NET LEASE AGREEMENT
THIS LEASE, made and entered effective as of this 18th day
of March, 1997, by and between AEI INCOME & GROWTH FUND XXI
LIMITED PARTNERSHIP, a Minnesota limited partnership whose
corporate general partner is AEI Fund Management XXI, Inc., a
Minnesota corporation, whose address is 1300 Minnesota World
Trade Center, 30 East Seventh Street, St. Paul, Minnesota 55101
("Lessor"), and HUNTINGTON RESTAURANTS GROUP, INC., a Texas
corporation, whose address is 6560 N. Scottsdale Road, Suite
G206, Scottsdale, Arizona 85261 ("Lessee");
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of real
property and improvements located at I-10 and U.S. Highway 90,
Covington, Louisiana and legally described in Exhibit "A", which
is attached hereto and incorporated herein by reference; and
WHEREAS, Lessee constructed the building and improvements
(together the "Building") on the real property described in
Exhibit "A", which Building is described in the plans and
specifications heretofore submitted to Lessor; and
WHEREAS, Lessee desires to lease said real property and
Building (said real property and Building hereinafter referred to
as the "Leased Premises"), from Lessor upon the terms and
conditions hereinafter provided;
NOW, THEREFORE, in consideration of the Rents, terms,
covenants, conditions, and agreements hereinafter described to be
paid, kept, and performed by Lessee, Lessor does hereby grant,
demise, lease, and let unto Lessee, and Lessee does hereby take
and hire from Lessor and does hereby covenant, promise, and agree
as follows:
ARTICLE 1. LEASED PREMISES
Lessor hereby leases to Lessee, and Lessee leases and takes
from Lessor, the Leased Premises subject to the conditions of
this Lease.
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Twenty (20)
consecutive "Lease Years", as hereinafter defined, commencing on
March 19, 1997 ("Occupancy Date").
(B) The first "Lease Year" of the Term shall be for a period
of twelve (l2) consecutive calendar months from the Occupancy
Date. If the Occupancy Date shall be other than the first day of
a calendar month, the first "Lease Year" shall be the period from
the Occupancy Date to the end of the calendar month of the
Occupancy Date, plus the following twelve (l2) calendar months.
Each Lease Year after the first Lease Year shall be a successive
period of twelve (l2) calendar months.
(C) The parties agree that once the Occupancy Date has been
established, upon the request of either party, a short form or
memorandum of this Lease will be executed for recording purposes.
That short form or memorandum of this Lease will set forth the
actual occupancy and termination dates of the Term and optional
Renewal Terms, as defined in Article 28 hereof, and the existence
of any right of first refusal or option to purchase, and that
said option or right shall terminate when the Lessee shall lose
right to possession or this Lease is terminated, whichever occurs
first.
ARTICLE 3. CONSTRUCTION OF IMPROVEMENTS
(A) Lessee warrants and agrees that the Building has been
constructed on the Leased Premises, and all other improvements to
the land, including the parking lot, approaches, and service
areas, have been constructed in all material respects by Lessee
in accordance with the plot, plans, and specifications heretofore
approved by a licensed architect as certified to Lessor.
(B) Lessee warrants that as of the date hereof, the Building
and all other improvements to the land do comply with the laws,
ordinances, rules, and regulations of all state and local
governments.
(C) Lessee agrees to pay, if not already paid in full, for
all architectural fees and actual construction costs, in the
past, present or future, which shall include, but not be limited
to, plans and specifications, general construction, carpentry,
electrical, plumbing, heating, ventilating, air conditioning,
decorating, equipment installation, outside lighting, curbing,
landscaping, blacktopping, electrical sign hookup, conduit and
wiring from building, fencing, and parking curbs, builder's risk
insurance (naming Lessor, Lessee, and contractor as co-insured),
and all construction bonds for improvements made by or at the
direction of Lessee, to the extent incurred or authorized by
Lessee.
(D) Opening for business in the Leased Premises by Lessee
shall constitute an acceptance of the Leased Premises and an
acknowledgment by Lessee that the premises are in the condition
described under this Lease.
ARTICLE 4. RENT PAYMENTS
(A) Annual Rent Payable for the first
Lease Year: Lessee shall pay to Lessor an annual Base
Rent of $141,242.50, which amount shall be payable in
advance on the first day of each month in equal monthly
installments of $11,770.21. If the first day of the
Lease Term is not the first day of a calendar month,
then the monthly Rent payable for that partial month
shall be a prorated portion of the equal monthly
installment of Base Rent.
(B) Annual Rent Payable beginning with
the Second Lease Year and each Lease Year thereafter:
1. The annual Base Rent due and
payable shall increase by an amount equal to One and
925/1000 Percent (1.925%) of the Base Rent payable
for the immediately prior Lease Year. Such
increased Base Rent shall be payable in advance of
the first day of each month in equal monthly
installments.
(C) Overdue Payments.
Lessee shall pay interest on all overdue payments of Rent or
other monetary amounts due here under at the rate of eighteen
percent (18%) per annum or the highest rate allowed by law,
whichever is less, accruing beginning five days after written
notice to Lessee that Rent or other monetary amounts properly due
and payable were not paid.
ARTICLE 5. INSURANCE AND INDEMNITY
(A) Lessee shall, throughout the Term or Renewal Terms, if
any, of this Lease, at its own cost and expense, procure and
maintain insurance which covers the Leased Premises and
improvements against fire, wind, and storm damage (including
flood insurance if the Leased Premises is in a federally
designated flood prone area) and such other risks (including
earthquake insurance, if the Leased Premises is located in a
federally designated earthquake zone or in an ISO high risk
earthquake zone) as may be included in the broadest form of
extended coverage insurance as may, from time to time, be
available in amounts sufficient to prevent Lessor or Lessee from
becoming a co-insurer within the terms of the applicable
policies. In any event, the insurance shall not be less than one
hundred percent (100%) of the then insurable value.
Additionally, replacement cost endorsements, inflation guard
endorsements, vandalism endorsement, malicious mischief
endorsement, waiver of subrogation endorsement, waiver of co-
insurance or agreed amount endorsement (if available), and
Building Ordinance Compliance endorsement and Rent loss
endorsements (for a period of one year) must be obtained.
(B) Lessee agrees to place and maintain throughout the Term
or Renewal Terms, if any, of this Lease, at Lessee's own expense,
public liability insurance with respect to Lessee's use and
occupancy of said premises, including "Dram Shop" or liquor
liability insurance, if the same shall be or become available in
the State of Louisiana and liquor is sold on the Premises, with
initial limits of at least $1,000,000 per occurrence/$2,000,000
general aggregate, or such additional amounts as Lessor shall
reasonably require from time to time, such amounts to be
consistent with requirements of other Lessor's in similar
circumstances.
(C) Lessee agrees to notify Lessor in writing if Lessee is
unable to procure all or some part of the aforesaid insurance.
In the event Lessee fails to provide all insurance required under
this Lease, Lessor shall have the right, but not the obligation,
to procure such insurance on Lessee's behalf. Lessee will then,
within three (3) days from receiving written notice, pay Lessor
the amount of the premiums due or paid, together with interest
thereon at the lesser of 18% per annum or the highest rate
allowable by law, which amount shall be considered Rent payable
by Lessee in addition to the Rent defined at Article 4 hereof.
(D) All policies of insurance provided for or contemplated by
this Article can be under Lessee's blanket insurance coverage and
shall name Lessor, AEI Fund Management XXI, Inc., a Minnesota
corporation and Robert P. Johnson, as the general partners of
Lessor, and Lessee as additional named insured, as their
respective interests may appear, and shall provide that the
policies cannot be canceled, terminated, changed, or modified
without thirty (30) days written notice to the parties. In
addition, all of such policies shall contain endorsements by the
respective insurance companies waiving all rights of subrogation,
if any, against Lessor. All insurance companies must be approved
in writing by Lessor. All insurance companies providing
coverages must be rated "A" or better by Best's Key Rating Guide
(the most current edition), or similar quality under a successor
guide if Best's Key Rating shall cease to be published. Lessee
shall provide Lessor with legible copies of any and all policies
on or before the Occupancy Date. No less than fifteen (15)
business days prior to expiration of such policies, Lessee shall
provide Lessor with legible copies of any and all renewal
Certificates of Insurance, if the terms of the Policies have not
changed, and copies of such policies if the same have changed.
Lessee agrees that it will not settle any property insurance
claims affecting the Leased Premises in excess of $50,000 without
Lessor's prior written consent, such consent not to be
unreasonably withheld or delayed. Lessor shall consent to any
settlement of an insurance claim wherein Lessee shall confirm in
writing with evidence reasonably satisfactory to Lessor that
Lessee has sufficient funds available to complete the rebuilding
of the Premises.
