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EXHIBIT 10.17
L E A S E
APGM LIMITED PARTNERSHIP
LANDLORD
AND
[NEW LLC ENTITY]
TENANT
DATED AS OF __________________________, 199__
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TABLE OF CONTENTS
ARTICLE PAGE
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1 LEASED PROPERTY..................................................... 5
2 TERM................................................................ 6
2.1 Initial Term.................................................. 6
2.2 Extended Terms................................................ 6
3 RENT................................................................ 6
3.1 Rent.......................................................... 6
3.2 Annual Base Rent.............................................. 6
3.3 Additional Rent............................................... 7
3.3.1 Quarterly Calculation and Payment of Additional Rent... 7
3.3.2 Annual Reconciliation.................................. 7
3.3.3 Record-keeping......................................... 7
3.3.4 Audits................................................. 8
3.4 Additional Charges............................................ 9
3.5 Late Payment of Rent.......................................... 9
3.6 Net Lease..................................................... 10
4 IMPOSITIONS......................................................... 10
4.1 Payment of Impositions........................................ 10
4.2 Information and Reporting..................................... 10
4.3 Assessment Challenges......................................... 11
4.4 Prorations.................................................... 11
4.5 Refunds....................................................... 11
4.6 Utility Charges............................................... 11
4.7 Assessment Districts.......................................... 11
5 TENANT WAIVERS...................................................... 11
5.1 No Termination, Abatement, Etc................................ 11
5.2 Condition of the Leased Property.............................. 12
6 OWNERSHIP OF PROPERTY............................................... 13
6.1 Leased Property............................................... 13
6.2 Landlord's Personal Property.................................. 13
6.3 Tenant's Personal Property.................................... 13
6.4 Purchase of Tenant's Personal Property........................ 14
6.5 Removal of Personal Property.................................. 15
6.6 Landlord's Waivers............................................ 15
6.7 Collateral.................................................... 15
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ARTICLE PAGE
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7 USE OF LEASED PROPERTY............................................... 16
7.1 Use........................................................... 16
7.2 Specific Prohibited Uses...................................... 17
7.3 Landlord to Grant Easements, Etc.............................. 17
8 HAZARDOUS MATERIALS.................................................. 18
8.1 Tenant Covenant - Operation of the Leased Property............ 18
8.2 Remediation................................................... 18
8.3 Environmental Indemnification................................. 18
8.4 Survival of Indemnification Obligations....................... 19
8.5 Environmental Violations at Expiration or
Termination of Lease.......................................... 19
9 MAINTENANCE AND REPAIR............................................... 20
9.1 Tenant's Sole Obligation - General............................ 20
9.2 Leased Improvements Maintenance............................... 20
9.3 Golf Course Maintenance....................................... 21
9.4 Waiver of Statutory Obligations............................... 21
9.5 Mechanic's Liens.............................................. 21
9.6 Surrender of Leased Property.................................. 21
9.7 Transfer of Operating Permits................................. 21
10 TENANT'S IMPROVEMENTS................................................ 22
10.1 Tenant's Right to Construct................................... 22
10.2 Scope of Right................................................ 22
10.3 Cooperation of Landlord....................................... 23
10.4 Commencement of Construction.................................. 23
10.5 Rights in Tenant Improvements................................. 24
11 LIENS, ENCROACHMENTS AND OTHER TITLE MATTERS......................... 24
11.1 Liens......................................................... 24
11.2 Encroachments and Other Title Matters......................... 25
12 PERMITTED CONTESTS................................................... 26
13 INSURANCE............................................................ 27
13.1 General Insurance Requirements................................ 27
13.2 Replacement Cost.............................................. 30
13.3 Waiver of Subrogation......................................... 30
13.4 Form Satisfactory, Etc........................................ 30
13.5 Change in Limits.............................................. 31
13.6 Blanket Policy................................................ 31
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ARTICLE PAGE
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14 APPLICATION OF INSURANCE PROCEEDS.................................... 31
14.1 Insurance Proceeds............................................ 31
14.1.1 Disbursement of Property Insurance Proceeds........... 32
14.1.2 Excess Property Insurance Proceeds.................... 33
14.1.3 Delivery of Insurance Proceeds........................ 33
14.2 Reconstruction Covered by Insurance........................... 34
14.2.1 Destruction Rendering Facility Unsuitable
for its Primary Use................................... 34
14.2.2 Destruction Not Rendering Facility Unsuitable
for its Primary Use................................... 34
14.2.3 Costs of Repair....................................... 34
14.3 Reconstruction Not Covered by Insurance....................... 34
14.4 No Abatement of Rent.......................................... 34
14.5 Waiver........................................................ 35
14.6 Damage Near End of Term....................................... 35
15 CONDEMNATION......................................................... 35
15.1 Total Taking.................................................. 35
15.2 Partial Taking................................................ 35
15.3 Restoration................................................... 35
15.4 Award Distribution............................................ 36
15.5 Temporary Taking.............................................. 36
16 EVENTS OF DEFAULT.................................................... 36
16.1 Events of Default............................................. 36
16.2 Payment of Costs.............................................. 39
16.3 Exceptions.................................................... 39
16.4 Certain Remedies.............................................. 39
16.5 Damages....................................................... 39
16.6 Additional Remedies........................................... 40
16.7 Appointment of Receiver....................................... 40
16.8 Waiver........................................................ 40
16.9 Application of Funds.......................................... 40
17 LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT............................ 41
18 OPERATIONS/CAPITAL EXPENDITURES...................................... 41
18.1 Annual Plan................................................... 41
18.2 Funding of Capital Expenditure Reserve Account................ 42
19 LEGAL REQUIREMENTS................................................... 43
20 HOLDING OVER......................................................... 43
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ARTICLE PAGE
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21 UPREIT UNITS/REIT SHARES/LETTER OF CREDIT/SECURITY DEPOSIT............ 44
21.1 Security Deposit............................................... 44
21.2 Officer's Certificate/Audit.................................... 44
21.3 Terms of Letter of Credit...................................... 45
21.4 Draws Against Letter of Credit/Alternative Security;
Application of Proceeds........................................ 45
21.5 Renewal of Letter of Credit.................................... 46
21.6 Other Security................................................. 46
22 IMPOUNDS.............................................................. 46
23 INDEMNIFICATION; RISK OF LOSS......................................... 47
23.1 Tenant's Indemnification of Landlord........................... 47
23.2 Landlord's Indemnification of Tenant........................... 48
23.3 Mechanics of Indemnification................................... 48
23.4 Survival of Indemnification Obligations........................ 48
24 SUBLETTING AND ASSIGNMENT............................................. 49
24.1 Prohibition Against Subletting and Assignment.................. 49
24.2 Changes in Control............................................. 49
24.2.1 Financial Covenants.................................... 50
24.2.2 Operating Standards.................................... 50
24.3 Subleases...................................................... 50
24.3.1 Permitted Subleases.................................... 50
24.3.2 Terms of Sublease...................................... 51
24.3.3 Copies................................................. 51
24.3.4 Assignment of Rights in Subleases...................... 51
24.3.5 Licenses, Etc.......................................... 52
24.4 Assignment..................................................... 52
24.5 REIT Limitations............................................... 52
24.6 Existing Leases and Licenses................................... 53
25 OFFICER'S CERTIFICATES AND OTHER STATEMENTS........................... 53
25.1 Officer's Certificates......................................... 53
25.2 Financial Reporting............................................ 54
25.2.1 Monthly Financial Information......................... 54
25.2.2 Quarter Financial Information......................... 54
25.2.3 Annual Financial Statements........................... 55
25.2.4 Other Information..................................... 55
25.2.5 Standard Reporting Format............................. 55
25.3 Environmental Statements....................................... 55
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ARTICLE PAGE
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26 LANDLORD MORTGAGES.................................................. 56
26.1 Landlord May Grant Liens.................................... 56
26.2 Tenant's Non-Disturbance Rights............................. 56
26.3 Breach by Landlord.......................................... 56
26.4 Facility Mortgage Protection................................ 57
27 MISCELLANEOUS....................................................... 57
27.1 Landlord's Right to Inspect................................. 57
27.2 No Waiver................................................... 57
27.3 Remedies Cumulative......................................... 57
27.4 Acceptance of Surrender..................................... 58
27.5 No Merger of Title.......................................... 58
27.6 Conveyance by Landlord...................................... 58
27.7 Quiet Enjoyment............................................. 58
27.8 Notices..................................................... 58
27.9 Survival of Claims.......................................... 58
27.10 Invalidity of Terms or Provisions........................... 58
27.11 Prohibition Against Usury................................... 59
27.12 Amendments to Lease......................................... 59
27.13 Successors and Assigns...................................... 59
27.14 Titles...................................................... 59
27.15 Governing Law............................................... 59
27.16 Memorandum of Lease......................................... 59
27.17 Attorneys' Fees............................................. 59
27.18 Non-Recourse as to Landlord................................. 59
27.19 No Relationship............................................. 60
27.20 Signs; Reletting............................................ 60
27.21 Resort and Golf Course Names................................ 60
27.22 Audit Dispute Resolution.................................... 60
27.23 Standard of Consent/Approval................................ 60
27.24 Interest on Payments Due Tenant............................. 61
28 RIGHT OF FIRST OFFER................................................ 61
28.1 Exercise of First Offer Right............................... 61
28.2 Further Documentation....................................... 62
28.3 Purchase Price.............................................. 62
28.4 Mechanics of Purchase....................................... 62
28.5 REIT Qualification Limitation............................... 63
28.6 Effectiveness of First Offer Right.......................... 63
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EXHIBITS:
EXHIBIT A - Defined Terms: Interpretation
EXHIBIT B - Legal Description of the Land
EXHIBIT C - Intentionally Omitted
EXHIBIT D - Operating Standards
EXHIBIT E - Intentionally Omitted
EXHIBIT F - Annual Base Rent Schedule
EXHIBIT G - Baseline Year Revenue Schedule
EXHIBIT H - Standard Reporting Format
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LEASE
THIS LEASE ("Lease"), dated ______________________, 199__ , is entered
into by and between APGM LIMITED PARTNERSHIP, a Delaware limited partnership
("Landlord"), and __________________________________________________________ ,
a(n) __________________ limited liability company ("Tenant"). This Lease
consists of the Basic Lease Provisions, the Detailed Lease Provisions and
Exhibits A through H, all of which are incorporated herein by this reference.
Capitalized terms used herein have the meanings assigned to such terms in
Exhibit A.
BASIC LEASE PROVISIONS
1. ADDITIONAL RENT: Means the amount, if any, by which (a) the sum of:
(i) the Applicable Percentage of the amount by which Room Revenue
for any Fiscal Year exceeds Baseline Rooms Revenue;
(ii) the Applicable Percentage of the amount by which Golf Course
Revenue for any Fiscal Year exceeds the Baseline Golf Course Revenue; and
(iii) the Applicable Percentage of the amount by which FB&M Revenue
for any Fiscal Year exceeds the Baseline FB&M Revenue,
exceeds (b) the Base Rent Escalation for such Fiscal Year. (See Section
3.3 of the Detailed Lease Provisions.)
2. ADDRESS FOR PAYMENTS:
Landlord:
APGM Limited Partnership
c/o Arnold Palmer Golf
Building 106, Montgomery Street
Presidio Main Post, P.O. Box 29355
San Francisco, California 94129
(See Section 3.1 of the Detailed Lease Provisions.)
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3. ADDRESSES FOR NOTICES:
Tenant:
c/o Olympus Real Estate Corporation
200 Crescent Court, Suite 1650
Dallas, Texas 75201
Attn: Michael Medzigian and Legal Department
Fax: 214/740-7340
-and-
c/o Montclair Hotel Investors
250 West Schick Road
Bloomingdale, Illinois 60108
Attn: Peter Cyrus and Dennis Langley
Fax: 630/529-3248
Landlord:
APGM Limited Partnership
c/o Arnold Palmer Golf Management
Building 106, Montgomery Street
Presidio Main Post, P.O. Box 29355
San Francisco, California 94129
Attn: Mr. George Haworth
FAX: (415)561-4680
(See Section 27.8 of the Detailed Lease Provisions.)
4. ANNUAL BASE RENT: Means the Initial Base Rent with respect to that
Fiscal Year (the "First Fiscal Year") commencing on the Commencement Date and
ending on the last day of that calendar month which is either the last calendar
month of the third (3rd) full Fiscal Quarter occurring after the Commencement
Date if the Commencement Date occurs less than halfway through the then current
Fiscal Quarter or the last calendar month of the fourth (4th) full Fiscal
Quarter if the Commencement Date occurs halfway or more than halfway through
the then current Fiscal Quarter, as the case may be [therefore, if the
Commencement Date occurred between May 16 and August 15, 1998, both dates
inclusive, the First Fiscal Year would end June 30, 1999 or if the Commencement
Date occurred between August 16, 1998 and November 15, 1998, both dates
inclusive, the First Fiscal Year would end September 30, 1999]. On the first
day of the Fiscal Year following the First Fiscal Year, and on the first day of
each successive Fiscal Year during the Term, the Annual Base Rent shall be
equal to the lesser of (a) the Annual Base Rent applicable to the immediately
preceding Fiscal Year multiplied by 103%
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and (b) the sum of (i) the Annual Base Rent applicable to the immediately
preceding Fiscal Year and (ii) the product of the Annual Base Rent applicable
to the immediately preceding Fiscal Year multiplied by the annual percentage
increase in the Consumer Price Index for the immediately preceding Fiscal Year
(the percentage increase in Consumer Price Index for the immediately preceding
Fiscal Year being defined as the comparison of the Consumer Price Index for the
last calendar month of the immediately preceding Fiscal Year to the Consumer
Price Index for the calendar month immediately preceding said immediately
preceding Fiscal Year).
5. APPLICABLE PERCENTAGE: Means 22% with respect to Rooms Revenue; 30%
with respect to Golf Course Revenue and 5% with respect to FB&M Revenue.
6. BASE RENT ESCALATION: Means, for any Fiscal Year, the amount by which
the Annual Base Rent for such Fiscal Year exceeds the Initial Base Rent.
7. BASELINE FB&M REVENUE: Means, for any Fiscal Year during the Term,
$13,566,829.00.
8. BASELINE GOLF COURSE REVENUE: Means, for any Fiscal Year during the
Term, $3,832,535.00.
9. BASELINE ROOMS REVENUE: Means, for any Fiscal Year during the Term,
$11,774,332.00.
10. COMMENCEMENT DATE: Means ____________________, 1998.
11. EXTENDED TERMS: Five (5) five-year terms (each, an "Extended Term"
and collectively, the "Extended Terms").
12. FACILITY: Means the Leased Property consisting of two resorts; one
commonly known as Indian Lakes Resort, containing 271 acres (approximately) on
which there is located a 314-room hotel, two 18-hole golf courses, indoor and
outdoor swimming pools, clubhouse, three restaurants, three lounges, health
club, three tennis courts, game room, pro shop, and convention and banquet
facilities; and the other commonly known as Nordic Hills, containing 102 acres
(approximately) on which there is located a 228-room hotel, an 18-hole golf
course, indoor and outdoor heated swimming pools, two restaurants, three
lounges, three tennis courts, eight racquetball courts, six bowling lanes,
health club, weight room and convention and banquet facilities.
13. FISCAL YEAR: Means the First Fiscal Year (as defined in the
definition of Annual Base Rent above) and the 12 full calendar month period
commencing on the first day of the first calendar month following the end of
the First Fiscal Year and on each anniversary thereof during the Term. Unless
the Commencement Date is the first day of a Fiscal Quarter, neither the First
nor the last Fiscal Year would be twelve (12) full calendar months.
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14. INITIAL BASE RENT: Means $6,167,400.00.
15. INITIAL TERM: 15 years commencing on the Commencement Date.
Certain other terms used in this Lease have the meanings ascribed to them
in Exhibit A attached hereto and made a part hereof.
LIST OF EXHIBITS:
Exhibit A Defined Terms; Interpretation
Exhibit B Legal Description of the Land
Exhibit C Intentionally Omitted
Exhibit D Operating Standards
Exhibit E Intentionally Omitted
Exhibit F Annual Base Rent Schedule
Exhibit G Baseline Year Revenue Schedule
Exhibit H Standard Reporting Format
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DETAILED LEASE PROVISIONS
ARTICLE 1
LEASED PROPERTY
Upon and subject to the terms and conditions set forth in this Lease,
Landlord leases to Tenant and Tenant rents from Landlord all of Landlord's
rights and interest in and to the following real property, improvements and
related rights (collectively the "Leased Property"):
(a) the land described in Exhibit B attached hereto (collectively,
the "Land");
(b) all buildings, structures, Fixtures and other improvements of
every kind including, but not limited to, alleyways and connecting
tunnels, sidewalks, utility pipes, conduits and lines (on-site and
off-site), parking areas, roadways, cart paths, bridges, lakes,
irrigation systems, and course markers presently situated upon the Land,
but not including any Tenant Improvements (collectively, the "Leased
Improvements");
(c) all easements, rights and appurtenances (including, without
limitation, all water rights) relating to the Land and the Leased
Improvements (collectively, the "Related Rights"); and
(d) all personal property owned by Landlord and located on the Land
or in the Leased Improvements, including but not limited to all fixtures,
furnishings, equipment, vehicles, machinery, signage, appliances, window
coverings, carpeting and other tangible personal property of every kind
and character which as of the date of this Lease are owned by Landlord
and situated in or upon the Land and/or the Leased Improvements
("Landlord's Personal Property").
In addition, upon and subject to the terms and conditions of this
Lease, Landlord hereby grants to Tenant the following rights:
(i) a license to use the Trade Names and Trademarks (as
defined in Exhibit A) in connection with the operation
of the Facility, including but not limited to marketing
and merchandising; and
(ii) the right to assert claims in Tenant's name or
Landlord's name on the Warranties (as defined in
Exhibit A) with respect to the Facility and Landlord's
Personal Property. Landlord agrees to cooperate with
Tenant in connection with asserting any such claims on
the Warranties.
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Upon any termination of this Lease or of Tenant's right to possession of the
Leased Property, Tenant's rights under this paragraph shall be deemed
automatically revoked and terminated, whether or not such rights are expressly
addressed in any notice to Tenant or in any legal proceedings with respect to
this Lease.
ARTICLE 2
TERM
2.1 INITIAL TERM. The initial Term of this Lease shall commence on the
Commencement Date.
2.2 EXTENDED TERMS. Landlord grants Tenant the right to extend the Term
of this Lease for the Extended Terms provided for in the Basic Lease Provisions
commencing upon the expiration of the Initial Term or the applicable Extended
Term. Tenant may exercise such right solely by giving written notice to
Landlord of such extension at least 270 days prior to the termination of the
then-current Term (time being of the essence). The exercise of such right
shall be valid only if, at the time of the giving of such notice and at the
time of the commencement of the applicable Extended Term, no Event of Default
shall have occurred and be continuing. During the Extended Term, all of the
terms and conditions of this Lease shall continue in full force and effect, as
the same may be amended, supplemented or modified.
ARTICLE 3
RENT
3.1 RENT. Tenant will pay to Landlord in lawful money of the United
States of America the Annual Base Rent and Additional Rent during the Term.
Payment of Annual Base Rent and Additional Rent shall be paid at Landlord's
address set forth in the Basic Lease Provisions or at such other place or to
such other Person as Landlord from time to time may designate in writing. If
any payment owing hereunder shall otherwise be due on a day that is not a
Business Day, such payment shall be due on the next succeeding Business Day.
Tenant's covenant to pay Annual Base Rent, Additional Rent and any other sums
due under this Lease shall be independent of all other covenants contained in
this Lease.
3.2 ANNUAL BASE RENT. Tenant shall pay Annual Base Rent to Landlord in
advance on the first day of each calendar month (which Base Rent shall, for
accounting purposes, consist of Annual Base Rent accruing during the respective
Fiscal Year in equal monthly installments, but which Base Rent shall be payable
for each month in the respective proportions described in Exhibit F); provided,
however, that the first monthly installment shall be payable on the
Commencement Date and the first and last month's payments shall be prorated as
to any partial month.
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3.3 ADDITIONAL RENT. In addition to the Annual Base Rent, Tenant shall
pay to Landlord Additional Rent in quarterly installments as provided in
Section 3.3.1.
3.3.1 QUARTERLY CALCULATION AND PAYMENT OF ADDITIONAL RENT. Tenant
shall calculate and pay Additional Rent for each Fiscal Quarter. The
amount of the Additional Rent for the Second, Third and Fourth Fiscal
Quarters shall account for any interim reconciliations made with respect
to prior Fiscal Quarters in such Fiscal Year as certified by Tenant to
Landlord as provided by this Section 3.3.1, but subject to a final
reconciliation as provided by Section 3.3.2. Within forty-five (45) days
after the end of each Fiscal Quarter, Tenant shall deliver to Landlord an
Officer's Certificate setting forth the calculation of Additional Rent
for such Fiscal Quarter. If the Additional Rent for the period beginning
on the first day of the current Fiscal Year and ending on the last day of
the Fiscal Quarter just ended exceeds the sum of quarterly payments on
account thereof previously made by Tenant, Tenant shall pay such
deficiency to Landlord along with the Officer's Certificate. If the
Additional Rent for the period beginning on the first day of the current
Fiscal Year and ending on the last day of the Fiscal Quarter just ended
is less than the sum of quarterly payments on account thereof previously
made by Tenant, Landlord shall, within thirty (30) days of its receipt of
such Officer's Certificate, pay to Tenant an amount equal to such
difference. In calculating Additional Rent for any Fiscal Quarter, the
Rooms Revenue, Golf Course Revenue or FB&M Revenue, as the case may be,
for the period beginning on the first day of the current Fiscal Year and
ending on the last day of such Fiscal Quarter shall be compared to the
Baseline Rooms Revenue, the Baseline Golf Course Revenue or the Baseline
FB&M Revenue for the same period during the Baseline Year, as scheduled
on Exhibit G attached hereto.
3.3.2 ANNUAL RECONCILIATION. Within ninety (90) days after the end
of each Fiscal Year, or after the expiration or termination of this
Lease, Tenant shall deliver to Landlord an Officer's Certificate setting
forth (i) the Rooms Revenue, the Golf Course Revenue and the FB&M Revenue
for the Fiscal Year just ended, and (ii) a comparison of the amount of
Additional Rent actually paid during such Fiscal Year versus the amount
of Additional Rent actually owing on the basis of the annual calculation
of the Rooms Revenue, the Golf Course Revenue and the FB&M Revenue. If
the Additional Rent for such Fiscal Year exceeds the sum of the quarterly
payments previously paid by Tenant on account thereof, Tenant shall pay
such deficiency to Landlord along with such Officer's Certificate. If
the Additional Rent for such Fiscal Year is less than the amount
previously paid by Tenant on account thereof, Landlord shall, within
thirty (30) days of its receipt of such Officer's Certificate, remit to
Tenant its check in an amount equal to such difference. The amount of
the reconciliation payment, whether in favor of Landlord or Tenant, shall
bear interest at a rate equal to the rate payable on ninety (90) day U.S.
Treasury Bills as of January 1 of the year following the close of such
Fiscal Year until the amount of such difference shall be paid or
otherwise discharged.
3.3.3 RECORD-KEEPING. Tenant shall utilize an accounting system
for the Leased Property in accordance with its usual and customary
practices and in accordance with
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accrual basis accounting principles applied on a consistent basis, which
will accurately record all Rooms Revenue, Golf Course Revenue and FB&M
Revenue. Tenant shall retain reasonably adequate records for each Fiscal
Year conforming to such accounting system until at least five years after
the expiration of such Fiscal Year (and in any event until the
reconciliation described in Section 3.3.2 above for such Fiscal Year has
been made). Tenant may use the then current edition of the Uniform
System for the Lodging Industry as part of its accounting system.
3.3.4 AUDITS. Landlord, at its own expense except as provided
hereinbelow, shall have the right from time to time directly or through
its accountants (who shall be from a nationally recognized accounting
firm) to audit the information set forth in the Officer's Certificate
referred to in Section 3.3.2 (it being expressly understood and agreed
that Landlord shall not have the right to conduct an audit with respect
to the quarterly information provided under Section 3.3.1) and in
connection with such audits to examine Tenant's books and records with
respect thereto (including supporting data, sales tax returns and
Tenant's work papers) at Tenant's office during normal business hours
upon reasonable advance notice to Tenant; provided, however, that any
audit of the information contained in an Officer's Certificate referred
to in Section 3.3.2 must be conducted, and the results thereof delivered
to Tenant, on or before one (1) year after delivery to Landlord of such
Officer's Certificate. At the end of such one (1) year period, the
information contained in the Officer's Certificate shall be final and
binding upon Landlord and Tenant, except with respect to any amount
therein which Landlord has challenged in writing delivered to Tenant on
or before expiration of such one (1) year period and except that in the
event that any subsequent audit by Landlord discloses that Tenant has
understated any revenue item by Fifty Thousand and no/100 Dollars
($50,000.00) and such understatement results in Gross Revenue being
understated by more than five percent (5%) of the actual amount thereof,
then Landlord shall have the right to audit all prior years' (falling
within the then current term of this Lease) information which has not
theretofore been audited by Landlord [the reference to $50,000.00 in the
foregoing sentence shall be deemed to mean said amount as increased based
upon changes in the Consumer Price Index from the date of this Lease].
