EXHIBIT 10.34
SECOND AMENDMENT TO LEASE
State of Georgia
County of DeKalb
THIS SECOND AMENDMENT TO LEASE (the "Agreement") is made and entered into
this 16th day of July, 1999 by and between Hallwood 95 L.P., a Delaware Limited
Partnership, as successor in interest to Hallwood Real Estate Investors Fund IV
("Landlord"), and U.S. Franchise Systems, Inc. ("Tenant").
WITNESSETH:
WHEREAS, Landlord's predecessor in interest and Tenant have previously
entered into a Lease Agreement dated September 25, 1995 (the "Initial
Lease"), for the use and occupancy of certain premises by Tenant known as
Suite 250 (the "Premises") in the building located at 13 Corporate Square,
Atlanta, Georgia 30329 ("the Building"); and
WHEREAS, Landlord and tenant do hereby intend to amend and modify the Lease
as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. EFFECTIVE DATE. This Second Amendment to the Lease shall take effect
as of July 1, 1999, and shall continue in effect for the duration of
the said Amendment, that is until September 30, 2005 ("Term").
2. PREMISES. Effective July 1, 1999, the square footage under lease to
Tenant shall be increased from 10,083 rentable square feet to
approximately 15,852 rentable square feet which includes 10,083
rentable square feet of existing space and 5,769 rentable square feet
of expansion space as outlined on Exhibit "A" attached hereto and
incorporated herein.
3. EXTENDED TERM. The term of this Lease Amendment is hereby extended by
an additional five (5) years beginning October 1, 2000 and ending
September 30, 2005.
4. RENTAL. Tenant agrees to pay to Landlord monthly rental payments in
accordance with the following schedule:
Term Total Monthly Rent Due
7/1/1999 - 6/30/2000 $19,881.05
7/1/2000 - 6/30/2001 $20,676.29
7/1/2001 - 6/30/2002 $21,503.34
7/1/2002 - 6/30/2003 $22,363.48
7/1/2003 - 6/30/2004 $23,258.02
7/1/2004 - 6/30/2005 $24,188.34
7/1/2005 - 9/30/2005 $25,155.87
5. LEASEHOLD IMPROVEMENTS. Exhibit "B", attached hereto and made part
hereof.
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6. SIGNAGE. Provided that Tenant occupies no less than fifteen thousand
(15,000) rentable square feet of space in the Building, and local
ordinances permitting such hereinafter described exterior signage
without requiring a change in the name of the Building, Tenant shall
have the right to install exterior signage on Building 13 and to install
a monument sign outside the northeast entrance of Building 13 (the
"Signs"). The approved signs must be installed within one year from the
date Landlord delivers signage specifications to Tenant.
Landlord's specifications that Tenant must adhere to regarding the
sign(s), including but not necessarily limited to location, size, style,
color, length, width, etc., shall be communicated to Tenant from Landlord
using Landlord's best efforts within 60 days of the date this Lease
Amendment is executed by Landlord.
Tenant shall not commence installation of the sign(s) without
Landlord's prior written approval of all working drawings in connection
therewith, as well as Landlord's approval of contractors to be utilized
by Tenant to construct and install the sign(s). Any and all costs
associated with the sign(s) shall be the expense of Tenant. All cost of
operating and maintaining the sign(s) are also the responsibility of
Tenant. After installation, Tenant shall, at its expense, maintain the
sign(s) in good working order and condition.
In addition, Tenant shall obtain any and all building permits,
electrical permits and sign permits for the installation, operation and
maintenance of the sign(s), required by governmental authorities having
jurisdiction over the Building.
Tenant shall also provide satisfactory evidence to Landlord that the
property and liability insurance coverage, to be maintained by Tenant
and as required by the Lease, covers the sign.
Tenant also agrees that upon expiration or earlier termination of the
Lease, or if Tenant should occupy less than fifteen thousand (15,000)
rentable square feel in the Building, Tenant shall remove the Sign(s)
within sixty (60) days, Tenant shall pay any and all costs to remove
and dispose of the sign under Landlord's direction and to repair and
restore any areas of the Building and or Property requiring repair or
restoration as a result of the installation and/or removal of the sign.
