptly and this
Lease being assumed within 60 days of any order for relief entered under the
Code for Lessee, or this Lease being rejected within such 60 day period and the
Properties surrendered to Lessor.
Accordingly, in consideration of the mutual covenants contained in this
Lease and for other good and valuable consideration, Lessee hereby agrees that:
(i) All obligations that accrue under this Lease (including the obligation
to pay rent), from and after the date that an Action is commenced shall be
timely performed exactly as provided in this Lease and any failure to so perform
shall be harmful and prejudicial to Lessor;
(ii) Any and all obligations under this Lease that become due from and
after the date that an Action is commenced and that are not paid as required by
this Lease shall, in the amount of such rents, constitute administrative expense
claims allowable under the Code with priority of payment at least equal to that
of any other actual and necessary expenses incurred after the commencement of
the Action;
(iii) Any extension of the time period within which Lessee may assume or
reject this Lease without an obligation to cause all obligations coming due
under this Lease from and after the date that an Action is commenced to be
performed as and when required under this Lease shall be harmful and prejudicial
to Lessor;
(iv) Any time period designated as the period within which Lessee must cure
all defaults and compensate Lessor for all pecuniary losses which extends beyond
the date of assumption of this Lease shall be harmful and prejudicial to Lessor;
(v) Any assignment of this Lease must result in all terms and conditions of
this Lease being assumed by the assignee without alteration or amendment, and
any assignment which results in an amendment or alteration of the terms and
conditions of this Lease without the express written consent of Lessor shall be
harmful and prejudicial to Lessor;
(vi) Any proposed assignment of this Lease to an assignee: (a) that will
not use the Properties specifically in accordance with a franchise, license
and/or area development agreement with the franchisor of Permitted Facilities,
(b) that does not possess financial condition, operating performance and
experience characteristics equal to or better than the financial condition,
operating performance and experience of Lessee as of the Effective Date, shall
be harmful and prejudicial to Lessor, or (c) that does not provide guarantors of
the Lease obligations with financial condition equal to or better than the
financial condition of Guarantor as of the Effective Date;
(vii) The rejection (or deemed rejection) of this Lease for any reason
whatsoever shall constitute cause for immediate relief from the automatic stay
provisions of the Code, and Lessee stipulates that such automatic stay shall be
lifted immediately and possession of the Properties will be delivered to Lessor
immediately without the necessity of any further action by Lessor; and
38
(viii) This Lease shall at all times be treated as consistent with the
specific characterizations set forth in Section 3 of this Lease, and assumption
or rejection of this Lease shall be (a) in its entirety, (b) for all of the
Properties, and (c) in strict accordance with the specific terms and conditions
of this Lease.
B. No provision of this Lease shall be deemed a waiver of Lessor's rights
or remedies under the Code or applicable law to oppose any assumption and/or
assignment of this Lease, to require timely performance of Lessee's obligations
under this Lease, or to regain possession of the Properties as a result of the
failure of Lessee to comply with the terms and conditions of this Lease or the
Code.
C. Notwithstanding anything in this Lease to the contrary, all amounts
payable by Lessee to or on behalf of Lessor under this Lease, whether or not
expressly denominated as such, shall constitute "rent" for the purposes of the
Code.
D. For purposes of this Section addressing the rights and obligations of
Lessor and Lessee in the event that an Action is commenced, the term "Lessee"
shall include Lessee's successor in bankruptcy, whether a trustee, Lessee as
debtor in possession or other responsible person.
45. No Offer. No contractual or other rights shall exist between Lessor and
Lessee with respect to the Properties until both have executed and delivered
this Lease, notwithstanding that deposits may have been received by Lessor and
notwithstanding that Lessor may have delivered to Lessee an unexecuted copy of
this Lease. The submission of this Lease to Lessee shall be for examination
purposes only, and does not and shall not constitute a reservation of or an
option for Lessee to lease or otherwise create any interest on the part of
Lessee in the Properties.
46. Other Documents. Each of the parties agrees to sign such other and
further documents as may be necessary or appropriate to carry out the intentions
expressed in this Lease.
47. Attorneys' Fees. In the event of any judicial or other adversarial
proceeding between the parties concerning this Lease, to the extent permitted by
law, the prevailing party shall be entitled to recover all of its reasonable
attorneys' fees and other costs in addition to any other relief to which it may
be entitled. In addition, Lessor shall, upon demand, be entitled to all
attorneys' fees and all other costs incurred in the preparation and service of
any notice or demand hereunder, whether or not a legal action is subsequently
commenced. References in this Lease to Lessor's attorneys' fees and/or costs
shall mean the fees and costs of independent counsel retained by Lessor with
respect to the matter.
