Exhibit 10.2.15
- -------------------------------------------------------------------------------
The Links at Polo Trace
Delray Beach
Palm Beach County
Florida
L E A S E
GOLF TRUST OF AMERICA, L.P.
LANDLORD
AND
EMERALD DUNES - POLO TRACE, INC.
TENANT
DATED AS OF JULY __, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE 1
LEASED PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
DEFINITIONS, RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . 2
2.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 3
TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 INITIAL TERM . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 EXTENSION OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . 15
3.3 RIGHT OF FIRST OFFER TO LEASE . . . . . . . . . . . . . . . . . . 15
ARTICLE 4
RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2 INCREASE IN INITIAL BASE RENT . . . . . . . . . . . . . . . . . . 17
4.3 PERCENTAGE RENT . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.4 ANNUAL RECONCILIATION OF PERCENTAGE RENT . . . . . . . . . . . . 17
4.5 INCREASE IN BASE RENT FOR CAPITAL IMPROVEMENTS . . . . . . . . . 18
4.6 RECORD-KEEPING . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.7 ADDITIONAL CHARGES . . . . . . . . . . . . . . . . . . . . . . . 18
4.8 LATE PAYMENT OF RENT . . . . . . . . . . . . . . . . . . . . . . 18
4.9 NET LEASE; CAPITAL REPLACEMENT RESERVE . . . . . . . . . . . . . 19
ARTICLE 5
SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1 PLEDGE OF OWNER'S SHARES . . . . . . . . . . . . . . . . . . . . 19
5.2 OBLIGATION TO WITHHOLD DISTRIBUTIONS . . . . . . . . . . . . . . 19
5.3 LANDLORD'S LIEN . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.4 TERMINATION PAYMENT . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 6
IMPOSITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1 PAYMENT OF IMPOSITIONS . . . . . . . . . . . . . . . . . . . . . 20
6.2 INFORMATION AND REPORTING . . . . . . . . . . . . . . . . . . . . 20
6.3 PRORATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 REFUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 UTILITY CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.6 ASSESSMENT DISTRICTS . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 7
TENANT WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(i)
7.1 NO TERMINATION, ABATEMENT, ETC . . . . . . . . . . . . . . . . . . 21
7.2 CONDITION OF THE PROPERTY . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 8
OWNERSHIP OF TANGIBLE PERSONAL PROPERTY . . . . . . . . . . . . . . . . . . 24
8.1 PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.2 TENANT'S PERSONAL PROPERTY . . . . . . . . . . . . . . . . . . . . 24
8.3 TENANT'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . 24
8.4 LANDLORD'S WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 9
USE OF PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 USE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.2 SPECIFIC PROHIBITED USES . . . . . . . . . . . . . . . . . . . . . 25
9.3 MEMBERSHIP SALES . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.4 LANDLORD TO GRANT EASEMENTS, ETC . . . . . . . . . . . . . . . . . 25
9.5 TENANT'S ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . 26
9.6 VALUATION OF REMAINDER INTEREST IN LEASE . . . . . . . . . . . . . 26
ARTICLE 10
HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.1 REMEDIATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.2 TENANT'S INDEMNIFICATION OF LANDLORD . . . . . . . . . . . . . . . 27
10.3 SURVIVAL OF INDEMNIFICATION OBLIGATIONS . . . . . . . . . . . . . 28
10.4 ENVIRONMENTAL VIOLATIONS AT EXPIRATION OR TERMINATION OF LEASE . . 28
ARTICLE 11
MAINTENANCE AND REPAIR . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.1 TENANT'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . 29
11.2 WAIVER OF STATUTORY OBLIGATIONS. . . . . . . . . . . . . . . . . . 29
11.3 MECHANIC'S LIENS . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.4 SURRENDER OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 12
TENANT IMPROVEMENTS; SUBMITTAL OF BUDGETS; FINANCIAL STATEMENTS . . . . . . 30
12.1 TENANT'S RIGHT TO CONSTRUCT . . . . . . . . . . . . . . . . . . . 30
12.2 SCOPE OF RIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.3 COOPERATION OF LANDLORD . . . . . . . . . . . . . . . . . . . . . 31
12.4 CAPITAL REPLACEMENT FUND . . . . . . . . . . . . . . . . . . . . . 32
12.5 RIGHTS IN TENANT IMPROVEMENTS. . . . . . . . . . . . . . . . . . . 33
12.6 LANDLORD'S RIGHT TO AUDIT CALCULATION OF GROSS REVENUE . . . . . . 33
12.7 ANNUAL BUDGET. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.8 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 13
LIENS, ENCROACHMENTS AND OTHER TITLE MATTERS . . . . . . . . . . . . . . . . 36
13.1 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(ii)
13.2 ENCROACHMENTS AND OTHER TITLE MATTERS . . . . . . . . . . . . . . 37
ARTICLE 14
PERMITTED CONTESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14.1 AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14.2 INDEMNIFICATION OF LANDLORD . . . . . . . . . . . . . . . . . . . 39
ARTICLE 15
INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
15.1 GENERAL INSURANCE REQUIREMENTS . . . . . . . . . . . . . . . . . 39
15.2 OTHER INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . 40
15.3 REPLACEMENT COST . . . . . . . . . . . . . . . . . . . . . . . . 40
15.4 WAIVER OF SUBROGATION . . . . . . . . . . . . . . . . . . . . . . 41
15.5 FORM SATISFACTORY, ETC . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 15.6
CHANGE IN LIMITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15.7 BLANKET POLICY . . . . . . . . . . . . . . . . . . . . . . . . 42
15.8 INSURANCE PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . 42
15.9 DISBURSEMENT OF PROCEEDS . . . . . . . . . . . . . . . . . . . . 42
15.10 EXCESS PROCEEDS, DEFICIENCY OF PROCEEDS . . . . . . . . . . . . 43
15.11 RECONSTRUCTION COVERED BY INSURANCE . . . . . . . . . . . . . . 44
15.12 RECONSTRUCTION NOT COVERED BY INSURANCE . . . . . . . . . . . . 44
15.13 NO ABATEMENT OF RENT . . . . . . . . . . . . . . . . . . . . . . 45
15.14 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
15.15 DAMAGE NEAR END OF TERM . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 16
CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
16.1 TOTAL TAKING . . . . . . . . . . . . . . . . . . . . . . . . . . 45
16.2 PARTIAL TAKING . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.3 RESTORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.4 AWARD-DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . 46
16.5 TEMPORARY TAKING . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 17
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
17.1 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 46
17.2 PAYMENT OF COSTS . . . . . . . . . . . . . . . . . . . . . . . . 48
17.3 CERTAIN REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . 48
17.4 DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
17.5 ADDITIONAL REMEDIES . . . . . . . . . . . . . . . . . . . . . . . 50
17.6 APPOINTMENT OF RECEIVER . . . . . . . . . . . . . . . . . . . . . 50
17.7 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
17.8 APPLICATION OF FUNDS . . . . . . . . . . . . . . . . . . . . . . 50
17.9 IMPOUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 18
LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT . . . . . . . . . . . . . . . . . 51
ARTICLE 19
(iii)
LEGAL REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 20
HOLDING OVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 21
RISK OF LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 22
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
22.1 TENANT'S INDEMNIFICATION OF LANDLORD . . . . . . . . . . . . . . 52
22.2 LANDLORD'S INDEMNIFICATION OF TENANT . . . . . . . . . . . . . . 53
22.3 MECHANICS OF INDEMNIFICATION . . . . . . . . . . . . . . . . . . 53
22.4 SURVIVAL OF INDEMNIFICATION OBLIGATIONS; AVAILABLE INSURANCE
PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 23
SUBLETTING AND ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . 54
23.1 PROHIBITION AGAINST ASSIGNMENT . . . . . . . . . . . . . . . . . 54
23.2 SUBLEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
23.3 TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
23.4 REIT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . 56
23.5 RIGHT OF FIRST OFFER OF LANDLORD TO ACQUIRE LEASEHOLD . . . . . 57
23.6 BANKRUPTCY LIMITATIONS . . . . . . . . . . . . . . . . . . . . . 57
