EXHIBIT 10.19
MASTER LEASE
THIS MASTER LEASE (this "Lease") is made as of June 23, 2000 (the
"Effective Date"), by and between CH RESTAURANT PROPERTY, LLC, a Delaware
limited liability company ("Lessor"), whose address is c/o U.S. Realty Advisors,
LLC, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and CHART HOUSE,
INC., a Delaware corporation ("Lessee"), whose address is 000 Xxxxx XxXxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000.
W I T N E S S E T H :
THAT, in consideration of the mutual covenants and agreements herein
contained, Lessor and Lessee hereby covenant and agree as follows:
1. Certain Defined Terms. The following terms shall have the
following meanings for all purposes of this Lease:
"ADA" has the meaning set forth in Section 16.C.
"Additional Rental" has the meaning set forth in Section 5.C.
"Adjustment Date" means the first day of the month following the month
in which the second anniversary of the Effective Date occurs, and every second
anniversary thereafter during the Lease Term (excluding the extension periods if
Lessee exercises its option pursuant to Section 27).
"Affiliate" means any Person which directly or indirectly controls, is
under common control with, or is controlled by any other Person. For purposes
of this definition, "controls", "under common control with" and "controlled by"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.
"Aggregate Fixed Charge Coverage Ratio" shall have the meaning set
forth in Section 8.A.
"Applicable Regulations" means all applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, orders and approvals of each
Governmental Authority having jurisdiction over Lessee and/or any of the
Properties, including, without limitation, all health, building, fire, safety
and other codes, ordinances and requirements and all applicable standards of the
National Board of Fire Underwriters and the ADA, in each case, as amended, and
any judicial or administrative interpretation thereof, including any judicial
order, consent, decree or judgment applicable to Lessee.
"Applicable Rent Reduction Percentage" means, with respect to any
Property, a fraction, the numerator of which shall be the Purchase Price for
such Property, and the denominator of
which shall be the sum of the Purchase Price for all of the Properties then
subject to this Lease, including such Property.
"Base Annual Rental" means $1,581,000.00, subject to the increases
provided for in Section 5.B.
"Base Annual Rental Period" means the period commencing on July 1,
2000 and ending on June 30, 2020.
"Base Monthly Rental" means an amount equal to 1/12 of the applicable
Base Annual Rental.
"Business Day" means a day on which banks located in Phoenix, Arizona
are not required or authorized to remain closed.
"Code" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 et
seq., as amended.
"CPI" means the Consumer Price Index which is designated for the
applicable month of determination as the United States City Average for All
Urban Consumers, All Items, Not Seasonally Adjusted, with a base period equaling
100 in 1993-1995, as published by the United States Department of Labor's Bureau
of Labor Statistics or any successor agency.
"CPI Adjustment Date" means the first day of the month following the
month in which the first anniversary of the Effective Date occurs, and every
first anniversary thereafter during the Lease Term.
"CPI Increase" means the quotient (expressed as a percentage) of (a)
the positive difference, if any, between (i) the CPI for the month which is one
month prior to the month of the applicable CPI Adjustment Date and (ii) the CPI
for the month which is thirteen months prior to the month of such CPI Adjustment
Date (the "Base CPI"), and (b) the Base CPI. In the event the statistics are
not available or in the event that publication of the CPI is modified or
discontinued in its entirety, the CPI Increase shall be determined on the basis
of an index chosen by Lessor as a comparable and recognized index of the
purchasing power of the United States consumer dollar published by the United
States Department of Labor or other governmental agency. In the event that the
CPI contemplated herein is not reported for the months required for the
calculation set forth above, the parties agree to utilize the CPI reported for
the month(s) nearest preceding the month(s) required for such calculation.
"De Minimis Amounts" shall mean, with respect to any given level of
Hazardous Materials, that level or quantity of Hazardous Materials in any form
or combination of forms, the use, storage or release of which does not
constitute a violation of, or require regulation or remediation under, any
Environmental Laws and is customarily employed in the ordinary course of, or
associated with, similar businesses located in the states in which the
Properties are located.
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"Default Rate" means 14% per annum or the highest rate permitted by
law, whichever is less.
"Disclosures" has the meaning set forth in Section 8.C.
"Effective Date" has the meaning set forth in the Preamble.
"Environmental Insurer" means American International Specialty Lines
Insurance Company or such other insurer providing Environmental Policies
reasonably acceptable to Lessor.
"Environmental Laws" means any present and future federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law, relating to Hazardous Materials and/or the protection of human
health or the environment, by reason of a Release or a Threatened Release of
Hazardous Materials or relating to liability for or costs of Remediation or
prevention of Releases. "Environmental Laws" includes, but is not limited to,
the following statutes, as amended, any successor thereto, and any regulations,
rulings, orders or decrees promulgated pursuant thereto, and any state or local
statutes, ordinances, rules, regulations and the like addressing similar issues:
the Comprehensive Environmental Response, Compensation and Liability Act; the
Emergency Planning and Community Right-to-Know Act; the Hazardous Materials
Transportation Act; the Resource Conservation and Recovery Act (including but
not limited to Subtitle I relating to underground storage tanks); the Solid
Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances
Control Act; the Safe Drinking Water Act; the Occupational Safety and Health
Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide
and Rodenticide Act; the Endangered Species Act; the National Environmental
Policy Act; and the River and Harbors Appropriation Act. "Environmental Laws"
also includes, but is not limited to, any present and future federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law: conditioning transfer of property upon a negative declaration or
other approval of a Governmental Authority of the environmental condition of the
property; requiring notification or disclosure of Releases or other
environmental condition of any of the Properties to any Governmental Authority
or other person or entity, whether or not in connection with transfer of title
to or interest in property; imposing conditions or requirements relating to
Hazardous Materials in connection with permits or other authorization for lawful
activity; relating to nuisance, trespass or other causes of action related to
Hazardous Materials; and relating to wrongful death, personal injury, or
property or other damage in connection with the physical condition or use of any
of the Properties by reason of the presence of Hazardous Materials in, on, under
or above any of the Properties.
"Environmental Liens" has the meaning set forth in Section 16.D(ix).
"Environmental Policies" means the environmental insurance policy or
policies, as applicable, issued by Environmental Insurer to Lessor with respect
to the Properties, which Environmental Policies shall be in form and substance
satisfactory to Lessor in its sole discretion.
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"Event of Default" has the meaning set forth in Section 23.
"FCCR Period" means the twelve month period of time immediately
preceding the date on which Lessee gives written notice to Lessor that Lessee is
proposing to substitute a Substitute Property as permitted by Section 55.A.
"Fiscal Year" has the meaning set forth in Section 8.A.
"GAAP" means generally accepted accounting principles consistently
applied.
"Governmental Authority" means any governmental authority, agency,
department, commission, bureau, board, instrumentality, court or quasi-
governmental authority of the United States, the states in which the Properties
are located or any political subdivision thereof.
"Gross Sales" means the sales or other income arising from all
business conducted at all of the Properties by Lessee during the period of
determination, less sales tax.
"Guarantor" means Chart House Enterprises, Inc., a Delaware
corporation.
"Guaranty" means that certain unconditional guaranty of payment and
performance dated as of the date of this Lease to be executed by Guarantor with
respect to the obligations of Lessee under this Lease, as the same may be
amended from time to time.
"Hazardous Materials" means (i) any toxic substance or hazardous
waste; (ii) radon gas, asbestos in any form which is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment which
contains dielectric fluid containing levels of polychlorinated biphenyls in
excess of federal, state or local safety guidelines, whichever are more
stringent, or any petroleum product; (iii) any substance, gas, material or
chemical which is or may be defined as or included in the definition of
"hazardous substances," "toxic substances," "hazardous materials," "hazardous
wastes," "regulated substances" or words of similar import under any
Environmental Laws; and (iv) any other chemical, material, gas or substance the
exposure to or release of which is or may be prohibited, limited or regulated by
any Governmental Authority that asserts or may assert jurisdiction over any of
the Properties or the operations or activity at any of the Properties, or any
chemical, material, gas or substance that does or may pose a hazard to the
health and/or safety of the occupants of any of the Properties or the owners
and/or occupants of property adjacent to or surrounding any of the Properties.
"Indemnified Parties" means Lessor, Environmental Insurer,
Remainderman, and Lender and their directors, officers, shareholders, trustees,
beneficial owners, partners, members, and any directors, officers, shareholders,
trustees, beneficial owners, partners, members of any beneficial owners,
partners or members of Lessor, Environmental Insurer, Remainderman or Lender,
and all employees, agents, servants, representatives, contractors,
subcontractors, affiliates, subsidiaries, participants, successors and assigns
of any of the foregoing, including, but not limited to, any successors by
merger, consolidation or acquisition of all or a substantial
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portion of the assets and business of Lessor, Environmental Insurer,
Remainderman or Lender, as applicable.
"Lease Term" shall have the meaning described in Section 4.
"Lease Year" means the 12-month period commencing on the first day of
the calendar year or any other 12-month period as may be approved in writing by
Lessor after the commencement of the Lease Term and each successive 12-month
period thereafter.
"Lender" means FFCA Acquisition Corporation, a Delaware corporation,
its successors and assigns, any successor lender in connection with any loan
secured by Lessor's interest in any of the Properties, and any servicer of any
loan secured by Lessor's interest in any of the Properties, including, without
limitation, Franchise Finance Corporation of America, a Delaware corporation.
"Lessee Entities" means, collectively, Lessee and all Affiliates of
Lessee.
"Loan" means the loans evidenced by the Loan Documents.
"Loan Agreement" means the Loan Agreement dated as of the date of this
Lease in effect between Lessor and Lender, as such agreement may be amended from
time to time and any and all replacements or substitutions thereof.
"Loan Documents" means, collectively, the Loan Agreement, the Notes,
the Mortgages and all other documents, instruments and agreements executed in
connection therewith or contemplated thereby, all as amended and supplemented
and any and all replacements or substitutions thereof.
"Losses" means any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement and
damages of whatever kind or nature (including, without limitation, reasonable
attorneys' fees, court costs and other costs of defense).
"Maturity Date" means July 1, 2020.
"Memorandum" means the memorandum of master lease dated as of the date
of this Lease between Lessor and Lessee with respect to the Properties. A
duplicate original Memorandum will be executed and recorded in the applicable
real property records for each Property. Each Memorandum will contain exhibits
with the addresses and store identification numbers for all of the Properties
and the legal description for the applicable Property.
"Mortgages" means, collectively, the mortgages, deeds of trust or
trust deeds, assignments of rents and leases, security agreements and fixture
filings dated as of even date herewith executed by Lessor for the benefit of
Lender with respect to the Properties, as such
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instruments may be amended, restated and/or supplemented from time to time and
any and all replacements or substitutions thereof.
"Notes" means, collectively, the promissory notes dated as of the date
of this Lease executed by Lessor and payable to Lender with respect to the
Properties, as such notes may be amended, restated and/or substituted from time
to time.
"Other Agreements" means, collectively, all agreements and instruments
now or hereafter entered into between, among or by (1) any of the Lessee
Entities, and, or for the benefit of, (2) Lessor; provided, however, the term
Other Agreements shall not include this Lease and the other Sale-Leaseback
Documents.
"Participation" means the granting of any participations in any
document evidencing loan obligations or any or all servicing rights with respect
thereto.
"Patio Lease" has the meaning set forth in Section 58.
"Patio Portion" has the meaning set forth in Section 58.
"Permitted Facility" means a Chart House restaurant or such other
restaurant concepts of Guarantor and its subsidiaries which are approved by
Lessor, such approval not to be unreasonably withheld, conditioned or delayed.
Notwithstanding the foregoing, Lessor's approval shall not be required to change
the use of no more than two (2) of the Properties to an Xxxxxx and Xxxxx'x
restaurant as long as Lessor's consent is obtained to the alterations relating
to such change of use if required by Section 18 hereof.
"Person" means any individual, corporation, partnership, limited
liability company, trust, unincorporated organization, Governmental Authority or
any other form of entity.
"Personalty" means all machinery, appliances, furniture, equipment,
trade fixtures and other personal property of Lessee from time to time situated
on or used in connection with the Properties; provided, however, the term
"Personalty" shall not include the HVAC, walk-in coolers, walk-in freezers,
supply fans, exhaust fans, air ducts, hoods, vents, built-in sinks, built-in
countertops, plumbing and electrical fixtures, sign poles and lighting poles,
all of which items are intended to be fixtures as such term is used within the
definition of "Properties".
"Prepayment Charges" means, for purposes of this Lease, the lesser of
(i) an amount equal to any prepayment premium or charge, yield maintenance
payment, or other cost or expense imposed on Lessor by the applicable lender in
connection with the payment of the applicable Note(s) or promissory note(s)
prior to the Maturity Date, or (ii) the Yield Maintenance Payment.
"Properties" means, collectively, the parcels of real estate described
by address, Lessor Number and Unit Number in Exhibit A attached hereto and
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legally described in Exhibit A-1 attached hereto, all rights, privileges and
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appurtenances associated therewith, and all buildings,
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structures, fixtures and other improvements now or hereafter located on such
real estate (whether or not affixed to such real estate).
"Property" means any one of the Properties.
"Purchase Price" means, with respect to any Property, the amount of
the purchase price corresponding to such Property as set forth on Exhibit A to
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the Sale-Leaseback Agreement.
"Questionnaires" means those certain environmental questionnaires
completed by Lessee and submitted to Environmental Insurer in connection with
the issuance of the Environmental Policies.
"Rejectable Offer" has the meaning set forth in Section 21.B.
"Rejectable Purchase Offer" has the meaning set forth in Section 56.A.
"Rejectable Substitution Offer" has the meaning set forth in Section
55.A.
"Release" means any presence, release, deposit, discharge, emission,
leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous Materials.
"Remainderman" means HC Remainder, LLC, a Delaware limited liability
company, which owns a remainder interest in the parcels of real estate described
by address, Lessor Number and Unit Number in Exhibit A attached hereto and
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legally described in Exhibit A-1 attached hereto and all rights, privileges and
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appurtenances associated therewith, together with its successors and assigns.
"Remediation" means any response, remedial, removal, or corrective
action, any activity to cleanup, detoxify, decontaminate, contain or otherwise
remediate any Hazardous Materials, any actions to prevent, cure or mitigate any
Release, any action to comply with any Environmental Laws or with any permits
issued pursuant thereto, any inspection, investigation, study, monitoring,
assessment, audit, sampling and testing, laboratory or other analysis, or any
evaluation relating to any Hazardous Materials.
"Sale-Leaseback Agreement" means that certain Sale-Leaseback Agreement
dated as of the date hereof between Lessor and Lessee with respect to the
Properties.
"Sale-Leaseback Documents" means the Sale-Leaseback Agreement, this
Lease and all other documents executed in connection therewith or contemplated
thereby.
"Securitization" means one or more sales, dispositions, transfers or
assignments by Lender or any Affiliate of Lender to a special purpose
corporation, trust or other entity identified by Lender or any Affiliate of
Lender of notes evidencing obligations to repay secured or unsecured loans owned
by Lender or any Affiliate of Lender (and, to the extent applicable, the
subsequent sale, transfer or assignment of such notes to another special purpose
corporation,
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trust or other entity identified by Lender or any Affiliate of Lender), and the
issuance of bonds, certificates, notes or other instruments evidencing interests
in pools of such loans, whether in connection with a permanent asset
securitization or a sale of loans in anticipation of a permanent asset
securitization. Each Securitization shall be undertaken in accordance with all
requirements which may be imposed by the investors or the rating agencies
involved in each such sale, disposition, transfer or assignment or which may be
imposed by applicable securities, tax or other laws or regulations, including,
without limitation, laws relating to Lender's status as a real estate investment
trust.
"Substitute Property" means one or more parcels of real estate
substituted for any of the Properties in accordance with the requirements of
Section 55, together with all rights, privileges and appurtenances associated
therewith, and all buildings, structures, fixtures and other improvements
located thereon. For purposes of clarity, where two or more parcels of real
property comprise a Substitute Property, such parcels shall be aggregated and
deemed to constitute the Substitute Property for all purposes of this Lease.
"Threatened Release" means a substantial likelihood of a Release which
requires action to prevent or mitigate damage to the soil, surface waters,
groundwaters, land, stream sediments, surface or subsurface strata, ambient air
or any other environmental medium comprising or surrounding any of the
Properties which may result from such Release.
"Title Company" means LandAmerica Financial Group or such other
nationally recognized title insurance company reasonably acceptable to Lessor.
"Transfer" means any sale, transfer or assignment of any document
evidencing loan obligations, or any or all servicing rights with respect
thereto.
"Yield Maintenance Payment" means, for purposes of this Lease, an
amount equal to the positive difference between (a) the present value, computed
at the Reinvestment Rate (as defined below), of the stream of monthly principal
and interest payments in effect under the applicable Note(s) as of the Effective
Date from the date of prepayment through the Maturity Date, and (b) the
outstanding principal balance of such Note(s) as of the date of prepayment;
provided, however, if such difference is a negative number, the Yield
Maintenance Payment shall be zero. For purposes hereof, the term "Reinvestment
Rate" means an interest rate equal to the then current yield of U.S. treasury
securities having a weighted average life to maturity closest to the Maturity
Date.
2. Demise of Properties. In consideration of the rentals and other
sums to be paid by Lessee and of the other terms, covenants and conditions on
Lessee's part to be kept and performed, Lessor hereby leases to Lessee, and
Lessee hereby takes and hires, the Properties. The Properties are leased to
Lessee "AS IS" and "WHERE IS" without representation or warranty by Lessor and
subject to the rights of parties in possession, to the existing state of title,
any state of facts which an accurate survey or physical inspection might reveal,
and all Applicable Regulations now or hereafter in effect. Lessee has examined
each of the Properties
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and title to each of the Properties and has found all of the same satisfactory
for all of Lessee's purposes.
3. Characterization of Lease. A. Lessor and Lessee intend that:
(i) this Lease constitutes a single master lease of all, but not
less than all, of the Properties and that Lessor and Lessee have
executed and delivered this Lease with the understanding that this
Lease constitutes a unitary, unseverable instrument pertaining to all,
but not less than all, of the Properties, and that neither this Lease
nor the duties, obligations or rights of Lessee may be allocated or
otherwise divided among the Properties by Lessee;
(ii) this Lease is a "true lease" and not a financing lease,
capital lease, mortgage, equitable mortgage, deed of trust, trust
agreement, security agreement or other financing or trust arrangement,
and the economic realities of this Lease are those of a true lease;
and
(iii) the business relationship created by this Lease and any
related documents is solely that of a long-term commercial lease
between landlord and tenant and has been entered into by both parties
in reliance upon the economic and legal bargains contained herein.
X. Xxxxxx and Lessee acknowledge and agree that the Lease Term,
including any term extensions provided for in this Lease, is less than the
remaining economic life of each of the Properties.
