EXHIBIT 16(b)(4)
MASTER LEASE
THIS MASTER LEASE (this "Lease") is made as of May 11, 2001 (the
"Effective Date"), by and between ZUNO PROPERTY LLC, a Delaware limited
liability company ("Lessor"), whose address is c/o U.S. Realty Advisors, LLC,
1370 Avenue of the Americas, New York, New York 10019, and SL PROPERTIES,
INC., a Massachusetts corporation ("Lessee"), whose address is 100 Charles
Park Road, West Roxbury, Massachusetts 02132.
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:
"ACKNOWLEDGEMENT" means the Acknowledgement of Master Lease
Assignment and Subordination, Nondisturbance and Attornment Agreement dated
as of the date of this Lease among Lessor, Lessee, Lender and Remainderman. A
duplicate original Acknowledgement will be executed and recorded in the
applicable real property records for each Property.
"ADA" has the meaning set forth in Section 16.C.
"ADDITIONAL RENTAL" has the meaning set forth in Section 5.C.
"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.
"APPROVED INSTITUTION" means either (i) Fleet National Bank or (ii)
any other domestic federal or state charted commercial bank located in any of
the cities listed on the attached SCHEDULE III and having, at the time of
selection, (i) a long-term deposit or long-term unsecured debt rating of at
least AA or its equivalent issued by Standard & Poors Rating Group, Moody's
Investors Service, Inc., any successor to such agencies or any other
nationally recognized credit rating agency, and (ii) combined capital and
surplus in excess of $100,000,000.00.
"BASE ANNUAL RENTAL" means $2,741,633.40.
"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 (other than a
Saturday and Sunday).
"CODE" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101
ET SEQ., as amended.
"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.
"DEFAULT RATE" means 18% 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.
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"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.
"EVENT OF DEFAULT" has the meaning set forth in Section 23.
"EXTENDED TERM" means the period subsequent to the expiration of the
Primary Term which this Lease is actually in effect.
"FCCR LETTER OF CREDIT" shall have the meaning set forth in Section
23.A(ix) of this Lease.
"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 57.A.
"FIXED CHARGE COVERAGE RATIO" has the meaning set forth in Section
57.B(i)(2).
"FRANCHISE FINANCE" means Franchise Finance Corporation of America,
a Maryland corporation, and its successors and assigns.
"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.
"GUARANTOR" means Uno Restaurant Corporation, 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, substance, solid waste, or related material, or any pollutant or
contaminant; (ii) radon gas, asbestos in any
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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 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.
"LENDER" means FFCA Funding 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 Maryland
corporation.
"LESSEE ENTITIES" means, collectively, Lessee and Permitted Lessees
and all Affiliates of Lessee and Permitted Lessees.
"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, attorneys' fees, court costs and other costs of defense).
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"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
net worth or operation of Lessee, Guarantor or any of the Properties,
including, without limitation, the operations of any of the Properties as a
Permitted Facility and/or the value of any of the Properties, or (ii)
Lessee's ability to perform its obligations under this Lease and the other
Sale-Leaseback Documents.
"MATURITY DATE" means June 1, 2021.
"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
deeds to secure debt, 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 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.
"NOTICES" means, when used herein, written notice.
"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 (as intended beneficiary or intended
third party beneficiary) of, (2) Lessor; provided, however, the term Other
Agreements shall not include this Lease, the other Sale-Leaseback Documents,
agreements between and among institutional lenders and one or more of the
Lessee Entities, the Security Deposit Letter of Credit and FCCR Letter of
Credit.
"PARTICIPATION" means the granting of any participations in any
document evidencing loan obligations or any or all servicing rights with
respect thereto.
"PERMITTED FACILITY" means a Pizzeria Uno Chicago Bar & Grill
restaurant, other nationally or regionally recognized concepts owned by
Lessee or other restaurant concept of a nationally or regionally recognized
owner/operator; provided, however, that at least 9 of the Properties shall be
operated as Pizzeria Uno Chicago Bar & Grill restaurants or another
nationally or regionally recognized restaurant concept operated by Lessee and
approved by Lessor and Lender.
"PERMITTED SUBLEASES" means the master subleases of even date
herewith of all the Properties by Lessee, as sublessor, to the Permitted
Sublessees, as sublessees.
"PERMITTED SUBLESSEE" or "PERMITTED SUBLESSEES" means, individually
or collectively, as the context may require, Franklin Mills Pizzeria, Inc., a
Pennsylvania corporation, Uno Restaurants, Inc., a Massachusetts corporation,
Uno of Smithtown, Inc., a New York corporation, Uno of Smoketown, Inc., a
Virginia corporation, Uno of Gurnee Mills, Inc., an Illinois
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corporation, Plizzettas of Burlington, Inc., a Vermont corporation, and Uno
of Tennessee, Inc., a Tennessee corporation, or their successors or assigns.
"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 (excluding inventory)
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, merchandise shelving, 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, 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.
"PRIMARY TERM" means the period commencing on the Effective Date and
expiring on May 31, 2021.
"PROPERTIES" means, collectively, the parcels of real estate
described by address, Lessor Number and Unit Number in EXHIBIT A attached
hereto as the same may be modified from time to time to reflect removed and
substituted Properties and legally described in EXHIBIT A-1 attached hereto
as the same may be modified from time to time to reflect removed and
substituted Properties, all rights, privileges and appurtenances associated
therewith, and all buildings, structures, fixtures and other improvements now
or hereafter located on such real estate (excluding Personalty and inventory).
"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 the Sale-Leaseback Agreement.
"QUESTIONNAIRES" means the environmental questionnaires completed by
Lessee with respect to each of the Properties 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
58.A.
"REJECTABLE SUBSTITUTION OFFER" has the meaning set forth in Section
57.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, except
for De Minimis Amounts.
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"REMAINDERMAN" means PiOne 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 legally described in EXHIBIT A-1 attached hereto and all
rights, privileges and 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 Sublessees with
respect to the Properties.
"SALE-LEASEBACK DOCUMENTS" means the Sale-Leaseback Agreement, this
Lease, the Memorandum, the Guaranty, Security Deposit Letter of Credit, FCCR
Letter of Credit, the Acknowledgement 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, 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 57, 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 pursuant to Environmental Law 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.
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"TITLE COMPANY" means Lawyers Title Insurance Corporation, 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.
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 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.
B. Lessor 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 this 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.
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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 this 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 support the intent of the
parties that this Lease is a unitary, 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.
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 May 31, 2021, unless
terminated sooner as provided in this Lease and as may be extended for four
additional successive 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, OTHER PAYMENTS AND SECURITY DEPOSIT. 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. 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.
C. On the Effective Date, Lessee shall deliver to Lessor a letter of
credit in the amount of $1,000,000.00 (the "Security Deposit") naming Lessor,
or at Lessor's direction, Lender, as beneficiary, issued by an Approved
Institution, permitting partial draws thereon, and otherwise in the form of
Exhibit B, attached hereto (the "Security Deposit Letter of Credit"). The
Security Deposit Letter of Credit shall be held by Lessor as security for the
performance of Lessee's obligations under this Lease. The Security Deposit
Letter of Credit is not an advance rental deposit or a measure of Lessor's
damages in the case of Lessee's default. Upon each occurrence of an Event of
Default, Lessor may draw on the Security Deposit Letter of Credit and use all
or a part of the proceeds to pay delinquent payments due under this Lease,
and the cost of any damage, injury, expense or liability caused by such Event
of Default, without prejudice to any other remedy provided in this Lease. If
the Security Deposit Letter of Credit is ever drawn
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upon by Lessor, Lessee, at Lessor's option, shall either pay to Lessor on
demand in immediately available funds the amount so drawn to be held as part
of the Security Deposit or within 5 days after such draw, cause the Security
Deposit Letter of Credit to be restored to its original amount. The Security
Deposit Letter of Credit shall be renewed annually by Lessee at least 30 days
prior to its scheduled expiration. If Lessee fails to renew the Security
Deposit Letter of Credit, timely, and such failure continues for 5 days after
written notice from Lessor, then an Event of Default shall be deemed to have
occurred and, in addition to any other remedies available to Lessor under
this Lease, Lessor may draw upon the Security Deposit Letter of Credit, and
retain amounts drawn as the Security Deposit. Provided an Event of Default
shall not have previously occurred, the Security Deposit Letter of Credit
shall be returned to Lessee within 30 days after Lessee makes the Base
Monthly Rental payment scheduled to be paid on January 1, 2007. Lessor shall
be released from any obligation with respect to the Security Deposit and the
Security Deposit Letter of Credit upon the transfer of this Lease, the
Properties and the Letter of Credit to a person or entity assuming Lessor's
obligations under this Lease.