23.7 MANAGEMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 24
OFFICER'S CERTIFICATES AND OTHER STATEMENTS . . . . . . . . . . . . . . . 59
24.1 OFFICER'S CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 59
24.2 ENVIRONMENTAL STATEMENTS . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 25
LANDLORD MORTGAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
25.1 LANDLORD MAY GRANT LIENS . . . . . . . . . . . . . . . . . . . . 60
25.2 TENANT'S NON-DISTURBANCE RIGHTS . . . . . . . . . . . . . . . . 61
25.3 FACILITY MORTGAGE PROTECTION . . . . . . . . . . . . . . . . . . 61
ARTICLE 26
SALE OF FEE INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
26.1 RIGHT OF FIRST OFFER TO PURCHASE . . . . . . . . . . . . . . . . 61
26.2 CONVEYANCE BY LANDLORD . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE 27 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . 62
27.1 ARBITRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 62
27.2 ARBITRATION PROCEDURES . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 28
(iv)
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
28.1 TRANSFER OF INVENTORY . . . . . . . . . . . . . . . . . . . . . 63
28.2 LANDLORD'S RIGHT TO INSPECT . . . . . . . . . . . . . . . . . . 63
28.3 BREACH BY LANDLORD . . . . . . . . . . . . . . . . . . . . . . 63
28.4 COMPETITION BETWEEN LANDLORD AND TENANT . . . . . . . . . . . . 63
28.5 NO WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . 63
28.6 REMEDIES CUMULATIVE . . . . . . . . . . . . . . . . . . . . . . 64
28.7 ACCEPTANCE OF SURRENDER . . . . . . . . . . . . . . . . . . . 64
28.8 NO MERGER OF TITLE . . . . . . . . . . . . . . . . . . . . . . 64
28.9 QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . . 64
28.10 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
28.11 SURVIVAL OF CLAIMS. . . . . . . . . . . . . . . . . . . . . . . 65
28.12 INVALIDITY OF TERMS OR PROVISIONS . . . . . . . . . . . . . . . 65
28.13 PROHIBITION AGAINST USURY . . . . . . . . . . . . . . . . . . . 65
28.14 AMENDMENTS TO LEASE . . . . . . . . . . . . . . . . . . . . . . 65
28.15 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . 65
28.16 TITLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
28.17 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 65
28.18 MEMORANDUM OF LEASE . . . . . . . . . . . . . . . . . . . . . . 65
28.19 ATTORNEYS' FEES . . . . . . . . . . . . . . . . . . . . . . . . 65
28.20 NO THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . . . . . 66
28.21 NON-RECOURSE AS TO LANDLORD . . . . . . . . . . . . . . . . . . 66
28.22 NO RELATIONSHIP . . . . . . . . . . . . . . . . . . . . . . . . 66
28.23 RELETTING . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Exhibits
Exhibit A - Legal Description of the Land
Exhibit B - Schedule of Improvements
Exhibit C - Other Leased Property
Exhibit D - Pledge Agreement
Exhibit E - Intentionally Omitted
Exhibit F - Schedule of Capital Improvements
Exhibit G - Golf Percentage Rent Schedule
Exhibit H - Quarterly Allocations of Food and Beverage Revenue,
Merchandise Revenue and Gross Golf Revenue
(v)
The Links at Polo Trace
Delray Beach
Palm Beach County
Florida
LEASE
THIS LEASE (this "Lease"), dated as of July ___, 1998, is entered
into by and between GOLF TRUST OF AMERICA, L.P., a Delaware limited
partnership ("Landlord"), and EMERALD DUNES--POLO TRACE, INC., a Florida
corporation ("Tenant").
THE PARTIES ENTER THIS LEASE on the basis of the following facts,
understandings and intentions:
A. Pursuant to that certain Purchase and Sale Agreement (the
"Agreement") dated as of May 28, 1998 by and between Landlord and Polo Trace
Management, Inc., a Florida corporation ("Transferor"), Transferor
transferred to Landlord all of its right, title and interest in and to the
Property (as hereafter defined); and
B. Tenant, desires to lease the Property from Landlord, and
Landlord desires to lease the Property to Tenant, on the terms set forth
herein.
NOW THEREFORE, in consideration of the foregoing and the covenants
and agreements to be performed by Tenant and Landlord hereunder, and of other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
ARTICLE 1
LEASED PROPERTY
Upon and subject to the terms and conditions set forth in this
Lease, Landlord leases to Tenant and Tenant leases from Landlord all of
Landlord's rights and interest (to the extent acquired from Transferor) in
and to the following real property, improvements, personal property and
related rights (collectively the "Property"):
(a) the Land;
(b) the Improvements;
1
(c) all rights, privileges, easements and appurtenances to the Land
and the Improvements, if any, including, without limitation, all of
Landlord's right, title and interest, if any, in and to all mineral and water
rights and all easements, rights-of-way and other appurtenances used or
connected with the beneficial use or enjoyment of the Land and the
Improvements;
(d) the Tangible Personal Property; and
(e) the Intangible Personal Property.
ARTICLE 2
DEFINITIONS, RULES OF CONSTRUCTION
2.1 DEFINITIONS. The following terms shall have the indicated
meanings:
"AAA" has the meaning provided in Section 27.1.
"ACTUAL PECUNIARY LOSS" has the meaning provided in Section 23.6.
"ADDITIONAL CHARGES" has the meaning provided in Section 4.7.
"ADVISORY ASSOCIATION" means that certain association of lessees
operating golf courses under a lease with Landlord or any Affiliate of
Landlord.
"AFFILIATE" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person.
"AGREEMENT" has the meaning provided in Recital A.
"ANNUAL BASE RENT" means the Initial Base Rent, as it may be
adjusted annually as provided in Section 4.2.
"ANNUAL BUDGET" has the meaning provided in Section 12.7.
"AUTHORIZATIONS" means all licenses, permits and approvals required
by any governmental or quasi-governmental agency, body or officer for the
ownership, operation and use of the Property or any part thereof.
"AWARD" means all compensation, sums or anything of value awarded,
paid or received on a total or partial Condemnation.
2
"BANKRUPTCY CODE" has the meaning provided in Section 23.6.
"BASE RENT" means one-twelfth of the Annual Base Rent.
"BASE RENT ESCALATOR" has the meaning provided in Section 4.2.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which national banks in the City of New York,
New York, are authorized, or obligated, by law or executive order, to close.
"CAPITAL BUDGET" has the meaning provided in Section 12.7.
"CAPITAL EXPENDITURES" shall mean items which are properly
capitalized in accordance with GAAP.
"CAPITAL IMPROVEMENTS" has the meaning provided in Section 12.3.
"CAPITAL REPLACEMENT FUND" means the cumulative amount of the Capital
Replacement Reserve accrued by Landlord, together with interest thereon as
provided in Section 12.4, less amounts withdrawn from the Capital Replacement
Fund as provided in Section 12.4
"CAPITAL REPLACEMENT RESERVE" means, beginning on the earlier of
the commencement of the third (3rd) Fiscal Year or when the Initial
Improvement Funding has been fully advanced, on an annual basis, the greater
of (i) an amount equal to 3% of each Fiscal Quarter's Gross Golf Revenue, to
be accrued monthly by Landlord as part of the Capital Replacement Fund, as
provided in Section 12.4 hereof, based on the Officer's Certificate, or (ii)
Ninety Thousand Dollars ($90,000). In no event shall the amount in the
Capital Replacement Reserve exceed Five Hundred Thousand Dollars ($500,000),
which amount shall be increased every ten (10) years by the change in the CPI
for such ten (10) year period.
"CHANGE OF CONTROL" means:
(a) the issuance and/or sale by Tenant or the sale by any
stockholder of Tenant of a Controlling interest in Tenant to a Person other
than to a Person that is an Affiliate of Tenant as of the date hereof,
exclusive of transfers to spouse and lineal descendants of any stockholder of
Tenant as well as any trust created for estate planning purposes where such
stockholder and/or spouses and lineal descendants are beneficiaries;
3
(b) the sale, conveyance or other transfer of all or substantially
all of the assets of Tenant (whether by operation of law or otherwise);
(c) any other transaction, or series of transactions, which
results in the shareholders, partners or members who control Tenant as
of the date hereof no longer having Control of Tenant; or
(d) any transaction pursuant to which Tenant is merged with or
consolidated into another entity (other than an entity owned and Controlled
by an Affiliate of Tenant as of the date hereof), and Tenant is not the
surviving entity.