C. Lessee waives any claim or defense based upon the characterization
of this Lease as anything other than a true lease and irrevocably waives any
claim or defense which asserts that the Lease is anything other than a true
lease. Lessee covenants and agrees that it will not assert that this Lease is
anything but a true lease. Lessee stipulates and agrees not to challenge the
validity, enforceability or characterization of the lease of the Properties as a
true lease and further stipulates and agrees that nothing contained in this
Lease creates or is intended to create a joint venture, partnership (either de
jure or de facto), equitable mortgage, trust, financing device or arrangement,
security interest or the like. Lessee shall support the intent of the parties
that the lease of the Properties pursuant to this Lease is a true lease and does
not create a joint venture, partnership (either de jure or de facto), equitable
mortgage, trust, financing device or arrangement, security interest or the like,
if, and to the extent that, any challenge occurs.
D. Lessee waives any claim or defense based upon the characterization
of this Lease as anything other than a master lease of all of the Properties and
irrevocably waives any claim or defense which asserts that the Lease is anything
other than a master lease. Lessee covenants and agrees that it will not assert
that this Lease is anything but a unitary, unseverable instrument pertaining to
the lease of all, but not less than all, of the Properties. Lessee stipulates
and agrees not to challenge the validity, enforceability or characterization of
the lease of the Properties as a unitary, unseverable instrument pertaining to
the lease of all, but not less than all, of the Properties. Lessee shall take
no action or position inconsistent with, and upon Lessor's request, shall take
such actions as are reasonably necessary to support, the intent of the parties
that this Lease is a unitary,
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unseverable instrument pertaining to the lease of all, but not less than all, of
the Properties, if, and to the extent that, any challenge occurs.
E. Lessee represents and warrants to Lessor that (i) the Base Annual
Rental is the fair market value for the use of the Properties and was agreed to
by Lessor and Lessee on that basis, and (ii) the execution, delivery and
performance by Lessee of this Lease does not constitute a transfer of all or any
part of the Properties, other than a transfer of the leasehold interest granted
herein.
F. The expressions of intent, the waivers, the representations and
warranties, the covenants, the agreements and the stipulations set forth in this
Section are a material inducement to Lessor entering into this Lease.
4. Lease Term. The Lease Term for all of the Properties shall
commence as of the Effective Date and shall expire on July 31, 2020, unless
terminated sooner as provided in this Lease and as may be extended for four
periods of five years each as set forth in Section 27 below. The time period
during which this Lease shall actually be in effect is referred to herein as the
"Lease Term."
5. Rental and Other Payments. A. If the Effective Date is a date
other than the first day of the month, Lessee shall pay Lessor on the Effective
Date the Base Monthly Rental prorated on the basis of the ratio that the number
of days from the Effective Date through the last day in the month containing the
Effective Date bears to the number of days in such month. Thereafter, on or
before the first day of each succeeding calendar month, Lessee shall pay Lessor
in advance the Base Monthly Rental.
B. Commencing on the first Adjustment Date and on each Adjustment
Date thereafter, the Base Annual Rental shall increase by an amount equal to the
product of the then-current Base Annual Rental multiplied by 5.00%, which
increase shall be compounded. The increased Base Annual Rental shall constitute
the Base Annual Rental due and payable until the next Adjustment Date.
C. All sums of money required to be paid by Lessee under this Lease
which are not specifically referred to as rent ("Additional Rental") shall be
considered rent although not specifically designated as such. Lessor shall have
the same remedies for nonpayment of Additional Rental as those provided herein
for the nonpayment of Base Annual Rental.
D. (i) For purposes of this Section 5.D, the following terms shall
have the following meanings:
"Aggregate Assumed Base Annual Rental" means the aggregate amount of
Base Annual Rental required to be paid by Lessee during the Base Annual Rental
Period.
"Aggregate Rent Refund" means the positive difference, if any, between
the Aggregate Assumed Base Annual Rental and the CPI-Adjusted Rent.
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"CPI-Adjusted Rent" means the aggregate amount of Base Annual Rental
that would have been paid during the entire Base Annual Rental Period had the
Base Annual Rental on each CPI Adjustment Date been increased over the Base
Annual Rental immediately preceding such CPI Adjustment Date by three and one-
half times the applicable CPI Increase.
"Extended Term" means the period subsequent to the expiration of the
Primary Term during which this Lease is actually in effect.
"Primary Term" means the period commencing on the Effective Date and
expiring on July 31, 2020.
(ii) Lessor hereby agrees that, to the extent that the Aggregate
Assumed Base Annual Rental exceeds the CPI-Adjusted Rent, Lessor shall be
required to pay Lessee the Aggregate Rent Refund in accordance with the
provisions of this Section 5.D. In no event shall Base Annual Rental be deemed
reduced as of any Adjustment Date from the Base Annual Rental which would have
been payable during the year immediately preceding such Adjustment Date. In
addition, if the Aggregate Assumed Base Annual Rental is less than or equal to
the aggregate CPI-Adjusted Rent, then no additional amounts shall be payable by
Lessee to Lessor and the payments of Base Annual Rental otherwise contemplated
by this Lease for the Primary Term shall become the final amounts payable as
Base Annual Rental for the Primary Term. Anything contained herein to the
contrary notwithstanding, in no event shall Lessor be required to pay the
Aggregate Rent Refund in the event of any termination of this Lease resulting
from the occurrence of an Event of Default or a rejection of this Lease in a
bankruptcy case involving Lessee.
(iii) Within thirty (30) days after the end of the Primary Term
(other than a termination resulting from the occurrence of an Event of Default
or a rejection of this Lease in a bankruptcy case involving Lessee), Lessor
shall (x) provide Lessee with a statement setting forth Lessor's calculation of
the amount of the Aggregate Rent Refund and each CPI Increase used in
calculating the Aggregate Rent Refund and (y) pay the Aggregate Rent Refund to
Lessee; provided, however, the obligation of Lessor to pay the Aggregate Rent
Refund to Lessee shall not excuse or reduce Lessee's obligation to pay any Base
Annual Rental or Additional Rental payable in respect of the Primary Term or,
except as provided in subsection (iv) below, the Extended Term, or any payment
due in respect of any termination of this Lease or as a result of the rejection
of this Lease in a bankruptcy case involving Lessee, or any other amount
(including, without limitation, indemnification payments or damages) payable
hereunder during or with respect to the Primary Term or the Extended Term, and
Lessee shall not have any right to set-off the Aggregate Rent Refund or any part
thereof against its obligation to pay any such Base Annual Rental, Additional
Rental, any payment due in respect of any termination of this Lease or as a
result of the rejection of this Lease in a bankruptcy case involving Lessee, or
any such other amount, except as provided in subsection (iv) below. If this
Lease is terminated as a result of an Event of Default or if this Lease is
rejected in a bankruptcy case involving Lessee, or if an Event of Default shall
have occurred and be continuing at the expiration of the Primary Term, Lessor
may, but shall not be required to, in exercising its rights hereunder, use,
apply or retain the whole
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or any part of the Aggregate Rent Refund for the payment of any rent or other
sum (including damages) to which Lessor may be entitled by reason of such Event
of Default or rejection.
(iv) In the event Lessee exercises its option to extend this Lease as
set forth in Section 27 below, Lessor may elect to apply the Aggregate Rent
Refund, if any, as a credit against the Base Annual Rental first accruing for
the Extended Term, until the balance of the Aggregate Rent Refund shall be
reduced to zero. Lessor shall evidence its election by giving notice thereof to
Lessee no later than the due date of the first installment of rent due in the
first Extended Term; provided, however, if Lessor fails to deliver such notice,
Lessor shall be deemed to have elected to so credit the Aggregate Rent Refund.
(v) Notwithstanding anything contained herein to the contrary, the
obligation created by this Section 5.D shall be personal to Lessor and shall be
subordinate in all respects to the loans secured by the Mortgages. Without
limiting the generality of the preceding sentence, in the event that Lender
succeeds to the interest of Lessor in this Lease whether by a foreclosure of the
Mortgages or the delivery to Lender of deeds-in-lieu of foreclosure, the
preceding subsections of this Section 5.D shall be of no force or effect, Lender
shall have no obligation to pay Lessee the Aggregate Rent Refund, and Lessee
shall have no right to receive a credit for the Aggregate Rent Refund against
the Base Annual Rental due for the Extended Term.
6. Representations and Warranties of Lessor. The representations and
warranties of Lessor contained in this Section are being made to induce Lessee
to enter into this Lease and Lessee has relied and will continue to rely upon
such representations and warranties. Lessor represents and warrants to Lessee as
of the Effective Date as follows:
A. Organization, Authority and Status of Lessor. (i) Lessor has
been duly organized and is validly existing and in good standing under
the laws of the State of Delaware. All necessary corporate action has
been taken to authorize the execution, delivery and performance by
Lessor of this Lease and the other documents, instruments and
agreements provided for herein.
(ii) The person who has executed this Lease on behalf of Lessor
is duly authorized so to do.
B. Enforceability. This Lease constitutes the legal, valid and
binding obligation of Lessor, enforceable against Lessor in accordance
with its terms.
7. Representations and Warranties of Lessee. The representations and
warranties of Lessee contained in this Section are being made to induce Lessor
to enter into this Lease and Lessor has relied, and will continue to rely, upon
such representations and warranties. Lessee represents and warrants to Lessor
as of the Effective Date as follows:
A. Organization, Authority and Status of Lessee. (i) Lessee
has been duly organized or formed, is validly existing and in good
standing under the laws of its state of incorporation or formation and
is qualified to do business in any jurisdiction where such
12
qualification is required. All necessary corporate action has been
taken to authorize the execution, delivery and performance by Lessee
of this Lease and of the other documents, instruments and agreements
provided for herein. Lessee is not a "foreign corporation", "foreign
partnership", "foreign trust", "foreign limited liability company" or
"foreign estate", as those terms are defined in the Internal Revenue
Code and the regulations promulgated thereunder. Lessee's United
States tax identification number is correctly set forth on the
signature page of this Lease.
(ii) The person who has executed this Lease on behalf of Lessee
is duly authorized to do so.
B. Enforceability. This Lease constitutes the legal, valid and
binding obligation of Lessee, enforceable against Lessee in accordance
with its terms.
C. Litigation. There are no suits, actions, proceedings or
investigations pending, or, to the best of its knowledge, threatened
against or involving Lessee, Guarantor or any of the Properties before
any arbitrator or Governmental Authority which might reasonably result
in any material adverse change in the contemplated business,
condition, worth or operations of Lessee, Guarantor or any of the
Properties.
D. Absence of Breaches or Defaults. Neither Lessee nor
Guarantor is in default under any document, instrument or agreement to
which Lessee or Guarantor is a party or by which Lessee, Guarantor,
any of the Properties or any of Lessee's or Guarantor's property is
subject or bound, which breach or default might reasonably result in
any material adverse change in the contemplated business, condition,
worth or operations of Lessee, Guarantor or any of the Properties. The
authorization, execution, delivery and performance of this Lease and
the documents, instruments and agreements provided for herein will not
result in any breach of or default under any document, instrument or
agreement to which Lessee or Guarantor is a party or by which Lessee,
Guarantor, any of the Properties or any of Lessee's or Guarantor's
property is subject or bound. The authorization, execution, delivery
and performance of this Lease and the documents, instruments and
agreements provided for herein will not violate any applicable law,
statute, regulation, rule, ordinance, code, rule or order.
E. Liabilities of Lessor. Lessee is not liable for any
indebtedness for money borrowed by Lessor and has not guaranteed any
of the debts or obligations of Lessor.
8. Covenants. Lessee covenants to Lessor for so long as this Lease
is in effect as follows:
A. Aggregate Fixed Charge Coverage Ratio. Lessee shall maintain
an Aggregate Fixed Charge Coverage Ratio at all of the Properties in
the aggregate of at least 1.25:1, as determined on the last day of
each fiscal year of Lessee (each, a "Fiscal Year"). For purposes of
this Lease, the term "Aggregate Fixed Charge Coverage Ratio" shall
mean with respect to the twelve month period of time immediately
preceding the date of
13
determination, the ratio calculated for such period of time, each as
determined in accordance with GAAP, of (a) the sum of Net Income,
Depreciation and Amortization, Interest Expense and Operating Lease
Expense, less a corporate overhead allocation in an amount equal to 4% of
Gross Sales, to (b) the sum of the Operating Lease Expense and the
Equipment Payment Amount.
For purposes of this Section, the following terms shall be defined as set
forth below:
"Capital Lease" shall mean any lease of any property (whether
real, personal or mixed) by Lessee with respect to one or more of the
Properties which lease would, in conformity with GAAP, be required to
be accounted for as a capital lease on the balance sheet of Lessee.
The term "Capital Lease" shall not include any operating lease or this
Lease.
"Debt" shall mean as directly related to all of the Properties
and the period of determination (i) indebtedness of Lessee for
borrowed money, (ii) obligations of Lessee evidenced by bonds,
indentures, notes or similar instruments, (iii) obligations of Lessee
to pay the deferred purchase price of property or services, (iv)
obligations of Lessee under leases which should be, in accordance with
GAAP, recorded as Capital Leases, and (v) obligations of Lessee under
direct or indirect guarantees in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in
clauses (i) through (iv) above. The term "Debt" shall not include
Lessor's debt with respect to the Properties or otherwise.
"Depreciation and Amortization" shall mean with respect to all of
the Properties the depreciation and amortization accruing during any
period of determination with respect to Lessee as determined in
accordance with GAAP. The term "Depreciation and Amortization" shall
not include Lessor's depreciation and amortization with respect to the
Properties or otherwise.
"Equipment Payment Amount" shall mean for any period of
determination the sum of all amounts (other than Operating Lease
Expense) payable during such period of determination under all (i)
leases entered into by Lessee for equipment located at one or more of
the Properties and (ii) all loans made to Lessee secured by Lessee's
interest in the equipment located at one or more of the Properties.
"Interest Expense" shall mean for any period of determination,
the sum of all interest accrued or which should be accrued in respect
of all Debt of Lessee allocable to one or more of the Properties and
all business operations thereon during such period (including interest
attributable to Capital Leases), as determined in accordance with
GAAP.
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"Net Income" shall mean with respect to all of the period of
determination, the net income or net loss of Lessee allocable to all
of the Properties. In determining the amount of Net Income, (i)
adjustments shall be made for nonrecurring gains and losses allocable
to the period of determination, (ii) deductions shall be made for,
among other things, Depreciation and Amortization, Interest Expense
and Operating Lease Expense allocable to the period of determination,
and (iii) no deductions shall be made for (x) income taxes or charges
equivalent to income taxes allocable to the period of determination,
as determined in accordance with GAAP, or (y) corporate overhead
expense allocable to the period of determination.
"Operating Lease Expense" shall mean the expenses incurred by
Lessee under any operating leases with respect to one or more of the
Properties (including this Lease) and the business operations thereon
during the period of determination, as determined in accordance with
GAAP.
B. Nonconsolidation Covenants. (i) Lessee will not assume
liability for any indebtedness for money borrowed by Lessor and does not,
and will not, guarantee any of the debts or obligations of Lessor. Lessee
will not hold itself out as being liable for any obligations or
indebtedness of Lessor.
(ii) Lessee shall not and shall use its best efforts to cause its
affiliates not to hold Lessor out to the public or to any individual
creditors as being a unified entity with assets and liabilities in common
with Lessee.
(iii) Lessee shall conduct its business so as not to mislead others
as to the separate identity of Lessor, and particularly will avoid the
appearance of conducting business on behalf of Lessor. Without limiting
the generality of the foregoing, no oral and written communications of
Lessee, including, without limitation, letters, invoices, purchase orders,
contracts, statements and loan applications, will be made in the name of
Lessor which to the extent that to do otherwise would materially bear upon
the maintenance of Lessor's separate identity.
(iv) Lessee will not act in Lessor's name.
(v) Where necessary and appropriate, Lessee shall disclose the
independent business status of Lessor to creditors of Lessee, if any.
(vi) The resolutions, agreements and other instruments of Lessee, if
any, underlying the transactions described in this Lease will be maintained
by Lessee.
(vii) All transactions between Lessee and Lessor will be no less fair
to each party than they could obtain on an arm's-length basis.
15
(viii) The books, records and accounts of Lessee shall at all times
be maintained in a manner permitting the assets and liabilities of Lessor
to be easily separated and readily ascertained from those of Lessee.
(ix) Lessee will not direct, or otherwise control, the ongoing
business decisions of Lessor.
(x) Lessee will not file or cause to be filed a voluntary or
involuntary petition in bankruptcy on behalf of or against Lessor.
C. Securitization Covenants. (i) Lessee agrees to cooperate in
good faith with Lessor and Lender in connection with any Transfer,
Participation and/or Securitization of any of the Notes, Mortgages and/or
any of the Loan Documents, or any or all servicing rights with respect
thereto, including, without limitation, (i) providing such documents,
financial and other data, and other information and materials (the
"Disclosures") which would typically be required with respect to Lessee by
a purchaser, transferee, assignee, servicer, participant, investor or
rating agency involved with respect to such Transfer, Participation and/or
Securitization, as applicable; provided, however, Lessee shall not be
required to make Disclosures of any confidential information or any
information which has not previously been made public unless required by
applicable federal or state securities laws; and (ii) amending the terms of
this Lease to the extent necessary so as to satisfy the requirements of
purchasers, transferees, assignees, servicers, participants, investors or
selected rating agencies involved in any such Transfer, Participation or
Securitization, so long as such amendments would not have a material
adverse effect upon Lessee, the rights of and obligations on Lessee under
this Lease or the transactions contemplated by this Lease.
(ii) Lessee consents to Lessor and Lender providing the Disclosures,
as well as any other information which Lessor and Lender may now have or
hereafter acquire with respect to the Properties or the financial condition
of Lessee to each purchaser, transferee, assignee, servicer, participant,
investor or rating agency involved with respect to such Transfer,
Participation and/or Securitization, as applicable. Lessor shall pay or
cause Lender to pay all of Lessee's reasonable attorney fees and other out-
of-pocket expenses incurred in connection with the performance of its
obligations under this Section 8.C.
D. Compliance Certificate. Within 120 days after the end of each
fiscal year of Lessee, Lessee shall deliver to Lessor such compliance
certificates as Lessor may reasonably require in order to establish that
Lessee is in compliance in all material respects with all of the
obligations, duties and covenants imposed on Lessee pursuant to this Lease.
9. Rentals To Be Net to Lessor. The Base Annual Rental payable hereunder
shall be net to Lessor, so that this Lease shall yield to Lessor the rentals
specified during the Lease Term, and that all costs, expenses and obligations of
every kind and nature whatsoever relating to the Properties shall be performed
and paid by Lessee, including, without limitation, all costs, expenses and
obligations with respect to the Patio Lease and the Patio Portion.
