Exhibit 10.1 - Amended and Restated Master Lease
AMENDED AND RESTATED MASTER LEASE AGREEMENT
This AMENDED AND RESTATED MASTER LEASE AGREEMENT (this "Lease") is made and
entered into as of the _21st_ day of December, 1995, by and between XXXXXX-XXXXX
PROPERTIES, INC., a Delaware corporation, as successor by merger to Xxxxxx-Xxxxx
Restaurant Properties, Inc., having its principal office at 0000 Xxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Lessor"), and XXXXXX-XXXXX
ENTERPRISES, INC., a North Carolina corporation, having its principal office at
0000 Xxxxx Xxxx, Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000 ("Lessee").
RECITALS
This Lease is made and entered into with reference to the following
recitals:
A. Lessor and Lessee entered into that certain Master Lease Agreement dated
May 1, 1987 (the "Original Lease"), covering certain parcels of real property
and improvements located thereon (the "Leased Properties"), as more particularly
identified on Exhibit A attached hereto and incorporated herein by reference,
for the use and operation by Lessee as Hardee's restaurants.
X. Xxxxxx and Lessee now desire to amend and restate the terms of the
Original Lease such that as of the date written above, this Lease shall wholly
supersede and replace the terms of the Original Lease.
C. This Lease provides that additional Leased Properties may be made
subject to the operation and effect of this Lease, upon execution by the Lessor
and the Lessee of a Lease Supplement designating each such additional property
as a Leased Property hereunder.
D. This Lease is intended to be applicable to each of the individual Leased
Properties whether identified on Exhibit A or added by a Lease Supplement, and
to all such properties collectively, as if all of the terms of this Lease were
incorporated into each Lease Supplement.
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
1.1 Leased Properties.
(a) Subject to the terms and conditions hereinafter set forth, Lessor
leases to Lessee, and Lessee rents from Lessor, the following commercial real
property (collectively, the "Leased Properties" and individually, a "Leased
Property"):
(i) the various parcels of land described in Exhibit A attached
hereto, together with any additional parcel of real property subsequently
designated as a Leased Property by the parties pursuant to a Lease
Supplement as provided in this Lease (collectively, the "Land");
(ii) all buildings, structures, and other improvements of every kind
situated on the Land at the time each such parcel of Land is made subject
to this Lease, together with any and all appurtenances to the Land and such
improvements, including, but not limited to, sidewalks, utility pipes,
conduits and lines (on-site and off-site), parking areas and roadways
appurtenant to such buildings (collectively, the "Leased Improvements");
(iii) all easements, rights and appurtenances relating to the Land and
Leased Improvements; and
(iv) all fixtures, including all components thereof, located in, on or
used in connection with, the Leased Improvements, which are hereby deemed
by the parties hereto to constitute real estate, together with all
replacements, modifications, alterations and additions thereto
(collectively, the "Fixtures").
1.2 Term. The initial term of this Lease (the "Primary Term") shall be for
a fixed term commencing on the Commencement Date (as hereinafter defined) and
ending on December 31, 2007. The Primary Term for any Leased Property designated
in a Lease Supplement shall begin on the date of such Lease Supplement and
expire at the end of the Primary Term or then current Extension Term, as the
case may be. Lessee shall have the right to extend this Lease to the Leased
Properties as a group, at Lessee's option, for up to a maximum of three (3)
five-year renewal terms from the expiration of the Primary Term, as set forth
more fully in Article XX.
ARTICLE II
2. Definitions. For all purposes of this Lease: (i) the terms defined in
this Article have the meanings assigned to them in this Article and include the
plural as well as the singular; (ii) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally accepted
accounting principles applicable as of the date thereof; (iii) all references in
this instrument to designated "Article", "Sections" and other subdivisions are
to the designated Articles, Sections and other subdivisions of this Lease; and
(iv) the words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Lease as a whole and not to any particular Article, Section
or other subdivision:
Additional Charges: As defined in Section 3.4.
Affiliate: When used with respect to any corporation, the term "Affiliate"
shall mean any person who, directly or indirectly, controls or is controlled by
or is under common control with such corporation. For the purposes of this
definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests or other
equity interests.
Alteration: As defined in Section 11.
Base Rent: As defined in Section 3.1.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which national banks in the City of Charlotte, North Carolina are
authorized, or obligated by law or executive order, to be closed for business.
Commencement Date: May 27, 1987.
Consolidated Financials: For any fiscal year or other accounting periods
for the Lessee and its consolidated subsidiaries, statements of earnings and
retained earnings and of changes in financial position for such period and for
the period from the beginning of the respective fiscal year to the end of such
period and the related balance sheet as at the end of the such period, together
with the notes thereto, all in reasonable detail and setting forth in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year, and prepared in accordance with generally accepted
accounting principles.
Default: Any condition or event which constitutes or would constitute an
Event of Default either with or without the giving of notice or the passage of
time, or both.
Event of Default: As defined in Article XVII.
Extension Term: Any one or both of the three (3) successive five (5) year
periods of extension of this Lease as to the Leased Properties, as provided in
Article XX.
Fixtures: As defined in Section 1.1(a)(iv).
Gross Sales: The gross aggregate amount received by Lessee or any
sublessee, franchisee or concessionaire from all sales or other income derived
from business conducted on the Leased Properties, less (i) the amount of all
sales tax receipts and similar tax receipts which are required to be accounted
for by Lessee to any governmental body or agency; (ii) any amounts received from
sales of non-food items omitted from the computation of gross sales under
Lessee's franchise agreement with Hardee's Food Systems, Inc. and (iii) the
amount of refunds or credits made by Lessee for items which already have been
included in Gross Sales. Further, no delivery or consumption of food shall be
regarded as a sale or included in Gross Sales if there existed no intention to
charge or collect for such delivery or consumption, as in the case of
promotional meals, charity meals and meals for employees.
Impositions: Collectively, all real estate taxes on the Leased Properties,
all ad valorem, sales and use, single business, gross receipts, transaction
privilege, rent or similar taxes levied or incurred with respect to the Leased
Properties, or the use, ownership, and operation thereof, assessments
(including, without limitation, all assessments for public improvements or
benefits, whether or not commenced or completed within the Term), water, sewer
or other rents and charges, excises, levies, fees, and all other governmental
charges of any kind or nature whatsoever, foreseen of unforeseen, ordinary or
extraordinary, in respect of a Leased Property and/or the Rent or Additional
Charges (including all interest and penalties thereon), or this Lease, which at
any time prior to, during or in respect of the Term hereof may be assessed or
imposed on or in respect of or be a lien upon Lessor or any of the Leased
Properties or any part thereof or any rent therefrom or any estate, title or
interest therein. Nothing contained in this Lease, however, shall be construed
to require Lessee to pay (1) any tax imposed on Lessor based on the net income
of Lessor; (2) any transfer, or net revenue, tax of Lessor or any other person;
or (3) any tax imposed with respect to the sale, exchange or other disposition
by Lessor of any Leased Property or the proceeds thereof, except to the extent
that any such tax, assessment, levy or charge set forth in clause (1) or clause
(2) may be levied, assessed or imposed as a total or partial substitute for a
tax, assessment, levy or charge upon the Leased Properties, the Rent, the
Additional Charges or any part of any thereof or interest therein which Lessee
would otherwise have been required to pay hereunder or except to the extent that
any such tax, assessment, levy or charge constitutes a lien upon the Leased
Properties or any part thereof or any Rent therefrom or any estate, title or
interest therein.
Insurance Requirements: All terms of any insurance policy required by this
Lease to be maintained by Lessee and all requirements of the issuer of any such
policy.
Land: The various parcels of land described in Exhibit A hereto, together
with any additional parcel of real property subsequently designated as a Leased
Property by the parties pursuant to a Lease Supplement as provided in this
Lease.
Lease Supplement: An instrument supplementary to this Lease, in the form
attached hereto as Exhibit B but with any modifications or amendments acceptable
to Lessor and Lessee, which is intended to bring additional Leased Properties
within the operation and effect of this Lease.
Leased Properties: As defined in Article I.
Legal Requirements: All federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either any Leased Property or the
construction, use or alteration thereof, whether now or hereafter enacted and in
force, including any which may (i) require repairs, modifications or alterations
in or to any Leased Property, or (ii) in any way limit the use and enjoyment
thereof, and all permits, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Lessee (other than those
created by Lessor without the consent of Lessee), affecting any Leased Property.
Lessee's Equipment: As defined in Section 7.2.
Lessor's Mortgagee: Any lender of Lessor, from time to time, taking as a
security interest, for purposes of securing any loan to Lessor by such lender, a
first lien deed of trust or mortgage on the Leased Properties and an assignment
of Lessor's interest in this Lease.
Officer's Certificates: A certificate of Lessee signed by the President or
any Vice President or the Treasurer. Lessee shall be bound by all Officer's
Certificates regardless of the actual authority of the person who executes them.
Original Cost: As to each Leased Property set forth on Exhibit A attached
hereto, Nine Hundred Twenty Thousand Sixty-Two and No/100s Dollars
($920,062.00).
Overdue Rate: On any date, the greater of (i) a rate per annum equal to the
annual rate on such dated announced by Citibank, N.A. as its prime rate of
interest or (ii) 10% per annum.
Payment Date: Any due date for the payment of an installment of Base Rent.
Percentage Rent: As defined in Article III.
Primary Term: As defined in Article I.
Purchase Contract: The Contract for Purchase and Sale of Property among
Xxxxxx-Xxxxx Enterprises, Inc., BNE Realty Partners, Limited Partnership, and
Xxxxxx-Xxxxx Restaurant Properties, Inc. (now known as Xxxxxx-Xxxxx Properties,
Inc. as successor by merger) dated April 21, 1987 pursuant to which Landlord
acquired the Leased Properties, a copy of which is attached hereto as Exhibit C.
Rent: Collectively, the Base Rent and Percentage Rent.
Term: Collectively, the Primary Term and the Extension Term(s) of all of
the Leased Properties. The term of this Lease is intended to continue until this
Lease shall have been terminated (whether through expiration or prior
termination).
Unavoidable Delays: Delays due to strikes, lock-outs, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other causes beyond the control
of Lessee, provided that lack of funds shall not be deemed a cause beyond the
control of Lessee.
