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LEASE AGREEMENT
by and between
SFC (TX) QRS 12-18, INC.
a Texas corporation,
as LANDLORD,
and
SPORTS & FITNESS CLUBS OF AMERICA, INC.,
an Ohio corporation,
as TENANT,
Premises: Houston, Texas
Dated as of: July 23, 1996
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TABLE OF CONTENTS
Page
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Parties
1. Demise of Premises .............................. 1
2. Certain Definitions ............................. 1
3. Title and Condition ............................. 9
4. Use of Leased Premises; Quiet Enjoyment ......... 11
5. Term ............................................ 12
6. Basic Rent ...................................... 12
7. Additional Rent ................................. 13
8. Net Lease; Non-Terminability .................... 14
9. Payment of Impositions .......................... 15
10. Compliance with Laws and Easement Agreements;
Environmental Matters ........................... 17
11. Liens; Recording ................................ 19
12. Maintenance and Repair .......................... 20
13. Alterations and Improvements .................... 20
14. Permitted Contests .............................. 21
15. Indemnification ................................. 22
16. Insurance ....................................... 23
17. Casualty and Condemnation ....................... 27
18. Termination Events .............................. 29
19. Restoration; Reduction of Rent .................. 30
20. Procedures Upon Purchase ........................ 32
21. Assignment and Subletting; Prohibition
against Leasehold Financing ..................... 34
22. Events of Default ............................... 35
23. Remedies and Damages Upon Default ............... 37
24. Notices ......................................... 41
25. Estoppel Certificate ............................ 41
26. Surrender ....................................... 42
27. No Merger of Title .............................. 42
28. Books and Records ............................... 42
29. Determination of Value .......................... 43
30. Non-Recourse as to Landlord ..................... 45
31. Financing ....................................... 46
32. Subordination ................................... 46
33. Tax Treatment; Reporting ........................ 46
34. Financing Major Alterations ..................... 47
35. Post-Closing Obligations ........................ 48
36. Miscellaneous ................................... 48
Exhibit "A" - Premises
Exhibit "B" - Machinery and Equipment
Exhibit "C" - Permitted Encumbrances
Exhibit "D" - Basic Rent Schedule
Exhibit "E" - Post-Closing Obligations
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LEASE AGREEMENT, made as of this 23rd day of July, 1996, between SFC
(TX) QRS 12-18, INC., a Texas corporation ("Landlord") with an address c/o W. P.
Xxxxx & Co., Inc., 00 Xxxxxxxxxxx Xxxxx, Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
and SPORTS & FITNESS CLUBS OF AMERICA, INC. ("Tenant"), an Ohio corporation with
an address at 000 Xxxxxxxxxx Xxxxx, Xxxxx, Xxxx 00000.
In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant hereby covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and lets to Tenant, and
Tenant hereby takes and leases from Landlord, for the term and upon the
provisions hereinafter specified, the following described property
(collectively, the "Leased Premises"): (a) the premises described in Exhibit "A"
hereto, together with the Appurtenances (the "Land"); (b) the buildings,
structures and other improvements now or hereafter constructed on the Land
(collectively, the "Improvements"); and (c) the fixtures, machinery, equipment
and other property described in Exhibit "B" hereto (collectively, the
"Equipment").
2. Certain Definitions.
"Acquisition Cost" of the Leased Premises shall mean
$6,180,000.
"Additional Rent" shall mean Additional Rent as defined in
Paragraph 7.
"Adjoining Property" shall mean all sidewalks, driveways,
curbs, gores and vault spaces adjoining any of the Leased Premises for which
Tenant has maintenance or operating responsibility or in which Tenant has any
right or claim (other than rights or claims available to the general public).
"Affected Premises" shall mean the Affected Premises as
defined in Paragraph 18.
"Alterations" shall mean all changes, additions, improvements
or repairs to, all alterations, reconstructions, renewals, replacements or
removals of and all substitutions or replacements for any of the Improvements or
Equipment, both interior and exterior, structural and non-structural, and
ordinary and extraordinary.
"Appurtenances" shall mean all tenements, hereditaments,
easements, rights-of-way, rights, privileges in and to the Land, including
easements over other lands or Adjoining Property granted by any Easement
Agreement.
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"Assignment" shall mean any assignment of rents and leases
from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified from time to time.
"Basic Rent" shall mean Basic Rent as defined in Paragraph 6.
"Basic Rent Payment Dates" shall mean the Basic Rent Payment
Dates as defined in Paragraph 6.
"Casualty" shall mean any injury to or death of any person or
any loss of or damage to any property (including the Leased Premises) included
within or related to the Leased Premises or arising from the Adjoining Property.
"Competitor" shall mean any Person competing with Tenant in
the fitness club industry, and whose primary business is to engage in the
fitness club industry.
"Condemnation" shall mean a Taking and/or a Requisition.
"Condemnation Notice" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.
"Costs" of a Person or associated with a specified transaction
shall mean all reasonable costs and expenses incurred by such Person or
associated with such transaction, including without limitation, attorneys' fees
and expenses, court costs, brokerage fees, escrow fees, title insurance
premiums, mortgage commitment fees, mortgage points, recording fees and transfer
taxes, as the circumstances require.
"Default Rate" shall mean the Default Rate as defined in
Paragraph 7(a) (iv).
"Default Termination Amount" shall mean the Default
Termination Amount as defined in Paragraph 23 (a) (iii).
"Easement Agreement" shall mean any conditions, covenants,
restrictions, easements, declarations, licenses and other agreements listed as
Permitted Encumbrances or as may hereafter affect any of the Leased Premises.
"Environmental Law" shall mean (i) whenever enacted or
promulgated, any applicable federal, state, foreign and local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any governmental entity, (x) relating to pollution (or the cleanup thereof), or
the
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protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of Hazardous Substances, Hazardous
Conditions or Hazardous Activities, in each case as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine (including,
without limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations or injuries or damages due to or threatened as a result of the
presence of, exposure to, or ingestion of, any Hazardous Substance. The term
Environmental Law includes, without limitation, the federal Comprehensive
Environmental Response Compensation and Liability Act of 1980 ("CERCLA"), the
Superfund Amendments and Reauthorization Act, the federal Water Pollution
Control Act, the federal Clean Air Act, the federal Clean Water Act, the federal
Resources Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments to RCRA), the federal Solid Waste Disposal Act, the
federal Toxic Substance Control Act, the federal Insecticide, Fungicide and
Rodenticide Act, the federal Occupational Safety and Health Act of 1970, the
federal National Environmental Policy Act and the federal Hazardous Materials
Transportation Act, each as amended and as now or hereafter in effect and any
similar state or local Law.
"Environmental Violation" shall mean (a) any direct or
indirect discharge, dumping, disposal, spillage, emission, escape, pumping,
pouring, injection, leaching, release, seepage, filtration or transporting of
any Hazardous Substance at, upon, under, onto or within any of the Leased
Premises, or from any of the Leased Premises to the environment, in violation of
any Environmental Law or in excess of any reportable quantity established under
any Environmental Law or which could result in any liability to Landlord, Tenant
or Lender, any Federal, state or local government or any other Person for the
costs of any removal or remedial action or natural resources damage or for
bodily injury or property damage, (b) any storage, placement or use of any
Hazardous Substance at, upon, under or within any of the Leased Premises or
which extends to any Adjoining Property in violation of any Environmental Law or
in excess of any reportable quantity established under any Environmental Law
(provided, however, that Tenant may store or use Hazardous Substances in such
quantities as are necessary for the operation of the Leased Premises in
accordance with Paragraph 4 hereof as long as such storage or use is in
compliance with all applicable Environmental Laws) or which could result in any
liability to any Federal, state or local government or to any other Person for
the costs of any removal or remedial action or natural resources damage or for
bodily injury or property damage, (c) the abandonment or discarding by Tenant or
any Person (other than Landlord or Lender,
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or their respective successors or assigns) occupying any of the Leased Premises
by, through or under Tenant of any barrels, containers or other receptacles
containing any Hazardous Substances in violation of any Environmental Laws, (d)
any activity, occurrence or condition which could result in any liability, cost
or expense to Landlord or Lender or any other owner or occupier of any of the
Leased Premises, or which could result in a creation of a lien on any of the
Leased Premises, under any Environmental Law, or (e) any violation of or
noncompliance with any Environmental Law by Tenant or any Person occupying any
of the Leased Premises by, through or under Tenant.
"Equipment" shall mean the Equipment as defined in Paragraph
1.
"Event of Default" shall mean an Event of Default as defined
in Paragraph 22 (a).
"Fair Market Value" shall mean the higher of (a) the fair
market value of the Leased Premises as of the Relevant Date as if unaffected and
unencumbered by this Lease or (b) the fair market value of the Leased Premises
as of the Relevant Date as affected and encumbered by this Lease and assuming
that the Term has been extended for all extension periods provided for herein.
For all purposes of this Lease, Fair Market Value shall be determined in
accordance with the procedure specified in Paragraph 29.
"Fair Market Value Date" shall mean the date when the Fair
Market Value is determined in accordance with Paragraph 29.
"Federal Funds" shall mean federal or other immediately
available funds which at the time of payment are legal tender for the payment of
public and private debts in the United States of America.
"GAAP" shall mean generally accepted accounting principles
consistently applied.
"Guarantor" shall mean Q Clubs Inc., a Delaware corporation.
"Guaranty" shall mean the Guaranty and Suretyship Agreement
dated as of the date hereof from Guarantor to Landlord guaranteeing the payment
and performance by Tenant of all of Tenant's obligations under the Lease.
"Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or creates any
Hazardous Substance; (ii) causes or results in (or threatens to cause or result
in) the release, seepage, spill, leak, flow, discharge or emission of any
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Hazardous Substance into the environment (including the air, ground water,
watercourses or water systems), (iii) involves the containment or storage of any
Hazardous Substance; or (iv) would cause the Leased Premises or any portion
thereof to become a hazardous waste treatment, recycling, reclamation,
processing, storage or disposal facility within the meaning of any Environmental
Law.
"Hazardous Condition" means any condition which would support
any claim or liability under any Environmental Law, including the presence of
underground storage tanks provided, however, that conditions which comply with
applicable Environmental Law shall not be deemed to be Hazardous Conditions.
"Hazardous Substance" means (i) any substance, material,
product, petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic, harmful or hazardous or acutely hazardous to the environment or
public health or safety or (ii) any substance supporting a claim under any
Environmental Law, whether or not defined as hazardous as such under any
Environmental Law. Hazardous Substances include, without limitation, any toxic
or hazardous waste, pollutant, contaminant, industrial waste, petroleum or
petroleum-derived substances or waste, radon, radioactive materials, asbestos,
asbestos containing materials, urea formaldehyde foam insulation, lead and
polychlorinated biphenyls.
"Impositions" shall mean the Impositions as defined in
Paragraph 9 (a).
"Improvements" shall mean the Improvements as defined in
Paragraph 1.
"Indemnitee" shall mean an Indemnitee as defined in Paragraph
15.
"Insurance Requirements" shall mean the requirements of all
insurance policies required to be maintained in accordance with this Lease.
"Land" shall mean the Land as defined in Paragraph 1.
"Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect and applicable or having
jurisdiction over the Leased Premises or Tenant.
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"Lease" shall mean this Lease Agreement as the same may from
time to time be modified, amended or supplemented.
"Lease Year" shall mean, with respect to the first Lease Year,
the period commencing on the date hereof and ending at midnight on the last day
of the twelfth (12th) consecutive calendar month following the month in which
the Term commenced, and each succeeding twelve (12) month period during the
Term.
"Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.
"Legal Requirements" shall mean all present and future Laws
(including but not limited to Environmental Laws and Laws relating to
accessibility to, usability by, and discrimination against, disabled
individuals) and all covenants, restrictions and conditions now or hereafter of
record which may be applicable to Tenant or to any of the Leased Premises, or to
the use, manner of use, occupancy, possession, operation, maintenance,
alteration, repair or restoration of any of the Leased Premises, even if
compliance therewith necessitates structural changes or improvements or results
in interference with the use or enjoyment of any of the Leased Premises.
"Lender" shall mean any Person (and their respective
successors and assigns) which may, after the date hereof, make a Loan to
Landlord or is the holder of any Note.
"Loan" shall mean any loan made by one or more Lenders to
Landlord, which loan is secured by a Mortgage and an Assignment and evidenced by
a Note.
"Major Alterations" shall mean Major Alterations as defined in
Paragraph 34 (a).
"Monetary Obligations" shall mean Rent and all other sums
payable by Tenant under this Lease to Landlord, to any third party on behalf of
Landlord or to any Indemnitee.
"Mortgage" shall mean any mortgage or deed of trust from
Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified.
"Net Award" shall mean (a) the entire award payable to
Landlord or Lender by reason of a Condemnation whether pursuant to a judgment or
by agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (i), (ii) (to the extent payable to Landlord or Lender), (iv), (v)
or (vi) of Paragraph 16 (a), as the case may be, less any expenses incurred by
Landlord and Lender in collecting such award or proceeds.
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"Note" shall mean any promissory note evidencing Landlord's
obligation to repay a Loan, as the same may be amended, supplemented or
modified.
"Partial Casualty" shall mean any Casualty which does not
constitute a Termination Event.
"Partial Condemnation" shall mean any Condemnation which does
not constitute a Termination Event.
"Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements and other
encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C"
hereto (but such listing shall not be deemed to revive any such encumbrances
that have expired or terminated or are otherwise invalid or unenforceable)
together with any and all future matters affecting title to the Leased Premises
(a) resulting from Landlord's acts or obligations or (b) agreed to or acquiesced
in by Landlord.
"Person" shall mean an individual, partnership, association,
corporation or other entity.
"Prepayment Premium" shall mean any payment (other than a
payment of principal and/or interest which Landlord is required to make under a
Note or a Mortgage) by reason of any prepayment by Landlord of any principal due
under a Note or Mortgage, and which may be (in lieu of such prepayment premium
or prepayment penalty) a "make whole" clause requiring a prepayment premium in
an amount sufficient to compensate a Lender for the loss of the benefit of the
Loan due to a prepayment, but, so long as no Event of Default has occurred,
shall not include any such payment that is payable as a result of any
involuntary taking of the Leased Premises or any part thereof by any Person or
as a result of a default by Landlord under any Loan.
"Present Value" of any amount shall mean such amount
discounted by a rate per annum which is the lower of (a) the Prime Rate at the
time such present value is determined or (b) eight percent (8%) per annum.
"Prime Rate" shall mean the average of the interest rates per
annum quoted by Bank of America NT & SA, San Francisco, CA, The Chase Manhattan
Bank, N.A., New York, NY, Chemical Bank, Xxx Xxxx, XX, Xxxxxxxx, X.X., Xxx Xxxx,
XX, and Xxxxxx Guaranty Trust Company, New York, NY, as their respective prime
rates, such average to change effective as of the effective date of any change
in any of the aforesaid prime rates. The Prime Rate shall be the average of such
publicly announced prime rates even though one or more of the aforesaid banks
may actually charge interest on some of its loans at lower rates; and if any of
the aforesaid banks has more than one prime rate of interest in effect
simultaneously, the prime rate of such bank for the purposes of this definition
shall
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be the highest of such prime rates then in effect far such bank. If three or
more of the aforesaid banks cease to have a publicly announced prime rate then,
for so long as such condition continues, the Prime Rate shall be the average per
annum discount rate from time to time on ninety-one (91) day bills issued by the
United States Treasury ("Treasury bills") at the most recent auction plus three
hundred (300) basis points or, if no such ninety-one (91) day bills are then
being issued, Treasury bills then being issued for the period of time closest to
ninety-one (91) days plus three hundred (300) basis points.
"Purchase Agreement" shall mean the Purchase Agreement of even
date between Landlord and Guarantor.
"Relevant Amount" shall mean the Termination Amount or the
Default Termination Amount, as the case may be.