(E) Lessee shall defend, indemnify, and hold Lessor harmless
against any and all claims, damages, and lawsuits arising after
the Occupancy Date of this Lease and any orders, decrees or
judgments which may be entered therein, brought for damages or
alleged damages resulting from any injury to person or property
or from loss of life sustained in or about the Leased Premises,
unless such damage or injury results from the intentional
misconduct or the gross negligence of Lessor and Lessee agrees to
save Lessor harmless from, and indemnify Lessor against, any and
all injury, loss, or damage, of whatever nature, to any person or
property caused by, or resulting from any act, omission, or
negligence of Lessee or any employee or agent of Lessee. In
addition, Lessee hereby releases Lessor from any and all
liability for any loss or damage caused by fire or any of the
extended coverage casualties, unless such fire or other casualty
shall be brought about by the intentional misconduct or gross
negligence of Lessor.
(F) Lessor hereby waives any and all rights that it may have
to recover from Lessee damages for any loss occurring to the
Leased Premises by reason of any act or omission of Lessee;
provided, however, that this waiver is limited to those losses
for which Lessor is compensated by insurers, if the insurance
required by this Lease is maintained.
Lessee hereby waives any and all right that it may have to
recover from Lessor damages for any loss occurring to the Leased
Premises by reason of any act or omission of Lessor; provided,
however, that this waiver is limited to those losses for which
Lessee is, or should be if the insurance required herein is
maintained, compensated by insurers.
ARTICLE 6. TAXES, ASSESSMENTS AND UTILITIES
(A) Lessee shall be liable and agrees to pay the charges for
all public utility services rendered or furnished to the Leased
Premises, including heat, water, gas, electricity, sewer, sewage
treatment facilities and the like, all personal property taxes,
real estate taxes, special assessments, and municipal or
government charges, general, ordinary and extraordinary, of every
kind and nature whatsoever, which may be levied, imposed, or
assessed against the Leased Premises, or upon any improvements
thereon, at any time after the Occupancy Date of this Lease and
prior to the expiration of the term hereof, or any Renewal Term,
if exercised.
(B) Lessee shall pay all real estate taxes, assessments for
public improvements or benefits, and other governmental
impositions, duties, and charges of every kind and nature
whatsoever which shall or may, during the term of this Lease, be
charged, laid, levied, assessed, or imposed upon, or become a
lien or liens upon the Leased Premises or any part thereof or
upon the Rents payable hereunder. Such payments shall be
considered as Rent paid by Lessee in addition to the Rent defined
at Article 4 hereof. If due to a change in the method of
taxation, a franchise tax, rent tax, or income or profit tax
shall be levied against Lessor in substitution for or in lieu of
any tax which would otherwise constitute a real estate tax, such
tax shall be deemed a real estate tax for the purposes herein and
shall be paid by Lessee.
(C) All real estate taxes, assessments for public
improvements or benefits, water rates and charges, sewer rents,
and other governmental impositions, duties, and charges which
shall become payable for the first and last tax years of the term
hereof shall be apportioned pro rata between Lessor and Lessee in
accordance with the respective number of months during which each
party shall be in possession of the Leased Premises in said
respective tax years. For the purposes of this provision, all
personal property taxes, real estate taxes and special
assessments shall be deemed to have been assessed in the year
that the first payment or any installment thereof is due.
(D) Lessee shall have the right to contest or review by legal
proceedings or in such other manner as may be legal (which, if
instituted, shall be conducted solely at Lessee's own expense)
any tax, assessment for public improvements or benefits, or other
governmental imposition aforementioned, upon condition that,
before instituting such proceeding Lessee shall pay (under
protest) such tax or assessments for public improvements or
benefits, or other governmental imposition, duties and charges
aforementioned, unless such payment would act as a bar to such
contest or interfere materially with the prosecution thereof and
in such event Lessee shall post with Lessor alternative security
satisfactory to Lessor. All such proceedings shall be begun as
soon as reasonably possible after the imposition or assessment of
any contested items and shall be prosecuted to final adjudication
with reasonable dispatch. In the event of any reduction,
cancellation, or discharge, Lessee shall pay the amount that
shall be finally levied or assessed against the Leased Premises
or adjudicated to be due and payable, and, if there shall be any
refund payable by the governmental authority with respect
thereto, if Lessee has paid the expenses of Lessor in such
proceeding, Lessee shall be entitled to receive and retain the
same, subject, however, to apportionment as provided during the
first and last years of the term of this Lease.
(E) Lessor, within sixty (60) days after notice to Lessee if
Lessee fails to commence such proceedings, may, but shall not be
obligated to, contest or review by legal proceedings, or in such
other manner as may be legal, and at Lessor's own expense, any
tax, assessments for public improvements and benefits, or other
governmental imposition aforementioned, which shall not be
contested or reviewed, as aforesaid, by Lessee, and unless Lessee
shall promptly join with Lessor in such contest or review, Lessor
shall be entitled to receive and retain any refund payable by the
governmental authority with respect thereto.
(F) Lessor shall not be required to join in any proceeding
referred to in this Article, unless in Lessee's reasonable
opinion, the provisions of any law, rule, or regulation at the
time in effect shall require that such a proceeding be brought by
and/or in the name of Lessor, in which event Lessor shall upon
written request, join in such proceedings or permit the same to
be brought in its name, all at no cost or expense to Lessor.
(G) Within thirty (30) days after Lessor notifies Lessee in
writing that Lessor has paid such amount, Lessee shall also pay
to Lessor, as additional Rent, the amount of any sales tax,
franchise tax, excise tax, and tax or fees charged foreign
limited partnerships or their general partners as a requisite for
doing business in the state where the Leased Premises are
located, arising out of or relating to the income derived from
this Lease. If such a tax on Rent is enacted in Louisiana, at
Lessor's option, and to the extent that the same are subject to
sales tax, Lessee shall deposit with Lessor on the first day of
each and every month during the term hereof, an amount equal to
one-twelfth (1/12) of any estimated sales tax payable to the
State in which the property is situated for Rent received by
Lessor hereunder ("Deposit"). From time to time out of such
Deposit Lessor will pay the sales tax to the State in which the
property is situated as required by law. In the event the
Deposit on hand shall not be sufficient to pay said tax when the
same shall become due from time to time, or the prior payments
shall be less than the current estimated monthly amounts, then
Lessee shall pay to Lessor on demand any amount necessary to make
up the deficiency. The excess of any such Deposit shall be
credited to subsequent payments to be made for such items. If a
default or an event of default shall occur under the terms of
this Lease, Lessor may, at its option, without being required so
to do, apply any Deposit on hand to cure such default, in such
order and manner as Lessor may elect. Lessee shall also pay to
Lessor, as additional Rent, the amount of any sales, use, or
other tax imposed on or measured by any Rent paid hereunder.
Such sales, use, or other tax shall be paid by Lessee to Lessor
at the same time as payment of any installment of Base Rent is
made.
ARTICLE 7. PROHIBITION ON ASSIGNMENTS AND SUBLETTING; TAKE-BACK
RIGHTS
(A) Except as otherwise expressly provided in this Article,
Lessee shall not, without obtaining the prior written consent of
Lessor, in each instance:
1. assign or otherwise transfer
this Lease, or any part of Lessee's right, title or
interest therein (except by devise or bequest upon
the death of a shareholder, but in such event, such
recipient shall be bound by the provisions of this
Article);
2. sublet all or any part of the
Leased Premises or allow all or any part of the
Leased Premises to be used or occupied by any other
Persons (herein defined as a Party other than
Lessee, be it a corporation, a partnership, an
individual or other entity); or
3. mortgage, pledge or otherwise
encumber this Lease, or the Leased Premises.
(B) For the purposes of this Article:
1. the transfer of voting control
of any class of capital stock of any corporate
Lessee or sublessee, or the transfer of voting
control of the total interest in any other person
which is a Lessee or sublessee, however
accomplished, whether in a single transaction or in
a series of related or unrelated transactions, shall
be deemed an assignment of this Lease, or of such
sublease, as the case may be (provided, however,
transfers by bequest or devise due to the death of a
shareholder shall not trigger the application of
these provisions, provided Lessor is given notice of
such transfer immediately after the disposition of
the decedent's estate);
2. an agreement by any other
Person, directly or indirectly, to assume Lessee's
obligations under this Lease shall be deemed an
assignment;
3. any Person to whom Lessee's
interest under this Lease passes by operation of
law, or otherwise, shall be bound by the provisions
of this Article;
4. each modification, amendment or
extension or any sublease to which Lessor has
previously consented shall be deemed a new sublease;
and
5. Lessee shall present the signed
consent to such assignment and/or subletting from
any guarantors of this Lease, such consent to be in
form and substance satisfactory to Lessor.