Any such challenge must be based upon the results of Landlord's audit.
If any such audit discloses a deficiency in the payment of Additional
Rent, Tenant shall, within thirty (30) days of its receipt of the results
of such audit and notice of deficiency, either pay to Landlord the amount
of the deficiency, as finally agreed or determined, or notify Landlord
that Tenant contests the results of Landlord's audit. The amount of the
deficiency shall bear interest at the Overdue Rate from the thirtieth
(30th) day after Tenant's receipt of the results of such audit and notice
of deficiency until the date of payment thereof. If any such audit
discloses that the Rooms Revenue, the Golf Course Revenue or FB&M Revenue
actually received by Tenant for any Fiscal Year exceeds the amount
thereof reported by Tenant by more than five percent (5%), Tenant shall
pay the reasonable cost of such audit and examination. Any proprietary
information obtained by Landlord pursuant to the provisions of this
Section shall be treated as confidential, except that such information
may be used, subject to appropriate confidentiality safeguards, in any
litigation between
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the parties and except further that Landlord may disclose such
information to lenders and prospective lenders to Landlord, purchasers
and prospective purchasers and investors in Landlord or the Leased
Property who agree to be bound by this confidentiality provision and to
any other persons to whom disclosure is necessary to comply with
applicable laws, regulations and government requirements. Any dispute as
to the existence or amount of any deficiency in the payment of Additional
Rent as disclosed by Landlord's audit shall, if not otherwise settled by
the parties, be resolved by the audit dispute resolution mechanism set
forth in Section 27.22.
3.4 ADDITIONAL CHARGES. In addition to the Annual Base Rent and
Additional Rent, (1) Tenant shall also pay and discharge when due and payable
all other amounts, liabilities, obligations and Impositions which Tenant
assumes or agrees to pay under this Lease, and (2) in the event of any failure
on the part of Tenant to pay any of those items referred to in clause (1)
above, Tenant shall also pay and discharge every fine, penalty, interest and
cost which may be added for non-payment or late payment of such items (the
items referred to in clauses (1) and (2) above being referred to herein
collectively as the "Additional Charges"). Except as otherwise provided in
this Lease or as otherwise required by any third party entitled to receipt of
Additional Charges, all Additional Charges shall be due and payable (a) ten
(10) Business Days after Landlord shall deliver an invoice to Tenant therefor
for Additional Charges to be paid to Landlord or (b) for each Additional Charge
due directly to a third party, on or before the date after which a fine,
penalty or interest will accrue if such Additional Charge is not paid. To the
extent that Tenant pays any Additional Charges to Landlord pursuant to any
requirements of this Lease, Tenant shall be relieved of its obligation to pay
such Additional Charges to the entity to which they would otherwise be due.
3.5 LATE PAYMENT OF RENT. Tenant hereby acknowledges that late payment by
Tenant to Landlord of Annual Base Rent, Additional Rent or Additional Charges
will cause Landlord to incur costs not contemplated under the terms of this
Lease, the exact amount of which is presently anticipated to be extremely
difficult to ascertain. Such costs may include processing and accounting
charges and late charges which may be imposed on Landlord by the terms of any
mortgage or deed of trust covering the Leased Property and other expenses of a
similar or dissimilar nature. Accordingly, if any installment or payment of
Annual Base Rent, Additional Rent or Additional Charges (but only as to those
Additional Charges which are payable directly to Landlord) shall not be paid or
made within five (5) Business Days after its due date (which, in the case of
Additional Charges due to Landlord, would be five (5) Business Days after the
ten (10) Business Day period Tenant has to pay such Additional Charge, as set
forth above), Tenant will pay Landlord on demand, as Additional Charges, a late
charge equal to three percent (3%) of such installment or payment; provided,
however, that if such payment or installment is not paid or made within ten
(10) Business Days after its due date, the late charge shall be five percent
(5%) of such installment or payment. The parties agree that this late charge
represents a fair and reasonable estimate of the costs that Landlord will incur
by reason of late payment by Tenant. In addition to said late charge, if any
installment or payment of Annual Base Rent, Additional Rent or Additional
Charges (but only as to those Additional Charges which are payable directly to
Landlord) shall not be paid on, or made by, its due date, the amount unpaid
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shall bear interest, from the date such installment or payment was due until
the date of payment thereof, computed at the Overdue Rate on the amount of such
delinquent installment or payment, and Tenant will pay such interest to
Landlord on demand, as Additional Charges. The payment of said late charge or
such interest, or both, as the case may be, shall not constitute a waiver, nor
excuse or cure, of any default under this Lease, nor prevent Landlord from
exercising any other rights and remedies available to Landlord.
3.6 NET LEASE. The Rent shall be paid absolutely net to Landlord and,
except as expressly provided in Article 14, Article 15 or elsewhere in this
Lease, without notice or demand and without set-off, counterclaim, recoupment,
abatement, suspension, determent, deduction or defense, so that this Lease
shall yield to Landlord the full amount of the installments of Annual Base
Rent, Additional Rent and Additional Charges throughout the Term.
ARTICLE 4
IMPOSITIONS
4.1 PAYMENT OF IMPOSITIONS. Subject to the terms of Article 22 hereof,
Tenant will pay, or cause to be paid, all Impositions before any fine, penalty,
interest or cost may be added for non-payment, such payments to be made
directly to the taxing authorities where feasible. All payments of Impositions
shall be subject to Tenant's right of contest pursuant to the provisions of
Article 12. As soon as reasonably available after payment of said Impositions
(for all Impositions where the failure to pay the same can result in a lien or
encumbrance against the Leased Property or any portion thereof), Tenant shall
furnish to Landlord copies of official receipts, if available, or other
satisfactory third-party evidence of such payments, such as canceled checks.
If any Imposition may, at the option of the taxpayer, lawfully be paid in
installments (whether or not interest shall accrue on the unpaid balance of
such Imposition), Tenant may elect to pay such Imposition in installments, in
which event Tenant shall pay all installments (and any accrued interest on the
unpaid balance of the Imposition) that are due during the Term before any fine,
penalty, premium, further interest or cost may be added thereto.
4.2 INFORMATION AND REPORTING. Landlord shall give prompt notice to
Tenant of all Impositions payable by Tenant hereunder of which Landlord at any
time has knowledge, but Landlord's failure to give any such notice shall in no
way diminish Tenant's obligations hereunder to pay such Impositions. Landlord
and Tenant shall, upon request of the other, provide such data as is maintained
by the party to whom the request is made with respect to the Leased Property as
may be necessary to prepare any required returns and reports. In the event any
applicable governmental authorities classify any property covered by this Lease
as personal property, Tenant shall file all personal property tax returns in
such jurisdictions where it must legally so file. Each party, to the extent it
possesses the same, will provide the other party, upon request, with cost and
depreciation records necessary for filing returns for any property so
classified as personal property.
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4.3 ASSESSMENT CHALLENGES. In addition to Tenant's rights under Article
12, Tenant may, upon notice to Landlord, at Tenant's option and at Tenant's
sole cost and expense, protest, appeal, or institute such other proceedings as
Tenant may deem appropriate to effect a reduction of real estate or personal
property assessments and Landlord, at Tenant's expense as aforesaid, shall
fully cooperate with Tenant in such protest, appeal, or other action.
4.4 PRORATIONS. Inasmuch as Tenant (or an affiliate of Tenant) was the
seller of the Leased Property to Landlord which sale was consummated
concurrently with the commencement of this Lease, there was no proration of
Impositions at such closing, but rather seller/Tenant was to remain fully
responsible therefor. Consequently, Impositions imposed in respect of the
tax-fiscal period during which the Term commences shall not be adjusted between
Landlord and Tenant and Tenant shall be obligated to pay the same. Impositions
imposed in respect of the tax-fiscal period during which the Term terminates
shall be adjusted and prorated between Landlord and Tenant, whether or not such
Imposition is imposed before or after such termination, and Tenant's obligation
to pay its prorated share thereof shall survive such termination.
4.5 REFUNDS. If Landlord shall receive any refund from any taxing
authority in respect of any Imposition paid by Tenant, the same shall be paid
over to Tenant if no Event of Default shall have occurred hereunder and be
continuing. Any such funds retained by Landlord due to an Event of Default
shall be applied as provided in Article 16, with the amount in excess of the
amount due Landlord as a consequence of said Event of Default to be paid by
Landlord to Tenant in any event.
4.6 UTILITY CHARGES. Tenant shall pay or cause to be paid prior to
delinquency charges for all utilities and services, including, without
limitation, electricity, telephone, trash disposal, gas, oil, water, sewer,
communication and all other utilities used in the Leased Property during the
Term.
4.7 ASSESSMENT DISTRICTS. Landlord shall not voluntarily consent to or
agree in writing to (i) any special assessment or (ii) the inclusion of any
material portion of the Leased Property into a special assessment district or
other taxing jurisdiction unless Tenant shall have consented thereto, which
consent shall not be unreasonably withheld.
ARTICLE 5
TENANT WAIVERS
5.1 NO TERMINATION, ABATEMENT, ETC. Except as otherwise specifically
provided in this Lease, and except for those causes resulting solely from the
negligence or willful misconduct of Landlord, (i) Tenant, to the extent
permitted by law, shall remain bound by this Lease in accordance with its terms
and shall neither take any action without the consent of Landlord to
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modify, surrender or terminate the same, nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent by
reason of, and (ii) the respective obligations of Landlord and Tenant shall not
be otherwise affected by reason of:
(a) any damage to, or destruction of, any Leased Property or any
portion thereof from whatever cause or any taking of the Leased Property
or any portion thereof;
(b) the lawful or unlawful prohibition of, or restriction upon,
Tenant's use of the Leased Property, or any portion thereof, the
interference with such use by any Person, or by reason of eviction by
paramount title;
(c) any claim which Tenant has or might have against Landlord or by
reason of any default or breach of any warranty by Landlord under this
Lease or any other agreement between Landlord and Tenant, or to which
Landlord and Tenant are parties;
(d) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceedings
affecting Landlord or any assignee or transferee of Landlord; or
(e) for any other cause whether similar or dissimilar to any of the
foregoing other than a discharge of Tenant from any such obligation as a
matter of law.
Tenant hereby specifically waives all rights arising from any occurrence
whatsoever, which may now or hereafter be conferred upon it by law (i) to
modify, surrender or terminate this Lease or quit or surrender the Leased
Property or any portion thereof, or (ii) to entitle Tenant to any abatement,
reduction, suspension or deferment of the Rent or other sums payable by Tenant
hereunder, except as otherwise specifically provided in this Lease. The
obligations of Landlord and Tenant hereunder shall be separate and independent
covenants and agreements and the Rent and all other sums payable by Tenant
hereunder shall continue to be payable in all events unless the obligations to
pay the same shall be terminated pursuant to the express provisions of this
Lease or by termination of this Lease other than by reason of any Event of
Default.
5.2 CONDITION OF THE LEASED PROPERTY. Tenant acknowledges receipt and
delivery of possession of the Leased Property and that Tenant has examined and
otherwise has knowledge of the condition of the Leased Property prior to the
execution and delivery of this Lease and has found the same to be in good order
and repair and satisfactory for its purposes hereunder. Regardless of any
inspection made by Tenant of the Leased Property and whether or not any patent
or latent defect or condition was revealed or discovered thereby, Tenant is
leasing the Leased Property "as is" in its present condition. Tenant waives
and releases any claim or action against Landlord in respect of the condition
of the Leased Property including any defects or adverse conditions, latent or
patent, matured or unmatured, known or unknown by Tenant or Landlord as of the
date hereof. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD
HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL
LANDLORD BE DEEMED TO
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HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO
THE LEASED PROPERTY, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS
FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE
QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY
DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v) VALUE, (vi)
COMPLIANCE WITH SPECIFICATION, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x)
MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY, (xiv)
OPERATION, (xv) THE EXISTENCE OF ANY HAZARDOUS MATERIAL OR (xvi) COMPLIANCE OF
THE LEASED PROPERTY WITH ANY LAW (INCLUDING ENVIRONMENTAL LAWS) OR LEGAL
REQUIREMENTS. TENANT ACKNOWLEDGES THAT THE LEASED PROPERTY IS OF ITS SELECTION
AND TO ITS SPECIFICATIONS AND THAT THE LEASED PROPERTY HAS BEEN INSPECTED BY
TENANT AND IS SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN
THE LEASED PROPERTY OF ANY NATURE, WHETHER LATENT OR PATENT, AS BETWEEN
LANDLORD AND TENANT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY
WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING
STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS Section 5.2 HAVE BEEN
NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASED
PROPERTY, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW
OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.
ARTICLE 6
OWNERSHIP OF PROPERTY
6.1 LEASED PROPERTY. Tenant acknowledges that the Leased Property is the
property of Landlord, that Landlord is the paramount owner of the Leased
Property and that Tenant has only the right to the exclusive possession and use
of the Leased Property during the Term of, and upon the terms and conditions
of, this Lease.
6.2 LANDLORD'S PERSONAL PROPERTY. Tenant shall maintain Landlord's
Personal Property in the same manner as Tenant maintains Tenant's Personal
Property. Upon the loss, destruction, or obsolescence of any of the Landlord's
Personal Property, Tenant shall, to the extent such replacement is necessary to
operate the Facility in compliance with all applicable Legal Requirements or
Insurance Requirements or otherwise in accordance with the standards set forth
in this Lease, replace such property with Tenant's Personal Property, which
Personal Property shall be owned by Tenant.
6.3 TENANT'S PERSONAL PROPERTY. Tenant may (and shall, as provided
below), at its expenses, install, affix or assemble or place on any parcel of
the Land or in any of the Leased
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Improvements, any items of Tenant's Personal Property. Tenant shall provide
and maintain during the entire Term all such Tenant's Personal Property as
shall be necessary in order to operate the Facility in compliance with all
applicable Legal Requirements and Insurance Requirements and otherwise in
accordance with the standards set forth in this Lease.
6.4 PURCHASE OF TENANT'S PERSONAL PROPERTY. Upon the termination of this
Lease or of Tenant's right to possession of the Leased Property in either event
as a consequence of the occurrence of an Event of Default on the part of
Tenant, Landlord shall have the right (but not the obligation) to purchase from
Tenant all or any portion of tangible Tenant's Personal Property (which shall
not include software) and upon the expiration of the Term of this Lease,
Landlord shall be obligated to purchase all of Tenant's tangible Tenant's
Personal Property which is of a type, quantity and quality reasonably necessary
for the operation of the Leased Property consistent with the nature of the
Leased Property and the manner in which it has been operated during the Term
(but which shall not include software) and the right (but not the obligation)
to purchase all such "non-consistent" tangible Tenant's Personal Property. The
purchase price for any Tenant's Personal Property to be so purchased shall be
calculated as follows:
(i) if owned by Tenant and not subject to any secured financing, at
the fair market value thereof;
(ii) if owned by Tenant, but subject to a secured financing, at the
greater of the fair market value thereof or the amount of the debt owing
under such financing; and
(iii) if leased by Tenant and the applicable lease provides for
termination of the lease as to such Personal Property upon the payment of
a given sum, at the greater of the fair market value thereof or the
amount of the payment so provided; provided, however, that at Tenant's
option and if the lessor will permit Landlord to assume the obligations
under the applicable lease with respect to such Personal Property
(separate from the obligations under a master lease if in effect), Tenant
shall, upon the request of Landlord, assign the applicable lease (or
portion thereof) to Landlord;
provided, however, that if Landlord's purchase right arises as a result of an
Event of Default on the part of Tenant, then in lieu of utilizing the fair
market value under clauses (i), (ii) and (iii) above for purposes of
calculating the purchase price for the Tenant's Personal Property to be so
purchased, the parties shall utilize the depreciated net book value of Tenant's
Personal Property for that purpose. Landlord shall exercise any of its
foregoing options to purchase Tenant's Personal Property or any portion thereof
(1) arising as a result of an Event of Default by Tenant by giving notice to
Tenant not later than, sixty (60) days after the termination of this Lease or
of Tenant's right to possession under this Lease, as the case may be, or (2)
arising at the expiration of the Term, by giving Tenant notice on or before the
expiration of the Term. Landlord shall pay Tenant for Tenant's Personal
Property within five (5) Business Days of the later to occur of (a) Tenant
vacating the Leased Property and (b) the parties liquidating the amount due
Tenant for Tenant's Personal Property. Tenant shall transfer title to such
Personal Property by a bill of sale without warranty (except as to ownership)
upon concurrent payment
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in cash by Landlord; provided, however, if Landlord has a judgment for unpaid
damages resulting from any Event of Default, Landlord may make payment by an
offset against such unpaid damages or if Landlord has then commenced an action
against Tenant for damages, Landlord may make payment to the court or other
escrowee pending resolution of such legal proceedings, but in either event,
Landlord shall remit to Tenant the balance of the amount due for Tenant's
Personal Property in excess of the amount of the judgment for damages or the
amount of damages claimed by Landlord in the commenced action, as the case may
be.
6.5 REMOVAL OF PERSONAL PROPERTY. Unless being purchased by Landlord, all
items of Tenant's Personal Property not removed by Tenant by the later to occur
of (a) fourteen (14) days following the exercise by Landlord of its option
under Section 6.4 above or fourteen (14) days following the date by which
Landlord must exercise its option under Section 6.4 above but fails to do so,
as the case may be, and (b) five (5) days after the expiration of the Term of
this Lease, shall be considered abandoned by Tenant and may, at Landlord's
discretion and without any obligation, be appropriated, sold, destroyed or
otherwise disposed of by Landlord without first giving notice thereof to Tenant
and without any payment to Tenant and without any obligation to account
therefor. Tenant shall, at its expense, restore the Leased Property to the
condition required by Section 9.1, including repair of all damage to the Leased
Property caused by the removal of Tenant's Personal Property, whether effected
by Tenant or Landlord. Landlord shall not be responsible for any loss or
damage to Tenant's Personal Property, or any other property of Tenant, by
virtue of Landlord's removal thereof at any time subsequent to the 14-day
period provided for herein.
6.6 LANDLORD'S WAIVERS. Any lessor of Tenant's Personal Property may,
upon notice to Landlord and during reasonable hours, enter the Facility and
take possession of any of Tenant's Personal Property without liability for
trespass or conversion. Landlord shall, upon the request of Tenant, execute
and deliver to Tenant, within fifteen (15) days of receipt thereof, such
"landlord's waivers" as may be reasonable and customary in connection with the
financing or leasing of personal property. Such "landlord's waiver" shall
limit to thirty (30) days the amount of time the lessor or lender has to enter
upon the Leased Property after notice from Landlord that the Term has expired
or otherwise terminated. If Tenant requests a "landlord's waiver," Tenant
shall attempt to secure from any financing source or lessor the right on the
part of Landlord to cure the defaults of Tenant and to use any such Personal
Property upon providing such cure.
6.7 COLLATERAL. During the Term, Tenant shall have the right and
obligation to enter into agreements and service contracts on behalf of the
Facility which are necessary or reasonably required in connection with the
operation of the Leased Property for its Primary Intended Use. In connection
with its operation of the Facility prior to the Commencement Date, Tenant (or
an affiliate of Tenant) (a) has entered into various leases, subleases,
contracts, bookings, concession agreements, service contracts and other
agreements and (b) has obtained certain permits and licenses relating to the
operation of the various businesses and activities at or on the Leased
Property, all of which have remained in the name of Tenant or have been
transferred to Tenant notwithstanding the sale of the Leased Property to
Landlord. All such leases, contracts,
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bookings, other agreements, service contracts, licenses and permits, whether
entered into, or obtained or renewed, prior to or during the Term, are
hereinafter collectively referred to as the "Collateral Agreements and
Permits." For good and valuable consideration, the receipt of which is hereby
acknowledged, and subject to the terms and conditions hereinafter set forth,
Tenant hereby assigns to Landlord all of Tenant's right, title and interest in
the Collateral Agreements and Permits; provided, however, that Tenant shall
continue to have all rights under said Collateral Agreements and Permits at all
times during the Term hereof and prior to an Event of Default hereunder. Upon
the occurrence of an Event of Default (and in addition to any other rights and
remedies available to Landlord), and upon the expiration or earlier termination
of this Lease, Landlord shall have the right, but not the obligation, by itself
or by a designee, to take the place of Tenant under any or all of the
Collateral Agreements and Permits, to proceed to perform any and all
obligations of the owner or operator contained in, or of the owner or holder
of, any such Collateral Agreements or Permits and exercise any and all rights
of the owner or operator therein or of the owner or holder thereof as fully as
Tenant itself could, and to take possession of all documents reasonably
required by Landlord to exercise its rights and perform its obligations under
the Collateral Agreements and Permits. Tenant hereby appoints Landlord its
attorney-in-fact to take such action and execute such documents as are
necessary or deemed appropriate by Landlord to effectuate the transfer of
Tenant's right, title and interest in those Collateral Agreements and Permits
which Landlord designates for such transfer. This power of attorney granted
hereby shall be irrevocable and coupled with an interest. Tenant acknowledges
that the foregoing assignment of Collateral Agreements and Permits described
above is an integral part of Landlord's consideration for entering into this
Lease and that Tenant shall be entitled to no additional consideration relative
to such assignment. Upon the termination of this Lease or termination of
Tenant's right to possession without termination of this Lease after the
occurrence of an Event of Default on the part of Tenant, Tenant shall assign to
Landlord or Landlord's nominee simultaneously with such termination, all
leases, subleases, contracts, bookings, concession agreements and other
agreements, including service contracts, in effect with respect to the Facility
then in Tenant's name which have been entered into in the ordinary course of
operation of the Facility in accordance with the standards set forth in this
Lease on prevailing market terms with persons unaffiliated with Tenant and if
such termination is not the result of an Event of Default by Tenant, then
Landlord shall assume and cause to be performed all such assigned agreements.
ARTICLE 7
USE OF LEASED PROPERTY
7.1 USE. After the Commencement Date and during the Term, Tenant shall
use or cause to be used the Leased Property and the improvements thereon for
its Primary Intended Use and for such other uses as may be necessary or
incidental to such use, except to the extent that Tenant shall be prevented
from using or unable to use all or any part of the Leased Property due to
damage or destruction, renovation expressly permitted hereunder or any of the
causes of Unavoidable Delay. Tenant shall not use the Leased Property or any
portion thereof for any other use without the prior written consent of
Landlord, which consent may be withheld in
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Landlord's sole discretion. No use shall be made or permitted to be made of
the Leased Property, and no acts shall be done, which will cause the
cancellation of any insurance policy covering the Leased Property or any part
thereof, nor shall Tenant sell or otherwise provide to patrons, or permit to be
kept, used or sold in or about the Leased Property any article which may be
prohibited by law or by the standard form of fire insurance policies, or any
other insurance policies required to be carried hereunder, or fire underwriters
regulations. Tenant shall, at its sole cost, comply with all of the
requirements pertaining to the Leased Property or other improvements of any
insurance board, association, organization or company necessary for the
maintenance of insurance, as herein provided, covering the Leased Property and
Tenant's Personal Property.
7.2 SPECIFIC PROHIBITED USES. Tenant shall not use or occupy or permit
the Leased Property to be used or occupied, nor do or permit anything to be
done in or on the Leased Property, in a manner which would (i) violate or fail
to comply with any law, rule or regulation or Legal Requirement, (ii) subject
to Article 10, cause structural injury to any of the Leased Improvements, or
(iii) constitute a public or private nuisance or waste. Tenant shall not allow
any Hazardous Material to be located in, on or under the Leased Property, or
any adjacent property, or incorporated in the Facility or any improvements
thereon, except in compliance with applicable law (including any Environmental
Law). Tenant shall not allow the Leased Property to be used as a landfill or a
waste disposal site, or as a manufacturing, distribution or disposal facility
for any Hazardous Materials. Tenant shall neither suffer nor permit the Leased
Property or any portion thereof, including Tenant's Personal Property, to be
used in such a manner as (i) might reasonably tend to impair Landlord's title
thereto or to any portion thereof, or (ii) may reasonably make possible a claim
or claims of adverse usage or adverse possession by the public, as such, or of
implied dedication of the Leased Property or any portion thereof, or (iii) is
in violation of any applicable Environmental Law.
7.3 LANDLORD TO GRANT EASEMENTS, ETC.. Landlord shall, from time to time
so long as no Event of Default has occurred and is continuing, at the request
of Tenant and at Tenant's cost and expense (but subject to the approval of
Landlord, which approval shall not be unreasonably withheld or delayed): (i)
grant easements and other rights in the nature of easements; (ii) release
existing easements or other rights in the nature of easements which are for the
benefit of the Leased Property; (iii) dedicate or transfer unimproved portions
of the Leased Property for road, highway or other public purposes; (iv) execute
petitions to have the Leased Property annexed to any municipal corporation or
utility district; (v) execute amendments to any covenants and restrictions
affecting the Leased Property; and (vi) execute and deliver to any Person any
instrument appropriate to confirm or effect such grants, releases, dedications
and transfers (to the extent of its interest in the Leased Property), but only
upon delivery to Landlord of an Officer's Certificate (which Certificate, if
contested by Landlord, shall not be binding on Landlord) stating that such
grant, release, dedication, transfer, petition or amendment is not detrimental
to the proper conduct of the business of Tenant on the Leased Property and does
not reduce its value or usefulness for the Primary Intended Use. If Landlord
fails to deliver to Tenant notice of its approval or disapproval of any of the
foregoing items within thirty (30) days after the delivery of same to Landlord
for approval, Landlord shall be deemed to have approved
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the same. Landlord shall not grant, release, dedicate or execute any of the
foregoing items in this Section 7.3 without obtaining Tenant's approval, which
approval shall not be unreasonably withheld or delayed.