ARTICLE III
3.1 Rent. Lessee will pay to Lessor, at Lessor's address set forth under
Article XXXIII, a net rental during the Term, as follows:
(a) an annual amount equal to Four Million Five Hundred Thousand and
No/100s ($4,500,000.00) ("Base Rent"). Base Rent shall be payable in consecutive
equal installments of Three Hundred Seventy Five Thousand and No/100s Dollars
($375,000.00) by the 15th day of each month during the Term (prorated as to any
partial month in the proportion that the number of days in such month bears to
thirty (30)); and
(b) nine and 875/1000 percent (9.875%) of aggregate Gross Sales during each
calendar quarter (or any portion thereof) generated from the operation of all of
the Leased Properties taken as a group, less the Base Rent payable for such
calendar quarter ("Percentage Rent"). Percentage Rent shall be due and payable
fifteen (15) days after the close of each calendar quarter, based upon an
Officer's Certificate furnished by Lessee to Lessor, setting forth (i) the Gross
Sales for such quarter for each Leased Property; (ii) the amount of Base Rent
for such calendar quarter; and (iii) the computation of the amount of Percentage
Rent. Notwithstanding the above, at the time for payment of Percentage Rent
relating to the last calendar quarter of each calendar year, Lessor and Lessee
shall compute percentage rent for said calendar year on an annual basis using
the formula set forth in the first sentence of this Section 3.1(b) except that
the periods used therein shall be said calendar year (the "Annual Percentage
Rent"). Lessee shall then pay as Percentage Rent for the last calendar quarter
of each calendar year the difference between the Annual Percentage Rent for such
calendar year less the amounts of Percentage Rent paid by Lessee for the
previous three quarters of said calendar year. If the Percentage Rent paid by
Lessee during the previous three calendar quarters of any calendar year exceeds
the Annual Percentage Rent for said calendar year, Lessee shall receive a credit
against the next succeeding payment of Rent due under this Lease in the amount
of such difference. The obligation to pay Percentage Rent shall survive the
expiration or earlier termination of the Term.
3.2 Confirmation of Percentage Rent. Lessee shall (and shall cause any and
all sublessees to) utilize an accounting system which will accurately record all
Gross Sales from a Leased Property, and Lessee shall (and cause any and all
sublessees to) retain for at least eighteen (18) months after the expiration of
each calendar quarter reasonably adequate records conforming to such accounting
system and showing all Gross Sales for such quarter and enabling Lessor to
verify all such Gross Sales through standard audit procedures. Lessor shall have
the right, from time to time by its accountants or representatives, to audit at
Lessee's corporate offices the information set forth in the Officer's
Certificate for each Leased Property and in connection with such audits to
examine Lessee's (or any sublessee's) records with respect thereof (including
but not limited to supporting data and sales tax returns). If any such audit
discloses a deficiency in the payment of Percentage Rent, Lessee shall, within
ten (10) days of notice from Lessor of such deficiency, pay to Lessor the amount
of such deficiency, together with interest at the Overdue Rate from the date
when said payment should have been made to the date of payment. If any such
audit discloses that the Gross Sales for any Leased Property exceed those
reported by Lessee by more than three percent (3%), Lessee shall pay the
reasonable cost of such audit and examination.
3.3 Payment of Base Rent and Percentage Rent. Lessee shall pay or cause all
Base Rent to be paid to Lessor in equal monthly installments as set forth in
Section 3.1(a), to be made on or before the fifteenth (15) day of each calendar
month, and shall make all payments of Percentage Rent within fifteen (15) days
after the end of each calendar quarter. Rent provided for herein shall be paid
absolutely net to Lessor, so that this Lease shall yield to Lessor the full
amount of the total Rent hereunder, without setoff, deduction, or reduction
except as expressly provided in this Lease. If any installment of Base Rent or
Percentage Rent shall not be paid within five (5) Business Days after its due
date, Lessee will pay Lessor on demand a late charge (to the extent permitted by
law) computed at the lesser of the Overdue Rate or at the maximum rate permitted
by law on the amount of such installment, from the due date for such installment
to the date of payment thereof. Rent shall accrue from the Commencement Date for
all properties described on Exhibit A. Rent for other properties added by Lease
Supplement shall accrue from the dates of their respective Lease Supplement.
3.4 Additional Charges. In addition to the Base Rent, Lessee will pay and
discharge as and when due and payable all other amounts, liabilities,
obligations and Impositions which Lessee assumes or agrees to pay under this
Lease; unless expressly provided otherwise in this Lease, in the event of any
failure on the part of Lessee to pay any of such items, Lessee will also
promptly pay and discharge any and every fine, penalty, interest and cost which
may be added for nonpayment or late payment of such items (the items referred to
above in this Section are referred to hereinafter collectively as the
"Additional Charges"), and Lessor shall have all legal, equitable and
contractual rights, powers and remedies provided either in this Lease or by
statute or otherwise in the case of nonpayment of the Additional Charges as in
the case of nonpayment of the Rent. Any late charge imposed by Lessor pursuant
to Section 3.3 shall constitute an Additional Charge hereunder. To the extent
that Lessee pays any Additional Charges to Lessor pursuant to any requirement of
this Lease, Lessee shall be relieved of its obligation to pay such Additional
Charges to the entity to which they would otherwise be due.
ARTICLE IV
4.1 Payment of Impositions. Subject to Article XIII relating to permitted
contests, Lessee will pay or cause to be paid, all Impositions before any fine,
penalty, interest or cost may be added for nonpayment, such payments to be made
directly to the taxing authorities where feasible, and will promptly, upon
request, furnish to Lessor copies of official receipts or other satisfactory
proof evidencing such payments. If any such Imposition may, at the option of the
taxpayer, lawfully be paid in installments (whether or not interest shall accrue
on the unpaid balance of such Imposition), Lessee may exercise the option to pay
the same in installments, and in such event shall pay such installments during
the Term hereof (subject to Lessee's right of contest pursuant to the provisions
of Article XIII) as the same respectively become due and before any fine,
penalty, premium, further interest or cost may be added thereto. Lessee, at its
expense, shall, to the extent permitted by applicable laws and regulations,
prepare and file all required tax returns and reports in respect of any
Imposition. Lessee shall be entitled to receive any refund due from any taxing
authority in respect of any Imposition previously paid by Lessee, unless an
Event of Default shall have occurred and be continuing. Lessor shall, upon
Lessee's request, provide such data as are maintained by Lessor with respect to
the Leased Properties as Lessee may require to prepare any required tax returns
and reports. In the event governmental authorities classify any property covered
by this Lease as personal property, Lessee shall file all necessary personal
property tax returns in the appropriate jurisdictions, unless by law Lessor is
required to file such returns. Lessor will provide Lessee with cost and
depreciation records necessary for filing returns for any property so classified
as personal property. Where Lessor is required by law to file personal property
tax returns, Lessee will be provided with copies of assessment notices
indicating a value in excess of the reported value in sufficient time for Lessee
to file a protest. Lessee may, upon notice to Lessor, at its option and at its
sole cost and expense, protest, appeal, or institute such other proceedings as
it may deem appropriate to effect a reduction of real estate or personal
property assessments and Lessor, at Lessee's expense as aforesaid, shall fully
cooperate with Lessee in such protest, appeal, or other action. In the event
Lessor makes a payment of any such personal property taxes, any statement sent
by Lessor to Lessee for reimbursement of Lessor's payment thereof shall be
accompanied by copies of a xxxx therefor and payments thereof which identify the
Fixtures with respect to which such payments are made.
4.2 Notice of Impositions. Lessor shall give prompt notice to Lessee of all
Impositions payable by Lessee hereunder of which Lessor at any time has
knowledge, and shall not pay any Imposition until it has given Lessee reasonable
opportunity to pay same, but Lessor's failure to give any notice shall in no way
diminish Lessee's obligations hereunder to pay such Impositions (exclusive of
interest, fines or penalties occasioned by Lessor's failure to timely give such
notice).
4.3 Adjustment of Impositions. Impositions imposed in respect of the
calendar year during which the Term as to a Leased Property terminates shall be
adjusted and prorated on a daily basis between Lessor and Lessee, whether or not
such Imposition is imposed before or after such termination, and Lessee's
obligation to pay its pro rata share thereof shall survive such termination. In
the event an Imposition is in the nature of a special assessment made against a
Leased Property within the last five (5) years of the Primary Term, or during an
Extension Term, for such Leased Property, Lessee shall pay such assessment
initially, but Lessor shall reimburse Lessee at the end of the Primary Term or
such Extension Term, as the case may be, for the amount of such assessment less
Lessee's share of such assessment, which shall be determined by multiplying the
amount of such assessment by the number of full calendar months remaining in
such Primary term or Extension Term after the assessment divided by sixty (60).
If Lessee thereafter elects to exercise its option for an Extension Term, Lessor
shall not be required to reimburse Lessee for Lessor's portion of such
assessment.
4.4 Utility Charges. Lessee will pay or cause to be paid all charges for
electricity, power, gas, oil, water, telephone, sanitary sewer service, and
other utilities used in or on the Leased Properties during the Term.
ARTICLE V
5. Quiet Enjoyment. So long as Lessee shall pay all Rent as the same
becomes due and shall fully comply with all of the terms of this Lease and fully
perform its obligations hereunder, Lessee shall peaceably and quietly have, hold
and enjoy the Leased Properties for the Term hereof, free of any claim or other
action by Lessor or anyone claiming by, through or under Lessor. No failure by
Lessor to comply with the foregoing covenant shall give Lessee any right to
cancel or terminate this Lease or xxxxx, reduce or make a deduction from or
offset against the Rent or Additional Charges or any other sum payable under
this Lease, or to fail to perform any other obligation of Lessee hereunder.
Notwithstanding the foregoing, Lessee shall have the right, by separate and
independent action, to pursue any claim it may have against Lessor as a result
of a breach by Lessor of the covenant of quiet enjoyment contained in this
Section.
ARTICLE VI
6. No termination, Abatement, Etc. Except as otherwise specifically
provided in this Lease, Lessee, to the fullest extent permitted by law, shall
remain bound by this Lease in accordance with its terms and shall neither take
any action without the consent of Lessor to modify, surrender or terminate the
same, nor seek or be entitled to any abatement, deduction, deferment or
reduction of Rent, or set-off against such Rent, nor shall the respective
obligations of Lessor and Lessee be otherwise affected by reason of (a) any
damage to, or destruction or condemnation of, any Leased Property or any portion
thereof from whatever cause, except as expressly provided in this Lease; (b) any
lawful or unlawful prohibition of, or restriction upon, Lessee's use of any
Leased Property or any portion thereof, the interference with such use by any
person, corporation, partnership or other entity, or by reason of any eviction
by paramount title; (c) any claim which Lessee has or might have against Lessor
or by reason of any default or breach of any warranty by Lessor under this Lease
or any other agreement between Lessor and Lessee, or to which Lessor and Lessee
are parties; (d) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceeding affecting
Lessor or any assignee or transferee of Lessor; or (e) any other cause other
than a discharge of Lessee from any such obligations as the result of a judicial
decree. Lessee hereby specifically waives all rights arising from any occurrence
whatsoever (i) to modify, surrender or terminate this Lease or quit or surrender
any Leased Property or any portion thereof; or (ii) that entitle Lessee to any
abatement, reduction, suspension or deferment of the Rent or other sums payable
by Lessee hereunder, except as otherwise specifically provided in this Lease.