Lessee agrees to furnish to Lessor upon demand at any time
such information and assurances as Lessor may reasonably request
that neither Lessee, nor any previously permitted sublessee, has
violated the provisions of this Article.
(C) If Lessee agrees to assign this Lease or to sublet all or
any portion of the Leased Premises, Lessee shall, prior to the
effective date thereof (the "Effective Date"), deliver to Lessor
executed counterparts of any such agreement and of all ancillary
agreements with the proposed assignee or sublessee, as
applicable. If Lessor in its sole discretion (except as
otherwise specifically limited herein in paragraph (E) below)
shall not have consented to a proposed sublease or assignment,
and Lessee shall attempt to effect such transfer without Lessor's
consent or in spite of Lessor's decision to not consent to such
transfer, Lessor shall then have all of the following rights, any
of which Lessor may exercise by written notice to Lessee given
within thirty (30) days after Lessor receives the aforementioned
documents:
1. with respect to a proposed
assignment of this Lease, the right to terminate
this Lease on the Effective Date as if it were the
Expiration Date of this Lease;
2. with respect to a proposed
subletting of the entire Leased Premises, the right
to terminate this Lease on the Effective Date as if
it were the Expiration Date; or
3. with respect to a proposed
subletting of less than the entire Leased Premises,
the right to terminate this Lease as to the portion
of the Leased Premises affected by such subletting
on the Effective Date, as if it were the Expiration
Date, in which case Lessee shall promptly execute
and deliver to Lessor an appropriate modification of
this Lease in form satisfactory to Lessor in all
respects.
4. with respect to a proposed
subletting or proposed assignment of this Lease,
impose such conditions upon Lessor's consent as
Lessor shall determine in its sole discretion.
(D) If Lessor exercises any of its options under Article 7(C)
above, (and if Lessor shall impose conditions upon its consent
and Lessee shall fail to meet any conditions Lessor may impose
upon its consent), Lessor may then lease the Leased Premises or
any portion thereof to Lessee's proposed assignee or sublessee,
as the case may be, without liability whatsoever to Lessee.
(E) Notwithstanding anything above to the contrary,
Lessor agrees to consent to any assignment or sublease of the
Lessee's interests herein, provided Lessor is given prior written
notice of such sublease or assignment, accompanied by a copy of
such sublease or assignment, and the consents of Lessee and
Guarantors affirming their continued liability hereunder or under
their guaranty, respectively, and such assignment or subletting
is made to an affiliate of Lessee that is under the control of
Lessee or the Guarantors of Lease, or is made to Lessee's
franchisor or another Denny's franchisee. Further, upon an
assignment of the Lessee's interest herein, Lessee and any
personal guarantors may be released from further liability
hereunder if the following conditions are met: (a) the assignment
of Lessee's interest must be to an entity or entity and persons
offering their personal guaranties of Lessee's obligations
("Assignee"), which Assignee has equal to or greater net worth
than the cumulative net worth of Lessee and the Guarantors of
this Lease at the time of such assignment; and (b) in Lessor's
sole but reasonable opinion, taking into consideration such
factors as years of restaurant managerial and operational
experience, business reputation, and other factors reasonably
related to the ability of the Assignee to operate the Leased
Premises, such Assignee is equivalent to Lessee as determined
either at the time this Lease was executed, or the date of the
assignment of Lessee's interest, such date of equivalency to be
determined by Lessor in its sole discretion. Any such assignment
shall be ineffective until AEI has approved, such approval not to
be unreasonably withheld or delayed, the form and substance of
the assignment, the consents and affirmation of continued
liability (if applicable) of the Lessee and original Guarantors,
the documents evidencing the net worth of the Assignee and any
new Guarantors, and the new guaranties in the form identical in
substance to the original guaranty executed by the original
Guarantors.)
ARTICLE 8. REPAIRS AND MAINTENANCE
(A) Lessee covenants and agrees to keep and maintain in good
order, condition and repair the interior and exterior of the
Leased Premises during the term of the Lease, or any renewal
terms, and further agrees that Lessor shall be under no
obligation to make any repairs or perform any maintenance to the
Leased Premises. Lessee covenants and agrees that it shall be
responsible for all repairs, alterations, replacements, or
maintenance of, including but without limitation to or of: The
interior and exterior portions of all doors; door checks and
operators; windows; plate glass; plumbing; water and sewage
facilities; fixtures; electrical equipment; interior walls;
ceilings; signs; roof; structure; interior building appliances
and similar equipment; heating and air conditioning equipment;
and any equipment owned by Lessor and leased to Lessee hereunder,
as itemized on Exhibit B attached hereto and incorporated herein
by reference; and further agrees to replace any of said equipment
when necessary. Lessee further agrees to be responsible for, at
its own expense, snow removal, lawn maintenance, landscaping,
maintenance of the parking lot (including parking lines, seal
coating, and blacktop surfacing), and other similar items.
(B) If Lessee refuses or neglects to commence or complete
repairs promptly and adequately, Lessor may cause such repairs to
be made, but shall not be required to do so, and Lessee shall pay
the cost thereof to Lessor upon demand. It is understood that
Lessee shall pay all expenses and maintenance and repair during
the term of this Lease. If Lessee is not then in default
hereunder, Lessee shall have the right to make repairs and
improvements to the Leased Premises without the consent of Lessor
if such repairs and improvements do not exceed Fifty Thousand
Dollars ($50,000.00), provided such repairs or improvements do
not affect the structural integrity of the Leased Premises. Any
repairs or improvements in excess of Fifty Thousand Dollars
($50,000.00) or affecting the structural integrity of the Leased
Premises may be done only with the prior written consent of
Lessor, such consent not to be unreasonably withheld or delayed.
All alterations and additions to the Leased Premises shall be
made in accordance with all applicable laws and shall remain for
the benefit of Lessor. In the event of making such alterations
as herein provided, Lessee further agrees to indemnify and save
harmless Lessor from all expense, liens, claims or damages to
either persons or property or the Leased Premises which may arise
out of or result from the undertaking or making of said repairs,
improvements, alterations or additions, or Lessee's failure to
make said repairs, improvements, alterations or additions.
ARTICLE 9. COMPLIANCE WITH LAWS AND REGULATIONS
Lessee will comply with all statutes, ordinances, rules,
orders, regulations and requirements of all federal, state, city
and local governments, and with all rules, orders and
regulations of the applicable Board of Fire Underwriters which
affect the use of the improvements. Lessee will comply with all
easements, restrictions, and covenants of record against or
affecting the Leased Premises and any franchise agreements
required for operation of the Leased Premises in accordance with
Article 14 hereof.
ARTICLE l0. SIGNS
Lessee shall have the right to install and maintain a sign or
signs advertising Lessee's business, provided that the signs
conform to law, and further provided that the sign or signs
conform specifically to the written requirements of the
appropriate governmental authorities.
ARTICLE 11. SUBORDINATION
(A) Lessor reserves the right and privilege to subject and
subordinate this Lease at all times to the lien of any mortgage
or mortgages now or hereafter placed upon Lessor's interest in
the Leased Premises and on the land and buildings of which said
premises are a part, or upon any buildings hereafter placed upon
the land of which the Leased Premises are a part. Lessor also
reserves the right and privilege to subject and subordinate this
Lease at all times to any and all advances to be made under such
mortgages, and all renewals, modifications, extensions,
consolidations, and replacements thereof, provided such mortgagee
shall execute its standard form, commercially reasonable
subordination, attornment and non-disturbance agreement, such
form to be consistent with other such forms used by commercial
mortgagees in the industry.
(B) Lessee covenants and agrees to execute and deliver, upon
demand, such further commercially reasonable instrument or
instruments subordinating this Lease on the foregoing basis to
the lien of any such mortgage or mortgages as shall be desired by
Lessor and any proposed mortgagee or proposed mortgagees.
ARTICLE l2. CONDEMNATION OR EMINENT DOMAIN
(A) If the whole of the Leased Premises are taken by any
public authority under the power of eminent domain, or by private
purchase in lieu thereof, then this Lease shall automatically
terminate upon the date possession is surrendered, and Rent shall
be paid up to that day. If any part of the Leased Premises shall
be so taken as to render the remainder thereof materially
unusable in the opinion of a licensed third party contractor or
architect approved by Lessor, for the purposes for which the
Leased Premises were leased, then Lessee shall have the right to
terminate this Lease on thirty (30) days notice to the Lessor
given within ninety (90) days after the date of such taking. In
the event that this Lease shall terminate or be terminated, the
Rent shall be paid up to the day that possession was surrendered.