Notwithstanding the foregoing, a Change of Control shall not
be deemed to have occurred for purposes of this Lease if the shareholders or
partners who Control Tenant as of the date hereof remain in Control of Tenant
through an agreement or equity interest.
"CODE" means the Internal Revenue Code of 1986, as the same may be
amended or supplemented, and the rules and regulations promulgated thereunder.
"COMMENCEMENT DATE" means the date hereof.
"COMPANY" means Golf Trust of America, Inc. and any subsidiaries
thereof, including, without limitation, GTA LP and GTA GP, and, for purposes
of Sections 10.7, 22.1, 22.3 and 22.4, each of their officers, employees,
directors, agents and representatives.
"CONDEMNATION" means (a) the exercise of any governmental power,
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.
"CONDEMNOR" means any public or quasi-public authority, or private
corporation or individual, having the power of condemnation.
"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.
4
"CPI" means the United States Consumer Price Index, All Urban
Consumers, U.S. City Average, All Items (1982-84 = 100).
"DATE OF TAKING" means the date the Condemnor has the right to
possession of the property being condemned.
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.
Section 9601, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq.; the Toxic Substances Control Act, 15 U.S.C. Section
2601 et seq.; the Hazardous Materials Transportation Act, as amended, 49
U.S.C. Section 1801, et seq.; the Superfund Amendments and Reauthorization
Act of 1986, Pub. L. 99-499 and 99-563; the Occupational Safety and Health
Act of 1970, as amended, 29 U.S.C. Section 651, et seq.; the Clean Air Act,
as amended, 42 U.S.C. Section 7401, et seq.; the Safe Drinking Water Act, as
amended, 42 U.S.C. Section 201, et seq.; the Federal Water Pollution Control
Act, as amended, 33 U.S.C. Section 1251, et seq.; and all federal, state and
local environmental health and safety statutes, ordinance, codes, rules,
regulations, orders and decrees regulating, relating to or imposing liability
or standards concerning or in connection with Hazardous Materials.
"EVENT OF DEFAULT" has the meaning provided in Section 17.1.
"EXPIRATION DATE" means the date that is the last day of the
fortieth (40th) full Fiscal Quarter following the Commencement Date, as such
date may be extended by the Extended Term.
"EXTENDED TERM" has the meaning provided in Section 3.2.
"FACILITY MORTGAGE" means a mortgage, deed of trust or other
security agreement securing any indebtedness or any other Landlord's
Encumbrance placed on the Property in accordance with the provisions of
Article 25.
"FACILITY MORTGAGEE" means the holder or beneficiary of a Facility
Mortgage, if any; provided Landlord has given Tenant notice of the identity
and address of the Person.
"FISCAL QUARTER" means 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" means the twelve-month period from the first day of
the first Fiscal Quarter commencing after the Commencement Date to the last
day of the fourth Fiscal Quarter
5
commencing after the Commencement Date, and each twelve-month period
thereafter, for the remainder of the Lease Term.
"FIXTURES" means all permanently affixed equipment, machinery,
fixtures, and other items of real and/or personal property, including all
components thereof, now or hereafter located in, on or used in connection
with and permanently affixed to or incorporated into the Property, including
all furnaces, boilers, heaters, electrical equipment, heating, plumbing,
lighting, ventilating, refrigerating, 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.
"FOOD AND BEVERAGE PERCENTAGE RENT" means 10% of the positive
difference, if any, between (x) the Food and Beverage Revenue during the
applicable Fiscal Year and (y) Three Hundred Fifty Thousand Dollars
($350,000). Food and Beverage Percentage Rent is calculated on a Fiscal
Quarter basis, and on a cumulative basis for each Fiscal Year, based on the
quarterly allocation set forth on EXHIBIT H attached hereto.
"FOOD AND BEVERAGE REVENUE" means all revenue received (whether
by Tenant or any subtenants, assignees, concessionaires or licensees) from
or by reason of the Property relating to (i) the operation of snack bars,
restaurants, bars, catering functions, and banquet operations (except to
the extent of any hotel referral or commission fees payable to any hotel
or other third party unrelated to Tenant or any Affiliate of Tenant);
PROVIDED, HOWEVER, that Food and Beverage Revenue shall not include:
(a) The amount of any city, county, state or federal sales,
admissions, usage, or excise tax on the item included in Food and Beverage
Revenue, which is both added to or incorporated in the selling price and
paid to the taxing authority by Tenant; and
(b) Revenues or proceeds from sales or trade-ins of machinery,
vehicles, trade fixtures or personal property owned by Tenant used in
connection with Tenant's operation of the Property.
"FULL REPLACEMENT COST" means the actual replacement cost from time
to time of the improvement being insured,
6
including the increased cost of a construction endorsement, less exclusions
provided in the fire insurance policy.
"GAAP" means generally accepted accounting principles, consistently
applied.
"GOLF PERCENTAGE RENT" means the positive difference, if any,
between (x) the Gross Golf Revenue during the applicable Fiscal Year and (y)
Two Million Eight Hundred Fifty Thousand Dollars ($2,850,000), and multiplied
by the percentage opposite the relevant year set forth on EXHIBIT G attached
hereto. Golf Percentage Rent is calculated on a Fiscal Quarter basis, and on
a cumulative basis for each Fiscal Year, based on the quarterly allocation
set forth on EXHIBIT H attached hereto.
"GROSS GOLF REVENUE" means all revenues accrued (whether by
Tenant or any subtenants, assignees, concessionaires or licensees) from or by
reason of the operation of the golf operations at the Property calculated in
accordance with GAAP (but excluding reasonable reserves for refunds,
allowances and bad debts applicable to such operations), including, without
limitation, (i) revenues from membership initiation fees, (ii) periodic
membership dues, (iii) greens fees (except to the extent of any hotel
referral or commission fees payable to any hotel or other third party
unrelated to Tenant or any Affiliate of Tenant), (iv) fees to reserve a tee
time, (v) guest fees, (vi) golf cart rentals, (vii) parking lot fees, (viii)
locker rentals, (ix) fees for golf club storage, (x) fees for the use of
swim, tennis or other facilities, (xi) charges for range balls, range fees or
other fees for golf practice facilities, (xii) fees or other charges paid for
golf or tennis lessons (except where retained by or paid to a USTA or PGA
professional in accordance with historical practice at the Property), (xiii)
fees or other charges for fitness centers, (xiv) forfeited deposits with
respect to any membership application, (xv) transfer fees imposed on any
member in connection with the transfer of any membership interest, (xvi) fees
or other charges paid to Tenant by sponsors of golf tournaments at the
Property (unless the terms under which Tenant is paid by such sponsor do not
comply with Section 23.4, in which event the gross revenues received from
such sponsor for the tournament shall be excluded from Gross Golf Revenue and
further provided that Tenant shall use commercially reasonable efforts to
structure such payment to comply with Section 23.4), (xvii) advertising or
placement fees paid by vendors in exchange for exclusive use or name rights
at the Property, and (xviii) fees received in connection with any golf
package sponsored by any hotel group, condominium group, golf association,
travel agency, tourist or travel association or similar payments; PROVIDED,
HOWEVER, that Gross Golf Revenue shall not include:
(a) The ProLink commissions received or payments to ProLink for
the usage of the ProLink systems which are
7
collected from golfers and remitted to ProLink and which would otherwise be
included in Gross Golf Revenue.
(b) The amount of any city, county, state
or federal sales, admissions, usage, or excise tax on the item included in
Gross Golf Revenue, which is both added to or incorporated in the selling
price and paid to the taxing authority by Tenant; and
(c) Revenues or proceeds from sales or trade-ins of machinery,
vehicles, trade fixtures or personal property owned by Tenant used in
connection with Tenant's operation of the Property.
"GROSS REVENUE" means the sum of Gross Golf Revenue, Food and
Beverage Revenue and Merchandise Revenue for the applicable period.
"GTA GP" means GTA GP, Inc. and any successor thereto.
"GTA LP" means GTA LP, Inc. and any successor thereto.