"Relevant Date" shall mean, as appropriate to the respective
contexts set forth below: (a) the date immediately prior to the date on which
the applicable Condemnation Notice is received, in the event of a Termination
Notice under Paragraph 18 which is occasioned by a Taking, (b) the date
immediately prior to the date on which the applicable Casualty occurs, in the
event of a Termination Notice under Paragraph 18 which is occasioned by a
Casualty, (c) the date when Fair Market Value is redetermined, in the event of a
redetermination of Fair Market Value pursuant to Paragraphs 20(c) and (d) the
date immediately prior to the Event of Default giving rise to the need to
determine Fair Market Value in the event Landlord provides Tenant with notice of
its intention to require Tenant to make a termination offer under Paragraph
23(a)(iii).
"Remaining Sum" shall mean Remaining Sum as defined in
Paragraph 19(c).
"Rent" shall mean, collectively, Basic Rent and Additional
Rent.
"Requisition" shall mean any temporary requisition or
confiscation of the use or occupancy of any of the Leased Premises by any
governmental authority, civil or military, whether pursuant to an agreement with
such governmental authority in settlement of or under threat of any such
requisition or confiscation, or otherwise.
"Retention Date" shall mean the later of the date on which the
amount of the Remaining Sum is finally determined or the date on which
Landlord's right to the Remaining Sum is finally determined.
"Site Assessment" shall mean a Site Assessment as defined in
Paragraph 10(c).
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"State" shall mean the State of Texas.
"Surviving Obligations" shall mean any obligations of Tenant
under this Lease, actual or contingent, which arise on or prior to the
expiration or prior termination of this Lease or which survive such expiration
or termination by their own terms.
"Taking" shall mean (a) any taking or damaging of all or a
portion of the Leased Premises (i) in or by condemnation or other eminent domain
proceedings pursuant to any Law, general or special, or (ii) by reason of any
agreement with any condemnor in settlement of or under threat of any such
condemnation or other eminent domain proceeding, or (b) any de facto
condemnation. The Taking shall be considered to have taken place as of the later
of the date actual physical possession is taken by the condemnor, or the date on
which the right to compensation and damages accrues under the law applicable to
the Affected Premises.
"Term" shall mean the Term as defined in Paragraph 5.
"Termination Amount" shall mean the greater of (a) Fair Market
Value or (b) the sum of the Acquisition Cost and any Prepayment Premium which
Landlord will be required to pay in prepaying any Loan with proceeds of the
Termination Amount.
"Termination Date" shall mean Termination Date as defined in
Paragraph 18(b).
"Termination Event" shall mean a Termination Event as defined
in Paragraph 18(a).
"Termination Notice" shall mean Termination Notice as defined
in Paragraph 18(a).
3. Title and Condition.
(a) The Leased Premises are demised and let subject to (i) the
rights of any Persons in possession of the Leased Premises, (ii) the state of
title of the Leased Premises, including any Permitted Encumbrances, as existed
when the Leased Premises were conveyed to Landlord by deed dated of even date
herewith, (iii) any state of facts which an accurate survey or physical
inspection of the Leased Premises might show, (iv) all Legal Requirements,
including any existing violation of any thereof, and (v) the condition of the
Leased Premises as of the commencement of the Term, without representation or
warranty by Landlord.
(b) Tenant acknowledges that the Leased Premises are in good
condition and repair at the inception of this Lease. LANDLORD LEASES AND WILL
LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS. TENANT
ACKNOWLEDGES THAT LANDLORD (WHETHER
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ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT
MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY
WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY
PARTICUlAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP
THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S
TITLE THERETO, (v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION,
(viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii)
DESCRIPTION, (xiii) DURABILITY (xiv) OPERATION (xv) THE EXISTENCE OF ANY
HAZARDOUS SUBSTANCE, HAZARDOUS CONDITION OR HAZARDOUS ACTIVITY OR (xvi)
COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT; AND ALL
RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT THE
LEASED PREMISES ARE OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT THE
LEASED PREMISES HAVE BEEN INSPECTED BY TENANT AND ARE SATISFACTORY TO IT. IN THE
EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE,
WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR
LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3 (b)
HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION
OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE
LEASED PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER
LAW NOW OR HEREAFTER IN EFFECT OR ARISING OTHERWISE. THIS PARAGRAPH 3(b) IS NOT
INTENDED, AND SHALL NOT BE CONSTRUED, TO RELEASE OR DISCLAIM ANY RIGHT, CLAIM,
ACTION OR CAUSE OF ACTION NOW OR HEREAFTER AVAILABLE TO TENANT IN CONNECTION
WITH THE LEASED PREMISES OR ANY RELATED PREMISES AGAINST ANY PARTY OTHER THAN
LANDLORD OR ANY LENDER OR THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
(c) Tenant represents to Landlord that (i) Tenant has only the
leasehold right of possession and use of the Leased Premises as provided herein,
(ii) the Improvements conform in all material respects to all material Legal
Requirements and all Insurance Requirements, (iii) all easements necessary or
appropriate for the use or operation of the Leased Premises have been obtained,
(iv) all contractors and subcontractors who have performed work on or supplied
materials to the Leased Premises have been fully paid, and all materials and
supplies have been fully paid for, (v) the Improvements have been fully
completed in all material respects in a workmanlike manner of first class
quality, and (vi) all Equipment necessary or appropriate for the use or
operation of the Leased Premises has been installed and is presently fully
operative in all material respects. Notwithstanding Tenant's warranties and
representations under this Paragraph 3(c), Landlord acknowledges that Tenant has
expressly reserved the right to initiate, prosecute, compromise, settle or
resolve any claim, action or cause of action that Tenant has or may hereafter
have against any party (other than Landlord or Lender or their respective
successors and assigns) with respect to
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the subject-matter of any one or more, or all, of such warranties or
representations.
(d) Landlord hereby assigns to Tenant, without recourse or
warranty whatsoever, all warranties, guaranties, indemnities and similar rights
which Landlord may have against any manufacturer, seller, engineer, contractor
or builder in respect of any of the Leased Premises. Such assignment shall
remain in effect until an Event of Default occurs or until the expiration or
earlier termination of this Lease, whereupon such assignment shall cease and all
of said warranties, guaranties, indemnities and other rights shall automatically
revert to Landlord.
4. Use of Leased Premises; Quiet Enjoyment.
(a) Tenant may occupy and use the Leased Premises for sports
and fitness clubs (with all ancillary or incidental uses) and for no other
purpose. Tenant shall not use or occupy or permit any of the Leased Premises to
be used or occupied, nor do or permit anything to be done in or on any of the
Leased Premises, in a manner which would or reasonably foreseeably might (i)
violate any Law or Legal Requirement, (ii) make void or voidable or cause any
insurer to cancel any insurance required by this Lease, or make it impossible to
obtain any such insurance at commercially reasonable rates, (iii) cause
structural injury to any of the Improvements or (iv) constitute a public or
private nuisance or waste.
(b) Subject to the provisions hereof, so long as no Event of
Default has occurred and is continuing, Tenant shall quietly hold, occupy and
enjoy the Leased Premises throughout the Term, without any hindrance, ejection
or molestation by Landlord with respect to any Mortgage or any other instrument
evidencing or securing any Loan, or to matters that arise after the date hereof,
provided that Landlord or Lender may enter upon and examine any of the Leased
Premises at such reasonable times, after reasonable prior notice to Tenant, as
Landlord or Lender may select for the purpose of inspecting the Leased Premises,
verifying compliance or non-compliance by Tenant with its obligations hereunder
and the existence or non-existence of an Event of Default or event which with
the passage of time and/or notice would constitute an Event of Default, showing
the Leased Premises to prospective Lenders and purchasers and taking such other
action with respect to the Leased Premises as is permitted by any provision
hereof; provided, however, that so long as no Event of Default has occurred,
Tenant shall have the opportunity to reasonably approve or disapprove
prospective purchasers of the Leased Premises such approval not to be
unreasonably withheld or delayed and to be deemed given if no response is
received within ten (10) days of any request therefor, except that no such
approval shall be required in connection with any foreclosure of any Mortgage,
deed-in-lieu of foreclosure, transfer of the Leased Premises by Lender or its
designee subsequent thereto or transfer of the Leased Premises or any
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interest therein to any affiliate of Landlord or to any Person for whom W.P.
Xxxxx & Co., Inc. or W.P. Xxxxx Incorporated provides management services or
investment advice, and provided, further, that Landlord shall use reasonable
efforts not to interfere with the operation of Tenant's business at the Leased
Premises in connection with any such entry or inspection. As used in the
preceding sentence, "reasonably" shall mean Tenant may consider only whether the
prospective purchaser is a Competitor of Tenant. Such approval or disapproval
must be given in writing within ten (10) days after Landlord delivers written
notice to Tenant identifying the prospective purchaser.
5. Term.
(a) Subject to the provisions hereof, Tenant shall have and
hold the Leased Premises for an initial term (such term, as extended or renewed
in accordance with the provisions hereof, being called the "Term") commencing on
July 23, 1996 and ending on the last day of the two hundred fortieth (240th)
calendar month next following the date hereof (the "Expiration Date"). If all
Rent and all other sums due hereunder shall not have been fully paid by the end
of the Term, Landlord may, at its option, extend the Term until all said sums
shall have been fully paid.
(b) Provided that if, on or prior to the Expiration Date or
any other Renewal Date (as hereinafter defined), this Lease shall not have been
terminated pursuant to any provision hereof, then on the Expiration Date and on
the fifth (5th), tenth (10th) and fifteenth (15th) anniversaries of the
Expiration Date (the Expiration Date and each such anniversary being a "Renewal
Date"), the Term shall be deemed to have been automatically extended for an
additional period of five (5) years, unless Tenant shall notify Landlord in
writing in recordable form at least eighteen (18) months prior to the next
Renewal Date that Tenant is terminating this Lease as of the next Renewal Date.
Any such extension of the Term shall be subject to all of the provisions of this
Lease, as the same may be amended, supplemented or modified.
(c) If Tenant exercises its option not to extend or further
extend the Term, or if an Event of Default occurs and is not cured, then
Landlord shall have the right during the remainder of the Term then in effect
and, in any event, Landlord shall have the right during the last year of the
Term, to (i) advertise the availability of the Leased Premises for sale or
reletting and to erect upon the Leased Premises signs indicating such
availability and (ii) show the Leased Premises to prospective purchasers or
tenants or their agents at such reasonable times as Landlord may select.
6. Basic Rent. Tenant shall pay to Landlord, as annual rent for the
Leased Premises during the Term, the amounts determined in accordance with
Exhibit "D" attached hereto and made
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a part hereof ("Basic Rent"), commencing on the first day of August, 1996 and
continuing on the first day of each November, February, May and August
thereafter during the Term (each such day being a "Basic Rent Payment Date").
Each such rental payment shall be made, at Landlord's sole discretion, (a) to
Landlord at its address set forth above and/or to such one or more other
Persons, at such addresses and in such proportions as Landlord may direct by
fifteen (15) days' prior written notice to Tenant (in which event Tenant shall
give Landlord notice of each such payment concurrently with the making thereof),
and (b) by a check hand delivered (or sent by recognized overnight courier
service) at least five (5) business days before or mailed at least ten (10) days
before the applicable Basic Rent Payment Date, or in Federal Funds. Pro rata
Basic Rent for the period from July 23, 1996 through and including July 31,
1996, shall be paid on the date hereof.
7. Additional Rent.
(a) Tenant shall pay and discharge, as additional rent
(collectively, "Additional Rent"):
(i) except as otherwise specifically provided herein,
all costs and expenses of Tenant, Landlord and any other Persons specifically
referenced herein which are incurred in connection or associated with (A) the
ownership, use, non-use, occupancy, possession, operation, condition, design,
construction, maintenance, alteration, repair or restoration of any of the
Leased Premises, (B) the performance of any of Tenant's obligations under this
Lease, (C) any sale or other transfer of any of the Leased Premises to Tenant
under this Lease, (D) to the extent not deducted in calculating the Net Award,
any Condemnation proceedings, (E) to the extent not deducted in calculating the
Net Award, the adjustment, settlement or compromise of any insurance claims
involving or arising from any of the Leased Premises, (F) the prosecution,
defense or settlement of any litigation involving or arising from any of the
Leased Premises, this Lease, or the sale of the Leased Premises to Landlord, (G)
the exercise or enforcement by Landlord, its successors and assigns, of any of
its rights under this Lease, (H) any amendment to or modification or termination
of this Lease made at the request of Tenant, (I) Costs of Landlord's counsel
incurred in connection with the preparation, negotiation and execution of this
Lease, or incurred in connection with any act undertaken by Landlord (or its
counsel) at the request of Tenant, or incurred in connection with any act of
Landlord performed on behalf of Tenant, (J) costs of appraisals, audits and
inspections of the Leased Premises required by the terms of any Mortgage, and
(K) any other items specifically required to be paid by Tenant under this Lease,
which costs and expenses shall include, without limitation, all Costs,
judgments, settlement amounts, Impositions (other than Landlord's net income tax
or franchise tax or any similar tax, however characterized, unless payable in
lieu of or substitution for any Impositions),
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insurance premiums, appraisal fees, the cost of performing and reporting all
Site Assessments, the cost of curing any Environmental Violation, and the cost
of complying with all Legal Requirements, fines, penalties and interest;
(ii) after the date all or any portion of any
installment of Basic Rent is due and not paid, an amount equal to five percent
(5%) of the amount of such unpaid installment or portion thereof;
(iii) a sum equal to any additional sums (including any
late charge, default penalties, interest and fees of Lender's counsel) which are
payable by Landlord to any Lender under any Note by reason of Tenant's late
payment or non-payment of Basic Rent or by reason of an Event of Default; and
(iv) interest at the rate (the "Default Rate") of five
percent (5%) over the Prime Rate per annum on the following sums until paid in
full: (A) all overdue installments of Basic Rent from the respective due dates
thereof, (B) all overdue amounts of Additional Rent relating to obligations
which Landlord shall have paid on behalf of Tenant, from the date of payment
thereof by Landlord, and (C) all other overdue amounts of Additional Rent, from
the date when any such amount becomes overdue.
(b) Tenant shall pay and discharge (i) any Additional Rent
referred to in Paragraph 7(a) (i) when the same shall become due, provided that
amounts which are billed to Landlord or any third party, but not to Tenant,
shall be paid within five (5) days after Landlord's demand for payment thereof,
and (ii) any other Additional Rent, immediately upon Landlord's demand for
payment thereof (which shall include a written invoice or other appropriate
written description of the source, amount and nature of the item for which
payment is sought).
(c) In no event shall amounts payable under Paragraph 7(a)
(ii), (iii) and (iv) exceed the maximum amount permitted by applicable Law.
8. Net Lease; Non-Terminability.
(a) This is a net lease and all Monetary obligations shall be
paid without notice or demand (except as specifically provided for herein) and
without set-off, counterclaim, recoupment, abatement, suspension, deferment,
diminution, deduction, reduction or defense (collectively, a "Set-Off").
(b) Except as otherwise expressly provided herein, this Lease
and the rights of Landlord and the obligations of Tenant hereunder shall not be
affected (provided that this Paragraph 8(b) is not intended, and shall not be
construed, to
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prohibit Tenant from commencing and prosecuting an action at law or in equity
against Landlord) by any event or for any reason, including the following: (i)
any damage to or theft, loss or destruction of any of the Leased Premises, (ii)
any Condemnation, (iii) the prohibition, limitation or restriction of Tenant's
use of all or any part of the Leased Premises, (iv) any eviction by paramount
title or otherwise, (v) Tenant's acquisition of ownership of all or any part of
the Leased Premises other than pursuant to an express provision of this Lease,
(vi) any default on the part of Landlord hereunder or under any Note, Mortgage,
Assignment or any other agreement, (vii) any latent or other defect in any of
the Leased Premises, (viii) the breach of any warranty of any seller or
manufacturer of any of the Equipment, (ix) any violation of Paragraph 4(b) or
any other provision of this Lease by Landlord, (x) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution or
winding-up of, or other proceeding affecting Landlord so long as such proceeding
does not terminate Tenant's right to possession of the Leased Premises pursuant
to the provisions of this Lease, (xi) the exercise of any remedy, including
foreclosure or deed-in-lieu of foreclosure, under any Mortgage or Assignment or
any transfer of the Leased Premises by a Lender, (xii) any action with respect
to this Lease (including the disaffirmance hereof) which may be taken by
Landlord, any trustee, receiver or liquidator of Landlord or any court under the
Federal Bankruptcy Code or otherwise, (xiii) any interference with Tenant's use
of the Leased Premises, (xiv) market or economic changes or (xv) any other
cause, whether similar or dissimilar to the foregoing, any present or future Law
to the contrary notwithstanding.