16
10. Taxes and Assessments. Lessee shall pay, prior to the earlier of
delinquency or the accrual of interest on the unpaid balance, all taxes and
assessments of every type or nature assessed against, imposed upon or arising
with respect to Lessor, any of the Properties, this Lease, the rental or other
payments due under this Lease or Lessee during the Lease Term which affect in
any manner the net return realized by Lessor under this Lease, including,
without limitation, the following:
A. All taxes and assessments upon any of the Properties or any part
thereof and upon any Personalty, whether belonging to Lessor or Lessee, or
any tax or charge levied in lieu of such taxes and assessments;
B. All taxes, charges, license fees and or similar fees imposed by
reason of the use of any of the Properties by Lessee; and
C. All excise, transaction, privilege, license, sales, use and other
taxes upon the rental or other payments due under this Lease, the leasehold
estate of either party or the activities of either party pursuant to this
Lease.
Notwithstanding the foregoing, but without limiting the preceding
obligation of Lessee to pay all taxes which are imposed on the rental or other
payments due under this Lease, in no event will Lessee be required to pay any
net income taxes (i.e., taxes which are determined taking into account
deductions for depreciation, interest, taxes and ordinary and necessary business
expenses) or franchise taxes (unless imposed in lieu of other taxes that would
otherwise be the obligation of Lessee under this Lease, including, without
limitation, any "gross receipts tax" or any similar tax based upon gross income
or receipts of Lessor which does not take into account deductions from
depreciation, interest, taxes and/or ordinary or necessary business expenses) of
Lessor, any transfer taxes of Lessor, or any tax imposed with respect to the
sale, exchange or other disposition by Lessor, in whole or in part, of any of
the Properties or Lessor's interest in this Lease (other than transfer or
recordation taxes imposed in connection with the transfer of any of the
Properties to Lessee, the substitution of a Substitute Property or the
termination of this Lease pursuant to the provisions of this Lease).
All taxing authorities shall be instructed to send all tax and
assessment invoices to Lessee and Lessee shall promptly provide Lessor and
Lender with copies of all tax and assessment invoices received by Lessee. Upon
request, Lessee shall also provide Lessor and Lender with evidence that such
invoices were paid in a timely fashion. Lessee may, at its own expense, contest
or cause to be contested (in the case of any item involving more than $1,000.00,
after prior written notice to Lessor), by appropriate legal proceedings
conducted in good faith and with due diligence, the amount or validity or
application, in whole or in part, of any item specified in this Section or lien
therefor, provided that (i) such proceeding shall suspend the collection thereof
from the applicable Properties or any interest therein, (ii) neither such
Properties nor any interest therein would be in any danger of being sold,
forfeited or lost by reason of such proceedings, (iii) no Event of Default has
occurred, and (iv) Lessee shall have deposited with Lessor adequate reserves for
the payment of the taxes, together with all interest and penalties thereon,
unless paid in full under
17
protest, or Lessee shall have furnished the security as may be required in the
proceeding or as may be reasonably required by Lessor to insure payment of any
contested taxes.
11. Utilities. Lessee shall contract, in its own name, for and pay when
due all charges for the connection and use of water, gas, electricity,
telephone, garbage collection, sewer use and other utility services supplied to
the Properties during the Lease Term. Under no circumstances shall Lessor be
responsible for any interruption of any utility service; provided, however,
Lessor shall remain responsible for its affirmative acts which constitute gross
negligence or intentional misconduct.
12. Insurance. Throughout the Lease Term, Lessee shall maintain with
respect to each of the Properties, at its sole expense, the following types and
amounts of insurance (which may be included under a blanket insurance policy if
all the other terms hereof are satisfied):
A. Insurance against loss, damage or destruction by fire and other
casualty, including theft, vandalism and malicious mischief, flood (for
each of the Properties which is in a location designated by the Federal
Emergency Management Administration as a Special Flood Hazard Area),
earthquake (for each of the Properties which is in an area subject to
destructive earthquakes within recorded history), boiler explosion (for
each of the Properties with a boiler), plate glass breakage, sprinkler
damage (for each of the Properties which has a sprinkler system), all
matters covered by a standard extended coverage endorsement, all matters
covered by a special coverage endorsement commonly known as an "all-risk"
endorsement and such other risks as Lessor may reasonably require, insuring
each of the Properties for not less than 100% of their full insurable
replacement cost. Such insurance shall also include law and ordinance
insurance covering both the increase in cost of construction and diminution
in value in the event that, after a casualty, the improvements at any of
the Properties cannot be rebuilt to the same condition or for the same use
which existed prior to such casualty because of applicable zoning
requirements.
B. Commercial general liability and property damage insurance,
including a products liability clause, covering Lessor, Remainderman and
Lessee against bodily injury liability, property damage liability and
automobile bodily injury and property damage liability, including without
limitation any liability arising out of the ownership, maintenance, repair,
condition or operation of the Properties or adjoining ways, streets or
sidewalks and, if applicable, insurance covering Lessor, Remainderman and
Lessee against liability arising from the sale of liquor, beer or wine on
the Properties. Such insurance policy or policies shall contain a broad
form contractual liability coverage endorsement under which the insurer
agrees to insure Lessee's obligations under Section 19 hereof to the extent
insurable, and a "severability of interest" clause or endorsement, or its
equivalent, which precludes the insurer from denying the claim of Lessee,
Remainderman or Lessor because of the negligence or other acts of the
other, shall be in amounts of not less than $1,000,000.00 per injury and
occurrence with respect to any insured liability, whether for personal
injury or property damage, or such higher limits as Lessor or Remainderman
may reasonably require from time to time, and shall be of form and
substance satisfactory to Lessor and Remainderman.
18
C. Business income insurance or rental interruption insurance, as
requested by Lessor, equal to 100% of the Base Annual Rental for a period
of not less than 12 months.
D. State Worker's compensation insurance in the statutorily mandated
limits, employer's liability insurance with limits not less than $500,000
or such greater amount as Lessor or Remainderman may from time to time
require and such other insurance as may be necessary to comply with
applicable laws.
E. Such other insurance as may from time to time be reasonably
required by Lessor, Remainderman or Lender in order to protect their
respective interests with respect to the Properties, consistent with
reasonably prudent business practices.
All insurance policies shall:
(i) Provide for a waiver of subrogation by the insurer as
to claims against Lessor, Remainderman, Lender and their respective
employees and agents;
(ii) Provide that any "no other insurance" clause in the
insurance policy shall exclude any policies of insurance maintained by
Lessor, Remainderman or Lender and that the insurance policy shall not
be brought into contribution with insurance maintained by Lessor,
Remainderman or Lender;
(iii) Contain a standard without contribution mortgage
clause endorsement in favor of Lender and any other party designated
by Lessor, as their interests may appear;
(iv) Provide that the policy of insurance shall not be
terminated, cancelled or substantially modified by endorsement without
at least thirty (30) days' prior written notice to Lessor,
Remainderman, Lender and to any other party covered by any standard
mortgage clause endorsement;
(v) Provide that the insurer shall not have the option to
restore the applicable Properties if Lessor or Lessee elects to
terminate this Lease in accordance with the terms hereof;
(vi) Be issued by insurance companies licensed to do
business in the states in which the Properties are located and which
are rated A:VI or better by Best's Insurance Guide or are otherwise
approved by Lessor and Remainderman; and
(vii) Provide that the insurer shall not deny a claim nor
shall the insurance be cancelled, invalidated or suspended by (1) any
action, inaction, conduct or negligence of Lessor, Remainderman,
Lender or any other party covered by any standard mortgage clause
endorsement, Lessee, anyone acting for Lessee or any subtenant or
other occupant of any of the Properties, (2) occupancy
19
or use of any of the Properties for purposes more hazardous than
permitted by such policies, (3) any foreclosure or other proceedings
relating to any of the Properties or change in title to or ownership
of any of the Properties, or (4) any breach or violation by Lessee or
any other person of any warranties, declarations or conditions
contained in such policies or the applications for such policies.
It is expressly understood and agreed that the foregoing minimum limits of
insurance coverage shall not limit the liability of Lessee for its acts or
omissions as provided in this Lease. All insurance policies (with the exception
of workers' compensation insurance to the extent not available under statutory
law and property insurance described in Section 12.A. and business income
insurance described in Section 12.C), shall designate Lessor, Remainderman and
Lender as additional named insureds, as their interests may appear and shall be
payable as set forth in Section 21 hereof. Property insurance policies shall
designate Lessor and Remainderman as loss payee and Lender as mortgagee. All
such policies shall be written as primary policies, with deductibles not to
exceed 10% of the amount of coverage. Any other policies, including any policy
now or hereafter carried by Lessor, Remainderman or Lender, shall serve as
excess coverage. Lessee shall procure policies for all insurance for periods of
not less than one year and shall provide to Lessor, Remainderman and Lender
certificates of insurance or, upon the request of Lessor, Remainderman or
Lender, duplicate originals of insurance policies evidencing that insurance
satisfying the requirements of this Lease is in effect at all times. In the
event of any transfer by Lessor of Lessor's interest in any of the Properties or
any financing or refinancing of Lessor's interest in any of the Properties, or
by Remainderman of Remainderman's interest in any of the Properties, Lessee
shall, upon not less than ten (10) days' prior written notice, deliver to Lessor
and Remainderman or any Lender providing such financing or refinancing, as the
case may be, certificates of all insurance required to be maintained by Lessee
hereunder naming such transferee or such Lender, as the case may be, as an
additional named insured to the extent required herein effective as of the date
of such transfer, financing or refinancing.
13. Tax and Insurance Impound. Upon the occurrence of an Event of Default,
Lessor may require Lessee to pay to Lessor sums which will provide an impound
account (which shall not be deemed a trust fund) for paying up to the next one
year of taxes, assessments and/or insurance premiums for each of the Properties.
Upon such requirement, Lessor will estimate the amounts needed for such purposes
and will notify Lessee to pay the same to Lessor in equal monthly installments,
as nearly as practicable, in addition to all other sums due under this Lease.
Should additional funds be required at any time, Lessee shall pay the same to
Lessor on demand. Lessee shall advise Lessor of all taxes and insurance bills
which are due and shall cooperate fully with Lessor in assuring that the same
are paid timely. Lessor may deposit all impounded funds in accounts insured by
any federal or state agency and may commingle such funds with other funds and
accounts of Lessor. Interest or other gains from such funds, if any, shall be
the sole property of Lessor. In the event of any default by Lessee, Lessor may
apply all impounded funds against any sums due from Lessee to Lessor. Lessor
shall give to Lessee an annual accounting showing all credits and debits to and
from such impounded funds received from Lessee.
20
14. Payment of Rental and Other Sums. All rental and other sums which
Lessee is required to pay hereunder shall be the unconditional obligation of
Lessee and shall be payable in full when due without any setoff, abatement,
deferment, deduction or counterclaim whatsoever. Upon execution of this Lease,
Lessee shall establish arrangements whereby payments of the Base Monthly Rental
and impound payments, if any, are transferred by wire or other means directly
from Lessee's bank account to such account as Lessor may designate. Any
delinquent payment (that is, any payment not made within five calendar days
after the date when due) shall, in addition to any other remedy of Lessor, incur
a late charge of 5% (which late charge is intended to compensate Lessor for the
cost of handling and processing such delinquent payment and should not be
considered interest) and bear interest at the Default Rate, such interest to be
computed from and including the date such payment was due through and including
the date of the payment; provided, however, in no event shall Lessee be
obligated to pay a sum of late charge and interest higher than the maximum legal
rate then in effect and Lessee shall not be obligated to pay the 5% late charge
for the first delinquent payment occurring in any 12 month-period.
15. Use. Except as set forth below, each of the Properties shall be used
solely for the operation of a Permitted Facility in accordance with the
standards of operations then in effect on a system-wide basis, and for no other
purpose. Lessee shall occupy the Properties promptly following the Effective
Date and, except as set forth below and except during periods when any of the
Properties is untenantable by reason of fire or other casualty or condemnation
(provided, however, during all such periods while any of the Properties is
untenantable, Lessee shall strictly comply with the terms and conditions of
Section 21 of this Lease), Lessee shall at all times during the Lease Term
occupy each of the Properties and shall diligently conduct its business on each
of the Properties as a Permitted Facility. Lessee may cease diligent operation
of business at any of the Properties for a consecutive period not to exceed 90
days and may do so only once with respect to each Property within any five-year
period during the Lease Term. If Lessee does discontinue operation as permitted
by this Section, Lessee shall (i) give written notice to Lessor within 10 days
after Lessee elects to cease operation, (ii) provide adequate protection and
maintenance of any such Properties during any period of vacancy, (iii) comply
with all Applicable Regulations and otherwise comply with the terms and
conditions of this Lease other than the continuous use covenant set forth in
this Section, and (iv) pay all costs necessary to restore such Properties to
their condition on the day operation of the business ceased at such time as such
Properties are reopened for Lessee's business operations or other substituted
use approved by Lessor as contemplated below. In addition, closing a Permitted
Facility for up to two days in each calendar week and up to seven consecutive
days once in any calendar year, in each case without notice to Lessee or Lender,
shall not be deemed a violation of this provision as long as such closing does
not cause Lessee to violate the provisions of Section 8.A. Notwithstanding
anything herein to the contrary, Lessee shall pay the Base Monthly Rental on the
first day of each month during any period in which Lessee discontinues
operation.
Lessee shall not, by itself or through any assignment, sublease or other
type of transfer, convert any of the Properties to a use other than a Permitted
Facility during the Lease Term without Lessor's consent, which consent shall not
be unreasonably withheld or delayed. Lessor
21
may consider any or all of the following in determining whether to grant its
consent, without being deemed to be unreasonable: (i) whether the converted use
will be consistent with the highest and best use of the Properties, and (ii)
whether the converted use will increase Lessor's risks or decrease the value of
the Properties.
16. Compliance with Laws, Restrictions, Covenants and Encumbrances.
A. Lessee's use and occupation of each of the Properties, and the condition
thereof, shall, at Lessee's sole cost and expense, comply fully with all
Applicable Regulations and all restrictions, covenants and encumbrances of
record with respect to each of the Properties. In addition to the other
requirements of this Section, Lessee shall, at all times throughout the Lease
Term, comply with all Applicable Regulations, including, without limitation, in
connection with any maintenance, repairs and replacements of the Properties
undertaken by Lessee as required by Section 17 of this Lease.
B. Lessee will not permit any act or condition to exist on or about
any of the Properties which will increase any insurance rate thereon, except
when such acts are required in the normal course of its business and Lessee
shall pay for such increase.
C. Without limiting the generality of the other provisions of this
Section, Lessee agrees that it shall be responsible for ensuring that the
Properties comply in all material respects with all applicable requirements of
the Americans with Disabilities Act of 1990, as such act may be amended from
time to time, and all regulations promulgated thereunder (collectively, the
"ADA"). Lessee further agrees that any and all alterations made to the
Properties during the Lease Term will comply with the requirements of the ADA.
All plans for alterations which must be submitted to Lessor under the provisions
of Section 18 must include a statement from a licensed Architect or Engineer
certifying that they have reviewed the plans, and that the plans comply with all
applicable requirements of the ADA. Any subsequent approval or consent to the
plans by Lessor shall not be deemed to be a representation of Lessor's part that
the plans comply with the requirements of the ADA, which obligation shall remain
with Lessee. Lessee agrees that it will defend, indemnify and hold harmless the
Indemnified Parties from and against any and all Losses caused by, incurred or
resulting from Lessee's failure to comply with its obligations under this
Section.
D. Lessee represents and warrants to Lessor and Environmental Insurer
as follows:
(i) None of the Properties nor Lessee are in violation of, or
subject to, any pending or threatened investigation or inquiry by any
Governmental Authority or to any remedial obligations under any
Environmental Laws, and this representation and warranty would
continue to be true and correct following disclosure to the applicable
Governmental Authorities of all relevant facts, conditions and
circumstances, if any, pertaining to the Properties.
(ii) No permits, licenses or similar authorizations to construct,
occupy, operate or use any buildings, improvements, fixtures and
equipment forming a part of any of the
22
Properties by reason of any Environmental Laws have been obtained or are
required to be obtained.
(iii) No Hazardous Materials have been used, handled, manufactured,
generated, produced, stored, treated, processed, transferred, disposed of
or otherwise Released in, on, under, from or about any of the Properties,
except in De Minimis Amounts or in compliance with Environmental Laws.
(iv) Except as disclosed in the Questionnaires, the Properties do
not contain Hazardous Materials, other than in De Minimis Amounts or in
compliance with Environmental Laws, or underground storage tanks.
(v) To the knowledge of the officers of Lessee, there is no threat
of any Release migrating to any of the Properties.
(vi) To the knowledge of the officers of Lessee, there is no past or
present non-compliance with Environmental Laws, or with permits issued
pursuant thereto, in connection with any of the Properties.
(vii) Lessee has not received any written notice from any
Governmental Authority relating to Hazardous Materials or Remediation
thereof, of possible liability of any person or entity pursuant to any
Environmental Law, other environmental conditions in connection with any of
the Properties, or any actual or potential administrative or judicial
proceedings in connection with any of the foregoing, which have not been
remedied in compliance with Environmental Laws.
(viii) Lessee has truthfully and fully provided to Lessor, in
writing, any and all information relating to environmental conditions in,
on, under or from the Properties that is known to the officers of Lessee
and that is contained in Lessee's files and records, including but not
limited to any reports relating to Hazardous Materials in, on, under or
from any of the Properties.
(ix) All uses and operations on or of the Properties by Lessee and,
to the knowledge of the officers of Lessee by any other person or entity,
have been in material compliance with all Environmental Laws and permits
issued pursuant thereto; there have been no Releases in, on, under or from
any of the Properties, except in De Minimis Amounts; there are no Hazardous
Materials in, on, or under any of the Properties, except in De Minimis
Amounts or in compliance with Environmental Laws; and the Properties have
been kept free and clear of all liens and other encumbrances imposed
pursuant to any Environmental Law (the "Environmental Liens"). Lessee has
not allowed any tenant or other user of any of the Properties to do any act
on any of the Properties in violation of any Environmental Laws.