"HAZARDOUS MATERIAL" means any substance, material, waste, gas or
particulate matter which is regulated by any local, state or federal
governmental authority, including but not limited to any material or
substance which is (i) defined as a "hazardous waste", "hazardous material",
or "restricted hazardous waste" or words of similar import under any
provision of any Environmental Law; (ii) petroleum or petroleum products;
(iii) asbestos; (iv) polychlorinated biphenyl; (v) radioactive material; (vi)
radon gas; (vii) designated as a "hazardous substance" pursuant to Section
311 of the Clean Water Act, 33 U.S.C. Section 1251, et seq. (42 U.S.C.
Section 1317); (viii) defined as a "hazardous waste" pursuant to Section 1004
of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq. (42 U.S.C. Section 6903); or (ix) defined as a "hazardous substance"
pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601, et seq. (42 U.S.C.
Section 9601).
"IMPARTIAL APPRAISER" means the casualty insurance company which is
then carrying the largest amount of casualty insurance carried on the
Property.
"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);
8
(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 Property and/or
the Rent or Additional Charges (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 Property; (ii) the
Property or any part thereof or any 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 Property or the leasing or
use of the Property or any part thereof; PROVIDED, HOWEVER, that Impositions
shall not include:
(aa) any taxes 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; or
(cc) any tax imposed with respect to any principal or interest on
any indebtedness on the Property.
"IMPOUND CHARGES" has the meaning provided in Section 17.9.
"IMPOUND PAYMENT" has the meaning provided in Section 17.9.
"IMPROVEMENTS" means the golf course, driving range, putting
greens, clubhouse facilities, snack bar, restaurant, pro shop, buildings,
structures, parking lots, improvements, Fixtures and other items of real
estate located on the Land as more particularly described in EXHIBIT B
attached hereto.
"INITIAL BASE RENT" means (i) from the Commencement Date through
December 31, 1998, $ , and (ii) thereafter,
(subject to adjustment as provided in Section 4.2).
9
"INITIAL IMPROVEMENT FUNDING" has the meaning provided in
Section 12.3
"INITIAL TERM" means the period of time from the Commencement Date
through the last day of the fortieth (40th) full Fiscal Quarter following the
Commencement Date.
"INSURANCE REQUIREMENTS" mean all terms of any insurance policy
required by this Lease and all requirements of the issuer of any such policy.
"INVENTORY" shall mean the merchandise located in any pro shop or
similar facility and held for sale in the ordinary course of Transferor's
business.
"INTANGIBLE PERSONAL PROPERTY" means all intangible personal
property owned by Landlord and used solely in connection with the ownership,
operation, leasing or maintenance of the Real Property or the Tangible
Personal Property, and any and all trademarks and copyrights, guarantees,
Authorizations, general intangibles, business records, plans and
specifications, surveys, all licenses, permits and approvals solely with
respect to the construction, ownership, operation or maintenance of the
Property.
"LAND" means the land described in EXHIBIT A attached hereto.
"LANDLORD" means Golf Trust of America, L.P., and any successor or
assignee permitted in accordance with the terms of the Lease.
"LANDLORD'S ENCUMBRANCE" means any lien, encumbrance or title
retention agreement upon the Property, or any portion thereof or interest
therein, whether to secure borrowing or other means of financing or
refinancing.
"LEASE" means this Lease, as the same may be amended from time to
time.
"LEASE TERM" means the period from the Commencement Date through
and including the Expiration Date (or the termination date, if earlier
terminated pursuant to the provisions hereof).
"LEGAL REQUIREMENTS" means 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 Property
or the construction, use or alteration thereof, whether now or hereafter
enacted
10
and in force, including any which may (i) require repairs, modifications, or
alterations in or to the 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), at any time in force affecting the Property; or (iii) require the
cleanup or other treatment of any Hazardous Material.
"MERCHANDISE PERCENTAGE RENT" means 10% of the positive difference,
if any, between (x) the Merchandise Revenue during the applicable Fiscal Year
and (y) Two Hundred Fifty Thousand Dollars ($250,000).
"MERCHANDISE REVENUE" means all revenue received (whether by Tenant
or any subtenants, assignees, concessionaires or licensees) from or by reason
of the Property relating to the sale of merchandise and inventory on the
Property (except to the extent of any hotel referral or commission fees
payable to any hotel or other third party unrelated to Tenant or any
Affiliate of Tenant); PROVIDED, HOWEVER, that Merchandise Revenue shall not
include:
(a) The amount of any city, county, state or federal sales,
admissions, usage, or excise tax on the item included in Merchandise
Revenue, which is both added to or incorporated in the selling price and
paid to the taxing authority by Tenant; and
(b) Revenues or proceeds from sales or trade-ins of machinery,
vehicles, trade fixtures or personal property owned by Tenant used in
connection with Tenant's operation of the Property.
"NET OPERATING INCOME FOR PURPOSES OF COVERAGE RATIO" shall be
defined as:
(1) Gross Revenue; less cost of sales; reduced by
(2) Gross operating expenses of the Property for the then-current
Fiscal year (calculated in accordance with GAAP), which shall include, the
Capital Replacement Reserve payable for that Fiscal Year, if any, and which
shall exclude the rent due pursuant to the Lease and the sales tax thereon;
increased by
(3) the following items (a) lessee-shareholder related expenses
(if any), (b) depreciation, (c) equipment lease
11
payments as interest and depreciation equivalents, and (d) interest (if any).
An example of Net Operating Income for Purposes of Coverage Ratio
is set forth on schedule K-1 attached as an exhibit to the Pledge Agreement.
"NON-COMPLYING PARTY" has the meaning provided in Section 27.2.
"OFFICER'S CERTIFICATE" means a certificate of Tenant signed by an
officer authorized to so sign by the board of directors or by-laws, or if
Tenant is a partnership, by an officer authorized to so sign by the general
partners.
"OPERATING BUDGET" has the meaning provided in Section 12.7.
"OTHER LEASED PROPERTIES" means the property or properties leased
or hereafter leased to Tenant or an Affiliate of Tenant by Landlord or an
Affiliate of Landlord, other than (i) pursuant to this Lease and (ii)
Bonaventure Country Club, which as of the date hereof are the properties
listed on EXHIBIT C attached hereto.
"OVERDUE RATE" means, on any date, a rate equal to the Prime Rate
plus an additional five percent (5%) per annum, but in no event greater than
the maximum rate then permitted under applicable law.
"PARTNERSHIP" means Golf Trust of America, L.P., a Delaware limited
partnership.
"PERCENTAGE RENT" means the sum of Golf Percentage Rent, Food and
Beverage Percentage Rent and Merchandise Percentage Rent.
"PERMITTED ASSIGNEE" means a Person or an Affiliate of a Person
meeting one or more of the following standards:
(a) an existing lessee under a lease with Landlord or any
Affiliate of Landlord who is not then in default under its lease;
(b) any entity affiliated with an entity acquiring from an
Affiliate of Tenant its resort and related operations located at or adjacent
to the Property, and provided Landlord has approved such assignee in its
reasonable discretion, based on, among other things, the proposed assignee's
reputation and experience in owning, operating and managing golf courses
similar in type to the
12
Property and the proposed assignee's net worth and financial resources; and
(c) a list of pre-approved assignees prepared by Landlord from
time to time in consultation with the Advisory Association.
"PERSON" means and includes natural persons, corporations, limited
partnerships, limited liability companies, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trusts
companies, land trusts, business trusts, Indian tribes or other
organizations, whether or not legal entities, and governments and agencies
and political subdivisions thereof.
"PLEDGE AGREEMENT" means that certain First Amended and Restated
Pledge Agreement dated as of the date of this Lease, by and between Pledgor
and Landlord, in the form attached hereto as EXHIBIT D.
"PLEDGED OWNER'S SHARES" means the Owner's Shares pledged pursuant
to the Pledge Agreement.
"PLEDGOR" means Okeechobee Championship Golf, Inc., a Florida
corporation and an affiliate of Tenant.
"PRIMARY INTENDED USE" means the operation of a golf course and other
activities incidental to the operation of a golf course.
"PRIME RATE" means on any date, a rate equal to the annual rate on
such date announced by NationsBank, N.A., or its successor entity, to be its
prime rate or, if the prime rate is discontinued, the base rate for 90-day
unsecured loans to its corporate borrowers of the highest credit standing.
"PROPERTY" means the Real Property, the Tangible Personal Property
and the Intangible Personal Property
"REAL PROPERTY" means the Land and the Improvements, and all
easements and appurtenances attached thereto.