48. Entire Agreement. This Lease and any other instruments or agreements
referred to herein, constitute the entire agreement between the parties with
respect to the subject matter hereof, and there are no other representations,
warranties or agreements except as herein provided. Without limiting the
foregoing, Lessee specifically acknowledges that neither Lessor nor any agent,
officer, employee or representative of Lessor has made any representation or
warranty regarding the projected profitability of the business to be conducted
on the Properties. Furthermore, Lessee acknowledges that Lessor did not prepare
or assist in the preparation of any of the projected figures used by Lessee in
analyzing the economic viability and feasibility of the business to be conducted
by Lessee at the Properties.
49. Forum Selection; Jurisdiction; Venue; Choice of Law. Lessee
acknowledges that this Lease was partially negotiated in the State of Arizona,
the executed Lease was delivered in the State of Arizona, all payments under
this Lease will be delivered in the State of Arizona (unless otherwise directed
by Lessor or its successors) and there are substantial contacts between the
parties and the transactions contemplated herein and the State of Arizona. For
39
purposes of any action or proceeding arising out of this Lease, the parties
hereto expressly submit to the jurisdiction of all federal and state courts
located in the State of Arizona. Lessee and Lessor consent that they may be
served with any process or paper by registered mail or by personal service
within or without the State of Arizona in accordance with applicable law.
Furthermore, Lessee and Lessor waive and agree not to assert in any such action,
suit or proceeding that they are not personally subject to the jurisdiction of
such courts, that the action, suit or proceeding is brought in an inconvenient
forum or that venue of the action, suit or proceeding is improper. The creation
of this Lease and the rights and remedies of Lessor with respect to the
Properties, as provided herein and by the laws of the states in which the
Properties are located, as applicable, shall be governed by and construed in
accordance with the internal laws of the states in which the Properties are
located, as applicable, without regard to principles of conflicts of law. With
respect to other provisions of this Lease, this Lease shall be governed by the
internal laws of the State of Arizona, without regard to its principles of
conflicts of law. Nothing contained in this Section shall limit or restrict the
right of Lessor or Lessee to commence any proceeding in the federal or state
courts located in the states in which the Properties are located to the extent
Lessor or Lessee deems such proceeding necessary or advisable to exercise
remedies available under this Lease.
50. Counterparts. This Lease may be executed in one or more counterparts,
each of which shall be deemed an original.
51. Memorandum of Master Lease. Concurrently with the execution of this
Lease, Lessor and Lessee are executing the Memorandum to be recorded in the
applicable real property records with respect to each of the Properties.
Further, upon Lessor's request, Lessee agrees to execute and acknowledge a
termination of lease and/or quit claim deed in recordable form with respect to
each of the Properties to be held by Lessor until the expiration or sooner
termination of the Lease Term.
52. No Brokerage. Lessor and Lessee represent and warrant to each other
that they have had no conversation or negotiations with any broker concerning
the leasing of the Properties. Each of Lessor and Lessee agrees to protect,
indemnify, save and keep harmless the other, against and from all liabilities,
claims, losses, costs, damages and expenses, including attorneys' fees, arising
out of, resulting from or in connection with their breach of the foregoing
warranty and representation.
53. Waiver of Jury Trial and Punitive, Consequential, Special and Indirect
Damages. LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES
PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF
THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY
MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF
LESSOR AND LESSEE, LESSEE'S USE OR OCCUPANCY OF ANY OF THE PROPERTIES, AND/OR
ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS
WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS
BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, LESSEE
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO
SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM LESSOR AND ANY
OF LESSOR'S AFFILIATES, OFFICERS, DIRECTORS, MEMBERS OR EMPLOYEES OR ANY OF
THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY LESSEE AGAINST LESSOR OR ANY OF
LESSOR'S AFFILIATES, OFFICERS, DIRECTORS, MEMBERS OR EMPLOYEES OR ANY OF THEIR
SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
LEASE OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY
LESSEE OF ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN ESSENTIAL
ASPECT OF THEIR BARGAIN.
54. Reliance By Environmental Insurer and Lender. (a) Lessee acknowledges
and agrees that Environmental Insurer may rely on the representations,
40
warranties and covenants set forth in Section 16 of this Lease, that
Environmental Insurer is an intended third-party beneficiary of such
representations, warranties and covenants and that Environmental Insurer shall
have all rights and remedies available at law or in equity as a result of a
breach of such representations, warranties and covenants, including to the
extent applicable, the right of subrogation.