(c) The obligations of Tenant hereunder shall be separate and
independent covenants and agreements, all Monetary Obligations shall continue to
be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal
thereto), and the obligations of Tenant hereunder shall continue unaffected
unless the requirement to pay or perform the same shall have been terminated
pursuant to an express provision of this Lease. All Rent payable by Tenant
hereunder shall constitute "rent" for all purposes (including Section 502 (b)
(6) of the Bankruptcy Code).
(d) Except as otherwise expressly provided herein and unless
Landlord has terminated Tenant's possession of the Leased Premises, Tenant shall
have no right and hereby waives all rights which it may have under any Law (i)
to quit, terminate or surrender this Lease or any of the Leased Premises, or
(ii) to any Set-Off of any Monetary Obligations.
9. Payment of Impositions.
(a) Tenant shall, before interest or penalties are due
thereon, pay and discharge all taxes (including real and personal property,
franchise, sales and rent taxes), all charges
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for any easement or agreement maintained for the benefit of any of the Leased
Premises, all assessments and levies, all permit, inspection and license fees,
all rents and charges for water, sewer, utility and communication services
relating to any of the Leased Premises, all ground rents and all other public
charges whether of a like or different nature, even if unforeseen or
extraordinary, imposed upon or assessed against (i) Tenant, (ii) the Leased
Premises, (iii) Landlord, as a result of or arising in respect of the
acquisition, ownership, occupancy, leasing, use, possession or sale of the
Leased Premises, any activity conducted on the Leased Premises, or the Rent, or
(iv) any Lender by reason of the provisions of any Note, Mortgage, Assignment or
other document evidencing or securing a Loan which are usual and customary in
commercial mortgage financing documentation and which (as to this clause (iv))
Landlord has agreed to pay (collectively, the "Impositions"); provided, that
nothing herein shall obligate Tenant to pay (A) income, excess profits or other
taxes of Landlord (or Lender) which are determined on the basis of Landlord's
(or Lender's) net income or net worth (unless such taxes are in lieu of or a
substitute for any other tax, assessment or other charge upon or with respect to
the Leased Premises which, if it were in effect, would be payable by Tenant
under the provisions hereof or by the terms of such tax, assessment or other
charge), (B) any estate, inheritance, succession, gift or similar tax imposed on
Landlord or (C) any capital gains tax imposed on Landlord in connection with the
sale of the Leased Premises to any Person. If any Imposition may lawfully be
paid in installments, without regard to whether interest shall accrue or be
payable on any deferred portion thereof, Tenant shall have the option to pay
such Imposition in installments; in such event, Tenant shall be liable only for
those installments, together with any interest payable thereon, which accrue or
become due and payable during the Term. Except for returns or reports required
to be submitted to any taxing authority by Landlord, Tenant shall prepare and
file all tax reports required by governmental authorities which relate to the
Impositions. Tenant shall deliver to Landlord and Lender (1) copies of all
settlements and notices pertaining to the Impositions which may be issued by any
governmental authority within ten (10) days after Tenant's receipt thereof, (2)
receipts for payment of all taxes required to be paid by Tenant hereunder within
thirty (30) days after the due date thereof, and (3) receipts for payment of all
other Impositions within ten (10) days after Landlord's written request
therefor.
(b) Landlord shall have the right at any time after the
occurrence of an Event of Default or if required by a Lender (for reasons other
than Landlord's default under any Note or other instrument evidencing or
securing a Loan) from time to time during the Term to require Tenant to pay to
Landlord an additional monthly sum (each an "Escrow Payment") sufficient to pay
the Escrow Charges (as hereinafter defined) as they become due. As used herein,
"Escrow Charges" shall mean real estate
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taxes on the Leased Premises or payments in lieu thereof and premiums on any
insurance required by this Lease. Landlord shall determine the amount of the
Escrow Charges and of each Escrow Payment; such determination shall be
reasonably calculated on the basis of the most recent corresponding costs. The
Escrow Payments may be commingled with other funds of Landlord or other Persons
and no interest thereon shall be due or payable to Tenant. Landlord shall apply
the Escrow Payments to the payment of the Escrow Charges in such order or
priority as Landlord shall determine or as required by law, provided, however,
that Tenant shall not be responsible for the payment of any interest or penalty
resulting from Landlord's failure to pay any Escrow Charges as and when the same
are due and payable if adequate Escrow Payments have been paid to Landlord by
Tenant to permit it to make such payments as and when due. If at any time the
Escrow Payments theretofore paid to Landlord shall be insufficient for the
payment of the Escrow Charges, Tenant, within ten (10) days after Landlord's
demand therefor, shall pay the amount of the deficiency to Landlord.
10. Compliance with Laws and Easement Agreements; Environmental
Matters.
(a) Tenant shall, at its expense, comply with and conform to,
and cause the Leased Premises and any other Person occupying any part of the
Leased Premises to comply with and conform to, all Insurance Requirements and
Legal Requirements (including all applicable Environmental Laws respecting the
Leased Premises). Tenant shall not at any time (i) cause, permit or suffer to
occur any Environmental Violation or (ii) permit any sublessee, assignee or
other Person occupying the Leased Premises under or through Tenant to cause,
permit or suffer to occur any Environmental Violation.
(b) Tenant, at its sole cost and expense, will at all times
promptly and faithfully abide by, discharge and perform all of the covenants,
conditions and agreements contained in any Easement Agreement on the part of
Landlord or the occupier to be kept and performed thereunder. Neither Landlord
nor Tenant shall alter, modify, amend or terminate any Easement Agreement, give
any consent or approval thereunder, or enter into any new Easement Agreement
unless such alteration, modification, amendment, termination or new agreement
has been approved in writing by both Landlord and Tenant'. neither party shall
unreasonably withhold, delay or condition its approval to any such proposed
action.
(c) Upon prior written notice from Landlord, Tenant shall
permit such persons as Landlord may designate ("Site Reviewers") to visit the
Leased Premises and perform, as agents of Tenant, environmental site
investigations and assessments ("Site Assessments") on the Leased Premises for
the purpose of determining whether there exists on the Leased Premises any
Environmental Violation or any condition which could result in any
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Environmental Violation. Such Site Assessments may include both above and below
the ground testing for Environmental Violations and such other tests as may be
necessary, in the opinion of the Site Reviewers, to conduct the Site
Assessments. Tenant shall supply to the Site Reviewers such historical and
operational information regarding the Leased Premises as may be reasonably
requested by the Site Reviewers to facilitate the Site Assessments (and as may
be available to Tenant), and shall make available for meetings with the Site
Reviewers appropriate personnel having knowledge of such matters. Tenant shall
not be liable for the cost of more than one such review in every five (5) year
period unless such review is performed (i) because an event has occurred which
reasonably results in Landlord's belief that an Environmental Violation is
likely to exist on account of such event; (ii) in connection with any proposed
sale of the Leased Premises by Landlord; (iii) in connection with any proposed
financing of the Leased Premises by a Lender (but no more than two (2) times in
any consecutive ten (10) year period); and (iv) at any time during the twelve
(12) month period preceding the end of the Term.
(d) If an Environmental Violation occurs or is found to exist
and, in the Site Reviewers' reasonable judgment, the cost of remediation to a
condition consistent with all applicable Environmental Laws or otherwise
acceptable to all governmental authorities having jurisdiction of the same is
likely to exceed $25,000, Tenant shall provide to Landlord, within ten (10) days
after Landlord's request therefor, adequate financial assurances that Tenant
will effect such remediation in accordance with applicable Environmental Laws.
Such financial assurances shall be a bond or letter of credit satisfactory to
Landlord in form and substance and in an amount equal to or greater than
Landlord's reasonable estimate, based upon a Site Assessment performed pursuant
to Paragraph 10(c), of the anticipated cost of such remedial action.
(e) Notwithstanding any other provision of this Lease, if an
Environmental Violation occurs or is found to exist and the Term would otherwise
terminate or expire, then, at the option of Landlord, the Term shall be
automatically extended beyond the date of termination or expiration and this
Lease shall remain in full force and effect beyond such date until the earlier
to occur of (i) the completion of all remedial action in accordance with
applicable Environmental Laws or (ii) the date specified in a written notice
from Landlord to Tenant terminating this Lease.
(f) If Tenant fails to comply with any requirement of any
Environmental Law in connection with any Environmental Violation which occurs or
is found to exist, and if such failure shall continue for thirty (30) days or
more after Tenant becomes aware of the same (unless Landlord determines it to be
an emergency), Landlord shall have the right (but no obligation) to
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take any and all actions as Landlord shall deem necessary or advisable in order
to cure such Environmental Violation. Notwithstanding the foregoing to the
contrary, Tenant may contest the existence of any Environmental Condition or the
propriety or applicability to the Leased Premises of any requirement imposed by
Environmental Law in accordance with the terms and subject to the conditions set
forth in Paragraph 14 below; pending the resolution of any such permitted
contest, Landlord shall not avail itself of the rights set forth in this
Paragraph 20(f).
(g) Tenant shall notify Landlord immediately after becoming
aware of any Environmental Violation (or alleged Environmental Violation) or
noncompliance with any of the covenants contained in this Paragraph 10 and shall
forward to Landlord immediately upon receipt thereof copies of all orders,
reports, notices, permits, applications or other communications relating to any
such violation or noncompliance.
(h) All future leases, subleases or concession agreements
relating to the Leased Premises entered into by Tenant shall contain covenants
of the other party thereto which are identical to the covenants contained in
this Paragraph 10.
11. Liens; Recording.
(a) Tenant shall not, directly or indirectly, create or permit
to be created or to remain, and shall promptly discharge or remove, any lien,
levy or encumbrance on any of the Leased Premises or on any Rent or any other
sums payable by Tenant under this Lease, other than any Mortgage or Assignment,
the Permitted Encumbrances and any mortgage, lien, encumbrance or other charge
created by or resulting solely from any act or omission of Landlord. NOTICE IS
HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR
MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR
OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO
MECHANICS' OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH
TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES.
LANDLORD MAY AT ANY TIME, AND AT LANDLORD'S REQUEST TENANT SHALL PROMPTLY, POST
ANY NOTICES ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY OF LANDLORD.
(b) Landlord and Tenant shall execute, deliver and record,
file or register (collectively, "record") all such instruments as may be
required or permitted by any present or future Law in order to evidence the
respective interests of Landlord and Tenant in the Leased Premises, and shall
cause a memorandum of this Lease (or, if such a memorandum cannot be recorded,
this Lease), and any supplement hereto or thereto, to be recorded in such manner
and in such places as may be required or permitted by any present or future Law
in order to protect the validity and priority of this Lease.
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12. Maintenance and Repair.
(a) Tenant shall at all times maintain the Leased Premises
(and any Adjoining Property) in as good repair and appearance as they are in on
the date hereof and fit to be used for their intended use in accordance with the
better of the practices generally recognized as then acceptable by other
companies in its industry or observed by Tenant with respect to the other real
properties owned or operated by it, and, in the case of the Equipment, in as
good mechanical condition as it was on the later of the date hereof or the date
of its installation, except (as to both the Leased Premises and the Equipment)
for ordinary wear and tear. Tenant shall take every other action necessary or
appropriate for the preservation and safety of the Leased Premises. Tenant shall
promptly make all Alterations of every kind and nature, whether foreseen or
unforeseen, which may be required to comply with the foregoing requirements of
this Paragraph 12 (a). Landlord shall not be required to make any Alteration,
whether foreseen or unforeseen, or to maintain any of the Leased Premises or
Adjoining Property in any way, and Tenant hereby expressly waives any right
which may be provided for in any Law now or hereafter in effect to make
Alterations at the expense of Landlord or to require Landlord to make
Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12 shall
be made in conformity with the provisions of Paragraph 13.
(b) If any Improvement, now or hereafter constructed, shall
(i) encroach upon any setback or any property, street or right-of-way adjoining
any of the Leased Premises, (ii) violate the provisions of any restrictive
covenant affecting the Leased Premises, (iii) hinder or obstruct any easement or
right-of-way to which any of the Leased Premises is subject or (iv) impair the
rights of others in, to or under any of the foregoing, Tenant shall, promptly
after receiving notice or otherwise acquiring knowledge thereof, either (A)
obtain from all necessary parties waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation,
hindrance, obstruction or impairment, whether the same shall affect Landlord,
Tenant or both, or (B) take such action as shall be necessary to remove all such
encroachments, hindrances or obstructions and to end (or ameliorate to the
reasonable satisfaction of all parties affected by such encroachment, violation
or hindrance) all such violations or impairments, including, if necessary,
making Alterations.
13. Alterations and Improvements.
(a) Other than Alterations required by Paragraphs 12 and 17
and Major Alterations that are consented to in writing by Landlord and Lender,
Tenant shall not (i) make any Alterations, or (ii) install Equipment in the
Improvements or accessions to the Equipment, without having first obtained the
prior written consent of Landlord and Lender. Such consent need not be given if
an
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Event of Default exists or if the cost of any Alteration (or a series of related
Alterations) exceeds $750,000; provided, however, so long as no Event of Default
exists, with respect to Alterations which cost, in the aggregate, less than
$750,000, the consent of the Landlord shall not be unreasonably withheld. Tenant
shall not construct upon the Land any additional Improvements without having
first obtained the prior written consent of Landlord and Lender.
(b) If Tenant makes any Alterations pursuant to this Paragraph
13 or Paragraph 34 or as required by Paragraph 12 or 17 (such Alterations and
actions being hereinafter collectively referred to as "Work"), whether or not
Landlord's and/or Lender's consent is required, then (i) neither the market
value nor the utility of the Leased Premises for the purposes permitted hereby
shall be diminished by any Alterations to result from such Work, (ii) all such
Work shall be performed by Tenant or for Tenant in a good and workmanlike
manner, (iii) all such Work shall be expeditiously completed in compliance with
all Legal Requirements, (iv) all such Work shall comply with the Insurance
Requirements, (v) if any such Work involves the replacement of Equipment or
parts thereto, all replacement Equipment or parts shall be fully paid for and
shall have a value, utility and useful life equal to the greater of (A) the
value, utility and useful life on the date hereof of the Equipment being
replaced or (B) the value, utility and useful life of the Equipment being
replaced immediately prior to the occurrence of the event which required its
replacement, (vi) Tenant shall promptly discharge or remove all liens filed
against any of the Leased Premises arising out of such Work, (vii) Tenant shall
procure and pay for all permits and licenses required in connection with any
such Work, (viii) all such Work shall be the property of Landlord and shall be
subject to this Lease, and Tenant shall execute and deliver to Landlord any
document requested by Landlord evidencing the assignment to Landlord of all
estate, right, title and interest (other than the leasehold estate created
hereby) of Tenant or any other Person thereto or therein, and (ix) Tenant shall
comply, to the extent requested by Landlord or required by this Lease, with the
provisions of Paragraph 19 (a), whether or not such Work involves restoration of
the Leased Premises.