The obligations of Lessor and Lessee hereunder shall be separate and independent
covenants and agreements and the Rent, Additional Charges and all other sums
payable by Lessee hereunder shall continue to be payable in all events unless
the obligation to pay the same shall have been terminated pursuant to the
express provisions of this Lease or by termination of this Lease other than by
reason of an Event of Default. Notwithstanding the foregoing, Lessee shall have
the right, by separate and independent action, to pursue any claim it may have
against Lessor.
ARTICLE VII
7.1 Ownership of the Leased Properties. Lessee acknowledges that the Leased
Properties are the property of Lessor and that Lessee has only the right to the
exclusive possession and use of the Leased Properties during the Term upon the
terms and conditions set forth in this Lease.
7.2 Lessee's Equipment. Lessee may, at its expense, install, affix,
assemble or place on any parcels of the Land or in or on any of the Leased
Improvements, and may remove and substitute, any types of machinery, equipment,
furnishing, computers or other personal property owned or leased by Lessee and
used in Lessee's restaurant business, including signs and movable walls or
partitions (collectively, "Lessee's Equipment"). All Lessee's Equipment shall be
and remain the property of Lessee, provided that any of Lessee's Equipment not
removed by Lessee within fifteen (15) days following the expiration or earlier
termination of this Lease or Lessee's right of possession (except that the said
15-day grace period shall not apply in the event that the Lease or Lessee's
right of possession has terminated because of an Event of Default) with respect
to any Leased Property shall be considered abandoned by Lessee and shall,
subject to Section 7.3, thereafter belong to Lessor. All costs and expenses
incurred in removing Lessee's Equipment by Lessee shall be paid by Lessee.
Lessee will, at its expense, repair all damage to any Leased Property caused by
the removal by Lessee of Lessee's Equipment.
7.3 No Interest of Lessor in Lessee's Equipment. Lessor agrees (i) to
acknowledge in writing to such persons, at such times and for such purposes as
Lessee may reasonably request, that Lessee's Equipment is Lessee's personal
property and not fixtures, and that Lessor has no right, title or interest in
such items and (ii) to give thirty (30) days' written notice of Lessor's intent
to exercise its rights under Section 7.2 to any person who has properly filed a
Uniform Commercial Code financing statement with respect to such property so
that such person may exercise its rights in Lessee's Equipment during such
thirty (30) day period. Without limiting the foregoing, in connection with any
purchase, leasing or financing transaction involving or secured by an item of
Lessee's Equipment, Lessor agrees to acknowledge in writing to the seller,
lessor or lender that the interest(s) of such person(s) in such item are and
shall be superior to any interest that Lessor may have or acquire therein by
virtue of Landlord's security interest created by this Lease, or by virtue of
any statutory or common law lien or otherwise.
ARTICLE VIII
8.1 Condition of the Leased Properties. Lessee acknowledges receipt and
delivery of possession of the Leased Properties listed on Exhibit A and that
Lessee has examined the title to and the condition of each of such Leased
Properties prior to the execution and delivery of this Lease or Lease
Supplement, as the case may be, and has found the same to be in good order and
repair and satisfactory for its purposes hereunder. Lessee is renting the Leased
Properties "as is" in their present condition. Lessee waives any claim or action
against Lessor in respect of the condition of each Leased Property. Lessor makes
no warranty or representation, express or implied, with respect to any Leased
Property or any part thereof, either as to its fitness for use, design or
condition for any particular use or purpose or otherwise, or as to quality of
the material or workmanship therein, latent or patent, or as to the existence of
any toxic or hazardous materials on or about any Leased Property, it being
agreed that all such risks are to be borne by Lessee. Lessee acknowledges that
each Leased Property has been inspected by Lessee and is satisfactory to it.
8.2 Use of the Leased Properties. Lessee shall use and cause each Leased
Property to be used for operating a Hardee's restaurant business utilizing
substantially the same menu and operating format as required under Lessee's
license agreements with Xxxxxx'x Food Systems, Inc. (the "License Agreements"),
for such other uses as may be incidental thereto, and for such other lawful uses
as may be consented to in writing by Lessor, which consent shall not be
unreasonably withheld. Lessee agrees that it will not permit any unlawful
occupation, activity, business or trade to be conducted on any Leased Property
or any use to be made thereof contrary to any applicable Legal Requirements or
Insurance Requirements. Lessee shall not use or occupy or permit a Leased
Property to be used or occupied, nor do or permit anything to be done in or on a
Leased Property or any part thereof, in a manner that may make it impossible to
obtain fire or other insurance covering such Leased Property meeting the
requirements of this Lease, or that will cause or be likely to cause structural
injury to any of the Leased Improvements, or that will constitute a public or
private nuisance. Lessee shall not be permitted to close the restaurant business
conducted on a Leased Property, except (i) as a result of damage to, or
condemnation of, the Leased Property; (ii) during periods of repair, renovation
or alteration; (iii) as otherwise contemplated by this Lease; or (iv) for any
reason beyond the reasonable control of Lessee, such as governmental action or
changes in zoning or other laws.
8.3 Covenant Not to Compete. Lessee covenants that during the term of this
Lease and any extensions or renewals thereof, Lessee shall not, either directly
or indirectly, for itself, or through, on behalf of, or in conjunction with any
person, persons, partnership or corporation own, maintain, engage in, or have a
controlling interest in, without Lessor's prior written consent, any operating
non-Hardee's restaurant business offering the same or similar products and
services as offered by the Hardee's restaurants operated by Lessee on the Leased
Properties, within a radius of one-and-a-half (1-1/2) miles of any Leased
Property hereunder.
8.4 Covenant Not to Acquire. Lessee covenants and agrees that during the
Primary Term and any Extension Terms of this Lease Lessee and its controlling
shareholders or Affiliates will not acquire, directly or indirectly, ten percent
(10%) or more of the outstanding stock of the Lessor. Lessee covenants and
agrees that it will divest itself of such stock of the Lessor as may be
necessary to satisfy the limitations of this paragraph, in the event of the
acquisition of shares by shareholders or Affiliates beyond the control of
Lessee.
ARTICLE IX
9. Compliance with Legal and Insurance Requirements, Instruments, Etc.
Lessee, at its expense, will (a) comply with all Legal Requirements and
Insurance Requirements in respect of the use, operation, maintenance, repair and
restoration of each Leased Property, whether or not compliance therewith shall
require structural changes in any of the Leased Improvements or interfere with
the use and enjoyment of a Leased Property; and (b) procure, maintain and comply
with all licenses and other authorizations required for the use of each Leased
Property and for the operation and maintenance of the Leased Improvements
including compliance with the provisions of the License Agreements with Xxxxxx'x
Food Systems, Inc. with respect to each Leased Property (including Lessee's
obligations to make periodic improvements to the Leased Properties to conform
with design standards imposed under such License Agreements) and taking any
action necessary to avoid a default or termination under such License
Agreements.
ARTICLE X
10.1 Maintenance and Repair.
(a) Lessee, at its expense, will keep each Leased Property and all private
roadways, sidewalks and curbs appurtenant thereto and which are under Lessee's
control in good order and repair (ordinary wear and tear excepted), and shall
make all necessary repairs thereto of every kind and nature whatsoever. To the
extent reasonably achievable, all such repairs will be at least equivalent in
quality to the original work. Lessee shall at its expense maintain each Leased
Property in good order and repair, reasonable wear and tear excepted, and
maintain and improve each Leased Property on a basis consistent with Lessee's
maintenance and improvements of all of the Hardee's restaurants owned or
operated by Lessee and as required by the License Agreements with Xxxxxx'x Food
Systems, Inc. Except as permitted by this Lease, Lessee will not take or omit to
take any action the taking or omission of which might materially impair the
value or the usefulness of any Leased Property or any parts thereof.
(b) Lessor shall under no circumstances be required to build any
improvements on any Leased Property, or to make any repairs, replacements,
alterations or renewals of any nature or description to a Leased Property, or to
make any expenditure whatsoever in connection with this Lease, or to maintain
any Leased Property in any way. Lessee hereby waives, to the fullest extent
permitted by law, the right to make repairs at the expense of Lessor pursuant to
any law in effect on the Commencement Date or thereafter enacted.
(c) Unless Lessor shall convey any of the Leased Properties to Lessee
pursuant to the provisions of this Lease, Lessee shall, upon the expiration or
prior termination of the Term as to a Leased Property, vacate and surrender such
Leased Property to Lessor in the condition in which such Leased Property was
originally received from Lessor, except as repaired, rebuilt, restored, altered
or added to as permitted or required by the provisions of this Lease, except for
ordinary wear and tear, and with due consideration being given to the age of the
Leased Improvements at such time.
10.2 Encroachments, Restrictions, Etc. If any of the Leased Improvements
shall, at any time, encroach upon any property, street or right-of-way adjacent
to a Leased Property, or shall violate the agreements or conditions contained in
any restrictive covenant or other agreement affecting a Leased Property, other
than one which is created or consented to by Lessor without Lessee's consent, or
shall impair the rights of others under any easement or right-of-way to which a
Leased Property is subject, other than one which is created or consented to by
Lessor without Lessee's consent, then promptly upon the request of Lessor or at
the request of any person affected by any such encroachment, violation or
impairment, Lessee shall, at its expense, subject to its right to contest the
existence of any encroachment, violation or impairment and in such case, in the
event of an adverse final determination, either (i) obtain valid and effective
waivers or settlements of all claims, liabilities and damages resulting from
each such encroachment, violation or impairment, whether the same shall affect
Lessor or Lessee; or (ii) make such changes in the Leased Improvements and take
such other actions as shall be necessary to remove such encroachment and to end
such violation or impairment, including, if necessary, the alteration of any of
the Leased Improvements. Any such alteration shall be made in conformity with
the requirements of Article XI.
ARTICLE XI
11. Alterations, Substitutions and Replacements. Lessee, at its sole cost
and expense, may at any time and from time to time make alterations to the
Leased Properties or any part thereof and substitutions and replacements for the
same (collectively, "Alterations"), provided that (a) the market value of the
affected Leased Property shall not be reduced or its structural integrity
adversely affected; (b) the work shall be done expeditiously and in a good and
workmanlike manner; (c) the plans and specifications for any single alteration
with an estimated cost in excess of Two Hundred Fifty Thousand Dollars
($250,000) shall be approved in writing by Lessor, such approval not to be
unreasonably withheld; provided, however, that if the Lessee shall not have
received either approval or rejection, or conditions for such approval, of any
such plans and specifications within thirty (30) days after delivery of the same
to Lessor, such plans and specifications shall be conclusively deemed approved
for all purposes hereof; (d) Lessee shall comply with any and all Legal
Requirements and Insurance Requirements applicable to the work; and (e) Lessee
shall promptly pay all costs and expenses and discharge any and all liens
arising in respect of the work.