E. Lessee covenants to Lessor and Environmental Insurer during the Lease
Term that: (i) the Properties shall not be in violation of any investigation or
inquiry by any Governmental
23
Authority or any remedial obligations under any Environmental Laws. If any such
investigation or inquiry is initiated with respect to any alleged violation of
Environmental Laws, Lessee shall promptly notify Lessor; (ii) all uses and
operations on or of each of the Properties, whether by Lessee or any other
person or entity, shall be in material compliance with all Environmental Laws
and permits issued pursuant thereto; (iii) there shall be no Releases in, on,
under or from any of the Properties, except in De Minimis Amounts or that do not
violate any Environmental Laws; (iv) there shall be no Hazardous Materials in,
on, or under any of the Properties, except in De Minimis Amounts or which do not
violate any Environmental Laws; (v) Lessee shall keep each of the Properties
free and clear of all Environmental Liens, whether due to any act or omission of
Lessee or any other person or entity; (vi) Lessee shall, at its sole cost and
expense, fully and expeditiously cooperate in all activities pursuant to
subsection F below, including but not limited to providing all relevant
information and making knowledgeable persons available for interviews; (vii) in
the event that Lessor notifies Lessee that it has knowledge of a Release or a
Threatened Release at any of the Properties or has a reasonable basis to believe
that a material violation of Environmental Laws at any of the Properties may
have occurred, Lessee shall, at its sole cost and expense, perform any
environmental site assessment or other investigation of environmental conditions
in connection with any of the Properties as may be reasonably requested by
Lessor (including but not limited to sampling, testing and analysis of soil,
water, air, building materials and other materials and substances whether solid,
liquid or gas), and share with Lessor and Environmental Insurer the reports and
other results thereof, and Lessor, Environmental Insurer and the other
Indemnified Parties shall be entitled to rely on such reports and other results
thereof; (viii) Lessee shall, at its sole cost and expense, comply with all
reasonable written requests of Lessor to (1) reasonably effectuate Remediation
of any condition (including but not limited to a Release) in, on, under or from
any of the Properties; (2) comply with any Environmental Law; (3) comply with
any applicable directive from any Governmental Authority having jurisdiction
over the Properties; and (4) take any other reasonable action necessary or
appropriate for protection of human health or the environment; (ix) Lessee shall
not do or allow any tenant or other user of any of the Properties to do any act
that materially increases the dangers to human health or the environment, poses
an unreasonable risk of harm to any person or entity (whether on or off any of
the Properties), impairs or may impair the value of any of the Properties, is
contrary to any requirement of any insurer, constitutes a public or private
nuisance, constitutes waste, or violates any covenant, condition, agreement or
easement applicable to any of the Properties; and (x) Lessee shall immediately
notify Lessor in writing of (A) any presence of Releases or Threatened Releases
in, on, under, from or migrating towards any of the Properties in violation of
any applicable Environmental Laws; (B) any non-compliance with any Environmental
Laws related in any way to any of the Properties; (C) any Environmental Lien;
(D) any required Remediation of environmental conditions relating to any of the
Properties; and (E) any written notice of which any officer of Lessee becomes
aware from any Governmental Authority relating in any way to liability of any
person or entity pursuant to any Environmental Law, or any administrative or
judicial proceedings commenced or overtly threatened in connection with any
alleged violation of Environmental Laws.
X. Xxxxxx, Lender, Environmental Insurer and any other person or entity
designated by Lessor, including but not limited to any receiver, any
representative of a Governmental Authority, and any environmental consultant,
shall have the right, but not the obligation, to enter
24
upon the Properties at all reasonable times (including, without limitation, in
connection with any Securitization, Participation or Transfer or in connection
with a proposed sale or conveyance of any of the Properties or a proposed
financing or refinancing secured by any of the Properties or in connection with
the exercise of any remedies set forth in this Lease, the Mortgages or the other
Loan Documents, as applicable) to assess any and all aspects of the
environmental condition of the Properties and its use, including but not limited
to conducting any environmental assessment or audit (the scope of which shall be
determined in the sole and absolute discretion of the party conducting the
assessment) and taking samples of soil, groundwater or other water, air, or
building materials, and conducting other invasive testing; provided, however,
that any such persons (except in emergencies) shall use reasonable efforts to
undertake any such assessments or investigations so as to minimize the impact on
Lessee's business operations at the Properties. Lessee shall cooperate with and
provide access to Lessor, Lender, Environmental Insurer and any other person or
entity designated by Lessor. Any such assessment and investigation shall be at
Lessee's sole cost and expense. Notwithstanding the forgoing, however, such
access and investigation shall be limited to one time in any calendar year
except in cases where more frequent access and investigation is reasonably
necessary under the circumstances.
G. Lessee shall, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless each of the Indemnified Parties for, from
and against any and all Losses (excluding Losses suffered by an Indemnified
Party directly arising out of such Indemnified Party's gross negligence or
willful misconduct; provided, however, that the term "gross negligence" shall
not include gross negligence imputed as a matter of law to any of the
Indemnified Parties solely by reason of the Lessor's interest in any of the
Properties or Lessor's failure to act in respect of matters which are or were
the obligation of Lessee under this Lease) and costs of Remediation (whether or
not performed voluntarily), engineers' fees, environmental consultants' fees,
and costs of investigation (including but not limited to sampling, testing, and
analysis of soil, water, air, building materials and other materials and
substances whether solid, liquid or gas) imposed upon or incurred by or asserted
against any Indemnified Parties, and directly or indirectly arising out of or in
any way relating to any one or more of the following: (i) any presence of any
Hazardous Materials in, on, above, or under any of the Properties; (ii) any past
or present Release or Threatened Release in, on, above, under or from any of the
Properties; (iii) any activity by Lessee, any person or entity affiliated with
Lessee or any other tenant or other user of any of the Properties in connection
with any actual, proposed or threatened use, treatment, storage, holding,
existence, disposition or other Release, generation, production, manufacturing,
processing, refining, control, management, abatement, removal, handling,
transfer or transportation to or from any of the Properties of any Hazardous
Materials at any time located in, under, on or above any of the Properties; (iv)
any activity by Lessee, any person or entity affiliated with Lessee or any other
tenant or other user of any of the Properties in connection with any actual or
proposed Remediation of any Hazardous Materials at any time located in, under,
on or above any of the Properties, whether or not such Remediation is voluntary
or pursuant to court or administrative order, including but not limited to any
removal, remedial or corrective action; (v) any past, present or threatened non-
compliance or violations of any Environmental Laws (or permits issued pursuant
to any Environmental Law) in connection with any of the Properties or operations
thereon, including but not limited to any failure by Lessee, any person or
entity affiliated with Lessee or any other tenant or other user of any of the
25
Properties to comply with any order of any Governmental Authority in connection
with any Environmental Laws; (vi) the imposition, recording or filing or the
threatened imposition, recording or filing of any Environmental Lien encumbering
any of the Properties; (vii) any administrative processes or proceedings or
judicial proceedings in any way connected with any matter addressed in this
Section; (viii) any past, present or threatened injury to, destruction of or
loss of natural resources in any way connected with any of the Properties,
including but not limited to costs to investigate and assess such injury,
destruction or loss; (ix) any acts of Lessee, any person or entity affiliated
with Lessee or any other tenant or user of any of the Properties in arranging
for disposal or treatment, or arranging with a transporter for transport for
disposal or treatment, of Hazardous Materials owned or possessed by Lessee, any
person or entity affiliated with Lessee or any other tenant or user of any of
the Properties, at any facility or incineration vessel owned or operated by
another person or entity and containing such or similar Hazardous Materials; (x)
any acts of Lessee, any person or entity affiliated with Lessee or any other
tenant or user of any of the Properties, in accepting any Hazardous Materials
for transport to disposal or treatment facilities, incineration vessels or sites
selected by Lessee, any person or entity affiliated with Lessee or any other
tenant or user of any of the Properties, from which there is a Release, or a
Threatened Release of any Hazardous Materials which causes the incurrence of
costs for Remediation; (xi) any personal injury, wrongful death, or property
damage arising under any statutory or common law or tort law theory, including
but not limited to damages assessed for the maintenance of a private or public
nuisance or for the conducting of an abnormally dangerous activity on or near
any of the Properties; and (xii) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations pursuant to this Section.
H. The obligations of Lessee and the rights and remedies of Lessor
under the foregoing subsections D through G shall survive the termination,
expiration and/or release of this Lease with respect to matters arising or
occurring prior to or during the Lease Term.
17. Condition of Properties; Maintenance. Lessee, at its own
expense, will maintain all parts of each of the Properties in good repair and
sound condition, except for ordinary wear and tear, and will take all action and
will make all structural and non-structural, foreseen and unforeseen and
ordinary and extraordinary changes and repairs which may be required to keep all
parts of each of the Properties in good repair and sound condition, ordinary
wear and tear excepted. Lessee waives any right to (i) require Lessor to
maintain, repair or rebuild all or any part of any of the Properties or (ii)
make repairs at the expense of Lessor, pursuant to any Applicable Regulations at
any time in effect, except in each case for those necessitated by affirmative
acts of Lessor or its agents which constitute gross negligence or intentional
misconduct.
18. Waste; Alterations and Improvements. Lessee shall not commit
actual or constructive waste upon any of the Properties. Lessee shall not alter
the exterior, structural, plumbing or electrical elements of any of the
Properties in any manner without the consent of Lessor, which consent shall not
be unreasonably withheld or conditioned (it being understood and agreed that to
the extent Lessor is required to obtain the approval of Lender with respect to
any such alterations, Lessor shall in no event be deemed to have unreasonably
withheld Lessor's
26
approval thereof if Lender shall not have given its approval if required);
provided, however, Lessee may undertake nonstructural alterations to any of the
Properties costing less than $500,000.00 without Lessor's consent. If Lessor's
consent is required hereunder and Lessor consents to the making of any such
alterations, the same shall be made according to plans and specifications
approved by Lessor, such approval not be unreasonably withheld or conditioned,
and subject to such other conditions as Lessor shall reasonably require. All
alterations shall be made by Lessee at Lessee's sole expense by licensed
contractors and in accordance with all applicable laws governing such
alterations. Any work at any time commenced by Lessee on any of the Properties
shall be prosecuted diligently to completion, shall be of good workmanship and
materials and shall comply fully with all the terms of this Lease. Upon
completion of any alterations, Lessee shall promptly provide Lessor with (i)
evidence of full payment to all laborers and materialmen contributing to the
alterations, (ii) an architect's certificate certifying the alterations to have
been completed in conformity with the plans and specifications, (iii) a
certificate of occupancy (if the alterations are of such a nature as would
require the issuance of a certificate of occupancy), and (iv) any other
documents or information reasonably requested by Lessor. Any addition to or
alteration of any of the Properties, other than the addition to or alteration of
Personalty, shall automatically be deemed a part of the Properties and belong to
Lessor, and Lessee shall execute and deliver to Lessor such instruments as
Lessor may require to evidence the ownership by Lessor of such addition or
alteration. Lessee shall execute and file or record, as appropriate, a "Notice
of Non-Responsibility," or any equivalent notice permitted under applicable law
in the states where the applicable Properties are located.
19. Indemnification. Lessee shall indemnify, protect, defend and
hold harmless each of the Indemnified Parties from and against any and all
Losses (excluding Losses suffered by an Indemnified Party arising out of the
gross negligence or willful misconduct of such Indemnified Party; provided,
however, that the term "gross negligence" shall not include gross negligence
imputed as a matter of law to any of the Indemnified Parties solely by reason of
the Lessor's interest in any of the Properties or Lessor's failure to act in
respect of matters which are or were the obligation of Lessee under this Lease)
caused by, incurred or resulting from Lessee's operations of or relating in any
manner to any of the Properties, whether relating to their original design or
construction, latent defects, alteration, maintenance, use by Lessee or any
person thereon, supervision or otherwise, or from any breach of, default under,
or failure to perform, any term or provision of this Lease by Lessee, its
officers, employees, agents or other persons, or to which any Indemnified Party
is subject because of Lessor's or Remainderman's interest in any of the
Properties, including, without limitation, Losses arising from (1) any accident,
injury to or death of any person or loss of or damage to property occurring in,
on or about any of the Properties or portion thereof or on the adjoining
sidewalks, curbs, parking areas, streets or ways, (2) any use, non-use or
condition in, on or about, or possession, alteration, repair, operation,
maintenance or management of, any of the Properties or any portion thereof or on
the adjoining sidewalks, curbs, parking areas, streets or ways, (3) any
representation or warranty made herein by Lessee, in any certificate delivered
in connection herewith or in any other agreement to which Lessee is a party or
pursuant thereto being false or misleading in any material respect as of the
date of such representation or warranty was made, (4) performance of any labor
or services or the furnishing of any materials or other property in respect to
any of the Properties or any portion thereof,
27
(5) any taxes, assessments or other charges which Lessee is required to pay
under Section 10, (6) any lien, encumbrance or claim arising on or against any
of the Properties or any portion thereof under any Applicable Regulation or
otherwise which Lessee is obligated hereunder to remove and discharge, or the
failure to comply with any Applicable Regulation, (7) the claims of any
invitees, patrons, licensees or subtenants of all or any portion of any of the
Properties or any Person acting through or under Lessee or otherwise acting
under or as a consequence of this Lease or any sublease, (8) any act or omission
of Lessee or its agents, contractors, licensees, subtenants or invitees, (9) any
contest referred to in Section 10, and (10) the sale of liquor, beer or wine on
any of the Properties. It is expressly understood and agreed that Lessee's
obligations under this Section shall survive the expiration or earlier
termination of this Lease for any reason with respect to matters arising or
occurring prior to or during the Lease Term.
20. Quiet Enjoyment. So long as Lessee shall pay the rental and
other sums herein provided and shall keep and perform all of the terms,
covenants and conditions on its part herein contained, Lessee shall have,
subject and subordinate to Lessor's rights herein, the right to the peaceful and
quiet occupancy of the Properties. Notwithstanding the foregoing, however, in
no event shall Lessee be entitled to bring any action against Lessor to enforce
its rights hereunder if an Event of Default shall have occurred and be
continuing.
21. Condemnation or Destruction. A. In the event of a taking of all
or any part of any of the Properties for any public or quasi-public purpose by
any lawful power or authority by exercise of the right of condemnation or
eminent domain or by agreement between Lessor, Lessee and those authorized to
exercise such right ("Taking") or the commencement of any proceedings or
negotiations which might result in a Taking or any damage to or destruction of
any of the Properties or any part thereof (a "Casualty"), Lessee will promptly
give written notice thereof to Lessor, generally describing the nature and
extent of such Taking, proceedings, negotiations or Casualty and including
copies of any documents or notices received in connection therewith.
Thereafter, Lessee shall promptly send Lessor copies of all correspondence and
pleadings relating to any such Taking, proceedings, negotiations or Casualty.
During all periods of time following a Casualty, Lessee shall insure that the
subject Property is secure and does not pose any risk of harm to adjoining
property owners or occupants or third-parties.
B. In the event of (i) a Taking of the whole of any of the
Properties, other than for temporary use, (ii) a Taking of substantially all of
any of the Properties (other than for temporary use) that results in Lessee
making a good faith determination that the restoration and continued use of the
remainder of such Property as a Permitted Facility would be uneconomic (each of
(i) and (ii), a "Total Taking"), or (iii) a Casualty of substantially all of any
of the Properties that results in Lessee making a good faith determination that
the restoration and continued use of such Property as a Permitted Facility would
be uneconomic (a "Total Casualty"), Lessor shall be entitled to receive the
entire award, insurance proceeds or payment in connection therewith without
deduction for any estate vested in Lessee by this Lease. Lessee hereby
expressly assigns to Lessor all of its right, title and interest in and to every
such award, insurance proceeds or payment and agrees that Lessee shall not be
entitled to any award, insurance proceeds or
28
payment for the value of Lessee's leasehold interest in this Lease. Lessee shall
be entitled to claim and receive any award or payment from the condemning
authority expressly granted for the taking of Personalty, the interruption of
its business and moving expenses, but only if such claim or award does not
adversely affect or interfere with the prosecution of Lessor's claim for the
Total Taking or otherwise reduce the amount recoverable by Lessor for the Total
Taking. Lessee shall be entitled to claim and receive any insurance proceeds
with respect to the Personalty, the interruption of its business and moving
expenses, but only if such claim or proceeds does not adversely affect or
interfere with the prosecution of Lessor's claim for the Total Casualty or
otherwise reduce the amount recoverable by Lessor for the Total Casualty.
In the event of a Total Taking or Total Casualty, Lessee shall have
the right to terminate this Lease with respect to the applicable Property by
notice (the "Termination Notice") given to Lessor not later than 30 days after
the Total Taking or Total Casualty, as applicable. The Termination Notice must:
(i) specify a date on which this Lease with respect to such Property shall
terminate, which date shall be the last day of a calendar month occurring not
earlier than 120 days and not later than 150 days after the delivery of such
notice (the "Early Termination Date"); (ii) contain a certificate executed by
the president, chief financial officer or treasurer of Lessee which (X)
describes the Total Taking or Total Casualty, and (Y) represents and warrants
that either the whole of such Property has been taken, or that substantially all
of such Property has been taken and Lessee has determined in good faith that the
restoration and continued use of the remainder of such Property as a Permitted
Facility would be uneconomic, or that substantially all of such Property has
been damaged or destroyed and Lessee has determined in good faith that the
restoration and continued use of such Property as a Permitted Facility would be
uneconomic; and (iii) if the Early Termination Date shall occur prior to the
commencement of any extension options which may be exercised pursuant to Section
27, contain either (X) an irrevocable rejectable written offer (the "Rejectable
Offer") of Lessee to purchase Lessor's interest in such Property and in the net
award for such Total Taking or net insurance proceeds for such Total Casualty,
as applicable, after deducting all costs, fees and expenses incident to the
collection thereof, including all costs and expenses incurred by Lessor and
Lender in connection therewith (the "Net Award") on the Early Termination Date
for a purchase price equal to the Stipulated Loss Value (as hereinafter defined)
for such Property, or (Y) a Rejectable Substitution Offer to substitute a
Substitute Property satisfying the applicable requirements of Section 55.A for
such Property and Lessor's interest in the Net Award. As used herein, the term
"Stipulated Loss Value" shall mean the sum of (a) the product of the amount
specified on Schedule I attached hereto which corresponds to the Early
----------
Termination Date multiplied by the Purchase Price for such Property, plus (b)
all Base Annual Rental, Additional Rental and other sums and obligations then
due and payable under this Lease, plus (c) in the event of a Rejectable Offer
relating to a Total Casualty, the Prepayment Charge corresponding to such
Property.
If the Early Termination Date shall occur prior to the commencement of
any extension options which may be exercised pursuant to Section 27, Lessor
shall have 90 days from the delivery of the Termination Notice to deliver to
Lessee written notice of its election to either accept or reject any Rejectable
Offer or Rejectable Substitution Offer contained in the Termination Notice.
Lessor's failure to deliver such notice within such time period shall be
29
deemed to constitute Lessor's acceptance of the applicable Rejectable Offer or
Rejectable Substitution Offer. If the Mortgage corresponding to such Property is
still outstanding, any rejection of the Rejectable Offer or Rejectable
Substitution Offer by Lessor shall not be effective unless it is consented to in
writing by the Lender.
If Lessor accepts the Rejectable Offer or is deemed to have accepted
the Rejectable Offer or if any rejection of the Rejectable Offer by Lessor is
not consented to in writing by the Lender, then, on the Early Termination Date,
Lessor shall sell and convey, and Lessee shall purchase for the purchase price
described above, Lessor's interest in such Property and the Net Award. Lessee's
obligations under this Lease with respect to such Property shall not be
terminated until the applicable Stipulated Loss Value is paid in full. Upon
such payment, (i) Lessor shall convey such Property to Lessee "as-is" by special
warranty deed, subject to all matters of record (except for the Mortgage
corresponding to such Property and any other consensual liens granted by Lessor
other than those granted by Lessor at the request of Lessee), and without
representation or warranty, and (ii) all obligations of either party hereunder
with respect to such Property shall cease as of the Early Termination Date,
provided, however, Lessee's obligations to Lessor under any indemnification
provisions of this Lease with respect to such Property (including, without
limitation, Sections 16 and 19) and Lessee's obligations to pay any sums
(whether payable to Lessor or a third party) accruing under this Lease with
respect to such Property prior to the Early Termination Date shall survive the
termination of this Lease with respect to such Property. This Lease shall,
however, continue in full force and effect with respect to all other Properties.