14. Permitted Contests. Notwithstanding any other provision of this
Lease, Tenant shall not be required to (a) pay any Imposition, (b) comply with
any Legal Requirement (including but not limited to those relating to
Environmental Laws), (c) discharge or remove any lien referred to in Paragraph
11 or 13 or (d) take any action with respect to any encroachment, violation,
hindrance, obstruction or impairment referred to in Paragraph 12(b) (such
non-compliance with the terms hereof being hereinafter referred to collectively
as "Permitted Violations"), so long as at the time of such contest no Event of
Default exists and so long as Tenant shall contest, in good faith, the
existence, amount or validity thereof, the amount of the damages caused
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thereby, or the extent of its or Landlord's liability therefor by appropriate
proceedings, diligently pursued, which shall operate during the pendency thereof
to prevent or stay (i) the collection of, or other realization upon, the
Permitted Violation so contested, (ii) the sale, forfeiture or loss of any of
the Leased Premises or any Rent to satisfy or to pay any damages caused by any
Permitted Violation, (iii) any interference with the use or occupancy of any of
the Leased Premises, (iv) any interference with the payment of any Rent, (v) the
cancellation or increase in the rate of any insurance policy or a statement by
the carrier that coverage will be denied or (vi) the enforcement or execution of
any injunction, order or Legal Requirement with respect to the Permitted
Violation. Tenant shall provide Landlord security which is satisfactory, in
Landlord's reasonable judgment, to assure that such Permitted Violation is
corrected, including all Costs, interest and penalties that may be incurred or
become due in connection therewith. While any proceedings which comply with the
requirements of this Paragraph 14 are pending and the required security is held
by Landlord, Landlord shall not have the right to correct any Permitted
Violation thereby being contested unless Landlord is required by law to correct
such Permitted Violation and Tenant's contest does not prevent or stay such
requirement as to Landlord. Each such contest shall be promptly and diligently
prosecuted by Tenant to a final conclusion, except that Tenant, so long as the
conditions of this Paragraph 14 are at all times complied with, has the right to
attempt to settle or compromise such contest through negotiations. Tenant shall
pay any and all losses, judgments, decrees and Costs in connection with any such
contest and shall, promptly after the final determination of such contest, fully
pay and discharge the amounts which shall be levied, assessed, charged or
imposed or be determined to be payable therein or in connection therewith,
together with all penalties, fines, interest and Costs thereof or in connection
therewith, and perform all acts the performance of which shall be ordered or
decreed as a result thereof. No such contest shall subject Landlord to the risk
of any civil or criminal liability.
15. Indemnification.
(a) Tenant shall pay, protect, indemnify, save and hold
harmless Landlord, Lender and all other Persons described in Paragraph 30 (each
an "Indemnitee") from and against any and all liabilities, losses, damages
(including punitive damages), penalties, Costs, causes of action, suits, claims,
demands or judgments of any nature whatsoever, howsoever caused, without regard
to the form of action and whether based on strict liability, gross negligence,
negligence or any other theory of recovery at law or in equity, arising from (i)
any matter pertaining to the acquisition (or the negotiations leading thereto),
ownership, use, non-use, occupancy, operation, condition, design, construction,
maintenance, repair or restoration of any of the Leased Premises or Adjoining
Property, (ii) any casualty in any manner arising from any of the Leased
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Premises or Adjoining Property, whether or not Landlord has or should have
knowledge or notice of any defect or condition causing or contributing to said
casualty, (iii) any violation by Tenant under any provision of this Lease, or
under any contract or agreement to which Tenant is a party, any Legal
Requirement or any Permitted Encumbrance or (iv) any alleged, threatened or
actual Environmental Violation, including (A) liability for response costs and
for costs of removal and remedial action incurred by the United States
Government, any state or local governmental unit or any other Person, or damages
from injury to or destruction or loss of natural resources, including the
reasonable costs of assessing such injury, destruction or loss, incurred
pursuant to Section 107 of CERCLA, or any successor section or act or provision
of any similar state or local Law, (B) liability for costs and expenses of
abatement, correction or clean-up, fines, damages, response costs or penalties
which arise from the provisions of any of the other Environmental Laws and (C)
liability for personal injury or property damage arising under any statutory or
common-law tort theory, including damages assessed for the maintenance of a
public or private nuisance or for carrying on of a dangerous activity; provided,
that Tenant shall not be required to indemnify Landlord against any matter
proximately caused by the gross negligence or willful misconduct of Landlord or
its employees.
(b) In case any action or proceeding is brought against any
Indemnitee by reason of any such claim, Tenant shall resist or defend such
action or proceeding by retaining counsel selected by Tenant, so long as such
counsel does not have a conflict in representing, or take a position adverse to,
any such Indemnitee, and such Indemnitee will cooperate and assist in the
defense of such action or proceeding if reasonably requested so to do by Tenant.
If an Event of Default has occurred and is continuing, however, such Indemnitee
may either (i) retain its own counsel and defend such action (it being
understood that Tenant may employ counsel of its choice to monitor the defense
of any such action) or (ii) notify Tenant to resist or defend such action or
proceeding by retaining counsel satisfactory to such Indemnitee, and such
Indemnitee will cooperate and assist in the defense of such action or proceeding
if reasonably requested to do so by Tenant.
(c) The obligations of Tenant under this Paragraph 15 shall
survive any termination or expiration of this Lease and shall apply only to
those matters which arise out of conditions or events that accrued or occurred
or existed prior to any such expiration or termination of this Lease.
16. Insurance.
(a) Tenant shall maintain the following insurance on or in
connection with the respective Leased Premises:
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(i) Insurance against physical loss or damage to the Improvements and
Equipment as provided under a standard "All Risk" property policy including but
not limited to "off-premises" power interruption, flood (if the Leased Premises
is in a flood zone) and earthquake coverage in amounts not less than the actual
replacement cost of the Improvements and Equipment. Such policies shall contain
replacement cost and agreed amount endorsements and shall contain deductibles
not more than $10,000.00 per occurrence, except for flood and earthquake
insurance which shall have deductibles of $25,000 with a $2,000,000 sublimit.
(ii) Commercial General Liability Insurance against claims for personal
and bodily injury, death or property damage occurring on, in or as a result of
the use of the Leased Premises, in an amount not less than $10,000,000 per
occurrence/ annual aggregate including but not limited to Incidental Medical
Malpractice, Host Liquor Liability, Non-Owned and Hired Automobile Liability and
all other coverage extensions that are usual and customary for properties of
this size and type provided, however, that the Landlord shall have the right to
require such higher limits as may be reasonable and customary for properties of
this size and use.
(iii) Worker's Compensation Insurance covering all persons employed by
Tenant in connection with any work done on or about any of the Leased Premises
for which claims for death, disease or bodily injury may be asserted against
Landlord, Tenant or any of the Leased Premises or, in lieu of such Worker's
Compensation Insurance, a program of self-insurance complying with the rules,
regulations and requirements of the appropriate agency of the State.
(iv) Business Income/Interruption Insurance to include Loss of Rents on
an Actual Loss Sustained Basis with a period of indemnity not less than one year
from the time of loss. Such insurance shall name Landlord and Lender as "loss
payee" solely with respect to Rent payable to or for the benefit of Landlord
under this Lease.
(v) During any period in which substantial Alterations at any Related
Premises are being undertaken, Builder's Risk insurance covering the total
completed value including any "soft costs" with respect to the Improvements
being altered or repaired (on a completed value, non-reporting basis),
replacement cost of work performed and equipment, supplies and materials
furnished in connection with such construction or repair of Improvements or
Equipment, together with such "soft cost" endorsements and such other
endorsements as Landlord may reasonably require and General Liability, Worker's
Compensation and Automobile Liability Insurance with respect to the Improvements
being constructed, altered or repaired.
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(vi) Such other insurance (or other terms with respect to any insurance
required pursuant to this Paragraph 16, including without limitation amounts of
coverage, deductibles, form of mortgagee clause) on or in connection with any of
the Leased Premises as Landlord or Lender may reasonably require, which at the
time is usual and commonly obtained in connection with properties similar in
type of building, size and use to the Leased Premises.
(b) Unless otherwise agreed to in writing, the insurance required by
Paragraph 16(a) shall be written by companies which have a Best's rating of A:X
or above and are admitted in, and approved to write insurance policies by, the
State Insurance Department for the State. Notwithstanding the foregoing,
Landlord hereby agrees that so long as Nautilus Insurance Company maintains a
Best's rating of not less than A:VI, such carrier shall be acceptable to
Landlord for purposes of compliance with the provisions of the preceding
sentence and so long as General Star Indemnity Company maintains a Best's rating
or not less than A++:VIII, such carrier shall be acceptable to Landlord for
purposes of compliance with the provisions of the preceding sentence for
provision of excess liability insurance. The insurance policies (i) shall be for
such terms as Landlord may reasonably approve, (ii) shall be in amounts
sufficient at all times to satisfy any coinsurance requirements thereof and
(iii) shall (except for the worker's compensation insurance referred to in
Paragraph 16(a) (iii) hereof) name Landlord, Tenant and Lender as insured
parties, as their respective interests may appear. If any such insurance shall
expire, be withdrawn, or become void or voidable, Tenant shall obtain new or
additional insurance reasonably satisfactory to Landlord prior to any such
expiration and not more than ten (10) days after any such other event.
(c) All proceeds of any insurance required under clauses (i), (ii)
(except proceeds payable to a Person other than Tenant, Landlord or Lender) and
(v) of Paragraph 16(a) shall be payable to Landlord or, if required by a
Mortgage, to Lender. Each insurance policy referred to in clauses (i), (iv), (v)
and (vi) of Paragraph 16 (a) shall contain standard non-contributory mortgagee
clauses in favor of and acceptable to Lender. Each policy required by any
provision of Paragraph 16 (a), except clause (iii) thereof, shall provide that
it may not be cancelled except after twenty (20) days' prior notice to Landlord
and Lender. Each such policy shall also provide that any loss otherwise payable
thereunder shall be payable notwithstanding (i) any act or omission of Landlord
or Tenant which might, absent such provision, result in a forfeiture of all or a
part of such insurance payment, (ii) the occupation or use of any of the Leased
Premises for purposes more hazardous than those permitted by the provisions of
such policy, (iii) any foreclosure or other action or proceeding taken by Lender
pursuant to any provision of the Mortgage, Note, Assignment or other document
evidencing or securing a Loan upon
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the happening of an event of default therein or (iv) any change in title to or
ownership of the Leased Premises.
(d) Tenant shall pay as they become due all premiums for the insurance
required by Paragraph 16 (a), shall renew or replace each policy and deliver to
Landlord and Lender evidence of the payment of the full premium therefor or
installment then due at least ten (10) days prior to the expiration date of such
policy, and shall promptly deliver to Landlord certificates of insurance
evidencing the insurance required by Paragraph 16 (a) and, upon request of
Landlord, but no later than sixty (60) days after the effective date of the
policy, shall deliver to Landlord copies of the insurance policies.
(e) Anything in this Paragraph 16 to the contrary notwithstanding, any
insurance which Tenant is required to obtain pursuant to Paragraph 16(a) may be
carried under a "blanket" or umbrella policy or policies covering other
properties or liabilities of Tenant, provided that such "blanket" or umbrella
policy or policies otherwise comply with the provisions of this Paragraph 16 and
provided further that such policies shall provide for a reserved amount
thereunder with respect to the Leased Premises so as to assure that the amount
of insurance required by this Paragraph 16 will be available notwithstanding any
losses with respect to other property covered by such blanket policies. The
amount of the total insurance allocated to the Leased Premises, which amount
shall not be less than the amounts required pursuant to this Paragraph 16, shall
be specified either (i) in each such "blanket" or umbrella policy or (ii) in a
written statement, which Tenant shall deliver to Landlord, from the insurer
thereunder. The original or a certified copy of each such "blanket" or umbrella
policy shall promptly be delivered to Landlord.
(f) Tenant shall promptly comply with and conform to (i) all provisions
of each insurance policy required by this Paragraph 16 and (ii) all requirements
of the insurers thereunder applicable to Tenant or any of the Leased Premises or
to the use, manner of use, occupancy, possession, operation, maintenance,
alteration or repair of any of the Leased Premises, even if such compliance
necessitates Alterations or results in interference with the use or enjoyment of
any of the Leased Premises.
(g) Tenant shall not carry separate insurance concurrent in form or
contributing in the event of a Casualty with that required in this Paragraph 16
unless (i) Landlord and Lender are included therein as named insureds, with loss
payable as provided herein, and (ii) such separate insurance complies with the
other provisions of this Paragraph 16. Tenant shall immediately notify Landlord
of such separate insurance and shall deliver to Landlord the original policies
therefor.
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(h) All policies shall contain effective waivers by the carrier against
all claims for insurance premiums against Landlord and shall contain full
waivers of subrogation against the Landlord.
17. Casualty and Condemnation.
(a) If any Casualty occurs to the Leased Premises, Tenant shall give
Landlord and Lender immediate notice thereof and, provided no Event of Default
has occurred and is continuing, Tenant shall have the right to adjust, collect
and compromise, subject to Landlord's and Lender's final approval, all claims
under any of the insurance policies required by Paragraph 16 (a) (except public
liability insurance claims payable to a Person other than Landlord, Tenant or
Lender) reasonably estimated by Landlord and Lender to be in amounts of less
than $50,000. Landlord and Lender are hereby authorized to adjust, collect and
compromise, in their discretion and upon notice to Tenant (except that no notice
to Tenant shall be required if an Event of Default has occurred and is
continuing), all other claims under any of the insurance policies required by
Paragraph 16 (a) (except public liability insurance claims payable to a Person
other than Tenant, Landlord or Lender) and, if an Event of Default exists, all
claims for amounts of less than $50,000 and to execute and deliver on behalf of
Tenant all necessary proofs of loss, receipts, vouchers and releases required by
the insurers. Provided that no Event of Default has occurred and is continuing,
Tenant shall be entitled to participate with Landlord and Lender in any
adjustment, collection and compromise of the Net Award payable in connection
with a Casualty where the Net Award is reasonably estimated by Landlord and
Lender to be in an amount of $50,000 or more. Tenant agrees to sign, upon the
request of Landlord or Lender, all such proofs of loss, receipts, vouchers and
releases. If Landlord or Lender so requests, Tenant shall adjust, collect and
compromise any and all such claims, and Landlord and Lender shall have the right
to join with Tenant therein. Any adjustment, settlement or compromise of any
such claim shall be subject to the prior written approval of Landlord and
Lender, and Landlord and Lender shall have the right to prosecute or contest, or
to require Tenant to prosecute or contest, any such claim, adjustment,
settlement or compromise. Each insurer is hereby authorized and directed to make
payment under said policies, including return of unearned premiums, directly to
Landlord or, if required by a Mortgage, to Lender instead of to Landlord and
Tenant jointly, and Tenant hereby appoints each of Landlord and Lender as
Tenant's attorneys-in-fact to endorse any draft therefor.
(b) Tenant, immediately upon receiving a Condemnation Notice, shall
notify Landlord and Lender thereof and, provided no Event of Default has
occurred and is continuing, Tenant shall have the right to collect, settle and
compromise the amount of any Net Award that is reasonably estimated by Landlord
and Lender to be in an amount less than $50,000. Landlord and
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Lender are authorized to collect, settle and compromise, in their discretion
(and, if no Event of Default exists, upon notice to Tenant), the amount of any
other Net Award and, if an Event of Default exists, any Net Award that is less
than $50,000. Provided that no Event of Default has occurred and is continuing,
Tenant shall be entitled to participate with Landlord and Lender in any
Condemnation proceeding or negotiations under threat thereof with respect to any
Net Award that is reasonably estimated by Landlord and Lender to be in an amount
of $50,000 or more and to contest the Condemnation or the amount of the Net
Award therefor. No agreement with any condemnor in settlement or under threat of
any Condemnation shall be made by Tenant without the written consent of Landlord
and Lender. Subject to the provisions of this Paragraph 17 (b), Tenant hereby
irrevocably assigns to Landlord any award or payment to which Tenant is or may
be entitled by reason of any Condemnation, whether the same shall be paid or
payable for Tenant's leasehold interest hereunder or otherwise; but nothing in
this Lease shall impair Tenant's right to any award or payment on account of
Tenant's trade fixtures, equipment or other tangible property which is not part
of the Equipment, moving expenses or loss of business, if available, to the
extent that and so long as (i) Tenant shall have the right to make, and does
make, a separate claim therefor against the condemnor and (Ii) such claim does
not in any way reduce either the amount of the award otherwise payable to
Landlord for the Condemnation of Landlord's fee interest in the Leased Premises
or the amount of the award (if any) otherwise payable for the Condemnation of
Tenant's leasehold interest hereunder.