(B) If any part of the Leased Premises shall be so taken such
that it does not materially interfere with the business of
Lessee, then Lessee shall, with the use of the condemnation
proceeds to be made available by Lessor, but otherwise at
Lessee's own cost and expense, restore the remaining portion of
the Leased Premises to the extent necessary to render it
reasonably suitable for the purposes for which it was leased.
Lessee shall make all repairs to the building in which the Leased
Premises is located to the extent necessary to constitute the
building a complete architectural unit. Provided, however, that
such work shall not exceed the scope of the work required to be
done by Lessee in originally constructing such building unless
Lessee shall demonstrate to Lessor's reasonable satisfaction the
availability of funds to complete such work. Provided, further,
the cost thereof to Lessor shall not exceed the proceeds of its
condemnation award, all to be done without any adjustments in
Rent to be paid by Lessee, except as follows: any condemnation
proceeds remaining after the completion of the repair or
restoration of the Leased Premises shall be paid to Lessor to
reduce the sum of monies expended by Lessor to acquire from
Lessee its interest in the Lease Premises and annual rent
hereunder shall be reduced by 11.25% of such amount. This lease
shall be deemed amended to reflect the taking in the legal
description of the Leased Premises.
(C) All compensation awarded or paid upon such total or
partial taking of the Leased Premises shall belong to and be the
property of Lessor without any participation by Lessee, whether
such damages shall be awarded as compensation for diminution in
value to the leasehold or to the fee of the premises herein
leased. Nothing contained herein shall be construed to preclude
Lessee from prosecuting any claim directly against the condemning
authority in such proceedings for: Loss of business; damage to
or loss of value or cost of removal of inventory, trade fixtures,
furniture, and other personal property belonging to Lessee;
provided, however, that no such claim shall diminish or otherwise
adversely affect Lessor's award or the award of any fee
mortgagee.
ARTICLE l3. RIGHT TO INSPECT
Lessor reserves the right to enter upon, inspect and examine
the Leased Premises at any time during business hours, after
reasonable notice to Lessee, and Lessee agrees to allow Lessor
free access to the Leased Premises to show the premises. Upon
default by Lessee or at any time within one hundred eighty (180)
days of the expiration or termination of the Lease, Lessee agrees
to allow Lessor to then place "For Sale" or "For Rent" signs on
the Leased Premises.
ARTICLE l4. EXCLUSIVE USE
After the Occupancy Date, Lessee expressly agrees and warrants
that the Leased Premises will be used exclusively as a Denny's
Restaurant or, after obtaining Lessor's prior written consent,
such consent not to be unreasonably withheld or delayed, other
casual dining sit-down restaurant. Lessee acknowledges and
agrees that any other use without the prior written consent of
Lessor will constitute a default under and a violation and breach
of this Lease. Lessee agrees: To open for business on the first
day in respect of which Rent is payable; to operate all of the
Leased Premises during the Term or Renewal Terms during regular
and customary hours for businesses similar to the permitted
exclusive use stated herein, unless prevented from doing so by
causes beyond Lessee's control; and to conduct its business in a
first class and reputable manner in order to maximize sales and
Rents payable to Lessor.
ARTICLE l5. DESTRUCTION OF PREMISES
If, during the term of this Lease, the Leased Premises are
totally or partially destroyed by fire or other elements, within
a reasonable time (but in no event longer than one hundred eighty
(180) days and subject to the provisions herein below), Lessee
shall repair and restore the improvements so damaged or destroyed
as nearly as may be practical to their condition immediately
prior to such casualty. All rents payable by Lessee shall be
abated during the period of repair and restoration to the extent
that Lessor shall be compensated by the proceeds of the rent loss
insurance required to be maintained by Lessee hereunder.
Provided Lessee is not in default hereunder (and retains
according to the terms hereof the right to rebuild) with the
Lessor's prior written consent, which consent shall not be
unreasonably withheld or delayed, Lessee shall have the right to
promptly and in good faith settle and adjust any claim under such
insurance policies with the insurance company or companies on the
amounts to be paid upon the loss. The insurance proceeds shall
be used to reimburse Lessee for the cost of rebuilding or
restoration of the Leased Premises. The Leased Premises shall be
so restored or rebuilt so as to be of at least equal value and
substantially the same character as prior to such damage or
destruction. If the insurance proceeds are less than Fifty
Thousand Dollars ($50,000), they shall be paid to Lessee for such
repair and restoration. If the insurance proceeds are greater
than or equal to Fifty Thousand Dollars ($50,000), they shall be
deposited by Lessee and Lessor into a customary construction
escrow at a nationally recognized title insurance company, or at
Lessee's option, with Lessor ("Escrowee") and shall be made
available from time to time to Lessee for such repair and
restoration. Such proceeds shall be disbursed in conformity with
the terms and conditions of a commercially reasonable
construction loan agreement. Lessee shall, in either instance,
deliver to Lessor or Escrowee (as the case may be) satisfactory
evidence of the estimated cost of completion together with such
architect's certificates, waivers of lien, contractor's sworn
statements and other evidence of cost and of payments as the
Lessor or Escrowee may reasonably require and approve. If the
estimated cost of the work exceeds Ten Percent (10%) of the
original cost to Lessor to acquire its interest in the Lease
Premises from Lessee, all plans and specifications for such
rebuilding or restoration shall be subject to the reasonable
approval of Lessor.
Any insurance proceeds remaining with Escrowee after the
completion of the repair or restoration shall be paid to Lessor
to reduce the sum of monies expended by Lessor to acquire from
Lessee its interest in the Lease Premises, and annual rent
hereunder shall be reduced by 11.25% of such amount.
If the proceeds from the insurance are insufficient, after
review of the bids for completion of such improvements, or should
become insufficient during the course of construction, to pay for
the total cost of repair or restoration, Lessee shall, prior to
commencement of work, demonstrate to Escrowee and Lessor's
reasonable satisfaction, the availability of such funds necessary
to completion construction and Lessee shall deposit the same with
Escrowee for disbursement under the construction escrow
agreement. Provided, further, that should the Leased Premises be
damaged or destroyed to the extent of fifty (50%) percent of its
value or such that Lessee cannot carry on business as a casual
dining restaurant without (in Lessor's reasonable opinion) being
closed for more than sixty (60) days (which duration of closure
may be established by Lessee by the affidavit of an independent
third party contractor as to the estimated time of repair) during
the last two years of the remaining term of this Lease or any of
the option terms of this Lease, if any further options to renew
remain, Lessee may elect within 30 days of such damage, to then
exercise at least one (1) option to renew this Lease so that the
remaining term of the Lease is not less than five (5) years in
order to be entitled to such insurance proceeds for restoration
or rebuilding. Absent such election, this Lease shall terminate
upon Lessor's receipt of the insurance proceeds in the amount
estimated to restore or rebuild the Leased Premises.
ARTICLE l6. ACTS OF DEFAULT
(A) Each of the following shall be deemed a default by Lessee
and a breach of this Lease:
1. Failure to pay the Rent or any
monetary obligation herein reserved, or any part
thereof when the same shall be due and payable.
Interest and late charges for failure to pay Rent
when due shall accrue if Lessee shall fail to make
payment within five days after notice to Lessee that
Rent has not been paid. Lessee shall be granted
five days after written notice to cure such failure
to pay the Rent or any other monetary obligation
herein reserved.
2. Failure to do, observe, keep
and perform any of the other terms, covenants,
conditions, agreements and provisions in this Lease
to be done, observed, kept and performed by Lessee;
provided, however, that Lessee shall have Thirty
(30) days after written notice from Lessor within
which to cure such default, or such longer time as
may be reasonably necessary if such default cannot
reasonably be cured within Thirty (30) days, if
Lessee is diligently pursuing a course of conduct
that in Lessor's reasonable opinion is capable of
curing such default, but in any event such longer
time shall not exceed 90 days after written notice
from Lessor of the default hereunder.
3. The abandonment of the premises
by Lessee, the adjudication of Lessee as a bankrupt,
the making by Lessee of a general assignment for the
benefit of creditors, the taking by Lessee of the
benefit of any insolvency act or law, the
appointment of a permanent receiver or trustee in
bankruptcy for Lessee property, or the appointment
of a temporary receiver which is not vacated or set
aside within sixty (60) days from the date of such
appointment.