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
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.
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(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, any Permitted Sublessee or any
of the Properties before any arbitrator or Governmental Authority which
might reasonably result in any Material Adverse Effect.
D. ABSENCE OF BREACHES OR DEFAULTS. Neither Lessee, Guarantor
nor any of the Permitted Sublessees is in default under any document,
instrument or agreement to which Lessee, Guarantor or any Permitted
Sublessee is a party or by which Lessee or any Permitted Sublessee, any
of the Properties or any of Lessee's, Guarantor's or any Permitted
Sublessee's property is subject or bound, which default could
reasonably be expected to result in a Material Adverse Effect. The
authorization, execution, delivery and performance of this Lease, the
Guaranty and the other 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 cause
to be maintained an Aggregate Fixed Charge Coverage Ratio at all of the
Properties of at least 1.25:1, determined as of the last day of each
fiscal year of Lessee. 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 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 5.00% of Gross
Sales, to (b) the sum of the Operating Lease Expense and the Equipment
Payment Amount.
For purposes of this Section 8.A, 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 and any Permitted
Sublessee 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.
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"DEBT" shall mean as directly related to all of the
Properties and the period of determination (i) indebtedness of
Lessee and the Permitted Sublessees for borrowed money, (ii)
obligations of Lessee and the Permitted Sublessees evidenced
by bonds, indentures, notes or similar instruments, (iii)
obligations of Lessee and any Permitted Sublessee to pay the
deferred purchase price of property or services, (iv)
obligations of Lessee and the Permitted Sublessees under
leases which should be, in accordance with GAAP, recorded as
Capital Leases, and (v) obligations of Lessee and the
Permitted Sublessees 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 and the Permitted Sublessees 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 payable during such
period of determination under all (i) leases entered into by
Lessee and any Permitted Sublessee for equipment located at
one or more of the Properties and (ii) all loans made to
Lessee and any Permitted Sublessee secured by Lessee's and
Permitted Sublessee's interests in the equipment located at
one or more of the Properties.
"GROSS SALES" means the sales or other income arising
from all business conducted at all of the Properties by Lessee
and any Permitted Sublessee during the period of
determination, less sales tax paid by Lessee in connection
with the business conducted at each of the Properties during
such period.
"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 and Permitted
Sublessees 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.
"NET INCOME" shall mean with respect to the period of
determination, the net income or net loss of Lessee and the
Permitted Sublessees 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.
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"OPERATING LEASE EXPENSE" shall mean the expenses
incurred by Lessee and Permitted Sublessees 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.
(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. TRANSFER, PARTICIPATION AND SECURITIZATION COVENANTS. (i)
Lessee agrees to cooperate and to cause the Permitted Sublessees 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, (x)
providing such documents, financial and other data, and other
information and materials (the "Disclosures") which would typically be
required with respect to Lessee and Permitted Sublessees by a
purchaser, transferee,
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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 (y) 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 increase the Base Annual Rental or Additional
Rental required to be paid under this Lease or have a material adverse
effect upon Lessee 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.
Lessee shall pay its own attorney fees and other out-of-pocket expenses
incurred in connection with the performance of its obligations under
this Section 8.C in an amount not to exceed $7,500.00.
D. LIMITATION ON CORPORATE DEBT. If a tender offer for or
other acquisition of any of the outstanding common shares of Guarantor
for the purposes of taking the Guarantor private occurs prior to the
third anniversary of the Effective Date, then Guarantor, prior to the
third anniversary of the Effective Date, shall not incur total funded
indebtedness of more than $75,000,000, excluding the then remaining
balance of Guarantor's current existing indebtedness to Metropolitan
Life Insurance Company, which as of December 31, 2000, was $4,320,039.
E. COMPLIANCE CERTIFICATE. Within 60 days after the end of
each fiscal year of Lessee, Lessee and Permitted Sublessees shall
deliver to Lessor such compliance certificates as Lessor may reasonably
require in order to establish that Lessee and Permitted Sublessees are
in compliance in all material respects with all of the obligations,
duties and covenants imposed pursuant to Section 8.
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.
10. TAXES AND ASSESSMENTS. Lessee shall pay, or shall cause the
Permitted Sublessees to 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,
Lessee or any Permitted Sublessee, or any tax or charge levied in lieu
of such taxes and assessments;
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B. All taxes, charges, license fees and or similar fees
imposed by reason of the use of any of the Properties by Lessee and the
Permitted Sublessees; 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 and cause to be paid 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 of Lessor (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 with respect to
this Lease which does not take into account deductions from depreciation,
interest, taxes and/or ordinary or necessary business expenses), 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) none of 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 protest, or Lessee
shall have furnished the security as may be required in the proceeding or as
may be required by Lessor to ensure payment of any contested taxes.
11. UTILITIES. Lessee and the applicable Permitted Sublessee shall
contract, in their 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.
12. INSURANCE. Throughout the Lease Term, Lessee shall maintain and
cause the Permitted Sublessees to maintain with respect to each of the
Properties, at their 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
15
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.
B. Commercial general liability and property damage insurance,
including a products liability clause, covering Lessor, Remainderman,
Lessee and Permitted Sublessees 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, Lessee and
Permitted Sublessees 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 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 which precludes the insurer from denying the claim of
Lessee, Permitted Sublessees, 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.
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.
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;
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(iii) Contain a standard without contribution
mortgage clause endorsement in favor of Lender and any other
party designated by Lessor;
(iv) Provide that the policy of insurance shall not
be terminated, cancelled or substantially modified 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 A.M. 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 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 worker's compensation insurance to the extent not available
under statutory law), 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. 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 and cause Permitted Sublessees to 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 and caused to be maintained by Lessee
and the Permitted Sublessees hereunder naming such transferee or such
17
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.
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
Automated Clearing House Debit 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.
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 and the Permitted Sublessees 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 and the Permitted Sublessees shall at all times during the Lease Term
occupy each of the Properties and shall diligently conduct their business on
each of the Properties as a Permitted Facility. Lessee may cease or permit a
Permitted Sublessee to cease diligent operation of business at any of the
Properties for a period not to exceed 180 days; provided, however, Lessee may
not cease or permit a Permitted Sublessee to cease diligent operation at more
than two Properties at any one time and Lessee may cease or permit a
Permitted Sublessee to cease operation only once with respect to each
Property within any five-year period during the Lease Term. If Lessee or a
Permitted Sublessee does discontinue operation as permitted by this Section,
Lessee shall (i) give written notice to Lessor within 10 days after Lessee or
a Permitted Sublessee elects to cease operation, (ii) provide adequate
protection and maintenance of any such
18
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 business operations or other substituted use approved by Lessor
as contemplated below. 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 may consider
any or all of the following in determining whether to grant its consent,
without being deemed to be unreasonable: (i) whether the rental paid to
Lessor would be equal to or greater than the anticipated rental assuming
continued existing use, (ii) whether the proposed rental to be paid to Lessor
is reasonable considering the converted use of the Properties and the
customary rental prevailing in the community for such use, (iii) whether the
converted use will be consistent with the highest and best use of the
Properties, and (iv) 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 and the Permitted Sublessees' use and occupation of each of the
Properties, and the condition thereof, shall, at Lessee's and the Permitted
Sublessees' 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 and cause the Permitted Sublessees to 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 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 complying in all
respects with and causing compliance in all respects with 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"), as it
affects the Properties, including, but not limited to, making required
"readily achievable" changes to remove any architectural or communications
barriers, and providing auxiliary aides and services within the Properties.