ARTICLE 8
HAZARDOUS MATERIALS
8.1 TENANT COVENANT - OPERATION OF THE LEASED PROPERTY. Tenant hereby
covenants with Landlord that, during the term of this Lease, Tenant shall
operate the Leased Property substantially in compliance with all Environmental
Laws. Notwithstanding the foregoing, to the extent not already done so, Tenant
hereby agrees to remediate/abate asbestos and implement an operation and
maintenance plan for each Resort as contemplated by Law Engineering and
Environmental Services ("LEES") Report of Confirmatory Asbestos Survey - Indian
Lakes Report dated July 14, 1995, LAW Project No. 274-5216-002, and LEES Report
of Confirmatory Asbestos Survey - Nordic Hills Resort dated July 14, 1995, LAW
Project No. 274-5216-001 (the "ASBESTOS ITEMS").
8.2 REMEDIATION. If any Hazardous Material in a quantity sufficient to
require remediation or reporting under any Environmental Law was released, or
disposed of, in, on or under the Leased Property at any time during the Term
hereof or during Tenant's affiliate's ownership of the Leased Property, or if
Tenant, Landlord, or the Leased Property becomes subject to any order of any
federal, state or local agency to investigate, remove, remediate, repair,
close, detoxify, decontaminate or otherwise clean up the Leased Property as a
result of any release or disposal in, on or under the Leased Property at any
time during the Term hereof or during Tenant's affiliate's ownership of the
Leased Property, excluding any release or disposal which is the result of any
act of Landlord, Tenant shall, at its sole expense, carry out and complete any
required investigation, removal, remediation, repair, closure, detoxification,
decontamination or other cleanup of the Leased Property in compliance with all
applicable Environmental Laws. If Tenant fails to implement and diligently
pursue any such repair, closure, detoxification, decontamination or other
cleanup of the Leased Property in a timely manner and in compliance with all
applicable Environmental Laws, Landlord shall have the right, but not the
obligation, to carry out such action and to recover all of the costs and
expenses from Tenant as Additional Charges.
8.3 ENVIRONMENTAL INDEMNIFICATION.
(a) TENANT'S INDEMNIFICATION OF LANDLORD. Except for matters
arising out of the actions of Landlord, Tenant shall pay, protect,
indemnify, save, hold harmless and defend Landlord and any Facility
Mortgagee from and against all liabilities, obligations, claims, damages
(including punitive damages), penalties, causes of action, demands,
judgments, costs and expenses (including reasonable attorneys' fees and
expenses), to the extent permitted by law, imposed upon, incurred by or
asserted against, Landlord or the
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Leased Property by reason of the Asbestos Items or by reason of any
Hazardous Material released, or disposed of, at, in or by the Leased
Property either during the Term or during the period of time when
Tenant's affiliate owned the Leased Property in violation of any
Environmental Law, howsoever arising, without regard to fault on the part
of Tenant, including (i) liability for response costs and for costs of
removal and remedial action incurred by the United States Government, any
state or local governmental unit to any other Person, or damages from
injury to or destruction or loss of natural resources, including the
reasonable costs of assessing such injury, destruction or loss, incurred
pursuant to any Environmental Law, (ii) liability for costs and expenses
of abatement, investigation, removal, remediation, correction or
clean-up, fines, damages, response costs or penalties which arise from
the provisions of any Environmental Law, (iii) liability for personal
injury or property damage arising under any statutory or common-law tort
theory, including damages assessed for the maintenance of a public or
private nuisance or for carrying on of a dangerous activity, or (iv) by
reason of a breach of its covenants in Section 8.1.
(b) LANDLORD'S INDEMNIFICATION OF TENANT. Landlord shall pay,
protect, indemnify, save, hold harmless and defend Tenant and its
"property manager" from and against all liabilities, obligations, claims,
damages (including punitive damages), penalties, causes of action,
demands, judgments, costs and expenses (including reasonable attorneys'
fees and expenses), to the extent permitted by law, imposed upon,
incurred by or asserted against, Tenant or its "property manager" by
reason of any Hazardous Material released, or disposed of, at, in, on or
by, the Leased Property in violation of any Environmental law and
resulting solely from Landlord's acts or omissions. Landlord's
indemnification obligation under the foregoing sentence shall include all
of the liability covered by Sections 8.3(a)(i), (ii) and (iii) above.
8.4 SURVIVAL OF INDEMNIFICATION OBLIGATIONS. Each party's obligations
and/or liability under this Article 8 arising during the Term hereof shall, to
the extent not covered by insurance maintained by said party, only survive any
termination of this Lease for a period of one (1) year.
8.5 ENVIRONMENTAL VIOLATIONS AT EXPIRATION OR TERMINATION OF LEASE.
Notwithstanding any other provision of this Lease, if, at a time when the Term
would otherwise terminate or expire, a violation of any Environmental Law has
been asserted by Landlord resulting from an act or omission on the part of
Tenant during the Term of this Lease or of Tenant's affiliate during its
ownership of the Leased Property prior to the Term and such violation has not
been resolved in a manner reasonably satisfactory to Landlord, or has been
acknowledged by Tenant to exist or has been found to exist at the Leased
Property, or has been asserted by any governmental authority, and Tenant's
failure to have completed all action required to correct, abate or remediate
such a violation of any Environmental Law materially impairs the leaseability
of the Leased Property upon the expiration of the Term, then, at the option of
Landlord, the Term shall be automatically extended with respect to the Leased
Property beyond the date of termination or expiration and this Lease shall
remain in full force
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and effect under the same terms and conditions beyond such date with respect to
the Leased Property until the earlier to occur of (i) the completion of all
remedial action in accordance with applicable Environmental Laws or (ii) 12
months beyond such expiration or termination date; provided, that Tenant may,
upon any such extension of the Term, terminate the Term by paying to Landlord
such amount as is necessary in the reasonable judgment of Landlord to complete
or perform such remedial action.
ARTICLE 9
MAINTENANCE AND REPAIR
9.1 TENANT'S SOLE OBLIGATION - GENERAL. Tenant, at its expense, will keep
the Leased Property and Tenant's Personal Property in good order, repair and
appearance (whether or not the need for such repairs occurs as a result of
Tenant's use, any prior use, the elements or the age of the Leased Property, or
any portion thereof) and maintain the Leased Property in accordance with any
applicable Legal Requirements, and, except as otherwise provided in Article 14,
with reasonable promptness, make all necessary and appropriate repairs thereto
of every kind and nature, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, foreseen or unforeseen or arising by
reason of a condition existing prior to the commencement of the Term of this
Lease (concealed or otherwise). Tenant shall maintain the Leased Property in
accordance with the Operating Standards set forth in Exhibit D; provided,
however, that Tenant may make such modifications to such Operating Standards as
Tenant may reasonably determine to be appropriate for the prudent management of
the Leased Property, which modifications, to the extent they are material and
adverse to the operating results of the Leased Property, shall be subject to
the approval of Landlord (which approval shall not be unreasonably withheld or
delayed); provided further, however, that Tenant shall make such changes to the
Operating Standards as may be appropriate to comply with Legal Requirements.
Tenant will not take or omit to take any action the taking or omission of which
could reasonably be expected to impair the value or the usefulness of the
Leased Property or any part thereof for its Primary Intended Use. Nothing in
this Article 9 shall obligate Tenant to make any capital improvement or
replacements to the Leased Property if the Leased Property can be repaired to
the standard required by this Section 9.1.
9.2 LEASED IMPROVEMENTS MAINTENANCE. Tenant, at its expense, will repair,
paint and keep in a clean and sanitary condition the interior and exterior of
all buildings, structures, and facilities comprising the Leased Improvements,
including all landscaping and parking areas located adjacent thereto, all in a
condition which is consistent with the prior practices of Tenant or its
affiliates with respect to the Leased Property. Without limitation of the
foregoing, Tenant, at its expense, will replace or refurbish in accordance with
prior practices all floor coverings; tile; carpeting; wall coverings; light
fixtures; curtains; blinds; shades; furniture; restaurant, lounge, lobby,
convention/banquet, room and other furnishings; wall paper; wall hangings;
signs; fixtures and other decor items when they become worn-out or in
disrepair. All security
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systems, ventilation, heating, air-conditioning, refrigeration, mechanical and
other equipment shall be kept in good working order by Tenant at all times
during the Term hereof.
9.3 GOLF COURSE MAINTENANCE. Tenant, at its expense, will replace, repair
and maintain the golf course portion of the Leased Property in a condition
which is consistent with the prior practices of Tenant or its affiliates with
respect to the Leased Property. Without limitation of the foregoing, Tenant
will, at its expense, replace or refurbish all tee box signs, pins, flags,
markers, benches and related golf course equipment as the same becomes worn-out
or in disrepair in accordance with prior practices. All grounds-keeping and
landscaping for the golf course will be maintained by Tenant in the condition
contemplated by Exhibit D attached hereto and made a part hereof.
9.4 WAIVER OF STATUTORY OBLIGATIONS. Landlord shall not under any
circumstances be required to build or rebuild any improvements on the Leased
Property, or to make any repairs, replacements, alterations, restorations or
renewals of any nature or description to the Leased Property, whether ordinary
or extraordinary, structural or non-structural, foreseen or unforeseen, or to
make any expenditure whatsoever with respect thereto, in connection with this
Lease, or to maintain the Leased Property in any way. Tenant hereby waives, to
the extent permitted by law, the right to make repairs at the expense of
Landlord pursuant to any law in effect at the time of the execution of this
Lease or hereafter enacted.
9.5 MECHANIC'S LIENS. Nothing contained in this Lease and no action or
inaction by Landlord shall be construed as (i) constituting the consent or
request of Landlord, expressed or implied, to any contractor, subcontractor,
laborer, materialman or vendor to or for the performance of any labor or
services or the furnishing of any materials or other property for the
construction, alteration, addition, repair or demolition of or to the Leased
Property or any part thereof; or (ii) giving Tenant any right, power or
permission to contract for or permit the performance of any labor or services
or the furnishing of any materials or other property, in either case, in such
fashion as would permit the making of any claim against Landlord in respect
thereof or to make any agreement that may create, or in any way be the basis
for, any right, title, interest, lien, claim or other encumbrance upon the
estate of Landlord in the Leased Property, or any portion thereof.
9.6 SURRENDER OF LEASED PROPERTY. Unless this Lease shall have been
terminated pursuant to the provisions of Article 14, Tenant shall, upon the
expiration or prior termination of the Term, vacate and surrender the Leased
Property to Landlord in the condition in which the Leased Property was
originally received from Landlord, except as repaired, rebuilt, restored,
altered or added to as permitted or required by the provisions of this Lease
and except for ordinary wear and tear (subject to the obligation of Tenant to
maintain the Leased Property in good order and repair during the entire Term of
this Lease) and damage due to a casualty or condemnation.
9.7 TRANSFER OF OPERATING PERMITS. Upon the expiration or earlier
termination of the Term, Tenant shall assign to Landlord all of its right,
title and interest in and to any and all
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licenses, permits and other authorizations or approvals which then exist
relative to the operation of the Leased Property (without any representation or
warranty by Tenant as to their assignability or Tenant's ownership thereof),
and to the extent they are assignable, Tenant shall, at no expense to Tenant,
cooperate with Landlord to effectuate such transfers, including, without
limitation, executing and delivering any petitions, applications or other
documentation required by applicable governmental authorities in connection
with such transfers.
ARTICLE 10
TENANT'S IMPROVEMENTS
10.1 TENANT'S RIGHT TO CONSTRUCT. During the Term of this Lease, Tenant
may not make any alterations, additions, changes and/or other capital
improvements to the Leased Property (individually, a "Tenant Improvement," and
collectively, "Tenant Improvements") without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed and which
consent shall not be deemed unreasonably withheld or delayed if Landlord must
obtain any Facility Mortgagee's consent and if such Facility Mortgagee elects
not to consent. Notwithstanding the foregoing, Tenant shall be entitled,
without Landlord's consent, to make any alterations, additions, changes and
other capital improvements (all of which shall be included within the phrase
"Tenant Improvements" hereunder), which (1) fall in any one or more of the
following categories: (a) are replacements or capital repairs of existing
improvements, fixtures and equipment performed to a standard and in a quality
equal to or better than what had previously existed and the cost of which, in
each instance, does not exceed $500,000.00; (b) are cosmetic in nature,
including but not limited to repainting, recarpeting, redecorating and
relandscaping and do not cost, in each instance, more than $500,000.00, (c) are
nonstructural, including but not limited to guest room renovations and interior
improvements in restaurants, bars, retail shops and lobbies and do not cost, in
each instance, more than $500,000.00; or (d) cost $500,000.00 or less and (2)
do not significantly alter the character or purposes or reduce the value,
operating efficiency or revenue producing capability of the Leased Property
[all references to $500,000.00 in the foregoing sentence shall be deemed to
mean said amount as increased based upon changes in the Consumer Price Index
from the date of this Lease]. In any case where Landlord's consent to a Tenant
Improvement is required, Tenant shall submit plans or another description of
the proposed Tenant Improvements sufficient for Landlord to evaluate such
proposed Tenant Improvements to Landlord, and Landlord shall have a period of
fifteen (15) Business Days after receipt of Tenant's submission to deliver
notice to Tenant either granting or withholding its consent, and any failure to
deliver such notice within such fifteen (15) Business Day period shall be
deemed to be the granting of consent. Except as otherwise agreed to by
Landlord in writing, any such Tenant Improvement shall be made at Tenant's sole
expense and shall become the property of Landlord upon termination of this
Lease.
10.2 SCOPE OF RIGHT. With respect to any permitted Tenant Improvements
and subject to Section 10.1 above, Tenant shall have the right, at Tenant's
cost and expense, to:
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(a) seek any governmental approvals, including building permits,
licenses, conditional use permits and any certificate of need that Tenant
requires to construct any Tenant Improvement;
(b) demolish, remove or otherwise dispose of any of the Tenant
Improvements;
(c) erect upon the Leased Property such Tenant Improvement as Tenant
deems desirable;
(d) make additions, alterations, changes and improvements in any
Tenant Improvement so erected;
(e) raze and demolish any Tenant Improvement together with the right
to salvage therefrom; and
(f) engage in any other lawful activities that Tenant determines are
necessary or desirable for the development of the Leased Property in
accordance with its Primary Intended Use.
10.3 COOPERATION OF LANDLORD. With respect to any permitted Tenant
Improvement, Landlord shall cooperate with Tenant and take such actions,
including the execution and delivery to Tenant of any applications or other
documents, reasonably requested by Tenant in order to obtain any governmental
approvals sought by Tenant to construct such Tenant Improvement within ten (10)
Business Days following the later of (a) the date Landlord receives Tenant's
request, or (b) the date of delivery of any such application or document to
Landlord, so long as the taking of such action, including the execution of said
applications or documents, shall be without cost to Landlord (or if there is a
cost to Landlord, such cost shall be reimbursed by Tenant), and will not cause
Landlord to be in violation of any law, ordinance or regulation.
10.4 COMMENCEMENT OF CONSTRUCTION. Tenant agrees that:
(a) Tenant shall diligently seek all governmental approvals relating
to the construction of any Tenant Improvement;
(b) Once Tenant begins the construction of any Tenant Improvement,
Tenant shall diligently prosecute any such construction to completion in
accordance with applicable insurance requirements and the laws, rules and
regulations of all governmental bodies or agencies having jurisdiction
over the Leased Property;
(c) Landlord shall have the right at any time and from time to time
to post and maintain upon the Leased Property such notices as may be
necessary to protect Landlord's interest from mechanics' liens,
materialmen's liens or liens of a similar nature;
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(d) Except as provided in Article 12, Tenant shall not suffer or
permit any mechanics' liens or any other claims or demands arising from
the work or construction of any Tenant Improvement to be enforced against
the Leased Property or any part thereof, and Tenant agrees to hold
Landlord and said Leased Property free and harmless from all liability
from any such liens, claims or demands, together with all costs and
expenses in connection therewith; and
(e) All work shall be performed in a good and workmanlike manner.
10.5 RIGHTS IN TENANT IMPROVEMENTS. Notwithstanding anything to the
contrary in this Lease, all Tenant Improvements constructed pursuant to Section
10.1, and any and all subsequent additions thereto and alterations and
replacements thereof, shall be the sole and absolute property of Tenant during
the Term of this Lease. Upon the expiration or early termination of this
Lease, all such Tenant Improvements shall become the property of Landlord.
Without limiting the generality of the foregoing, Tenant shall be entitled to
all federal and state income tax benefits associated with any Tenant
Improvement during the Term of this Lease.
ARTICLE 11
LIENS, ENCROACHMENTS AND OTHER TITLE MATTERS
11.1 LIENS. Subject to the provisions of ARTICLE 12 relating to permitted
contests, Tenant will not directly or indirectly create or allow to remain, and
will promptly discharge at its expense any lien, encumbrance, attachment, title
retention agreement or claim upon the Leased Property or any attachment, levy,
claim or encumbrance in respect of the Rent, not including, however:
(a) the matters, if any, that existed, as of the Commencement Date;
(b) restrictions, liens and other encumbrances which are consented
to in writing by Landlord, or any easements granted pursuant to the
provisions of Section 7.3 of this Lease;
(c) liens for those taxes of Landlord which Tenant is not required
to pay hereunder;
(d) subleases permitted by Article 24;
(e) liens for Impositions or for sums resulting from noncompliance
with legal requirements so long as (1) the same are not yet payable or
are payable without the addition of any fine or penalty or (2) such liens
are in the process of being contested as permitted by Article 12;
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(f) liens of mechanics, laborers, materialmen, suppliers or vendors
for sums either disputed (provided that such liens are in the process of
being contested as permitted by Article 12) or not yet due; and
(g) any liens which are the responsibility of Landlord pursuant to
the provisions of Article 26.
11.2 ENCROACHMENTS AND OTHER TITLE MATTERS.
(a) Subject to Section 18.1 and excepting any matters granted or
created by Landlord after the Commencement Date, if (i) any of the Leased
Improvements shall, at any time, encroach upon any property, street or
right-of-way adjacent to the Leased Property, or shall violate the
agreements or conditions contained in any lawful restrictive covenant or
other agreement affecting the Leased Property, or any part thereof, or
shall impair the rights of others under any easement or right-of-way to
which the Leased Property is subject and (ii) such encroachment,
violation or impairment is the result of any act or omission of Tenant
occurring during the Term or of Tenant's affiliate during its ownership
of the Leased Property prior to the Term, then promptly upon the request
of Landlord or at the behest of any Person affected by any such
encroachment, violation or impairment, Tenant, at its sole cost and
expense (subject to its right to contest the existence of any such
encroachment, violation or impairment), shall protect, indemnify, save
harmless and defend Landlord from and against all losses, liabilities,
obligations, claims, damages, penalties, causes of action, costs and
expenses (including reasonable attorneys' fees and expenses) based on, or
arising by reason of, any such encroachment, violation or impairment and
in such case, in the event of an adverse final determination, either (A)
obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation
or impairment, whether the same shall affect Landlord or Tenant; or (B)
make such changes in the Leased Improvements, and take such other
actions, as Tenant in the good faith exercise of its judgment deems
reasonably practicable, to remove such encroachment, and to end such
violation or impairment, including, if necessary, the alteration of any
of the Leased Improvements, and in any event take all such actions as may
be necessary in order to be able to continue the operation of the Leased
Improvements for the Primary Intended Use substantially in the manner and
to the extent the Leased Improvements were operated prior to the
assertion of such violation or encroachment. Tenant's obligations under
this Section 11.2(a) shall survive any termination of this Lease for a
period of one (1) year and shall be in addition to and shall in no way
discharge or diminish any obligation of any insurer under any policy of
title or other insurance and Tenant shall be entitled to a credit for any
sums recovered by Landlord under any such policy of title or other
insurance.
(b) Subject to Section 18.1, if, as a result of any matters granted
or created by Landlord after the Commencement Date, any of the Leased
Improvements shall, at any time, encroach upon any property, street or
right-of-way adjacent to the Leased
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Property, or shall violate the agreements or conditions contained in any
lawful restrictive covenant or other agreement affecting the Leased
Property, or any part thereof, or shall impair the rights of others under
any easement or right-of-way to which the Leased Property is subject, or
the use of the Leased Property is impaired, limited or interfered with by
reason of the exercise of the right of surface entry or any other rights
under a lease or reservation of any oil, gas, water or other minerals,
then promptly upon the request of Tenant or at the behest of any Person
affected by any such encroachment, violation or impairment, Landlord, at
its sole cost and expense (subject to its right to contest the existence
of any such encroachment, violation or impairment), shall protect,
indemnify, save harmless and defend Tenant from and against all losses,
liabilities, obligations, claims, damages, penalties, causes of action,
costs and expenses (including reasonable attorneys' fees and expenses)
based on, or arising by reason of, any such encroachment, violation or
impairment and in such case, in the event of an adverse final
determination, either (i) obtain valid and effective waivers or
settlements of all claims, liabilities and damages resulting from each
such encroachment, violation or impairment, whether the same shall affect
Landlord or Tenant; or (ii) make such changes in the Leased Improvements,
and take such other actions, as Landlord in the good faith exercise of
its judgment deems reasonably practicable, to remove such encroachment,
and to end such violation or impairment, including, if necessary, the
alteration of any of the Leased Improvements, and in any event take all
such actions as may be necessary in order to enable Tenant to be able to
continue the operation of the Leased Improvements for the Primary
Intended Use substantially in the manner and to the extent the Leased
Improvements were operated prior to the assertion of such violation or
encroachment. Landlord's obligations under this Section 11.2(b) shall be
in addition to and shall in no way discharge or diminish any obligation
of any insurer under any policy of title or other insurance and Landlord
shall be entitled to a credit for any sums recovered by Tenant under any
such policy of title or other insurance.
ARTICLE 12
PERMITTED CONTESTS
Tenant, on its own or on Landlord's behalf (or in Landlord's name) but at
Tenant's expense, may contest, 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 Imposition or any Legal Requirement or any lien,
attachment, levy, encumbrance, charge or claim not otherwise permitted by
Section 11.1, provided that:
(a) in the case of an unpaid Imposition, lien, attachment, levy,
encumbrance, charge or claim, the commencement and continuation of such
proceedings shall suspend the collection thereof from Landlord and from
the Leased Property, and neither the Leased Property nor any Rent
therefrom nor any part thereof or interest therein would
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be in any danger of being sold, forfeited, attached or lost pending the
outcome of such proceedings;
(b) in the case of a Legal Requirement, Landlord would not be
subject to criminal or civil liability for failure to comply therewith
pending the outcome of such proceedings. Nothing in this Article 12(b),
however, shall permit Tenant to delay compliance with any requirement of
any Environmental Law to the extent such non-compliance poses an
immediate threat of injury to any Person or to the public health or
safety or of material damage to any real or personal property;
(c) in the case of a Legal Requirement and/or an Imposition, lien,
encumbrance or charge, Tenant shall give such reasonable security, if
any, as may be demanded by Landlord to insure ultimate payment of the
same and to prevent any sale or forfeiture of the affected Leased
Property or the Rent by reason of such non-payment or noncompliance,
provided, however, the provisions of this Article 12 shall not be
construed to permit Tenant to contest the payment of Rent (except as to
contests concerning the method of computation or the basis of levy of any
Imposition or the basis for the assertion of any other claim) or any
other sums payable by Tenant to Landlord hereunder;
(d) no such contest shall interfere in any material respect with the
use or occupancy of the Leased Property;
(e) in the case of an Insurance Requirement, the coverage required
by Article 13 shall be maintained; and
(f) if such contest be finally resolved against Landlord or Tenant,
Tenant shall, as Additional Charges due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties
accrued thereon, or comply with the applicable Legal Requirement or
Insurance Requirement, and Landlord, at Tenant's expense, shall execute
and deliver to Tenant such authorization and other documents as may
reasonably be required in any such contest, and, if reasonably requested
by Tenant or if Landlord so desires, Landlord shall join as a party
therein. Tenant shall indemnify and save Landlord harmless against any
liability, cost or expense of any kind that may be imposed upon Landlord
in connection with any such contest and any loss resulting therefrom.
ARTICLE 13
INSURANCE
13.1 GENERAL INSURANCE REQUIREMENTS. Subject to the terms of Section 13.7
and Article 22 hereof, during the Term of this Lease, Tenant shall at all times
obtain and maintain,
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at Tenant's sole cost and expense, the kinds and amounts of insurance described
below. This insurance shall be written by companies authorized to do insurance
business in the State in which the Leased Property is located. The policies
must name Landlord as an additional insured, except on the business
interruption insurance, worker's compensation insurance and employer's
liability insurance. Losses shall be payable to Landlord and/or Tenant as
provided in Article 14 with respect to the property insurance proceeds governed
thereby. In addition, the policies described in Sections 13.1(a) and 13.1(b)
below (other than with respect to Tenant's Personal Property) shall contain a
standard form of mortgagee's loss payable endorsement in favor of the holder of
any mortgage, deed of trust or other security agreement securing any
indebtedness or any other Landlord's Encumbrance placed on the Leased Property
in accordance with the provisions of Article 26 ("Facility Mortgage"). Any
loss adjustment with respect to the coverages described in Sections 13.1(a) and
13.1(b) below (other than with respect to Tenant's Personal Property) shall
require the written consent of Landlord, Tenant, and each Facility Mortgagee.