7 Until the expiration or earlier termination of this Lease as to a
Leased Property, beneficial title to and ownership of any Alterations to such
Leased Property shall remain solely in Lessee and Lessee alone shall be entitled
to deduct all depreciation and amortization on Lessee's income tax returns with
respect to such Alterations. Upon the expiration of earlier termination of this
Lease as to such Property, such Alterations shall revert to, pass to and become
the property of the Lessor.
ARTICLE XII
12. Liens. Subject to Article XIII relating to contests, Lessee shall not
directly or indirectly create or allow to remain, and will promptly discharge at
its expense, any lien, encumbrance, attachment, title retention agreement or
claim upon any Leased Property or any attachment, levy, claim or encumbrance in
respect of the Rent or Additional Charges provided under this Lease, not
including, however, (a) this Lease; (b) utility easements and road rights-of-way
in the customary form (i) provided the same do not adversely affect the intended
use of the Leased Properties (including the Improvements) and do not materially
adversely affect the value of the Leased Properties or (ii) which result solely
from the action or inaction of Lessor; (c) zoning and building laws or
ordinances, provided they do not prohibit the use of the Leased Properties for
commercial restaurant purposes and so long as the Leased Properties are in
compliance with same; (d) such encumbrances as are subsequently consented to in
writing by Lessor or result solely from the action or inaction of Lessor, but
excluding liens in respect of Impositions required to be paid under Section 4.1;
(e) liens for Impositions or for sums resulting from noncompliance with Legal
Requirements so long as (1) the same are not yet payable or are payable without
the addition of any fine or penalty, or (2) such liens are being contested as
permitted by Article XIII; and (f) liens of mechanics, laborers, materialmen,
suppliers or vendors for sums either disputed or not yet due, provided that (1)
the payment of such sums shall not be postponed under any contract for more than
sixty (60) days after the completion of the work, services or delivery of
supplies giving rise to such lien, (2) adequate reserves shall have been made
for the payment thereof, and (3) such liens shall in any event be discharged by
bonding or otherwise within fifteen (15) days after the same have been filed.
ARTICLE XIII
13. Permitted Contests. Lessee, on its own or on Lessor's behalf, but at
Lessee's sole cost and expense, may contest, by appropriate legal proceedings
conducted in good faith and with due diligence, the amount, validity or
application, in whole or in part, of any Imposition or any Legal Requirement or
Insurance Requirement or any lien, attachment, levy, encumbrance, or claim not
otherwise permitted by Article XII, and Lessor agrees not to itself pay any such
item, provided that (a) the commencement and continuation of such proceedings
shall suspend the collection thereof from Lessor and any assignee of Lessor and
from the affected Leased Properties; (b) no part of the affected Leased
Properties nor any Rent therefrom would be in any immediate danger of being
sold, forfeited, attached or lost; (c) in the case of a Legal Requirement,
Lessor would not be in any immediate danger of civil or criminal liability for
failure to comply therewith pending the outcome of such proceedings; (d) such
contest shall not interfere with the use and occupancy of any Leased Property;
and (e) in the event that any such contest shall involve a sum of money or
potential loss in excess of fifty thousand dollars ($50,000), the Lessee shall
deliver to Lessor an Officer's Certificate to the effect set forth in clauses
(a), (b), (c) and (d), and Lessee shall give such reasonable security as may be
demanded by Lessor to ensure ultimate payment of the same and to prevent any
sale or forfeiture of the affected Leased Property. If Lessee contests any
Insurance Requirement; Lessee shall nonetheless maintain the coverage required
by Article XIV during the pendency of any such contest. Lessor, at Lessee's
expense, shall execute and deliver to Lessee such authorizations and other
documents as may reasonably be required in any such contest and, if reasonably
required by Lessee or if Lessor so desires, Lessor shall or may join as a party
therein. Lessee shall indemnify and save Lessor harmless from and against any
liability, cost or expense of any kind that may be imposed upon Lessor in
connection with any such contest and any loss resulting therefrom.
ARTICLE XIV
14.1 Insurance. Lessee agrees to maintain at all times and at its sole cost
and expense insurance covering each Leased Property as follows: (a) fire, with
extended coverage (including windstorm and subsidence), vandalism and malicious
mischief endorsements and insurance against such other risks as Lessee deems
prudent, such insurance to be in each case in an amount not less than the full
insurable value (actual replacement cost to reconstruct in accordance with all
then applicable laws, ordinances, codes and regulations, less the costs of land
excavation, foundations and footings) of each Leased Property; (b) comprehensive
liability insurance as to each Leased Property in amounts equal to the greater
of (i) One Million dollars ($1,000,000) for each occurrence and One Million
dollars ($1,000,000) in the aggregate, and (ii) the limits of liability
generally required under the License Agreements with respect to the Leased
Properties between Lessee and Xxxxxx'x Food Systems, Inc.; (c) workers'
compensation insurance as required by statute in respect of any work or other
operations on or about each Leased Property; (d) flood insurance in an amount
equal to the full insurable value (as defined in clause (a) above) of each
Leased Property or the maximum amount available, whichever is less, if any
Leased Property is located in a designated flood hazard area or Lessor's
Mortgagee is required by law or regulation to require or maintain flood
insurance with respect to any Leased Property; (e) upon request and to the
extent available at reasonable cost, earthquake insurance in an amount not less
than the full insurable value (as defined in clause (a) above) of each Leased
Property; (f) commercial comprehensive catastrophic liability insurance with
limits of liability of not less than the greater of (i) Thirty Five Million
dollars ($35,000,000) and (ii) the limits of liability generally required under
the License Agreements with respect to the Leased Properties between Lessee and
Xxxxxx'x Food Systems,Inc.; and (g) during the period when any addition,
alteration, construction, installation or demolition is being made or performed
to any part of the Leased Improvements, contingent liability, public liability,
completed value, builder's risk (non-reporting form), workers' compensation and
other insurance as is deemed prudent by Lessee. Deductible provisions for the
insurance required under clause (a) shall not exceed ten thousand dollars per
location per occurrence and one hundred thousand dollars ($100,000) aggregate
per occurrence; under clause (b), one hundred fifty thousand dollars ($150,000)
per occurrence; under clause (d), fifty thousand dollars ($50,000) per
occurrence except that if federal flood insurance is available then such
deductible shall not be greater than the lowest deductible available with
respect to such federal flood insurance; under clause (f), one hundred fifty
thousand dollars ($150,000) per occurrence; and under clause (g), ten thousand
dollars ($10,000) per occurrence. Lessee may effect all coverage required herein
under its blanket insurance policies, if available thereunder, and all such
policies shall be written by companies presently or hereafter insuring
substantially all of the properties of Lessee; provided, however, that in the
case of insurance under clause (d), such insurance must be written on the
federal flood insurance program if available for such Leased Property up to the
maximum amount available under the federal flood insurance program; provided
further, however, that any policy of blanket insurance hereunder shall comply in
all respects with the other provisions of this Article XIV, except that such
policies need not provide for a minimum reserved amount of insurance allocated
to any given Leased Property. Unless otherwise approved by Lessor such insurance
shall be written by an insurance company (i) having a Bests' policyholder's
rating of A or better; (ii) in the Bests' Class XII financial size category; and
(iii) authorized to do insurance business in the states in which the Leased
Properties are located, if so required by law.
14.2 Policy Provisions and Certificates. The insurance maintained by Lessee
under clauses (a), (b), (d), (e), (f) and (g) of Section 14.1 shall name Lessor
and Lessor's Mortgagee, if any, as an additional insured and in the case of (a),
(d), (e) and (g), Lessor and Lessee as their respective interests may appear, as
loss payees, provided, however, that if there is then a Lessor's Mortgagee,
Lessor's Mortgagee shall be named as loss payee pursuant to a standard mortgagee
and lender loss payable clause. The insurance maintained by Lessee under clauses
(a), (d), (e), and (g) of Section 14.1 shall provide that all property losses
insured against shall be adjusted by Lessee (subject to Lessor's approval of
final settlement of estimated losses of ten thousand dollars ($10,000) or more).
All insurance maintained by Lessee shall provide that (a) no cancellation or
reduction thereof shall be effective until at least thirty (30) days after
mailing Lessor, and Lessor's Mortgagee if any, written notice thereof; and (b)
all losses shall be payable notwithstanding any act or negligence of Lessor or
Lessee or their respective agents or employees which might, absent such
agreement, result in a forfeiture of all or part of such insurance payment and
notwithstanding (i) the occupation or use of any Leased Property for purposes
more hazardous than permitted by the terms of such policy, or (ii) any change in
title or ownership of any Leased Property or any part thereof. Lessee will,
within fifteen (15) days after the date hereof, furnish to Lessor and Lessor's
Mortgagee, if any, certificates for the insurance required by Section 14.1(b),
(c) and (f) and evidence of insurance on the Xxxxx 27 form (or equivalent) for
insurance under (a), (d), (e) and (g), and upon request certified copies of all
policies required hereunder, and not less than thirty (30) days evidencing the
replacement or renewal thereof.
14.3 Subrogation. In respect of any real, personal or other property
located in, at or upon each Leased Property, and in respect of each Leased
Property itself, Lessee and Lessor each hereby releases, to the extent permitted
by law, the other from any and all liability or responsibility to the other or
anyone claiming by, through or under either party, by way of subrogation or
otherwise, for any loss or damage caused by fire or any other casualty whether
or not such fire or other casualty shall have been caused by the fault or
negligence of either party or anyone for whom said person may be responsible. If
available, Lessee shall require its fire, extended coverage and other casualty
insurance carriers to include in Lessee's policies a clause or endorsement
whereby the insurer waives any rights of subrogation against Lessor.
14.4 Other Insurance. Lessee shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required by
this Article XIV to be furnished by Lessee unless Lessor and Lessor's Mortgagee,
if any, are included therein as a named insured as their interests may appear,
with loss payable as provided in this Article and such separate insurance does
not have the effect of impairing collection from the insurance required to be
maintained under Section 14.1. Lessee shall immediately notify Lessor whenever
any such separate insurance is taken out and shall deliver the policy or
policies or duplicates thereof, or certificates evidencing the same as provided
in this Article.
ARTICLE XV
15.1 Notice of Taking; Condemnation Awards. In case Lessee receives notice
of a proposed taking, by eminent domain or otherwise, by a public authority, of
a Leased Property, or any interest therein, Lessee shall give notice thereof to
Lessor within ten (10) days of the receipt of notice of such proposed taking. If
Lessor shall be advised by the condemning authority of a proposed taking, Lessor
shall within ten (10) days thereafter give notice thereof to Lessee.