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
substantially comply with all applicable provisions 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 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.
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D. Lessee represents and warrants to Lessor and Environmental
Insurer, as of the Effective Date, to Lessee's knowledge and except as
disclosed in the Questionnaires:
(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 Properties by reason of any
Environmental Laws have been obtained or are required to be obtained,
except for such permits, licenses or authorizations the failure of
which to obtain could reasonably be expected to have a Material Adverse
Effect.
(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.
(iv) The Properties do not contain Hazardous Materials, other
than in De Minimis Amounts, or underground storage tanks.
(v) There is no threat of any Release migrating to any of the
Properties.
(vi) 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 or oral notice or
other communication from any person or entity (including but not
limited to a 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, in each case with respect to a condition or event that could
reasonably be expected to have a Material Adverse Effect.
(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 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, whether
by Lessee or any other person or entity, have been in compliance with
all Environmental Laws and permits issued pursuant thereto, except for
such non-compliance which could not reasonably be expected to have a
Material Adverse Effect; 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; 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
20
allowed any tenant or other user of any of the Properties to do any act
that materially increased the dangers to human health or the
environment, posed an unreasonable risk of harm to any person or entity
(whether on or off the Properties), impaired the value of any of the
Properties, is contrary to any requirement of any insurer, constituted
a public or private nuisance, constituted waste, or violated any
covenant, condition, agreement or easement applicable to any of the
Properties.
E. Lessee covenants to Lessor and Environmental Insurer during the
Lease Term that: (i) the Properties shall not be in violation of or subject
to any investigation or inquiry by any Governmental Authority or to any
remedial obligations under any Environmental Laws, except for such violations
or investigations or inquiries which relate to Hazardous Materials in De
Minimis Amounts. If any such investigation or inquiry is initiated, Lessee
shall promptly notify Lessor; (ii) all uses and operations on or of each of
the Properties, whether by Lessee, a Permitted Sublessee or any other person
or entity, shall be in 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; (iv) there shall be
no Hazardous Materials in, on, or under any of the Properties, except in De
Minimis Amounts; (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) 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
directive from any Governmental Authority; 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 Permitted Sublessee or any
other 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; (B) any non-compliance with any Environmental Laws related in any
way to any of the Properties; (C) any actual Environmental Lien; (D) any
required or proposed Remediation of environmental conditions relating to any
of the Properties; and (E) any written or oral notice or other communication
of which Lessee becomes aware from any source whatsoever (including but not
limited to a Governmental Authority) relating in any way to Hazardous
Materials or Remediation thereof, 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 anything referred
to in this Section.
21
F. Lessor, 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, after five Business Days' prior written notice to
Lessee (except that in the event of an emergency no such prior notice shall
be required) but not the obligation, to enter 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 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.
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, a Permitted Sublessee, any person or entity
affiliated with Lessee or a Permitted Sublessee 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, a Permitted Sublessee, any person or entity affiliated with Lessee or
a Permitted Sublessee 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 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, a Permitted Sublessee, any person or
entity affiliated with Lessee or a Permitted Sublessee or any other tenant or
other user of any of the Properties to comply with any order of any
Governmental Authority in connection with any Environmental Laws; (vi) the
imposition, recording or filing of any Environmental Lien
22
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 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, a Permitted Sublessee, any person or entity
affiliated with Lessee or a Permitted Sublessee 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, a Permitted Sublessee, any person or
entity affiliated with Lessee or a Permitted Sublessee 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, a Permitted Sublessee, any
person or entity affiliated with Lessee or a Permitted Sublessee 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, a Permitted Sublessee, any person or entity
affiliated with Lessee or a Permitted Sublessee 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 the
Indemnified Parties under the foregoing subsections D through G shall survive
the termination, expiration and/or release of this Lease.
17. CONDITION OF PROPERTIES; MAINTENANCE. Lessee, at its own
expense, will maintain and cause the Permitted Sublessees to 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 or replacements which may be required to
keep all parts of each of the Properties in good repair and sound condition.
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.
18. WASTE; ALTERATIONS AND IMPROVEMENTS. Neither Lessee nor any
Permitted Sublessee shall commit actual or constructive waste upon any of the
Properties. Neither Lessee nor any Permitted Sublessee shall 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, conditioned or delayed (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 approval thereof if Lender shall not have
given its approval if required); provided, however, Lessee or a Permitted
Sublessee may undertake nonstructural alterations to any of the Properties
costing less than $50,000.00 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
23
specifications approved by Lessor and subject to such other conditions as
Lessor shall require. All alterations shall be made by Lessee or a Permitted
Sublessee shall be at their sole expense by licensed contractors and in
accordance with all applicable laws governing such alterations. Any work at
any time commenced by Lessee or a Permitted Sublessee 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) to the extent Lessor is required to
preapprove plans and specifications for such alterations, 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 shall automatically be deemed a part of the Properties and belong
to Lessor, and Lessee and the applicable Permitted Sublessee shall execute
and deliver to Lessor such instruments as Lessor may require to evidence the
ownership by Lessor of such addition or alteration. Lessee and the applicable
Permitted Sublessee 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 or any Permitted
Sublessee'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, any Permitted Sublessee 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, (5) any taxes,
assessments or other charges which Lessee is required to pay or cause to be
paid 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 cause to be removed or discharged, 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 any Permitted Sublessee or otherwise acting
under or as a consequence of this Lease or any sublease, (8) any act or
omission
24
of Lessee or any Permitted Sublessee or their 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.
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 ensure 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 or any Permitted Sublessee by the Permitted Subleases.
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 neither Lessee nor any Permitted Sublessee shall be entitled to any
award, insurance proceeds or 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.
25
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, (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 (Z) contains a
covenant by Lessee that neither Lessee or any Affiliate of Lessee will use
such Property for a period of 2 years following the Early Termination Date;
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
defined below) for such Property, or (Y) a Rejectable Substitution Offer to
substitute a Substitute Property satisfying the applicable requirements of
Section 57.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 percentage 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 Total Casualty only, the Prepayment Charge corresponding to
such Property. In the event of a termination of this Lease with respect to a
Property pursuant to this Section 21.B which does not involve the acceptance
(or deemed acceptance) of a Rejectable Substitution Offer, 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.
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 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 and such written
consent is delivered to Lessee within such 90-day period.
If Lessor accepts the Rejectable Offer or is deemed to have accepted
the Rejectable Offer or if, while the Mortgage corresponding to such Property
is still outstanding, any rejection of the Rejectable Offer by Lessor is not
consented to in writing by the Lender, then, on the Early
26
Termination Date, Lessor shall sell and convey, and Lessee shall purchase for
the Stipulated Loss Value, 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 quit-claim 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 the
Indemnified Parties 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, while the Mortgage
corresponding to such Property is still outstanding, 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 Section 57. 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 the Indemnified Parties 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.
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 in writing by Lender (and such written consent
delivered to Lessee within the applicable 90-day period), 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, provided, however, Lessee's obligations
to the Indemnified Parties with respect to such
27
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 the entire award relating to the 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. 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 the Indemnified Parties 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,
28
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, subject to the rights of Lender under the Loan Documents, 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. Any loss under any property damage insurance required to be
maintained by Lessee or any Permitted Sublessee 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.
