LEASE SUMMARY
COUNTRY HEARTH INN
FINDLAY, OHIO
The following is a summary of the material terms and conditions of that
certain Lease Agreement dated effective as of October 21, 1997, by and
between XX-XXXXXXX, X.X., as Lessor, and BUCKHEAD AMERICA CORPORATION, as
Lessee, relating to that certain real property commonly known as a Country
Hearth Inn located in Findlay, Ohio, including all equipment, machinery,
fixtures and other items of property incidental to the use of the real
property as a hotel (the "Leased Property").
LESSOR: XX-Xxxxxxx, X.X., an Ohio limited partnership.
LESSEE: Buckhead America Corporation, a Georgia
corporation.
TERM: Commencing October 21, 1997, and ending October
21, 2012, unless otherwise terminated in
accordance with the terms of the Lease Agreement.
RENT: Annual base rental of $288,000 payable monthly
which increases by $5,000 per year for fiscal
years 1998 and 1999, plus percentage rentals
commencing January 1, 1998, and payable quarterly
equal to the total of (a) thirty percent (30%) of
the first $300,000 of cumulative gross revenues
for the applicable fiscal year through the
calendar quarter for which the calculation is
being made in excess of $740,000 (the "Gross
Revenue First Break Point") and (b) forty percent
(40%) of all amounts of cumulative gross revenues
for the applicable fiscal year through the
calendar quarter for which the calculation is
being made in excess of $1,040,000 (the "Gross
Revenue Second Break Point"). Lessee in no event
is responsible for the payment of percentage
rental if there are no funds available after the
payment of or to satisfy the payment of base rent.
Commencing January 1, 1998, the Gross Revenue
First Break Point and the Gross Revenue Second
Break Point are subject to increase to an amount
equal to the product of the break point in effect
for the prior fiscal year times the CPI Factor
plus one percent (1%).
PAYMENT OF IMPOSITIONS: Lessee is responsible for the payment of all taxes
(including, without limitation, all personal,
property, sales and use taxes, gross receipts or
similar taxes, as the same relate to or are
imposed upon Lessee or its business conducted upon
the Leased Property), assessments, water, sewer or
other rents and charges, excise taxes, inspection,
authorization and similar fees and all other
governmental charges. Lessor is responsible for
the payment of all ad valorem taxes, personal
property taxes imposed on furniture, fixtures and
equipment and taxes, assessments or similar
charges for the costs of public improvements,
excluding taxes on Xxxxxx's personal property. In
addition, Xxxxxx is responsible for maintaining
utility services to the Leased Property and paying
all charges for electricity, gas, oil, water,
sewer and other utilities used in the Leased
Property.
FRANCHISE FEES: Lessee is responsible for the payment of all
franchise fees due and owing in accordance with
the terms of the Franchise Agreement between BAC
Franchising, Inc., and Lessor.
INSURANCE: Lessee is responsible for payment of all costs and
expenses for providing and maintaining insurance
which is sufficient to furnish to Lessor and
Lessee reasonable and adequate protection in the
management and operation of the Leased Property.
Such insurance shall provide coverage for fire and
extended coverage, worker's compensation, general
liability and business interruption. All
insurance is required to be in the name of Lessor
and Lessee as the insureds and shall contain
riders and endorsements adequately protecting the
interests of Lessor and Lessee as they shall
appear. All insurance proceeds payable by reason
of any loss or damage to the Leased Property shall
be paid to Lessor and held in trust by Lessor to
be used for reconstruction or repair, as the case
may be, of any destruction to or damage of the
Leased Property.
ENVIRONMENTAL: Lessee is responsible for full compliance with all
environmental laws applicable to the Leased
Property and the operations thereon. Xxxxxx
agrees to defend, indemnify and hold harmless
Lessee from and against any and all environmental
liabilities relating to the Leased Property
excluding any such liabilities caused by the acts
or failures to act of Lessee.