(c) If any Partial Casualty (whether or not insured against) or Partial
Condemnation shall occur, this Lease shall continue, notwithstanding such event,
and there shall be no abatement or reduction of any Monetary Obligations, except
as provided in Paragraphs 17(d) and 19(c) and except that, provided no Event of
Default exists, Tenant shall have the right to receive a credit against
subsequent payments of Basic Rent in the amount of the proceeds of rental
interruption insurance required to be maintained hereby and received by
Landlord. Promptly after such Partial Casualty or Partial Condemnation, Tenant,
as required in Paragraph 12 (a), shall commence and diligently continue to
restore the Leased Premises as nearly as possible to their value, condition and
character immediately prior to such event. Upon the receipt by Landlord of the
entire Net Award of such Partial Casualty or Partial Condemnation, Landlord
shall make such Net Award available to Tenant for restoration in accordance with
and subject to the provisions of Paragraph 19(a). If any Casualty or
Condemnation which is not a Partial Casualty or Partial Condemnation shall
occur, Tenant shall comply with the terms and conditions of Paragraph 18.
(d) In the event of a Requisition of the Leased Premises, if any Net
Award payable by reason of such Requisition is retained by Landlord or paid to
Lender, each installment of
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Basic Rent payable on or after the date on which the Net Award is paid to
Landlord shall be reduced in the amount that and for the period during which
such Net Award is retained by Landlord or paid to Lender, until such Net Award
has been applied in full or until the Term has expired, whichever first occurs.
Upon the expiration of the Term, any portion of such Net Award which shall not
have been previously credited to Tenant shall be retained by Landlord.
(e) Notwithstanding the foregoing Paragraphs 17(a) through 17(d), in
the event that a Casualty or Condemnation shall occur and it shall cost, in the
aggregate, less than $50,000 to restore, repair or replace the portion of the
Leased Premises damaged or taken thereby, Landlord or Lender shall immediately
upon receipt remit the Net Award to Tenant (without regard for the procedures
set forth in Paragraph 19 hereof), and Tenant shall restore, repair or replace
the Leased Premises as a result of such Casualty or Condemnation in accordance
with the standards set forth in Paragraph 12 hereof.
18. Termination Events.
(a) If (i) the Leased Premises shall be taken in its entirety by a
Taking or (ii) any substantial portion of the Leased Premises shall be taken by
a Taking or all or any substantial portion of the Leased Premises shall be
totally damaged or destroyed by a Casualty and, in any such case, Tenant
certifies and covenants to Landlord that the continued operation of Tenant's
business at the Leased Premises is no longer practicable and that it will
discontinue such operations (each of the events described in the above clauses
(i) and (ii) shall hereinafter be referred to as a "Termination Event"), then
(x) in the case of (i) above, Tenant shall be obligated, within thirty (30) days
after Tenant receives a Condemnation Notice and (y) in the case of (ii) above,
Tenant shall have the option, within thirty (30) days after Tenant received a
Condemnation Notice or thirty (30) days after the Casualty, as the case may be,
to give to Landlord written notice (a "Termination Notice") of Tenant's option
to terminate this Lease in the form described in Paragraph 18(b).
(b) A Termination Notice shall contain (i) notice of Tenant's intention
to terminate this Lease on the first Basic Rent Payment Date which occurs at
least ninety (90) days after the Fair Market Value Date (the "Termination
Date"), (ii) a binding and irrevocable offer of Tenant to pay the Termination
Amount and (iii) if the Termination Event is an event described in Paragraph 18
(a) (ii), the certification and covenants described therein and a certified
resolution of the Board of Directors of Tenant authorizing the same. Promptly
upon the delivery to Landlord of a Termination Notice, Landlord and Tenant shall
commence to determine the Fair Market Value of the Leased Premises.
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(c) If Landlord shall reject such offer to terminate this Lease by
written notice to Tenant (a "Rejection"), which Rejection shall contain the
written consent of Lender, not later than sixty (60) days following the Fair
Market Value Date, then this Lease shall terminate on the Termination Date;
provided that, if Tenant has not satisfied all Monetary Obligations and all
other obligations and liabilities under this Lease which have arisen on or prior
to the Termination Date (collectively, "Remaining Obligations") on the
Termination Date, then Landlord may, at its option, extend the date on which
this Lease may terminate to a date which is no later than the first Basic Rent
Payment Date after the Termination Date on which Tenant has satisfied all
Remaining Obligations. Upon such termination (i) all obligations of Tenant
hereunder shall terminate except for any Surviving Obligations, (ii) Tenant
shall vacate the Leased Premises as promptly as is practicable and shall
thereafter have no further right, title or interest in or to the Leased Premises
and (iii) the Net Award shall be retained by Landlord. Notwithstanding anything
to the contrary hereinabove contained, if Tenant shall have received a Rejection
and, on the date when this Lease would otherwise terminate as provided above,
Landlord shall not have received the full amount of the Net Award payable by
reason of the applicable Termination Event, then the date on which this Lease is
to terminate automatically shall be extended to the first Basic Rent Payment
Date after the receipt by Landlord of the full amount of the Net Award provided
that, if Tenant has not satisfied all Remaining Obligations on such date, then
Landlord may, at its option, extend the date on which this Lease may terminate
to a date which is no later than the first Basic Rent Payment Date after such
date on which Tenant has satisfied all such Remaining Obligations.
(d) Unless Tenant shall have received a Rejection not later than the
sixtieth (60th) day following the Fair Market Value Date, Landlord shall be
conclusively presumed to have accepted such offer. If such offer is accepted by
Landlord then, on the Termination Date, Tenant shall pay to Landlord the
Termination Amount and all Remaining Obligations and, if requested by Tenant,
Landlord shall (i) convey to Tenant the Leased Premises or the remaining portion
thereof, if any, and (ii) pay to or assign to Tenant its entire interest in and
to the Net Award, free and clear of any claim or right of Lender, all in
accordance with Paragraph 20.
19. Restoration; Reduction of Rent.
(a) If Tenant is required by the terms of this Lease to restore any of
the Leased Premises, the Net Award shall be made available by Landlord for such
restoration, and, if the Net Award is less than $50,000 and at the date of
payment no Event of Default exists, the Net Award shall be paid directly to
Tenant, in which event Tenant shall comply with the provisions of Paragraph
13(b) and Paragraph 19(a) (iii) in connection with such
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restoration. If the Net Award is $50,000 or more, Landlord (or Lender if
required by any Mortgage) shall hold such Net Award in a fund (the "Restoration
Fund") and shall disburse amounts from the Restoration Fund only in accordance
with the following conditions:
(i) prior to commencement of restoration, (A) the architects,
contracts, contractors, plans and specifications for the restoration shall have
been approved by Landlord (which approval shall not be unreasonably withheld)
and Lender, (B) Landlord and Lender shall be provided with mechanics' lien
insurance (if available) and acceptable performance and payment bonds which
insure satisfactory completion of and payment for the restoration, are in an
amount and form and have a surety acceptable to Landlord and Lender, and name
Landlord and Lender as additional dual obligees, and (C) if permitted by
applicable law, appropriate waivers of mechanics' and materialmen's liens shall
have been filed;
(ii) at the time of any disbursement, no Event of Default shall exist
and no mechanics' or materialmen's liens shall have been filed against the
Affected Premises that Tenant shall not have bonded or discharged;
(iii) disbursements shall be made from time to time in an amount not
exceeding the cost of the work completed since the last disbursement, upon
receipt of (A) satisfactory evidence, including architects' certificates, of the
stage of completion, the estimated total cost of completion and performance of
the work to date in a good and workmanlike manner in accordance with the
contracts, plans and specifications, (B) waivers of liens, (C) contractors' and
subcontractors' sworn statements as to completed work and the cost thereof for
which payment is requested, (D) a satisfactory bringdown of title insurance and
(E) other evidence of cost and payment so that Landlord and Lender can verify
that the amounts disbursed from time to time are represented by work that is
completed, in place and free and clear of mechanics' and materialmen's lien
claims;
(iv) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by the president or a vice president of Tenant,
describing the work for which payment is requested, stating the cost incurred in
connection therewith, stating that Tenant has not previously received payment
for such work and, upon completion of the work, also stating that the work has
been fully completed and complies with the applicable requirements of this
Lease;
(v) Landlord or Lender, as the case may be, may retain ten percent
(10%) of the restoration fund until the restoration is fully completed;
(vi) if held by Landlord, the Restoration Fund may not be commingled
with Landlord's other funds and shall bear
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interest at the "money market" rate and, if held by Lender, the Restoration Fund
may be commingled with Lender's other funds and shall not bear interest; and
(vii) such other reasonable conditions as Landlord or Lender
may impose.
(b) Prior to commencement of restoration and at any time during
restoration, if the estimated cost of completing the restoration work free and
clear of all liens, as reasonably determined by Landlord and Lender on the basis
of estimates supplied by the architect and/or the general contractor, exceeds
the amount of the Net Award available for such restoration, the amount of such
excess shall, within ten (10) days after demand by Landlord or Lender, be
deposited by Tenant in the Restoration Fund. Any sum so added by Tenant which
remains in the Restoration Fund upon completion of restoration shall be refunded
to Tenant. For purposes of determining the source of funds with respect to the
disposition of funds remaining after the completion of restoration, the Net
Award shall be deemed to be disbursed prior to any amount added by Tenant.
(c) If any sum remains in the Restoration Fund after completion of the
restoration and payment of any refund to Tenant pursuant to Paragraph 19(b),
such sum (the "Remaining Sum") shall be retained by Landlord or, if required by
a Note or Mortgage, paid by Landlord to a Lender and each installment of Basic
Rent thereafter payable shall be reduced in the same amount as payments would be
reduced under any Note assuming that a Loan corresponding to such Note is
re-amortized to reflect such payment, in each case until such Remaining Sum has
been applied in full or until the Term has expired, whichever occurs first. Upon
the expiration of the Term, any portion of the Remaining Sum which has not been
so applied shall be retained by Landlord (and delivered by the Landlord to a
Lender if required by any Mortgage).
20. Procedures Upon Purchase.
(a) If the Leased Premises are purchased by Tenant pursuant to any
provision of this Lease, Landlord need not convey any better title thereto than
that which was conveyed to Landlord, and Tenant shall accept such title,
subject, however, to the Permitted Encumbrances and to all other liens,
exceptions and restrictions on, against or relating to the Leased Premises and
to all applicable Laws, but free of the lien of and security interest created by
any Mortgage or Assignment and liens, exceptions and restrictions on, against or
relating to the Leased Premises which have been created by or resulted solely
from acts of Landlord after the date of this Lease, unless the same are
Permitted Encumbrances or customary utility easements benefiting the Leased
Premises or were created with the concurrence of Tenant or as a result of a
default by Tenant under this Lease.
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(b) Upon the date fixed for any such purchase of the Leased Premises
pursuant to any provision of this Lease (any such date the "Purchase Date"),
Tenant shall pay to Landlord, or to any Person to whom Landlord directs payment,
the Relevant Amount therefor specified herein, in Federal Funds, less any Net
Award received by Landlord or a Lender allowed against the Relevant Amount, and
Landlord shall deliver to Tenant (i) a special warranty deed which describes the
premises being conveyed and conveys the title thereto as provided in Paragraph
20 (a), (ii) such other instruments as shall be necessary to transfer to Tenant
or its designee any other property (or rights to any Net Award not yet received
by Landlord or a Lender) then required to be sold by Landlord to Tenant pursuant
to this Lease, (iii) any Net Award received by Landlord, not credited to Tenant
against the Relevant Amount and required to be delivered by Landlord to Tenant
pursuant to this Lease, and (iv) customary title affidavits required by a title
insurance company in order to permit such title insurance company to delete the
so-called "standard exceptions" to title insurance coverage, but only to the
extent the subject matter of such affidavits are matters not applicable to
Tenant's use and occupancy of the Leased Premises; provided, that if any
Monetary Obligations remain outstanding on such date, then Landlord may deduct
from the Net Award the amount of such outstanding Monetary Obligations. If on
the Purchase Date any Monetary Obligations remain outstanding and no Net Award
is payable to Tenant by Landlord or the amount of such Net Award is less than
the amount of the Monetary Obligations, then Tenant shall pay to Landlord on the
Purchase Date the amount of such Monetary Obligations. Upon the completion of
such purchase, this Lease and all obligations and liabilities of Tenant
hereunder shall terminate, except that such termination shall not relieve Tenant
of its continuing obligation for the payment or performance of any Surviving
Obligations.
(c) If the completion of such purchase shall be delayed after (i) the
Termination Date, in the event of a purchase pursuant to Paragraph 18 or, (ii)
the date scheduled for such purchase, in the event of a purchase under any other
provision of this Lease then (x) Rent shall continue to be due and payable until
completion of such purchase and (y) at Landlord's sole option, Fair Market Value
shall be redetermined and the Relevant Amount payable by Tenant pursuant to the
applicable provision of this Lease shall be adjusted to reflect such
redetermination.
(d) Any prepaid Monetary Obligations paid to Landlord shall be prorated
as of the Purchase Date, and the prorated unapplied balance shall be deducted
from the Relevant Amount due to Landlord; provided, that no apportionment of any
Impositions (other than sums impounded for the payment thereof as provided
above) shall be made upon any such purchase.
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21. Assignment and Subletting; Prohibition against Leasehold Financing.
(a) Tenant may not assign this Lease, whether by operation of law or
otherwise, or sublet the Leased Premises at any time to any other Person, except
to another wholly-owned subsidiary of Guarantor, without the prior written
consent of Landlord, which consent, in the event of an assignment, may be
withheld by Landlord for any or no reason. If Tenant assigns all its rights and
interest under this Lease, the assignee under such assignment shall expressly
assume all the obligations of Tenant hereunder, actual or contingent, including
obligations of Tenant which may have arisen on or prior to the date of such
assignment, by a written instrument delivered to Landlord at the time of such
assignment. Each sublease of the Leased Premises shall be subject and
subordinate to the provisions of this Lease. No assignment or sublease made as
permitted by this Paragraph 21 shall affect or reduce any of the obligations of
Tenant hereunder, and all such obligations shall continue in full force and
effect as obligations of a principal and not as obligations of a guarantor, as
if no assignment or sublease had been made. No assignment or sublease shall
impose any additional obligations on Landlord under this Lease.
(b) Tenant shall, within ten (10) days after the execution and delivery
of any assignment or sublease consented to by Landlord, deliver a duplicate
original copy thereof to Landlord which, in the event of an assignment, shall be
in recordable form.
(c) As security for performance of its obligations under this Lease,
Tenant hereby grants, conveys and assigns to Landlord all right, title and
interest of Tenant in and to all subleases now in existence or hereinafter
entered into for any or all of the Leased Premises, any and all extensions,
modifications and renewals thereof and all rents, issues and profits therefrom.
Landlord hereby grants to Tenant a license to collect and enjoy all rents and
other sums of money payable under any sublease of any of the Leased Premises,
provided, however, that Landlord shall have the absolute right at any time upon
notice to Tenant and any subtenants to revoke said license and to collect such
rents and sums of money and to retain the same. Tenant shall not consent to,
cause or allow any modification or alteration of any of the terms, conditions or
covenants of any of the subleases or the termination thereof, without the prior
written approval of Landlord, which consent shall not be unreasonably withheld,
nor shall Tenant accept any rents more than thirty (30) days in advance of the
accrual thereof nor do nor permit anything to be done, the doing of which, nor
omit or refrain from doing anything, the omission of which, will or could be a
breach of or default in the terms of any of the subleases.