F. 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 and cause the Permitted Sublessees
to keep and maintain at the Properties or Lessee's corporate headquarters
full, complete and appropriate
29
books of account and records of Lessee's business relating to the Properties
in accordance with GAAP. Lessee's and Permitted Sublessees' books and records
shall be open for inspection at reasonable times and upon reasonable notice
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, 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 as and when made in any material respect, or if
Lessee renders any statement or account which is false as and when made
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 unless
and until Lessor shall have given Lessee written notice thereof and a
period of five days from the delivery of such written 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; provided,
however, notwithstanding the occurrence of such an Event of Default,
Lessor shall not be entitled to exercise its remedies set forth below
unless and until Lessor shall have given Lessee written notice thereof
and a period of 5 days from the delivery of such written notice shall
have elapsed without such Event of Default being cured;
(iv) If Lessee 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 (except with respect to a breach of the Aggregate Fixed
Charge Coverage Ratio, which breach is addressed in subitem (ix)
below), conditions or obligations of this Lease; provided, however, if
any such failure does not involve the payment of any monetary sum, is
not willful or intentional, does not place any rights or property of
Lessor in immediate jeopardy, and is within the reasonable power of
Lessee to promptly cure after receipt of notice thereof, all as
determined by Lessor in its reasonable discretion, then such failure
shall not constitute an Event of Default hereunder, unless otherwise
expressly provided herein, unless and until Lessor shall have given
Lessee notice thereof and a period of 30 days shall have elapsed,
30
during which period Lessee may correct or cure such failure, upon
failure of which an Event of Default shall be deemed to have occurred
hereunder without further notice or demand of any kind being required.
If such failure cannot reasonably be cured within such 30 day period,
as determined by Lessor in its reasonable discretion, 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, any of the Other
Agreements or any of the Permitted Subleases;
(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 $500,000.00 or more that is not covered by
insurance, and in either event is not discharged or provision made for
such discharge 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 15 days from
the delivery of such notice to either:
(1) deliver a Rejectable Substitution Offer to Lessor
for the substitution of such Substitute Properties satisfying
the applicable requirements of Section 57.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 cure the breach of the Aggregate Fixed Charge
Coverage Ratio requirement;
(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 cure the breach of
the Aggregate Fixed Charge Coverage Ratio requirement;
(3) deliver notice to Lessor that it has elected to
pay the FCCR Rent Prepayment Amount (as hereinafter defined)
on the first day of the calendar month immediately following
the date such notice is delivered; or
(4) deliver to Lessor a letter of credit in favor of
Lessor (or, at Lessor's written direction, in favor of Lender)
in the form attached to this Lease as EXHIBIT B issued by an
Approved Institution (the "FCCR Letter of Credit") in the
amount of the FCCR Rent Prepayment Amount. Notwithstanding the
foregoing, Lessee may not provide a FCCR Letter of Credit to
cure a breach of the Aggregate Fixed Charge Coverage Ratio
requirement if the amount of the FCCR Letter of Credit, when
31
added to the aggregate amount of all FCCR Letters of Credit
and the Security Deposit Letter of Credit, previously
delivered to Lessor, would exceed the Base Annual Rental.
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 product of (x) the
Applicable Rent Reduction Percentage for such Property, and (y) the
Base Annual Rental then in effect.
If Lessor makes a Rejectable Substitution Offer or Rejectable
Purchase Offer as contemplated by subitems (1) and (2) above, unless
Lessor rejects such Rejectable Substitution Offer or Rejectable
Purchase Offer as contemplated by Section 57 or 58, as applicable, the
failure of Lessee to complete such substitutions or purchases within
the time period contemplated by Section 57 or 58, as applicable, shall
be deemed an Event of Default without further notice or demand of any
kind being required. If Lessee delivers notice to Lessor that it has
elected to pay the FCCR Rent Prepayment Amount as provided in subitem
(3) above, the failure of Lessee to pay Lessor the FCCR Rent Prepayment
Amount on the first day of the calendar month immediately following the
date such notice is delivered shall be deemed an Event of Default
without further notice or demand of any kind being required.
In the event Lessee elects to pay Lessor the FCCR Rent
Prepayment Amount as provided in subitem (3) above, Base Monthly Rental
beginning with the calendar month in which such payment is made shall
be equal to the Base Monthly Rental then in effect reduced by the FCCR
Rent Reduction Amount (as hereinafter defined).
For purposes of this Section 23.A(ix), the following terms
shall be defined as set forth below:
"FCCR RENT PREPAYMENT AMOUNT" means the present value,
discounted on a monthly basis at 9.44%, of the FCCR Rent Reduction
Amount for each month beginning with the calendar month in which the
FCCR Rent Prepayment Amount is paid and ending with the calendar month
of May, 2021, inclusive.
"FCCR RENT REDUCTION AMOUNT" the product of (x) the Base
Monthly Rental for the last month of the fiscal year for which the
breach of the Aggregate Fixed Charge Coverage Ratio requirement
occurred and (y) the Fixed Charge Coverage Shortfall Percentage. For
purposes of illustration and not limitation, if (i) Lessee's Aggregate
Fixed Charge Coverage Ratio for the Fiscal Year ending May 27, 2010 was
1.0 (which results in a Fixed Charge Coverage Shortfall Percentage of
20%), (ii) Lessee paid the FCCR Rent Prepayment Amount on September 1,
2010, and (iii) the Base Monthly Rental for August, 2010 was $100, then
the Base Monthly Rental payment beginning on September 1, 2010 shall be
equal to the Base Monthly Rental for August, 2010 reduced by the sum of
$20.
32
"FIXED CHARGE COVERAGE SHORTFALL PERCENTAGE" means the
percentage represented by (x) 1 minus (y) a fraction, the numerator of
which shall be the Aggregate Fixed Charge Coverage Ratio for the fiscal
year for which the breach of the Aggregate Fixed Charge Coverage Ratio
requirement occurred, and the denominator of which shall be 1.25.
Any FCCR Letter of Credit delivered pursuant to this Section
23.A(ix) shall be maintained in effect until the next fiscal year of
Lessee for which Lessee complies with the Aggregate Fixed Charge
Coverage Ratio requirement without taking such FCCR Letter of Credit
into account. If an Event of Default shall have occurred and be
continuing, Lessor shall have the right to present such FCCR Letter of
Credit for payment and apply such proceeds towards any amounts due
under this Lease (including, without limitation, any amounts owed by
Lessee under Section 23.B as a result of such Event of Default),
provided that (x) such application of proceeds shall not be deemed to
cure such Event of Default if the amount of the FCCR Letter of Credit
is less than the amounts due under this Lease (including, without
limitation, the amounts owed by Lessee under Section 23.B as a result
of such Event of Default), and (y) if the amount of the FCCR Letter of
Credit is more than the amounts due under this Lease (including,
without limitation, the amounts owed by Lessee under Section 23.B as a
result of such Event of Default), the excess shall be retained by
Lessor to be applied towards amounts due under this Lease as a result
of any subsequent Event of Default or returned to Lessee as required by
the last sentence of this grammatical paragraph. Also, if a substitute
or replacement FCCR Letter of Credit issued by an Approved Institution
for such FCCR Letter of Credit in the amount of such FCCR Letter of
Credit is not provided to Lessor at least 30 days prior to the
scheduled expiration date of such FCCR Letter of Credit, Lessor shall
have the right to present such FCCR Letter of Credit for payment at any
time within such 30 day period and the proceeds of such FCCR Letter of
Credit shall be retained by Lessor to be applied towards amounts due
under this Lease as a result of any subsequent Event of Default or
returned to Lessee as required by the last sentence of this grammatical
paragraph. Once there occurs a fiscal year of Lessee for which Lessee
complies with the Aggregate Fixed Charge Coverage Ratio requirement
without taking such FCCR Letter of Credit into account and no Event of
Default shall have occurred and be continuing, Lessor shall either: (i)
release such FCCR Letter of Credit to the Approved Institution if the
FCCR Letter of Credit has not been presented for payment; or (ii) pay
to Lessee any proceeds from any drawn FCCR Letter of Credit if such
proceeds were not previously applied as contemplated above.
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 Lessee shall fail to maintain or cause to be maintained
insurance in accordance with the requirements of Section 12 of this
Lease; or
(xi) There shall be a breach of Section 26.D or Section 26.E.