7. BROKER. Tenant and Landlord represent and warrant to each other that
it has not entered into any agreement with, or otherwise had any dealings
with, any broker or agent in connection with the negotiations,
procurement or execution of this Second Amendment which could form the
basis of any claim by any such broker or agent for a brokerage fee or
commission, finder's fee or any other compensation of any kind or nature
in connection herewith. Tenant and Landlord shall and hereby agrees to,
indemnify, defend and hold the other harmless from all cost, expenses, or
liability for commissions or other compensation claimed by any broker or
agent with respect to the Lease and/or this Second Amendment which arise
out of any agreement or dealings, between Tenant or Landlord and any such
agent or broker. Hallwood Commercial Real Estate, LLC, has not acted as
agent for Tenant in his transaction.
8. CONFLICT OF TERMS. Except as expressly amended herein, all terms and
conditions in the Lease shall remain unchanged and in full force and
effect, and all capitalized terms not otherwise defined herein shall
have the meaning set forth in the Lease. In the event of any conflict
between the terms and conditions of the Lease and the terms and
conditions of this Agreement, the terms and conditions of this Agreement
shall control.
IN WITNESS WHEREOF, each party has caused this Amendment to Lease to be
executed by its authorized officer(s).
LANDLORD: TENANT:
HALLWOOD 95, L.P., U.S. Franchise Systems, Inc.
A Delaware Limited Partnership
Hallwood Commercial Real
Estate, LLC
BY: [ILLEGIBLE] BY: /s/ Neal K. Aronson
----------------------------- -----------------------------
TITLE: [ILLEGIBLE] TITLE: Exec. VP-CFO
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DATE: 7/11/99 DATE: July 6, 1999
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EXHIBIT "A"
PREMISES
[FLOOR PLAN]
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Exhibit "8"
LEASEHOLD IMPROVEMENTS
WORK LETTER AGREEMENT
Landlord and Tenant mutually agree as follows:
1. Definitions
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The terms defined in this paragraph, for purposes of this work letter
agreement, shall have the meanings specified herein, and in addition to the
terms defined herein, terms defined in the Lease of which this Agreement is
an Exhibit shall, for purposes of this work letter agreement, have the
meanings specified therein.
1.01 "Building Standard" means the quantity and quality of materials,
finishes and workmanship currently used in Building 13.
1.02 "Construction Documents" means the construction drawings, plans and
specification referred to in paragraph 2.02 below.
1.03 "Leasehold Improvements" mean the tenant improvements as
contemplated by the Construction Documents.
1.04 "Quality Licensed Contractors" means Contractor that is licensed in
the State of Georgia, with required insurance including but not
limited to Workmen's Compensation, Comprehensive General Liability,
Employer's Liability and Property Damage.
2. Approval and Construction Procedures.
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2.01 Tenant shall build improvements in the Premises pursuant to the
terms hereof and of the Lease and in the manner necessary to
satisfy its business requirements, in substantial compliance with
the Building Standards and applicable Code Requirements and in a
safe and efficient manner to conform with the existing structural,
electrical, plumbing, heating, ventilating and air conditioning
components of the Building.
Tenant shall submit to Landlord for approval floor plans of the
Premises as they are developed. Landlord shall review plans and
provide approvals and/or comments within five (5) business days
after receipt of the plans. Landlord acknowledges that Tenant will
hand deliver plans to Landlord for the purpose of reviewing and
discussing the plans in order to expedite approval. Approval will
not be unreasonably withheld and plans will not be disapproved for
items other than those, which are against local and/or state
codes or affecting the structural or architectural integrity of the
Premises.
The following shall apply to the construction of the Leasehold
Improvements.