In case of a taking of an entire Leased Property which Lessee reasonably
expects to be permanent or beyond the remainder of the Primary Term or the
Extension Term(s) for which Lessee has committed hereunder to renew this Lease
as to such Leased Property (a "Long-Term Taking"), (i) this Lease shall
terminate with respect to the affected Leased Property on the day prior to the
earlier of the taking of possession by, or the vesting of title in, the public
authority (the "Condemnation Date") and thereafter the Base Rent shall be
proportionately reduced, (ii) Lessor shall be entitled to all awards or payments
by the public authority on account of the taking that are attributable to the
Leased Properties, including the Land, Fixtures and Leased Improvements, and
(iii) Lessee hereby authorizes Lessor in the name of Lessee or otherwise to file
and prosecute any claims for such award or payment.
In case of a taking of an entire Leased Property which Lessee reasonably
expects is for a period of greater than one hundred eighty (180) days, but not a
Long-Term Taking, Lessee may terminate this Lease with respect to such Leased
Property by giving Lessor notice of termination within thirty (30) days
following the Condemnation Date, in which event this Lease shall terminate as to
such Leased Property as of the Payment Date immediately following such
Condemnation Date, and thereafter the Base Rent shall be proportionately
reduced. Any award on account of such taking attributable to the Leased
Properties, including the Land, Fixtures and Leased Improvements shall belong to
Lessor. If Lessee does not so terminate this Lease, this Lease shall continue in
effect with respect to such Leased Property and Lessee shall continue to pay
Rent during the period of taking; provided, that if the performance of any term
hereof (other than the payment of Rent, maintenance of insurance and payment of
Impositions and other Additional Charges) is rendered impossible by such taking,
Lessee shall be excused from such performance.
If a portion of a Leased Property is taken for a period that Lessee
reasonably expects to be permanent or to constitute a Long-Term Taking or for
more than one hundred eighty (180) days and, as a result, in Lessee's reasonable
judgment the potential profitability of the restaurant operated thereon is
substantially adversely affected for the period of the taking by such partial
taking, Lessee may terminate this Lease with respect to such Leased Property by
giving Lessor written notice of termination within twenty (20) days following
the Condemnation Date, in which event this Lease shall terminate as to such
Leased Property as of the Payment Date immediately following such Condemnation
Date and thereafter the Base Rent shall be proportionately reduced. Following
such payment, any condemnation award shall belong to Lessor. If Lessee does not
so terminate this Lease (i) this Lease shall continue in effect with respect to
the portion of the Leased Property not condemned; (ii) the Base Rent shall not
be reduced; (iii) Lessee shall, at its own expense and as soon as practicable
(subject to Unavoidable Delays), perform or cause to be performed such work as
is required to make a complete architectural unit of the remainder of the Leased
Property; and (iv) any condemnation award shall belong to Lessee to the extent
such award does not exceed the cost of such repairs and the proportionate amount
of Base Rent payable with respect to the Leased Property during the repair or
reconstruction period, with the balance of the award, if any, to be paid to
Lessor. For purposes of determining Percentage Rent, if such Leased Property is
closed for repair or reconstruction for more than sixty (60) consecutive days,
then on the sixty-first (61st) day and continuing until the day on which the
Leased Property is reopened, the closed Leased Property shall be deemed to have
Gross Sales during such period equal to the average Gross Sales of the remaining
operating Leased Properties.
Notwithstanding anything to the contrary in this Section 15.1, so long as
no Default shall exist hereunder, Lessee shall be entitled to submit a claim to
a condemning authority for loss of profit, relocation expenses or damage to
Lessee's Equipment resulting from a taking and Lessee may retain any such
separate award applicable thereto. For the purposes of this Lease, all amounts
paid pursuant to any agreement with any condemning authority in settlement of
any condemnation or other eminent domain proceeding affecting a Leased Property
shall be deemed to constitute an award made in such proceeding whether or not
the same shall have actually been commenced.
15.2 Taking Other Than Long-Term Taking. In case of a temporary taking of
all or a portion of a Leased Property for a period not longer than one hundred
eighty (180) days, and which does not constitute a Long-Term Taking, there shall
be no termination, cancellation or modification of this Lease, and Lessee shall
continue to perform and comply with (except as such performance and such
compliance may be rendered impossible by reason of such taking) all of its
obligations under this Lease and shall in no event be relieved of its obligation
to pay punctually all Rent and other charges payable hereunder. For purposes of
determining Percentage Rent, if such Leased Property is closed for repair or
reconstruction for more than sixty (60) consecutive days, then on the
sixty-first (61st) day and continuing until the day on which the Leased Property
is reopened, the closed Leased Property shall be deemed to have Gross Sales
during such period equal to the average Gross Sales of the remaining operating
Leased Properties. Lessor shall pay to Lessee the net awards received by it
(whether by way of damages, rent or otherwise) by reason of such taking.
15.3 Damage or Destruction; Repair or Replacement. In case of any damage or
loss to a Leased Property which is not a Material Loss (as defined below), or
which is a Material Loss but as to which this Lease is not terminated pursuant
to this Section 15.3, Lessee will, at its expense, promptly commence and
complete with due diligence (subject to Unavoidable Delays) the replacement and
repair of the affected Leased Property in order to restore it as nearly as
practicable to the value and condition thereof immediately prior to such damage,
destruction or loss, whether or not the insurance proceeds shall be sufficient
for such purpose. Insurance proceeds available for such purpose shall be placed
in an escrow account at a bank or other financial institution selected by Lessee
and reasonably satisfactory to Lessor. Such funds shall be paid by the escrow
agent to Lessee (or as Lessee may direct), from time to time as the affected
Leased Property is replaced or repaired, in amounts equal to the cost of such
replacement and repair, upon delivery to the escrow agent of an Officer's
Certificate certifying, in each case, the amount to be paid (which may represent
amounts theretofore paid by Lessee in the effectuation of such repairs or
replacements and not reimbursed hereunder or amounts due and payable by Lessee
therefor, or both). Upon completion of construction, Lessee shall deliver to
Lessor (i) if required by law for occupancy, a copy of a permanent,
unconditional certificate of occupancy for the affected Leased Property; and
(ii) an Officer's Certificate certifying to the completion of the repair or
replacement of the affected Leased Property, the payment of the cost thereof in
full, and the amount of such cost, and upon receipt of such certificates by
Lessor, any balance of such insurance proceeds (including any interest earned
thereon) required to be applied to reimburse Lessee for such restoration shall
be paid over to Lessee,and the balance, if any, shall be retained by Lessor.
Notwithstanding the foregoing, if an Event of Default shall have occurred and be
continuing at the time of Lessor's or Lessee's receipt of any such insurance
proceeds, any proceeds received by Lessee shall be paid over to Lessor and all
insurance proceeds shall be held by Lessor and applied in the manner specified
in Article XVII hereof.
During the period of replacement and repair of a damaged Leased Property
under this Section 15.3, Lessee's obligation to punctually pay all Rent and
other charges required under this Lease shall continue notwithstanding that such
Leased Property may be closed for business. For purposes of determining
Percentage Rent, if such Leased Property is closed for replacement or repair for
more than sixty (60) consecutive days, then on the sixty-first (61st) day and
continuing until the day on which the Leased Property is reopened, the damaged
Leased Property shall be deemed to have Gross Sales during such period equal to
the average Gross Sales of the remaining operating Leased Properties.
When loss or damage occurs which, in Lessee's reasonable judgment, renders
an affected Leased Property unfit for occupancy by Lessee to carry on its normal
business activities for a period exceeding one hundred eighty (180) days (a
"Material Loss"), Lessee shall notify Lessor, by an Officer's Certificate,
within ten (10) days following such occurrence and either Lessor or Lessee may
terminate this Lease as to that Leased Property by giving the other party notice
of termination within sixty (60) days following the date of the occurrence of
such Material Loss, in which event this Lease shall terminate as of the Payment
Date specified in such notice of termination and thereafter Base Rent shall be
proportionately reduced. Upon such termination, all insurance proceeds available
as a result of the Material Loss shall be paid and belong to Lessor, and Lessee
shall pay Lessor the amount of any deductible under the applicable insurance
policy providing such proceeds. In any other event, such proceeds shall be
applied in the manner hereinabove set forth in the first paragraph of this
Section 15.3.
15.4 Voluntary Repair or Remodeling. In the event a Leased Property is
closed for business for any reason other than pursuant to Sections 15.1, 15.2 or
15.3, then during the period in which such Leased Property is closed for
business, Lessee's obligation to punctually pay all Rent and other charges
required under this Lease shall continue. For purposes of determining Percentage
Rent, if such Leased Property is closed for more than sixty (60) consecutive
days, then on the sixty-first (61st) day and continuing until the day on which
the Leased Property is reopened, the closed Leased Property shall be deemed to
have Gross Sales during such period equal to the average Gross Sales of the
remaining operating Leased Properties.
ARTICLE XVI
16. Economic Abandonment; Substitution or Purchase of Property.
(a) If, at any time during the Term hereof, in the good faith judgment of
Lessee, a Leased Property becomes uneconomic or unsuitable for Lessee's then use
and occupancy (an "Uneconomic Property"), Lessee shall have the right to
terminate this Lease with regard to such Uneconomic Property, provided that (i)
at the time such discontinuance is sought no Event of Default shall have
occurred and be continuing; and (ii) Lessee must intend to discontinue use of
the Uneconomic Property as a restaurant by Lessee or any Affiliate of Lessee,
for a period of at least one year after the termination of this Lease as to such
Uneconomic Property. Lessee shall signify its election to exercise its right of
termination by giving notice of such election to Lessor. Such notice shall cause
Lessor and Lessee to follow the procedures set forth in this Article XVI, which
procedures must be followed by Lessee as a precondition to the termination of
this Lease as to any Uneconomic Property (provided, however, that after December
31, 2007, Lessee may also elect to follow the procedures set forth in Article
XXIII).
(b) In the event Lessee elects to exercise its right of termination as to
an Uneconomic Property, Lessee shall present to Lessor information regarding at
least three (3) potential substitute properties operated by Lessee as Hardee's
restaurants. Unless Lessor otherwise specifies, such information shall be
substantially similar to the type of information specified in paragraph 5 of the
Purchase Contract. Each substitute site shall have average Gross Sales (as
defined in Article II hereof) for the preceding thirty six (36) month period, of
at least ninety percent (90%) of the average Gross Sales per Leased Property of
all of the Leased Properties for the preceding thirty six (36) month period but
not less than the average Gross Sales of the Uneconomic Property for such
period. Lessor shall have a period of thirty (30) days from the date of
presentation of the third potential substitute property, within which to review
such information and either accept any one of, or reject all of, the potential
substitute properties so presented. If Lessor accepts a proposed substitute
property (a "Substitute Property"), then the parties shall follow substantially
the same procedures set forth in the Purchase Contract to the extent not
inconsistent herewith, except that the consideration to be paid by Lessor shall
consist solely of the conveyance of the Uneconomic Property to Lessee free from
any liens, encumbrances, claims or assessments. Upon execution by Lessor and
Lessee of a Lease Supplement applicable to such Substitute Property, such
Substitute Property shall become a Leased Property and such Leased Property
shall, for the purposes of the Lease, be deemed to have an Original Cost equal
to the Original Cost of the Uneconomic Property, and this Lease shall terminate
as to the Uneconomic Property.