33
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, including without limitation, any one or more of the following:
(i) To terminate this Lease, whereupon Lessee's and Permitted
Sublessees' right to possession of the Properties shall cease and this
Lease, except as to Lessee's liability, and the Permitted Subleases
shall be terminated.
(ii) To reenter and take possession of any or all of the
Properties, any or all Personalty 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 seize all Personalty located on or at any or all of
the Properties and to dispose thereof in accordance with the laws
prevailing at the time and place of such seizure or to remove all or
any portion of such Personalty 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.
(iv) To bring an action against Lessee for any damages
sustained by Lessor 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, remodeling 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
34
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 percentage
specified on Schedule I attached hereto which corresponds to the month
in which such Event of Default first occurred multiplied by the sum of
the Purchase Price for all of the Properties which are then subject to
the 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
reasonable 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 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 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.
(xi) To present for payment all FCCR Letters of Credit and
Security Deposit Letter of Credit previously delivered to Lessor and
still outstanding and apply such proceeds toward any amounts due under
this Lease (including, without limitation, any amounts owed by Lessee
under this Section 23.B as a result of such Event of Default), provided
that (x) such application of proceeds shall not be deemed to cure such
Event of Default if the amount of the FCCR Letters of Credit and the
Security Deposit Letter of Credit is less than the amounts due under
this Lease (including, without limitation, the amounts owed by Lessee
under this Section 23.B as a result of such Event of Default), and (y)
if the amount of the FCCR Letters of Credit and the Security Deposit
Letter of Credit is more than the amounts due under this Lease
(including, without limitation, the amounts owed by Lessee under this
Section 23.B as a result of such Event of Default), the excess shall be
kept,
35
applied by Lessor and returned as provided in either Section 5.C
or Section 23.A(ix), as applicable.
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. 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 OR THE PERSONALTY, AND
ANY SUCH PURPORTED TRANSACTION WHICH IS NOT APPROVED BY LESSOR SHALL BE VOID.
FURTHERMORE, ANY SUCH PURPORTED 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, trust
deeds and deeds to secure debt now or hereafter placed upon any of the
Properties by Lessor, and Lessee covenants and agrees to execute and deliver,
upon demand, such further instruments subordinating this Lease to the lien of
the Mortgages and any or all such ground leases, mortgages, trust deeds or
deeds to secure debt as shall be desired by Lessor, or any present or
proposed mortgagees or lenders under trust deeds or deeds to secure debt,
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, trust deeds or
deeds to secure debt or after foreclosure
36
of any or all such Mortgages, mortgages, trust deeds or deeds to secure debt
or termination of any or all such ground leases, so long as Lessee is not in
default under any of the covenants, conditions and agreements contained in
this Lease.
If any landlord, 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, trust deed or deed
to secure debt 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, trust deed or deed to secure debt,
whether this Lease was executed before or after such Mortgage, ground lease,
mortgage, trust deed or deed to secure debt and in that event such landlord,
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, trust
deed or deed to secure debt and had been assigned to such landlord,
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, and in the event Lessee fails so to do within 10 days after
demand, Lessee does hereby make, constitute and irrevocably appoint Lessor as
its agent and attorney-in-fact and in its name, place and stead so to do,
which appointment shall be deemed coupled with an interest.
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.
The Permitted Subleases at all times shall automatically be
subordinate to this Lease and the Mortgages.
25. ESTOPPEL CERTIFICATE. A. At any time, but not more often than
twice every 12 months, and from time to time, Lessee shall, promptly and in
no event later than 10 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
37
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.
B. If Lessee shall fail or refuse to sign a certificate in
accordance with the provisions of this Section within 10 days following a
written request by Lessor, Lessee irrevocably constitutes and appoints Lessor
as its attorney-in-fact to execute and deliver the certificate to any such
third party, it being stipulated that such power of attorney is coupled with
an interest and is irrevocable and binding; provided, however, that Lessor's
execution and delivery of such certificate on behalf of Lessee shall not cure
any default arising by reason of Lessee's failure to execute and deliver such
certificate.
26. ASSIGNMENT; SUBLETTING. 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 the Permitted Sublessees and
upon the particular purposes for which Lessee and the Permitted Sublessees
intend to use the Properties in entering into this Lease. Without the prior
written consent of Lessor and except as provided below and for the Permitted
Subleases: (i) Lessee shall not assign, transfer or convey this Lease or any
interest therein, whether by operation of law or otherwise; (ii) no interest
in Lessee or Guarantor shall be assigned, transferred, conveyed, pledged or
mortgaged, whether by operation of law or otherwise, including, without
limitation, a dissolution of Lessee or Guarantor or a transfer of any of the
voting stock of Lessee or Guarantor other than trades of Lessee's or
Guarantor's common stock on a nationally recognized stock market or transfers
of common stock of Guarantor in connection with a going private transaction
so long as immediately following the transaction, Aaron Spencer directly or
indirectly continues to control at least 51% of the outstanding voting
capital stock of Parent (as defined below) and Parent continues to own at
least 51% of the outstanding voting capital stock of Guarantor; and (iii)
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
hereunder by undertakings enforceable by Lessor, payment to Lessor of any
rentals owing under a sublease which are in excess of the rentals owing
hereunder, 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
38
Lessor's standard form of assumption agreement. No such assignment nor any
subletting of any of the Properties shall relieve Lessee of its obligations
respecting this Lease. Any assignment, transfer, conveyance, pledge, mortgage
or subletting in violation of this Section shall be voidable at the sole
option of Lessor.
C. Notwithstanding the foregoing, Lessee shall have the right to
sublease any of the Properties, without the prior written consent of Lessor
or Lender, if the following conditions are satisfied:
(1) no Event of Default shall have occurred and be continuing
under this Lease as of the effective date of such sublease;
(2) any such sublease shall be subordinate to this Lease and
the Mortgage corresponding to the Property to which such sublease
relates;
(3) Lessee shall remain liable under this Lease
notwithstanding such sublease; and
(4) the Properties subject to such subleases shall be used as
Permitted Facilities and shall otherwise be operated and maintained in
accordance with the terms and conditions of this Lease.
D. Notwithstanding the foregoing, if the voting capital stock of
Guarantor is no longer publicly traded: (i) Uno Restaurant Holdings
Corporation, a Delaware corporation, or such other Person that acquires all
the voting capital stock of Guarantor in a transaction making Guarantor a
privately held company ("Parent") may transfer so much of its capital stock
in Guarantor for so long as Parent continues to own 51% or more of the
outstanding voting capital stock of Guarantor; and (ii) Aaron Spencer may
transfer so much of his capital stock in Parent for so long as he continues
to own 51% or more of the outstanding voting capital stock of Parent (such
51% ownership interest, in each case the "Threshold Amount"). Neither Parent
nor Aaron Spencer shall transfer any voting capital stock in Guarantor or
Parent, respectively, resulting in Parent or Aaron Spencer owning voting
capital stock in Guarantor or Parent, respectively, in an amount less than
the Threshold Amount (each, an "Excess Threshold Transfer") without Lessor's
and Lender's prior written consent, which consent shall not be unreasonably
withheld if: (i) no Event of Default then exists and is continuing; and (ii)
if an Excess Threshold Transfer occurs prior to the third anniversary of the
Effective Date, Lessee provides Lessor with written reasonable evidence that
following the Excess Threshold Transfer the following individuals will
maintain their respective positions as officers of Guarantor for a period of
not less than one year after the date of the Excess Threshold Transfer: (a)
Craig S. Miller as President and CEO, (b) Robert M. Vincent, Executive Vice
President and Chief Financial Officer, and (c) Paul W. MacPhail, Executive
Vice President and Chief Operating Officer. Regardless of when an Excess
Threshold Transfer occurs, from and after the occurrence of an Excess
Threshold Transfer, Lessee shall cause Guarantor and Parent to maintain a
"Corporate Fixed Charge Coverage Ratio" (as defined below) of not less than
1.20 to 1. The term "Corporate Fixed Charge Coverage Ratio" shall mean with
respect to the twelve month period of time immediately preceding the end of
each fiscal quarter of Guarantor and Parent (each, a "12 Month Period"), 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, to (b) the sum of Operating
Lease Expense, scheduled principal payments of long term Debt,
39
scheduled maturities of all Capital Leases and Interest Expense.