(d) Tenant shall not have the power to mortgage, pledge or otherwise
encumber its interest under this Lease or any
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sublease of the Leased Premises, and any such mortgage, pledge or encumbrance
made in violation of this Paragraph 21 shall be void.
(e) Landlord may sell or transfer the Leased Premises at any time
without Tenant's consent to any third party (each a "Third Party Purchaser"),
provided, however, that unless an Event of Default exists or Tenant has failed
to extend the term of this Lease pursuant to Paragraph 5 hereof, Landlord may
not sell or transfer all or any portion of the Leased Premises to any Competitor
of Tenant without Tenant's prior written consent (which may be withheld in
Tenant's sole discretion). In the event of any such transfer, Tenant shall
attorn to any Third Party Purchaser as Landlord so long as such Third Party
Purchaser and Landlord notify Tenant in writing of such transfer. At the request
of Landlord, Tenant will execute such documents confirming the agreement
referred to above and such other agreements as Landlord may reasonably request,
provided that such agreements do not increase the liabilities and obligations of
Tenant hereunder.
22. Events of Default.
(a) The occurrence of any one or more of the following (after
expiration of any applicable cure period as provided in Paragraph 22(b)) shall,
at the sole option of Landlord, constitute an "Event of Default" under this
Lease:
(i) a failure by Tenant to make any payment of any Monetary
Obligation, regardless of the reason for such failure;
(ii) a failure by Tenant duly to perform and observe, or a
violation or breach of, any other provision hereof not otherwise specifically
mentioned in this Paragraph 22 (a) or Tenant fails to comply with any covenant
made by Tenant in any writing executed by Tenant in connection herewith;
(iii) any representation or warranty made by Tenant herein or
in any certificate, demand or request made pursuant hereto proves to have been
incorrect in any material respect when made;
(iv) a default beyond any applicable cure period by Tenant in
any payment of principal or interest on any obligations for borrowed money
having an outstanding principal balance of $500,000 or more in the aggregate, or
in the performance of any other provision contained in any instrument under
which any such indebtedness is created or secured (including the breach of any
covenant thereunder), if an effect of such default is to cause, or permit any
Person to cause, such obligation to become due prior to its stated maturity;
(v) a default by Tenant beyond any applicable cure period in
the payment of rent under, or in the performance of
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any other material provision of, any other lease or leases with rental
obligations over the terms thereof of $500,000 or more in the aggregate;
(vi) a final, non-appealable judgment or judgments for the
payment of money in excess of $1,000,000 in the aggregate shall be rendered
against Tenant or Guarantor and the same shall remain undischarged for a period
of sixty (60) consecutive days;
(vii) Tenant shall (A) voluntarily be adjudicated a bankrupt
or insolvent, (B) seek or consent to the appointment of a receiver or trustee
for itself or for any of the Leased Premises, (C) file a petition seeking relief
under the bankruptcy or other similar laws of the United States, any state or
any jurisdiction, (D) make a general assignment for the benefit of creditors, or
(E) be unable to pay its debts as they mature;
(viii) a court shall enter an order, judgment or decree
appointing, without the consent of Tenant, a receiver or trustee for it or for
any of the Leased Premises or approving a petition filed against Tenant which
seeks relief under the bankruptcy or other similar laws of the United States,
any state or any jurisdiction, and such order, judgment or decree shall remain
undischarged or unstayed sixty (60) days after it is entered;
(ix) the Leased Premises shall have been vacated or abandoned,
provided that Tenant shall be permitted to vacate the Leased Premises for the
purpose of reconditioning the Leased Premises in connection with an assignment
or sublet that has been approved by Landlord pursuant to the terms of this
Lease;
(x) Tenant shall be liquidated or dissolved or shall begin
proceedings towards its liquidation or dissolution;
(xi) the estate or interest of Tenant in any of the Leased
Premises shall be levied upon or attached in any proceeding and such estate or
interest is about to be sold or transferred or such process shall not be vacated
or discharged within sixty (60) days after it is made;
(xii) a failure by Tenant to perform or observe, or a
violation or breach of, or misrepresentation by Tenant under, any provision of
any Assignment or any other document between Tenant and Lender, if such failure,
violation, breach or misrepresentation continues beyond any applicable cure
period with respect to any Loan after Tenant's receipt of written notice
thereof, and results in a default under such Loan;
(xiii) a failure by Tenant to maintain in effect any other
license or permit necessary for the use, occupancy or operation of the Leased
Premises;
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(xiv) Tenant shall sell or transfer all or substantially all
of its assets; or
(xv) an Event of Default (as defined in the Guaranty) beyond
any applicable cure period shall occur under the Guaranty or a default under the
Purchase Agreement shall occur.
(b) No notice or cure period shall be required in any one or more of
the following events: (A) the occurrence of an Event of Default under clause (i)
(except as otherwise set forth (xii), (xiii), (xiv) or (xv) of Paragraph 22(a);
(B) the default consists of failure to provide any insurance required by
Paragraph 16 or an assignment or sublease entered into in violation of Paragraph
21; or (C) the default is such that any delay in the exercise of a remedy by
Landlord could reasonably be expected to cause irreparable harm to Landlord. If
the default consists of the failure to pay any Monetary Obligation under clause
(i) of Paragraph 22(a), the applicable cure period shall be three (3) days from
the date on which notice is given, but Landlord shall not be obligated to give
notice of, or allow any cure period for, any such default more than twice within
any Lease Year. If the default consists of a default under clause (ii) of
Paragraph 22 (a), other than the events specified in clauses (B) and (C) of the
first sentence of this Paragraph 22 (b), the applicable cure period shall be
twenty (20) days from the date on which notice is given or, if the default
cannot be cured within such twenty (20) day period and delay in the exercise of
a remedy would not (in Landlord's reasonable judgment) cause any material
adverse harm to Landlord or any of the Leased Premises or cause a default under
any Mortgage, the cure period shall be extended for the period required to cure
the default (but such cure period, including any extension, shall not in the
aggregate exceed sixty (60) days), provided that Tenant shall commence to cure
the default within the said twenty-day period and shall actively, diligently and
in good faith proceed with and continue the curing of the default until it shall
be fully cured.
23. Remedies and Damages Upon Default.
(a) If an Event of Default shall have occurred and is continuing,
Landlord shall have the right, at its sole option, then or at any time
thereafter, to exercise its remedies and to collect damages from Tenant in
accordance with this Paragraph 23, without demand upon or notice to Tenant
except as otherwise provided in Paragraph 22(b) and this Paragraph 23.
(i) Landlord may give Tenant notice of Landlord's intention to
terminate this Lease on a date specified in such notice. Upon such date, this
Lease, the estate hereby granted and all rights of Tenant hereunder shall expire
and terminate. Upon such termination, Tenant shall immediately surrender and
deliver possession of the Leased Premises to
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Landlord in accordance with Paragraph 26. If Tenant does not so surrender and
deliver possession of the Leased Premises, Landlord may re-enter and repossess
the Leased Premises, with or without legal process, by peaceably entering the
Leased Premises and changing locks or by summary proceedings, ejectment or any
other lawful means or procedure. Upon or at any time after taking possession of
the Leased Premises, Landlord may, by peaceable means or legal process, remove
any Persons or property therefrom. Landlord shall be under no liability for or
by reason of any such entry, repossession or removal. Notwithstanding such entry
or repossession, Landlord may (A) exercise the remedy set forth in and collect
the damages permitted by Paragraph 23 (a) (iii) or (B) collect the damages set
forth in Paragraph 23(b) (i) or 23(b) (ii).
(ii) After repossession of the Leased Premises pursuant to
clause (i) above, Landlord shall have the right to relet any of the Leased
Premises to such tenant or tenants, for such term or terms, for such rent, on
such conditions and for such uses as Landlord in its sole discretion may
determine, and collect and receive any rents payable by reason of such
reletting. Landlord may make such Alterations in connection with such reletting
as it may deem advisable in its sole discretion. Notwithstanding any such
reletting, Landlord may collect the damages set forth in Paragraph 23 (b) (ii).
(iii) Landlord may, upon notice to Tenant, require Tenant to
make an irrevocable offer to terminate this Lease upon payment to Landlord of an
amount (the "Default Termination Amount") specified in the next sentence. The
"Default Termination Amount" shall be the greatest of (A) the Fair Market Value
of the Leased Premises, (B) the sum of the Acquisition Cost and Prepayment
Premium which Landlord will be required to pay in prepaying any Loan with
proceeds of the Default Termination Amount or (C) an amount equal to the Present
Value of the entire Basic Rent from the date of such purchase to the date on
which the Term would expire, assuming that the Term has been extended for all
extension periods, if any, provided for in this Lease. Upon such notice to
Tenant, Tenant shall be deemed to have made such offer and shall, if requested
by Landlord, within ten (10) days following such request deposit with Landlord
as payment against the Default Termination Amount the amount described in (B)
above and Landlord and Tenant shall promptly commence to determine Fair Market
Value. Within thirty (30) days after the Fair Market Value Date, Landlord shall
accept or reject such offer. If Landlord accepts such offer then, on the tenth
(10th) business day after such acceptance, Tenant shall pay to Landlord the
Default Termination Amount and, at the request of Tenant, Landlord will convey
the Leased Premises to Tenant or its designee in accordance with Paragraph 20.
Any rejection by Landlord of such offer shall have no effect on any other remedy
Landlord may have under this Lease.
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(iv) Landlord may declare by notice to Tenant the entire Basic
Rent (in the amount of Basic Rent then in effect) for the remainder of the then
current Term to be immediately due and payable. Tenant shall immediately pay to
Landlord all such Basic Rent discounted to its Present Value, all accrued Rent
then due and unpaid, all other Monetary Obligations which are then due and
unpaid and all Monetary Obligations which arise or become due by reason of such
Event of Default (including any Costs of Landlord). Upon receipt by Landlord of
all such accelerated Basic Rent and Monetary Obligations, this Lease shall
remain in full force and effect and Tenant shall have the right to possession of
the Leased Premises from the date of such receipt by Landlord to the end of the
Term, and subject to all the provisions of this Lease, including the obligation
to pay all increases in Basic Rent and all Monetary Obligations that
subsequently become due, except that (A) no Basic Rent which has been prepaid
hereunder shall be due thereafter during the said Term and (B) Tenant shall have
no option to extend or renew the Term.
(b) The following constitute damages to which Landlord shall be
entitled if Landlord exercises its remedies under Paragraph 23(a) (i) or 23(a)
(ii):
(i) If Landlord exercises its remedy under Paragraph 23 (a)
(i) but not its remedy under Paragraph 23(a)(ii) (or attempts to exercise such
remedy and is unsuccessful in reletting the Leased Premises) then, upon written
demand from Landlord, Tenant shall pay to Landlord, as liquidated and agreed
final damages for Tenant's default and in lieu of all current damages beyond the
date of such demand (it being agreed that it would be impracticable or extremely
difficult to fix the actual damages), an amount equal to the Present Value of
the excess, if any, of (A) all Basic Rent from the date of such demand to the
date on which the Term is scheduled to expire hereunder in the absence of any
earlier termination, re-entry or repossession over (B) the then fair market
rental value of the Leased Premises for the same period. Tenant shall also pay
to Landlord all of Landlord's Costs in connection with the repossession of the
Leased Premises and any attempted reletting thereof, including all brokerage
commissions, legal expenses, attorneys' fees, employees' expenses, costs of
Alterations and expenses and preparation for reletting.
(ii) If Landlord exercises its remedy under Paragraph 23(a)(i)
or its remedies under Paragraph 23 (a) (i) and 23(a) (ii), then Tenant shall,
until the end of what would have been the Term in the absence of the termination
of the Lease, and whether or not the Leased Premises shall have been relet, be
liable to Landlord for, and shall pay to Landlord, as liquidated and agreed
current damages all Monetary Obligations which would be payable under this Lease
by Tenant in the absence of such termination less the net proceeds, if any, of
any reletting pursuant to Paragraph 23 (a) (ii), after deducting from such
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proceeds all of Landlord's Costs (including the items listed in the last
sentence of Paragraph 23(b) (i) hereof) incurred in connection with such
repossessing and reletting; provided, that if Landlord has not relet the Leased
Premises, such Costs of Landlord shall be considered to be Monetary Obligations
payable by Tenant. Tenant shall be and remain liable for all sums aforesaid, and
Landlord may recover such damages from Tenant and institute and maintain
successive actions or legal proceedings against Tenant for the recovery of such
damages. Nothing herein contained shall be deemed to require Landlord to wait to
begin such action or other legal proceedings until the date when the Term would
have expired by its own terms had there been no such Event of Default.
(c) Notwithstanding anything to the contrary herein contained, in lieu
of or in addition to any of the foregoing remedies and damages, Landlord may
exercise any remedies and collect any damages available to it at law or in
equity. If Landlord is unable to obtain full satisfaction pursuant to the
exercise of any remedy, it may pursue any other remedy which it has hereunder or
at law or in equity.
(d) Landlord shall not be required to mitigate any of its damages
hereunder unless required to by applicable Law. If any Law shall validly limit
the amount of any damages provided for herein to an amount which is less than
the amount agreed to herein, Landlord shall be entitled to the maximum amount
available under such Law.
(e) No termination of this Lease, repossession or reletting of the
Leased Premises, exercise of any remedy or collection of any damages pursuant to
this Paragraph 23 shall relieve Tenant of any Surviving Obligations.
(f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD HEREUNDER,
TENANT WAIVES THE SERVICE OF ANY NOTICE NOT SPECIFIED HEREIN WHICH MAY BE
REQUIRED BY ANY APPLICABLE LAW AND ANY RIGHT TO A TRIAL BY JURY.
(g) Upon the occurrence of any Event of Default, Landlord shall have
the right (but no obligation) to perform any act required of Tenant hereunder
and, if performance of such act requires that Landlord enter the Leased
Premises, Landlord may enter the Leased Premises for such purpose.
(h) No failure of Landlord (i) to insist at any time upon the strict
performance of any provision of this Lease or (ii) to exercise any option,
right, power or remedy contained in this Lease shall be construed as a waiver,
modification or relinquishment thereof. A receipt by Landlord of any sum in
satisfaction of any Monetary obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision hereof
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shall be deemed to have been made unless expressed in a writing signed by
Landlord.
(i) Tenant hereby waives and surrenders, for itself and all
those claiming under it, including creditors of all kinds, (i) any right and
privilege which it or any of them may have under any present or future Law to
redeem any of the Leased Premises or to have a continuance of this Lease after
termination of this Lease or of Tenant's right of occupancy or possession
pursuant to any court order or any provision hereof, and (ii) the benefits of
any present or future Law which exempts property from liability for debt or for
distress for rent.
(j) Except as otherwise provided herein, all remedies are
cumulative and concurrent and no remedy is exclusive of any other remedy. Each
remedy may be exercised at any time an Event of Default has occurred and is
continuing and may be exercised from time to time. No remedy shall be exhausted
by any exercise thereof.
24. Notices. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Lease shall be in writing and
shall be deemed to have been given for all purposes when delivered in person or
by Federal Express or other reliable 24-hour delivery service or five (5)
business days after being deposited in the United States mail, by registered or
certified mail, return receipt requested, postage prepaid, addressed to the
other party at its address stated above. A copy of any notice given by Tenant to
Landlord shall simultaneously be given by Tenant to Xxxx Xxxxx Xxxx & XxXxxx,
0000 Xxx Xxxxxxx Xxxxx, Xxxxxxxxxxxx, XX 00000, Attention: Chairman, Real Estate
Department. A copy of any notice regarding real estate matters given by Landlord
to Tenant shall simultaneously be given by Landlord to Xxxxx, Day, Xxxxxx &
Xxxxx, North Point, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, Attention: Tax
Group, Private Capital Section Chairman. For the purposes of this Paragraph, any
party may substitute another address stated above (or substituted by a previous
notice) for its address by giving fifteen (15) days' notice of the new address
to the other party, in the manner provided above.