Evidence of insurance shall be deposited with Landlord and, if requested, with
any Facility Mortgagee(s). The policies on the Leased Property, including the
Leased Improvements, Fixtures, Tenant's Personal Property and any Tenant
Improvements, shall insure against the following risks:
(a) Property damage insurance in an amount not less than the Full
Replacement Cost thereof covering all real and personal property, which
insurance shall be written on an "all risks" and replacement cost form;
(b) Boiler and machinery coverage insuring against damage to, and
against loss or damage caused by an accident or occurrence arising from
or related to, boilers, heating apparatus, pressure vessels and pipes,
air conditioning apparatus and electrical equipment, which insurance
coverage shall be written on a standard, broad form boiler and machinery
policy (on a blanket or comprehensive basis) and shall include "repair
and replacement" coverage;
(c) Commercial general liability insurance in an amount not less
than $1,000,000.00 per occurrence/$2,000,000.00 aggregate, insuring
against liability for bodily injury and property damage and, including
without limitation, the following coverage:
(i) premises and operations liability;
(ii) independent contractors liability;
(iii) product/completed operations liability;
(iv) broad form property damage liability;
(v) blanket contractual liability with respect to all
contracts, written and oral;
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(vi) personal injury liability;
(vii) liquor liability;
(viii) incidental malpractice liability; and
(ix) garagekeepers legal liability.
(d) Comprehensive automobile liability insurance in an amount not
less than $1,000,000.00 per occurrence covering liability for bodily
injury and property damage arising out of the ownership, maintenance or
use of all private passenger and commercial vehicles and other equipment
required to be licensed for road use;
(e) Innkeeper's legal liability insurance covering the property of
guests of the Facility in an amount not less than $10,000.00 per guest
and $250,000.00 per occurrence;
(f) Safe depository insurance in an amount not less than $250,000.00
per occurrence;
(g) Business interruption insurance written on an "all risks" form
either as endorsements to the policies satisfying (a) and (b) above or on
a separate policy, such insurance to include specific coverage for the
Rent;
(h) Broad form umbrella/excess liability insurance, which shall
cover defense costs on a "first dollar" basis and shall provide coverage
not less than "following form" in respect of all underlying coverages, in
an amount not less than $75,000,000.00 covering against excess liability
over coverages provided by all primary general liability, automobile
liability and employers' liability insurance policies.
(i) Workers' compensation insurance complying with the statutory
workers' compensation law for the State;
(j) Employer's liability insurance in an amount not less than
$500,000.00 covering against liability in respect of employees, agents
and servants not covered by workers' compensation insurance and against
occupational disease benefits;
(k) Employee fidelity insurance in an amount not less than
$500,000.00;
(l) Employment practices coverage in an amount not less than
$1,000,000 per claim/aggregate; and
(m) Such other insurance on or in connection with any of the Leased
Property as Landlord or any Facility Mortgagee may reasonably require,
which at the time is usual
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and commonly obtained in connection with properties similar in type of
building size and use to the Leased Property and located in the
geographic area where the Leased Property is located; provided, however,
that to the extent that the imposition of the requirement to obtain such
other insurance causes the cost to Tenant of obtaining and maintaining
all of the insurance then required under this Lease to exceed Tenant's
cost for the insurance required under this Lease during the first Fiscal
Year of the Term, as such cost is increased based upon changes in the
Consumer Price Index since the date of this Lease, Landlord shall be
responsible to pay the amount in excess of said Consumer Price Index
increased cost.
13.2 REPLACEMENT COST. In the event either party believes that the Full
Replacement Cost of the insured property has increased or decreased at any time
during the Term, such party shall have the right to have such Full Replacement
Cost redetermined by the fire insurance company which is then carrying the
largest amount of fire insurance carried on the Leased Property (the "Impartial
Appraiser"). The party desiring to have the Full Replacement Cost so
redetermined shall forthwith, on receipt of such determination by such
Impartial Appraiser, give written notice thereof to the other party hereto.
The determination of such Impartial Appraiser shall be final and binding on the
parties hereto, and Tenant shall forthwith increase, or may decrease, the
amount of the insurance carried pursuant to Section 13.1 above, as the case may
be, to the amount so determined by the Impartial Appraiser. Each party shall
pay one-half of the fee, if any, of the Impartial Appraiser.
13.3 WAIVER OF SUBROGATION. Landlord and Tenant each hereby waives any
and all rights of recovery against the other (and against the officers,
employees and agents of the other party) for loss of, or damage to, such
waiving party or its property or the property of others under its control, to
the extent such loss or damage is covered by any property insurance, including
but not limited to rental loss and business interruption coverages, required to
be maintained under Section 13.1. All insurance policies carried by either
party covering the Leased Property including contents, fire and casualty
insurance, shall expressly waive any right of subrogation on the part of the
insurer against the other party (including any Facility Mortgagee). The
parties hereto agree that their policies will include such waiver clause or
endorsement so long as the same are obtainable without extra cost, and in the
event of such an extra charge, the other party, at its election, may pay the
same, but shall not be obligated to do so.
13.4 FORM SATISFACTORY, ETC. All of the policies of insurance referred to
in Section 13.1 shall be written in a form reasonably satisfactory to Landlord
and by insurance companies rated not less than AVIII by A.M. Best's Insurance
Guide. Except as otherwise expressly provided in this Article 13, Tenant shall
pay all premiums for the policies of insurance referred to in Section 13.1 and
shall deliver certificates thereof to Landlord prior to their effective date
(and with respect to any renewal policy, at least 10 days prior to the
expiration of the existing policy). In the event Tenant fails to satisfy its
obligations under this Section 13.4 after notice thereof being given to Tenant,
Landlord shall be entitled, but shall have no obligation, to effect such
insurance and pay the premiums therefor, which premiums (together with interest
thereon accruing at the Overdue Rate until repaid) shall be repayable to
Landlord
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upon written demand as Additional Charges. Each policy of insurance required
by Section 13.1 shall, by endorsement on the policy or policies, or by
independent instrument furnished to Landlord, provide that the insurer
thereunder will give to Landlord not less than thirty (30) days' written notice
before the policy or policies in question shall be altered, allowed to expire
or canceled. Each such policy shall also provide that any loss otherwise
payable thereunder shall be payable notwithstanding (i) any act or omission of
Landlord or Tenant which might, absent such provision, result in a forfeiture
of all or a part of such insurance payment, (ii) the occupation or use of the
Leased Property for purposes more hazardous than those permitted by the
provisions of such policy, (iii) any foreclosure or other action or proceeding
taken by any Facility Mortgage pursuant to any provision of a mortgage, note,
assignment or other document evidencing or securing a loan upon the happening
of an event of default therein or (iv) any change in title to or ownership of
the Leased Property.
13.5 CHANGE IN LIMITS. In the event that Landlord shall at any time
reasonably determine on the basis of prudent industry practice that the
liability insurance carried by Tenant pursuant to Section 13.1(c) is either
excessive or insufficient, the parties shall endeavor to agree on the proper
and reasonable limits for such insurance to be carried; and such insurance
shall thereafter be carried with the limits thus agreed on until further
changed pursuant to the provisions of this Section 13.5; provided, however,
that the deductibles for such insurance or the amount of such insurance which
is self-retained by Tenant shall be as reasonably determined by Tenant so long
as Tenant can reasonably demonstrate its ability to satisfy such deductible or
amount of such self-retained insurance.
13.6 BLANKET POLICY. Notwithstanding anything to the contrary contained
in this Article 13, Tenant's obligations to carry the insurance provided for
herein may be brought within the coverage of a so-called blanket policy or
policies of insurance carried and maintained by Tenant; provided, however, that
the coverage afforded Landlord will not be reduced or diminished or otherwise
be different from that which would exist under a separate policy meeting all
other requirements of this Lease by reason of the use of such blanket policy of
insurance, and provided further that the requirements of this Article 13 are
otherwise satisfied. The amount of the total insurance allocated to the Leased
Property, which amount shall be not less than the amounts required pursuant to
Section 13.1, shall be specified either (i) in each such "blanket" policy or
(ii) in a written statement, which Tenant shall deliver to Landlord and
Facility Mortgagee, from the insurer thereunder. A certificate of each such
"blanket" policy shall promptly be delivered to Landlord and Facility
Mortgagee.
ARTICLE 14
APPLICATION OF INSURANCE PROCEEDS
14.1 INSURANCE PROCEEDS. All proceeds ("Property Insurance Proceeds") of
insurance payable by reason of any loss or damage to the Leased Property or any
portion thereof, or to any portion of Tenant's Personal Property which has been
purchased in replacement of
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Landlord's Personal Property ("Tenant's Replacement Personal Property") and
insured under any policy of insurance required by Article 13 shall (i) if
greater than $500,000, be paid to an insurance trustee mutually approved by
Landlord, Tenant and any Facility Mortgagee (the cost of which, if not covered
by insurance proceeds or if the insurance proceeds are insufficient, shall be
borne entirely by Tenant) and held by said insurance trustee in accordance with
this Article 14 and (ii) if less than such amount, be paid to and held by
Tenant. All such Property Insurance Proceeds shall be held in trust and shall
be made available for reconstruction or repair, as the case may be, of any
damage to or destruction of the Leased Property, or any portion thereof. It is
expressly understood that "Property Insurance Proceeds" shall not include (a)
the proceeds of Tenant's business interruption insurance (the "BI Proceeds"),
which shall, subject to Section 14.4 below, belong to Tenant, (b) the proceeds
("Tenant's PP Proceeds") of insurance on that portion of Tenant's Personal
Property which does not constitute Tenant's Replacement Personal Property,
which shall, subject to Section 14.4 below, belong to Tenant, or (c) the
proceeds of Landlord's loss of rents insurance (the "Rental Loss Proceeds"),
which shall belong to Landlord, subject to any rights of any Facility
Mortgagee.
14.1.1 DISBURSEMENT OF PROPERTY INSURANCE PROCEEDS. Any Property
Insurance Proceeds held by the insurance trustee or Tenant shall be paid
out by said insurance trustee or Tenant from time to time for the
reasonable costs of such reconstruction or repair (which, to the extent
covered by the Property Insurance Proceeds, may also include supervision
costs and/or technical service fees); provided, however, that the
Property Insurance Proceeds shall be disbursed subject to the following
requirements:
(i) prior to commencement of restoration, (A) the architects,
contracts, contractors, plans and specifications for the
restoration shall have been approved by Landlord, which approval
shall not be unreasonably withheld or delayed (and Landlord's
failure to respond within fifteen (15) Business Days shall be
deemed Landlord's approval thereof) and (B) if legally permitted,
appropriate waivers of mechanics' and materialmen's liens shall
have been filed;
(ii) at the time of any disbursement, subject to Article 12,
no mechanics' or materialmen's liens shall have been filed against
any of the Leased Property and remain undischarged, unless a
satisfactory bond shall have been posted in accordance with the
laws of the State;
(iii) disbursements shall be made from time to time in an
amount not exceeding the cost of the work completed since the last
disbursement, upon receipt of (A) satisfactory evidence of the
stage of completion, the estimated total cost of completion and
performance of the work to date in a good and workmanlike manner in
accordance with the contracts, plans and specifications, (B)
waivers of liens, (C) a satisfactory bringdown of title insurance
and (D) other evidence of cost and payment so that said insurance
trustee, Landlord and Facility Mortgagee can verify that the
amounts disbursed from time to time are
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represented by work that is completed, in place and free and clear
of mechanics' and materialmen's lien claims;
(iv) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by a duly authorized representative
of Tenant, describing the work for which payment is requested,
stating the cost incurred in connection therewith, stating that
Tenant has not previously received payment for such work and, upon
completion of the work, also stating that the work has been fully
completed and complies with the applicable requirements of this
Lease;
(v) to the extent actually held by Landlord and not by a
Facility Mortgagee or said insurance trustee, (1) the proceeds
shall be held in a separate account and shall not be commingled
with Landlord's other funds, and (2) interest shall accrue on funds
so held at the money market rate of interest and such interest
shall constitute part of the proceeds; and
(vi) such other reasonable conditions as Landlord or Facility
Mortgagee may reasonably impose, including, without limitation,
payment by Tenant of reasonable costs of administration imposed by
or on behalf of Facility Mortgagee should the proceeds be held by
Facility Mortgagee.
14.1.2 EXCESS PROPERTY INSURANCE PROCEEDS. Any excess Property
Insurance Proceeds remaining after the completion of the restoration or
reconstruction of the Leased Property (or in the event neither Landlord
nor Tenant is required or elects to repair and restore) shall be paid to
Landlord and Tenant in like proportions to the value of Landlord's
interests in the Leased Property and Tenant's interest in Tenant's
Replacement Personal Property and the Tenant Improvements, or any portion
thereof, as determined under Article 13, upon completion of any such
repair and restoration except as otherwise specifically provided below in
this Article 14. All salvage resulting from any risk covered by
insurance shall belong to Landlord.
14.1.3 DELIVERY OF INSURANCE PROCEEDS. If any BI Proceeds or
Tenant's PP Proceeds are paid to Landlord or by check jointly made
payable to Tenant and Landlord, then, so long as there is not then
existing an uncured Event of Default on the part of Tenant, Landlord
shall not have the right to any such proceeds or to offset any amount
hereof against sums due or to become due from Tenant to Landlord under
this Lease, and Landlord shall pay to Tenant or endorse and deliver to
Tenant any check for BI Proceeds or Tenant's PP Proceeds on or before
three (3) Business Days after receipt thereof by Landlord (and if there
is such an Event of Default, then Landlord shall only be entitled to hold
or retain therefrom that amount which is then subject to such Event of
Default and the balance shall be paid over to Tenant). If any Rental
Loss Proceeds are paid to Tenant or by check jointly made payable to
Tenant and Landlord, Tenant shall not have the right to any such proceeds
or to offset any amount thereof against sums due or to become due from
Landlord under this Lease, and Tenant shall pay to Landlord
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or endorse and deliver to Landlord any check for Rental Loss Proceeds on
or before three (3) Business Days after receipt thereof by Tenant. If
any Property Insurance Proceeds are paid to Tenant or by check jointly
made payable to Tenant and Landlord, Tenant shall not have the right to
any such proceeds or to offset any amount thereof against sums due or to
become due from Landlord under this Lease, and Tenant shall pay to
Landlord or endorse and deliver to Landlord any check for Property
Insurance Proceeds on or before three (3) Business Days after receipt
thereof by Tenant.
14.2 RECONSTRUCTION COVERED BY INSURANCE.
14.2.1 DESTRUCTION RENDERING FACILITY UNSUITABLE FOR ITS PRIMARY
USE. If during the Term the Leased Property is totally or partially
destroyed from a risk covered by the insurance described in Article 13
and the Facility thereby is rendered Unsuitable For Its Primary Intended
Use, Tenant shall diligently restore the Facility to substantially the
same condition as existed immediately before the damage or destruction.
14.2.2 DESTRUCTION NOT RENDERING FACILITY UNSUITABLE FOR ITS
PRIMARY USE. If during the Term, the Leased Property is totally or
partially destroyed from a risk covered by the insurance described in
Article 13, but the Facility is not thereby rendered Unsuitable For Its
Primary Intended Use, Tenant shall diligently restore the Facility to
substantially the same condition as existed immediately before the damage
or reconstruction; provided, however, Tenant shall not be required to
restore that portion of Tenant's Personal Property which is not Tenant's
Replacement Personal Property and/or any Tenant Improvements if failure
to do so does not adversely affect the amount of Additional Rent payable
hereunder. Such damage or destruction shall not terminate this Lease.
14.2.3 COSTS OF REPAIR. If the cost of the repair or restoration
exceeds the amount of proceeds received by Landlord or Tenant from the
insurance required under Article 13, Tenant shall pay for such excess
cost of repair or restoration.
14.3 RECONSTRUCTION NOT COVERED BY INSURANCE. If during the Term, the
Facility is totally or materially destroyed from a risk not covered by the
insurance described in Article 13, whether or not such damage or destruction
renders the Facility Unsuitable For Its Primary Intended Use, Tenant shall
restore the Facility to substantially the same condition as existed immediately
before the damage or destruction.
14.4 NO ABATEMENT OF RENT. This Lease shall remain in full force and
effect and Tenant's obligation to make rental payments and to pay all other
charges required by this Lease shall remain unabated during the period required
for repair and restoration; provided, however, that if there is then no uncured
Event of Default on the part of Tenant, Tenant shall be entitled to retain any
BI Proceeds (which amounts shall be deemed Rooms Revenue and Golf Course
Revenue for purposes hereof and allocated between the two components on the
same basis as
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the relationship of said two components on the then most recent full Fiscal
Year financial statements for the Leased Property).
14.5 WAIVER. Tenant hereby waives any statutory or other rights of
termination which may arise by reason of any damage or destruction of the
Facility which Landlord or Tenant is obligated to restore or may restore under
any of the provisions of this Lease.
14.6 DAMAGE NEAR END OF TERM. Notwithstanding any other provision to the
contrary in this Article 14, if damage to or destruction of the Leased Property
occurs during the last 24 months of the Term of this Lease, and if such damage
or destruction cannot reasonably be expected to be fully repaired or restored
prior to the date that is 12 months prior to the end of the then-applicable
Term, then either Landlord or Tenant shall have the right to terminate this
Lease on not less than thirty (30) days' prior notice to the other party by
giving notice thereof to said other party within 60 days after the date of such
damage or destruction. Upon any such termination, Landlord shall be entitled
to retain all Property Insurance Proceeds, grossed up by Tenant to account for
the deductible or any self-insured retention; provided, however, that Tenant
shall be entitled to retain or receive all Property Insurance Proceeds relating
to Tenant Improvements. If Landlord shall give Tenant a notice under this
Section 14.6 that it seeks to terminate this Lease at a time when Tenant has a
remaining Extended Term, then such termination notice shall be of no effect if
Tenant shall exercise its rights to extend the Term not later than the earlier
of the time required by Section 2.2 or within thirty (30) days after Landlord's
notice of termination given under this Section 14.6.
ARTICLE 15
CONDEMNATION
15.1 TOTAL TAKING. If, at any time during the Term, the Leased Property
is totally and permanently taken by Condemnation, this Lease shall terminate on
the Date of Taking and Tenant shall promptly pay all outstanding Rent and other
charges through such date of termination.
15.2 PARTIAL TAKING. If a portion of the Leased Property is taken by
Condemnation, this Lease shall remain in effect if the Facility is not thereby
rendered Unsuitable For Its Primary Intended Use, but if the Facility is
thereby rendered Unsuitable For Its Primary Intended Use, this Lease shall
terminate on the Date of Taking.
15.3 RESTORATION. If there is a partial taking of the Leased Property and
this Lease remains in full force and effect pursuant to Section 15.2, Landlord
at its cost shall accomplish all necessary restoration up to but not exceeding
the amount of the Award payable to Landlord, as provided herein. Landlord
shall cause such restoration to be performed with due diligence and in a good
and workmanlike manner, keeping the Leased Property at all times free from
mechanic's liens. If Tenant receives an Award under Section 15.4, Tenant shall
repair or
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restore any Tenant Improvements up to but not exceeding the amount of the Award
payable to Tenant therefor.
15.4 AWARD DISTRIBUTION. The entire Award shall belong to and be paid to
Landlord, except that, subject to the rights of the Facility Mortgagee, Tenant
shall be entitled to receive from the Award, if and to the extent such Award
specifically includes such items, a sum attributable to the value, if any, of:
(i) any Tenant Improvements and (ii) the leasehold interest of Tenant under
this Lease; provided, however, that if the amount received by Landlord and the
Facility Mortgagee is less than the Condemnation Threshold, then the amount of
the Award otherwise payable to Tenant for the value of its leasehold interest
under this Lease (and not any other funds of Tenant) shall instead be paid over
to Landlord up to the amount of the shortfall.
15.5 TEMPORARY TAKING. The taking of the Leased Property, or any part
thereof, by military or other public authority shall constitute a taking by
Condemnation only when the use and occupancy by the taking authority has
continued for longer than six months. During any such six month or less
period, which shall be deemed a temporary taking, all the provisions of this
Lease shall remain in full force and effect with no abatement of Rent payable
by Tenant hereunder. In the event of any such temporary taking, the entire
amount of any such Award made for such temporary taking allocable to the Term
of this Lease, whether paid by way of damage, rent or otherwise, shall be paid
to Tenant.
ARTICLE 16
EVENTS OF DEFAULT
16.1 EVENTS OF DEFAULT. If any one or more of the following events
(individually, an "Event of Default") shall occur:
(a) if Tenant shall fail to make payment of the Rent payable by
Tenant under this Lease when the same becomes due and payable and such
failure is not cured by Tenant within a period of 10 days after receipt
by Tenant of notice thereof from Landlord;
(b) if Tenant shall fail to obtain, maintain or replace the security
deposit as required by Article 21 and such failure is not cured within
ten (10) days after Landlord gives Tenant written notice thereof;
(c) if, other than as a result of Unavoidable Delays, Tenant shall
fail to observe or perform any material term, covenant or condition of
this Lease and such failure is not cured by Tenant within a period of
thirty (30) days after receipt by Tenant of notice thereof from Landlord,
unless such failure cannot with due diligence be cured within a period of
thirty (30) days, in which case such failure shall not be deemed to
continue if Tenant proceeds promptly and with due diligence to cure the
failure and
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diligently completes the curing thereof, and in any event cures such
failure within an additional ninety (90) day period following the
foregoing thirty (30) day cure period; provided, however, that the cure
period shall not extend beyond thirty (30) days as otherwise provided by
this Section 16.1(c) if the facts or circumstances giving rise to the
default are creating a further harm to Landlord or the Leased Property
and Landlord makes a good faith determination that Tenant is not
undertaking remedial steps that Landlord would cause to be taken if this
Lease were then to terminate.
(d) if Tenant shall:
(i) admit in writing its inability to pay its debts generally
as they become due;
(ii) file a petition in bankruptcy or a petition to take
advantage of any insolvency act;
(iii) make an assignment for the benefit of its creditors;
(iv) consent to the appointment of a receiver of itself or of
the whole or any substantial part of its property; or
(v) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other
applicable law or statute of the United States of America or any
state thereof;
(e) if Tenant shall, on a petition in bankruptcy filed against it,
be adjudicated as bankrupt or a court of competent jurisdiction shall
enter an order or decree appointing, without the consent of Tenant, a
receiver of Tenant or of the whole or substantially all of its property,
or approving a petition filed against it seeking reorganization or
arrangement of Tenant under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state
thereof, and such judgment, order or decree shall not be vacated or set
aside or stayed within ninety (90) days from the date of the entry
thereof;
(f) if Tenant shall be liquidated or dissolved and is not
reconstituted within ninety (90) days thereafter, or shall begin
proceedings toward such liquidation or dissolution;
(g) if the estate or interest of Tenant in the Leased Property or
any part thereof shall be levied upon or attached in any proceeding and
the same shall not be vacated or discharged within the later of ninety
(90) days after commencement thereof or thirty (30) days after receipt by
Tenant of notice thereof from Landlord (unless Tenant shall be contesting
such lien or attachment in accordance with Article 12);
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(h) if, except as a result of damage, destruction or a partial or
complete Condemnation or other Unavoidable Delays, or, as a result of any
renovation, repair, or replacement expressly required or permitted under
this Lease, Tenant voluntarily ceases operations on the Leased Property
for a period in excess of forty-five (45) consecutive days;
(i) any representation or warranty made by Tenant herein or in any
certificate, demand or request made pursuant hereto proves to be
incorrect, now or hereafter, in any material respect and any adverse
effect on Landlord of any such misrepresentation or breach of warranty
has not been corrected to Landlord's satisfaction within twenty (20) days
after Tenant becomes aware of, or is notified by Landlord of the fact of,
such misrepresentation or breach of warranty;
(j) Intentionally Omitted
(k) a default by Tenant in any payment of principal or interest on
any obligations for borrowed money having a principal balance of
$5,000,000 or more in the aggregate (excluding obligations which are
limited in recourse to specific property of Tenant provided that such
property is not a substantial portion of the assets of Tenant), or in the
performance of any other provision contained in any instrument under
which any such obligation is created or secured (including the breach of
any covenant thereunder), if an effect of such default is that the
holder(s) of such obligation cause such obligation to become due prior to
its stated maturity; or
(l) a final, non-appealable judgment or judgments for the payment of
money in excess of $3,000,000 in the aggregate not fully covered
(excluding deductibles) by insurance shall be rendered against Tenant and
the same shall remain undischarged, unvacated, unbonded, or unstayed for
a period of sixty (60) consecutive days;
THEN, Landlord may terminate this Lease by giving Tenant not less than ten (10)
days' notice (or no notice for clauses (d), (f) and (g)) of such termination
and upon the expiration of the time fixed in such notice, the Term shall
terminate and all rights of Tenant under this Lease shall cease. Without
limitation of the foregoing, Landlord shall have all other rights at law and in
equity available to Landlord as a result of any Event of Default under this
Lease.