If Lessor rejects all of the substitute properties proffered by Lessee and
Lessor and Lessee are not otherwise able to agree on a Substitute Property, then
Lessee shall nonetheless have the right to terminate this Lease as to the
Uneconomic Property upon notice to Lessor, provided that such notice must be
accompanied by a written offer to purchase the Uneconomic Property at a cash
price equal to the greater of (i) the Original Cost of such Uneconomic Property
or (ii) the Fair Market Value (as defined in Section 16(d) below) of such
Uneconomic Property. Any such notice of intent to purchase shall be given within
thirty (30) days following the expiration of the thirty (30) day review period
set forth above for review of potential substitute properties and shall specify
as the proposed purchase date a date which is between ninety (90) and one
hundred twenty (120) days after such notice. If Lessor does not accept Lessee's
offer to purchase such Uneconomic Property by a date which is thirty (30) days
prior to such proposed purchase date, then this Lease shall terminate as to such
Uneconomic Property as of such proposed purchase date. If Lessor accepts
Lessee's offer to purchase such Uneconomic Property, such sale shall be
consummated on such proposed purchase date and this Lease shall terminate as to
such Uneconomic Property on the date of sale. Upon the termination of the Lease
as to such Uneconomic Property, the Base Rent shall be proportionately reduced.
Notwithstanding anything above to the contrary, the exercise by Lessee of its
rights under this Section 16(b) shall not have a material adverse affect on
Lessor relative to any outstanding loan Lessor may have, including without
limitation, the imposition of prepayment penalties, causing an event of default,
or triggering an acceleration.
(c) From and after the date of substitution, for all purposes of this Lease
Gross Sales for the Substitute Property for any calendar quarter after the
quarter in which the substitution occurs shall be deemed to be the greater of
(A) the actual Gross Sales of such Substitute Property, or (b) the average Gross
Sales per calendar quarter of the Uneconomic Property for the last four full
calendar quarters of its operation. The Term as to such Substitute Property
shall be identical to the Term for the Uneconomic Property, as if no
substitution occurred.
(d) "Fair Market Value" for the purposes of Articles XVI and XXIII shall be
deemed to be the value agreed to by Lessor and Lessee, or,in the absence of such
agreement, the median (i.e., the middle) of those values determined in
accordance with Article XXXIV, provided, however, that if two of the three
appraisers thereunder agree on a value, such value shall govern. Notwithstanding
the foregoing, with respect to a determination of Fair Market Value of an
Uneconomic Property, Fair Market Value shall be computed without regard to any
encumbrance which Lessor or Lessee is, or will be, required to remove pursuant
to any provision of this Lease, but taking into account any other encumbrance
created by, through or under Lessor.
(e) Lessee shall bear all out of pocket costs and expenses associated with,
required by, or incidental to (i) the termination of this Lease as to an
Uneconomic Property resulting from the purchase of the Uneconomic Property by
Lessee under Articles XVI or XXIII, or (ii) the conveyance of the Uneconomic
Property to Lessee and the Substitute Property to Lessor under this Article XVI.
(f) In the event of a substitution of a property for an Uneconomic
Property, or a purchase of an Uneconomic Property by Lessee pursuant to this
Article XVI or Article XXIII, Lessee must discontinue its use of the Uneconomic
Property in its business operations on or before the date of substitution or
purchase and neither Lessee nor any of its Affiliates may use the Uneconomic
Property as a restaurant for a period of one year from the date of substitution
or purchase.
ARTICLE XVII
17. Events of Default.
17.1 If any one or more of the following events (individually, an "Event of
Default") shall occur:
(a) Lessee shall fail to make payment of any Rent, or Additional Charges
payable by Lessee under this Lease when the same becomes due and payable and
such failure shall continue for a period of ten (10) days;
(b) Lessee shall fail to observe or perform the covenants with respect to
insurance set forth in Section 14.1 of this Lease;
(c) Lessee shall fail to observe or perform any other term, covenant or
condition of this Lease and such failure shall continue for a period of thirty
(30) days after notice thereof from Lessor, unless such failure cannot be cured
within such period by the payment of money and Lessee acts with diligence to
correct such failure, in which case Lessee shall be entitled to reasonable time
extensions;
(d) any representation or warranty made by the Lessee herein or made by the
Lessee in a statement, agreement or certificate furnished by the Lessee to or
with any Landlord's Mortgagee or furnished by the Lessee pursuant hereto, is
untrue in any material respect as of the date of the issuance or making thereof;
or
(e) the termination, expiration or relinquishment of the franchise or
license for a Leased Property pursuant to which the Lessee operates a Leased
Property as a Hardee's Restaurant;
(f) the Lessee shall (i) admit in writing its inability to pay its debts
generally as they become due; (ii) file a petition in bankruptcy or a petition
to take advantage of any insolvency act; (iii) make an assignment for the
benefit of its creditors; (iv) consent to the appointment of a receiver of
itself or of the whole or any substantial part of its property; (v) or if a
custodian, trustee or receiver is appointed for the Lessee or for the major part
of the property of the Lessee and is not discharged within 30 days after such
appointment; (vi) file a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other applicable law or
statute of the United States of America or any stated thereof;
(g) insolvency proceedings or a petition in bankruptcy shall be filed
against Lessee and not dismissed within sixty (60) days of filing, or a court of
competent jurisdiction shall enter an order or decree appointing, without the
consent of Lessee, a receiver of Lessee or of the whole or substantially all of
its property, and such order or decree shall not be vacated or set aside or
stayed within sixty (60) days from the date of the entry thereof; or
(h) the estate or interest of Lessee in any Leased Property or any part
thereof or in this Lease shall be levied upon or attached in any proceeding and
the same shall not be vacated or discharged within sixty (60) days after such
levy or attachment (unless Lessee shall be contesting such levy or attachment in
good faith in accordance with Article XIII hereof).
Then, and in any such event, Lessor may terminate this Lease as to any one
or all of the Leased Properties by giving Lessee ten (10) days notice of such
termination and upon the expiration of the time fixed in such notice, the Term
shall terminate and all rights of Lessee under this Lease shall cease as to the
designated Leased Properties.
Lessee will, to the fullest extent permitted by law, pay as Additional
Charges all reasonable costs and expenses incurred by or on behalf of Lessor,
including, without limitation, attorneys' fees and expenses, as a result of any
Event of Default hereunder.
17.2 If an Event of Default shall have occurred and be continuing, and this
Lease has been terminated pursuant to Section 17.1, Lessee shall immediately
surrender to Lessor possession of the designated Leased Properties and Lessee
shall quit the same. Lessor may enter upon and repossess such Leased Properties
by reasonable force, summary proceedings, ejectment or otherwise, and may remove
Lessee and all other persons and any and all personal property and Lessee's
Equipment from such Leased Properties. Lessor shall have no liability by reason
by any such entry, repossession or removal.
17.3 If an Event of Default shall have occurred and be continuing, and this
Lease has been terminated pursuant to Section 17.1, Lessor shall use reasonable
efforts to relet those Leased Properties which Lessor has taken possession of,
in the name of Lessee or otherwise, for such term or terms (which may be greater
or less than the period which would otherwise have constituted the balance of
the then current Term) and on such conditions (which may include concessions or
free rent) and for such purposes as Lessor may reasonably determine, and may
collect, receive and retain the rents resulting from such reletting.
17.4 Neither (a) the termination of this Lease as to all or any of the
Leased Properties pursuant to Section 17.1; (b) the repossession of Leased
Properties; (c) the failure of Lessor to relet Leased Properties; (d) the
reletting of all or any portion thereof; nor (e) the failure of Lessor to
collect or receive any rentals due upon any such reletting, shall relieve Lessee
of its liability and obligations hereunder, all of which shall survive any such
termination, repossession or reletting. In the event of any such termination as
to one or more of the Leased Properties pursuant to Section 17.1, Lessee shall
forthwith pay to Lessor all Rent and other sums due and payable hereunder to and
including the date of such termination for the designated Leased Properties.
Thereafter, on the days on which the Rent (or the components thereof) would have
been payable under this Lease if the same had not been terminated and until the
end of what would have been the Primary Term(s) or the then current Extension
Term(s) (as the case may be) in the absence of such termination, Lessee shall
pay Lessor, as current liquidated damages (it being agreed that it would be
impossible to accurately determine actual damages):
(i) an amount equal to the Rent and Additional Charges that would have
been payable by Lessee hereunder for the designated Leased Properties if
the Term had not been terminated; provided, however, that for this purpose
Base Rent for a repossessed Leased Property shall be deemed to be Eleven
and 141/1000 percent (11.141%) of the Original Cost of such Leased
Property, less
(ii) the net proceeds, if any, of any reletting of the repossessed
Leased Properties or any portion thereof, after deducting all of Lessor's
expenses in connection therewith, including, without limitation,
repossession costs, brokerage commissions, reasonable attorneys' fees and
expenses and any repair or alteration costs and expenses incurred in
preparation for such reletting;
17.5 At any time after the termination of this Lease as to one or more
Leased Properties pursuant to Section 17.1, whether or not Lessor shall have
collected any current liquidated damages pursuant to Section 17.4, Lessor, at
its option and, as to any Leased Properties, shall be entitled to recover from
Lessee and Lessee will pay to Lessor on demand as and for liquidated and agreed
final damages for Lessee's default (it being agreed that it would be impossible
to accurately determine the actual damages), and in lieu of all current damages
provided in Section 17.4 beyond the date to which the same shall have been paid,
(a) the sum of (i) any past due Rent (and other sums payable thereunder)
together with a late charge thereon (to the extent permitted by law) computed
from the due date thereof to the date of payment of such liquidated damages at
the lesser of the Overdue Rate or the maximum rate permitted by law (in lieu of
the late charge provided by Section 3.4); (ii) the remaining payments of Base
Rent which would otherwise have become due during the remainder of the Primary
Terms(s) or the then current Extension Term(s) for the Leased Properties as to
which this Lease is then being terminated but for such termination (and for the
limited purposes of this Section) the annual Base Rent shall be deemed to be
equal to Eleven and 141/1000 percent (11.141%) of the Original Cost of each
Leased Property as to which this Lease is being terminated, as of the later of
the date to which Base Rent shall have been paid or the date to which Lessee
shall have paid current damages pursuant to Section 17.4, discounted to the date
of payment at the market rate provided in Subsection (b) below; and (iii) an
amount equal to the Additional Charges and other charges (as reasonably
estimated by Lessor) which would be payable hereunder with respect to the
repossessed Leased Properties from such date for what would have been the then
unexpired Primary Term or the then current Extension Term had the same not been
terminated, discounted to the date of payment at the market rate provided in
subsection (b) below; less
(b) the then net fair rental value of the Leased Properties as to which
this Lease is being terminated, as determined by appraisal consistent with the
procedures of Article XXXIV, for the period from the date or payment of such
liquidated damages to the date which would have been the then expiration date of
the Primary Term or the then current Extension Term had this Lease not been
terminated (after deducting all reasonable estimated expense to be incurred in
connection with reletting of any of the repossessed Leased Properties),
discounted to the date of payment at market rate selected by the appraisers
designated pursuant to Article XXXIV.