"RENT" means, collectively, the Base Rent and Percentage Rent, when
applicable.
"REVENUES" means the sum of Gross Golf Revenue, Food and Beverage
Revenue and Merchandise Revenue.
"STATE" means the State or Commonwealth in which the Property is
located.
13
"TANGIBLE PERSONAL PROPERTY" means all items of tangible personal
property and fixtures (if any) owned by Landlord and located on or used
solely in connection with the Real Property, including, but not limited to,
machinery, equipment, furniture, furnishings, movable walls or partitions,
phone systems, restaurant equipment, computers or trade fixtures, golf course
operation and maintenance equipment, including mowers, tractors, aerators,
sprinklers, sprinkler and irrigation facilities and equipment, valves or
rotors, driving range equipment, athletic training equipment, office
equipment or machines, antiques or other decorations, furniture, computers or
other control systems, and equipment or machinery of every kind or nature,
including all warranties and guaranties associated therewith, with the
exception of golf carts.
"TENANT" means Emerald Dunes--Polo Trace, Inc., a Florida
corporation and any successor thereto, or assignee thereof, as permitted by
the terms of this Lease.
"TENANT IMPROVEMENTS" has the meaning provided in Section 12.1.
"TENANT'S PERSONAL PROPERTY" has the meaning provided in Section 8.2.
"TENANT'S RIGHT OF FIRST OFFER TO LEASE" has the meaning provided
in Section 3.3.
"TENANT'S RIGHT OF FIRST OFFER TO PURCHASE" has the meaning
provided in Section 26.1.
"TERM" means, collectively, the Initial Term and the Extended Term,
as the context may require, unless earlier terminated pursuant to the
provisions hereof.
"TERMINATION PAYMENT" means, if at any time during the Initial
Term, Net Operating Income for Purposes of Coverage Ratio did not equal or
exceed one hundred and thirteen and one-half percent (113.5%) of Rent due
under this Lease, the collateral pledged under the Pledge Agreement, on a
pro-rata basis. An example of the calculation of the Termination Payment is
set forth on Exhibit D-2 to the Pledge Agreement.
"TRANSFEROR" has the meaning provided in Recital A.
"TRUSTEE" has the meaning provided in Section 23.6.
"UNAVOIDABLE DELAYS" means delays due to strikes, lockouts, power
failure, acts of God, governmental restrictions, enemy action, civil
commotion, fire, unavoidable casualty or
14
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" means a state of
condition of the Property such that in the good faith judgment of Landlord,
reasonably exercised, the Property cannot be operated on a commercially
practicable basis for its Primary Intended Use.
2.2 RULES OF CONSTRUCTION. The following rules shall apply to the
construction and interpretation of this Lease:
(a) Singular words shall connote the plural number as well as the
singular and vice versa, and the masculine shall include the feminine and the
neuter.
(b) All references herein to particular articles, sections,
subsections, clauses or exhibits are references to articles, sections,
subsections, clauses or exhibits of this Lease.
(c) The table of contents and headings contained herein are solely
for convenience of reference and shall not constitute a part of this
Lease nor shall they affect its meaning, construction or effect.
(d) "Including" and variants thereof shall be deemed to mean
"including without limitation."
(e) All accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles then in effect.
(f) Each party hereto and its counsel have reviewed and revised
(or requested revisions of) this Lease and have participated in the preparation
of this Lease, and therefore any usual rules of construction requiring that
ambiguities are to be resolved against a particular party shall not be
applicable in the construction and interpretation of this Lease or any
exhibits hereto.
ARTICLE 3
TERM
3.1 INITIAL TERM. The Initial Term shall commence on the
Commencement Date and shall terminate on the last day of the fortieth (40th)
full Fiscal Quarter following the Commencement Date.
15
3.2 EXTENSION OPTIONS. Landlord grants Tenant the right to extend
the Initial Term of this Lease two (2) consecutive times for a period of five
(5) years each (such extension, an "Extended Term").
Tenant may exercise its option for an Extended Term solely by
giving written notice at least one hundred eighty (180) days prior to the
termination of the then-current term. Tenant shall be entitled to exercise
these options only if at the time of the giving of such notice, Tenant is
then the lessee of the Property pursuant to this Lease, and at the time of
the commencement of the applicable Extended Term no Event of Default shall
then exist beyond any applicable cure period. During each 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.
3.3 RIGHT OF FIRST OFFER TO LEASE. Upon the expiration of the
Initial Term and provided that Tenant has exercised the Extended Term and no
Event of Default then exists beyond any applicable notice and cure period,
Tenant shall have a right of first offer ("Tenant's Right of First Offer to
Lease") to lease the Property upon the same terms and conditions as Landlord,
at its election, intends to offer to lease the Property to a third party.
Tenant shall be entitled to exercise Tenant's Right of First Offer to Lease
only if at the time of the giving of such notice and at the time of the
commencement of the applicable term no Event of Default shall then exist and
only if Landlord elects to lease the Property at the expiration of the Lease
Term. Not more than nine (9) months and not less than three (3) months prior
to the expiration of the Lease Term, Landlord shall, if applicable, give
Tenant written notice of its intent to lease the Property and shall indicate
the terms and conditions upon which Landlord intends to lease the Property.
Tenant shall thereafter have a period of thirty (30) days to elect by
unequivocal written notice to Landlord to lease the Property on the same
terms and conditions as Landlord intends to offer to a third party; provided
prior to Tenant's acceptance Landlord shall retain the right to elect not to
lease the Property by giving Tenant written notice thereof. If Tenant elects
not to lease the Property, then Landlord shall be free to lease the Property
to a third party. However, if the Base Rent for such proposed lease is
reduced by five percent (5%) or more as compared to the Base Rent included in
the lease that Tenant rejected, then Landlord shall again offer Tenant the
right to acquire the Property upon the same terms and conditions, provided
that Tenant shall have only fifteen (15) days to accept such offer.
16
ARTICLE 4
RENT
4.1 RENT. Tenant will pay to Landlord, in lawful money of the
United States of America, Rent during the Initial Term or any Extended Term.
Payments of Base Rent shall be paid monthly, on the twenty-fifth (25th) day
of each month in arrears, at Landlord's address set forth in Section 28.10 or
at such other place or to such other Person as Landlord from time to time may
designate in writing. The first monthly installment shall be prorated as to
any partial month. 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 shall receive a credit against Rent (or be
paid directly, at Landlord's option) for any operating expense credits or
operating revenues credited to Landlord pursuant to the Agreement which are
applicable to any period in the Lease Term (E.G., credit for real property
taxes, membership dues, sublease rents, etc.) and conversely Tenant shall
reimburse Landlord for any operating expenses paid for by Landlord pursuant
to the Agreement which are the responsibility of Tenant hereunder.
4.2 INCREASE IN INITIAL BASE RENT. Beginning on the first (1st)
day of the first (1st) Fiscal Quarter commencing after the one (1) year
anniversary of the Commencement Date, and on the first (1st) day of each
Fiscal Year thereafter for the remainder of the Lease Term, Annual Base Rent
will increase by the lesser of (i) three percent (3%) of the Annual Base Rent
payable for the immediately preceding year, or (ii) two hundred percent
(200%) of the change in CPI from the immediately preceding Fiscal Year (the
"Base Rent Escalator").
4.3 PERCENTAGE RENT. In addition to Base Rent, Tenant shall pay
Percentage Rent as provided herein. During the Initial Term and the Extended
Term, Tenant shall calculate the Revenues for each Fiscal Quarter (or shorter
period, if applicable) within twenty (20) days of the end of such Fiscal
Quarter (or shorter period, if applicable) and submit such calculations in
writing to Landlord by way of an Officer's Certificate. If there is due any
Percentage Rent for that Fiscal Quarter (or shorter period, if applicable),
then Tenant shall pay to Landlord the applicable Percentage Rent, upon
submittal of the Officer's Certificate. The Percentage Rent payable in any
period in any Fiscal Year shall be adjusted to reflect the Percentage Rent
paid on a year-to-date cumulative basis for the Fiscal Year (pro rated for
any partial periods) and the limits set forth in the next two sentences on a
pro rated basis. The increase in Rent payable during any Fiscal Year shall
be limited to seven percent (7%) of the Rent payable for the prior Fiscal
Year. Tenant shall receive a credit against the payment of Percentage Rent
in an amount
17
equal to the increase in the Base Rent over the Initial Base Rent.