(b) Lessee acknowledges and agrees that Lender may rely on all of the
representations, warranties and covenants set forth in this Lease, that Lender
is an intended third-party beneficiary of such representations, warranties and
covenants and that Lender shall have all rights and remedies available at law or
in equity as a result of a breach of such representations, warranties and
covenants, including to the extent applicable, the right of subrogation.
55. Document Review. In the event Lessee makes any request upon Lessor
requiring Lessor, Lender or the attorneys of Lessor or Lender to review and/or
prepare (or cause to be reviewed and/or prepared) any documents, plans,
specifications or other submissions in connection with or arising out of this
Lease, then Lessee shall reimburse Lessor or its designee promptly upon Lessor's
demand therefor for all out-of-pocket costs and expenses incurred by Lessor in
connection with such review and/or preparation plus a reasonable processing and
review fee.
56. Substitution. A. Subject to the fulfillment of all of the conditions
set forth in the following subsection B, Lessee shall have the right to deliver
a rejectable offer to Lessor (each, a "Rejectable Substitution Offer") to
substitute a Substitute Property for a Property if the terms of Section 21.B of
this Lease permit such substitution (each, a "Casualty/Condemnation
Substitution").
From and after the third anniversary of the Effective Date and subject to
the fulfillment of all of the conditions set forth in the following subsection
B, Lessee shall also have a one time right to deliver a Rejectable Substitution
Offer to substitute a Substitute Property for a Property if the Fixed Charge
Coverage Ratio (with the definitions of Section 8.A being deemed to be modified,
as contemplated by subsection B(i)(2) below to provide for a calculation of a
"Fixed Charge Coverage Ratio" for the Property to be replaced only) for the
Property to be replaced is less than 1.1:1 for the FCCR Period (an "Uneconomic
Substitution"); provided, however, Lessee shall not have the right to substitute
more than 5 of the Properties pursuant to this paragraph.
Each Rejectable Substitution Offer shall identify the proposed Substitute
Property in reasonable detail and contain a certificate executed by a duly
authorized officer of Lessee pursuant to which Lessee shall certify that in
Lessee's good faith judgment such proposed Substitute Property satisfies as of
the date of such notice, or will satisfy as of the date of the closing of such
substitution, all of the applicable conditions to substitution set forth in this
Section 56. Lessee agrees to deliver to Lessor all of the diligence information
and materials contemplated by the provisions of Section 56.B of this Lease
within 30 days after the delivery to Lessor of a Rejectable Substitution Offer.
Lessor shall have 90 days from the delivery of a Rejectable Substitution
Offer notice satisfying the requirements of the preceding paragraph to deliver
to Lessee written notice of its election to either accept or reject the
Rejectable Substitution Offer. Lessor's failure to deliver such notice within
such time period shall be deemed to constitute Lessor's acceptance of the
Rejectable Substitution Offer. If the Mortgage corresponding to the Property to
be replaced is still outstanding, any rejection of the Rejectable Substitution
Offer by Lessor shall not be effective unless it is consented to in writing by
Lender. If Lessor accepts the Rejectable Substitution Offer or is deemed to have
accepted the Rejectable Substitution Offer or if Lender does not consent in
writing to any rejection of the Rejectable Substitution Offer by Lessor, then
Lessee shall complete such substitution, subject, however, to the satisfaction
of each of the applicable terms and conditions set forth in this Section 56.
41
If Lessor rejects the Rejectable Substitution Offer pursuant to the
previous paragraph for reasons other than that, in Lessor's reasonable judgment,
the proposed Substitute Property would not have satisfied the applicable
substitution conditions set forth in this Section 56, and such rejection is
consented to by Lender, then:
(X) if such rejected Rejectable Substitution Offer was made with respect to
a Casualty/Condemnation Substitution, the provisions of the last paragraph of
Section 21.B and the last sentence of the second paragraph of Section 21.B shall
be applicable; and
(Y) if such rejected Rejectable Substitution Offer was made with respect to
a Uneconomic Substitution, this Lease shall terminate with respect to the
Property which Lessee proposed to replace on the next scheduled Base Monthly
Rental payment date (the "Early Substitution Termination Date") provided Lessee
has paid to Lessor all Base Annual Rental, Additional Rental and all other sums
and obligations then due and payable under this Lease as of such Early
Substitution Termination Date.