Notwithstanding the foregoing to the contrary, a transfer of capital stock
by: (i) Aaron Spencer to a family trust or other estate planning entity
controlled by Aaron Spencer and in which Aaron Spencer's family members are
beneficiaries, (ii) the estate of Aaron Spencer to family members, a family
trust or other family-owned estate planning entity or (iii) transfers by
family members, a family trust or other family-owned estate planning entity
among themselves, shall not be deemed an Excess Threshold Transfer and such
capital stock held by a family member, in a family trust or another
family-owned estate planning entity controlled by Aaron Spencer and in which
Aaron Spencer's family members are beneficiaries shall be deemed to be owned
by Aaron Spencer for purposes of this Section 26.D.
For purposes of this Section 26.D, the following terms shall be
defined as set forth below:
"CAPITAL LEASE" shall mean all leases of any property, whether
real, personal or mixed, by Guarantor and Parent, which leases would,
in conformity with GAAP, be required to be accounted for as a capital
lease on the balance sheet of Guarantor and Parent. The term "Capital
Lease" shall not include any operating lease.
"DEBT" shall mean with respect to Guarantor and Parent and for
the applicable 12 Month Period (i) indebtedness for borrowed money,
(ii) obligations evidenced by bonds, indentures, notes or similar
instruments, (iii) obligations to pay the deferred purchase price of
property or services, (iv) obligations under leases which should be, in
accordance with GAAP, recorded as Capital Leases, and (v) obligations
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.
"DEPRECIATION AND AMORTIZATION" shall mean the depreciation
and amortization accruing during the applicable 12 Month Period with
respect to Guarantor and Parent, as determined in accordance with GAAP.
"INTEREST EXPENSE" shall mean for the applicable 12 Month
Period, the sum of all interest accrued or which should be accrued in
respect of all Debt of Guarantor and Parent, as determined in
accordance with GAAP.
"NET INCOME" shall mean with respect to the applicable 12
Month Period, the net income or net loss of Guarantor and Parent. In
determining the amount of Net Income, (i) adjustments shall be made for
nonrecurring gains and losses or non-cash items allocable to the
applicable 12 Month Period, and (ii) deductions shall be made for,
among other things, Depreciation and Amortization, Interest Expense,
Operating Lease Expense and actual corporate overhead expense allocable
to the applicable 12 Month Period.
"OPERATING LEASE EXPENSE" shall mean the sum of all payments
and expenses incurred by Guarantor and Parent under any operating
leases during the applicable 12 Month Period, as determined in
accordance with GAAP.
E. Notwithstanding the prohibition on pledging set forth in
subsection B, above, the holders of capital stock in Guarantor and Parent may
pledge or otherwise encumber their capital
40
stock to secure obligations of Lessee, Guarantor, Parent and their Affiliates
to institutional lenders for indebtedness and other obligations or any
refinancings thereof (an "Institutional Loan"). Notwithstanding the
prohibition on transfer set forth in subsection B, above, and without
limiting any transfer permitted by the preceding subsection D, the interests
in Guarantor and/or Parent may be assigned, transferred or conveyed: (i) in
connection with a foreclosure or other sale of the interests in Guarantor
and/or Parent as a result of a default or breach of the Institutional Loan or
(ii) in connection with any subsequent transfer made by the Institutional
Loan lender which acquired the interests by foreclosure or transfer-in-lieu
thereof (each, the "Foreclosure Transfer"), and Lessor shall in each instance
be deemed to have consented to such Foreclosure Transfer, provided that:
(i) no Event of Default shall have occurred and be continuing
at the time of the Foreclosure Transfer;
(ii) after giving effect to such Foreclosure Transfer, whether
as a single transaction or as a series of transactions, either (x)
Guarantor, including any surviving entity as a result of such
Foreclosure Transfer and/or successor of Guarantor, shall have a net
worth determined in accordance with GAAP at least equal to
$40,000,000.00 (the "Net Worth Condition") or (y) if Guarantor does not
meet the Net Worth Condition concurrently with the completion of such
Foreclosure Transfer, Lessee shall (1) pay to Lessor the Foreclosure
Transfer Rent Prepayment Amount (as hereinafter defined) to the extent
necessary to cause the Aggregate Fixed Charge Coverage Ratio for all of
the Properties, taken as a whole, to be at least equal to 3.0:1 for the
twelve-month period of time immediately preceding the end of the fiscal
quarter of Lessee closed prior to the date on which Lessee gives the
Foreclosure Transfer Notice (as hereinafter defined), and (2) pay to
Lessor the Prepayment Charges payable by Lessor to Lender as a result
of the prepayment of such Base Monthly Rental. Upon Lessee's payment of
the Foreclosure Transfer Rent Prepayment Amount and Prepayment Charges
as contemplated by the preceding sentence, Lessor agrees that the Base
Monthly Rental beginning with the calendar month immediately following
the month in which such payment is made (or, if such payment is made on
the first day of a calendar month, beginning with the calendar month in
which such payment is made) shall be equal to the Base Monthly Rental
then in effect reduced by the Foreclosure Transfer Rent Reduction
Amount (as hereinafter defined);
(iii) after giving effect to such Foreclosure Transfer,
whether as a single transaction or as a series of transactions, if
Guarantor has a long term debt rating, such rating is no worse than the
lesser of Guarantor's long term debt rating as of the Effective Date of
the Lease and Guarantor's long term debt rating immediately prior to
the consummation of such Foreclosure Transfer;
(iv) Guarantor, including any surviving entity of such
Foreclosure Transfer and/or successor of Guarantor, shall not be
released from any of its obligations under this Guaranty, and such
surviving entity or successor entity, as applicable, has assumed in
writing or by operation of law (provided Lessor has received a
satisfactory opinion of counsel to Guarantor confirming that such
assumption will occur by operation of law) all of Guarantor's
obligations under this Guaranty and Guarantor shall not be released
from its obligations under this Guaranty;
(v) Guarantor, after giving effect to such Foreclosure
Transfer, shall have a Corporate Fixed Charge Coverage Ratio determined
as of the end of Guarantor's most
41
recently closed fiscal quarter on a proforma basis after giving effect
to the proposed Foreclosure Transfer of at least 1.20;
(vi) the Properties will be operated as a nationally or
regionally recognized casual dining concept;
(vii) Guarantor or the operator of the Properties will have at
least 5 years' experience operating a multi-unit casual dining
restaurant concept with the same or greater number of units as are then
operated by Guarantor and its Affiliates; and
(viii) if and to the extent that the Loans have been subject
to a Securitization, Lender shall have received a notice or
confirmation of the rating agencies which have issued ratings in
connection with such Securitization that such Foreclosure Transfer will
not cause any of such rating agencies to downgrade, modify, withdraw or
qualify any of such ratings.
For purposes of this Section 26.E, the following terms shall be defined
as set forth below:
"FORECLOSURE TRANSFER RENT PREPAYMENT AMOUNT" means the
present value, discounted on a monthly basis at [___%], of the Subject
Transfer Rent Reduction Amount for each month beginning with the
calendar month immediately following the month in which the Foreclosure
Transfer Rent Prepayment Amount is paid (or, if the Foreclosure
Transfer Rent Prepayment Amount is paid on the first day of a calendar
month, beginning with the calendar month in which the Foreclosure
Transfer Rent Prepayment Amount is paid) and ending with the calendar
month of May, 2021, inclusive.