ARTICLE l7. TERMINATION FOR DEFAULT
In the event of any uncured default by Lessee and at any time
thereafter, Lessor may serve a written notice upon Lessee that
Lessor elects to terminate this Lease upon a specified date not
less than ten (10) days after the date of serving such notice of
termination, and this Lease shall then terminate on the date so
specified as if that date had been originally fixed as the
expiration date of the term herein granted, provided, however,
that Lessee shall have continuing liability for future rents for
the remainder of the original term and any exercised renewal term
as set forth in Article 19, notwithstanding any earlier
termination of the Lease hereunder, preserving unto Lessor the
benefit of its bargained-for rental payments.
ARTICLE l8. LESSOR'S RIGHT OF RE-ENTRY
In the event that this Lease shall be terminated as
hereinbefore provided, or by summary proceedings or otherwise, or
in the event of an uncured default hereunder by Lessee, or in the
event that the premises or any part thereof, shall be abandoned
by Lessee, then Lessor or its agents, servants or
representatives, may immediately or at any time thereafter, re-
enter and resume possession of the premises or any part thereof,
and remove all persons and property therefrom, either by summary
dispossess proceedings or by a suitable action or proceeding at
law, or by force or otherwise without being liable for any
damages therefor.
ARTICLE l9. LESSEE'S CONTINUING LIABILITY
(A) Should Lessor elect to re-enter as provided in this Lease
or should it take possession pursuant to legal proceedings or
pursuant to any notice provided for by law, it may either (i)
terminate this Lease or (ii) it may from time to time, without
terminating the contractual obligation of Lessee to pay Rent
under this Lease, make such alterations and repairs as may be
necessary to relet the Leased Premises or any part thereof for
such Term or Renewal Terms, at such Rent or Rents, and upon such
other terms and conditions as Lessor in its sole discretion may
deem advisable. Termination of Lessee's right to possession by
Court Order shall be sufficient evidence of the termination of
Lessee's possessory rights under this Lease, and the filing of
such an Order shall be notice of the termination of Lessee's
Option to Purchase or Right of First Refusal as set forth in any
Memorandum of Lease of record.
(B) Upon each such reletting, without termination of the
contractual obligation of Lessee to pay Rent under this Lease,
all Rents received by Lessor shall be applied as follows:
1. First, to the payment of any
indebtedness other than Rent due hereunder from
Lessee to Lessor;
2. Second, to the payment of any
costs and expenses of such reletting, including
brokerage fees and attorney's fees and of costs of
such alterations and repairs;
3. Third, to the payment of Rent
and other monetary obligations due and unpaid
hereunder;
4. Finally, the residue, if any,
shall be held by Lessor and applied in payment of
future Rent as the same may become due and payable
hereunder.
If such Rents received from such reletting during any month are
less than that to be paid during that month by Lessee hereunder,
Lessee shall pay any such deficiency to Lessor. Such deficiency
shall be calculated and paid monthly. No such re-entry or taking
possession of such Leased Premises by Lessor shall be construed
as an election on its part to terminate Lessee's contractual
obligations under this Lease respecting the payment of rent and
obligations for the costs of repair and maintenance unless a
written notice of such intention be given to Lessee.
(C) Notwithstanding any such reletting without termination,
Lessor may at any time thereafter elect to terminate this Lease
for any breach.
(D) In addition to any other remedies Lessor may have with
this Article 19, Lessor may recover from Lessee all damages it
may incur by reason of any breach. Without limiting the
generality of the foregoing, Lessor may recover the following as
liquidated damages if Lessor elects to terminate the Lease: The
cost of recovering and reletting the Leased Premises; reasonable
attorney's fees; and, the present value (discounted at a rate of
10% per annum) of the excess of the amount of Rent and charges
equivalent to Rent reserved in this Lease for the remainder of
the Term over the then reasonable Rent value of the Leased
Premises (or the actual Rents receivable by Lessor, if relet) for
the remainder of the Term, all of which amounts shall be
immediately due and payable from Lessee to Lessor in full. In
the event that the Rent obtained from such alternative or
substitute tenant is more than the Rent which Lessee is obligated
to pay under this Lease, then such excess shall be paid to Lessor
provided that Lessor shall credit such excess against the
outstanding obligations of Lessee due pursuant hereto, if any.
(E) It is the object and purpose of this Article 19 that
Lessor shall be kept whole and shall suffer no damage by way of
non-payment of Rent or by way of diminution in Rent. Lessee
waives and will waive all rights to trial by jury in any summary
proceedings or in any action brought to recover Rent herein which
may hereafter be instituted by Lessor against Lessee in respect
to the Leased Premises. Lessee hereby waives any rights of re-
entry it may have or any rights of redemption or rights to redeem
this Lease upon a termination of this Lease.
ARTICLE 20. PERSONALTY, FIXTURES AND EQUIPMENT
(A) All building fixtures, building machinery, and building
equipment used in connection with the operation of the Leased
Premises including, but not limited to, heating, electrical
wiring, lighting, ventilating, plumbing, air conditioning
systems, and the equipment owned by Lessor and leased to Lessee
hereunder as specifically set forth on Exhibit B attached hereto
and incorporated herein by reference shall be the property of
Lessor. All trade fixtures and all other fixtures and articles
of personal property owned by Lessee shall remain the property of
Lessee.
(B) Lessee shall furnish and pay for any and all equipment,
furniture, trade fixtures, and signs, except for such items, if
any, described in Article 20(A) above, as owned by Lessor.
(C) At the end of the term of this Lease, the property
described at Article 20(B) above, after written notice to Lessor
given at least ten (10) days prior thereto, may be removed from
the Leased Premises by Lessee regardless of whether or not such
property is attached to the Leased Premises so as to constitute a
"fixture" within the meaning of the law; however, all damages and
repairs to the Leased Premises which may be caused by the removal
of such property shall be paid for by Lessee.
ARTICLE 2l. LIENS
Lessee shall not do or cause anything to be done whereby the
Leased Premises may be encumbered by any mechanic's or other
liens. Whenever and as often as any mechanic's or other lien is
filed against said Leased Premises purporting to be for labor or
materials furnished or to be furnished to Lessee, Lessee shall
remove the lien of record by payment or by bonding with a surety
company authorized to do business in the state in which the
property is located, within twenty (20) days from the date of the
filing of said mechanic's or other lien and delivery of notice
thereof to Lessee of Lessee's obligation under this Lease.
Should Lessee fail to take the foregoing steps within said twenty
(20) day period, Lessor shall have the right, among other things,
to pay said lien without inquiring into the validity thereof, and
Lessee shall forthwith reimburse Lessor for the total expense
incurred by it in discharging said lien as additional Rent
hereunder.
ARTICLE 22. NO WAIVER BY LESSOR EXCEPT IN WRITING
No agreement to accept a surrender of the Leased Premises or
termination of this Lease shall be valid unless in writing signed
by Lessor. The delivery of keys to any employee of
Lessor or Lessor's agents shall not operate as a termination of
the Lease or a surrender of the premises. The failure of Lessor
to seek redress for violation of any rule or regulation, shall
not prevent a subsequent act, which would have originally
constituted a violation, from having all the force and effect of
an original violation. Neither payment by Lessee or receipt by
Lessor of a lesser amount than the Rent herein stipulated shall
be deemed to be other than on account of the earliest stipulated
Rent. Nor shall any endorsement or statement on any check nor
any letter accompanying any check or payment as Rent be deemed an
accord and satisfaction. Lessor may accept such check or payment
without prejudice to Lessor's right to recover the balance of
such Rent or pursue any other remedy provided in this Lease.
This Lease contains the entire agreement between the parties, and
any executory agreement hereafter made shall be ineffective to
change it, modify it or discharge it, in whole or in part, unless
such executory agreement is in writing and signed by the party
against whom enforcement of the change, modification or discharge
is sought.
ARTICLE 23. QUIET ENJOYMENT
Lessor covenants that Lessee, upon paying the Rent set forth
in Article 4 and all other sums herein reserved as Rent and upon
the due performance of all the terms, covenants, conditions and
agreements herein contained on Lessee's part to be kept and
performed, shall have, hold and enjoy the Leased Premises free
from molestation, eviction, or disturbance by Lessor, or by any
other person or persons lawfully claiming the same, and that
Lessor has good right to make this Lease for the full term
granted, including renewal periods.