Landlord shall not be required to serve Tenant with any notices or demands
as a prerequisite to its exercise of any of its rights or remedies under this
Lease, other than those notices and demands specifically required under this
Lease. Tenant expressly waives the service of any statutory demand or notice
which is a prerequisite to Landlord's commencement of eviction proceedings
against Tenant, including the demands and notices specified in 735 ILCS Section
Section 5/9-209 and 5/9-210.
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16.2 PAYMENT OF COSTS. Tenant shall, to the extent permitted by law, pay
as Additional Charges all costs and expenses incurred by or on behalf of
Landlord, including reasonable attorneys' fees and expenses, as a result of any
Event of Default hereunder.
16.3 EXCEPTIONS. No Event of Default (other than a failure to make
payment of money or post a required letter of credit) shall be deemed to exist
under clause (c) or clause (j) during any time the curing thereof is prevented
by an Unavoidable Delay; provided that, upon the cessation of such Unavoidable
Delay, Tenant shall remedy such default without further delay.
16.4 CERTAIN REMEDIES. If an Event of Default shall have occurred (and
the event giving rise to such Event of Default has not been cured within the
curative period relating thereto as set forth in Section 16.1) and be
continuing, whether or not this Lease has been terminated pursuant to Section
16.1, Tenant shall, to the extent permitted by law, if required by Landlord so
to do, immediately surrender to Landlord the Leased Property pursuant to the
provisions of Section 16.1 and quit the same and Landlord may enter upon and
repossess the Leased Property by reasonable force, summary proceedings,
ejectment or otherwise, and may remove Tenant and all other Persons and any and
all Tenant's Personal Property from the Leased Property subject to any
requirement of law.
16.5 DAMAGES. None of (a) the termination of this Lease pursuant to
Section 16.1, (b) the repossession of the Leased Property, (c) the failure of
Landlord, notwithstanding reasonable good faith efforts, to relet the Leased
Property, (d) the reletting of all or any portion thereof, nor (e) the failure
of Landlord to collect or receive any rentals due upon any such reletting,
shall relieve Tenant of its liability and obligations hereunder, all of which
shall survive any such termination, repossession or reletting. In the event of
any such termination, Tenant shall forthwith pay to Landlord all Rent due and
payable with respect to the Leased Property to, and including, the date of such
termination. Thereafter, Tenant shall forthwith pay to Landlord, at Landlord's
option, as and for liquidated and agreed current damages for Tenant's default,
either:
(A) the sum of:
(1) the worth at the time of award of the unpaid Rent which
had been earned at the time of termination,
(2) the worth at the time of award of the amount by which the
unpaid Rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided,
(3) the worth at the time of award of the amount by which the
unpaid Rent for the balance of the Term after the time of award
exceeds the amount of such rental loss that Tenant proves could be
reasonably avoided, and
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(4) any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom; provided, however, that
Landlord shall not be entitled to punitive or speculative damages
as a consequence of such Event of Default on the part of Tenant
hereunder.
In making the above determinations, the worth at the time of the award
shall be determined by the court having jurisdiction thereof using, as a
discount factor for present value, a rate equal to the Prime Rate at the
time of the Event of Default, and the Additional Rent shall be deemed to
be the same as for the then-current Fiscal Year or, if not determinable,
the immediately preceding Fiscal Year, for the remainder of the Term, or
such other amount as either party shall prove reasonably could have been
earned during the remainder of the Term or any portion thereof; or
(B) without termination of Tenant's right to possession of the
Leased Property, each installment of said Rent and other sums payable by
Tenant to Landlord under the Lease as the same becomes due and payable,
which Rent and other sums shall bear interest at the maximum annual rate
permitted by the law of the State from the date when due until paid, and
Landlord may enforce, by action or otherwise, any other term or covenant
of this Lease.
16.6 ADDITIONAL REMEDIES. In addition to and without limitation of the
foregoing, Landlord shall have all other remedies that may be available under
applicable law.
16.7 APPOINTMENT OF RECEIVER. Upon the occurrence of an Event of Default,
and upon filing of a suit or other commencement of judicial proceedings to
enforce the rights of Landlord hereunder, Landlord shall be entitled to seek in
accordance with applicable laws the appointment of a receiver or receivers
acceptable to Landlord of the Leased Property and the Facility and of the
revenues, earnings, income, products and profits thereof, pending such
proceedings, with such powers as the court making such appointment shall
confer.
16.8 WAIVER. If this Lease is terminated pursuant to Section 16.1, Tenant
waives, to the extent permitted by applicable law (a) any right of redemption,
re-entry or repossession and (b) any right to a trial by jury in the event of
summary proceedings to enforce the remedies set forth in this Article 16.
16.9 APPLICATION OF FUNDS. Any payments received by Landlord under any of
the provisions of this Lease during the existence or continuance of any Event
of Default shall be applied to Tenant's obligations in such order as Landlord
may determine or as may be prescribed by the laws of the State.
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ARTICLE 17
LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT
If Tenant shall fail to make any payment or to perform any act required to
be made or performed under this Lease, and to cure the same within the relevant
time periods in Section 16.1, Landlord, after notice to and demand upon Tenant,
and without waiving or releasing any obligation or default, may (but shall be
under no obligation to) at any time thereafter make such payment or perform
such act for the account and at the expense of Tenant. Landlord may, to the
extent permitted by law, enter upon the Leased Property for such purpose and
take all such action thereon as, in Landlord's opinion, may be necessary or
appropriate therefor. No such entry shall be deemed an eviction of Tenant.
All sums so paid by Landlord and all costs and expenses (including reasonable
attorneys' fees and expenses, to the extent permitted by law) so incurred,
together with a late charge thereon at the Overdue Rate from the date on which
such sums or expenses are paid or incurred by Landlord, shall be paid by Tenant
to Landlord on demand. The obligations of Tenant and rights of Landlord
contained in this Article 17 shall survive the expiration or earlier
termination of this Lease.
ARTICLE 18
OPERATIONS/CAPITAL EXPENDITURES
18.1 ANNUAL PLAN. On or before the Commencement Date (i.e., with respect
to the calendar year in which the Commencement Date occurs), and thereafter on
or before November 30th of each year during the Term hereof, Tenant shall
deliver to Landlord a report with respect to the next succeeding calendar year
(herein, an "Annual Plan"), setting forth the plans and prospects for Tenant's
business operations at the Leased Property, which shall include (i) a forecast
or budget of revenues (including, without limitation, Rooms Revenue, Golf
Course Revenue and FB&M Revenue) and expenses for such period, (ii) a
projection on a month-by-month basis of cash in-flow and working capital, (iii)
proposed plans for marketing, sales, promotion, and advertising, (iv) a
schedule of all fees and charges to be imposed at the Leased Property,
including, but not limited to, room rates, greens fees and cart rental charges,
charges for the use of practice range facilities, food and beverages charges,
and fees and charges for other services, amenities and products that Tenant
intends to offer at the Leased Property, (v) a forecast or budget of Capital
Expenditures for such period, together with the plan for any improvements to be
made by Tenant during such period to the hotel, clubhouse and other buildings
at the Leased Property, and of the golf course, landscaping and related
physical facilities on the Leased Property, and (vi) description of any other
material action concerning the management, operation or marketing of the Leased
Property contemplated for the period at issue. Tenant shall utilize good faith
efforts to implement the Annual Plan for the respective period or periods
covered thereby and shall promptly notify Landlord of any action taken by
Tenant which materially deviates from the matters set forth in the current
Annual Plan. Without limitation of the foregoing, it is agreed by Tenant that
the Annual Plan shall provide for not less
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than four percent (4%) of Gross Revenues budgeted for such annual period either
to be spent on Capital Expenditures or to be deposited into the Capital
Expenditure Reserve Account (as defined below), but the actual amount to be so
expended or deposited shall be determined in accordance with Section 18.2
below.
18.2 FUNDING OF CAPITAL EXPENDITURE RESERVE ACCOUNT. Within twenty (20)
days after the end of each Fiscal Quarter during the Term hereof, Tenant shall
deposit into an account at LaSalle National Bank or another institution
designated by Tenant and approved by Landlord (herein, the "Capital Expenditure
Reserve Account"), the aggregate "Capital Expenditure Reserve Amounts" required
for the immediately preceding Fiscal Quarter. As further security for the
payment and performance of all obligations of Tenant hereunder, Tenant hereby
grants to Landlord and, if so requested by Landlord, to any Facility Mortgagee
designated by Landlord, a security interest in and to the Capital Expenditure
Reserve Account and all sums on deposit therein (which security interest shall
be acknowledged by the institution with which said account is established).
All such sums will be held in the Capital Expenditure Reserve Account and
released and applied in accordance with the terms of this Lease. Tenant may
make withdrawals from the Capital Expenditure Reserve Account for (a) Capital
Expenditures that are reflected in the Annual Plan and (b) those expenditures
for repairs, replacements, upgrades and other items which, under generally
accepted accounting principles as applied in the hotel/resort industry,
constitute capital expenditures (the expenditures described in the foregoing
clauses (a) and (b) are hereinafter collectively called "Eligible
Expenditures"). Notwithstanding the foregoing, upon the occurrence and during
the continuance of an Event of Default hereunder, Tenant shall have no further
right to withdraw any amounts on deposit in the Capital Expenditure Reserve
Account, Landlord shall be entitled to become the sole signatory on the Capital
Expenditure Reserve Account, and such amounts shall be deemed to be held by
Landlord as further security for Tenant's obligations hereunder, to be
disbursed or applied in accordance with the same terms and conditions as set
forth in Article 21 hereof with respect to the balance of the security then on
deposit with Landlord; provided, however, that until this Lease is terminated
or Tenant's right to possession of the Leased Property is terminated without
this Lease being terminated, Landlord shall only cause amounts in the Capital
Expenditure Reserve Account to be disbursed for Eligible Expenditures and
Landlord shall cause the amounts in the Capital Expenditure Reserve Account to
be disbursed for those Eligible Expenditures necessary to operate the Leased
Property in accordance with the standards set forth in this Lease. For
purposes hereof, the term "Capital Expenditure Reserve Amount" shall mean, for
any Fiscal Quarter, an amount equal to the excess (if any) of (i) four percent
(4%) of Gross Revenues accruing from the beginning of the "Capital Expenditure
Period" (as defined below) in which such Fiscal Quarter occurs through and
including the end of such Fiscal Quarter (herein, the "Calculation Period")
over (ii) the sum of all Eligible Expenditures incurred during such Calculation
Period with respect to the Leased Property, which Eligible Expenditures were
made pursuant to an Annual Plan and otherwise pursuant to the terms of Article
10 hereof or in accordance with the other terms and provisions of this Lease.
For purposes hereof, the term "Capital Expenditure Period" shall mean (a) the
period from and the Commencement Date and through the fourth (4th) full Fiscal
Quarter thereafter and (b) each successive period of four (4) full Fiscal
Quarters thereafter occurring during the Term thereof. If Eligible
Expenditures for a Capital Expenditure Period exceed the
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sum of the maximum possible amount of Capital Expenditure Reserve Amount due
for that Fiscal Quarter plus the then balance in the Capital Expenditure
Reserve Account at that time, Tenant shall be entitled to recoup such excess
out of the balance remaining in the Capital Expenditure Reserve Account as of
the end of each succeeding Fiscal Quarter until Tenant has fully recouped said
excess. Subject to the foregoing, the Capital Expenditure Reserve Account and
the funds therein shall be and remain the property of Tenant, and so long as no
Event of Default on the part of Tenant then exists and is continuing, the
interest earned thereon may be withdrawn by Tenant from time to time.
ARTICLE 19
LEGAL REQUIREMENTS
Subject to Article 12 regarding permitted contests, Tenant, at its
expense, shall promptly (a) comply with all Legal Requirements and Insurance
Requirements in respect of the use, operation, maintenance, repair and
restoration of the Leased Property, whether or not compliance therewith shall
require structural changes in any of the Leased Improvements or interfere with
the use and enjoyment of the Leased Property; and (b) procure, maintain and
comply with all licenses and other authorizations required for any use of the
Leased Property then being made, and for the proper erection, installation,
operation and maintenance of the Leased Property or any part thereof. In the
event that as a result of any new or amended Legal Requirement imposed after
the date of this Lease Capital Expenditures are required, Landlord shall
advance the funds therefor and in consideration thereof, Tenant shall pay to
Landlord "additional" Base Rent on a monthly basis equal to the amount advanced
by Landlord amortized over the useful life of the Capital Expenditure item,
together with interest on the unamortized balance at the rate of ten percent
(10%) per annum.
ARTICLE 20
HOLDING OVER
If Tenant shall for any reason remain in possession of the Leased Property
after the expiration of the Term or earlier termination of the Term hereof
other than with the consent or at the request of, Landlord, such possession
shall be as a month-to-month tenant during which time Tenant shall pay as
rental each month, 125% of the aggregate of (i) one-twelfth of the aggregate
Annual Base Rent and Additional Rent payable with respect to the last Fiscal
Year of the preceding Term; (ii) all Additional Charges accruing during the
month; and (iii) all other sums, if any, payable by Tenant pursuant to the
provisions of this Lease with respect to the Leased Property. During such
period of month-to-month tenancy, Tenant shall be obligated to perform and
observe all of the terms, covenants and conditions of this Lease, but shall
have no rights hereunder other than the right, to the extent given by law to
month-to-month tenancies, to continue its occupancy and use of the Leased
Property. Nothing contained herein shall
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constitute the consent, express or implied, of Landlord to the holding over of
Tenant after the expiration or earlier termination of this Lease.
ARTICLE 21
UPREIT UNITS/REIT SHARES/LETTER OF CREDIT/SECURITY DEPOSIT
21.1 SECURITY DEPOSIT. On or before the Commencement Date, Tenant shall
post with Landlord a security deposit consisting of one or some combination of
cash, a Letter of Credit, limited partnership units in Landlord, shares of
common stock in Landlord's general partner, or other security acceptable to
Landlord and described in Section 21.6 below, to be held as a security deposit
in accordance with the terms of this Article 21. Tenant shall have the right,
at any time and from time to time, to substitute for all or any portion of
existing security deposit one or some combination of cash, a Letter of Credit,
limited partnership units in Landlord, shares of common stock in Landlord's
general partner or other security acceptable to Landlord and described in
Section 21.6 below. The security deposit shall, at all times, be in an amount
equal to the then Required Security Deposit Amount (as defined in Exhibit A
hereto). If Units are pledged as all or part of the security deposit, the
parties will use the value (the "Initial Value") of these Units as of the
Commencement Date and said Initial Value will, for purposes of valuing the
Units for credit against Tenant's security deposit requirements hereunder, be
utilized at all times throughout the Term regardless of actual market
fluctuations.
21.2 OFFICER'S CERTIFICATE/AUDIT. Tenant shall provide an Officer's
Certificate to Landlord not later than forty-five (45) days after the end of
each Fiscal Quarter, as to the Required Security Deposit Amount then in effect,
which Certificate shall include a calculation and reasonable detail of such
item. Without limitation of the foregoing, Landlord shall have the right, at
any time and from time to time, to audit, whether directly or through its
accountants (which shall be a nationally recognized accounting firm), the
information set forth in any Officer's Certificate to be delivered under this
Article 21, and in connection with such audit, to examine Tenant's books and
records with respect thereto (including supporting data, sales tax returns and
Tenant's workpapers) at Tenant's office during normal business hours upon
reasonable advance notice to Tenant; provided, however, that Landlord must
deliver to Tenant, within thirty (30) days after receipt of the Officer's
Certificate, notice that Landlord will conduct an audit and any audit of the
information contained in an Officer's Certificate referred to in this Section
21.2 must be conducted, and the results thereof delivered to Tenant, on or
before ninety (90) days after delivery to Landlord of such Officer's
Certificate. At the end of such ninety (90) day period, the information
contained in the Officer's Certificate shall be final and binding upon Landlord
and Tenant, unless Landlord has challenged the amount shown in the Officer's
Certificate in writing delivered to Tenant on or before expiration of such
ninety (90) day period. Any such challenge must be based upon the results of
Landlord's audit. Any determination made by Landlord pursuant to said audit
shall be binding upon Tenant. If any such audit discloses that the Adjusted
EBITDA (as defined in Exhibit A hereto) was overstated by such amount so as to
result in a reduction in the Required Security Deposit Amount for which
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Tenant was not otherwise entitled based upon the audited Adjusted EBITDA
calculations, then, in such case, Tenant shall be responsible for all costs
incurred by Landlord in connection with such audit and examination. If the
determination of the then Required Security Deposit Amount indicates that
Landlord is then holding either less than or greater than the then required
security deposit hereunder, the parties shall promptly cooperate with one
another in either increasing or decreasing the security deposit so that
Landlord, within fifteen (15) Business Days after delivery of said Officer's
Certificate (or, if Landlord disputes such determination, then within thirty
(30) days following any audit conducted by Landlord as provided above in this
Section 21.2), is then holding the appropriate security deposit hereunder;
provided, however, that if Tenant objects to the results of Landlord's audit,
the dispute shall be resolved by arbitration pursuant to Section 27.22 below.
At such time or times as said security deposit is no longer required pursuant
hereto, Landlord shall, within fifteen (15) Business Days, return the then
security deposit to Tenant.
21.3 TERMS OF LETTER OF CREDIT. In the event that all or any part of the
security under this Article 21 is in the form of a Letter of Credit, such
Letter of Credit shall:
(i) be an irrevocable standby letter of credit from LaSalle National
Bank or another bank selected by Tenant with a long-term debt rating from
Standard & Poor's or Moody's of "A" or better at the time of original
issuance of the Letter of Credit naming Landlord (and/or any Facility
Mortgagee if requested by Landlord) as beneficiary to secure Tenant's
obligations hereunder;
(ii) have a stated amount equal to the portion of the Required
Security Deposit Amount to be provided by the Letter of Credit;
(iii) have a term of not less than one year;
(iv) provide that it will be honored upon a signed statement by
Landlord that Landlord is entitled to draw upon the letter of credit
under this Lease, and shall require no signature or statement from any
party other than Landlord; and
(v) permit multiple draws by providing that following the honor of
any drafts in an amount less than the aggregate stated amount of the
Letter of Credit, the issuing bank shall return the original Letter of
Credit to Landlord and that Landlord's rights as to the remaining stated
amount of the Letter of Credit will not be extinguished.
21.4 DRAWS AGAINST LETTER OF CREDIT/ALTERNATIVE SECURITY; APPLICATION OF
PROCEEDS. Landlord may draw against the Letter of Credit (or, in the case of
alternative security under Section 21.6 below, Landlord may apply or otherwise
proceed against such security) upon the occurrence of any Event of Default on
the part of Tenant under the terms of this Lease. Landlord may apply any
amounts drawn or received under the Letter of Credit (or alternative security)
to the satisfaction of any obligations owed to Landlord under this Lease. Any
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proceeds from the Letter of Credit (or alternative security) drawn or received
but not so applied shall be held by Landlord as a cash security deposit.
21.5 RENEWAL OF LETTER OF CREDIT. If the Letter of Credit shall expire at
a time when the Letter of Credit is still required under Section 21.1 or
Section 21.2, Tenant shall renew the Letter of Credit at least thirty (30) days
prior to its expiration. If Tenant shall fail to renew the Letter of Credit
prior to such time, Landlord may draw against the same and hold the proceeds
thereof as a security deposit until such time as Tenant shall renew the Letter
of Credit. Landlord shall hold such security deposit in a separate account in
trust for Tenant and shall account to Tenant for any interest earned thereon.
21.6 OTHER SECURITY. In the event Landlord, at its discretion (and
without obligation to do so), permits the security under this Article 21 to be
in a form other than cash or a Letter of Credit, then the alternative security
shall be in the same amount as the "Required Security Deposit Amount" and shall
otherwise be in such form and substance as may be acceptable to Landlord, in
its discretion. In such event, Tenant agrees to enter into a supplement to
this Lease, at Landlord's request, in order to set forth the terms and
conditions governing the alternative security. Without limitation of the
foregoing, Landlord hereby agrees that limited partnership units in Landlord or
shares of common stock in Landlord's general partner, valued as of the date of
this Lease and as of the end of each Fiscal Quarter (such valuation to be part
of each Officer's Certificate), shall be deemed to be an acceptable form of
alternative security hereunder.
21.7 CASH SECURITY DEPOSIT. Any cash security deposit or any cash which
Landlord is holding pursuant to the other provisions of this Article 21 shall
be held by Landlord in an interest bearing account with interest accruing to
the benefit of Tenant and Tenant shall be entitled to receive from time to time
(but not more often than once per Fiscal Quarter) on demand the accrued and
undisbursed interest earned thereon, provided that an Event of Default on the
part if Tenant has not then occurred and is then continuing to exist.
ARTICLE 22
IMPOUNDS
Without limitation on any obligations of Tenant set forth herein, Landlord
shall have the right, at any time and from time to time during the Term hereof
after the occurrence of an Event of Default on the part of Tenant hereunder, to
require Tenant to pay to Landlord an additional monthly sum (each an "Impound
Payment") sufficient to pay the Impound Charges (as hereinafter defined) as
they become due. As used herein, "Impound Charges" shall mean real estate
taxes on the Leased Property or payments in lieu thereof and premiums on any
insurance required by this Lease. Landlord shall determine the amount of the
Impound Charges and of each Impound Payment. The Impound Payments shall be
held in a separate account and shall not be commingled with other funds of
Landlord and interest thereon shall be held for the
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account of Tenant and provided that no Event of Default on the part of Tenant
has then occurred and is continuing hereunder, Tenant may, once per Fiscal
Year, request and receive payment of said interest. Upon Tenant's tendering to
Landlord of invoices therefor no later than thirty (30) days prior to the
respective due dates thereof, Landlord shall apply the Impound Payments to the
payment of the Impound Charges in such order or priority as Landlord shall
reasonably determine or as otherwise required by law. If at any time the
Impound Payments theretofore paid to Landlord shall be insufficient for the
payment of the Impound Charges, Tenant, within 10 days after Landlord's demand
therefor, shall pay the amount of the deficiency to Landlord.
ARTICLE 23
INDEMNIFICATION; RISK OF LOSS
23.1 TENANT'S INDEMNIFICATION OF LANDLORD. Notwithstanding the existence
of any insurance provided for in Article 13, and without regard to the policy
limits of any such insurance, Tenant will protect, indemnify, save harmless and
defend Landlord from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including reasonable
attorneys' fees and expenses), to the extent permitted by law, imposed upon or
incurred by or asserted against Landlord by reason of:
(a) any accident, injury to or death of Persons or loss of or damage
to property occurring on or about the Leased Property or adjoining
sidewalks, including, but not limited to, any accident, injury to or
death of Person or loss of or damage to property resulting from any
business activity or operation conducted on, at or with respect to the
Leased Property;
(b) any use, misuse, non-use, condition, maintenance or repair by
Tenant of the Leased Property;
(c) any Impositions (which are the obligations of Tenant to pay
pursuant to the applicable provisions of this Lease);
(d) any failure on the part of Tenant to perform or comply with any
of the terms of this Lease;
(e) the non-performance of any of the terms and provisions of any
and all existing and future subleases of the Leased Property to be
performed by the landlord (Tenant) thereunder;
(f) any "dram shop" liability associated with the sale and/or
consumption of alcohol at the Leased Property; and
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(g) any liability Landlord may incur or suffer as a result of any
permitted contest by Tenant pursuant to Article 12.
23.2 LANDLORD'S INDEMNIFICATION OF TENANT. Landlord shall protect,
indemnify, save harmless and defend Tenant from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and expenses
(including reasonable attorneys' fees) imposed upon or incurred by or asserted
against Tenant as a result of Landlord's active or passive negligence or
willful misconduct.
23.3 MECHANICS OF INDEMNIFICATION. As soon as reasonably practicable
after receipt by the indemnified party of notice of any liability or claim
incurred by or asserted against the indemnified party that is subject to
indemnification under this Article 23, the indemnified party shall give notice
thereof to the indemnifying party. The indemnified party may at its option
demand indemnity under this Article 23 as soon as a claim has been threatened
by a third party regardless of whether an actual loss has been suffered, so
long as the indemnified party shall in good faith determine that such claim is
not otherwise frivolous and that the indemnified party may be liable for, or
otherwise incur, a loss as a result thereof and shall give notice of such
determination to the indemnifying party. The indemnified party shall permit
the indemnifying party, at its option and expense, to assume the defense of any
such claim by counsel selected by the indemnifying party and reasonably
satisfactory to the indemnified party, and to settle or otherwise dispose of
the same; provided, however, that the indemnified party may at all times
participate in such defense at its expense; and provided further, however, that
the indemnifying party shall not, in defense of any such claim, except with the
prior written consent of the indemnified party, consent to the entry of any
judgment or to enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff in question
to the indemnified party and its affiliates a release of all liabilities in
respect of such claims, or that does not result only in the payment of money
damages by the indemnifying party. If the indemnifying party shall fail to
undertake such defense within thirty (30) days after such notice, or within
such shorter time as may be reasonable under the circumstances, then the
indemnified party shall have the right to undertake the defense, compromise or
settlement of such liability or claim on behalf of and for the account of the
indemnifying party.
23.4 SURVIVAL OF INDEMNIFICATION OBLIGATIONS. Tenant's or Landlord's
liability for indemnification under the provisions of this Article 23 arising
during the Term hereof shall only survive any termination of this Lease for a
period of one (1) year (that is, notice of the claim or liability for which
indemnification is sought must be given by the party seeking such
indemnification not later than the first anniversary of said termination date).