"FORECLOSURE TRANSFER RENT REDUCTION AMOUNT" the product of
(x) the Base Monthly Rental for the last month of the fiscal quarter of
Lessee which ended prior to the date on which Lessee gives Lessor the
Foreclosure Transfer Notice and (y) the Foreclosure Transfer FCCR
Shortfall Percentage. For purposes of illustration and not limitation,
if (i) Lessee's Aggregate Fixed Charge Coverage Ratio for the Fiscal
Year ending May 27, 2010 was 2.0 (which results in a Foreclosure
Transfer FCCR Shortfall Percentage of 33%), (ii) Lessee paid the
Foreclosure Transfer Rent Prepayment Amount on August 15, 2010, and
(iii) the Base Monthly Rental for August, 2010 was $100, then the Base
Monthly Rental payment beginning on September 1, 2010 shall be equal to
the Base Monthly Rental for August, 2010 reduced by the sum of $33.33.
"FORECLOSURE TRANSFER FCCR SHORTFALL PERCENTAGE" means the
percentage represented by (x) 1 minus (y) a fraction, the numerator of
which shall be the Aggregate Fixed Charge Coverage Ratio for the twelve
month period of time immediately preceding the end of the fiscal
quarter of Lessee which closed prior to the date on which Lessee gives
the Foreclosure Transfer Notice, and the denominator of which shall be
3.
Lessee shall notify Lessor and Lender at least 30 days but not more
than 90 days prior to the completion of any Foreclosure Transfer, whether or
not the consent of Lessor to such Foreclosure Transfer is deemed given under
the terms of this Section 26.E (each, a "Foreclosure Transfer Notice").
Lessee shall provide Lessor and Lender with information reasonably sufficient
to enable Lessor and Lender to determine that Lessee has satisfied the
conditions to any Foreclosure Transfer, including, without limitation, such
financial information as Lessor and
42
Lender may reasonably require to enable them to determine that the Net Worth
Condition and/or Aggregate Fixed Charge Coverage Ratio requirements set forth
in Section 26.E have been satisfied, or will be satisfied simultaneously with
the completion of the Foreclosure Transfer. In addition, to the extent that
the loans contemplated by the Loan Documents have been subject to a
Securitization, Lessee agrees to cooperate in good faith in connection with
providing such information as the rating agencies may reasonably require to
evaluate any such proposed Foreclosure Transfer. If the foregoing conditions
are not satisfied, then the interests in Guarantor or Parent shall not be
transferred pursuant to a Foreclosure Transfer.
F. Except as provided in Section 12 of the Permitted Subleases,
Lessee shall not amend, modify, alter, change, terminate or cancel any of the
Permitted Subleases or grant any approval, consent or waiver under any of the
Permitted Subleases without the prior written consent of Lessor and Lender
and any such action which is not approved by Lessor and Lender shall be void.
27. OPTION TO EXTEND; NEW LEASE. A. Lessee shall have the option to
continue this Lease in effect for four additional successive periods of five
years each, provided that, at the time of exercise of such option or at the
expiration of the Lease Term or, if applicable, the preceding extension of
the Lease Term, no Event of Default shall have occurred and be continuing
under this Lease. If Lessee exercises such option, this Lease shall continue
for the applicable period 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 in an amount set forth on attached Exhibit C.
Lessor and Lessee agree that the Base Annual Rental during each extension
period represents the then fair market value of the Properties.
Lessee may only exercise the first extension option by giving notice
to Lessor of Lessee's intention to do so not later than November 30, 2019. If
the first extension option is exercised by Lessee, Lessee may only exercise
the second extension option by giving notice to Lessor of Lessee's intention
to do so not later than August 31, 2025. If the first two extension options
are exercised, Lessee may only exercise the third extension option by giving
notice to Lessor of Lessee's intention to do so not later than August 31,
2030. If the first three extension options are exercised, Lessee may only
exercise the fourth extension option by giving notice to Lessor of Lessee's
intention to do so not later than August 31, 2035.
28. RIGHT OF FIRST OFFER TO PURCHASE PROPERTIES. If, during the
Lease Term, Lessor desires to sell its interest in the Properties, as a
result of a third party offer or expression of interest from a third party
(which may be solicited by Lessor and with no requirement that an offer
actually be made by such third party), then, provided no Event of Default has
occurred and is continuing, Lessor shall give Lessee the right to purchase
such interest (the "Interest") for a price and on terms and conditions,
determined by Lessor and set forth in a notice given to Lessee (the "ROFO
Notice"), Lessee shall have thirty (30) days after receipt of the ROFO Notice
to elect, in writing, to acquire such Interest at the price and on such terms
and conditions set forth in the ROFO Notice. Lessee's silence shall be deemed
a rejection of its right to acquire such Interest. Any such election by
Lessee shall only be effective if accompanied by Lessee's payment to Lessor
of a non-refundable cash down payment equal to 10% of the price set forth in
the ROFO Notice. If Lessee timely and properly elects to acquire such
Interest, the closing shall take place within one hundred and twenty (120)
days after the ROFO Notice. The balance of the purchase price shall be paid
in cash at closing. If Lessee does not timely elect to acquire such Interest,
Lessor shall be free to sell the Interest to any other Person within one (1)
year of Lessee's rejection or deemed rejection without
43
being required to comply again with the foregoing provisions of this Section,
provided that, if Lessor intends to sell the Interest after such one (1) year
period or within such one (1) year period at a price less than 95% of the
price described in the ROFO Notice or on terms materially more favorable to a
purchaser than those set forth in the ROFO Notice, Lessor shall give Lessee
written notice, setting forth the applicable purchase price and terms and
conditions, and Lessee shall have thirty (30) days to elect in writing to
purchase the Interest at such purchase price and on such terms and
conditions. The right of first offer granted by this Section shall not
survive the expiration or earlier termination of this Lease or the purchase
of the Properties by a third party after Lessee's failure to exercise such
right or Lessee's waiver thereof. Furthermore, the right of first offer
granted by this Section shall not apply to a foreclosure of any of the
Mortgages or the delivery to Lender of a deed in lieu of foreclosure and
shall not survive any such foreclosure or delivery of a deed in lieu of
foreclosure. Upon the termination of this right of first offer, Lessee shall
execute such instruments as may be reasonably required by Lessor to provide
constructive notice of the termination thereof.
29. 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, 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:
If to Lessee: SL Properties, Inc.
100 Charles Park Road
West Roxbury, Massachusetts 02132
Attention: Robert M. Vincent
Telephone: (617) 218-5215
Telecopy: (617) 218-5375
If to Lessor: Zuno Property LLC
c/o U.S. Realty Advisors LLC
1370 Avenue of the Americas
New York, NY 10019
Attention: Mr. David M. Ledy
Telephone: (212) 581-4540
Telecopy: (212) 581-4950
With a copy to: Proskauer Rose LLP
1585 Broadway
New York, NY 10036
Attention: Kenneth S. Hilton, Esq.
Telephone: (212) 969-3000
Telecopy: (212) 969-2900
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,
44
consents, approvals or other communications shall be valid unless Lender
receives a duplicate original thereof at the following address:
Dennis L. Ruben, Esq.
Executive Vice President, General Counsel
and Secretary
FFCA Funding Corporation
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (480) 585-4500
Telecopy: (480) 585-2226
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.
30. 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
increased by 150%, 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. The terms of this Section 30 shall survive the expiration
of the Lease Term.