ARTICLE 24. BREACH - PAYMENT OF COSTS AND ATTORNEYS' FEES
Each party agrees to pay and discharge all reasonable costs,
and actual attorneys' fees, including but not limited to
attorney's fees incurred at the trial level and in any appellate
or bankruptcy proceeding, and expenses that shall be incurred by
the prevailing party in enforcing the covenants, conditions and
terms of this Lease or defending against an alleged breach,
including the costs of reletting. Such costs, attorneys fees,
and expenses if incurred by Lessor shall be considered as Rent as
due and owing in addition to any Rent defined in Article 4
hereof.
ARTICLE 25. ESTOPPEL CERTIFICATES
Either party to this Lease will, at any time, upon not less
than ten (l0) days prior request by the other party, execute,
acknowledge and deliver to the requesting party a statement in
writing, executed by an executive officer of such party,
certifying that: (a) this Lease is unmodified (or if modified
then disclosure of such modification shall be made); (b) this
Lease is in full force and effect; (c) the date to which the Rent
and other charges have been paid; and (d) to the knowledge of the
signer of such certificate that the other party is not in default
in the performance of any covenant, agreement or condition
contained in this Lease, or if a default does exist, specifying
each such default of which the signer may have knowledge. It is
intended that any such statement delivered pursuant to this
Article may be relied upon by any prospective purchaser or
mortgagee of the Leased Premises or any assignee of such
mortgagee or a purchaser of the leasehold estate.
ARTICLE 26. FINANCIAL STATEMENTS
During the term of this Lease, Lessee will, within ninety (90)
days after the end of Lessee's fiscal year, furnish its financial
statements to Lessor. The financial statements shall be
reviewed, at the Lessee's expense, by an independent certified
public accountant and shall be prepared in conformity with
generally accepted accounting principles. The reviewed financial
statements shall be accompanied by the preparing accountant's
opinion. Additionally, during the term of the Lease, Lessee will
within thirty (30) days from the end of each quarter of each
fiscal year, furnish Lessor with Lessee's financial statements
and operating statements of the Leased Premises for such quarter.
Lessor shall have the right to require such operating statements
on a monthly basis. Said quarterly (or monthly, if requested by
Lessor) statements do not need to be prepared by an independent
certified public accountant, but shall be certified as true and
correct by the chief financial officer of Lessee. The financial
statements shall include a balance sheet and related statements
of income, changes in cash funds, changes in capital, and related
notes to financial statements.
ARTICLE 27. MORTGAGE
Lessee does hereby agree to make reasonable modifications of
this Lease requested by any Mortgagee of record from time to time
provided such modifications are not substantial and do not
increase any of the Rents or materially modify any of the
elements of this Lease.
ARTICLE 28. OPTION TO RENEW
If this Lease is not previously canceled or terminated and if
Lessee is not then in default or has not failed to comply with
and perform any of the covenants and conditions in this Lease
more than 3 times in any previous 36 month period, then Lessee
shall have the option to renew this Lease upon the same
conditions and covenants contained in this Lease for Three (3)
consecutive periods of Five (5) years each (singularly "Renewal
Term"). Rent during each of the Lease Years of any renewal
period shall increase by 1.925% of the Rent payable for the
preceding Lease Year.
The first Renewal Term will commence on the day following the
date the original Term expires and successive Renewal Terms would
commence on the day of following the last day of the then
expiring Renewal Term. Lessee must give one hundred eighty (l80)
days written notice to Lessor of its intent to exercise this
option prior to the expiration of the original Term of this Lease
or any Renewal Term, as the case may be.
ARTICLE 29. MISCELLANEOUS PROVISIONS
(A) All written notices shall be given to Lessor by certified
mail. Notices to either party shall be addressed to the person
and address given on the first page hereof. Lessor and Lessee
may, from time to time, change these addresses by notifying each
other of this change in writing. Notices of overdue Rent may be
sent to Lessee by regular, special delivery, or nationally
recognized overnight mail.
(B) The terms, conditions and covenants contained in this
Lease and any riders and plans attached hereto shall bind and
inure to the benefit of Lessor and Lessee and their respective
successors, heirs, legal representatives, and assigns.
(C) This Lease shall be governed by and construed under the
laws of the State of Louisiana.
(D) In the event that any provision of this Lease shall be
held invalid or unenforceable, no other provisions of this Lease
shall be affected by such holding, and all of the remaining
provisions of this Lease shall continue in full force and effect
pursuant to the terms hereof.
(E) The Article captions are inserted only for convenience
and reference, and are not intended, in any way, to define,
limit, describe the scope, intent, and language of this Lease or
its provisions.
(F) In the event Lessee remains in possession of the premises
herein leased after the expiration of this Lease and without the
execution of a new lease, it shall be deemed to be occupying said
premises as a tenant from month-to-month, subject to all the
conditions, provisions, and obligations of this Lease insofar as
the same can be applicable to a month-to-month tenancy except
that the monthly installment of Rent shall be increased 150% of
the amount due on the last month prior to such expiration.
(G) If any installment of Rent (whether lump sum, monthly
installments, or any other monetary amounts required by this
Lease to be paid by Lessee and deemed to constitute Rent
hereunder) shall not be paid when due and shall remain unpaid for
five days after written notice to Lessee, or financial statements
required to be delivered hereunder by Lessee remain undelivered
when due for five days after written notice to Lessee, Lessor
shall have the right to charge Lessee a late charge of $250.00
per month for each month (or portion thereof) that any amount of
Rent installment remains unpaid or such financial statements
remain undelivered. Said late charge shall commence after such
installment is due and continue until said installment, interest
and all accrued late charges are paid in full.
(H) Any part of the Leased Premises (excluding the Building)
may be conveyed by Lessor for private or public non-exclusive
easement purposes at any time, provided such easement does not
interfere with the business of Lessee. In such event Lessor
shall, at its own cost and expense, restore the remaining portion
of the Leased Premises to the extent necessary to render it
reasonably suitable for the purposes for which it was leased, all
to be done without adjustments in Rent to be paid by Lessee. All
proceeds from any conveyance of an easement shall belong solely
to Lessor.
(I) For the purpose of this Lease, the term "Rent" shall be
defined as Rent under Article 4, and any other monetary amounts
required by this Lease to be paid by Lessee.
(J) Lessee agrees to cooperate with Lessor to allow Lessor to
obtain and use at Lessor's expense promotional photographs of the
Leased Premises, to the extent permitted by Lessee's franchisor.
ARTICLE 30. REMEDIES
NON-EXCLUSIVITY. Notwithstanding anything contained herein it
is the intent of the parties that the rights and remedies
contained herein shall not be exclusive but rather shall be
cumulative along with all of the rights and remedies of the
parties which they may have at law or equity.
ARTICLE 31. HAZARDOUS MATERIALS INDEMNITY
Lessee covenants, represents and warrants to Lessor, its
successors and assigns, (i) that (except for items normally used
by Lessee in the course of restaurant operations and in such
case, such items are used and stored in accordance with
applicable law or regulation) it has not used or permitted and
will not use or permit the Leased Premises to be used, whether
directly or through contractors, agents or tenants, and to the
best of Lessee's knowledge and except as disclosed to Lessor in
writing, the Leased Premises has not at any time been used for
the generating, transporting, treating, storage, manufacture,
emission of, or disposal of any dangerous, toxic or hazardous
pollutants, chemicals, wastes or substances as defined in the
Federal Comprehensive Environmental Response Compensation and
Liability Act of 1980 ("CERCLA"), the Federal Resource
Conservation and Recovery Act of 1976 ("RCRA"), or any other
federal, state or local environmental laws, statutes,
regulations, requirements and ordinances ("Hazardous Materials");
(ii) that there have been no investigations or reports involving
Lessee, or the Leased Premises by any governmental authority
which in any way pertain to Hazardous Materials (iii) that the
operation of the Leased Premises has not violated and is not
currently violating any federal, state or local law, regulation,
ordinance or requirement governing Hazardous Materials; (iv) that
the Leased Premises is not listed in the United States
Environmental Protection Agency's National Priorities List of
Hazardous Waste Sites nor any other list, schedule, log,
inventory or record of Hazardous Materials or hazardous waste
sites, whether maintained by the United States Government or any
state or local agency; and (v) that the Leased Premises will not
contain any formaldehyde, urea or asbestos, except as may have
been disclosed in writing to Lessor by Lessee at the time of
execution and delivery of this Lease. Lessee agrees to indemnify
and reimburse Lessor, its successors and assigns, for:
(a) any breach of these representations and warranties, and
(b)any loss, damage, expense or cost arising out of or
incurred by Lessor which is the result of a breach of,
misstatement of or misrepresentation of the above
covenants, representations and warranties, and
(c)any and all liability of any kind whatsoever which
Lessor may, for any cause and at any time, sustain or
incur by reason of Hazardous Materials discovered on the
Leased Premises during the term hereof or placed or
released on the Leased Premises by Lessee;
together with all attorneys' fees, costs and disbursements
incurred in connection with the defense of any action against
Lessor arising out of the above. These covenants,
representations and warranties shall be deemed continuing
covenants, representations and warranties for the benefit of
Lessor, and any successors and assigns of Lessor and shall
survive expiration or sooner termination of this Lease. The
amount of all such indemnified loss, damage, expense or cost,
shall bear interest thereon at the highest rate of interest
allowed by law and shall become immediately due and payable in
full on demand of Lessor, its successors and assigns. Lessee
shall not be responsible for any liabilities under this Article
if the liability results from activities of Lessor or any agent,
employee, or contractor of Lessor.