If Lessor accepts the Rejectable Substitution Offer or is deemed to
have accepted the Rejectable Substitution Offer or if any rejection of the
Rejectable Substitution Offer by Lessor is not consented to in writing by the
Lender, then, on the Early Termination Date, Lessee shall complete such
substitution, subject, however, to the satisfaction of each of the applicable
terms and conditions set forth in this Section 55. Upon such substitution (i)
Lessee shall be entitled to claim and receive the Net Award and (ii) all
obligations of either party hereunder with respect to the Property being
replaced shall cease as of the Early Termination Date, provided, however,
Lessee's obligations to Lessor under any indemnification provisions of this
Lease with respect to such Property (including, without limitation, Sections 16
and 19) and Lessee's obligations to pay any sums (whether payable to Lessor or a
third party) accruing under this Lease with respect to such Property prior to
the Early Termination Date shall survive the termination of this Lease with
respect to such Property. This Lease shall, however, continue in full force and
effect with respect to all other Properties.
Lessee shall be solely responsible for the payment of all costs and
expenses incurred in connection with the conveyance of a Property to Lessee
pursuant to this Section 21, including, without limitation, to the extent
applicable, the cost of title insurance, survey charges, stamp taxes, mortgage
taxes, transfer fees, escrow and recording fees, taxes imposed on Lessor as a
result of such conveyance, taxes imposed in connection with the transfer of a
Property to Lessee or the termination of this Lease with respect to a Property
pursuant to the provisions of this Section 21, Lessee's attorneys' fees and the
reasonable attorneys' fees and expenses of counsel to Lessor and Lender.
30
If Lessor rejects the Rejectable Offer or Rejectable Substitution Offer
and, as long as the Mortgage corresponding to the Property subject to such
Rejectable Offer or Rejectable Substitution Offer is still outstanding, such
rejection is consented to by Lender, or if the Early Termination Date shall
occur after the commencement of any extension options exercised pursuant to
Section 27, then (i) the Net Award shall be paid to and belong to Lessor, (ii)
on the Early Termination Date, Lessee shall pay to Lessor all Base Annual
Rental, Additional Rental and other sums and obligations then due and payable
under this Lease, and (iii) all obligations of either party hereunder shall
cease as of the Early Termination Date with respect to the applicable Property,
including the termination of the obligation to pay rent with respect to such
Property for the period from and after the Early Termination Date, provided,
however, Lessee's obligations to Lessor with respect to such Property under any
indemnification provisions of this Lease with respect to such Property
(including, without limitation, Sections 16 and 19) and Lessee's obligations to
pay any sums (whether payable to Lessor or a third party) accruing under this
Lease with respect to such Property prior to the Early Termination Date shall
survive the termination of this Lease. This Lease shall, however, continue in
full force and effect with respect to all other Properties.
C. In the event of a Taking of all or any part of any of the Properties
for a temporary use ("Temporary Taking"), this Lease shall remain in full force
and effect without any reduction of Base Annual Rental, Additional Rental or any
other sum payable hereunder. Except as provided below, Lessee shall be entitled
to the entire award for a Temporary Taking, whether paid by damages, rent or
otherwise, unless the period of occupation and use by the condemning authorities
shall extend beyond the date of expiration of this Lease, in which case the
award made for such Taking shall be apportioned between Lessor and Lessee as of
the date of such expiration. At the termination of any such Temporary Taking,
Lessee will, at its own cost and expense and pursuant to the terms of Section 18
above, promptly commence and complete the restoration of the Property affected
by such Temporary Taking; provided, however, Lessee shall not be required to
restore such Property if the Lease Term shall expire prior to, or within one
year after, the date of termination of such Temporary Taking, and in such event
Lessor shall be entitled to recover all damages and awards arising out of the
failure of the condemning authority to repair and restore such Property at the
expiration of such Temporary Taking.
D. In the event of a Taking which is not a Total Taking or a Temporary
Taking ("Partial Taking") or of a Casualty which is not a Total Casualty (a
"Partial Casualty"), all awards, compensation or damages shall be paid to
Lessor, and Lessor shall have the option to (i) terminate this Lease with
respect to the Property affected, provided that, as long as the Mortgage
corresponding to the applicable Property is still outstanding, Lessor shall have
obtained Lender's prior written consent, by notifying Lessee within 60 days
after Lessee gives Lessor notice of such Partial Casualty or that title has
vested in the taking authority or (ii) continue this Lease in effect, which
election may be evidenced by either a notice from Lessor to Lessee or Lessor's
failure to notify Lessee that Lessor has elected to terminate this Lease with
respect to such Property within such 60-day period. Lessee shall have a period
of 60 days after Lessor's notice that it has elected to terminate this Lease
with respect to such Property during which to elect to continue this Lease with
respect to such Property on the terms herein provided.
31
If Lessor elects to terminate this Lease with respect to such Property and
Lessee does not elect to continue this Lease with respect to such Property or
shall fail during such 60-day period to notify Lessor of Lessee's intent to
continue this Lease with respect to such Property, then this Lease shall
terminate with respect to such Property as of the last day of the month during
which such period expired. Lessee shall then immediately vacate and surrender
such Property, all obligations of either party hereunder with respect to such
Property shall cease as of the date of termination (provided, however, Lessee's
obligations to Lessor under any indemnification provisions of this Lease with
respect to such Property (including, without limitation, Sections 16 and 19) and
Lessee's obligations to pay Base Annual Rental, Additional Rental and all other
sums (whether payable to Lessor or a third party) accruing under this Lease with
respect to such Property prior to the date of termination shall survive such
termination) and Lessor may retain all such awards, compensation or damages. The
Lease shall continue in full force and effect with respect to all other
Properties. If Lessor elects not to terminate this Lease with respect to such
Property, or if Lessor elects to terminate this Lease with respect to such
Property but Lessee elects to continue this Lease with respect to such Property,
then this Lease shall continue in full force and effect on the following terms:
(i) all Base Annual Rental, Additional Rental and other sums and obligations due
under this Lease shall continue unabated, and (ii) Lessee shall promptly
commence and diligently prosecute restoration of such Property to the same
condition, as nearly as practicable, as prior to such Partial Taking or Partial
Casualty as approved by Lessor. Subject to reasonable conditions for
disbursement imposed by Lessor, Lessor shall promptly make available in
installments as restoration progresses an amount up to but not exceeding the
amount of any award, compensation or damages received by Lessor after deducting
all costs, fees and expenses incident to the collection thereof, including all
costs and expenses incurred by Lessor and Lender in connection therewith (the
"Net Restoration Amount"), upon request of Lessee accompanied by evidence
reasonably satisfactory to Lessor that such amount has been paid or is due and
payable and is properly a part of such costs and that Lessee has complied with
the terms of Section 18 above in connection with the restoration. Prior to the
disbursement of any portion of the Net Restoration Amount with respect to a
Partial Casualty, Lessee shall provide evidence reasonably satisfactory to
Lessor of the payment of restoration expenses by Lessee up to the amount of the
insurance deductible applicable to such Partial Casualty. Lessor shall be
entitled to keep any portion of the Net Restoration Amount which may be in
excess of the cost of restoration, and Lessee shall bear all additional costs,
fees and expenses of such restoration in excess of the Net Restoration Amount.
If this Lease is terminated with respect to any Property as a result of a
Partial Casualty, simultaneously with such termination Lessee shall pay Lessor
an amount equal to the insurance deductible applicable to such Partial Casualty.
E. In the event of a termination of this Lease with respect to a Property
pursuant to Section 21.B which does involve the acceptance (or deemed
acceptance) of a Rejectable Substitution Offer or a termination of this Lease
with respect to a Property pursuant to Section 21.D, the Base Annual Rental then
in effect shall be reduced by an amount equal to the product of (x) the
Applicable Rent Reduction Percentage for such Property, and (y) the Base Annual
Rental then in effect.
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F. Any loss under any property damage insurance required to be maintained
by Lessee shall be adjusted by Lessor and Lessee. Any award relating to a Total
Taking or a Partial Taking shall be adjusted by Lessor or at Lessor's election,
Lessee. Notwithstanding the foregoing or any other provisions of this Section to
the contrary, if at the time of any Taking or any Casualty or at any time
thereafter Lessee shall be in default under this Lease and such default shall be
continuing, Lessor is hereby authorized and empowered but shall not be
obligated, in the name and on behalf of Lessee and otherwise, to file and
prosecute Lessee's claim, if any, for an award on account of such Taking or for
insurance proceeds on account of such Casualty and to collect such award or
proceeds and apply the same, after deducting all costs, fees and expenses
incident to the collection thereof, to the curing of such default and any other
then existing default under this Lease and/or to the payment of any amounts owed
by Lessee to Lessor under this Lease, in such order, priority and proportions as
Lessor in its discretion shall deem proper.
G. Notwithstanding the foregoing, nothing in this Section 21 shall be
construed as limiting or otherwise adversely affecting the representations,
warranties, covenants and characterizations set forth in Lease, including,
without limitation, those provisions set forth in Section 3 of this Lease.
22. Inspection. Lessor and its authorized representatives shall have the
right, upon giving reasonable advance notice, to enter any of the Properties or
any part thereof at reasonable times in order to inspect the same and make
photographic or other evidence concerning Lessee's compliance with the terms of
this Lease or in order to show the Properties to prospective purchasers and
lenders. Lessee hereby waives any claim for damages for any injury or
inconvenience to or interference with Lessee's business, any loss of occupancy
or quiet enjoyment of any of the Properties and any other loss occasioned by
such entry so long as Lessor shall have used reasonable efforts not to
unreasonably interrupt Lessee's normal business operations. Lessee shall keep
and maintain at the Properties or Lessee's corporate headquarters full, complete
and appropriate books of account and records of Lessee's business relating to
the Properties in accordance with GAAP. Lessee's books and records shall at all
times, upon reasonable advance notice from Lessor or Lender, be open for
inspection by Lessor, Lender and their respective auditors or other authorized
representatives and shall show such information as is reasonably necessary to
determine compliance with Lessor's obligations under the Loan Documents.
23. Default, Conditional Limitations, Remedies and Measure of Damages. A.
Each of the following shall be an event of default under this Lease (each, an
"Event of Default"):
(i) If any representation or warranty of Lessee set forth in this
Lease is false in any material respect, or if Lessee renders any statement
or account which is false in any material respect;
(ii) If any rent or other monetary sum due under this Lease is not
paid within five days from the date when due; provided, however,
notwithstanding the occurrence of such an Event of Default, Lessor shall
not be entitled to exercise its remedies set forth below
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unless and until Lessor shall have given Lessee notice thereof and a period
of five days from the delivery of such notice shall have elapsed without
such Event of Default being cured;
(iii) If Lessee fails to pay, prior to delinquency, any taxes,
assessments or other charges, the failure of which to pay will result in
the imposition of a lien against any of the Properties or the rental or
other payments due under this Lease or a claim against Lessor, unless
Lessee is contesting such taxes, assessments or other charges in accordance
with the provisions of Section 10 of this Lease;
(iv) If Lessee or Guarantor becomes insolvent within the meaning of
the Code, files or notifies Lessor that it intends to file a petition under
the Code, initiates a proceeding under any similar law or statute relating
to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts (collectively, hereinafter, an "Action"), becomes the subject of
either a petition under the Code or an Action which is not dissolved within
90 days after filing, or is not generally paying its debts as the same
become due;
(v) If Lessee vacates or abandons any of the Properties other than
in accordance with the provisions of Section 15 of this Lease;
(vi) If Lessee fails to observe or perform any of the other
covenants, conditions or obligations of this Lease (except with respect to
a breach of the Aggregate Fixed Charge Coverage Ratio, which breach is
addressed in subitem (ix) below, breaches of Sections 24 and 25, which
breaches are addressed in subitem (xi) below, and the failure to maintain
insurance, which breach is addressed in subitem (xii) below) and such
failure continues for 30 days after Lessor shall have given Lessee notice
thereof; provided, however, if such failure cannot reasonably be cured
within such 30 day period and Lessee is diligently pursuing a cure of such
failure, then Lessee shall have a reasonable period to cure such failure
beyond such 30 day period, which shall in no event exceed 90 days after
receiving notice of such failure from Lessor. If Lessee shall fail to
correct or cure such failure within such 90-day period, an Event of Default
shall be deemed to have occurred hereunder without further notice or demand
of any kind being required;
(vii) If there is an "Event of Default" or a breach or default, after
the passage of all applicable notice and cure or grace periods, under any
other Sale-Leaseback Document or any of the Other Agreements;
(viii) If a final, nonappealable judgment is rendered by a court
against Lessee which has a material adverse effect on either the ability to
conduct business at any of the Properties for its intended use or Lessee's
ability to perform its obligations under this Lease, or is in the amount of
$100,000.00 or more, and in either event is not discharged, stayed or
provision made for such discharge or stay within 60 days from the date of
entry thereof;
(ix) If there is a breach of the Aggregate Fixed Charge Coverage
Ratio requirement and Lessor shall have given Lessee notice thereof and
Lessee shall have failed within a period of 10 days from the delivery of
such notice to either:
34
(1) deliver a Rejectable Substitution Offer to Lessor for the
substitution of such Substitute Properties satisfying the applicable
requirements of Section 55.A for the Properties (starting with the
Property with the lowest "Fixed Charge Coverage Ratio" (determined as
contemplated in the following sentence) and proceeding in ascending
order to the Property with the next lowest Fixed Charge Coverage
Ratio) as is necessary to cause the Aggregate Fixed Charge Coverage
Ratio for the Fiscal Year in which such breach occurred to be in
compliance with the Aggregate Fixed Charge Coverage Ratio requirement;
or
(2) deliver a Rejectable Purchase Offer to Lessor to purchase
such of the Properties (starting with the Property with the lowest
Fixed Charge Coverage Ratio and proceeding in ascending order to the
Property with the next lowest Fixed Charge Coverage Ratio) as is
necessary to cause the Aggregate Fixed Charge Coverage Ratio for the
Fiscal Year in which such breach occurred to be in compliance with the
Aggregate Fixed Charge Coverage Ratio requirement.
For purposes of the preceding subitems (1) and (2), the definitions
set forth in Section 8.A of this Lease with respect to the calculation of
the Aggregate Fixed Charge Coverage Ratio shall be deemed modified as
applicable to provide for the calculation of a Fixed Charge Coverage Ratio
for each Property on an individual basis rather than on an aggregate basis
with the other Properties. For purposes of such calculation, the Operating
Lease Expense with respect to this Lease for each such Property shall equal
the Base Annual Rental then in effect multiplied by the Applicable Rent
Reduction Percentage for such Property.
Unless Lessor rejects such Rejectable Substitution Offer or Rejectable
Purchase Offer as contemplated by Section 55 or 56, as applicable, the
failure of Lessee to complete such substitutions or purchases within 90
days after the delivery to Lessor of such Rejectable Substitution Offer or
Rejectable Purchase Offer shall be deemed an Event of Default without
further notice or demand of any kind being required.
Notwithstanding the foregoing, if, within a 30 day period after the
delivery of Lessor's notice to Lessee of Lessee's breach of the Aggregate
Fixed Charge Coverage Ratio requirement, Lessee provides evidence
satisfactory to Lessor that the Aggregate Fixed Charge Coverage Ratio is at
least 1.25:1 for the twelve calendar month period immediately preceding the
delivery to Lessor of such evidence, no Event of Default shall be deemed to
have occurred as a result of such breach of the Aggregate Fixed Charge
Coverage Ratio requirement.
(x) If Guarantor shall fail to maintain a net worth of at least
$25,000,000.00, as determined in accordance with GAAP or if Guarantor shall
breach Section 7(a) or 7(b) of the Guaranty.
35
(xi) If Lessee shall fail to sign any instrument or certificate in
accordance with the provisions of Sections 24 or 25 of this Lease and such
failure shall not be cured within five days following notice from Lessor.
(xii) If Lessee shall fail to maintain insurance in accordance with
the requirements of Section 12 and such failure continues for 5 days.
B. Upon the occurrence of an Event of Default, with or without notice or
demand, except the notice prior to default required under certain circumstances
by subsection A. above or such other notice as may be required by statute and
cannot be waived by Lessee (all other notices being hereby waived), Lessor shall
be entitled to exercise, at its option, concurrently, successively, or in any
combination, all remedies available at law or in equity (other than seeking
punitive, consequential or indirect damages), including without limitation, any
one or more of the following:
(i) Lessor may serve a written three (3) day notice of cancellation
and termination of this Lease upon Lessee, and upon the expiration of such
three (3) days, this Lease and the term hereunder shall end and expire as
fully and completely as if the date of expiration of such three (3) day
period were the day herein definitely fixed for the end and expiration of
this Lease and the term thereof, and Lessee shall immediately quit and
surrender the Properties to Lessor, but Lessee shall remain liable as
hereinafter provided;
(ii) To reenter and take possession of any or all of the Properties
and, to the extent permissible, all franchises, licenses, area development
agreements, permits and other rights or privileges of Lessee pertaining to
the use and operation of any or all of the Properties and to expel Lessee
and those claiming under or through Lessee, without being deemed guilty in
any manner of trespass or becoming liable for any loss or damage resulting
therefrom, without resort to legal or judicial process, procedure or
action. No notice from Lessor hereunder or under a forcible entry and
detainer statute or similar law shall constitute an election by Lessor to
terminate this Lease unless such notice specifically so states. If Lessee
shall, after default, voluntarily give up possession of any of the
Properties to Lessor, deliver to Lessor or its agents the keys to any of
the Properties, or both, such actions shall be deemed to be in compliance
with Lessor's rights and the acceptance thereof by Lessor or its agents
shall not be deemed to constitute a termination of this Lease. Lessor
reserves the right following any reentry and/or reletting to exercise its
right to terminate this Lease by giving Lessee written notice thereof, in
which event this Lease will terminate as specified in said notice.
(iii) To remove all Personalty located on or at any or all of the
Properties and cause the same to be stored in a public warehouse or
elsewhere at Lessee's sole expense, without becoming liable for any loss or
damage resulting therefrom and without resorting to legal or judicial
process, procedure or action.
36
(iv) To bring an action against Lessee for any damages sustained by
Lessor (other than punitive, consequential or indirect damages) or any
equitable relief available to Lessor.