25. Estoppel Certificate. Landlord and Tenant shall, at any time upon
not less than ten (10) days' prior written request by the other or by Lender,
deliver to such requesting party a statement in writing, executed by the
president or a vice president of such executing party, certifying (a) that,
except as otherwise specified, this Lease is unmodified and in full force and
effect, (b) the dates to which Basic Rent, Additional Rent and all other
Monetary Obligations have been paid, (c) that, to the knowledge of the signer of
such certificate and except as otherwise specified, no default by either
Landlord or Tenant exists hereunder, (d) such other matters as such requesting
party
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may reasonably request, and (e) with respect to such a statement requested by
Landlord from Tenant, that, except as otherwise specified, there are no
proceedings pending or, to the knowledge of the signer, threatened, against
Tenant before or by any court or administrative agency which, if adversely
decided, would materially and adversely affect the financial condition and
operations of Tenant. Any such statements may be relied upon by Lender,
Landlord, Tenant or their respective assignees and by any prospective purchaser
or mortgagee of any of the Leased Premises. Any certificate required under this
Paragraph 25 from Tenant shall state that, in the opinion of each person signing
the same, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to the subject matter of such
certificate, and shall briefly state the nature of such examination or
investigation.
26. Surrender. Upon the expiration or earlier termination of this
Lease, Tenant shall peaceably leave and surrender the Leased Premises to
Landlord in the same condition in which the Leased Premises was at the
commencement of this Lease, except as repaired, rebuilt, restored, altered,
replaced or added to as permitted or required by any provision of this Lease,
and except for ordinary wear and tear. Upon such surrender, Tenant shall (a)
remove from the Leased Premises all property which is owned by Tenant or third
parties other than Landlord and (b) repair any damage caused by such removal.
Property not so removed shall become the property of Landlord, and Landlord may
thereafter cause such property to be removed from the Leased Premises. The cost
of removing and disposing of such property and repairing any damage to any of
the Leased Premises caused by such removal shall be paid by Tenant to Landlord
upon demand. Landlord shall not in any manner or to any extent be obligated to
reimburse Tenant for any such property which becomes the property of Landlord
pursuant to this Paragraph 26.
27. No Merger of Title. There shall be no merger of the leasehold
estate created by this Lease with the fee estate in the Leased Premises by
reason of the fact that the same Person may acquire or hold or own, directly or
indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in the Leased Premises or any part
thereof or interest therein, unless and until all Persons having any interest in
the interests described in (a) and (b) above which are sought to be merged shall
join in a written instrument effecting such merger and shall duly record the
same.
28. Books and Records.
(a) Tenant shall keep adequate records and books of account
with respect to the finances and business of Tenant generally and with respect
to the Leased Premises, in accordance with GAAP, and shall permit Landlord and
Lender by their respective agents, accountants and attorneys, upon reasonable
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prior written notice to Tenant, to visit and inspect the Leased Premises and
examine (and make copies of) the records and books of accounts and to discuss
the finances and business with the officers of Tenant, at such reasonable times
as may be requested by Landlord or Lender. Upon the request of Lender or
Landlord (either telephonically or in writing), Tenant shall provide the
requesting party with copies of any information to which such party would be
entitled in the course of a personal visit.
(b) Tenant shall deliver to Landlord and to Lender within ninety (90)
days of the close of each fiscal year, annual audited financial statements of
Tenant prepared by nationally recognized independent certified public
accountants. Tenant shall also furnish to Landlord and to Lender, within sixty
(60) days of the end of each of the three remaining quarters, unaudited
financial statements and all quarterly reports of Tenant, certified by Tenant's
chief financial officer, and all filings, if any, of Form 10-K, Form 10-Q and
other required filings with the Securities and Exchange Commission pursuant to
the provisions of the Securities Exchange Act of 1934, as amended, or any other
Law. All financial statements of Tenant shall be prepared in accordance with
GAAP consistently applied. All annual financial statements shall be accompanied
by an unqualified opinion of said accountants and by the affidavit of the
president or a vice president of Tenant, dated within five (5) days of the
delivery of such statement, stating that (i) the affiant knows of no Event of
Default, or event which, upon notice or the passage of time or both, would
become an Event of Default which has occurred and is continuing hereunder or, if
any such event has occurred and is continuing, specifying the nature and period
of existence thereof and what action Tenant has taken or proposes to take with
respect thereto and (ii) except as otherwise specified in such affidavit, that
Tenant has fulfilled all of its obligations under this Lease which are required
to be fulfilled on or prior to the date of such affidavit.
29. Determination of Value.
(a) Whenever a determination of Fair Market Value is required pursuant
to any provision of this Lease, such Fair Market Value shall be determined in
accordance with the following procedure:
(i) Landlord and Tenant shall endeavor to agree upon such Fair
Market Value within thirty (30) days after the date (the "Applicable Initial
Date") on which (A) Tenant provides Landlord with notice of its intention to
terminate this Lease and purchase the Leased Premises pursuant to Paragraph 18,
(B) Landlord provides Tenant with notice of its intention to redetermine Fair
Market Value pursuant to Paragraph 20(c) or (C) Landlord provides Tenant with
notice of Landlord's intention to require Tenant to make an offer to terminate
this Lease pursuant to Paragraph 23(a)(iii). Upon reaching such agreement,
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the parties shall execute an agreement setting forth the amount of such Fair
Market Value.
(ii) If the parties shall not have signed such agreement
within thirty (30) days after the Applicable Initial Date, Tenant shall within
fifty (50) days after the Applicable Initial Date select an appraiser and notify
Landlord in writing of the name, address and qualifications of such appraiser.
Within twenty (20) days following Landlord's receipt of Tenant's notice of the
appraiser selected by Tenant, Landlord shall select an appraiser and notify
Tenant of the name, address and qualifications of such appraiser. Such two
appraisers shall endeavor to agree upon Fair Market Value based on a written
appraisal made by each of them as of the Relevant Date and delivered to each of
Landlord and Tenant. If such two appraisers shall agree upon a Fair Market
Value, the amount of such Fair Market Value as so agreed shall be binding and
conclusive.
(iii) If such two appraisers shall be unable to agree upon a
Fair Market Value within twenty (20) days after the selection of an appraiser by
Landlord, then such appraisers shall advise Landlord and Tenant of their
respective determination of Fair Market Value and shall select a third appraiser
to make the determination of Fair Market Value. The selection of the third
appraiser shall be binding and conclusive upon Landlord and Tenant.
(iv) If such two appraisers shall be unable to agree upon the
designation of a third appraiser within ten (10) days after the expiration of
the twenty (20) day period referred to in clause (iii) above, or if such third
appraiser does not make a determination of Fair Market Value within twenty (20)
days after his selection, then such third appraiser or a substituted third
appraiser, as applicable, shall, at the request of either party hereto, be
appointed by the President or Chairman of the American Arbitration Association
in Houston, Texas. The determination of Fair Market Value made by the third
appraiser appointed pursuant hereto shall be made within twenty (20) days after
such appointment.
(v) If a third appraiser is selected, Fair Market Value shall
be the average of the determination of Fair Market Value made by the third
appraiser and the determination of Fair Market Value made by the appraiser (the
"Nearest Appraiser") (pursuant to Paragraph 29 (a) (ii) hereof) whose
determination of Fair Market Value is nearest to that of the third appraiser. In
calculating the average of the Fair Market Value determined by the third
appraiser and by the Nearest Appraiser, the values determined by Lender pursuant
to clause "(a)" of the definition of "Fair Market Value" shall be averaged, and
the values determined by each pursuant to clause "(b)" of such definition shall
be averaged, and the "Fair Market Value" shall be the higher of such
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two averages. Such determination of Fair Market Value shall be binding and
conclusive upon Landlord and Tenant.
(vi) All appraisers selected or appointed pursuant to this
Paragraph 29(a) shall (A) be independent qualified MAI appraisers (B) have no
right, power or authority to alter or modify the provisions of this Lease, (C)
utilize the definition of Fair Market Value hereinabove set forth above, and (D)
be registered in the State if the State provides for or requires such
registration. The Cost of the procedure described in this Paragraph 29(a) above
shall be borne entirely by Tenant.
(b) If, by virtue of any delay, Fair Market Value is not determined by
the expiration or termination of the then current Term, then the date on which
the Term would otherwise expire or terminate shall be extended to the date
specified for termination in the particular provision of this Lease pursuant to
which the determination of Fair Market Value is being made.
(c) In determining Fair Market Value as defined in clause (b) of the
definition of Fair Market Value, the appraisers shall add (a) the present value
of the Rent for the remaining Term, assuming the Term has been extended for all
extension periods provided herein (with assumed increases in the CPI (as defined
in Exhibit D) to be determined by the appraisers) and (b) the present value of
the Leased Premises as of the end of such Term (having assumed the Term has been
extended for all extension periods provided herein). The present value in each
such instance shall be determined by using the Prime Rate in effect on the
Applicable Initial Date as a discounting factor. The appraisers shall further
assume that no default then exists under the Lease and that Tenant has complied
(and will comply) with all provisions of the Lease.
30. Non-Recourse as to Landlord. Anything contained herein to the
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord or W. P. Xxxxx Incorporated ("W. P. Xxxxx") under this Lease shall be
enforced only against the Leased Premises and not against any other assets,
properties or funds (other than funds held pursuant to this Lease) of (a)
Landlord or W. P. Xxxxx, (b) any director, officer, general partner,
shareholder, limited partner, employee or agent of Landlord or W. P. Xxxxx or
any general partner of Landlord or W. P. Xxxxx or any of its general partners
(or any legal representative, heir, estate, successor or assign of any thereof),
(c) any predecessor or successor partnership or corporation (or other entity) of
Landlord or W. P. Xxxxx or any of its or their general partners, shareholders,
officers, directors, employees or agents, either directly or through Landlord or
W. P. Xxxxx or its or their general partners, shareholders, officers, directors,
employees or agents or any predecessor or successor partnership or corporation
(or other entity), or (d) any other Person (including Xxxxx Property Advisors,
Xxxxx Fiduciary Advisors, Inc., W. P.
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Xxxxx & Co., Inc.), affiliated with any of the foregoing, or any director,
officer, employee or agent of any thereof.
31. Financing. If Landlord desires to obtain or refinance any Loan,
Tenant shall negotiate in good faith with Landlord concerning any request made
by any Lender or proposed Lender for changes or modifications in this Lease. In
particular, Tenant shall agree, upon request of Landlord, to supply any such
Lender with such notices and information as Tenant is required to give to
Landlord hereunder and to extend the rights of Landlord hereunder to any such
Lender and to consent to such financing if such consent is requested by such
Lender. Tenant shall provide any other consent or statement and shall execute
any and all other documents that such Lender requires in connection with such
financing, including any environmental indemnity agreement and subordination,
non-disturbance and attornment agreement, so long as the same are not
inconsistent with the terms of this Lease, do not materially adversely affect
any right, benefit or privilege of Tenant under this Lease or materially
increase Tenant's obligations under this Lease, and provided that any such
Lender shall agree not to disturb Tenant's use or occupancy of the Leased
Premises and to recognize this Lease and Tenant's right hereunder unless and
until an Event of Default exists or Landlord shall have the right to terminate
this Lease pursuant to any applicable provision hereof. Such subordination,
nondisturbance and attornment agreement may require Tenant to confirm that (a)
Lender and its assigns will not be liable for any misrepresentation, act or
omission of Landlord and (b) Lender and its assigns will not be subject to any
counterclaim, demand or offset which Tenant may have against Landlord.
32. Subordination. This Lease and Tenant's interest hereunder shall be
subordinate to any Mortgage or other security instrument hereafter placed upon
the Leased Premises by Landlord, and to any and all advances made or to be made
thereunder, to the interest thereon, and all renewals, replacements and
extensions thereof, provided that any such Mortgage or other security instrument
(or a separate instrument in recordable form duly executed by the holder of any
such Mortgage or other security instrument and delivered to Tenant) shall
provide for the recognition of this Lease and all Tenant's rights hereunder
unless and until an Event of Default exists or Landlord shall have the might to
terminate this Lease pursuant to any applicable provision hereof.
33. Tax Treatment; Reporting. Landlord and Tenant each shall report
this transaction consistently for all purposes, including Federal income tax
purposes. Each shall report this Lease as a true lease with Landlord as the
owner of the Leased Premises and Equipment and Tenant as the lessee of such
Leased Premises and Equipment including: (1) treating Landlord as the owner of
the property eligible to claim depreciation deductions under Section 167 or 168
of the Internal Revenue Code of 1986 (the
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"Code") with respect to the Leased Premises and Equipment, (2) Tenant reporting
its Rent payments as rent expense under Section 162 of the Code, and (3)
Landlord reporting the Rent payments as rental income.
34. Financing Major Alterations.
(a) Should Tenant, during the Term of this Lease, desire to make
Alterations to the Leased Premises which are not readily removable without
causing material damage to the Leased Premises and which will cost in excess of
$750,000 ("Major Alterations"), Tenant may, prior to the commencement of
construction of such Major Alterations, request Landlord to reimburse the costs
thereof (the "Alteration Cost") to Tenant to wit: cost of labor and materials,
financing fees, legal fees, survey, architectural, engineering, title insurance
and other normal and customary loan or construction costs.
(b) Should Landlord agree to reimburse such costs, Landlord and Tenant
shall enter into good faith negotiations regarding the execution and delivery of
a written agreement of modification of this Lease, which agreement shall provide
for the following:
(i) payment by Landlord to Tenant of the Alteration Cost
within one hundred twenty (120) days of the date of Landlord's agreement to pay
the Alteration Cost, or on the date of completion of the Major Alterations,
whichever shall be the later, or in installment payments as agreed;
(ii) an increase in the annual Basic Rent payable during the
Amortization Period (as hereinafter defined) to an amount sufficient to amortize
the Alteration Cost and the unpaid principal balance of any Note ("Total
Financing") over a period (the "Amortization Period") which shall be the shorter
of (A) twenty-five (25) years or (B) the remainder of the then current Term and,
if Tenant so elects, any additional extension periods provided for herein (so
long as Tenant shall confirm any such extension periods included in the
Amortization Period by a written waiver of its right to give notice of its
intention not to renew this Lease prior to the expiration of such extension
periods), at such rate of interest that is equal to the return enjoyed by
Landlord hereunder immediately prior to such proposed increase in Basic Rent and
upon such other terms as shall be agreed upon between Landlord and Tenant, but
which shall be no less favorable than the terms for first unsecured loans in a
principal amount equal to the Total Financings for borrowers with credit ratings
equivalent to that of Tenant's at that time; and
(iii) such other changes and amendments to this Lease as may
be necessary and appropriate in view of such payment of the Alteration Cost by
Landlord to Tenant.
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Tenant shall pay all Costs incurred by Landlord in connection with any such
modification to this Lease and such financing, including closing costs,
brokerage fees, taxes, recording charges and legal fees and expenses.
(c) To the extent that the terms of a Mortgage or any other
document encumbering any of the Leased Premises shall require the consent of
Lender and/or the holder or holders of any encumbrance on any of the Leased
Premises (the "Encumbrancers") to the addition or construction of any Major
Alterations or to the financing thereof by Landlord, the rights and obligations
of Landlord and Tenant under Paragraph 13 and this Paragraph 34 are expressly
conditioned upon Tenant's obtaining, prior to the commencement of any
construction, the Encumbrancers' written consent to such construction and to
Landlords obtaining, in the event Landlord has accepted Tenant's offer to accept
payment for the Major Alterations, the Encumbrancers' written consent to such
financing.