ARTICLE 32. ESCROWS
Upon a default by Lessee or upon the request of Lessor's
Mortgagee, if any, Lessee shall deposit with Lessor on the first
day of each and every month, an amount equal to one-twelfth
(1/12th) of the estimated annual real estate taxes, assessments
and insurance ("Charges") due on the Leased Premises, or such
higher amounts reasonably determined by Lessor as necessary to
accumulate such amounts to enable Lessor to pay all charges due
and owing at least thirty (30) days prior to the date such
amounts are due and payable. From time to time out of such
deposits Lessor will, upon the presentation to Lessor by Lessee
of the bills therefor, pay the Charges or will upon presentation
of receipted bills therefor, reimburse Lessee for such payments
made by Lessee. In the event the deposits on hand shall not be
sufficient to pay all of the estimated Charges when the same
shall become due from time to time or the prior payments shall be
less than the currently estimated monthly amounts, then Lessee
shall pay to Lessor on demand any amount necessary to make up the
deficiency. The excess of any such deposits shall be credited to
subsequent payments to be made for such items. If a default or
an event of default shall occur under the terms of this Lease,
Lessor may, at its option, without being required so to do, apply
any Deposit on hand to cure the default, in such order and manner
as Lessor may elect.
ARTICLE 33. NET LEASE
Notwithstanding anything contained herein to the contrary it
is the intent of the parties hereto that this Lease shall be a
net lease and that the Rent defined pursuant to Article 4 should
be a net Rent paid to Lessor. Any and all other expenses
including but not limited to, maintenance, repair, insurance,
taxes, and assessments, shall be paid by Lessee.
ARTICLE 34. RIGHT OF FIRST REFUSAL
Lessor, for itself, its successors and assigns, hereby gives
and grants to Lessee a right of first refusal (the "Refusal
Right") to purchase the Leased Premises, subject to the following
terms and conditions:
(A) Duration of Refusal Right. The Refusal Right and all
rights and privileges of Lessee hereunder shall be in force for
the term of this Lease (including any exercised renewal terms
hereof) until the expiration of Lessee's right to possession.
(B) Manner of Exercising Refusal Right. If Lessor shall
desire to sell the Leased Premises (subject to the terms of this
Lease), Lessor shall give Lessee written notice of Lessor's
intention to sell Lessor's interest in the Leased Premises. Such
notice ("Lessor's Notice") shall state a price at which (or
greater) Lessor intends to sell its interest. For ten (10)
business days following the giving of such notice, Lessee shall
have the option to purchase the Lessor's interest at the price in
cash stated in the Lessor's Notice. A written notice in
substantially the following form, addressed to Lessor and signed
by Lessee and given, in accordance with the provisions of Article
29(A) hereof, within the period for exercising the Refusal Right,
submitted with a bank cashier's check or money order payable to
the order of Lessor in the amount of $5,000.00 (the "Earnest
Money") shall be an effective exercise of Lessee's Refusal Right,
to wit:
(date)
"We hereby exercise the Refusal Right to purchase the property
commonly known as Denny's, Covington, La., pursuant to the Right
of First Refusal contained in that certain Net Lease Agreement
between us pertaining to said premises."
(C) Terms of Sale if Refusal Right Exercised. Upon Lessee's
exercise of the Refusal Right in accordance with the provisions
of subparagraph (B) hereof, Lessor shall be obligated to sell and
convey by recordable Act of Cash Sale, good and marketable title
to the Leased Premises subject only to the matters affecting
title which were of record at the time Lessor came into title to
the Leased Premises and those matters which Lessee created,
suffered or permitted to accrue during the term hereof, and
Lessee shall be obligated to purchase the Premises upon the
following terms and conditions:
(i) Price. The price "Purchase Price" at which Lessor
shall sell and Lessee shall purchase the Leased Premises
shall be the price stated in Lessor's Notice.
(ii)Closing. Closing shall be eighty (80) days after
the expiration of the twenty days within which Lessee
may exercise its Refusal Right, unless the parties
mutually agree otherwise. The Purchase Price less
credit for the Earnest Money shall be tendered in cash
or other certified funds by Lessee at Closing.
(iii) Evidence of Title. Not less than
ten (10) days prior to closing , Lessor shall obtain a
commitment for a ALTA owner's policy of title insurance
dated within thirty (30) days of the closing date,
issued by a nationally recognized title insurance
company selected by Lessor (the "Title Company") in the
amount of the Purchase Price determined pursuant to
subparagraph (C)(i) above, naming Lessee as the proposed
insured, and covering the fee simple title to the Leased
Premises, and showing Lessor vested with good title to
the Leased Premises subject only to the matters
affecting title which were of record at the time Lessor
came into title to the Leased Premises and those matters
which Lessee created, suffered or permitted to accrue
during the term hereof. Such title commitment shall be
conclusive evidence of good title. If Lessee shall make
objection to the marketability of title, Lessor shall
have no obligation to make title marketable, but may
withdraw Lessor's notice of intent to market the
Premises.
(iv)Prorations. Lessor shall pay the cost of the
aforesaid title policy and any and all state and
municipal taxes imposed by law on the transfer of the
title to the Leased Premises, or the transaction
pursuant to which such transfer occurs. Water, sewer
and other utility charges, if any, which are not
metered, driveway permit charges, if any, general real
estate taxes, and other similar items, shall be adjusted
ratably as of the Closing, except to the extent
otherwise settled between the parties pursuant to other
provisions of this Lease. No portion of the Base Rent
paid by Lessee shall be credited toward the Purchase
Price but Lessee shall be given a credit for rent
prepaid for any period after the Closing.
(v) Escrow Closing. At the election of Lessor or Lessee
upon notice to the other party not less than five (5)
days prior to the Closing, this sale shall be closed
through an escrow with the Title Company, in accordance
with the general provisions of the usual form of Act of
Cash Sale and Money Escrow Agreement then is use by said
company, with such special provisions inserted in the
escrow agreement as may be required to conform with this
agreement. Upon the creation of such an escrow,
anything herein to the contrary notwithstanding, paying
of the purchase price and delivery of the Act of Cash
Sale shall be made through the escrow. The cost of the
escrow shall be divided equally between the Lessor and
Lessee. If for any reason other than Lessee's default,
the transaction fails to close, the Earnest Money shall
be returned to Lessee forthwith.
(vi)Remedies on Default. If Lessee defaults under the
provisions of this subparagraph 34(C), Lessor shall have
the right to annul the provisions of this paragraph 34
by giving Lessee notice of such election, provided that
Lessor has first notified Lessee of such default and
Lessee has failed to cure the same within ten (10) days
after such notice. Upon Lessor's notice of annulment in
accordance herewith, the Earnest Money shall be
forfeited and paid to Lessor as liquidated damages,
which shall be Lessor's sole and exclusive remedy. If
Lessor defaults under the provisions of this
subparagraph 34(C) and fails to cure such default within
ten (10) days after being notified of the same by
Lessee, then in such event, (i) the Earnest Money at
Lessee's election and immediately upon its demand shall
be returned to Lessee, which return shall not, however,
in any way release or absolve Lessor from its
obligations hereunder and (ii) Lessee shall be entitled
to all remedies (both legal and equitable) the law (both
statutory and decisional) of the state in which the
Leased Premises are situated provides without first
having to tender the balance of the purchase price as a
condition precedent thereof and without having to make
any election of such remedies.
(D) Effect of Refusal Right on Lease. If the Refusal Right
is exercised, this Lease shall continue in full force and effect
until the Closing hereinabove specified. If the Refusal Right is
exercised only as to all of an offered undivided portion of the
fee simple to the Leased Premises, the Lease shall remain in full
force and effect without merger or termination of this Lease
because of such purchase.If for any reason such Closing fails to
occur, this Lease shall continue in full force and effect, except
that if the provisions of this paragraph 34 are annulled by
Lessor, in accordance with subparagraph 34(C)(vi), by reason of a
default by Lessee, this Lease shall continue but without the
provisions of this paragraph 34 being a part hereof.