(a) All work involved in the completion of Leasehold Improvements shall
be carried out by Tenant and its agents and contractors subject to
the reasonable review and approval by Landlord or its
representatives. Landlord shall cooperate with Tenant and its agents
and contractors to promote the efficient and expeditious completion
of the Leasehold Improvements; and
(b) Tenant agrees to construct or cause to be constructed the Leasehold
Improvements (i) in accordance with the Landlord Approved
Construction Documents, (ii) so as not to damage the structure,
exterior, mechanical systems, electrical system and plumbing of the
Building, and (iii) in compliance with all applicable governmental
or quasi-governmental laws, ordinances, rules and regulations.
(c) Tenant agrees to utilize Quality Licensed Contractors. Tenant shall
ensure that Contractors are insured and bonded.
(d) Tenant and Tenant's Contractor shall adhere to the Contractor Rules
and Regulations attached hereto as Exhibit C, during all phases of
improvements to the premises.
2.02 Upon completion of any work performed hereunder, Tenant shall
deliver to Landlord copies of all as built construction drawings,
shop drawings plans or specifications related to such work.
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Exhibit "B"
LEASEHOLD IMPROVEMENTS
WORK LETTER AGREEMENT-Page 2
2.03 Tenant shall hold Landlord harmless from any and all mechanic's or
materialman's lien claim(s) arising from the construction of the
Leasehold Improvements: if any such lien claim(s) are filed, Tenant
shall immediately cause all to be removed or obtain a bond insuring
over the effect of such lien(s) in the amount of 100% of the amount
of such lien(s) for the benefit of Landlord. If Tenant fails within
30 days of demand from Landlord to remove or bond over any such
lien(s) unless Tenant is disputing such lien(s) in good faith or
otherwise, to protect Landlord from any such loss, claim, expense,
cost or liability, Landlord may take such reasonable actions necessary
to do so and the cost of such actions shall be additional Rent due
Landlord under the Lease and immediately payable by Tenant.
3. ALLOWANCE.
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3.01 Tenant shall receive an allowance in an amount up to $73,491.00, to
apply against Tenant's obligation to pay for the Leasehold
improvements. Solely, tenant shall pay any portion of the Leasehold
Improvement Cost in excess of the amount of such allowance. Leasehold
Improvement Allowance must be used prior to December 31, 2000.
Tenant will be allowed to amortize 50% of any unused allowance monies
to reduce its monthly rental obligations from January 1, 2001 through
September 30, 2005. The maximum amount of unused allowance to be
amortized is $10,000. For example: If $20,000 is remaining as unused
allowance 50% or $10,000 shall be divided by the months remaining on
the lease term which is 57 months ($10,000 divided by 57 = $175.44)
and that amount shall be deducted each month from Tenant's lease
obligation. In no event shall Tenant's amortized rent deduction exceed
$10,000.
3.02 Tenant will be allowed to use up to $20,000.00 of the allowance for
cost associated with the relocation from Suite 140 in Building 13 to
Tenant's second floor premises, including but not limited to
installation of phones, computer or data equipment or cabling.
4 REIMBURSEMENT.
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Tenant may request the allowance after the improvements listed in
paragraph 5 below are complete by submitting to the Landlord the
following:
(a) A billing to the Landlord for the agreed allowance accompanied by
copies of actual paid contractor invoices.
(b) Signed lien waivers from the general contractor and his
subcontractors for the total work performed under the contract,
even if the contract amount is more than the agreed allowance.
Landlord reserves the right to inspect premises and provided all costs
are substantiated; Landlord shall reimburse Tenant within 30 days
after receipt of all of the above items thereof.
5. IMPROVEMENTS
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Improvements to the expansion area shall include, but not limited to, the
re-configuration of offices marked 1,2 and 3, in the expanded area. All
improvements shall be done in accordance with paragraphs 1 through 4 above.
EXHIBIT "B"
LEASEHOLD IMPROVEMENTS
WORK LETTER AGREEMENT -- Page 3
[FLOOR PLAN]
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EXHIBIT C
CONTRACTOR RULES & REGULATIONS
Any contractor, sub-contractor or employee of same shall abide by the
following guidelines. In the event these guidelines are not followed, it
shall be deemed as a breach of contract and will be the building manager's
discretion whether to continue or cancel the contract.
1. PARKING: Contractor and anyone in his employ shall park in areas
designated by the building manager.