31. LANDLORD'S LIEN/SECURITY INTEREST. Lessee agrees that Lessor
shall have a landlord's lien, and additionally hereby separately grants to
Lessor a first and prior security interest, in, on and against all Personalty
and Security Deposit Letter of Credit and any FCCR Letter of Credit, which
lien and security interest shall secure the payment of all rental and other
charges payable by Lessee to Lessor under the terms hereof and all other
obligations of Lessee to Lessor under this Lease. Lessee further agrees to
execute and deliver to Lessor from time to time such financing statements and
other documents as Lessor may then deem appropriate or necessary to perfect
and maintain said lien and security interest, and expressly acknowledges and
agrees that, in addition to any and all other rights and remedies of Lessor
whether hereunder or at law or in equity, in the event of any default of
Lessee hereunder, Lessor shall have any and all rights and remedies granted a
secured party under the Uniform Commercial Code then in effect in the states
in which the Properties are located. If Lessee shall fail for any reason to
execute any such financing statement or document within 15 days after
Lessor's request therefor, Lessor shall have the right to execute the same as
attorney-in-fact of Lessee, coupled with an interest, for, and on behalf, and
in the name of Lessee. Lessee covenants to promptly notify Lessor of any
changes in Lessee's name and/or organizational structure which may
necessitate the execution and filing of additional financing statements
(provided, however, the foregoing shall not be construed as Lessor's consent
to such changes).
32. REMOVAL OF PERSONALTY. At the expiration of the Lease Term, and
if Lessee is not then in breach hereof, 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
45
tenth day following the expiration of the Lease Term shall, at Lessor's
option, automatically and immediately become the property of Lessor.
33. 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 and Guarantor, Lessee shall deliver to Lessor and Lender (i) complete
financial statements of Lessee, Guarantor and Permitted Sublessees 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 and Guarantor (or the Treasurer or
other appropriate officer of Lessee and Guarantor). 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,
Guarantor's and Permitted Sublessees' 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 and
Guarantor which may be prepared, as soon as they are available.
34. 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.
35. 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.
36. 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.
37. 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
46
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.
38. WAIVER AND AMENDMENT. No provision of this Lease shall be deemed
waived or amended except by a written instrument unambiguously setting forth
the matter waived or amended and signed by the party against which
enforcement of such waiver or amendment is sought. Waiver of any matter shall
not be deemed a waiver of the same or any other matter on any future
occasion. 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.
39. 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.
40. 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.
41. 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.
42. 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.
43. 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.
B. Lessor 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,
47
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.
44. 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
materially interfere with Lessee's or a Permitted Sublessee's use.
45. 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
and Permitted Sublessees' 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.
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
48
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, or (c) that does not
provide guarantors of the Lease obligations having a financial
condition equal to or better than the financial condition of Guarantor
as of the Effective Date, shall be harmful and prejudicial to Lessor;
(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 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.
46. 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.
47. 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.
48. 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. 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. References in this Lease to
49
Lessor's attorneys' fees and/or costs shall mean both the fees and costs of
independent counsel retained by Lessor with respect to the matter and the
fees and costs incurred in connection with the matter.
49. 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.
50. FORUM SELECTION; JURISDICTION; VENUE; CHOICE OF LAW. Lessee
acknowledges that this Lease was partially negotiated in the State of
Arizona, this Lease was partially 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.
51. COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall be deemed an original.
52. 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.
53. 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
50
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.
54. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL 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 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, LESSEE AND LESSOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHTS THEY MAY HAVE TO SEEK
PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM EACH OTHER AND ANY
OF THEIR AFFILIATES, OFFICERS, DIRECTORS, MEMBERS OR EMPLOYEES OR ANY OF
THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER
PARTY OR ANY OF THEIR AFFILIATES, OFFICERS, DIRECTORS, MEMBERS OR EMPLOYEES
OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS LEASE OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED
HERETO. THE WAIVER BY EITHER PARTY OF ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE
PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
55. 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.
56. 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
51
promptly upon Lessor's demand therefor for all out-of-pocket costs and
expenses incurred by Lessor in connection with such review and/or preparation
plus a reasonable processing and review fee.
57. 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 the right to deliver a
Rejectable Substitution Offer to substitute any Property with a Substitute
Property (each a "Discretionary Substitution"); provided, however, the number
of Properties for which Lessee may do a Discretionary Substitution or FCCR
Substitution shall not exceed three (3) Properties in the aggregate (the
"Maximum Substitution Threshold"). Once Lessee has reached the Maximum
Substitution Threshold, Lessee shall no longer be entitled to make any
Discretionary Substitutions, but nevertheless shall be entitled to make a
Rejectable Substitution Offer in order to pursue a FCCR 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 57. Lessee agrees to deliver to Lessor
all of the diligence information and materials contemplated by the provisions
of Section 57.B of this Lease within 30 days after the delivery to Lessor of
a Rejectable Substitution Offer.
Lessor shall have 90 days after 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 57.
If Lessor rejects the Rejectable Substitution Offer pursuant to the
previous paragraph for reasons other than that, in Lessor's reasonable
judgment, the proposed Substitute Property would not have satisfied the
applicable substitution conditions set forth in this Section 57, and such
rejection is consented to by Lender, then:
52
(X) if such rejected Rejectable Substitution Offer was made
with respect to a Casualty/Condemnation Substitution, the provisions of
the last paragraph of Section 21.B and the last sentence of the second
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 Discretionary 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;
(2) have a Fixed Charge Coverage Ratio (with the
definitions of Section 8.A being deemed to be modified, as
contemplated by the following sentence to provide for a
calculation of an individual "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
53
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 Operating Lease Expense for the Substitute
Property would be the same amount as the Operating Lease
Expense for the Property to be replaced, as determined in
accordance with the last sentence of this subitem (2)). For
purposes of this subitem (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 product of (x) the Applicable Rent
Reduction Percentage for such Property, and (y) the Base
Annual Rental then in effect;
(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 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;
(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"); and
(6) be located in either (a) the same state as the
Property to be replaced is then located, or (b) in another
state acceptable to Lessor in Lessor's reasonable discretion;
(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
54
resulting from such proposed substitution, regardless of whether such
substitution is 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 (as defined in the
Sale-Leaseback Agreement) 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;
(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 (the "Substitute
Documents"), all of which documents shall be in form and substance
reasonably satisfactory to Lessor;
(ix) the representations and warranties set forth in the
Substitute Documents, this Lease and the Sale-Leaseback Agreement
applicable to the proposed Substitute Property 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;
55
(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;
(xii) Lender shall have consented to the substitution of the
proposed Substitute Property; and
(xiii) the date of the closing of the substitution shall occur
no later than 20 days after the date of acceptance (or deemed
acceptance) by Lessor of the Rejectable Substitution Offer.
C. Upon satisfaction of the foregoing conditions set forth in
Section 57.B and provided Lessor has accepted the Rejectable Substitution
Offer or is deemed to have accepted the Rejectable Substitution Offer, or
while the Mortgage corresponding to such Property is still outstanding, any
rejection of the Rejectable Substitution Offer by Lessor is not consented to
in writing by the Lender:
(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 quit-claim 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 57 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.
58. 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 58.
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
56
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;
(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 57;
(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
(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 20 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:
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(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
quit-claim 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 58, the term "Subject Purchase
Price" shall mean 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.
59. 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.
60. CERTIFICATE. At any time, and from time to time, at or following
the assignment by any Permitted Sublessee of its right, title and interest in
any Permitted Sublease, Lessor, provided all of the conditions in Section 12
of the Permitted Sublease have been satisfied, agrees, promptly and in no
event later than twenty (20) Business Days after a request from Lessee to
execute, acknowledge and deliver to Lessee and any such Permitted Sublessee a
certificate from Lessor, certifying that such Permitted Sublessee has been
released from all liabilities, obligations and duties to Lessor under the
Permitted Sublease.
IN WITNESS WHEREOF, Lessor and Lessee have entered into this Lease
as of the date first above written.
LESSOR:
ZUNO PROPERTY LLC,
a Delaware limited liability company
By: Zuno Equity LLC, a Delaware
limited liability company, its member
By: /s/ Laura A. Hawkes
---------------------------------
Printed Name: Laura A. Hawkes
Its: Vice President
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LESSEE:
SL PROPERTIES, INC., a Massachusetts
corporation
By: /s/ Robert M. Vincent
--------------------------------
Printed Name: Robert M. Vincent
Its: Vice President
Lessee's Tax Identification Number:
___________________________________
59