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ARTICLE 24
SUBLETTING AND ASSIGNMENT
24.1 PROHIBITION AGAINST SUBLETTING AND ASSIGNMENT. Subject to Section
24.3, Tenant shall not, without the prior written consent of Landlord (which
consent Landlord may except as hereinafter expressly provided, grant or
withhold in its sole and absolute discretion), assign, mortgage, pledge,
hypothecate, encumber or otherwise transfer (except to an Affiliate of Tenant)
this Lease or any interest herein, all or any part of the Leased Property or
suffer or permit this Lease or the leasehold estate created hereby or any other
rights arising under this Lease to be assigned, transferred, mortgaged,
pledged, hypothecated or encumbered, in whole or in part, whether voluntarily,
involuntarily or by operation of law; provided, however, that Landlord's
consent to a proposed assignment of this Lease shall not be unreasonably
withheld if the proposed assignee (together with any proposed guarantor(s) of
the proposed assignee's obligations under this Lease) has a net worth and
liquidity at least equal to the greater of Tenant's net worth and liquidity as
of the Commencement Date and Tenant's net worth and liquidity as of the time of
the assignment and is qualified (or agrees to engage qualified management) to
operate the Leased Property in the manner operated by Tenant prior to the
assignment (hereinafter collectively called the "Minimum Assignee
Qualifications"). Landlord shall have a period of thirty (30) days after
delivery to it of a request for assignment together with the financial and
other information on the proposed assignee (and any proposed guarantors)
necessary for Landlord to evaluate whether the proposed assignee satisfies the
Minimum Assignee Qualifications and Landlord's failure to respond within thirty
(30) days of Landlord's receipt of a request for assignment and all required
information (as evidenced by a receipt signed and dated by Landlord) shall be
deemed Landlord's approval of said assignee and said assignment. Any notice
withholding consent must specify in detail the reasonable grounds for Landlord
so withholding its consent. For purposes of this Section 24.1, an assignment
of this Lease shall be deemed to include any Change of Control of Tenant, as if
such Change of Control were an assignment of this Lease.
24.2 CHANGES IN CONTROL. A Change of Control requiring the consent of
Landlord shall mean:
(a) the issuance and/or sale by Tenant or the sale by any
stockholder, partner or stockholder/member of a member or partner of
Tenant of a Controlling interest in Tenant or one of its members or
partners to a Person, excepting, however, (i) a transfer or sale to a
Person who is (A) another member or partner of Tenant, (B) an Affiliate
of Tenant, or (C) an Affiliate of a member or partner of Tenant; (ii)
public trading of stock in a publicly traded company where Tenant or any
of its members or partners is such publicly traded company; and (iii) a
distribution to the public pursuant to an effective registration
statement under the Securities Act of 1933, as amended (a "Registered
Offering");
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(b) at any time when Tenant is not a publicly traded company, any
other transaction, or series of transactions, which results in the
Affiliates of Tenant or Affiliates of any member or partner of Tenant no
longer having Control of Tenant (other than through a Registered
Offering); or
(c) at any time when Tenant is not a publicly traded company, any
transaction pursuant to which Tenant is merged with or consolidated into
another entity (other than an entity owned and Controlled by (i) a member
or partner of Tenant, (ii) an Affiliate of Tenant, or (iii) an Affiliate
of a member or partner of Tenant), and Tenant is not the surviving
entity;
provided, however, that notwithstanding the foregoing, any such
transaction described in any of (a) through (c) above which otherwise
constitutes a Change of Control shall not be deemed a Change of Control
if each of the following conditions are met:
24.2.1 FINANCIAL COVENANTS. Unless a Letter of Credit (or other
security acceptable to Landlord under Article 21 hereof) in an amount
equal to 200% of the then Required Security Deposit Amount is posted by
Tenant concurrently with any such consolidation, merger, sale or
conveyance, the Person formed by or surviving such transaction shall have
(i) a Tangible Net Worth not less than twice the Initial Annual Base Rent
hereunder increased by four percent per annum compounded annually from
the Commencement Date to the date of the Change of Control and (ii) a
Fixed Charge Coverage Ratio of 1.5 to 1.0.
24.2.2 OPERATING STANDARDS. The surviving entity after such
transaction shall be qualified to operate the Leased Property at a
standard at least as high in the reasonable judgment of Landlord as that
operated by Tenant prior to the Change of Control or shall agree to
engage management with such qualifications.
24.3 SUBLEASES.
24.3.1 PERMITTED SUBLEASES. Tenant shall not sublet all or any
part of the Leased Property without first having obtained Landlord's
prior written consent, at Landlord's sole discretion. Landlord shall
have a period of thirty (30) days after delivery to it of a request for a
sublease, together with such financial and other information as is
customary or appropriate, to evaluate the request for sublease, and
Landlord's failure to respond within thirty (30) days of Landlord's
receipt of a request for a sublease and all required information (as
evidenced by a receipt signed and dated by Landlord) shall be deemed
Landlord's approval of said sublessee and said sublease. Notwithstanding
the foregoing, (A) Landlord's consent shall not be required for bookings
in the ordinary course of business or for leases/subleases to an
independent, unaffiliated third party where the annual rent is less than
Fifty Thousand and no/100 Dollars ($50,000.00), but Tenant shall be
obligated to give Landlord written notice of each such less than
$50,000.00 lease/sublease (said $50,000.00 to be adjusted for changes in
the Consumer
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Price Index from the date of this Lease) and (B) Landlord agrees that it
shall not unreasonably withhold its consent to any requested sublease of
portions of the Leased Property not falling within the foregoing clause
(A) to concessionnaires or licensees who are not (i) members or partners
of Tenant, (ii) Affiliates of Tenant, or (iii) Affiliates of Tenant's
members or partners to:
(a) operate gift and/or sundries shop;
(b) one or more small retail/commercial shops within the
Facility;
(c) operate other small concessions or businesses at the
Facility;
(d) operate golf professionals' shops;
(e) operate golf driving ranges;
(f) provide golf lessons;
(g) operate restaurants;
(h) operate bars;
(i) audio/visual service concessions; and
(j) operate any other portions (but not the entirety) of the
Leased Property customarily associated with or incidental to the
operation of the resort, the convention/banquet facilities and/or
the golf course.
24.3.2 TERMS OF SUBLEASE. Each sublease of any of the Leased
Property shall be subject and subordinate to the provisions of this
Lease. No sublease made as permitted by Section 24.3.1 shall affect or
reduce any of the obligations of Tenant hereunder, and all such
obligations shall continue in full force and effect as if no sublease had
been made. No sublease shall impose any additional obligations on
Landlord under this Lease.
24.3.3 COPIES. Tenant shall, within 10 Business Days after the
execution and delivery of any sublease permitted by Section 24.3.1,
deliver a duplicate original thereof to Landlord.
24.3.4 ASSIGNMENT OF RIGHTS IN SUBLEASES. As security for
performance of its obligations under this Lease, Tenant hereby grants,
conveys and assigns to Landlord all right, title and interest of Tenant
in and to all subleases now in existence or hereinafter entered into for
any or all of the Leased Property, and all extensions, modifications and
renewals thereof and all rents, issues and profits therefrom. Landlord
hereby grants to
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Tenant a license to collect and enjoy all rents and other sums of money
payable under any sublease of any of the Leased Property; provided,
however, that Landlord shall have the absolute right at any time after
the occurrence and continuance of an Event of Default upon notice to
Tenant and any subtenants to revoke said license and to collect such
rents and sums of money and to retain the same. Tenant shall not (i)
after the occurrence and continuance of an Event of Default, consent to,
cause or allow any material modification or alteration of any of the
terms, conditions or covenants of any of the subleases or the termination
thereof, without the prior written approval of Landlord nor (ii) accept
any rents (other than customary security deposits) more than ninety (90)
days in advance of the accrual thereof nor permit anything to be done,
the doing of which, nor omit or refrain from doing anything, the omission
of which, will or could be a breach of or default in the terms of any of
the subleases.
24.3.5 LICENSES, ETC. For purposes of Sections 24.1, 24.3 and
24.5, subleases shall be deemed to include any licenses, concession
arrangements, management contracts or other arrangements relating to the
possession or use of all or any part of the Leased Property; provided,
however, that a management contract with Montclair Hotel Investors, Inc.
or between an entity approved as Tenant pursuant to the other terms of
this Lease and its affiliate shall not be subject to this Article 24 or
to Landlord's consent and, consequently, shall be deemed to be an
approved arrangement under this Article 24.
24.4 ASSIGNMENT. Upon any assignment permitted under this Lease (either
as a matter of right or with Landlord's consent), the assignor shall, from and
after the effective date of such assignment, be relieved of all liability for
any obligation arising from and after said effective date. No consent to any
assignment in a particular instance shall be deemed to be a waiver of the
prohibition set forth in Article 24. Any assignment or other transfer of all
or any portion of Tenant's interest in the Lease in contravention of Article 24
shall be voidable at Landlord's option.
24.5 REIT LIMITATIONS. Anything contained in this Lease to the contrary
notwithstanding, Tenant shall not (i) sublet or assign the Leased Property or
this Lease on any basis such that the rental or other amounts to be paid by the
sublessee or assignee thereunder would be based, in whole or in part, on the
income or profits derived by the business activities of the sublessee or
assignee; (ii) sublet or assign the Leased Property or this Lease to any person
that Landlord owns, directly or indirectly (by applying constructive ownership
rules set forth in Section 856(d)(5) of the Code), a 10% or greater interest
(provided that Landlord shall, when requested by Tenant from time to time,
deliver to Tenant a schedule of all persons in which Landlord owns a 10% or
greater interest); or (iii) sublet or assign the Leased Property or this Lease
in any other manner or otherwise derive any income which could cause any
portion of the amounts received by Landlord pursuant to this Lease or any
sublease to fail to qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, or which could cause any other income received by
Landlord to fail to qualify as income described in Section 856(c)(2) of the
Code. The requirements of this Section 24.5 shall likewise apply to any
further subleasing by any subtenant.
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24.6 EXISTING LEASES AND LICENSES. Landlord acknowledges that the leases,
licenses and concessions set forth on Schedule 24.6 attached to and made a part
of this Lease are in effect as of the Commencement Date, and Landlord consents
thereto.
ARTICLE 25
OFFICER'S CERTIFICATES AND OTHER STATEMENTS
25.1 OFFICER'S CERTIFICATES.
(a) TENANT'S STATEMENT. At any time, and from time to time in
connection with any proposed sale or financing of the Leased Property by
Landlord or in connection with the preparation of Landlord's annual
audit, upon Tenant's receipt of not less than 10 days' prior written
request by Landlord, Tenant will furnish to Landlord an Officer's
Certificate certifying that:
(i) this Lease is unmodified and in full force and effect (or
that this Lease is in full force and effect as modified and setting
forth the modifications);
(ii) the dates to which the Rent has been paid;
(iii) whether or not to the best knowledge of Tenant, Landlord
is in default in the performance of any covenant, agreement or
condition contained in this Lease and, if so, specify each such
default of which Tenant may have knowledge;
(iv) that, except as otherwise specified, there are no
proceedings pending or, to the knowledge of the signatory,
threatened, against Tenant before or by any court or administrative
agency which, if adversely decided, would materially and adversely
affect the financial condition and operations of Tenant; and
(v) responding to such other questions or statements of fact
as Landlord shall reasonably request.
Tenant's failure to deliver such statement within such time shall constitute an
acknowledgment by Tenant that this Lease is unmodified and in full force and
effect (except as may be represented to the contrary by Landlord), Landlord is
not in default in the performance of any covenant, agreement or condition
contained in this Lease and the other matters set forth in such request, if
any, are true and correct. Any such certificate furnished pursuant to this
Section 25.1(a) may be relied upon by Landlord.
(b) LANDLORD'S STATEMENT. At any time, and from time to time in
connection with any proposed sale or financing by Tenant or in connection
with the preparation of
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Tenant's annual audit, upon Landlord's receipt of not less than 10 days'
prior written request by Tenant, Landlord will furnish to Tenant an
Officer's Certificate certifying that:
(i) this Lease is unmodified and in full force and effect (or
that this Lease is in full force and effect as modified and setting
forth the modifications);
(ii) the dates to which the Rent has been paid;
(iii) whether or not to the best knowledge of Landlord,
Tenant, is in default in the performance of any covenant, agreement
or condition contained in this Lease and, if so, specify each such
default of which Landlord may have knowledge;
(iv) that, except as otherwise specified, there are no
proceedings pending or, to the knowledge of the signatory,
threatened, against Landlord before or by any court or
administrative agency which, if adversely decided, would materially
and adversely affect the financial condition and operations of
Landlord; and
(v) responding to such other questions or statements of fact
as Tenant shall reasonably request.
Landlord's failure to deliver such statement within such time shall constitute
an acknowledgment by Landlord that this Lease is unmodified and in full force
and effect (except as may be represented to the contrary by Tenant), Tenant is
not in default in the performance of any covenant, agreement or condition
contained in this Lease and the other matters set forth in such request, if
any, are true and correct. Any such certificate furnished pursuant to this
Section 25.1(b) may be relied upon by Tenant.
25.2 FINANCIAL REPORTING. Tenant shall deliver to Landlord the following
items at the time or times hereinafter set forth:
25.2.1 MONTHLY FINANCIAL INFORMATION. As soon as practicable, and
in any event on or before the thirtieth (30th) day following the end of
each calendar month during the Term, Tenant shall furnish to Landlord
unaudited balance sheets relative to the Leased Property as of the end of
such calendar month, and income (including information on Eligible
Expenditures) and cash flow statements for the Leased Property for such
calendar month and on a year-to-date and trailing twelve (12) month
basis, certified as being true and correct by Tenant.
25.2.2 QUARTER FINANCIAL INFORMATION. As soon as practicable, and
in any event within forty-five (45) days after the end of each Fiscal
Quarter during the Term, Tenant shall furnish to Landlord unaudited
balance sheets of the Leased Property
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as of the close of such Fiscal Quarter, together with income statements
and statements of cash flow for the Leased Property for such Fiscal
Quarter and on a year-to-date and trailing twelve (12) month basis, in
all cases setting forth in comparative form the figures for the preceding
corresponding periods, together with a statement of all Eligible
Expenditures made during such Fiscal Quarter, all in detail and
presentation reasonably acceptable to Landlord.
25.2.3 ANNUAL FINANCIAL STATEMENTS. As soon as practicable, and in
any event within ninety (90) days after the close of each Fiscal Year
during the Term, Tenant shall furnish to Landlord a copy of its audited
(combined for the two resorts constituting the Leased Property) balance
sheet and related audited (combined for the two resorts constituting the
Leased Property) statement of income and audited statement of cash flow,
in each case with respect to the Leased Property, prepared in accordance
with generally accepted accounting principles consistently applied. The
foregoing financial statements shall be certified by a nationally
recognized certified public accountants, or such other accountants as may
be reasonably acceptable to Landlord. All such financial statements
shall set forth, in comparative form, the figures for the preceding
Fiscal Year. The foregoing annual financial statements shall be
accompanied by an opinion of the foregoing accountants to the effect that
(a) there are no qualifications as to the scope of the audit and (b) the
audit was performed in accordance with generally accepted accounting
principles, consistently applied.
25.2.4 OTHER INFORMATION. Tenant shall promptly furnish Landlord
such other information concerning the business being conducted at the
Leased Property and/or the financial condition of Tenant as Landlord may
reasonably request from time to time during the Term. Unless such
information is normally prepared by Tenant or is customarily prepared by
entities engaged in the same business as Tenant, Landlord shall bear the
expense of preparation of such other information.
25.2.5 STANDARD REPORTING FORMAT. Without limitation of the
reporting requirements described above in this Article 25, it is
understood and agreed that the monthly, quarterly and annual financial
delivery requirements shall include such information with respect to the
operations of the Leased Property as set forth on, and in accordance with
the reporting format provided in, Exhibit H attached hereto.
25.3 ENVIRONMENTAL STATEMENTS. Promptly upon Tenant's learning, or having
reasonable cause to believe, that any Hazardous Material in a quantity
sufficient to require remediation or reporting under applicable law has been
released, or disposed of, in, on or under the Leased Property or any adjacent
property in violation of Environmental Laws, Tenant shall notify Landlord in
writing of the same, which notice shall include (a) a statement, in reasonable
detail, of any enforcement, cleanup, removal, or other governmental or
regulatory action instituted, completed or threatened; (b) a statement, in
reasonable detail, of any claim made or threatened by any Person against Tenant
or the Leased Property relating to damage, contribution, cost recovery,
compensation, loss, or injury resulting from or claim to result from any
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Hazardous Material; and (c) any reports made to any federal, state or local
environmental agency arising out of or in connection with any Hazardous
Material in or removed from the Leased Property, including any complaints,
notices, warnings or asserted violations in connection therewith.
ARTICLE 26
LANDLORD MORTGAGES
26.1 LANDLORD MAY GRANT LIENS. Subject to Section 26.2, (a) without the
consent of Tenant, Landlord may, from time to time, directly or indirectly,
create or otherwise cause to exist any lien, encumbrance or title retention
agreement ("Landlord's Encumbrance") upon the Leased Property, or any portion
thereof or interest therein, whether to secure any borrowing or other means of
financing or refinancing; and (b) this Lease is and at all times shall be
subject and subordinate to any ground or underlying leases, mortgages, trust
deeds or like encumbrances, which may now or hereafter affect the Leased
Property and to all renewals, modifications, consolidations, replacements and
extensions of any such lease, mortgage, trust deed or like encumbrance.
26.2 TENANT'S NON-DISTURBANCE RIGHTS. So long as Tenant shall pay all
Rent as the same becomes due and shall fully comply with all of the terms of
this Lease and fully perform its obligations hereunder, none of Tenant's rights
under this Lease shall be disturbed by the holder of any Landlord's Encumbrance
which is created or otherwise comes into existence after the Commencement Date.
As a condition to the effectiveness of any subordination of this Lease,
Landlord shall provide to Tenant a non-disturbance agreement in a form
reasonably approved by Tenant which provides, among other things, that (a) the
holder of such Landlord's Encumbrance agrees to such non-disturbance and will,
upon a foreclosure in the case of a mortgage or lease termination in the case
of a ground lease, recognize this Lease and Tenant hereunder, and will assume
and perform all of Landlord's obligations set forth in this Lease and Tenant
shall be entitled to all defenses, rights and remedies of Tenant under this
Lease which accrue after the date of such foreclosure or termination and (b)
such holder will make available insurance proceeds for repair or restoration of
the Leased Property in accordance with Article 14 and agrees to the allocation
of condemnation awards set forth in Article 15.
26.3 BREACH BY LANDLORD. It shall be a breach of this Lease if Landlord
shall fail to observe or perform any material term, covenant or condition of
this Lease on its part to be performed and such failure shall continue for a
period of thirty (30) days after notice thereof from Tenant, unless such
failure cannot with due diligence be cured within a period of thirty (30) days,
in which case such failure shall not be deemed to continue if Landlord, within
said thirty (30) day period, proceeds promptly and with due diligence to cure
the failure and diligently completes the curing thereof. The time within which
Landlord shall be obligated to cure any such failure shall also be subject to
extension of time due to the occurrence of any Unavoidable Delay.
Notwithstanding the foregoing, the cure period for Landlord to deliver an
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Officer's Certificate under Section 25.1(b) shall be ten (10) days after
Tenant's notice to Landlord of Landlord's failure to deliver timely the
previously requested Officer's Certificate.
26.4 FACILITY MORTGAGE PROTECTION. Tenant agrees that the holder of any
Landlord Encumbrance shall have no duty, liability or obligation to perform any
of the obligations of Landlord under this Lease (except for such obligations
first occurring after such holder takes title to the Leased Property), but that
in the event of Landlord's default with respect to any such obligation, Tenant
will give any such holder whose name and address have been furnished Tenant in
writing for such purpose notice of Landlord's default and allow such holder
thirty (30) days following receipt of such notice for the cure of said default
before invoking any remedies Tenant may have by reason thereof. Such thirty
(30) day cure period shall be extended if the failure cannot be cured by said
holder within the foregoing thirty (30) day period, so long as said holder
proceeds with due diligence to cure the failure.
ARTICLE 27
MISCELLANEOUS
27.1 LANDLORD'S RIGHT TO INSPECT. Provided that Landlord has given Tenant
not less than five (5) Business Day's prior notice thereof, Tenant shall permit
Landlord and its authorized representatives to inspect the Leased Property
during usual business hours subject to any security, health, safety or
confidentiality requirements of Tenant or any governmental agency or insurance
requirement relating to the Leased Property, or imposed by law or applicable
regulations. At the option of Tenant, Landlord and its authorized
representative shall be accompanied on such inspections by a representative of
Tenant. Landlord agrees to conduct such inspections in a manner designed to
minimize interference with the operations of the Leased Property. Landlord
shall indemnify Tenant for all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against Tenant by reason of Landlord's inspection pursuant to this Section
27.1.
27.2 NO WAIVER. No failure by Landlord or Tenant to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial payment
of Rent during the continuance of any such breach, shall constitute a waiver of
any such breach or of any such term. To the extent permitted by law, no
waiver of any breach shall affect or alter this Lease, which shall continue in
full force and effect with respect to any other then existing or subsequent
breach.
27.3 REMEDIES CUMULATIVE. To the extent permitted by law, each legal,
equitable or contractual right, power and remedy of Landlord or Tenant now or
hereafter provided either in this Lease or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power
and remedy. The exercise or beginning of the exercise by Landlord or Tenant of
any one or more of such rights, powers and remedies shall not preclude the
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simultaneous or subsequent exercise by Landlord or Tenant, as the case may be,
of any or all of such other rights, powers and remedies.
27.4 ACCEPTANCE OF SURRENDER. No surrender to Landlord of this Lease or
of the Leased Property or any part thereof, or of any interest therein, shall
be valid or effective unless agreed to and accepted in writing by Landlord and
no act by Landlord or any representative or agent of Landlord, other than such
a written acceptance by Landlord, shall constitute an acceptance of any such
surrender.
27.5 NO MERGER OF TITLE. There shall be no merger of this Lease or of the
leasehold estate created hereby by reason of the fact that the same Person may
acquire, own or hold, directly or indirectly, (a) this Lease or the leasehold
estate created hereby or any interest in this Lease or such leasehold estate
and (b) the fee estate in the Leased Property.
27.6 CONVEYANCE BY LANDLORD. If Landlord shall convey the Leased Property
in accordance with the terms hereof other than as security for a debt, Landlord
shall, upon the written assumption by the transferee of the Leased Property of
all liabilities and obligations of this Lease arising after the transfer, be
released from all future liabilities and obligations under this Lease arising
or accruing from and after the date of such conveyance or other transfer as to
the Leased Property. All such future liabilities and obligations shall
thereupon be binding upon the new owner.
27.7 QUIET ENJOYMENT. So long as Tenant shall pay all Rent as the same
becomes due and shall fully comply with all of the terms of this Lease and
fully perform its obligations hereunder, Tenant shall peaceably and quietly
have, hold and enjoy the Leased Property for the Term hereof, free of any
claim or other action by Landlord or anyone claiming by, through or under
Landlord, but subject to all liens and encumbrances of record as of the date
hereof or otherwise permitted hereunder, and subject to any Landlord's
Encumbrances.
27.8 NOTICES. All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing and personally delivered, or
mailed (by registered or certified mail, return receipt requested and postage
prepaid), or sent by nationally recognized overnight courier, in each case
addressed to the respective parties, as provided in the Basic Lease Provisions.
Notices shall be deemed to have been given (i) upon delivery, if personally
delivered, or (ii) upon the third (3rd) Business Day after mailing by
registered or certified mail, or (iii) upon the first (1st) Business Day after
delivery to an overnight courier.
27.9 SURVIVAL OF CLAIMS. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, Tenant or Landlord
arising prior to any date of termination of this Lease shall survive such
termination.
27.10 INVALIDITY OF TERMS OR PROVISIONS. If any term or provision of this
Lease or any application thereof shall be invalid or unenforceable, the
remainder of this Lease and any other application of such term or provision
shall not be affected thereby.
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27.11 PROHIBITION AGAINST USURY. If any late charges provided for in any
provision of this Lease are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be fixed
at the maximum permissible rate.
27.12 AMENDMENTS TO LEASE. Neither this Lease nor any provision hereof
may be changed, waived, discharged or terminated except by an instrument in
writing signed by Landlord or Tenant.
27.13 SUCCESSORS AND ASSIGNS. All the terms and provisions of this Lease
shall be binding upon and inure to the benefit of the parties hereto. All
permitted assignees or subleasees shall be subject to the terms and provisions
of this Lease.
27.14 TITLES. The headings in this Lease are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
27.15 GOVERNING LAW. This Lease shall be governed by and construed in
accordance with the laws of the State.
27.16 MEMORANDUM OF LEASE. Landlord and Tenant shall, concurrently with
the execution and delivery of this Lease, enter into a short form memorandum of
this Lease, in form and substance satisfactory to Landlord and suitable for
recording under the State, in which reference to this Lease, and all options
contained herein, shall be made. Tenant shall pay all costs and expenses of
recording such Memorandum of Lease.