4.4 ANNUAL RECONCILIATION OF PERCENTAGE RENT. Within sixty (60)
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 Revenues for the Fiscal Year just ended,
and (ii) a comparison of the amount of any Percentage Rent actually paid
during such Fiscal Year versus the amount of Percentage Rent actually owing
on the basis of the annual calculation of the Revenues. If the Percentage
Rent for such Fiscal Year exceeds the sum of the quarterly payments of
Percentage Rent previously paid by Tenant, Tenant shall pay such deficiency
to Landlord along with such Officer's Certificate. If the Percentage Rent
for such Fiscal Year is less than the amount of Percentage Rent previously
paid by Tenant, Landlord shall, at Landlord's option, either (i) remit to
Tenant its check in an amount equal to such difference, or (ii) grant Tenant
a credit against the payment of Rent next coming due. Landlord shall have
the right to audit all of Tenant's business operations at the Property so as
to determine the calculation of Percentage Rent as provided in Section 12.6.
For the purposes of this Section 4.4 and Section 4.3 above, each of the
Revenues and each Percentage Rent shall be calculated individually.
4.5 INCREASE IN BASE RENT FOR CAPITAL IMPROVEMENTS. At the end of
each Fiscal Quarter, Landlord shall calculate the amount (the "Quarterly
Capital Expenditure"), if any, funded to Tenant for construction of Capital
Improvements pursuant to Section 12.3, and provide notice to Tenant of the
Quarterly Capital Expenditure. Effective as of the due date of the next
monthly installment of Annual Base Rent, Annual Base Rent shall increase by
an amount equal to nine and five-tenths percent (9.5%) of the Quarterly
Capital Expenditure. Notwithstanding the foregoing, if Landlord funds
Quarterly Capital Expenditures not paid for or reimbursed by third parties
related to the relocation of hole number 11 and the related changes to holes
12, 16 and 17, or the items addressed in Section 3 of Exhibit J to the
Agreement, then only fifty percent (50%) of such Quarterly Capital
Expenditures shall increase the Annual Base Rent.
4.6 RECORD-KEEPING. Tenant shall utilize an accounting system for
the Property in accordance with its usual and customary practices and in
accordance with GAAP approved by Landlord, which will accurately record all
Gross Revenue. Tenant shall retain all accounting records for each Fiscal
Year conforming to such accounting system until at least five (5) years after
the expiration of such Fiscal Year.
4.7 ADDITIONAL CHARGES. In addition to the Base Rent and
Percentage Rent, (a) Tenant shall also pay and discharge when due and payable
all other amounts, liabilities, obligations and
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Impositions which Tenant assumes or agrees to pay under this Lease, and (b)
in the event of any failure on the part of Tenant to pay any of those items
referred to in clause (a) 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 (a) and (b) above
being referred to herein collectively as the "Additional Charges"). Except
as otherwise provided in this Lease, all Additional Charges shall become due
and payable at the earlier of (i) thirty (30) days after either Landlord or
the applicable third party delivery of an invoice to Tenant, or (ii) the date
of delinquency with respect to Impositions.
4.8 LATE PAYMENT OF RENT. Tenant hereby acknowledges that late
payment by Tenant to Landlord of Base Rent, Percentage 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 Property and other
expenses of a similar or dissimilar nature. Accordingly, if any installment
of Base Rent, Percentage Rent or Additional Charges (but only as to those
Additional Charges which are payable directly to Landlord) shall not be paid
within ten (10) days after the date such payment is due, Tenant will pay
Landlord on demand, as Additional Charges, a late charge equal to five
percent (5%) of such installment. 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 and is not a penalty. In addition,
if any installment of Base Rent, Percentage Rent or Additional Charges (but
only as to those Additional Charges which are payable directly to Landlord)
shall not be paid within five (5) days after the due date with respect to
Base Rent or Percentage Rent or delivery of an invoice to Tenant with respect
to the Additional Charge, the amount unpaid shall bear interest, from such
due date to the date of payment thereof, computed at the Overdue Rate on the
amount of such installment, and Tenant will pay such interest to Landlord as
Additional Charges. The acceptance of any late charge or interest shall not
constitute a waiver of, nor excuse or cure, any default under this Lease, nor
prevent Landlord from exercising any other rights and remedies available to
Landlord.
4.9 NET LEASE; CAPITAL REPLACEMENT RESERVE. This Lease shall be a
triple net lease and Rent shall be payable to Landlord without notice or
demand and without set-off, counterclaim, recoupment, abatement, suspension,
determent, deduction or defense, except as expressly provided herein, so that
this Lease shall yield to Landlord the full amount of the installments of
Base Rent, Percentage Rent and Additional Charges throughout the Term.
Without limiting the foregoing, beginning
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on the earlier of the commencement of the third (3rd) Fiscal Year or when the
Initial Improvement Funding has been fully advanced, Tenant shall pay to
Landlord on a monthly basis along with Base Rent, as additional rent, an
amount equal to one-twelfth (1/12) of the Capital Replacement Reserve. Such
amounts shall be subject to reconciliation at the end of each Fiscal Quarter
and at the end of each Fiscal Year.
ARTICLE 5
SECURITY DEPOSIT
5.1 PLEDGE OF OWNER'S SHARES. Within sixty (60) days after the
Commencement Date, Tenant shall cause the Pledge Agreement to be executed for
the benefit of Landlord.
5.2 OBLIGATION TO WITHHOLD DISTRIBUTIONS. Notwithstanding the
above provisions, if the Net Operating Income for Coverage Ratio purposes for
the Property falls below the coverage ratio set forth in Section 2(a) of
EXHIBIT D-1 to the Pledge Agreement, at any time following the release of any
Pledged Owner's Shares (or security deposit held by Landlord in lieu
thereof), then Tenant shall thereafter retain, and not make cash
distributions (except as may be necessary to pay any applicable taxes and
customarily paid reasonable compensation) to its shareholders, partners or
members, as applicable, until such time as Tenant has accumulated six (6)
months of Base Rent at the then current level. Cash distributions may be
made at such time as Tenant shall have again satisfied such coverage ratios
for two (2) consecutive Fiscal Years. Tenant shall provide Landlord with such
documentation, including Officer's Certificates and financial statements,
within forty-five (45) days after the end of each Fiscal Quarter as are
necessary to establish Tenant's compliance with the foregoing requirements.
5.3 LANDLORD'S LIEN. To the fullest extent permitted by
applicable law, Landlord is granted a lien and security interest on all of
Tenant's personal property now or hereafter located on the Property, and such
lien and security interest shall remain attached to Tenant's personal
property until payment in full of all Rent and satisfaction of all of
Tenant's obligations hereunder; provided, however, Landlord shall subordinate
its lien and security interest only to that of any third party lender or
seller which finances Tenant's personal property or any lessor that leases
personal property to Tenant, the terms and conditions of such subordination
to be satisfactory to Landlord in its reasonable discretion. Tenant shall,
upon the request of Landlord, execute such financing statements or other
documents or instruments reasonably requested by Landlord to perfect the lien
and security interests herein granted.
5.4 TERMINATION PAYMENT. On the Expiration Date, unless each
option for an Extended Term is exercised, Tenant
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shall pay to Landlord the Termination Payment, if any, which shall be payable
solely from the proceeds of the Security Fund. For purposes of calculating
the Termination Payment, the Owner's Shares shall have a value deemed to
equal the average closing share price of common stock of Golf Trust of
America, Inc. for the five (5) day period prior to the Expiration Date.
ARTICLE 6
IMPOSITIONS
6.1 PAYMENT OF IMPOSITIONS. Subject to Section 6.3 and Section
17.9, 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 14. Upon request, Tenant shall promptly furnish to
Landlord copies of official receipts, if available, or other satisfactory
proof evidencing such payments, such as cancelled checks.
6.2 INFORMATION AND REPORTING. Landlord shall give prompt notice
to Tenant of all Impositions payable by Tenant hereunder of which Landlord at
any time has actual 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 reasonable request of the other,
provide such data as is maintained by the party to whom the request is made
with respect to the 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 reasonable request, with cost and depreciation
records necessary for filing returns for any property so classified as
personal property.