(E) If Lessee fails to exercise its Refusal Right, Lessee
shall sign an appropriate waiver of its rights hereunder, such
waiver to be effective for the six months folowing the
exexecution of such waiver, but notwithstanding the execution or
failure to execute such waiver by Lessee, if Lessee fails to
exercise its Refusal Right hereunder, Lessor shall be free to
sell all or any portion of its interest in the Leased Premises
for six months following the expiration of the twenty days within
which Lessee may exercise its Refusal Right, provided that Lessor
shall sell its interest for a price equal to or greater than the
price (prorata with respect to the sale of a partial interest
therein) set forth in Lessor's Notice. This Right of First
Refusal shall survive any sale of the Leased Premises and shall
apply to any subsequent sale or potential sale by Lessor or its
assigns, but only as to such portion of or partial interest in
the Leased Premises.
ARTICLE 35. OPTION TO PURCHASE
Lessor, for itself, its successors and assigns, hereby gives
and grants to Lessee the exclusive and irrevocable option (the
"Option") to purchase the Leased Premises, subject to the
following terms and conditions:
(A) Duration of Option. The Option and all rights and
privileges of Lessee hereunder shall be in force for the period
commencing after the end of the Sixth (6th) Lease Year and
continuing until the expiration of the Term or any on-going
Renewal Term.
(B) Manner of Exercising Option. A written notice in
substantially the following form, addressed to Lessor and signed
by Lessee and given, in accordance with the provisions of Article
29(A) hereof, within the period for exercising the Option,
submitted with a bank cashier's check or money order payable to
the order of Lessor in the amount of $5,000.00 (the "Deposit")
shall be an effective exercise of the Option, to wit:
(date)
"We hereby exercise the Option to purchase the property commonly
known as Denny's Restaurant, Covington, La., pursuant to the
option to purchase contained in that certain Net Lease Agreement
between us pertaining to said premises."
(C) Terms of Sale if Option Exercised. Upon Lessee's
exercise of the Option in accordance with the provisions of
subparagraph (B) hereof, Lessor shall be obligated to sell and
convey by recordable Act of Cash Sale, good and marketable title
to the Leased Premises subject only to the matters affecting
title of record at the time Lessor acquired title to the Leased
Premises and those matters which Lessee has suffered, created, or
permitted to accrue during the term hereof, and Lessee shall be
obligated to purchase the Premises upon the following terms and
conditions:
(i) Price. The price "Purchase Price" at which Lessor
shall sell and Lessee shall purchase the Leased Premises
shall be the then current annual Base Rent capitalized
at the rate of 10 percent (10%), e.g. (current annual
Base Rent divided by 0.10).
(ii)Closing. Closing shall be thirty (30) days after
the Option is exercised, unless the parties mutually
agree otherwise. The Purchase Price less credit for the
Deposit shall be tendered in cash or other certified
funds by Lessee at Closing.
(iii) Evidence of Title. Not less than
ten (10) days prior to closing, Lessee shall obtain a
commitment for a TLTA owner's policy of title insurance
dated within thirty (30) days of the closing date,
issued by a nationally recognized title insurance
company approved by Lessor (the "Title Company") in the
amount of the Purchase Price determined pursuant to
subparagraph (C)(i) above, naming Lessee as the proposed
insured, and covering the fee simple title to the Leased
Premises, and showing Lessor vested with good title to
the Leased Premises subject only to the matters
affecting title which were of record at the time Lessor
acquired title to the Leased Premises and those matters
which Lessee has suffered, created, or permitted to
accrue during the term hereof. Such title commitment
shall be conclusive evidence of good title.
(iv)Prorations. Lessor shall pay the cost of the
aforesaid title policy and any and all state and
municipal taxes imposed by law on the transfer of the
title to the Leased Premises, or the transaction
pursuant to which such transfer occurs. Water, sewer
and other utility charges, if any, which are not
metered, driveway permit charges, if any, general real
estate taxes, and other similar items, shall be adjusted
ratably as of the Closing, except to the extent
otherwise settled between the parties pursuant to other
provisions of this Lease. No portion of the Base Rent
paid by Lessee shall be credited toward the Purchase
Price but Lessee shall be given a credit for rent
prepaid for any period after the Closing.
(v) Escrow Closing. At the election of Lessor or Lessee
upon notice to the other party not less than five (5)
days prior to the Closing, this sale shall be closed
through an escrow with the Title Company, in accordance
with the general provisions of the usual form of Act of
Cash Sale and Escrow Agreement then is use by said
company, with such special provisions inserted in the
escrow agreement as may be required to conform with this
agreement. Upon the creation of such an escrow,
anything herein to the contrary notwithstanding, paying
of the purchase price and delivery of the Act of Sale
shall be made through the escrow. The cost of the
escrow shall be divided equally between the Lessor and
Lessee. If for any reason other than Lessee's default,
the transaction fails to close, the Deposit shall be
returned to Lessee forthwith.
(vi)Remedies on Default. If Lessee defaults under the
provisions of this subparagraph 35(C), Lessor shall have
the right to annul the provisions of this paragraph 35
by giving Lessee notice of such election, provided that
Lessor has first notified Lessee of such default and
Lessee has failed to cure the same within ten (10) days
after such notice. Upon Lessor's notice of annulment in
accordance herewith, the Deposit shall be forfeited and
paid to Lessor as liquidated damages, which shall be
Lessor's sole and exclusive remedy. If Lessor defaults
under the provisions of this subparagraph 35(C) and
fails to cure such default within ten (10) days after
being notified of the same by Lessee, then in such
event, (i) the Deposit at Lessee's election and
immediately upon its demand shall be returned to Lessee,
which return shall not, however, in any way release or
absolve Lessor from its obligations hereunder and (ii)
Lessee shall be entitled to all remedies (both legal and
equitable) the law (both statutory and decisional) of
the state in which the Leased Premises are situated
provides without first having to tender the balance of
the purchase price as a condition precedent thereof and
without having to make any election of such remedies.
(D) Effect of Option on Lease. If the Option is exercised,
this Lease shall continue in full force and effect until the
Closing hereinabove specified. If for any reason such Closing
fails to occur, this Lease shall continue in full force and
effect, except that if the provisions of this paragraph 35 are
annulled by Lessor, in accordance with subparagraph 35(C)(vi), by
reason of a default by Lessee, this Lease shall continue but
without the provisions of this paragraph 35 being a part hereof.
ARTICLE 36. DENNY'S FRANCHISE AGREEMENT
Lessor and Lessee expressly acknowledge the existence of a
Franchise Agreement between Lessee and Denny's, Inc.
("Franchisor") for the Denny's Restaurant located on the Leased
Premises. In the event of a default under or termination of the
Franchise Agreement or this Lease, Lessor hereby agrees to allow
Franchisor, for a period of thirty (30) days after prior written
notice to Lessor, to enter the Premises for the purpose of
removing any items, signs or equipment not owned by Lessor,
displaying Franchisor's trademarks, from said items, signs or
equipment, without damaging the Leased Premises (or in the case
of unavoidable damage, Franchisor shall restore the Leased
Premises to its prior undamaged condition at Franchisor's
expense). Furthermore, in the event of a termination of the
Franchise Agreement or Lessee's rights to possession under this
Lease, Lessor agrees to the assignment of the Lease to
Franchisor, at Franchisor's sole option, subject to Franchisor's
assumption of the duties and the unaccrued but not the then
existing debts and obligations of Lessee under this Lease,
provided said parties so agree to assume in writing within thirty
(30) days of written notice of termination. Lessor agrees to use
its best efforts to provide Franchisor with concurrent copies of
any written notices of default required to be given to Lessee
hereunder, but Lessor's failure to provide such copies shall not
be a defense or bar to the enforcement of Lessor's rights
hereunder.
IN WITNESS WHEREOF, Lessor and Lessee have respectively signed
and sealed this Lease as of the day and year first above written.
LESSEE: HUNTINGTON RESTAURANTS GROUP, INC.
By: /s/ Richard P Beattie
Its: President
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - LESSOR'S SIGNATURE
ON FOLLOWING PAGE
LESSOR: AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP,
a Minnesota limited partnership
By: AEI FUND MANAGEMENT XXI, INC., a Minnesota corporation
By:/s/ Robert P Johnson
Robert P. Johnson, President