27.17 ATTORNEYS' FEES. In the event of any dispute between the parties
hereto involving the covenants or conditions contained in this Lease or arising
out of the subject matter of this Lease, the prevailing party shall be entitled
to recover against the other party reasonable attorneys' fees and court costs.
27.18 NON-RECOURSE AS TO LANDLORD. Anything contained herein to the
contrary notwithstanding, any claim based on or in respect of any liability of
Landlord under this Lease shall be enforced only against the Leased Property
and Landlord's interest in Property Insurance Proceeds under Article 13 and not
against any other assets, properties or funds of (a) Landlord, (b) any
director, officer, general partner, limited partner, employee or agent of
Landlord, or of any general partner of Landlord, any of their respective
general partners or stockholders (or any legal representative, heir, estate,
successor or assign of any thereof), (c) any predecessor or successor
partnership or corporation (or other entity) of Landlord, or any of their
respective general partners, either directly or through either Landlord or
their respective general partners of any predecessor or successor partnership
or corporation or their stockholders, officers, directors, employees or agents
(or other entity), or (d) any other Person affiliated with any of the
foregoing, or any director, officer, employee or agent of any thereof.
Additionally, Tenant shall have the right to offset against Rent due or
becoming due hereunder the amount of any final judgment for damages obtained by
Tenant against Landlord. The foregoing is not intended to limit the payment of
claims under any liability insurance maintained by Landlord.
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27.19 NO RELATIONSHIP. Landlord shall in no event be construed for any
purpose to be a partner, joint venturer or associate of Tenant or of any
subtenant, operator, concessionaire or licensee of Tenant with respect to the
Leased Property or otherwise in the conduct of their respective businesses.
27.20 SIGNS; RELETTING. If Tenant fails to timely exercise its option to
extend or further extend the Term under Section 2.2 or if an Event of Default
occurs, then Landlord shall have the right during the remainder of the Term
then in effect (i) to advertise the availability of the Leased Property for
sale or reletting and to erect upon the Leased Property signs indicating such
availability and (ii) to show the Leased Property to prospective purchasers or
tenants or their agents at such reasonable times as Landlord may elect.
27.21 RESORT AND GOLF COURSE NAMES. Each of the resort portion and golf
course portion of the Leased Property shall continue to be known by their
current respective trade name(s) and/or trademark(s) or logo(s) which may not
be changed or altered without the prior written consent of Landlord.
27.22 AUDIT DISPUTE RESOLUTION. In the event that Tenant disputes the
result of any Landlord's audit of Tenant's books and records with respect to
the Leased Property or any portion thereof, Tenant shall so notify Landlord in
writing ("Tenant's Dispute Notice") within twenty (20) days of Tenant's receipt
of said audit. During the thirty (30) day period thereafter, the parties shall
endeavor to negotiate a settlement of such dispute, failing which either party
may give written notice (the "Resolution Notice") to the other of its election
to have the dispute settled by an independent third party and shall designate
in its Resolution Notice an accountant from one of the nationally recognized
accounting firms. If no Resolution Notice is given and the parties have not
agreed upon a settlement of the issues raised in Tenant's Dispute Notice within
thirty (30) days of the date Tenant's Dispute Notice is given, then Landlord's
audit shall be deemed final, conclusive and binding on the parties. If the
Resolution Notice is given, the recipient thereof shall, within fifteen (15)
days of the date of the Resolution Notice, designate an accountant from a
different nationally recognized accounting firm. The two designated
accountants shall then designate a third accountant (the "Arbitrator") who
shall review Landlord's audit and the dispute and issue, within forty-five (45)
days of his designation, a decision which shall be conclusive and binding upon
the parties. If the recipient of the Resolution Notice fails to designate an
accountant within said fifteen (15) day period, then the accountant designated
in the Resolution Notice shall be the Arbitrator. If the two designated
accountants fail to select the Arbitrator within thirty (30) days of the date
the second accountant is designated, then either party may petition the head of
the Illinois Association for Certified Public Accountants to designate the
Arbitrator. The cost of the Arbitrator shall be split evenly between the
parties unless the Arbitrator agrees with the conclusion of Landlord's audit,
in which event the cost of the Arbitrator shall be borne exclusively by Tenant.
27.23 STANDARD OF CONSENT/APPROVAL. Unless another standard is expressly
set forth with respect to any particular approval, consent or the like of a
party necessary or required under this Lease, such approval, consent or the
like shall not be unreasonably withheld or
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delayed (being defined as not more than thirty (30) days after request
therefor unless a shorter or longer time is expressly provided in this Lease).
27.24 INTEREST ON PAYMENTS DUE TENANT. If Landlord fails to pay Tenant
any amount due Tenant hereunder, then such amount shall bear interest at the
Overdue Rate from the date such amount is due Tenant until the date paid by
Landlord to Tenant.
ARTICLE 28
RIGHT OF FIRST OFFER
If Landlord desires to sell its interest in the Leased Property or any
portion thereof (the "Sale Parcel") to a third party purchaser at any time
during the Term (other than in connection with a foreclosure or deed in lieu of
foreclosure of, or power of sale under, any Facility Mortgage), then, prior to
selling, or entering into a binding agreement to sell its interest in each Sale
Parcel to such third party purchaser, Landlord shall deliver written notice to
Tenant (herein, "Landlord's Notice") setting forth (i) the Sale Parcel, (ii)
the proposed closing date (which date shall be no less than one hundred twenty
(120) days and no more than one hundred eighty (180) days following the date of
said Landlord's Notice), and (iii) the proposed cash purchase price at which
Landlord desires to sell its interest in the Sale Parcel, and Tenant shall
thereupon have a right of first offer (herein, the "First Offer Right") to
purchase Landlord's interest in the Sale Parcel in accordance with the
following terms and conditions.
28.1 EXERCISE OF FIRST OFFER RIGHT. Upon Tenant's receipt of each such
Landlord's Notice, Tenant shall have a period of thirty (30) days following
receipt of such Landlord's Notice (herein, "Tenant's Election Period") to
exercise Tenant's First Offer Right hereunder. If Tenant so exercises its
First Offer Right, then Landlord's interest in the Sale Parcel shall be sold to
Tenant upon the terms hereinafter set forth. In the event Tenant fails to
notify Landlord, in writing, within Tenant's Election Period, that Tenant has
exercised its First Offer Right hereunder, then Tenant's rights in or to the
Sale Parcel under this Article 28 shall terminate and be null and void, and
Landlord shall have no further obligation under this Article 28 with respect to
that Sale Parcel (and if the Sale Parcel is the entire Leased Property, then
Landlord shall have no further obligations under this Article 28); provided,
however, that in the event Landlord thereafter fails to close on any sale of
its interest in the Sale Parcel within a period of one hundred eighty (180)
days following the expiration of Tenant's Election Period (which 180 day period
may be extended, if Landlord is then under contract to sell its interest in the
Sale Parcel to a third party purchaser, which extension shall continue until
the first to occur of (a) ninety (90) days after the expiration of said one
hundred eighty (180) day period, (b) the termination of such contract and (c)
the closing of the sale thereunder), then Tenant shall thereafter again have a
First Offer Right with respect to Landlord's interest in that Sale Parcel as
provided in this Article 28. Additionally, if the purchase price at which
Landlord subsequently elects to sell said Sale Parcel to a third party is less
than ninety five percent (95%) of the purchase price set forth in Landlord's
Notice, then Tenant's First Offer Right shall be
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reinstated, and, prior to Landlord selling or entering into a binding
agreement to sell, its interest in the Sale Parcel at such lower price,
Landlord shall deliver a new Landlord's Notice to Tenant reflecting the new
offered purchase price, all in accordance with the terms of this Article 28.
28.2 FURTHER DOCUMENTATION. If Tenant has validly exercised its First
Offer Right, then within fifteen (15) Business Days after the request by either
party and determination of the purchase price as described below, Landlord and
Tenant shall enter into a written agreement confirming the terms, conditions
and provisions applicable to the sale of Landlord's interest in the Sale
Parcel, including the proposed closing date and purchase price with respect to
such transaction and the other terms set forth in Landlord's Notice or
otherwise provided for in this Article 28. Each party further agrees to
execute such documents and to take such actions as may be reasonably requested
by the other party in order to effectuate the sale transaction contemplated by
any such Landlord's Notice. If the Sale Parcel does not constitute the entire
Leased Property, then the parties shall also enter into an amendment to this
Lease modifying the Rent in a manner consistent with the allocation of purchase
price under the agreement whereby Landlord acquired the Leased Property from an
Affiliate of Tenant.
28.3 PURCHASE PRICE. The purchase price of Landlord's interest in the
Sale Parcel under this Article 28 shall be the price set forth in Landlord's
Notice, subject to modification as described in the last sentence of Section
28.1.
28.4 MECHANICS OF PURCHASE. If Tenant's First Offer Right hereunder is
exercised, the following closing procedure shall apply:
(a) The closing date for the sale of Landlord's interest in the Sale
Parcel to Tenant shall be on the date set forth in Landlord's Notice.
Payment of the purchase price and the delivery of the deed (the
"Closing") shall be made at the office of Landlord or its attorneys or at
such other place as the parties may agree. At the request of either
party, the Closing shall be effected through a deed and money escrow, the
cost of which escrow shall be borne equally by Landlord and Tenant. The
purchase price shall be payable to Landlord on the Closing Date in cash
or by certified or cashier's check upon delivery of the applicable
conveyance and assignment document(s) to Tenant and performance of
Landlord's other obligations as set forth herein.
(b) The sale of Landlord's interest in the Sale Parcel shall be made
by a deed for the real property, a Bill of Sale for the tangible personal
property, and one or more assignment and assumption document(s)
conveying, transferring and assigning, as the case may be, all of
Landlord's interest in the Sale Parcel to Tenant (or its designee) and
other documentation necessary to transfer Landlord's interest in the Sale
Parcel to Tenant, provided that Tenant shall accept Landlord's interest
in the Sale Parcel subject only to (A) the lien of current general real
estate taxes and special assessments not then due and payable; (B) any
acts or doings caused or suffered by Tenant; and (C) such other liens and
encumbrances which were in effect on the date that Landlord obtained its
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interest in the Sale Parcel or which are otherwise permitted to be
imposed on the Sale Parcel pursuant to the terms hereof (collectively,
the "Permitted Title Exceptions").
(c) Landlord shall deliver or cause to be delivered to Tenant, not
later than twenty (20) days prior to the Closing, as evidence of
Landlord's interest in the Sale Parcel, a commitment for a standard
owner's title insurance policy in the aggregate amount of the purchase
price as provided hereunder. Such title commitment shall name Tenant or
its designee as the proposed insured and show Tenant as holding a
leasehold interest in the Sale Parcel, subject only to (a) the Permitted
Title Exceptions, and (b) other title exceptions pertaining to mortgage
liens of a definite or ascertainable amount which may be removed at
Closing by the payment of money, and which Landlord shall so remove or
cause to be removed concurrently with the Closing.
(d) The payment of all prorations, transfer taxes, title insurance
charges, escrow fees, recording fees and other expenses, fees and charges
shall be made by the party from whom such payment is due in accordance
with statutory requirements or in accordance with the custom at the time
of the Closing for sales of properties (or interests therein) similar to
the Sale Parcel located in the geographical area where the Sale Parcel is
located; provided, however, that there shall be no proration of
Impositions inasmuch as Tenant is fully responsible therefor under this
Lease.
(e) Landlord's interest in the Sale Parcel shall be transferred to
Tenant under this Article 28 in its as-is condition, it being
acknowledged that Landlord has made and shall make no representations
whatsoever as to the condition of said Sale Parcel or any other matters
pertaining thereto.
28.5 REIT QUALIFICATION LIMITATION. Notwithstanding any other provision
of this Lease, Landlord shall not be required to sell or transfer its interest
in the Sale Parcel, or any portion thereof, which is a real estate asset as
defined in Section 856(c)(6)(B), or functionally equivalent successor
provision, of the Code, to Tenant if Landlord's counsel advises Landlord that
such sale or transfer may not be a sale of property described in Section
857(b)(6)(C), or functionally equivalent successor provision, of the Code. If
Landlord determines not to sell such property pursuant to the above sentence,
Tenant's First Offer Right under this Article 28 shall continue in full force
and effect.
28.6 EFFECTIVENESS OF FIRST OFFER RIGHT. The First Offer Right described
in this Article 28 is for the personal benefit of the original named Tenant
hereunder, and such right is non-assignable and may not be exercised by any
other party without the prior written specific consent of Landlord (which
consent may be granted or withheld in Landlord's sole and absolute discretion).
Without limitation of the foregoing, in the event Tenant assigns this Lease or
subleases all or greater than fifty percent (50%) of the area of the Leased
Property, then Tenant's First Offer Right under this Article 28 shall thereupon
terminate and be deemed null and void. Tenant shall have no right to exercise
its First Offer Right under this Article 28, and any such exercise shall (at
Landlord's election) be null and void, if, at the time of such exercise
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or as of the Closing Date, an Event of Default on the part of Tenant shall have
occurred and then be continuing.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
date and year first above written.
LANDLORD:
APGM LIMITED PARTNERSHIP, a Delaware
limited partnership
By: PALMER MANAGEMENT, LLC, a Delaware
limited liability company, its general partner
By: ARNOLD PALMER GOLF MANAGEMENT,
LLC, a Delaware limited liability
company, its managing member
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
TENANT:
[NEW ENTITY], a(n) _________________________________
limited liability company
By:
-------------------------------------------------
Name:
-----------------------------------------------
Its:
------------------------------------------------
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EXHIBIT A
DEFINED TERMS; INTERPRETATION
DEFINED TERMS. For all purposes of this Lease, except as otherwise
expressly provided or unless the context otherwise requires, the terms defined
below have the meanings assigned to them below.
ADDITIONAL CHARGES: As defined in Section 3.4.
ADDITIONAL RENT: As defined in Basic Lease Provisions.
ADJUSTED EBITDA: Subject to the adjustments hereinafter described, the
net income from the Leased Property for the period at issue, as determined in
accordance with generally accepted accounting principles consistently applied,
excluding gains (or losses) from debt restructuring and sales of property and
other ordinary items (other than sales of items of inventory), and without any
reductions for (i) depreciation or amortization, (ii) interest expense, (iii)
federal, state or local income taxes, or (iv) non-property specific
entity-level overhead and administrative expenses. Notwithstanding the
foregoing, it is understood that, in computing net income, (i) Rooms Revenue,
(ii) Golf Course Revenue, and (iii) FB&M Revenue shall be included as part of
total revenue. Further, it is understood that, in computing net income, (a)
Leased Property operating expenses (including maintenance and repair expenses,
real estate taxes and/or insurance expenses), and (b) management fees in an
amount equal to two percent (2%) of the Gross Revenues, shall be treated as an
expense. Neither Capital Expenditures nor payments into the Capital
Expenditure Reserves Account shall be included in calculating Adjusted EBITDA.
For any period that Tenant is unable to operate all of the revenue generating
sources at the Leased Property due to damage or destruction, renovation or
Unavoidable Delays, for purposes of determining Adjusted EBITDA for the period
or periods affected thereby, the revenues and expenses attributable to the
affected portions of the Leased Property shall be deemed to be equal to the
revenues and expenses attributable to such affected portions of the Leased
Property during the same period of the last preceding calendar year for which
such portion of the Leased Property was unaffected by damage or destruction,
renovation or Unavoidable Delays for the entire period in question. Attached
as Schedule 1 to this Exhibit A is an example of the calculation of Adjusted
EBITDA for purposes of this Lease.
AFFILIATE: As applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person.
ANNUAL BASE RENT: As defined in the Basic Lease Provisions.
APPLICABLE PERCENTAGE: As defined in the Basic Lease Provisions.
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AWARD: Means all compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation.
BASELINE FB&M REVENUE: As defined in the Basic Lease Provisions.
BASELINE GOLF COURSE REVENUE: As defined in the Basic Lease Provisions.
BASELINE ROOMS REVENUE: As defined in the Basic Lease Provisions.
BASELINE YEAR: Means calendar year 199__.
BASE RENT: Means the proportion of the Annual Base Rent payable with
respect to each respective calendar month as described in Exhibit F attached
hereto.
BASE RENT ESCALATION: As defined in the Basic Lease Provisions.
BASIC LEASE PROVISIONS: The provisions so labelled starting on page (1)
of this Lease.
BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and Friday which
is not a day on which national banks in the City of Chicago, are authorized, or
obligated, by law or executive order, to close.
CAPITAL EXPENDITURES: Means all expenditures for capital investment items
at the Leased Property and other items and matters, to the extent such
expenditures are to be "capitalized" under general accepted accounting
principles.
CHANGE OF CONTROL: As defined in Section 24.2.
CODE: The Internal Revenue Code of 1986, as amended.
COMMENCEMENT DATE: As defined in the Basic Lease Provisions.
CONDEMNATION: Means (a) the exercise of any governmental power or eminent
domain, whether by legal proceedings or otherwise, by a Condemnor, and (b) a
voluntary sale or transfer by Landlord to any Condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending.
CONDEMNATION THRESHOLD: Means, as of any given date, an amount determined
by dividing (i) the aggregate Base Rent and Additional Rent under this Lease
for the most recent 12 full calendar months by (ii) the average dividend yield
for such 12 month period on the common stock then issued and outstanding of
Landlord's general partner.
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CONDEMNOR: Means any public or quasi-public authority, or private
corporation or individual, having the power of condemnation.
CONSUMER PRICE INDEX: Means the Consumer Price Index for Urban Wage
Earners and Clerical Workers, all items, Chicago-Gary-Lake County (IL-IN-WI)
(1982-1984 equals 100) of the United States Department of Labor, Bureau of
Labor Statistics. If the Consumer Price Index is no longer published or
issued, Landlord and Tenant shall mutually agree on a substitute index for
measurement of changes in the cost of living.
CONTROL: Means (including, with correlative meanings, the terms
"controlling" and "controlled by"), as applied to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
DATE OF TAKING: Means the date the Condemnor has the right to possession
of the property being condemned.
ENVIRONMENTAL LAW: Means all applicable statutes, regulations, rules,
ordinances, codes, licenses, permits, orders, demands, approvals,
authorizations and similar items of all governmental agencies, departments,
commissions, boards, bureaus or instrumentalities of the United States, states
and political subdivisions thereof and all applicable judicial, administrative
and regulatory decrees, judgments and orders relating to the protection of
human health or the environment as in effect on the Commencement Date or as
thereafter amended, including but not limited to those pertaining to reporting,
licensing, permitting, investigation, removal and remediation of emissions,
discharges, releases or threatened releases of "Hazardous Materials,"
substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes whether solid, liquid or gaseous in nature, into the air,
surface water, ground water or land, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of substances, pollutants, contaminants or hazardous or toxic
substances, materials, or wastes, whether solid, liquid or gaseous in nature,
including: (x) the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section Section 9601 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section Section 6901 et seq.), the
Clean Air Act (42 U.S.C. Section Section 7401 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Safe Drinking
Water Act (42 U.S.C. Section Section 300f et seq.), the Toxic Substances
Control Act (15 U.S.C. Section Section 2601 et seq.), the Endangered Species
Act (16 U.S.C. Section Section 1531 et seq.), the Emergency Planning and
Community Right-to-Know Act of 1986 (42 U.S.C. Section Section 11001 et seq.),
and (y) analogous state and local provisions.
EVENT OF DEFAULT: As defined in Section 16.1.
EXISTING SUBTENANT PREMISES: Those portions of the Leased Property which
are currently subject to leases/subleases with each of American Gifts, Inc.,
Fun in the Sun, CPS Hotel Management Services (Shelly's Hair Room) and
Kaliedoscope of Floral Design, Inc., as
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tenant/subtenant, on the date of this Lease and which may in the future be
subject to leases/subleases, concessions, licenses or similar arrangements with
other parties.
EXTENDED TERMS: As defined in the Basic Lease Provisions.
FACILITY: As defined in the Basic Lease Provisions.
FACILITY MORTGAGEE: Means the holder or beneficiary of a Facility
Mortgage, if any, and only to the extent Landlord gives Tenant notice of the
identity and address of such holders or beneficiary.
FB&M REVENUE: The amount by which Gross Revenue exceeds the sum of Room
Revenue, Golf Course Revenue and five percent (5%) of Gross Revenue.
FISCAL QUARTER: The three-month periods (or applicable portions thereof)
in any Fiscal Year from January 1 through March 31, April 1 through June 30,
July 1 through September 30 and October 1 through December 31.
FISCAL YEAR: As defined in the Basic Lease Provisions.
FIXED CHARGE COVERAGE RATIO: Means, for any period, the ratio of (A) the
sum of, without duplication (i) consolidated net income of Tenant excluding any
gains or losses in respect of dispositions plus (ii) provision for taxes plus
(iii) consolidated interest expense (including non-cash interest payments or
accruals and the interest component, if any, of lease obligations of Tenant and
its subsidiaries) plus (iv) all lease and rent obligations (including
percentage rent obligations) of Tenant and its subsidiaries plus (iv) other
non-cash charges deducted from consolidated revenues in determining net income
for such period including depreciation and amortization (including amortization
of intangibles), over (B) the sum of (i) consolidated interest expenses of
Tenant and its subsidiaries for such period plus (ii) all lease and rent
obligations (excluding percentage rent obligations) of Tenant and its
subsidiaries for such period.
FIXTURES: Means all permanently affixed equipment, machinery, fixtures,
and other items of real and/or personal property, including all components
thereof, now and hereafter located in, on or used in connection with, and
permanently affixed to, or incorporated into, the Leased Improvements,
including all furnaces, boilers, heaters, electrical equipment, heating,
plumbing, lighting, ventilating, refrigeration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection equipment, all of
which, to the greatest extent permitted by law, are hereby deemed by the
parties hereto to constitute real estate, together with all replacements,
modifications, alterations and additions thereto, but specifically excluding
all items included within the category of Tenant's Personal Property and any
Tenant Improvements.
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FULL REPLACEMENT COST: Means the actual replacement cost thereof from
time to time including increased cost of construction endorsement, less
exclusions provided in the normal fire insurance policy.
GOLF COURSE REVENUE: Means all revenues received (whether by Tenant or
any subtenants, concessionaires, licensees or other party) from or by reason of
the operation of the golf course portion of the Facility, including revenues
from greens fees, fees to reserve a tee time, golf-related guest fees or golf
cart rentals, and surcharges, fees or other charges paid to Tenant relating to
golf tournaments or other group outings or group activities at the Leased
Property (unless the terms under which Tenant is paid by such sponsor do not
comply with Section 24.5, in which event the gross revenues received by such
sponsor for the tournament shall be included in Golf Course Revenue); provided,
however, that Golf Course Revenue shall not include:
(a) Rooms Revenue or Other Items Revenue;
(b) Cash refunds or credits allowed on returns by customers;
(c) The amount of any city, county, state or federal sales or excise
tax on sales, which is both added to the selling price and paid to the
taxing authority by Tenant.
(d) The actual uncollectible amount of any check or bank draft
received by Tenant as payment for services and returned to Tenant from a
customer's bank as being uncollectible, but only after Tenant has made
reasonable efforts to collect on the check;
(e) The actual uncollectible amount of any charge or credit account
incurred by Tenant for the sale of services; provided, however, that the
credit was extended to the customer by Tenant, and that reasonable
efforts to collect said account have been made;
(f) The actual uncollectible amount of any sale of services for
which Tenant accepted a credit card; provided, however, that Tenant has
made reasonable efforts to collect the debt after being notified by the
issuing bank of the invalidity or uncollectability of the charge;
(g) Interest or other charges paid by customers for extension of
credit;
(h) [Intentionally Omitted]
(i) Revenue or proceeds from sales or trade-in of machinery,
vehicles, trade fixtures or personal property used in connection with
Tenant's operation of the Leased Property;
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(j) All revenue received by the tenant/subtenant of the Existing
Subtenant Premises;
(k) Revenue, if any, from receipts in the form of refunds from or
the value of merchandise, supplies or equipment returned to shippers,
suppliers or manufacturers;
(l) Revenue, if any, from the amount of any cash or quantity
discounts received from sellers, suppliers or manufacturers;
(m) The amount of any gratuities paid or given by customers to or
for employees of Tenant;
(n) Receipts from the sales of uniforms or clothing required to be
worn by employees;
(o) Revenues from charging employees for meals served or provided to
employees of Tenant;
(p) Receipts from the sale of waste or scrap materials resulting
from Tenant's operations;
(q) Revenue received from any subtenant, concessionaire or licensee,
to the extent the gross revenue received by such subtenant,
concessionaire or licensee is otherwise included in the definition of
Rooms Revenue or Gross Revenue;
(r) Judgments and awards and insurance and condemnation proceeds;
and
(s) Allowances expressly permitted under the Uniform System of
Accounts for the Lodging Industry.