6.3 PRORATIONS. Impositions imposed in respect of the tax-fiscal
period during which the Lease commences or terminates shall be adjusted and
prorated between Landlord and Tenant, whether or not such Imposition is
imposed before or after such commencement or termination, and Tenant's
obligation to pay its prorated share thereof shall survive such termination.
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 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 hereof before any
fine, penalty, premium, further interest or cost may be added thereto.
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6.4 REFUNDS. If any refund shall be due from any taxing authority
in respect of any Imposition paid by Tenant, the same shall be paid over to
or retained by 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 17.
6.5 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 Property during the Term.
6.6 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 or unless Landlord
agrees to pay the cost thereof.
ARTICLE 7
TENANT WAIVERS
7.1 NO TERMINATION, ABATEMENT, ETC. Subject to Article 21 and
except as otherwise specifically provided in this Lease, and except for those
causes resulting from the willful misconduct or gross negligence of Landlord
or any person whose claim arose under 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
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 Property or any portion
thereof from whatever cause or any taking of the Property or any portion
thereof;
(b) the lawful or unlawful prohibition of, or restriction upon,
Tenant's use of the 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;
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(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 obligations
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
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 an Event of Default.
7.2 CONDITION OF THE PROPERTY. Subject to Section 12.3 hereof,
Tenant acknowledges receipt and delivery of possession of the Property and
that Tenant has examined and otherwise has knowledge of the condition of the
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. Landlord hereby represents and warrants to Tenant that Landlord
has made available to Tenant or an Affiliate of Tenant all information in
Landlord's possession regarding the condition of the Property prior to the
date hereof. Regardless, however, of any inspection made by Tenant of the
Property and whether or not any patent or latent defect or condition was
revealed or discovered thereby, subject to Section 12.3 hereof, Tenant is
leasing the Property "as is" in its present condition. Subject to Section
12.3 hereof, Tenant waives and releases any claim or cause of action against
Landlord with respect to the condition of the 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 HAVE MADE, ANY
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE 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
SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x)
MERCHANTABILITY, (xi)
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QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY, (xiv) OPERATION, (xv) THE
EXISTENCE OF ANY HAZARDOUS MATERIAL OR (xvi) COMPLIANCE OF THE PROPERTY WITH
ANY LAW (INCLUDING ENVIRONMENTAL LAWS) OR LEGAL REQUIREMENTS. TENANT
ACKNOWLEDGES THAT THE PROPERTY IS OF ITS SELECTION AND TO ITS SPECIFICATIONS
AND THAT THE PROPERTY HAS BEEN INSPECTED BY TENANT AND IS SATISFACTORY TO IT.
IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN THE 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 7.2 HAVE BEEN NEGOTIATED AND REVIEWED BY
TENANT'S LEGAL COUNSEL, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND
NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO
THE PROPERTY, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER
LAW NOW OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.
Tenant represents to Landlord that Tenant has examined the title to
the Property prior to the execution and delivery of this Lease and has found
the same to be satisfactory for the purposes contemplated hereby. Tenant
acknowledges that fee simple title, except where the Property is held under a
ground lease, (both legal and equitable) is in Landlord and that Tenant has
only the leasehold right of possession and use of the Property as provided
herein.
ARTICLE 8
OWNERSHIP OF TANGIBLE PERSONAL PROPERTY
8.1 PROPERTY. Tenant acknowledges that (i) the Property has been
transferred to Landlord and leased to Tenant, (ii) the Property is the
property of Landlord and (iii) that Tenant has only the right to the use of
such Property during the Term of and upon the terms and conditions of this
Lease.
8.2 TENANT'S PERSONAL PROPERTY. Tenant shall maintain all of the
Property, whether initially included in the Lease or thereafter acquired by
Landlord or Tenant, in good condition and repair, normal wear and tear
excepted. Upon the loss, destruction or obsolescence of any Tangible Personal
Property, Tenant shall replace such property with replacements of the same
type and quality as initially in place, which such property will be owned by
Tenant except to the extent acquired with funds from the Capital Replacement
Fund ("Tenant's Personal Property"). Upon the expiration or sooner
termination of this Lease, the Tenant's Personal Property shall transfer to
Landlord without requirement of any bill of sale or assignment; provided
Landlord, at its election, may require Tenant to execute such documentation
as Landlord may require to evidence such transfer. Tenant shall not remove
any Tangible Personal Property from the Property upon
24
termination of the Lease. If any of such Tangible Personal Property is
stored away from the Property, Tenant will provide Landlord with proper
access to the storage facility.
8.3 TENANT'S OBLIGATIONS. Tenant shall provide and maintain, or
cause to be provided and maintained, during the entire term of the Lease, all
Tangible Personal Property, as well as merchandise for sale to the public,
and food and beverage, as shall be necessary in order to operate the Property
in compliance with (a) all applicable Legal Requirements, (b) customary
practices in the golf industry, and (c) such other reasonable requirements
imposed by Landlord from time to time.
8.4 LANDLORD'S WAIVERS. Any lessor of Tenant's Personal Property
may, upon notice to Landlord and during reasonable hours, enter the Property
and take possession of any of Tenant's Personal Property without liability
for trespass or conversion upon a default by Tenant, provided that such
lessor provide Landlord with the opportunity to cure the defaults of Tenant
on terms and conditions satisfactory to such lessor and Landlord.
ARTICLE 9
USE OF PROPERTY
9.1 USE. After the Commencement Date and during the Term, Tenant
shall use or cause to be used the Property and the improvements thereon for
its Primary Intended Use. Tenant shall not use the Property or any portion
thereof for any other use without the prior written consent of Landlord, in
Landlord's absolute discretion. No use shall be made or permitted to be made
of the Property, and no acts shall be done, which will cause the cancellation
of any insurance policy covering the 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 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 Property or other improvements of any insurance board,
association, organization or company necessary for the maintenance of
insurance, as herein provided, covering the Property and Tenant's Personal
Property.
9.2 SPECIFIC PROHIBITED USES. Tenant shall not use or occupy or
permit the Property to be used or occupied, nor do or permit anything to be
done in or on the 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 11, cause structural injury to any of the 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
25
the Property, or any adjacent property, or incorporated in the Property or
any improvements thereon except in compliance with applicable law (including
any Environmental Laws). Tenant shall not allow the Property to be used as a
landfill or a waste disposal site, or a manufacturing, distribution or
disposal facility for any Hazardous Materials. Tenant shall neither suffer
nor permit the 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 Property or any portion
thereof, or (iii) is in material violation of any applicable Environmental
Law.
9.3 MEMBERSHIP SALES. Tenant shall not sell and/or classify or
reclassify memberships, or set initiation fees, dues and other charges or
materially increase or decrease the number of memberships available at the
Property, except as approved by Landlord, in Landlord's reasonable discretion.
9.4 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 Property; (iii) dedicate or transfer
unimproved portions of the Property for road, highway or other public
purposes; (iv) execute petitions to have the Property annexed to any
municipal corporation or utility district; (v) execute amendments to any
covenants and restrictions affecting the 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 Property), but only upon delivery to Landlord of an Officer's Certificate
(which Officer's 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 Property and does not reduce its value or usefulness for the
Primary Intended Use. Except for the conveyances and transfers contemplated
in the Fourth Amendment to the Joint Development Agreement, by and among K.
Hovnanian at Polo Trace, Inc., Polo Trace Country Club, Inc. and Polo Trace
Management, Inc., dated December 24, 1996, Landlord shall not grant, release,
dedicate or execute any of the foregoing items in this Section 9.4 without
obtaining Tenant's approval, which approval shall not be unreasonably
withheld or delayed.
9.5 TENANT'S ADDITIONAL COVENANTS. Tenant shall (a) join the
Advisory Association and cooperate in the activities of
26
such association; (b) at its election, engage in reasonable cross-marketing
endeavors with the members of the Advisory Association; and (c) at its
election, provide signage on the Property which references that the Property
is owned by Landlord, which signage may include an appropriate logo selected
by Landlord. In addition, it is the intent of the parties that Tenant be a
single-purpose entity with no business operations except for those related
solely to the operation of the Property for its Primary Intended Use and
other property of Landlord which may be leased to Tenant. Tenant shall,
therefore, not engage in or undertake any activities other than those
respecting the operation of the Property for its Primary Intended Use,
including leasing, managing, and operating golf courses in accordance with
this Lease.