If any statute or rule of law shall validly limit the amount of such liquidated
current or final damages to less than the amount above agreed upon, Lessor shall
be entitled to the maximum amount allowable under such statute or rule of law.
17.6 If this Lease is terminated pursuant to Section 17.1, Lessee waives,
to the extent permitted by applicable law, (a) any notice of re-entry or of the
institution of legal proceedings to obtain re-entry or possession; (b) any right
of redemption, re-entry or repossession; (c) any right to a trail by jury in the
event of summary proceedings to enforce the remedies set forth in this Article
XVII; (d) the benefit of any laws now or hereafter in force exempting property
from liability for rent or for debt; and (e) any other rights which might
otherwise limit or modify any of Lessor's rights or remedies under this Article
XVII.
17.7 Any payments received by Lessor under any of the provisions of this
Lease during the existence or continuance of any Event of Default (if such
payment is made to Lessor rather than Lessee due to the existence of an Event of
Default) shall be applied to Lessee's obligations in the order which Lessor may
determine.
ARTICLE XVIII
18. Lessor's Right to Cure Lessee's Default. If Lessee shall fail to make
any payment or perform any act required to be made or performed under this
Lease, Lessor, after notice to and demand upon Lessee, and without waiving or
releasing any obligation or Default, may (but shall be under no obligation to)
at any time thereafter make such payment or perform such act for the account and
at the expense of Lessee, and may, to the extent permitted by law, enter upon
any Leased Property for such purpose and take all such action thereon as, in
Lessor's opinion, may be necessary or appropriate therefor. No such entry shall
be deemed an eviction of Lessee. All sums so paid by Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so incurred, together
with a late charge thereon at the Overdue Rate (or at the maximum rate permitted
by law, whichever is the lesser) from the date on which such sums or expenses
are paid or incurred by Lessor, shall be paid by Lessee to Lessor on demand.
ARTICLE XIX
19. Provisions Relating to Lessee's Acquisition of a Leased Property. In
the event Lessee purchases or otherwise acquires a Leased Property from Lessor
pursuant to any of the terms of this Lease, Lessor shall, upon receipt from
Lessee of the applicable purchase price or other consideration, together with
full payment of any unpaid Rent due and payable on or before the date of the
purchase, execute and deliver to Lessee, on the purchase date, an appropriate
special warranty deed conveying title to the affected Leased Property in its
then present condition to Lessee free and clear of any liens and encumbrances
that have been created by, through or under Lessor without consent of Lessee
other than (i) those that Lessee has agreed hereunder to pay or discharge; and
(ii) those mortgage liens, if any, which Lessee has agreed at that time in
writing to accept and to take title subject to (which will result in an
adjustment of the cash portion of the purchase price).
ARTICLE XX
20. Extension Terms. If no Event of Default shall have occurred and be
continuing, the Term of this Lease shall be automatically extended and renewed
for three (3) consecutive five-year optional renewal terms unless the Lessee
shall give notice to Lessor, at least one hundred eighty (180) days prior to the
end of the Primary Term or the then current Extension Term, of Lessee's desire
to terminate the Lease effective at the end of the Primary Term or then current
Extension Term. All of the terms and conditions of this Lease shall continue in
full force and effect during any extension (including Base Rent) except that the
number of Extension Terms permitted hereunder shall be reduced by one upon the
expiration of each successive Extension Term. If Lessee fails to timely notify
Lessor of its desire to terminate the Lease, the Lease shall be extended and
continued as aforesaid unless such timely notice is waived by Lessor in writing
in Lessor's sole discretion.
ARTICLE XXI
21. Holding Over. If Lessee shall for any reason remain in possession of a
Leased Property after the expiration or earlier termination of the Term as to
such Leased Property, such possession shall be as a tenancy at sufferance during
which time Base Rent for such Leased Property shall be Eleven and 141.1000
percent (11.141%) per annum of the Original Cost and Lessee shall continue to
pay all Percentage Rent and Additional Charges, and all other sums, if any,
payable by Lessee pursuant to the provisions of this Lease during the term
thereof with respect to such Leased Property, including Percentage Rent. During
such period of tenancy at sufferance, Lessee shall be obligated to perform and
observe all of the terms, covenants and conditions of this Lease, but shall have
no rights thereunder other than the right, to the extent given by law to tenants
at sufferance, to continue its occupancy and use of such Leased Property.
Nothing contained herein shall constitute the consent, express or implied, of
Lessor to the holding over of Lessee after the expiration or earlier termination
of this Lease and nothing contained herein shall be read or construed as
preventing Lessor from maintaining a suit for possession of any such Leased
Property.
ARTICLE XXII
[INTENTIONALLY LEFT BLANK]
ARTICLE XXIII
23. Special Cash Purchase of Properties by Lessee. In the event Lessee
wishes to terminate this Lease as to up to five (5) Uneconomic Properties per
year after December 31, 2007 but does not wish to utilize the substitution
procedure provided by Section 16(b), Lessee may give Lessor written notice of
such intention. Such notice shall be accompanied by an offer to purchase any of
up to five (5) Uneconomic Properties on a date (the "Termination Date")
specified by Lessee which is between ninety (90) and one hundred twenty (120)
days after such notice, for a cash purchase price equal to the greater of (i)
the Fair Market Value (as defined in Section 16(d) above) of each such
Uneconomic Property or (ii) the net book value of each such Uneconomic Property
as of the Termination Date, computed on the basis of the Original Cost of each
such Uneconomic Property less depreciation of all depreciable components on a
straight line basis using a forty (40) year useful life beginning on the date
such Uneconomic Property became subject to the terms of this Lease. If Lessor
does not accept Lessee's offer by a date which is thirty (30) days prior to the
Termination Date, this Lease shall terminate as to each such Uneconomic Property
on the Termination Date. If Lessor accepts Lessee's offer, such purchase shall
be consummated in accordance with all of the provisions of Article XVI (other
than the substitution provision contained in subparagraph (b) thereof) and this
Lease terminated as to each such Uneconomic Property, on the Termination Date.
Thereafter, Base Rent shall be proportionately reduced.
ARTICLE XXIV
24. Risk of Loss. During the Term of this Lease, the risk of loss of or
decrease in the enjoyment and beneficial use of the Leased Properties in
consequence of the damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise is assumed by lessee, and Lessor
shall in no event be answerable or accountable therefor except in the case of
gross negligence, willful misconduct or breach of this Lease by Lessor resulting
in such damage or destruction. In addition, all risk of loss or decrease in
enjoyment and beneficial use in consequence of foreclosures, attachments, levies
or executions is assumed by Lessee.
ARTICLE XXV
25. Indemnification by Lessee. Lessee will protect, indemnify, save
harmless and defend Lessor from and against all liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses ), to the extent
permitted by law, imposed upon or incurred by or asserted against Lessor by
reason of (a) any accident, injury to or death of persons or loss of or damage
to property occurring on or about a Leased Property or adjoining sidewalks; (b)
any use, misuse, nonuse, condition, maintenance or repair of a Leased Property;
(c) any failure on the part of Lessee to perform or comply with any of the terms
of this Lease; (d) the alleged or actual existence of hazardous or toxic
materials on or about the Leased Properties; (e) the nonperformance of any of
the terms and provisions of any and all existing and future subleases of a
Leased Property to be performed by the sublessor thereunder; and (f) obligations
of Lessor under any and all documents evidencing any loan from a Lessor's
Mortgagee incurred by reason of Lessee's defaults under this Lease, including
without limitation any prepayment penalties. Any amounts which become payable by
Lessee under this Section shall be paid no later than ten (10) days after demand
by Lessor and, if such payment is to be made to Lessor and is not timely paid,
shall bear a late charge (to the extent permitted by law) at the lesser of the
Overdue Rate or the maximum rate permitted by law from the date of such
determination to the date of payment. Lessee, at its expense, shall contest,
resist and defend any such claim, action or proceeding asserted or instituted
against Lessor or may compromise or otherwise dispose of the same as Lessee sees
fit, provided any such contest shall be conducted by counsel who shall be
satisfactory to the Lessor. Nothing herein shall be construed as indemnifying
Lessor against its own grossly negligent acts or willful misconduct. Lessee's
liability under this Section shall survive any termination of this Lease as to
any circumstance, condition, act or omission occurring to and including the date
of termination of this Lease or existing as of the date of Termination, whether
known or unknown to Lessor or Lessee.
ARTICLE XXVI
26.1. Subletting and Assignment by Lessee. Lessee shall not sublet all or
any part of any Leased Property nor assign its interest under this Lease as to
any Leased Property without the prior written consent of Lessor except as
provided in the next sentence. Provided there shall exist no Default or Event of
Default hereunder, Lessee may, without the consent of Lessor, upon written
notice to Lessor, sublet all or any part of any Leased Property or assign its
interest under this Lease as to any Leased Property to any Affiliate of Lessee
(provided the Affiliate agrees in writing to be bound by the provisions of this
Lease) or a business organization into or with which Lessee may merge or with
which it may consolidate (provided the surviving business organization controls
all or substantially all of Lessee's restaurant operations) or to any business
organization which acquired all or substantially all of Lessee's restaurant
operations (provided that the acquiring entity shall expressly assume Lessee's
obligations under this Lease to the extent assigned). In the event of any
assignment or subletting, Lessee shall remain primarily liable under this Lease
as to the Leased Property or Properties so assigned or sublet, and the subtenant
or assignee shall be bound by all of the terms of this Lease applicable to such
Leased Property. No such sublease may have a term with respect to a Leased
Property which extends beyond the Term of this Lease as to such Property.
26.2. Attornment. Lessee shall insert in each sublease permitted under
Section 26.1 provisions to the effect that (a) such sublease is subject and
subordinate to all of the terms and provisions of this Lease and to the rights
of Lessor hereunder; (b) in the event this Lease shall terminate before the
expiration of such sublease, the sublease thereunder will, at Lessor's option,
attorn to Lessor and waive any right the sublessee may have to terminate the
sublease or to surrender possession thereunder, as a result of the termination
of this Lease; and (c) in the event the sublessee receives a written notice from
Lessor stating that Lessee is in Default under this Lease, the sublessee shall
thereafter be obligated to pay all rentals and other sums accruing under said
sublease directly to the party giving such notice, or as such party may direct.