(v) To relet any or all of the Properties or any part thereof for
such term or terms (including a term which extends beyond the original
Lease Term), at such rentals and upon such other terms as Lessor, in its
sole discretion, may determine, with all proceeds received from such
reletting being applied to the rental and other sums due from Lessee in
such order as Lessor may, in it sole discretion, determine, which other
sums include, without limitation, all repossession costs, brokerage
commissions, attorneys' fees and expenses, employee expenses, alteration
and remodeling costs in connection with such reletting and repair costs and
expenses of preparing for such reletting. Except to the extent required by
applicable law, Lessor shall have no obligation to relet any of the
Properties or any part thereof and shall in no event be liable for refusal
or failure to relet any of the Properties or any part thereof, or, in the
event of any such reletting, for refusal or failure to collect any rent due
upon such reletting, and no such refusal or failure shall operate to
relieve Lessee of any liability under this Lease or otherwise to affect any
such liability. Lessor reserves the right following any reentry and/or
reletting to exercise its right to terminate this Lease by giving Lessee
written notice thereof, in which event this Lease will terminate as
specified in said notice.
(vi) (x) To recover from Lessee all rent and other monetary sums
then due and owing under this Lease; and (y) to accelerate and recover from
Lessee the present value (discounted at the rate of 6% per annum) of all
rent and other monetary sums scheduled to become due and owing under this
Lease after the date of such breach for the entire original scheduled Lease
Term, provided, however, in no event shall such recovery be less than the
sum of (i) the product of the amount specified on Schedule I attached
----------
hereto which corresponds to the time period during which such Event of
Default occurs multiplied by the sum of the Purchase Price for all of the
Properties which are then subject to this Lease plus (ii) the sum of the
Prepayment Charges corresponding to all of the Properties which are then
subject to this Lease.
(vii) To recover from Lessee all costs and expenses, including
attorneys' fees, court costs, expert witness fees, costs of tests and
analyses, travel and accommodation expenses, deposition and trial
transcripts, copies and other similar costs and fees, paid or incurred by
Lessor as a result of such breach, regardless of whether or not legal
proceedings are actually commenced.
(viii) To immediately or at any time thereafter, and with or without
notice, at Lessor's sole option but without any obligation to do so,
correct such breach or default and charge Lessee all costs and expenses
incurred by Lessor therein. Any sum or sums so paid by Lessor, together
with interest at the then existing maximum legal rate, but not higher than
the Default Rate, shall be deemed to be Additional Rental hereunder and
shall be immediately due from Lessee to Lessor. Any such acts by Lessor in
correcting Lessee's
37
breaches or defaults hereunder shall not be deemed to cure said breaches or
defaults or constitute any waiver of Lessor's right to exercise any or all
remedies set forth herein.
(ix) To immediately or at any time thereafter, and with or without
notice, except as required herein, set off any money of Lessee held by
Lessor under this Lease against any sum owing by Lessee or Guarantor
hereunder.
(x) To seek any equitable relief available to Lessor, including,
without limitation, the right of specific performance.
All powers and remedies given by this Section to Lessor, subject to
applicable law, shall be cumulative and not exclusive of one another or of any
other right or remedy or of any other powers and remedies available to Lessor
under this Lease, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements of Lessee contained in
this Lease, and no delay or omission of Lessor to exercise any right or power
accruing upon the occurrence of any Event of Default shall impair any other or
subsequent Event of Default or impair any rights or remedies consequent thereto.
However, Lessor shall not be entitled to duplicate recoveries for the same loss.
Every power and remedy given by this Section or by law to Lessor may be
exercised from time to time, and as often as may be deemed expedient, by Lessor,
subject at all times to Lessor's right in its sole judgment to discontinue any
work commenced by Lessor or change any course of action undertaken by Lessor.
If Lessee shall fail to observe or perform any of its obligations under
this Lease or in the event of an emergency, then, without waiving any Event of
Default which may result from such failure or emergency, Lessor may, but without
any obligation to do so, take all actions, including, without limitation, entry
upon any or all of the Properties to perform Lessee's obligations, immediately
and without notice in the case of an emergency and upon five days written notice
to Lessee in all other cases. All expenses incurred by Lessor in connection with
performing such obligations, including, without limitation, reasonable
attorneys' fees and expenses, together with interest at the Default Rate from
the date any such expenses were incurred by Lessor until the date of payment by
Lessee, shall constitute Additional Rental and shall be paid by Lessee to Lessor
upon demand.
24. Liens; Mortgages, Subordination, Nondisturbance and Attornment.
Lessor's interest in this Lease and/or any of the Properties shall not be
subordinate to any liens or encumbrances placed upon any of the Properties by or
resulting from any act of Lessee, and nothing herein contained shall be
construed to require such subordination by Lessor. Lessee shall keep the
Properties free from any liens for work performed, materials furnished or
obligations incurred by Lessee. NOTICE IS HEREBY GIVEN THAT LESSEE IS NOT
AUTHORIZED TO PLACE OR ALLOW TO BE PLACED ANY LIEN, MORTGAGE, DEED OF TRUST,
SECURITY INTEREST OR ENCUMBRANCE OF ANY KIND UPON ALL OR ANY PART OF ANY OF THE
PROPERTIES OR LESSEE'S LEASEHOLD INTEREST THEREIN, AND ANY SUCH PURPORTED
TRANSACTION WHICH IS NOT APPROVED BY LESSOR SHALL BE VOID. FURTHERMORE, ANY SUCH
PURPORTED
38
TRANSACTION SHALL BE DEEMED A TORTIOUS INTERFERENCE WITH LESSOR'S RELATIONSHIP
WITH LESSEE AND LESSOR'S OWNERSHIP OF THE PROPERTIES.
This Lease at all times shall automatically be subordinate to the Mortgages
and to the lien of any and all ground leases, mortgages, deeds of trust and
trust deeds now or hereafter placed upon any of the Properties by Lessor, and
Lessee covenants and agrees to execute and deliver, within 20 days following
demand, such further instruments subordinating this Lease to the lien of the
Mortgages and any or all such ground leases, mortgages, deeds of trust or trust
deeds as shall be desired by Lessor, or any present or proposed mortgagees or
lenders under deeds of trust or trust deeds, upon the condition that Lessee
shall have the right to remain in possession of the Properties under the terms
of this Lease, notwithstanding any default in the Mortgages or any or all such
ground leases, mortgages, deeds of trust or trust deeds or after foreclosure of
any or all such Mortgages, mortgages, deeds of trust or trust deeds or
termination of any or all such ground leases, so long as no Event of Default has
occurred or is continuing under this Lease.
If any mortgagee, receiver, Lender or other secured party elects to have
this Lease and the interest of Lessee hereunder be superior to any of the
Mortgages or any such ground lease, mortgage or trust deed and evidences such
election by notice given to Lessee, then this Lease and the interest of Lessee
hereunder shall be deemed superior to any such Mortgage, ground lease, mortgage
or trust deed, whether this Lease was executed before or after such Mortgage,
ground lease, mortgage or trust deed and in that event such mortgagee, receiver,
Lender or other secured party shall have the same rights with respect to this
Lease as if it had been executed and delivered prior to the execution and
delivery of such Mortgage ground lease, mortgage or trust deed and had been
assigned to such mortgagee, receiver, Lender or other secured party.
Although the foregoing provisions shall be self-operative and no future
instrument of subordination shall be required, upon request by Lessor, Lessee
shall execute and deliver whatever instruments may be required for such purposes
within 20 days following demand.
In the event any purchaser or assignee of Lender at a foreclosure sale
acquires title to any of the Properties, or in the event Lender or any assignee
otherwise succeeds to the rights of Lessor as landlord under this Lease, Lessee
shall attorn to Lender or such purchaser or assignee, as the case may be (a
"Successor Lessor"), and recognize the Successor Lessor as lessor under this
Lease, and this Lease shall continue in full force and effect as a direct lease
between the Successor Lessor and Lessee, provided that the Successor Lessor
shall only be liable for any obligations of the lessor under this Lease which
accrue after the date that such Successor Lessor acquires title. The foregoing
provision shall be self operative and effective without the execution of any
further instruments.
Lessee shall give written notice to any lender of Lessor having a recorded
lien upon any of the Properties or any part thereof of which Lessee has been
notified of any breach or default by Lessor of any of its obligations under this
Lease simultaneously with the giving of such notice to Lessor, and Lessee shall
give such lender at least 60 days beyond any notice period to which Lessor might
be entitled to cure such default before Lessee may exercise any remedy with
respect thereto. Upon request by Lessor, Lessee shall also provide Lessee's most
recent audited
39
financial statements (to the extent audited financial statements are prepared)
to Lessor or any such lender and certify the continuing accuracy of such
financial statements in such manner as Lessor or such lender may request.
Notwithstanding the forgoing, Lessee shall be obligated to provide such
financial statements and certifications to only one lender at a time. If Lessor
has more than one lender, it shall designate to Lessee a single lender or
servicer to receive such financial statements and certifications.
25. Estoppel Certificate. At any time, and from time to time, Lessee
shall, promptly and in no event later than 20 days after a request from Lessor
or Lender, execute, acknowledge and deliver to Lessor or Lender a certificate in
the form supplied by Lessor, Lender or any present or proposed mortgagee or
purchaser designated by Lessor, certifying: (i) that Lessee has accepted the
Properties (or, if Lessee has not done so, that Lessee has not accepted the
Properties, and specifying the reasons therefor); (ii) that this Lease is in
full force and effect and has not been modified (or if modified, setting forth
all modifications), or, if this Lease is not in full force and effect, the
certificate shall so specify the reasons therefor; (iii) the commencement and
expiration dates of the Lease Term, including the terms of any extension options
of Lessee; (iv) the date to which the rentals have been paid under this Lease
and the amount thereof then payable; (v) whether there are then any existing
defaults by Lessor in the performance of its obligations under this Lease, and,
if there are any such defaults, specifying the nature and extent thereof; (vi)
that no notice has been received by Lessee of any default under this Lease which
has not been cured, except as to defaults specified in the certificate; (vii)
the capacity of the person executing such certificate, and that such person is
duly authorized to execute the same on behalf of Lessee; (viii) that neither
Lessor nor Lender has actual involvement in the management or control of
decision making related to the operational aspects or the day-to-day operations
of the Properties; and (ix) any other information reasonably requested by
Lessor, Lender or such present or proposed mortgagee or purchaser.
26. Assignment. A. Lessor shall have the right to sell or convey all, but
not less than all, of the Properties or to assign its right, title and interest
as Lessor under this Lease in whole, but not in part. In the event of any such
sale or assignment other than a security assignment, provided Lessee receives
written notice that such purchaser or assignee has assumed all of Lessor's
obligations under this Lease, Lessee shall attorn to such purchaser or assignee
and Lessor shall be relieved, from and after the date of such transfer or
conveyance, of liability for the performance of any obligation of Lessor
contained herein, except for obligations or liabilities accrued prior to such
assignment or sale.
B. Lessee acknowledges that Lessor has relied both on the business
experience and creditworthiness of Lessee and upon the particular purposes for
which Lessee intends to use the Properties in entering into this Lease. Without
the prior written consent of Lessor: (i) Lessee shall not assign, transfer or
convey this Lease or any interest therein, whether by operation of law or
otherwise; and (ii) Lessee shall not sublet all or any part of any of the
Properties. It is expressly agreed that Lessor may withhold or condition such
consent based upon such matters as Lessor may in its reasonable discretion
determine, including, without limitation, the experience and creditworthiness of
any assignee, the assumption by any assignee of all of Lessee's obligations
40
hereunder by undertakings enforceable by Lessor, the transfer to any assignee of
all necessary licenses and franchises to continue operating the Properties for
the purposes herein provided, receipt of such representations and warranties
from any assignee as Lessor may request, including such matters as its
organization, existence, good standing and finances and other matters, whether
or not similar in kind. At the time of any assignment of this Lease which is
approved by Lessor, the assignee shall assume all of the obligations of Lessee
under this Lease pursuant to Lessor's standard form of assumption agreement. No
such assignment nor any subletting of any of the Properties shall relieve Lessee
of its obligations under this Lease or the other Sale-Leaseback Documents or
Guarantor from any of its obligations under the Guaranty. Any assignment,
transfer or conveyance in violation of this paragraph shall be voidable at the
sole option of Lessor.
C. Without the prior written consent of Lessor: (i) a majority of the
voting stock of Lessee shall not be transferred by the owners of such stock as
of the Effective Date, whether through one or more transactions (a "Controlling
Interest Transfer"), (ii) Lessee shall not merge or consolidate with any other
entity (a "Consolidation"), and (iii) Lessee shall not sell or otherwise
transfer substantially all of its assets (an "Asset Sale"). Notwithstanding the
foregoing, Lessor's consent shall be deemed given with respect to a Controlling
Interest Transfer, Consolidation or Asset Sale if the following conditions have
been satisfied:
(1) the applicable Controlling Interest Transfer, Consolidation or Asset
Sale does not cause any of the rating agencies which have issued ratings in
connection with any Securitization of the Loan to downgrade, modify, withdraw or
qualify any of such ratings;
(2) the applicable Controlling Interest Transfer, Consolidation or Asset
Sale does not result in a violation of Section 29 of the Guaranty;
(3) with respect to a Controlling Interest Transfer, Lessee shall not be
released from any of its obligations under this Lease or the other Sale-
Leaseback Documents and Guarantor shall not be released from any of its
obligations under the Guaranty, including without limitation, Section 29
thereof; and
(4) with respect to a Consolidation or Asset Sale, the surviving entity or
purchaser, as applicable, has assumed in writing (or by operation of law) all of
Lessee's obligations under this Lease and the other Sale-Leaseback Documents and
Guarantor shall not be released from any of its obligations under the Guaranty,
including without limitation, Section 29 thereof.
27. Option To Extend. Provided that, at the time of exercise or at the
expiration of the Lease Term or, if applicable, the preceding extension of the
Lease Term, no Event of Default has occurred and is continuing under this Lease
and no default in payment of rent, insurance or taxes is continuing under this
Lease, Lessee shall have the option to continue this Lease in effect for up to
four additional successive periods of five years each in accordance with the
terms and provisions of this Lease then in effect, except that the Base Annual
Rental during each extension period shall be an amount equal to 95% of the
annual fair market rental value of the Properties during such extension period
(to be determined as set forth below).
41
Lessee shall exercise the first extension option by giving notice to Lessor
of Lessee's intention to do so not later than January 31, 2019. If the first
extension option is exercised by Lessee, Lessee shall exercise the second
extension option by giving notice to Lessor of Lessee's intention to do so not
later than October 31, 2024. If the first two extension options are exercised,
Lessee shall exercise the third extension option by giving notice to Lessor of
Lessee's intention to do so not later than October 31, 2029. If the first three
extension options are exercised, Lessee shall exercise the fourth extension
option by giving notice to Lessor of Lessee's intention to do so not later than
October 31, 2034.
Lessor shall cause an appraisal of the fair market rental value of the
Properties to be made by an independent MAI appraiser (the "Lessor Appraisal")
within 60 days after Lessor is notified of the exercise of such option. Lessee
shall have 20 days from its receipt of the Lessor Appraisal to either accept or
reject such appraisal, provided that, Lessee's failure to reject the Lessor
Appraisal within such 20 day period shall be deemed to be an acceptance thereof.
If Lessee shall accept or be deemed to have accepted the Lessor Appraisal, the
fair market rental value shall be the amount set forth in the Lessor Appraisal.
If Lessee shall reject the Lessor Appraisal within such 20 day period, then
Lessee shall within 60 days after such rejection cause an appraisal of the fair
market rental value of the Properties to be made by an independent MAI appraiser
selected by Lessee (the "Lessee Appraisal"). Lessor shall have 20 days from its
receipt of the Lessee Appraisal to either accept or reject such appraisal,
provided that, Lessor's failure to reject the Lessee Appraisal within such 20
day period shall be deemed to be an acceptance thereof. If Lessor shall accept
or be deemed to have accepted the Lessee Appraisal, the fair market rental value
shall be the amount set forth in the Lessee Appraisal. If Lessor shall reject
the Lessee Appraisal within such 20 day period, then the appraisers who
conducted the Lessor Appraisal and the Lessee Appraisal shall be directed to
jointly select, within 20 days thereafter, a third independent MAI appraiser who
shall, within 30 days after selection, select either the Lessor Appraisal or the
Lessee Appraisal as the fair market rental value of the Properties. If the two
appraisers are unable to agree on the third appraiser within such 20 day period,
the third appraiser shall be selected by the American Arbitration Association.
Lessee shall be obligated to pay the costs of all three appraisers and the
American Arbitration Association (to the extent applicable).
28. Notices. All notices, consents, approvals or other instruments required
or permitted to be given by either party pursuant to this Lease shall be in
writing and given by (i) hand delivery, (ii) facsimile, (iii) express overnight
delivery service or (iv) certified or registered mail, return receipt requested,
and shall be deemed to have been delivered upon (a) receipt or refusal of the
intended recipient to accept receipt, if hand delivered, (b) transmission, if
delivered by facsimile, (c) the next Business Day, if delivered by express
overnight delivery service, or (d) the third Business Day following the day of
deposit of such notice with the United States Postal Service, if sent by
certified or registered mail, return receipt requested. Notices shall be
provided to the parties and addresses (or facsimile numbers, as applicable)
specified below:
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If to Lessee: Chart House, Inc.
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Seyfarth Xxxx
00 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Lessor: CH Restaurant Property, LLC
c/o U.S. Realty Advisors LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above. No such notices, consents, approvals or other communications
shall be valid unless Lender is provided a duplicate original thereof at the
following address:
Xxxxxx X. Xxxxx, Esq.
Executive Vice President, General Counsel and Secretary
FFCA Acquisition Corporation
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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or to such other address or such other person as Lender may from time to time
specify to Lessor and Lessee in a notice delivered in the manner provided above.
29. Holding Over. If Lessee remains in possession of any of the
Properties after the expiration of the term hereof, Lessee, at Lessor's option
and within Lessor's sole discretion, may be deemed a tenant on a month-to-month
basis and shall continue to pay rentals and other sums in the amounts herein
provided, except that the Base Monthly Rental shall be 150% of the Base Monthly
Rental in effect at such expiration, and to comply with all the terms of this
Lease; provided that nothing herein nor the acceptance of rent by Lessor shall
be deemed a consent to such holding over. Lessee shall defend, indemnify,
protect and hold the Indemnified Parties harmless from and against any and all
Losses resulting from Lessee's failure to surrender possession upon the
expiration of the Lease Term, including, without limitation, any claims made by
any succeeding lessee.
30. Removal of Personalty. At the expiration of the Lease Term, and if no
Event of Default has occurred and is continuing, Lessee may remove all
Personalty from the Properties. Lessee shall repair any damage caused by such
removal and shall leave the Properties broom clean and in good and working
condition and repair inside and out. Any property of Lessee left on the
Properties on the fifteenth day following the expiration of the Lease Term
shall, at Lessor's option, automatically and immediately become the property of
Lessor.