2. THE WORK SITES: Work sites shall be kept clean and confined to the
area in which the work is being done unless the building manager gives
prior approval.
3. COMMON AREA: Shall be kept clean at all times, and no material shall be
left in a common area for more than 15 minutes. Contractor at his sole
expense will immediately repair any damage to any common area. Should
these repairs not be made, Hallwood will have the area repaired and
deduct the cost of said repair from the contract amount.
4. USE OF BUILDING FACILITIES: Contractor employees will have use of the
building restrooms. These areas are not to be used as a tool clean-up
area; they are to be left in a clean and orderly condition. Janitor's
closets can be used to get water and clean equipment, but must be
cleaned each time it is used. If these areas are not kept clean,
contractor will lose access to these areas.
5. ACCESS: Should special access to the building be needed, the
contractor shall give the manager at least 48 hours written notice.
6. UTILITY INTERRUPTION: Should there be a required utility interruption,
the contractor shall give the building manager at least 48 hours
written notice. Should this be an accidental interruption, the
contractor will immediately repair the interruption. Should these
repairs not be made in an expeditious manner, Hallwood will make the
needed repairs and deduct the cost of said repairs from the contract
amount.
7. WORKERS ON SITE: Contractor employees and sub-contractors shall
confine their activities to the work area as much as possible. There
will be no loitering in the common areas or building office.
8. TELEPHONE: The building manager's telephone will not be made available
for your use. Should you have the need for direct contact with the job
site, other arrangements should be made.
9. MATERIALS: Any materials taken out of a space during demolition, not
scheduled for reinstallation in that space, will remain the property
of the building and shall be placed in storage or removed from the
site by the contractor as directed by the manager.
10. VACANT SPACE: There will be no removal of material of any kind, from
any vacant space in the building for use somewhere else, without
written consent from the building manager.
11. TENANT DISRUPTIONS: Any activity that is excessively noisy, (ram-set,
hammer drills, saws, concrete cutting, screw guns, coring, etc.) will
be done after normal business hours and scheduled with the building
manager.
12. CHANGES IN THE WORK: Any change in the scope of work, whether it affects
the contract amount or not, must go through the building manager where
a change order will be initiated. No change in the work will be
accepted without a signed change order.
13. DUMPSTER: Prior to setting any container used to dispose of
construction debris, approval must by given by the building manager.
Steps must be taken by the contractor not to allow said container to
damage parking lot or any area it might occupy. Should such damage
occur, it shall be repaired at the sole cost of the contractor in a
timely manner or Hallwood will repair such damage and deduct cost of
repair from contract amount.
14. QUALITY OF WORK: Hallwood will not accept any work that is not of the
highest quality. All material will be specified in bid documents or in
the absence of any specifications, will be of highest quality.
Craftsmanship will also be of highest quality. Any work not meeting
Hallwood's quality standard will not be accepted and will be re-done at
the contractor's sole expense prior to final payment.
15. HEALTH AND SAFETY PROGRAMS: Contractor agrees to abide by all the
regulations imposed by Hallwood with respect to "Hazard Communication",
"Lockout/Tagout", "Health and Safety" or any other program in place
at the time. Contractor also agrees to train his employees in all
proper procedures required by these programs.
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16. MECHANICAL: In the event that there are no mechanical prints or
specifications attached to the bid document, the following
language shall apply to all work. In the event of a conflict
between this language and the construction documents the
construction documents shall govern.
Contractor agrees to provide sufficient supply and return air,
heating and air conditioning to all usable areas covered by this
contract. This shall include, but not limited to, all labor,
fire dampers, controls, ducts, supply and return registers
heating elements, cooling coils, hangers, filters or any other
items required to adequately condition the space equal to or
better than building standard conditions. Contractor shall air
balance the system to provide proper air flow in accordance with
all "ASHRAE", SMACNA", and "AABC" guidelines. Contractor shall
keep all filters cleaned during construction and replace with new
filters upon completion and prior to delivery of space to owner.
In no event shall more than 5 lineal feet of flex duct be used
in any single run.
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