26.3. Sublease Limitation. Anything contained in this Lease to the contrary
notwithstanding, Lessee shall not sublet any Leased Property on any basis such
that the rental to be paid by the sublessee thereunder would be based, in whole
or in part, on either (i) the income or profits derived by the business
activities of the sublessee, or (ii) any other formula such that any portion of
the sublease rental received by Lessor would fail to qualify as "rents from real
property" within the meaning of Section 856(d) of the Internal Revenue Code of
1986, as amended, or any similar or successor provision thereto.
26.4. Assignment by the Lessor. Lessor may assign its rights under this
Lease, in whole or in part in connection with a sale, mortgage or financing of
all or part of the Leased Properties, subject to Lessee's right of first refusal
under Article XXXV hereof.
ARTICLE XXVII
27. Estoppel Certificates and Financial Statements. At any time and from
time to time upon not less than twenty (20) days prior request by Lessor, Lessee
will furnish to Lessor an Officer's Certificate certifying that this Lease is
unmodified and in full force and effect (or that this Lease is in full force and
effect as modified and setting forth the modifications) and the dates to which
the Base Rent, Percentage Rent and all Additional Charges have been paid. Any
such certificate furnished pursuant to this Section may be relied upon by Lessor
and any prospective purchaser of a Leased Property.
Lessee will furnish to Lessor and Lessor's Mortgagee within one hundred and
twenty (120) days after the end of Lessee's fiscal year, Consolidated Financials
for the fiscal year accompanied by an audit opinion of the independent certified
public accountants then employed by Lessee. Lessee shall also furnish Lessor and
Lessor's Mortgagee with reasonable promptness, such other information,
consistent with the disclosure requirements of the federal securities law,
respecting the financial condition of Lessee as Lessor and Lessor's Mortgagee
may reasonably request from time to time, and Lessee consents to the use and
distribution of such other information in the financial reports and other
statements sent to Lessor's shareholders and filed by the Lessor with the
Securities and Exchange Commission.
ARTICLE XXVIII
28. Right to Inspect. Lessee shall permit Lessor and Lessor's Mortgagee and
their authorized representatives, to inspect the Leased Properties during usual
business hours upon reasonable notice, provided that such inspections shall not
unreasonably interfere with Lessee's business operations.
ARTICLE XXIX
29. No Waiver. No failure by Lessor or Lessee to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no waiver
of any breach shall affect or alter this Lease, which shall continue in full
force and effect with respect to any other then existing or subsequent breach.
ARTICLE XXX
30. Acceptance of Surrender. No surrender to Lessor of this Lease or of any
or all of the Leased Properties or of any part of any thereof or of any interest
therein shall be valid or effective unless agreed to and accepted in writing by
Lessor and no act by Lessor or any representative of agent of Lessor, other than
such a written acceptance by Lessor, shall constitute an acceptance of any such
surrender.
ARTICLE XXXI
31. No Merger of Title. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same person,
firm, corporation or other entity may acquire, own or hold, directly or
indirectly (a) this Lease or the leasehold estate created hereby or any interest
in this Lease or such leasehold estate and (b) the fee estate in any of the
Leased Properties.
ARTICLE XXXII
32. Conveyance by Lessor. If Lessor or any successor owner of any of the
Leased Properties shall convey any of the Leased Properties other than as
security for a debt, Lessor or such successor owner, as the case may be, shall
thereupon be released from all future liabilities and obligations of the Lessor
under this Lease as to the affected Leased Properties and all such future
liabilities and obligations shall thereupon be binding upon the new owner.
ARTICLE XXXIII
33. Notices. All notices, demands, requests, consents, approvals and other
communications hereunder or as may be required by applicable law shall be in
writing and delivered personally or mailed (by registered or certified mail,
return receipt requested and postage prepaid), addressed to the respective
parties, as follows:
(a) if to Lessee:
Xxxxxx-Xxxxx Enterprises, Inc.
0000 Xxxxx Xxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx or
W. Xxxxx Xxxxxx
(b) if to Lessor:
Xxxxxx-Xxxxx Properties, Inc.
0000 Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: D. Xxxxx Xxxxxxxxx or
Xxxxxx X. Xxxxx
or to such other address as either party may hereafter designate, and shall be
effective upon receipt, if delivered personally, or upon the fifth Business Day
after mailing, if mailed. Lessee shall also send a copy of any notice required
to be sent to Lessor under this Lease to any Lessor's Mortgagee which has
notified Lessee of its status as Lessor's Mortgagee and provided Lessee with an
address to which to send such notices.
ARTICLE XXXIV
34.1 Appraisers. In the event that Lessee desires to terminate this Lease
with respect to an Uneconomic Property pursuant to the provisions of Article XVI
or Article XXIII, and the Fair Market Value of the Uneconomic Property is
required by such provisions to be determined by appraisal, Lessee shall include
in the notice of termination of this Lease as to the Uneconomic Property the
name of a person selected to act as appraiser on its behalf. Within ten (10)
days after such notice, Lessor shall by notice to lessee appoint a second person
as appraiser on its behalf. The appraisers thus appointed shall appoint a third
appraiser, and the three appraisers, each of whom must be a member of the
American Institute of Real Estate Appraisers (or any successor organization
thereto), shall proceed to appraise the Uneconomic Property to determine the
fair market value thereof as of the date of such original notice by Lessee;
provided, however, that
(a) if the second appraiser shall not have been appointed as aforesaid, the
first appraiser shall proceed to determine such matter; and
(b) if the two appraisers appointed by the parties shall be unable to
agree, within ten (10) days after the appointment of the second appraiser, upon
the selection of a third appraiser, they shall give notice of such failure to
agree to the parties, and if the parties fail to agree upon the selection of
such third appraiser within ten (10) days thereafter, then within five (5) days
thereafter either of the parties upon notice to the other party may request the
American Institute of Real estate Appraisers (or any successor organization
thereto), or in its absence, court appointment of such appraiser; Lessee and
Lessor hereby agree to use their best efforts to cause the third appraiser to be
appointed within thirty (30) days after the appointment of the second appraiser
if the first two appraisers are unable to agree upon such third appraiser.
34.2 Appraisal. The appraisers shall render their valuation appraisals
within thirty (30) days after the appointment of the third appraiser, or by the
sole appraiser within thirty (30) days after the expiration of the period
described in Section 34.1 for the appointment of a second appraiser, in the
event no second appraiser is so appointed. Such appraisals of fair market value
shall be in writing and shall be final and conclusive on the parties, and
counterpart copies thereof shall be delivered to each of the parties. The
appraisers shall determine fair market value of the Uneconomic Property on the
basis that such Property is free and clear of this Lease. Lessee shall pay the
fees and expenses incurred in connection with each appraisal.
ARTICLE XXXV
35. First Refusal to Purchase. Provided no Event of Default shall have
occurred and be continuing, Lessee shall have a right of first refusal to
purchase any of the Leased Properties during the Term of this Lease upon the
same terms and conditions as proposed in a bona fide written offer to Lessor, or
its successors and assigns, by a third party who does not qualify as an
Affiliate. If Lessor receives a bona fide offer from such a third party and
Lessor desires to accept said offer, Lessor shall promptly notify Lessee of the
proposed purchase price and all other material terms and conditions of such
offer, and Lessee shall have thirty (30) days after such notice from Lessor
within which time to elect to exercise Lessee's right to purchase. If Lessee
elects to exercise its right to purchase, then such transaction shall be
consummated within sixty (60) days after Lessee's notice to Lessor of such
election, in accordance with the terms and conditions of such offer. If Lessee
fails to exercise its right of first refusal within the time set forth above,
then Lessor shall have the right for a period of ninety (90) days to sell such
property to the prospective purchaser on the same terms as the offer. If such
sale is not completed within such ninety (90) day period, Lessee's right of
first refusal shall thereafter apply to such property. Notwithstanding anything
to the contrary herein, (a) such right of first refusal shall not apply to any
conveyance by mortgage or deed of trust executed by Lessor in favor of any
Lessor's Mortgagee, or to any foreclosure or deed in lieu of foreclosure
thereof, (b) any purchase pursuant to such right of first refusal shall be
subject to any such mortgage or deed of trust and shall not affect Lessee's
obligations under this Lease, and (c) all rights of first refusal shall be
deemed extinguished by foreclosure of, or acceptance of a deed in lieu of
foreclosure with respect to, any such mortgage or deed of trust, but all other
provisions of this Lease shall remain in full force and effect.
ARTICLE XXXVI
36. Miscellaneous. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and the liabilities of, the Lessee or
Lessor arising prior to any date of termination of this Lease shall survive such
termination. If any term or provision of this Lease of any application thereof
shall be invalid or unenforceable, the remainder of this Lease and any other
application of such term or provision shall not be affected thereby. In the
event that Lessor or Lessee shall initiate any legal proceeding or suit against
the other relating to this Lease, including any default thereunder, the
unsuccessful party in such proceeding or suit shall reimburse the successful
party for the reasonable fees and expenses of the successful party's attorneys.
Neither this Lease nor any provision hereof may be changed, waived, discharged
or terminated except by an instrument in writing and in recordable form signed
by Lessor and Lessee. Any such change, waiver, discharge or termination, to be
effective against Lessor, must be approved by a majority of the Independent
Directors, as defined in Lessor's certificate of incorporation. All the terms
and provisions of this Lease shall inure to the benefit of the parties hereto
and their respective successors and assigns. The headings in this Lease are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Lease shall be governed by and construed in accordance with
the laws of the State of North Carolina.
ARTICLE XXXVII
37. Memorandum of Lease. This Lease shall not be recorded, but Lessor and
Lessee shall, promptly upon the request of either or Lessor's Mortgagee, enter
into a short form memorandum of this Lease, in form suitable for recording under
the laws of the states in which the Leased Properties are located, in which
reference to this Lease shall be made.
IN WITNESS WHEREOF, the parties have caused this Lease to be executed and
their respective corporate seals to be hereunto affixed and attested by their
respective officers thereunto duly authorized.
LESSOR:
XXXXXX-XXXXX PROPERTIES, INC.
ATTEST: ____/s/ X. Xxxxx Wilkerson___
By: D. Xxxxx Xxxxxxxxx
___/s/ Xxxxxx X. Payne___ President
Xxxxxx X. Xxxxx
_Asst._Secretary
[Corporate Seal]
LESSEE:
XXXXXX-XXXXX ENTERPRISES, INC.
ATTEST: ____/s/ Xxx Xxxx Boddie_______
By:
__/s/ Xxxxxxx X. Anderson__ _________President
By:
_____ Secretary
[Corporate Seal]