31. Financial Statements. Within 45 days after the end of each fiscal
quarter and within 120 days after the end of each fiscal year of Lessee, Lessee
shall deliver to Lessor and Lender (i) complete financial statements of Lessee
including a balance sheet, profit and loss statement, statement of cash flows
and all other related schedules for the fiscal period then ended; and (ii)
income statements for the business at each of the Properties. All such
financial statements shall be prepared in accordance with GAAP and shall be
certified to be accurate and complete by Lessee (or the Treasurer or other
appropriate officer of Lessee). Lessee understands that Lessor and Lender will
rely upon such financial statements and Lessee represents that such reliance is
reasonable. In the event that Lessee's property and business at the Properties
is ordinarily consolidated with other business for financial statement purposes,
such financial statements shall be prepared on a consolidated basis showing
separately the sales, profits and losses, assets and liabilities pertaining to
each of the Properties with the basis for allocation of overhead of other
charges being clearly set forth. The financial statements delivered to Lessor
and Lender need not be audited, but Lessee shall deliver to Lessor and Lender
copies of any audited financial statements of Lessee which may be prepared, as
soon as they are available.
32. Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, acts of God, enemy or hostile governmental action, civil commotion,
fire or other casualty beyond the control of the party obligated to perform
shall excuse the performance by such party for a period equal to any such
prevention, delay or stoppage, except the obligations imposed with regard to
rental and other monies to be paid by Lessee pursuant to this Lease and any
indemnification obligations imposed upon Lessee under this Lease.
44
33. Time Is of the Essence. Time is of the essence with respect to each
and every provision of this Lease in which time is a factor.
34. Lessor's Liability. Notwithstanding anything to the contrary provided
in this Lease, it is specifically understood and agreed, such agreement being a
primary consideration for the execution of this Lease by Lessor, that (i) there
shall be absolutely no personal liability on the part of Lessor, its successors
or assigns and the trustees, members, partners, shareholders, officers,
directors, employees and agents of Lessor and its successors or assigns, to
Lessee with respect to any of the terms, covenants and conditions of this Lease,
(ii) Lessee waives all claims, demands and causes of action against the
trustees, members, partners, shareholders, officers, directors, employees and
agents of Lessor and its successors or assigns in the event of any breach by
Lessor of any of the terms, covenants and conditions of this Lease to be
performed by Lessor, and (iii) Lessee shall look solely to the Properties for
the satisfaction of each and every remedy of Lessee in the event of any breach
by Lessor of any of the terms, covenants and conditions of this Lease to be
performed by Lessor, or any other matter in connection with this Lease or the
Properties, such exculpation of liability to be absolute and without any
exception whatsoever.
35. Consent of Lessor. (a) Unless specified otherwise herein, Lessor's
consent to any request of Lessee may be conditioned or withheld in Lessor's sole
discretion. Lessor shall have no liability for damages resulting from Lessor's
failure to give any consent, approval or instruction reserved to Lessor,
Lessee's sole remedy in any such event being an action for injunctive relief.
(b) It is understood and agreed that to the extent Lessor is required to
obtain the consent, approval, agreement or waiver of Lender with respect to a
matter for which Lessor's approval has been requested under this Lease, Lessor
shall in no event be deemed to have unreasonably withheld Lessor's consent,
approval, agreement or waiver thereof if Lender shall not have given its
approval if required.
36. Waiver and Amendment. No provision of this Lease shall be deemed
waived except by a written instrument unambiguously setting forth the matter
waived and signed by the party against which enforcement of such waiver is
sought. Waiver of any matter shall not be deemed a waiver of the same or any
other matter on any future occasion. No provision of this Lease shall be deemed
amended except by a written instrument unambiguously setting forth the matter
amended and signed by both parties hereto. No acceptance by Lessor of an amount
less than the monthly rent and other payments stipulated to be due under this
Lease shall be deemed to be other than a payment on account of the earliest such
rent or other payments then due or in arrears nor shall any endorsement or
statement on any check or letter accompanying any such payment be deemed a
waiver of Lessor's right to collect any unpaid amounts or an accord and
satisfaction.
37. Successors Bound. Except as otherwise specifically provided herein,
the terms, covenants and conditions contained in this Lease shall bind and inure
to the benefit of the respective heirs, successors, executors, administrators
and assigns of each of the parties hereto.
45
38. No Merger. The voluntary or other surrender of this Lease by Lessee,
or a mutual cancellation thereof, shall not result in a merger of Lessor's and
Lessee's estates, and shall, at the option of Lessor, either terminate any or
all existing subleases or subtenancies, or operate as an assignment to Lessor of
any or all of such subleases or subtenancies.
39. Captions. Captions are used throughout this Lease for convenience of
reference only and shall not be considered in any manner in the construction or
interpretation hereof.
40. Severability. The provisions of this Lease shall be deemed severable.
If any part of this Lease shall be held unenforceable by any court of competent
jurisdiction, the remainder shall remain in full force and effect, and such
unenforceable provision shall be reformed by such court so as to give maximum
legal effect to the intention of the parties as expressed therein.
41. Characterization. A. It is the intent of the parties hereto that the
business relationship created by this Lease and any related documents is solely
that of a long-term commercial lease between landlord and tenant and has been
entered into by both parties in reliance upon the economic and legal bargains
contained herein. None of the agreements contained herein, is intended, nor
shall the same be deemed or construed, to create a partnership between Lessor
and Lessee, to make them joint venturers, to make Lessee an agent, legal
representative, partner, subsidiary or employee of Lessor, nor to make Lessor in
any way responsible for the debts, obligations or losses of Lessee.
X. Xxxxxx and Lessee acknowledge and warrant to each other that each has
been represented by independent counsel and has executed this Lease after being
fully advised by said counsel as to its effect and significance. This Lease
shall be interpreted and construed in a fair and impartial manner without regard
to such factors as the party which prepared the instrument, the relative
bargaining powers of the parties or the domicile of any party. Whenever in this
Lease any words of obligation or duty are used, such words or expressions shall
have the same force and effect as though made in the form of a covenant.
42. Easements. During the Lease Term Lessor shall have the right to grant
utility easements on, over, under and above any of the Properties without the
prior consent of Lessee, provided that such easements will not interfere with
Lessee's use of such Properties or business operations or increase Lessee's
obligations or decrease Lessee's rights under this Lease.
43. Bankruptcy. A. As a material inducement to Lessor executing this
Lease, Lessee acknowledges and agrees that Lessor is relying upon (i) the
financial condition and specific operating experience of Lessee and Lessee's
obligation to use each of the Properties specifically in accordance with system-
wide requirements imposed from time to time on Permitted Facilities, (ii)
Lessee's timely performance of all of its obligations under this Lease
notwithstanding the entry of an order for relief under the Code for Lessee and
(iii) all defaults under this Lease as to all Properties being cured promptly
and this Lease being assumed within 60 days of any order for relief entered
under the Code for Lessee, or this Lease being rejected within such 60 day
period and the Properties surrendered to Lessor.
46
Accordingly, in consideration of the mutual covenants contained in this
Lease and for other good and valuable consideration, Lessee hereby agrees that:
(i) All obligations that accrue under this Lease (including the
obligation to pay rent), from and after the date that an Action is
commenced shall be timely performed exactly as provided in this Lease and
any failure to so perform shall be harmful and prejudicial to Lessor;
(ii) Any and all obligations under this Lease that become due from
and after the date that an Action is commenced and that are not paid as
required by this Lease shall, in the amount of such rents, constitute
administrative expense claims allowable under the Code with priority of
payment at least equal to that of any other actual and necessary expenses
incurred after the commencement of the Action;
(iii) Any extension of the time period within which Lessee may assume
or reject this Lease without an obligation to cause all obligations coming
due under this Lease from and after the date that an Action is commenced to
be performed as and when required under this Lease shall be harmful and
prejudicial to Lessor;
(iv) Any time period designated as the period within which Lessee
must cure all defaults and compensate Lessor for all pecuniary losses which
extends beyond the date of assumption of this Lease shall be harmful and
prejudicial to Lessor;
(v) Any assignment of this Lease must result in all terms and
conditions of this Lease being assumed by the assignee without alteration
or amendment, and any assignment which results in an amendment or
alteration of the terms and conditions of this Lease without the express
written consent of Lessor shall be harmful and prejudicial to Lessor;
(vi) Any proposed assignment of this Lease to an assignee: (a) that
will not use the Properties specifically in accordance with a franchise,
license and/or area development agreement with the franchisor of Permitted
Facilities, (b) that does not possess financial condition, operating
performance and experience characteristics equal to or better than the
financial condition, operating performance and experience of Lessee as of
the Effective Date, shall be harmful and prejudicial to Lessor, or (c) that
does not provide guarantors of the Lease obligations with financial
condition equal to or better than the financial condition of Guarantor as
of the Effective Date;
(vii) The rejection (or deemed rejection) of this Lease for any
reason whatsoever shall constitute cause for immediate relief from the
automatic stay provisions of the Code, and Lessee stipulates that such
automatic stay shall be lifted immediately and possession of the Properties
will be delivered to Lessor immediately without the necessity of any
further action by Lessor; and
(viii) This Lease shall at all times be treated as consistent with
the specific characterizations set forth in Section 3 of this Lease, and
assumption or rejection of this
47
Lease shall be (a) in its entirety, (b) for all of the Properties, and (c)
in strict accordance with the specific terms and conditions of this Lease.
B. No provision of this Lease shall be deemed a waiver of Lessor's rights
or remedies under the Code or applicable law to oppose any assumption and/or
assignment of this Lease, to require timely performance of Lessee's obligations
under this Lease, or to regain possession of the Properties as a result of the
failure of Lessee to comply with the terms and conditions of this Lease or the
Code.
C. Notwithstanding anything in this Lease to the contrary, all amounts
payable by Lessee to or on behalf of Lessor under this Lease, whether or not
expressly denominated as such, shall constitute "rent" for the purposes of the
Code.
D. For purposes of this Section addressing the rights and obligations of
Lessor and Lessee in the event that an Action is commenced, the term "Lessee"
shall include Lessee's successor in bankruptcy, whether a trustee, Lessee as
debtor in possession or other responsible person.
44. No Offer. No contractual or other rights shall exist between Lessor
and Lessee with respect to the Properties until both have executed and delivered
this Lease, notwithstanding that deposits may have been received by Lessor and
notwithstanding that Lessor may have delivered to Lessee an unexecuted copy of
this Lease. The submission of this Lease to Lessee shall be for examination
purposes only, and does not and shall not constitute a reservation of or an
option for Lessee to lease or otherwise create any interest on the part of
Lessee in the Properties.
45. Other Documents. Each of the parties agrees to sign such other and
further documents as may be necessary or appropriate to carry out the intentions
expressed in this Lease.
46. Attorneys' Fees. In the event of any judicial or other adversarial
proceeding between the parties concerning this Lease, to the extent permitted by
law, the prevailing party shall be entitled to recover all of its reasonable
attorneys' fees and other costs in addition to any other relief to which it may
be entitled. In addition, Lessor shall, upon demand, be entitled to all
attorneys' fees and all other costs incurred in the preparation and service of
any notice or demand hereunder, whether or not a legal action is subsequently
commenced.
47. Entire Agreement. This Lease and any other instruments or agreements
referred to herein, constitute the entire agreement between the parties with
respect to the subject matter hereof, and there are no other representations,
warranties or agreements except as herein provided. Without limiting the
foregoing, Lessee specifically acknowledges that neither Lessor nor any agent,
officer, employee or representative of Lessor has made any representation or
warranty regarding the projected profitability of the business to be conducted
on the Properties. Furthermore, Lessee acknowledges that Lessor did not prepare
or assist in the preparation of any of the projected figures used by Lessee in
analyzing the economic viability and feasibility of the business to be conducted
by Lessee at the Properties.
48
48. Forum Selection; Jurisdiction; Venue; Choice of Law. Lessee
acknowledges that this Lease was partially negotiated in the State of Arizona,
the Lease was executed and delivered in the State of Arizona, all payments under
this Lease will be delivered in the State of Arizona (unless otherwise directed
by Lessor or its successors) and there are substantial contacts between the
parties and the transactions contemplated herein and the State of Arizona. For
purposes of any action or proceeding arising out of this Lease, the parties
hereto expressly submit to the jurisdiction of all federal and state courts
located in the State of Arizona. Lessee and Lessor consent that they may be
served with any process or paper by registered mail or by personal service
within or without the State of Arizona in accordance with applicable law.
Furthermore, Lessee and Lessor waive and agree not to assert in any such action,
suit or proceeding that they are not personally subject to the jurisdiction of
such courts, that the action, suit or proceeding is brought in an inconvenient
forum or that venue of the action, suit or proceeding is improper. The creation
of this Lease and the rights and remedies of Lessor with respect to the
Properties, as provided herein and by the laws of the states in which the
Properties are located, as applicable, shall be governed by and construed in
accordance with the internal laws of the states in which the Properties are
located, as applicable, without regard to principles of conflicts of law. With
respect to other provisions of this Lease, this Lease shall be governed by the
internal laws of the State of Arizona, without regard to its principles of
conflicts of law. Nothing contained in this Section shall limit or restrict the
right of Lessor or Lessee to commence any proceeding in the federal or state
courts located in the states in which the Properties are located to the extent
Lessor or Lessee deems such proceeding necessary or advisable to exercise
remedies available under this Lease.
49. Counterparts. This Lease may be executed in one or more counterparts,
each of which shall be deemed an original.
50. Memorandum of Master Lease. Concurrently with the execution of this
Lease, Lessor and Lessee are executing the Memorandum to be recorded in the
applicable real property records with respect to each of the Properties.
Further, upon Lessor's request, Lessee agrees to execute and acknowledge a
termination of lease and/or quit claim deed in recordable form with respect to
each of the Properties to be held by Lessor until the expiration or sooner
termination of the Lease Term.
51. No Brokerage. Lessor and Lessee represent and warrant to each other
that they have had no conversation or negotiations with any broker concerning
the leasing of the Properties. Each of Lessor and Lessee agrees to protect,
indemnify, save and keep harmless the other, against and from all liabilities,
claims, losses, costs, damages and expenses, including attorneys' fees, arising
out of, resulting from or in connection with their breach of the foregoing
warranty and representation.
52. Waiver of Jury Trial and Punitive, Consequential and Indirect Damages.
LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE
RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES
PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF
THE PARTIES
49
HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING
OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LESSOR AND LESSEE,
LESSEE'S USE OR OCCUPANCY OF ANY OF THE PROPERTIES, AND/OR ANY CLAIM FOR INJURY
OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS WAIVER BY THE PARTIES
HERETO OF ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND
IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, LESSOR AND LESSEE HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO SEEK
PUNITIVE, CONSEQUENTIAL AND INDIRECT DAMAGES FROM THE OTHER OR ANY OF THE
OTHER'S AFFILIATES, OFFICERS, DIRECTORS, MEMBERS AND EMPLOYEES OR THEIR
SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE
OTHER OR ANY OF THE OTHER'S AFFILIATES, OFFICERS, DIRECTORS, MEMBERS OR
EMPLOYEES OR THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS LEASE OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED
HERETO, EXCEPT THAT SUCH WAIVER ON THE PART OF LESSOR SHALL NOT BE DEEMED TO
LIMIT, REDUCE OR PRECLUDE IN ANY WAY LESSOR'S REMEDIES PURSUANT TO SECTION 23
HEREOF. THE RECIPROCAL WAIVERS BY LESSOR AND LESSEE OF ANY RIGHT EITHER MAY HAVE
TO SEEK PUNITIVE, CONSEQUENTIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE
PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
53. Reliance By Environmental Insurer and Lender. (a) Lessee acknowledges
and agrees that Environmental Insurer may rely on the representations,
warranties and covenants set forth in Section 16 of this Lease, that
Environmental Insurer is an intended third-party beneficiary of such
representations, warranties and covenants and that Environmental Insurer shall
have all rights and remedies available at law or in equity as a result of a
breach of such representations, warranties and covenants, including to the
extent applicable, the right of subrogation.
(b) Lessee acknowledges and agrees that Lender may rely on all of the
representations, warranties and covenants set forth in this Lease, that Lender
is an intended third-party beneficiary of such representations, warranties and
covenants and that Lender shall have all rights and remedies available at law or
in equity as a result of a breach of such representations, warranties and
covenants, including to the extent applicable, the right of subrogation.
54. Document Review. In the event Lessee makes any request upon Lessor
requiring Lessor, Lender or the attorneys of Lessor or Lender to review and/or
prepare (or cause to be reviewed and/or prepared) any documents, plans,
specifications or other submissions in connection with or arising out of this
Lease, then Lessee shall reimburse Lessor or its designee promptly upon Lessor's
demand therefor for all reasonable out-of-pocket costs and expenses incurred by
Lessor in connection with such review and/or preparation.
50
55. Substitution. A. Subject to the fulfillment of all of the conditions
set forth in the following subsection B, Lessee shall have the right to deliver
a rejectable offer to Lessor (each, a "Rejectable Substitution Offer") to
substitute a Substitute Property for a Property if:
(i) the terms of Section 21.B of this Lease permit such substitution
(each, a "Casualty/Condemnation Substitution"); or
(ii) the terms of Section 23.A(ix)(1) of this Lease permit such
substitution (each, a "FCCR Substitution").
From and after the third anniversary of the Effective Date and subject to
the fulfillment of all of the conditions set forth in the following subsection
B, Lessee shall also have a one time right to deliver a Rejectable Substitution
Offer to substitute a Substitute Property for a Property if the Fixed Charge
Coverage Ratio (with the definitions of Section 8.A being deemed to be modified,
as contemplated by Section 23.A(ix), to provide for a calculation of a "Fixed
Charge Coverage Ratio" for the Property to be replaced only) for the Property to
be replaced is less than 1:1 for the FCCR Period (an "Uneconomic Substitution").
Each Rejectable Substitution Offer shall identify the proposed Substitute
Property in reasonable detail and contain a certificate executed by a duly
authorized officer of Lessee pursuant to which Lessee shall certify that in
Lessee's good faith judgment such proposed Substitute Property satisfies as of
the date of such notice, or will satisfy as of the date of the closing of such
substitution, all of the applicable conditions to substitution set forth in this
Section 55. Lessee agrees to deliver to Lessor all of the diligence information
and materials contemplated by the provisions of Section 55.B of this Lease
within 30 days after the delivery to Lessor of a Rejectable Substitution Offer.
Lessor shall have 90 days from the delivery of a Rejectable Substitution
Offer notice satisfying the requirements of the preceding paragraph to deliver
to Lessee written notice of its election to either accept or reject the
Rejectable Substitution Offer. Lessor's failure to deliver such notice within
such time period shall be deemed to constitute Lessor's acceptance of the
Rejectable Substitution Offer. If the Mortgage corresponding to the Property to
be replaced is still outstanding, any rejection of the Rejectable Substitution
Offer by Lessor shall not be effective unless it is consented to in writing by
Lender. If Lessor accepts the Rejectable Substitution Offer or is deemed to
have accepted the Rejectable Substitution Offer or if Lender does not consent in
writing to any rejection of the Rejectable Substitution Offer by Lessor, then
Lessee shall complete such substitution, subject, however, to the satisfaction
of each of the applicable terms and conditions set forth in this Section 55.