MAINTENANCE AND REPAIRS: Lessee is responsible for all maintenance and
repairs required on the Leased Property, whether
interior or exterior, ordinary or extraordinary,
foreseen or unforeseen, or arising by reason of a
condition existing prior to the commencement date
of the term of the lease, excluding, however,
structural elements of the Leased Property
(including the roof) and all underground
utilities, unless caused by the negligent acts or
willful misconduct of Lessee.
ASSIGNMENT: Lessee has the right to assign the lease or sublet
any portion of the Leased Property, without the
consent of Lessor, to an affiliate of Lessee;
provided, that (i) no event of default exists
under the lease on
2
the part of Lessee, (ii) the assignment or
subletting does not materially diminish the
actual or potential percentage rent payable
under the lease; and (iii) the assignee or
sublessee, as the case may be, shall agree in
writing to keep and perform all of the terms of
the lease required on the part of Lessee to be
kept and performed and to otherwise be jointly and
severally liable with Lessee for the performance
thereof. Except as set forth above, Lessee may
not assign the lease without the prior consent of
Lessor, which consent can be withheld on a
reasonable or unreasonable basis by Lessor.
CAPITAL EXPENDITURES AND
RESERVES: Lessee is required to submit to Lessor for
Lessor's approval and inclusion in a capital
expenditure reserve account, a capital expenditure
budget for the next successive fiscal year during
the term of the lease. The purpose of the capital
expenditure reserve account is to keep the Leased
Property competitive with any hotel or hotels
similar in nature and type to the Leased Property
in the area of the hotel and to keep the Leased
Property in compliance with the applicable
provisions of the franchise agreement. The
capital expenditure budget includes, but is not
limited to, items such as expenditures required,
necessary and/or anticipated for the repair,
replacement or refurbishment of carpet, soft
goods, furniture, fixtures and equipment,
structural and mechanical items, alterations to
the Leased Property, reconstruction in the event
of damage or destruction of the Leased Property,
restoration pursuant to a condemnation or other
taking of the Leased Property, other required or
desired capital improvements of the Leased
Property, and such other items characterized as
capital expenditures under the Uniform System of
Accounts for Hotels. No monies may be expended
from the capital expenditure reserve account by
Xxxxxx, without the prior written consent of
Lessor, unless such expenditures were previously
approved by lessor for inclusion in the capital
expenditure budget. Lessor is required to fund on
a monthly basis into the capital reserve account
an amount not to exceed four percent (4%) of gross
room revenues for the immediately preceding month.
HOTEL RENOVATIONS: Lessee is responsible for the performance, at the
sole cost and expense of Xxxxxx, of certain
renovation work described in the lease. The
renovation work is scheduled to be completed
during the first three fiscal years of the lease
and includes such items as painting of rooms and
replacement of carpet, replacement of mattresses,
televisions, drapes, bedspreads and furniture, and
replacement of room cleaning items such as
housekeeping carts and vacuum cleaners. The
estimated
3
cost of the renovation work pursuant to the lease
averages approximately $70,000 per year.
EVENTS OF DEFAULT: The lease contains default provisions typical of
hotel leases, including, but not limited to,
non-payment of rent, bankruptcy, dissolution or
liquidation of the Lessee, and default by Lessee
under the terms of the franchise agreement
relating to the Leased Property.
LESSEE'S RIGHT OF FIRST
REFUSAL: If Xxxxxx receives a bona fide offer to purchase
the Leased Property, and Lessor desires to sell
the Leased Property pursuant to the terms of such
offer, Lessee shall have the option, within thirty
(30) days after receipt of written notice from
Lessor setting forth the terms of such offer, to
(i) purchase the Leased Property at the same price
and upon the same terms and conditions as those
set forth in the notice from Lessor, or (ii)
consent to the sale and the assignment of the
lease to the purchaser of the Leased Property.
SECURITY FOR XXXXXX'S
PERFORMANCE: As security for the performance of Xxxxxx's
covenants and obligations under the lease, Xxxxxx
has assigned to Lessor fifty-one percent (51%) of
Lessee's membership interest in BacHost, LLC, a
Texas limited liability company ("BacHost").
XxxXxxx is the beneficial owner of ninety-nine
percent (99%) of the limited partnership interests
of the Lessor.
4