(d) If Landlord and Tenant do not reach agreement on Tenant's
request to have Landlord finance the Alteration Costs, Tenant shall, subject to
the provisions of Paragraph 13 of this Lease, have the right to construct the
Major Alterations at Tenant's sole cost and expense. In any event, the
construction of the Major Alterations shall be performed in accordance with the
provisions of Paragraph 13 hereof and the Major Alterations shall be the
property of Landlord and part of the Leased Premises subject to this Lease.
(e) Nothing contained in this Paragraph 34 shall be construed
to modify Paragraph 13 hereof, and the provisions of Paragraph 12 and
subparagraphs (i) and (ii) of Paragraph 13(a) shall apply to all Major
Alterations made or constructed hereunder, including the requirement for
Landlord's consent to Alterations.
35. Post-Closing Obligations. Tenant shall complete
each post-closing obligation within the time period specified, all
as described on Exhibit "E" attached hereto and made a part hereof.
36. Miscellaneous.
(a) The paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this Lease or to
be used in determining the intent of the parties or otherwise interpreting this
Lease.
(b) As used in this Lease, the singular shall include the
plural and any gender shall include all genders as the context requires and the
following words and phrases shall have the following meanings: (i) "including"
shall mean "including without limitation"; (ii) "provisions" shall mean
"provisions,
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terms, agreements, covenants and/or conditions"; (iii) "lien" shall mean "lien,
charge, encumbrance, title retention agreement, pledge, security interest,
mortgage and/or deed of trust"; (iv) "obligation" shall mean "obligation, duty,
agreement, liability, covenant and/or condition"; (v) "any of the Leased
Premises" shall mean "the Leased Premises or any part thereof or interest
therein"; (vi) "any of the Land" shall mean "the Land or any part thereof or
interest therein"; (vii) "any of the Improvements" shall mean "the Improvements
or any part thereof or interest therein"; (viii) "any of the Equipment" shall
mean "the Equipment or any part thereof or interest therein"; and (ix) "any of
the Adjoining Property" shall mean "the Adjoining Property or any part thereof
or interest therein.
(c) Any act which Landlord is permitted to perform under this Lease may
be performed at any time and from time to time by Landlord or any person or
entity designated in writing by Landlord. Each appointment of Landlord as
attorney-in-fact for Tenant hereunder is irrevocable and coupled with an
interest. Except as otherwise specifically provided herein, Landlord shall have
the right, at its sole option, to withhold or delay its consent whenever such
consent is required under this Lease for any reason or no reason. Time is of the
essence with respect to the performance by Tenant of its obligations under this
Lease.
(d) Landlord shall in no event be construed for any purpose to be a
partner, joint venturer or associate of Tenant or of any subtenant, operator,
concessionaire or licensee of Tenant with respect to any of the Leased Premises
or otherwise in the conduct of their respective businesses.
(e) This Lease and any documents which may be executed by Tenant on or
about the effective date hereof at Landlord's request constitute the entire
agreement between the parties and supersede all prior understandings and
agreements, whether written or oral, between the parties hereto relating to the
Leased Premises and the transactions provided for herein. Landlord and Tenant
are business entities having substantial experience with the subject matter of
this Lease and have each fully participated in the negotiation and drafting of
this Lease. Accordingly, this Lease shall be construed without regard to the
rule that ambiguities in a document are to be construed against the drafter.
(f) This Lease may be modified, amended, discharged or waived only by
an agreement in writing signed by the party against whom enforcement of any such
modification, amendment, discharge or waiver is sought.
(g) The covenants of this Lease shall run with the land and bind
Tenant, its successors and assigns and all present and subsequent encumbrancers
and subtenants of any of the Leased Premises, and shall inure to the benefit of
Landlord, its
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successors and assigns. If there is more than one Tenant, the obligations of
each shall be joint and several.
(h) If any one or more of the provisions contained in this
Lease shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Lease, but this Lease shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
(i) This Lease shall be governed by and construed and enforced
in accordance with the Laws of the State.
(j) This lease may be executed in counterparts.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed under seal as of the day and year first above written.
LANDLORD:
SFC (TX) QRS 12-18, INC.
a Texas corporation
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxx
Vice President
TENANT:
SPORTS & FITNESS CLUBS OF
AMERICA, INC.,
an Ohio corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President and Treasurer
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EXHIBIT A
LEGAL DESCRIPTION
BEING 6.239 acres (271.771 square feet) of land situated in the Xxxxx Xxxxxxxx
Survey, Abstract No. 844 Xxxxxx County, Texas, and being a portion of Block One
(1), Unrestricted Reserve "A" of Westchase Subdivision, Section Nineteen (19) of
record according to the map or plat thereof recorded in Volume 292, Page 92 of
the Xxxxxx County Map Records (H.C.M.R.); said 6.239 acre tract being out of a
9.808 acre residue of a called 15.0626 acre tract conveyed to Vantage
Properties, Inc., in deed recorded under File Number G795388, Pile Code Number
###-##-#### of the Xxxxxx County Official Public Records of Real Property
(H.C.O.P.R.R.P.); said 6.239 acre tract being more particularly described by
metes and bounds as follows, with all bearings referenced to said Westchase
Subdivision plat:
BEGINNING at a 1/2 inch iron rod found for the common East corner of said
15.0626 acre tract and a called 9.7651 acre tract conveyed to B & S Ventures in
deed recorded under File Number G663243, File Code Number ###-##-#### of the
H.C.O.P.R.R.P., being in the Westerly right-of-way line of Wallingford Drive (60
feet wide);
THENCE, South 87 deg. 27 min. 52 sec. West, along the line common to said
15.0626 acre tract and said 9.7651 acre tract, passing at 379.22 feet the common
North corner of said 9.7651 acre tract and a called 11.2978 acre tract conveyed
to Xxxxx Development Corporation and recorded under File Number G697866, Film
Code Number ###-##-#### of said N.C.O.P.R.R.P., continuing in all a total
distance of 582.48 feet to a 5/8 inch iron rod found for the Southeast corner of
a called 5.2541 acre tract conveyed to Westchase Equities, Inc. and recorded
under file Number N460377, Film Code Number 000-00-0000 of the H.C.O.P.R.R.P.;
THENCE, along the East line of said 5.2541 acre tract, the following courses:
North 02 deg. 32 min. 08 sec. West, 303.00 feet to a 5/8 inch iron rod
found for corner;
South 87 deg. 27 min. 52 sec. West, 19.86 feet to a 5/8 inch iron rod
found for corner;
North 02 deg. 32 min. 08 sec. West 142.43 feet to an "X" in concrete
set for corner;
THENCE, North 87 deg. 27 min. 52 sec., East, 216.42 feet, departing said
Easterly line to a 5/8 inch iron rod set for corner;
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THENCE, North 02 deg. 32 min. 08 sec., West, 299.08 feet to a 5/8 inch iron rod
set for corner;
THENCE, North 47 deg. 32 min. 08 sec. West, 56.57 feet to a "X" in concrete set
for corner in the Southerly right-of-way line of Westheimer Road (120 feet
wide);
THENCE, North 87 deg. 27 min. 52 sec. East, 99.00 feet along the Southerly
right-of-way line of said Westheimer Road to an "X" in concrete set for corner;
THENCE, South 02 deg. 32 min. 08 sec. East, 339.08 feet departing said Southerly
right-of-way line to a 5/8 inch iron rod set for corner;
THENCE, North 87 deg. 27 min. 52 sec. East, 258.22 feet to a 5/8 inch iron rod
Set in the Westerly right-of-way line of the aforementioned Wallingford Drive;
being in the arc of a non-tangent curve to the left;
THENCE, along the Westerly right-of-way line of said Wallingford Drive, the
following courses:
Southeasterly, along the arc of said curve to the left (Central Angle
equal 02 deg. 29 min. 47 Sec.; Radius equal 1430.00 feet; Chord Bearing
and Distance equal South 14 deg. 37 min. 46 sec. East, 62.30 feet)
62.31 feet to a 5/8-inch iron rod found for the point of tangency;
South 15 deg. 52 min. 40 sec. East, 81.06 feet to a 5/8-inch iron rod
found for the point of curvature of a tangent curve to the right;
Southeasterly, along the arc of said curve to the right (Central Angle
equal 12 deg. 54 min. 08 sec.; Radius equal 1370.00 feet; Chord Bearing
and Distance equal South 09 deg. 25 min. 36 sec. East, 307.86 feet)
308.51 feet to the POINT OF BEGINNING, containing a computed area of
6.239 acres (271,771 square feet) of land.
TOGETHER with appurtenant easements recorded under Xxxxxx County Clerk's File
Nos. N367792 and N367793.
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EXHIBIT B
MACHINERY AND EQUIPMENT
All fixtures, machinery, apparatus, equipment, fittings and appliances of every
kind and nature whatsoever now or hereafter affixed or attached to or installed
in any of the Leased Premises (except as hereafter provided), including all
electrical, anti-pollution, heating, lighting (including hanging fluorescent
lighting), incinerating, power, air cooling, air conditioning, humidification,
sprinkling, plumbing, lifting, cleaning, fire prevention, fire extinguishing and
ventilating systems, devices and machinery and all engines, pipes, pumps, tanks
(including exchange tanks and fuel storage tanks), motors, conduits, ducts,
steam circulation coils, blowers, steam lines, compressors, oil burners,
boilers, doors, windows, loading platforms, lavatory facilities, stairwells,
fencing (including cyclone fencing), passenger and freight elevators, overhead
cranes and garage units, together with all additions thereto, substitutions
therefor and replacements thereof required or permitted by this Lease, but
excluding all personal property and all trade fixtures, machinery, office,
exercise and physical fitness equipment or machinery, manufacturing and
warehouse equipment which are not necessary to the operation, as buildings, of
the buildings which constitute part of the Leased Premises.
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EXHIBIT C
PERMITTED ENCUMBRANCES
1. Standby fees, taxes and assessments for the year 1996 and subsequent years,
which are not yet due and payable.
2. The following restrictive covenants of record itemized below:
Those recorded in Volume 292, Page 92, of the Nap Records of XXXXXX County,
Texas; and also recorded under XXXXXX County Clerk's File Numbers G795388,
P950657, P950658, P950659 and P950660.
3. A ten (10) foot sanitary sewer easement along the East property line as
shown on the map recorded in Volume 292, Page 92 of Map Records of XXXXXX
County, Texas.
4. A twelve and one-half (12.5) foot sanitary sewer and storm sewer easement
along the South property line as shown on the map recorded in Volume 292,
Page 92 of the Map Records of XXXXXX County, Texas.
5. An easement six (6) feet wide out of an unobstructed easement ten (10) feet
wide along the South property line together with an unobstructed aerial
easement adjacent thereto reserved by WESTCHASE TWO in Deed filed for
record under XXXXXX County Clerk's File Number G-795388.
6. An easement six (6) feet wide out of a ten (10) foot easement along the
South property line, together with an unobstructed aerial easement adjacent
thereto granted to HOUSTON LIGHTING AND POWER COMPANY by instrument filed
for record under XXXXXX County Clerk's File Number G-896184.
7. Terms, conditions and stipulations contained in 44 Foot Access And Drainage
Easement filed for record under XXXXXX County Clerk's File Number N-367791
and refiled under XXXXXX County Clerk's File Number N-455967.
8. 1/8 royalty interest of all the oil, gas and other minerals, the royalties,
bonuses, rentals and all other rights in connection with same are excepted
herefrom, as set forth in instrument recorded in Volume 2103, Page 207 of
the Deed Records of XXXXXX County, Texas.
9. 1/8 royalty interest of all the oil, gas and other minerals, the royalties,
bonuses, rentals and all other rights in connection with same are excepted
herefrom, as set forth in instrument recorded in Volume 2103, Page 213 of
the Deed Records of XXXXXX County, Texas.
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10. 1/4 royalty interest of all the oil, gas and other minerals, the royalties,
bonuses, rentals and all other rights in connection with same are excepted
herefrom, as set forth in instrument recorded in Volume 2103, page 219 of
the Deed Records of XXXXXX County, Texas.
11. Maintenance charge, secured by vendor's lien, as set forth in instrument
recorded under XXXXXX County Clerk's File Numbers F748372 and G-795388.
12. Terms, conditions and stipulations contained in Declaration of Covenants,
Conditions and Restrictions and Grant of Easement filed under XXXXXX County
Clerk's File Numbers P950659 and P950660, as amended by instrument filed
under XXXXXX County Clerk's File Number R355651.
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EXHIBIT D
BASIC RENT SCHEDULE
1. Basic Rent. Subject to the adjustments provided for in Paragraphs 2,
3 and 4 below, Basic Rent payable in respect of the first five (5) Lease Years
Term shall be $694,000 per annum, payable quarterly in advance on each Basic
Rent Payment Date, in equal installments of $173,500 each.
2. CPI Adjustments to Basic Rent. The Basic Rent shall be subject to
adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items,
(1982-84=100) ("CPI") or the successor index that most closely approximates the
CPI. If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the Basic Rent as adjusted by the CPI adjustment be less than the
Basic Rent in effect for the five (5) year period immediately preceding such
adjustment.
3. Effective Dates of CPI Adjustments. Basic Rent shall not be adjusted
to reflect changes in the CPI until the fifth (5th) anniversary of the Basic
Rent Payment Date on which the first full quarterly installment of Basic Rent
shall be due and payable (the "First Full Basic Rent Payment Date"). As of the
fifth (5th) anniversary of the First Full Basic Rent Payment Date and thereafter
on each of the tenth (10th) and fifteenth (15th) anniversaries of the First Full
Basic Rent Payment Date and, in the event and to the extent the Term is extended
pursuant to Paragraph 5(b) of the Lease, on the Expiration Date and on each
Renewal Date, Basic Rent shall be adjusted to reflect increases in the CPI
during the most recent five (5) year period immediately preceding each of the
foregoing dates (each such date being hereinafter referred to as the "Basic Rent
Adjustment Date").
4. Method of Adjustment for CPI Adjustment.
(a) As of each Basic Rent Adjustment Date when the average CPI
determined in clause (i) below exceeds the Beginning CPI (as defined in this
Paragraph 4(a)), the Basic Rent in effect immediately prior to the applicable
Basic Rent Adjustment Date shall be multiplied by a fraction, the numerator of
which shall be the difference between (i) the average CPI for the three (3) most
recent calendar months (the "Prior Months") ending prior to such Basic Rent
Adjustment Date for which the CPI has been published on or before the
forty-fifth (45th) day preceding such Basic Rent
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Adjustment Date and (ii) the Beginning CPI, and the denominator of which shall
be the Beginning CPI. An amount equal to the lesser of: (x) the product of such
multiplication; or (y) 18.77% of the Basic Rent in effect immediately prior to
such Basic Rent in effect immediately prior to such Basic Rent Adjustment Date
shall be added to the Basic Rent in effect immediately prior to such Basic Rent
Adjustment Date. As used herein, "Beginning CPI" shall mean the average CPI for
the three (3) calendar months corresponding to the Prior Months, but occurring
five (5) years earlier. If the average CPI determined in clause (i) is the same
or less than the Beginning CPI, the Basic Rent will remain the same for the
ensuing five (5) year period.
(b) Effective as of a given Basic Rent Adjustment Date, Basic
Rent payable under this Lease until the next succeeding Basic Rent Adjustment
Date shall be the Basic Rent in effect after the adjustment provided for as of
such Basic Rent Adjustment Date.
(c) Notice of the new annual Basic Rent shall be delivered to
Tenant on or before the tenth (10th) day preceding each Basic Rent Adjustment
Date.
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EXHIBIT E
POST-CLOSING OBLIGATIONS
1. Tenant must obtain an estoppel certificate in recordable form from Westchase
Two, a Texas limited partnership, with regard to a certain Agreement
Establishing Maintenance Charge of record at F748372 certifying that all charges
and amounts due and payable thereunder by Tenant have been paid in full and that
there is no default by Tenant in the performance of its obligations thereunder.