If Lessor rejects the Rejectable Substitution Offer and Lessee has
satisfied the applicable requirements for substitution set forth in this Section
55, and such rejection is consented to by Lender, then:
51
(X) if such rejected Rejectable Substitution Offer was made with
respect to a Casualty/Condemnation Substitution, the provisions of Section
21.E and the last paragraph of Section 21.B shall be applicable;
(Y) if such rejected Rejectable Substitution Offer was made with
respect to a FCCR Substitution, then the breach of the Aggregate Fixed
Charge Coverage Ratio requirement which was the basis of such Rejectable
Substitution Offer shall be deemed waived; and
(Z) if such rejected Rejectable Substitution Offer was made with
respect to a Uneconomic Substitution, this Lease shall terminate with
respect to the Property which Lessee proposed to replace on the next
scheduled Base Monthly Rental payment date (the "Early Substitution
Termination Date") provided Lessee has paid to Lessor all Base Annual
Rental, Additional Rental and all other sums and obligations then due and
payable under this Lease as of such Early Substitution Termination Date.
On the Early Substitution Termination Date, and provided Lessee shall
have paid to Lessor all Base Annual Rental, Additional Rental and other
sums and obligations then due and payable under this Lease as of the Early
Substitution Date:
(i) the Base Annual Rental then in effect shall be reduced by an
amount equal to the product of (x) the Applicable Rent Reduction Percentage
for the Property which Lessee proposed to replace, and (y) the Base Annual
Rental then in effect; and
(ii) all obligations of Lessor and Lessee shall cease as of the Early
Substitution Termination Date with respect to such Property; provided,
however, Lessee's obligations to Lessor with respect to such Property under
any indemnification provisions of this Lease with respect to such Property
(including, without limitation, Sections 16 and 19 of this Lease) and
Lessee's obligations to pay any sums (whether payable to Lessor or a third
party) accruing under this Lease with respect to such Property prior to the
Early Substitution Termination Date shall survive the termination of this
Lease with respect to such Property or otherwise. This Lease shall,
however, continue in full force and effect with respect to all other
Properties.
B. The substitution of a Substitute Property for a Property
pursuant to the preceding subsection A shall be subject to the fulfillment
of all of the following terms and conditions:
(i) The Substitute Property must:
(1) be a Permitted Facility, in good condition and repair,
ordinary wear and tear excepted, and located in the same state as the
Property to be replaced or in another state acceptable to Lessor in
Lessor's sole discretion;
52
(2) have a Fixed Charge Coverage Ratio (with the definitions of
Section 8.A being deemed to be modified, as contemplated by Section
23.A(ix), to provide for a calculation of a "Fixed Charge Coverage
Ratio" for the Substitute Property only) for the FCCR Period of not
less than the greater of (X) 1.25:1 or (Y) the Fixed Charge Coverage
Ratio for the Property to be replaced for such FCCR Period; provided
that, with respect to each FCCR Substitution, the Fixed Charge
Coverage Ratio for the Substitute Property for such FCCR Period must
also be high enough (after taking into account any other substitutions
for Properties which are being consummated simultaneously therewith)
to result in a cure of the breach of the Aggregate Fixed Charge
Coverage Ratio requirement (it being understood and agreed that the
determination of the Fixed Charge Coverage Ratio for the Substitute
Property shall be based on an assumption that the portion of the
Operating Lease Expense for the Substitute Property which would be
attributable to this Lease would be the same as the portion of the
Operating Lease Expense attributable to this Lease for the Property to
be replaced as determined in accordance with the provisions of Section
23.A(ix));
(3) have a fair market value no less than the greater of the then
fair market value of the Property being replaced or the fair market
value of such Property as of the Effective Date (in each case,
determined without regard to this Lease, but assuming that while this
Lease has been in effect, Lessee has complied with all of the terms
and conditions of this Lease), as reasonably determined by Lessor, and
consented to by Lender, utilizing the same valuation method as used in
connection with the closing of the transaction described in the Sale-
Leaseback Agreement, which was based upon the sum of (x) the fair
market value of the land comprising such Property and (y) the
replacement cost of the improvements located thereon;
(4) have improvements which have a remaining useful life
substantially equivalent to, or better than, that of the improvements
located at the Property to be replaced; and
(5) be conveyed to Lessor (or, if directed by Lessor, to Lessor
and a person designated to acquire the remainderman interest) by
special or limited warranty deed, free and clear of all liens and
encumbrances, except such matters as are reasonably acceptable to
Lessor (the "Substitute Property Permitted Exceptions");
(ii) Lessor shall have inspected and approved the Substitute Property
utilizing Lessor's customary site inspection and underwriting approval
criteria. Lessee shall have reimbursed Lessor and Lender for all of their
reasonable costs and expenses incurred with respect to such proposed
substitution, including, without limitation, Lessor's third-party and/or
in-house site inspectors' costs and expenses with respect to the proposed
Substitute Property. Lessee shall be solely responsible for the payment of
all costs and expenses resulting from such proposed substitution,
regardless of whether such substitution is
53
consummated, including, without limitation, the cost of title insurance and
endorsements for both Lessor and Lender, survey charges, stamp taxes,
mortgage taxes, transfer fees, escrow and recording fees, the cost of
environmental policies or endorsements to the Environmental Policies as
applicable, income and transfer taxes imposed on Lessor as a result of such
substitution and the reasonable attorneys' fees and expenses of counsel to
Lessee, Lessor and Lender;
(iii) Lessor shall have received a preliminary title report and
irrevocable commitment to insure title by means of an ALTA extended
coverage owner's policy of title insurance (or its equivalent, in the event
such form is not issued in the jurisdiction where the proposed Substitute
Property is located) for the proposed Substitute Property issued by Title
Company and committing to insure Lessor's good and marketable title in the
proposed Substitute Property, subject only to the Substitute Property
Permitted Exceptions and containing endorsements substantially comparable
to those required by Lessor at the Closing (as defined in the Sale-
Leaseback Agreement) and Lender shall have received such title report and
irrevocable commitment to insure its first priority lien encumbering the
proposed Substitute Property as Lender shall reasonably require;
(iv) Lessor shall have received a current ALTA survey of the
proposed Substitute Property, the form of which shall be comparable to
those received by Lessor at the Closing and sufficient to cause the
standard survey exceptions set forth in the title policy referred to in the
preceding subsection to be deleted;
(v) Lessor shall have received an environmental insurance policy
with respect to the proposed Substitute Property, or to the extent
applicable, an endorsement to the Environmental Policies, the form and
substance of which shall be satisfactory to Lessor in its sole discretion;
(vi) Lessee shall deliver, or cause to be delivered, with respect
to Lessee and the Substitute Property, opinions of Counsel (as defined in
the Sale-Leaseback Agreement) in form and substance comparable to those
received at Closing (but also addressing such matters unique to the
Substitute Property as may be reasonably required by Lessor);
(vii) no Event of Default shall have occurred and be continuing
under any of the Sale-Leaseback Documents (other than the Event of Default
under Section 23.A(ix) if such Event of Default is the reason for the
substitution);
(viii) Lessee shall have executed such documents as may be reasonably
required by Lessor as a result of such substitution, including amendments
to this Lease and the memorandum of this Lease (the "Substitute
Documents"), all of which documents shall be in form and substance
reasonably satisfactory to Lessor and Lessee;
(ix) the representations and warranties set forth in the Substitute
Documents, this Lease and the Sale-Leaseback Agreement applicable to the
proposed Substitute Property
54
shall be true and correct in all material respects as of the date of
substitution, and Lessee shall have delivered to Lessor an officer's
certificate certifying to that effect;
(x) Lessee shall have delivered to Lessor certificates of insurance
showing that insurance required by the Substitute Documents is in full
force and effect;
(xi) Lessor shall have obtained an endorsement to the policy of
residual value insurance issued to Lessor and Lender in connection with the
transaction described in the Sale-Leaseback Agreement with respect to the
proposed Substitute Property, which endorsement shall be in form and
substance reasonably satisfactory to Lessor and Lender; and
(xii) Lender shall have consented to the substitution of the proposed
Substitute Property.
C. Upon satisfaction of the foregoing conditions set forth in Section
55.B and provided Lessor has accepted the Rejectable Substitution Offer:
(i) the proposed Substitute Property shall be deemed substituted
for the Property to be replaced;
(ii) the Substitute Property shall be referred to herein as a
"Property" and included within the definition of "Properties";
(iii) the Substitute Documents shall be dated as of the date of the
substitution; and
(iv) Lessor shall convey the Property to be replaced to Lessee or a
designee of Lessee "as-is" by special warranty deed, subject to all matters
of record (except for the Mortgage corresponding to the Property to be
replaced and any other consensual liens granted by Lessor other than those
granted by Lessor at the request of Lessee), and without representation or
warranty.
D. Notwithstanding the foregoing, nothing in this Section 55 shall be
construed as limiting or otherwise adversely affecting the representations,
warranties, covenants and characterizations set forth in Lease, including,
without limitation, those provisions set forth in Section 3 of this Lease.
56. Rejectable Purchase Offer. A. If Lessor shall have given Lessee
notice of a breach of the Aggregate Fixed Charge Coverage Ratio requirement
under this Lease, Lessee shall have the right to deliver a rejectable offer to
Lessor (a "Rejectable Purchase Offer") to purchase such of the Properties as is
contemplated by Section 23.A(ix)(2), subject to the fulfillment of all of the
conditions set forth in this Section 56.
55
Lessor shall have 90 days from the delivery of the Rejectable Purchase
Offer notice to deliver to Lessee written notice of its election to either
accept or reject the Rejectable Purchase Offer. Lessor's failure to deliver
such notice within such time period shall be deemed to constitute Lessor's
acceptance of the Rejectable Purchase Offer. If the Mortgage corresponding to
the Property to be purchased is still outstanding, any rejection of the
Rejectable Purchase Offer by Lessor shall not be effective unless it is
consented to in writing by Lender. If Lessor accepts the Rejectable Purchase
Offer or is deemed to have accepted the Rejectable Purchase Offer or if Lender
does not consent in writing to any rejection of the Rejectable Purchase Offer by
Lessor, then Lessee shall complete such purchase, subject, however, to the
satisfaction of each of the terms and conditions set forth in the following
subsection B.
If Lessor rejects the Rejectable Purchase Offer pursuant to the previous
paragraph, and such rejection is consented to by Lender, then, the breach of the
Aggregate Fixed Charge Coverage Ratio requirement which was the basis of such
Rejectable Purchase Offer shall be deemed waived.
B. The purchase of a Property pursuant to the preceding subsection A
shall be subject to the fulfillment of all of the following terms and
conditions:
(i) no Event of Default shall have occurred and be continuing under
any of the Sale-Leaseback Documents (other than the Event of Default under
Section 23.A(ix));
(ii) Lessee shall have delivered to Lessor a certificate executed by
a duly authorized officer of Lessee certifying to Lessor that Lessee does
not own any properties which are available for substitution and which meet
the applicable requirements for substitution set forth in Section 55;
(iii) the purchase of such Property (together with any other
Properties which are being purchased simultaneously therewith) must result
in a cure of the breach of the Aggregate Fixed Charge Coverage Ratio
requirement;
(iv) Lessee shall have paid to Lessor the Subject Purchase Price (as
defined below), together with all Base Annual Rental, Additional Rental and
other sums and obligations then due and payable under this Lease as of the
date of the closing of such purchase;
(v) Lessee shall be solely responsible for the payment of all costs
and expenses resulting from such proposed purchase, regardless of whether
the purchase is consummated, including, without limitation, to the extent
applicable, the cost of title insurance and endorsements, including, survey
charges, stamp taxes, mortgage taxes, transfer taxes and fees, escrow and
recording fees, taxes imposed on Lessor as a result of such purchase, the
attorneys' fees of Lessee and the reasonable attorneys' fees and expenses
of counsel to Lessor and Lender; and
56
(vi) the date of the closing of such purchase shall occur on the next
scheduled Base Monthly Rental payment date following Lessor's acceptance
(or deemed acceptance) of the Rejectable Purchase Offer, but in no event
later than 30 days after the date of acceptance (or deemed acceptance) by
Lessor of such Rejectable Purchase Offer.
On the date of the closing of the purchase of a Property pursuant to this
Section (the "Rejectable Purchase Closing Date"), subject to satisfaction of the
foregoing conditions:
(1) this Lease shall be deemed terminated with respect to such
Property only, but this Lease shall continue in full force and effect with
respect to all of the other Properties; provided, however, such termination
shall not limit Lessee's obligations to Lessor with respect to such
Property under any indemnification provisions of this Lease (including,
without limitation, Sections 16 and 19 of this Lease) and Lessee's
obligations to pay any sums (whether payable to Lessor or a third party)
accruing under this Lease with respect to such Property prior to the
Rejectable Purchase Closing Date shall survive the termination of this
Lease;
(2) the Base Annual Rental shall be reduced for each such Property by
an amount equal to the product of (x) the Applicable Rent Reduction
Percentage for such Property and (y) the Base Annual Rental then in effect;
and
(3) Lessor shall convey such Property to Lessee "as-is" by special
warranty deed, subject to all matters of record (except for the Mortgage
corresponding to the Property to be replaced and any other consensual liens
granted by Lessor other than those granted by Lessor at the request of
Lessee), and without representation or warranty.
For purposes of this Section 56, the term "Subject Purchase Price"
shall mean the greater of:
(i) the Fair Market Value of the Property being purchased, or
(ii) the product of the amount specified on Schedule I attached
----------
hereto which corresponds to the time period during which such purchase
occurs multiplied by the Purchase Price for the Property being
purchased.
The term "Fair Market Value" means the fair market value of the
Property being purchased determined as follows: Lessor shall cause an
appraisal of the fair market value of such Property, including any
additions or renovations thereto, to be made by an independent MAI
appraiser (the "Section 56 Lessor Appraisal") within 20 days after notice
of the Rejectable Purchase Offer is given to Lessor. In determining the
fair market value of such Property, the appraiser shall utilize the cost,
income and sales comparison approaches to value. In utilizing the income
approach, the appraiser shall determine the "leased fee" value of such
Property, which shall be arrived at by considering (i) the income that
would be produced by this Lease through the end of the applicable Lease
Term, and (ii) any other factors relating to such approach which the
appraiser shall deem
57
relevant in his sole discretion, including, without limitation, determining
the residual value of such Property following the expiration of the Lease
Term. The highest amount which results from the calculation of each of the
cost approach, the income approach, and the sales comparison approach, all
as determined in accordance with the provisions of this Section 56, shall
constitute the "Fair Market Value" of such Property for purposes of this
Section 56. Lessee shall have 5 Business Days from its receipt of the
Section 56 Lessor Appraisal to either accept or reject such appraisal,
provided that, Lessee's failure to reject the Section 56 Lessor Appraisal
within such 5 Business Day period shall be deemed to be an acceptance
thereof. If Lessee shall accept or be deemed to have accepted the Section
56 Lessor Appraisal, the "Fair Market Value" of such Property for purposes
of this Section 56 shall be the amount set forth in the Section 56 Lessor
Appraisal as determined above. If Lessee shall reject the Section 56 Lessor
Appraisal within such 5 Business Day period, then Lessee shall within 20
days after such rejection cause an appraisal of the Fair Market Value of
such Property, including any additions or renovations thereto, to be made
by an independent MAI appraiser selected by Lessee utilizing the
methodology specified above (the "Section 56 Lessee Appraisal"). Lessor
shall have 5 Business Days from its receipt of the Section 56 Lessee
Appraisal to either accept or reject such appraisal, provided that,
Lessor's failure to reject the Section 56 Lessee Appraisal within such 5
Business Day period shall be deemed to be an acceptance thereof. If Lessor
shall accept or be deemed to have accepted the Section 56 Lessee Appraisal,
the "Fair Market Value" of such Property for purposes of this Section 56
shall be the amount set forth in the Section 56 Lessee Appraisal as
determined above. If Lessor shall reject the Section 56 Lessee Appraisal
within such 5 Business Day period, then the appraisers who conducted the
Section 56 Lessor Appraisal and the Section 56 Lessee Appraisal shall be
directed to jointly select, within 5 Business Days thereafter, a third
independent MAI appraiser who shall, within 15 days after selection, select
the amount set forth (as determined above) in either the Lessor Appraisal
or the Lessee Appraisal as the Fair Market Value of such Property. If the
two appraisers are unable to agree on the third appraiser within such 5
Business Day period, the third appraiser shall be selected by the American
Arbitration Association. Lessee shall be obligated to pay the costs of all
three appraisers and the American Arbitration Association (to the extent
applicable).
C. Notwithstanding the foregoing, nothing in this Section 56 shall be
construed as limiting or otherwise adversely affecting the representations,
warranties, covenants and characterizations set forth in Lease, including,
without limitation, those provisions set forth in Section 3 of this Lease.
57. State Specific Provisions. The provisions and/or remedies which are
set forth on Schedule II shall be deemed a part of and included within the terms
-----------
and conditions of this Lease.
58. Property Specific Provisions. With respect to the Property located at
0000 XxXxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxx, a portion of such Property (the
"Patio Portion") is leased by Lessor from XxXxxxxxx Ranch Property Owners
Association ("XxXxxxxxx Ranch") pursuant to a Lease Agreement dated as of June
18, 1979 between XxXxxxxxx Ranch and Lessee
58
(as successor to Paragon Restaurant Group, Inc. (formerly Vicorp Specialty
Restaurants, Inc.) which was the successor to Foodmaker, Inc.) (the "Patio
Lease"), which Patio Lease has been assigned by Lessee to Lessor as of the
Effective Date. Notwithstanding anything to the contrary contained herein,
Lessor and Lessee acknowledge and agree that, with respect to the Patio Portion,
this Lease is a sublease of the Patio Portion and, during the Lease Term, Lessee
shall be responsible for complying with all of the obligations of the lessee
under the Patio Lease, including, without limitation, the payment of all rent
and other sums required to be paid to the lessor under the Patio Lease. Nothing
in this Section 58 shall be construed as limiting or otherwise adversely
affecting the representations, warranties, covenants and characterizations set
forth in Lease, including, without limitation, those provisions set forth in
Section 3 of this Lease.
59
IN WITNESS WHEREOF, Lessor and Lessee have entered into this Lease as of
the date first above written.
LESSOR:
CH RESTAURANT PROPERTY, LLC,
a Delaware limited liability company
By CH Restaurant Equity, LLC, a Delaware
limited liability company, its member
By: /s/ Xxxxx Xxxxxxx
--------------------------------------
Xxxxx Xxxxxxx
Its Vice President
LESSEE:
CHART HOUSE, INC., a Delaware corporation
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------------
Xxxxxxx Xxxxxxxx
Its Executive Vice President and Chief
Financial Officer
Lessee's Tax Identification Number: 00-0000000