GROSS REVENUE OR REVENUES: Means all revenues received (whether by Tenant
or any subtenants, concessionnaires, licensees or other party) from or by
reason of the operation of the Leased Property, including, without limitation,
(i) Rooms Revenue, (ii) Golf Course Revenue, and (iii) each of the following
items (herein called "OTHER ITEMS REVENUE"): (1) all revenue generated from
the operation of all restaurants, lounges, bars, snack bars, banquet facilities
and other food and beverage activities located on or at the Facility, including
room service, (2) all revenue generated from the sale of all merchandise, food
and beverages sold on the Leased Property, (3) meeting room rental, (4)
audio/visual commissions, (5) banquet service charges received by Tenant, (6)
banquet sundry revenue, (7) shop rentals; (8) guest laundry/valet, (9) movies,
(10) fax charges, (11) marketing fees, (12) cancellation fees, (13) vending
machine revenue, (14) health club membership fees, pool fees, masseuse
commissions, miniature golf fees and other charges for, and revenue from, the
use of the other amenities on the Leased Property (i.e., tennis courts, bowling
lanes, etc.), (15) telephone charges (including local and
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long distance), and (16) miscellaneous taxable and non-taxable items; provided,
however, that Gross Revenue shall not include the following:
(a) Cash refunds or credits allowed on returns by customers;
(b) The amount of any city, county, state or federal sales or excise
tax on sales, which is both added to the selling price and paid to the
taxing authority by Tenant.
(c) The actual uncollectible amount of any check or bank draft
received by Tenant as payment for goods or services and returned to
Tenant from a customer's bank as being uncollectible, but only after
Tenant has made reasonable efforts to collect on the check;
(d) The actual uncollectible amount of any charge or credit account
incurred by Tenant for the sale of merchandise or services; provided,
however, that the credit was extended to the customer by Tenant, and that
reasonable efforts to collect said account have been made;
(e) The actual uncollectible amount of any sale of merchandise or
services for which Tenant accepted a credit card; provided, however, that
Tenant has made reasonable efforts to collect the debt after being
notified by the issuing bank of the invalidity or uncollectability of the
charge;
(f) Interest or other charges paid by customers for extension of
credit;
(g) All revenue received by the tenant/subtenant of the Existing
Subtenant Premises (so long as all rental paid by said tenant/subtenant
is included in Gross Revenue);
(h) Revenue or proceeds from sales or trade-in of machinery,
vehicles, trade fixtures or personal property used in connection with
Tenant's operation of the Leased Property;
(i) The value of any merchandise, supplies or equipment exchanged or
transferred from or to other locations or businesses of Tenant where such
exchange or transfer is not made for the purpose of avoiding a sale which
would otherwise be made from or at the Leased Property;
(j) Revenue, if any, from receipts in the form of refunds from or
the value of merchandise, supplies or equipment returned to shippers,
suppliers or manufacturers;
(k) Revenue, if any, from the amount of any cash or quantity
discounts received from sellers, suppliers or manufacturers;
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(l) The amount of any gratuities paid or given by customers to or
for employees of Tenant;
(m) Receipts from the sales of uniforms or clothing required to be
worn by employees;
(n) Revenues from charging employees for meals served or provided to
employees of Tenant;
(o) Receipts from the sale of waste or scrap materials resulting
from Tenant's operations;
(p) Revenue received from any subtenant, concessionaire or licensee,
to the extent the gross revenue received by such subtenant,
concessionaire or licensee is otherwise included in the definition of
Rooms Revenue or Golf Course Revenue;
(q) Judgments and awards and insurance and condemnation proceeds;
and
(r) Allowances expressly permitted under the Uniform System of
Accounts for the Lodging Industry.
HAZARDOUS MATERIAL: Means any chemical substance:
(i) the presence of which requires investigation or remediation
under any federal, state or local statute, regulation, ordinance, order,
action or policy, administrative request or civil complaint under any of
the foregoing or under common law;
(ii) which is defined as a "hazardous waste" or "hazardous
substance" under any federal, state or local statute, regulation or
ordinance or amendments thereto as in effect as of the Commencement Date,
or as thereafter amended, including the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section Section 6901
et seq.);
(iii) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and as of the
Commencement Date, or as thereafter amended, is regulated by any
governmental authority, agency, department, commission, board, agency or
instrumentality of the United States, or any state or any political
subdivision thereof having or asserting jurisdiction over the Leased
Property;
(iv) the presence of which on any of the Leased Property causes a
nuisance upon such Leased Property or to adjacent properties or poses a
hazard to the health or safety of persons on or about any of the Leased
Property;
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(v) which, except as contained in building materials, contains
gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated
biphenyls (PCBs) or friable asbestos or friable asbestos-containing
materials or urea formaldehyde foam insulation; or
(vi) radon gas.
IMPARTIAL APPRAISER: As defined in Section 13.2.
IMPOSITIONS: Means collectively:
(a) all taxes (including all real and personal property, ad valorem,
sales and use, single business, gross receipts, transaction privilege,
rent or similar taxes);
(b) assessments and levies (including all assessments for public
improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term);
(c) excises;
(d) fees (including license, permit, inspection, authorization and
similar fees); and
(e) all other governmental charges;
in each case whether general or special, ordinary or extraordinary, or foreseen
or unforeseen, of every character in respect of the Leased Property and/or the
Rent (including all interest and penalties thereon due to any failure in
payment by Tenant), which at any time during or in respect of the term hereof
may be assessed or imposed on or in respect of or be a lien upon (i) Landlord
or Landlord's interest in the Leased Property; (ii) the Leased Property or any
part thereof or any rent therefrom or any estate, right, title or interest
therein; or (iii) any operation, use or possession of, or sales from or
activity conducted on or in connection with the Leased Property or the leasing
or use of the Leased Property or any part thereof; provided, however, that
Impositions shall not include:
(aa) any tax based on net income (whether denominated as an income,
franchise, capital stock or other tax) imposed on Landlord or any other
Person other than Tenant;
(bb) any transfer, or net revenue tax of Landlord or any other
Person other than Tenant;
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(cc) any tax imposed with respect to the sale, exchange or other
disposition by Landlord of any Leased Property or the proceeds thereof;
or
(dd) any tax imposed with respect to any principal or interest on
any indebtedness on the Leased Property.
IMPOUND CHARGES: As defined in Article 22.
IMPOUND PAYMENT: As defined in Article 22.
INITIAL BASE RENT: As defined in the Basic Lease Provisions.
INITIAL TERM: As defined in the Basic Lease Provisions.
INSURANCE REQUIREMENTS: All terms of any insurance policy required by
this Lease and all requirements of the issuer of any such policy.
LAND: As defined in Article 1.
LANDLORD: As defined in the preamble.
LANDLORD'S ENCUMBRANCE: As defined in Section 26.1.
LANDLORD'S PERSONAL PROPERTY: As defined in Article 1.
LEASE: As defined in the preamble.
LEASED IMPROVEMENTS: As defined in Article 1.
LEASED PROPERTY: As defined in Article 1.
LEGAL REQUIREMENTS: All federal, state, county, municipal and other
governmental statutes, laws (including the Americans with Disabilities Act and
any Environmental Laws), rules, orders, regulations, ordinances, judgments,
decrees and injunctions affecting either the Leased Property or the
construction, use or alteration thereof, whether now or hereafter enacted and
in force, including any which may (i) require repairs, modifications or
alterations in or to the Leased Property; (ii) in any way adversely affect the
use and enjoyment thereof, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to Tenant
(other than encumbrances created by Landlord without the consent of Tenant and
which are not otherwise permitted under the Lease), at any time in force
affecting the Leased Property; or (iii) require the cleanup or other treatment
of any Hazardous Material.
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LETTER OF CREDIT: Means a letter of credit satisfying the requirements of
Section 21.3.
OFFICER'S CERTIFICATE: A certificate of Tenant signed by a duly
authorized representative of Tenant.
OVERDUE RATE: On any date, a rate equal to 3% above the Prime Rate, but
in no event greater than the maximum rate then permitted under applicable law.
PERSON: Means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts, Indian tribes or other organizations,
whether or not legal entities, and governments and agencies and political
subdivisions thereof.
PRIMARY INTENDED USE: Means the operation of a resort, golf course and
convention/banquet complex (including restaurant, lounges, and clubhouse
facilities), consisting of the Facility, and other activities customarily
associated with or incidental to the operation of a resort, golf course and
convention/banquet complex, including operation of a gift/merchandise store,
operation of restaurants and lounges, including liquor sales, sale or rental of
golf-related merchandise at a golf professional's shop, furnishing of lessons
by a golf professional and operation of a driving range.
PRIME RATE: On any date, a rate equal to the annual rate on such date
announced by Citibank, N.A. to be its prime rate or base rate for ninety (90)
day unsecured loans to its corporate borrowers of the highest credit standing
(or, if Citibank, N.A. no longer announces such prime rate or base rate, then
the prime or base rate announced by such other financial institution as
selected by Landlord) but in no event greater than the maximum rate then
permitted under applicable law.
QUARTERLY BASE RENT : Means, with respect to any Fiscal Quarter,
one-fourth of the Annual Base Rent for the Fiscal Year in which such Fiscal
Quarter falls.
REGISTERED OFFERING: As defined in Section 24.2.
RELATED RIGHTS: As defined in Article 1.
RENT: Collectively, the Annual Base Rent, Additional Rent and Additional
Charges.
RENT COVERAGE RATIO: Means, for any period, the ratio of (a) Adjusted
EBITDA for such period to (b) all rental obligations of Tenant (excluding
percentage rent obligations) under this Lease for such period.
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REQUIRED SECURITY DEPOSIT AMOUNT: Means, (A) the amount of $6,167,400.00
for the period commencing on the Commencement Date and continuing through the
end of the first (1st) full Fiscal Quarter occurring during the Term, and (B)
thereafter, the following applicable amounts, determined as of the last day of
each subsequent Fiscal Quarter during the Term: (a) the amount of
$6,167,400.00, in the event that the Rent Coverage Ratio for the twelve (12)
month period ending as of such date of determination is less than 1.2:1; (b)
the amount of $3,083,700.00, in the event that the Rent Coverage Ratio for the
twelve (12) month period ending as of such date of determination is equal to or
greater than 1.2:1, but less than 1.3:1; and (c) zero amount, in the event that
the Rent Coverage Ratio for the twelve (12) month period ending as of such date
of determination is equal to or greater than 1.3:1.
ROOM OR ROOMS REVENUE: Means all revenues received (whether by Tenant or
any subtenants, concessionaires, licensees, or other party) from or by reason
of the leasing or renting of hotel rooms in the resort portion of the Facility,
including all revenue attributable to any packages which include a stay in one
of the hotel rooms; provided, however, that Rooms Revenue shall not include:
(a) Golf Course Revenue or Other Items Revenue;
(b) Cash refunds or credits allowed on returns by customers;
(c) The amount of any city, county, state or federal sales or excise
tax on sales, which is both added to the selling price and paid to the
taxing authority by Tenant.
(d) The actual uncollectible amount of any check or bank draft
received by Tenant as payment for services or room usage and returned to
Tenant from a customer's bank as being uncollectible, but only after
Tenant has made reasonable efforts to collect on the check;
(e) The actual uncollectible amount of any charge or credit account
incurred by Tenant for the sale of services or rooms usage; provided,
however, that the credit was extended to the customer by Tenant, and that
reasonable efforts to collect said account have been made;
(f) The actual uncollectible amount of any sale of services or
charge for room usage for which Tenant accepted a credit card; provided,
however, that Tenant has made reasonable efforts to collect the debt
after being notified by the issuing bank of the invalidity or
uncollectability of the charge;
(g) Interest or other charges paid by customers for extension of
credit;
(h) [Intentionally Omitted]
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(i) Revenue or proceeds from sales or trade-in of machinery,
vehicles, trade fixtures or personal property used in connection with
Tenant's operation of the Leased Property;
(j) All revenue received by the tenant/subtenant of the Existing
Subtenant Premises;
(k) Revenue, if any, from receipts in the form of refunds from or
the value of merchandise, supplies or equipment returned to shippers,
suppliers or manufacturers;
(l) Revenue, if any, from the amount of any cash or quantity
discounts received from sellers, suppliers or manufacturers;
(m) The amount of any gratuities paid or given by customers to or
for employees of Tenant;
(n) Receipts from the sales of uniforms or clothing required to be
worn by employees;
(o) Revenues from charging employees for meals served or provided to
employees of Tenant;
(p) Receipts from the sale of waste or scrap materials resulting
from Tenant's operations;
(q) Revenue received from any subtenant, concessionaire or licensee,
to the extent the gross revenue received by such subtenant,
concessionaire or licensee is otherwise included in the definition of
Golf Course Revenue or Gross Revenue;
(r) Judgments and awards and insurance and condemnation proceeds;
and
(s) Allowances expressly permitted under the Uniform System of
Accounts for the Lodging Industry.
STATE: The State or Commonwealth in which the Leased Property is located.
TANGIBLE NET WORTH: Means the total book value of the assets of Tenant
(excluding goodwill, patents, trademarks, trade names, and organizational
expense) less all liabilities.
TENANT: As defined in the preamble.
TENANT IMPROVEMENT: As defined in Section 10.1.
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TENANT'S PERSONAL PROPERTY: All machinery, equipment, furniture,
furnishings, movable walls or partitions, phone system, computers or trade
fixtures or other personal property, and consumable inventory and supplies,
owned by Tenant and used or useful in Tenant's business on the Leased Property,
including all items of furniture, furnishings, equipment, supplies and
inventory, kitchen fixtures, bar equipment, flatware, lawn mowers and other
gardening tools, tractors and other motorized vehicles and golf carts.
TERM: Collectively, the Initial Term and any Extended Terms, as the
context may require, unless earlier terminated pursuant to the provisions
hereof.
TRADE NAMES AND TRADEMARKS. All of Landlord's rights in and to the trade
names and trademarks currently used in connection with the operation of the
Facility, and any and all derivatives and forms thereof, together with all
other service marks and logos, whether or not registered; specifically
excluding, however, the trade names and trademarks relating to the name
"Montclair Chop House".
UNAVOIDABLE DELAYS: Delays due to strikes, lockouts, inability to procure
materials, power failure, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other causes beyond the control
of the party responsible for performing an obligation hereunder, provided that
lack of funds shall not be deemed a cause beyond the control of either party
hereto unless such lack of funds is caused by the failure of the other party
hereto to perform any obligations of such party, under this Lease.
UNSUITABLE FOR ITS PRIMARY INTENDED USE. A state or condition of the
Facility such that in the good faith judgment of Tenant, reasonably exercised,
the Facility cannot be operated on a commercially practicable basis for its
Primary Intended Use.
WARRANTIES. All guarantees and warranties in effect as of the
Commencement Date with respect to the Leased Property or any portion thereof,
including, without limitation, all guarantees and warranties of contractors,
materialmen, manufacturers, mechanics or suppliers who have been engaged prior
to the date of this Lease to furnish labor, materials, equipment or supplies to
all or any portion of the Leased Property.
INTERPRETATION. The foregoing defined terms include the plural as well as
the singular. "Including" and variants thereof shall be deemed to mean
"including without limitation." All accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally accepted
accounting principles as at the time applicable and in accordance with the
Uniform System of Accounts for the Lodging Industry. All references in this
Lease to designated "Articles," "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of this Lease. The words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Lease as a whole and not to any particular Article, Section or other
subdivision.
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EXHIBIT C
[INTENTIONALLY OMITTED]
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EXHIBIT D
OPERATING STANDARDS
I. HOTEL OPERATING STANDARDS. The resort and convention/banquet
facilities portion of the Leased Property shall be operated in a manner
consistent with (i) the condition thereof as of the Commencement Date and the
condition and level of operation of projects of comparable class and standing
to the Leased Property; (ii) then current market conditions regarding rental
rates and lease terms and conditions with respect to projects of comparable
class and standing to the Leased Property, and (iii) then current prudent
business and management practices applicable to the leasing, operation, repair,
maintenance and management of a project comparable in size, character and
location to the Leased Property, including those concerning compliance with
applicable Legal Requirements.
II. GOLF COURSE OPERATING STANDARDS.
A. Greens, Practice Putting Greens & Nurseries.
1. Mowing - At least five days per week at a height between
3/16" - 5/16" during the growing season; as needed during the off
season.
2. Change cup locations on all greens and practice putting
greens daily during the active season and at least three times
weekly in the off-season. Cup location on all greens will be moved
at least twenty feet from the previous placement. Since the course
is closed from November 15 to March 15 (approximately), there will
be no cup changing during that time period.
3. Repair ball marks, divots, or any other damaged turf areas
on all greens and practice greens daily.
4. Aerify all greens, practice putting greens and nurseries at
least two times per year during the growing season. Aerify problem
areas as often as necessary to produce superior turf quality.
5. Topdress all greens, practice putting greens and nurseries;
a. After any aerification performed with 1/2" or larger
tines;
b. As needed to maintain a smooth putting surface.
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c. Topdressing will be sand or a mix similar to that used
to construct the greens.
6. Light vertical mowing of all greens, practice putting
greens and nurseries shall be performed as appropriate to smooth
and true the putting surfaces. Heavy dethatching shall be
performed only prior to any winter overseeding.
7. Spiking of all greens and practice greens shall be
performed as needed between aerifications to maintain water
infiltration.
8. Fertilization - All greens, practice greens, and nurseries
shall be fertilized with nitrogen, phosphorous, potash, and other
elements as needed to maintain color, growth, health and turgidity
of the turf, without allowing excessive or succulent growth.
The goal of the greens fertilization program is to provide the
best possible putting surface, not to produce the maximum amount of
growth.
9. Fungicides - All greens, practice greens and nurseries
shall receive appropriate fungicide applications to prevent and/or
control fungal disease activity.
10. Weed Control - All greens, practice greens and nurseries
shall be maintained free of undesirable grasses and weeds.
Pre-emergent herbicides shall be used as necessary to prevent
intrusion into the greens of weeds difficult to eradicate such as
goosegrass, crabgrass, etc.
11. Insecticides - All greens, practice greens and nurseries
shall be treated as necessary to prevent or halt insect damage.
B. Tees - All Areas Used for Tee Surface.
1. Mowing - All tees shall be mowed at a height between 3/8" -
5/8" three times per week during growing season and as necessary
during off-season.
2. Topdressing - All worn areas on tees shall be topdressed at
least weekly to fill divots and level tee surface. Topdressing
material shall contain seed of annual or perennial ryegrasses, or
other species as appropriate.
3. [Intentionally Omitted]
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4. Set up - Tee markers and all tee equipment shall be moved
daily for proper play and control of turf wear.
5. Weed Control - Tees shall be kept weed free to an extent of
at least ninety percent (90%) of the area by the proper and timely
application of pre- and/or post-emergent herbicides.
6. [Intentionally Omitted]
7. Aerification - All tees shall be aerified at least every
two months from March through October and as necessary during the
remainder of the year.
8. Fertilization - All tees shall be fertilized with nitrogen,
phosphorous, potash, and other elements as needed to maintain
color, growth, health and turgidity of the turf, without showing
excessive or succulent growth.
C. Fairways - All Areas of Play Except Greens, Tees, Roughs and
Natural Growth Areas.
1. Mowing - All fairways shall be mowed at least three times
per week at a height between 1/2" - 7/8" during the growing season
and as needed for the balance of the year.
2. Aerification - All fairways shall be aerified a minimum of
two times per year during the growing season. Aerification holes
shall not exceed a spacing of eight inches on center or be of a
diameter of less than 1/2".
3. Fertilization - All fairways shall be fertilized with
nitrogen, phosphorous, potash, or other elements as needed to
maintain color, growth, health and turgidity of the turf, without
allowing excessive or succulent growth.
4. [Intentionally Omitted]
5. Weed control - Fairways shall be kept weed free to an
extent of at least ninety percent (90%) of the area by the proper
and timely application of pre- and/or post-emergent herbicides.
D. Roughs. All turfed areas of play except greens, tees, fairways
and natural growth areas.
1. Mowing - All roughs shall be mowed weekly during the
growing season and as necessary during the balance of the year.
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90
2. Aerification -
a. [Intentionally Omitted]
b. Within wooded play areas - as necessary to establish and/or
maintain turf.
c. Fertilization - Roughs shall be fertilized as necessary to
maintain turf.
d. Weed Control - Shall be performed as necessary to prevent
seed formation and to allow proper play.
E. Natural Growth Areas. All areas in which native or introduced
vegetation is allowed to survive without routine mowing, cultivating,
irrigation or other routine maintenance procedures. May be out of play areas,
steep slopes, barriers, windbreaks, nature trails, etc. Such areas are to be
maintained free of excessive trash, noxious weeds and vertebrate pests, and in
such manner as to comply fully with fire department regulations or other such
regulations as may apply. Such natural growth areas may be improved and may
from time to time be subjected to irrigation, cultivation, pruning, or other
such practices as may be necessary or desirable to establish or maintain them.
F. Planters - All Areas Planted with Ornamental Plants, Not Intended
for Golf Play and Having a Definable Border.
1. Clean-up - All planters shall be maintained free of trash and
debris.
2. Weed Control - All planters shall be maintained free of weeds by
mechanical and/or chemical means.
3. Trimming - The plant material (trees, shrubbery and ground
covers) in planters shall be trimmed for protection from wind, insect
damage, and for appearance.
G. Trees - All Trees Within the Property Lines of the Golf Course.
1. Stakes - Trees shall be staked as necessary until of sufficient
size to stand unassisted. Stakes shall be removed as soon as possible.
2. Pruning - All trees shall be properly pruned for protection from
wind and pests as well as for appearance and safety.
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91
3. Irrigation - All trees shall be irrigated to provide adequate
moisture for normal growth.
4. Mowing - Large area mowers shall not be used within one foot of the
trunk of any tree.
5. Removal and Replacement - When appropriate, all dead trees, for
whatever cause, shall be removed. Any necessary replacement shall be with
a tree of appropriate type and size.
H. Irrigation - All Equipment Required to Irrigate all Areas of the
Property.
1. Repair or replace all heads, valves, controllers, wiring, and pipe
as needed to maintain the proper operation of the entire golf course
irrigation system (including greens, tees, fairways, planters, flower
beds, etc.) on an on-going basis
2. The golf course shall be irrigated as necessary to support the
proper growth of golf turf and associated landscaping.
I. Fences - All Fences and Walls, Block, Chain Link, or Barbed Wire, etc.
on or Within Boundaries of the Property.
1. Repair all broken or damaged fencing as necessary.
2. Repair or replace as necessary all fences, gates and locking
devices needed for the protection of the golf course or equipment.
J. Clubhouse and Structures - All Structures Within the Boundaries of the
Golf Course.
1. Course Restrooms - All course restrooms shall be maintained daily
to provide clean and sanitary facilities for the users and employees of
the course. Soap, towels, toilet paper, etc. shall be provided in
adequate quantity at all times. Portable facilities shall be maintained
similarly.
2. All buildings and structures shall be maintained in good repair at
all times. Surrounding areas shall be maintained free of weeds, brush,
disorganized junk or broken-down equipment, trash piles, etc. Interior
areas shall be clean and neatly organized, safe and sanitary for customers
and employees. Painting, rodent and insect control, and landscaping shall
be performed as necessary. "Housekeeping" duties shall be assigned to all
maintenance crew members and shall be performed daily.
D-5
92
3. Cart Paths - Maintain all cart paths in a safe and clean
condition and repair promptly as needed.
4. The golf course superintendent is responsible for all facilities
and structures maintenance not within the clubhouse area proper.
K. Edging. All sidewalks, patios and concrete cart paths must be kept
edged. Edging around valve boxes, meter boxes, backflow preventers, etc. shall
be done as needed to insure that there is no obstruction of play or maintenance
from growth around these items.
L. Sand Traps. All sand traps shall be edged as necessary to maintain an
appropriate lip, raked daily and filled with fresh sand as needed to maintain
a minimum 1 1/2" depth on slopes and 4" in the bottom. Replacement sand will be
of a dust-free type, suitable for trap use.
M. Landscaped Areas. The various planting areas throughout the course
shall be cultivated and weeded on a regular basis.
N. Trash and Refuse. Shall be collected daily and removed from the
property in a safe, sanitary and lawful manner as necessary to minimize or
eliminate problems from refuse odors, insects, etc. Approved trash receptacles
shall be conveniently stationed on tees and other appropriate areas and emptied
daily.
O. Vertebrate Pest Control. Shall be routinely performed throughout the
property on an on-going basis, in such a manner that vertebrate pest
populations are steadily reduced and eventually eliminated.
P. Aquatic. All lakes, ponds and streams shall be maintained in a safe
and sanitary manner and in good appearance.
Q. Soil and Water. Analysis will be performed yearly by an approved
professional laboratory.
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93
EXHIBIT E
[INTENTIONALLY OMITTED]
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EXHIBIT F
ANNUAL BASE RENT SCHEDULE
MONTH PROPORTION
----- ----------
January 1.62%
February 1.62%
March 2.43%
April 9.74%
May 11.80%
June 11.80%
July 11.80%
August 11.80%
September 11.80%
October 11.80%
November 8.11%
December 5.68%
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EXHIBIT G
BASELINE YEAR REVENUE SCHEDULE
========================================================================================================
PERIOD DURING BASELINE BASELINE ROOMS REVENUE BASELINE GOLF COURSE BASELINE FB&M
YEAR REVENUE REVENUE
- --------------------------------------------------------------------------------------------------------
January 1 through March
31 $1,763,763.00 $28,139.00 $1,688,204.00
- --------------------------------------------------------------------------------------------------------
April 1 through June 30 $3,490,539.00 $1,420,589.00 $4,002,768.00
- --------------------------------------------------------------------------------------------------------
July 1 through September
30 $3,795,094.00 $2,177,206.00 $4,850,686.00
- --------------------------------------------------------------------------------------------------------
October 1 through
December 31 $2,724,936.00 $206,601.00 $3,025,171.00
========================================================================================================
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