On the Early Substitution Termination Date, and provided Lessee shall have
paid to Lessor all Base Annual Rental, Additional Rental and other sums and
obligations then due and payable under this Lease as of the Early Substitution
Date:
(i) the Base Annual Rental then in effect shall be reduced by an amount
equal to the product of (x) one divided by the number of Properties then subject
to this Lease without giving effect to such termination, and (y) the Base Annual
Rental then in effect; and
(ii) all obligations of Lessor and Lessee shall cease as of the Early
Substitution Termination Date with respect to such Property; provided, however,
Lessee's obligations to Lessor with respect to such Property under any
indemnification provisions of this Lease with respect to such Property
(including, without limitation, Sections 16 and 19 of this Lease) and Lessee's
obligations to pay any sums (whether payable to Lessor or a third party)
accruing under this Lease with respect to such Property prior to the Early
Substitution Termination Date shall survive the termination of this Lease with
respect to such Property or otherwise. This Lease shall, however, continue in
full force and effect with respect to all other Properties.
B. The substitution of a Substitute Property for a Property pursuant to the
preceding subsection A shall be subject to the fulfillment of all of the
following terms and conditions:
(i) The Substitute Property must:
(1) be a Permitted Facility, in good condition and repair, ordinary wear
and tear excepted, and located in the same state as the Property to be replaced
or in another state acceptable to Lessor in Lessor's reasonable discretion;
(2) have a Fixed Charge Coverage Ratio (with the definitions of Section 8.A
being deemed to be modified, as contemplated by the following sentence to
provide for a calculation of a "Fixed Charge Coverage Ratio" for the Substitute
Property only) for the FCCR Period of not less than the greater of (X) 1.25:1 or
(Y) the Fixed Charge Coverage Ratio for the Property to be replaced for such
FCCR Period; provided that, with respect to each FCCR Substitution, the Fixed
Charge Coverage Ratio for the Substitute Property for such FCCR Period must also
be high enough (after taking into account any other substitutions for Properties
which are being consummated simultaneously therewith) to result in a cure of the
breach of the Aggregate Fixed Charge Coverage Ratio requirement (it being
understood and agreed that the determination of the Fixed Charge Coverage Ratio
for the Substitute Property shall be based on an assumption that the Operating
Lease Expense for the Substitute Property would be determined as set forth in
the last sentence of this subitem (2)). For purposes of this subitem (2), the
definitions set forth in Section 8.A of this Lease with respect to the
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calculation of the Aggregate Fixed Charge Coverage Ratio shall be deemed
modified as applicable to provide for the calculation of a Fixed Charge Coverage
Ratio for each Property on an individual basis rather than on an aggregate basis
with the other Properties. For purposes of such calculation, the Operating Lease
Expense with respect to this Lease for each such Property shall equal the Base
Annual Rental then in effect divided by the number of Properties then subject to
this Lease;
(3) have a fair market value no less than the greater of the then fair
market value of the Property being replaced or the fair market value of such
Property as of the Effective Date (in each case, determined without regard to
this Lease, but assuming that while this Lease has been in effect, Lessee has
complied with all of the terms and conditions of this Lease), as determined by
Lessor, and consented to by Lender, utilizing the same valuation method as used
in connection with the closing of the transaction described in the
Sale-Leaseback Agreement, which was based upon the sum of (x) the fair market
value of the land comprising such Property and (y) the replacement cost of the
improvements located thereon;
(4) have improvements which have a remaining useful life substantially
equivalent to, or better than, that of the improvements located at the Property
to be replaced;
(5) be conveyed to Lessor (or, if directed by Lessor, to Lessor and a
person designated to acquire the remainderman interest) by special or limited
warranty deed, free and clear of all liens and encumbrances, except such matters
as are reasonably acceptable to Lessor (the "Substitute Property Permitted
Exceptions"); and
(6) be located in either (a) the same state as the Property is then
located, or (b) in another state acceptable to Lessor in Lessor's reasonable
discretion;
(ii) Lessor shall have inspected and approved the Substitute Property
utilizing Lessor's customary site inspection and underwriting approval criteria.
Lessee shall have reimbursed Lessor and Lender for all of their reasonable costs
and expenses incurred with respect to such proposed substitution, including,
without limitation, Lessor's third-party and/or in-house site inspectors' costs
and expenses with respect to the proposed Substitute Property. Lessee shall be
solely responsible for the payment of all costs and expenses resulting from such
proposed substitution, regardless of whether such substitution is consummated,
including, without limitation, the cost of title insurance and endorsements for
both Lessor and Lender, survey charges, stamp taxes, mortgage taxes, transfer
fees, escrow and recording fees, the cost of environmental policies or
endorsements to the Environmental Policies as applicable, income and transfer
taxes imposed on Lessor as a result of such substitution and the reasonable
attorneys' fees and expenses of counsel to Lessee, Lessor and Lender;
(iii) Lessor shall have received a preliminary title report and irrevocable
commitment to insure title by means of an ALTA extended coverage owner's policy
of title insurance (or its equivalent, in the event such form is not issued in
the jurisdiction where the proposed Substitute Property is located) for the
proposed Substitute Property issued by Title Company and committing to insure
Lessor's good and marketable title in the proposed Substitute Property, subject
only to the Substitute Property Permitted Exceptions and containing endorsements
substantially comparable to those required by Lessor at the Closing (as defined
in the Sale-Leaseback Agreement) and Lender shall have received such title
report and irrevocable commitment to insure its first priority lien encumbering
the proposed Substitute Property as Lender shall reasonably require;
(iv) Lessor shall have received a current ALTA survey of the proposed
Substitute Property, the form of which shall be comparable to those received by
Lessor at the Closing and sufficient to cause the standard survey exceptions set
forth in the title policy referred to in the preceding subsection to be deleted;
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(v) Lessor shall have received an environmental insurance policy with
respect to the proposed Substitute Property, or to the extent applicable, an
endorsement to the Environmental Policies, the form and substance of which shall
be satisfactory to Lessor in its sole discretion;
(vi) Lessee shall deliver, or cause to be delivered, with respect to Lessee
and the Substitute Property, opinions of Counsel (as defined in the
Sale-Leaseback Agreement) in form and substance comparable to those received at
Closing (but also addressing such matters unique to the Substitute Property as
may be reasonably required by Lessor);
(vii) no Event of Default shall have occurred and be continuing under any
of the Sale-Leaseback Documents;
(viii) Lessee shall have executed such documents as may be reasonably
required by Lessor as a result of such substitution, including amendments to
this Lease and the memorandum of this Lease (the "Substitute Documents"), all of
which documents shall be in form and substance reasonably satisfactory to
Lessor;
(ix) the representations and warranties set forth in the Substitute
Documents, this Lease and the Sale-Leaseback Agreement applicable to the
proposed Substitute Property shall be true and correct in all material respects
as of the date of substitution, and Lessee shall have delivered to Lessor an
officer's certificate certifying to that effect;
(x) Lessee shall have delivered to Lessor certificates of insurance showing
that insurance required by the Substitute Documents is in full force and effect;
(xi) Lessor shall have obtained an endorsement to the policy of residual
value insurance issued to Lessor and Lender in connection with the transaction
described in the Sale-Leaseback Agreement with respect to the proposed
Substitute Property, which endorsement shall be in form and substance reasonably
satisfactory to Lessor and Lender; and
(xii) Lender shall have consented to the substitution of the proposed
Substitute Property.
C. Upon satisfaction of the foregoing conditions set forth in Section 56.B
and provided Lessor has accepted the Rejectable Substitution Offer:
(i) the proposed Substitute Property shall be deemed substituted for the
Property to be replaced;
(ii) the Substitute Property shall be referred to herein as a "Property"
and included within the definition of "Properties";
(iii) the Substitute Documents shall be dated as of the date of the
substitution; and
(iv) Lessor shall convey the Property to be replaced to Lessee or a
designee of Lessee "as-is" by quit-claim deed, subject to all matters of record
(except for the Mortgage corresponding to the Property to be replaced and any
other consensual liens granted by Lessor other than those granted by Lessor at
the request of Lessee), and without representation or warranty.
57. State Specific Provisions. The provisions and/or remedies which are set
forth on Schedule III shall be deemed a part of and included within the terms
and conditions of this Lease.
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IN WITNESS WHEREOF, Lessor and Lessee have entered into this Lease as
of the date first above written.
LESSOR:
PUBS PROPERTY, LLC,
a Delaware limited liability company
By Pubs Equity, LLC, a Delaware
limited liability company, its member
By:
----------------------------------------
Xxxxxx X. Xxxxxx
Member
LESSEE:
HOPS GRILL & BAR, INC.,
a Florida corporation
By:
----------------------------------------
Xxxxxxxx X. Xxxxxxx
Chief Administrative Officer
Lessee's Tax Identification Number: 00-0000000
45
Exhibits and schedules to this agreement are not filed pursuant to Item
601(b)(2) of SEC Regulation S-K. By the filing of this Form 10-K, the Registrant
hereby agrees to furnish supplementally a copy of any ommitted exhibit or
schedule to the Commission upon request.
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