9.6 VALUATION OF REMAINDER INTEREST IN LEASE. Tenant hereby represents
that, at the end of the Term, including the Extended Term, it expects that
the Land and each of the Improvements will have a fair market value
(determined without regard to any increase or decrease for inflation or
deflation during the Term) equal to at least twenty percent (20%) of the fair
market value of the Land and each of the Improvements at the Commencement
Date. Tenant further represents that, at the end of the Term, including the
Extended Term, it expects that the Land and each of the Improvements will
have a remaining useful life equal to at least twenty percent (20%) of its
expected useful life at the Commencement Date.
ARTICLE 10
HAZARDOUS MATERIALS
Except as specifically set forth in the Phase I Environmental Site
Assessment dated June 12, 1998, as supplemented by letter addendum June 26,
1998, prepared by Dames and Moore ("Environmental Report"), Tenant hereby
covenants to Landlord as follows:
10.1 REMEDIATION. If Tenant becomes aware of the presence of any
Hazardous Material in a quantity sufficient to require remediation or
reporting under any Environmental Law in, on or under the Property or if
Tenant, Landlord, or the 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 Property, Tenant
shall, at its sole expense, but subject to the last sentence of Section 10.2,
carry out and complete any required investigation, removal, remediation,
repair, closure, detoxification, decontamination or other cleanup of the
Property. If Tenant fails to implement and diligently pursue any such
repair, closure, detoxification, decontamination or other cleanup of the
Property in a timely manner, Landlord shall have the
27
right, but not the obligation, to carry out such action and to recover its
costs and expenses therefor from Tenant as Additional Charges.
10.2 TENANT'S INDEMNIFICATION OF LANDLORD. Tenant shall pay,
protect, indemnify, save, hold harmless and defend Landlord, the Company,
Affiliates of the Company and Landlord (including, without limitation, their
respective officers, directors and controlling persons), and any Facility
Mortgagee from and against all liabilities, obligations, claims, damages
(including punitive or consequential damages), penalties, causes of action,
demands, judgments, costs and expenses (including reasonable attorneys' fees
and expenses), to the extent permitted by law, imposed upon or incurred by or
asserted against Landlord or the Property by reason of any Environmental Law
(irrespective of whether there has occurred any violation of any
Environmental Law) in respect of the Property howsoever arising, without
regard to fault on the part of Tenant, including (a) 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, (b) 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, or (c) 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. Notwithstanding the
foregoing or any other provision of this Lease (including, without
limitation, Section 7.2, Section 10.4 and Article 23), Tenant shall not be
liable, or otherwise be required to indemnify Landlord or the Company or any
Affiliates of the Company, or incur any costs in connection with, (i) any
environmental conditions that are disclosed in the Environmental Reports,
(ii) any matters or events that existed before the Commencement Date that are
not exacerbated as a result of the willful misconduct or gross negligence of
Tenant, (iii) any matters or events that arise after the Commencement Date
that are not caused by any act or omission on the part of Tenant, or (iv) any
matters or events that arise after the Commencement Date that are directly
caused by a breach by Landlord of the terms of this Lease. In the event
Tenant and Landlord disagree whether an environmental condition was caused by
an act or omission on the part of the Tenant, the matter shall be submitted
to arbitration as provided in Section 27.1.
10.3 SURVIVAL OF INDEMNIFICATION OBLIGATIONS. Tenant's obligations
and/or liability under this Article 10 arising during the Term hereof shall
survive any termination of this Lease.
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10.4 ENVIRONMENTAL VIOLATIONS AT EXPIRATION OR TERMINATION OF
LEASE. Notwithstanding any other provision of this Lease (except the last
sentence of Section 10.2), if, at a time when the Term would otherwise
terminate or expire, a violation of any Environmental Law has been asserted
by Landlord and 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 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
leasability of the Property upon the expiration of the Term, then, at the
option of Landlord, the Term shall be automatically extended with respect to
the Property beyond the date of termination or expiration and this Lease
shall remain in full force and effect under the same terms and conditions
beyond such date with respect to the 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.
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ARTICLE 11
MAINTENANCE AND REPAIR
11.1 TENANT'S OBLIGATIONS. Tenant, at its expense, will operate
and maintain the 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 Property or any portion thereof) and in
accordance with any applicable Legal Requirements, and, except as otherwise
provided in Article 15, 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 Date (concealed or otherwise), except that Tenant shall have no
obligation to make any capital improvements in connection with environmental
conditions disclosed in the Environmental Reports (except to the extent such
conditions are exacerbated by Tenant). Tenant shall operate and maintain the
Property in accordance with the operation and maintenance practices of the
Property at the Commencement Date and otherwise in a manner comparable to
other comparable golf course facilities in the vicinity of the Property.
Landlord may consult with the Advisory Association from time to time with
respect to Tenant's compliance with its maintenance and operation obligations
under this Section 11.1, and Landlord and representatives of Advisory
Association shall have the right from time to time to enter the Property for
the purpose of inspecting the Property. If Landlord, in consultation with the
Advisory Association, determines that Tenant has failed to comply with its
maintenance and operation obligations under this Section 11.1, Landlord shall
provide written notice to Tenant setting forth a list of remedial work and/or
steps to be performed by Tenant. Tenant shall promptly and diligently
perform such remedial work and/or steps as recommended by Landlord, provided
if Tenant objects to one or more of the remedial obligations proposed by
Landlord, then the matter shall be submitted to the dispute resolution
procedure set forth in Section 12.7. 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 Property or any part thereof for its
Primary Intended Use.
11.2 WAIVER OF STATUTORY OBLIGATIONS. Landlord shall not under any
circumstances be required to build or rebuild any improvements on the
Property, or to make any repairs, replacements, alterations, restorations or
renewals of any nature or description to the 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 Property in any way. Tenant hereby waives, to the
extent
30
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.
11.3 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
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 Property, or any portion thereof.
11.4 SURRENDER OF PROPERTY. Unless the Lease shall have been
terminated pursuant to the provisions of Article 15, Tenant shall, upon the
expiration or prior termination of the Term, vacate and surrender the
Property to Landlord in the condition in which the 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 Property in good order and repair during the entire Term of the Lease).
ARTICLE 12
TENANT IMPROVEMENTS; SUBMITTAL OF BUDGETS; FINANCIAL STATEMENTS
12.1 TENANT'S RIGHT TO CONSTRUCT. Subject to the prior written
approval of Landlord in its reasonable discretion, during the Lease Term
Tenant may make alterations, additions, changes and/or improvements to the
Property (individually, a "Tenant Improvement," and collectively, "Tenant
Improvements"). Any such Tenant Improvement shall be made at Tenant's sole
expense, except for the Capital Improvements, and shall become the property
of Landlord upon termination of this Lease. Unless made on an emergency
basis to prevent injury to Person or property, Tenant will submit plans and
specifications for any Tenant Improvements, in the form necessary for any
required building permits, to Landlord for Landlord's prior written approval,
which approval shall not to be unreasonably withheld or delayed.
Upon approval by Landlord:
(a) Tenant shall diligently seek all governmental approvals and
any other necessary private approvals (E.G.,
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ground lessor, mortgagee, etc.) relating to the construction of any
Tenant Improvement; and
(b) once Tenant begins the construction of any Tenant Improvement,
Tenant shall diligently prosecute any such Tenant Improvement to
completion in accordance with applicable insurance requirements and the
laws, rules and regulations of all governmental bodies or agencies
having jurisdiction over the Property; and
(c) Tenant shall not suffer or permit any mechanics' liens or any
other claims or demands arising from the work of construction of any
Tenant Improvement to be enforced against the Property or any part
thereof, and Tenant agrees to hold Landlord and the Property free and
harmless from all liability from any such liens, claims or demands,
together with all costs and expenses in connection therewith; and
(d) all work shall be performed in a good and workmanlike manner.
12.2 SCOPE OF RIGHT. Subject to Section 11.1, at Tenant's cost and
expense, Tenant shall have the right to:
(a) seek any governmental approvals, including building permits,
licenses, conditional use permits and any certificates of need that
Tenant requires to construct any Tenant Improvement;
(b) erect upon the Property such Tenant Improvements as Tenant
deems desirable; and
(c) engage in any other lawful activities that Tenant determines
are necessary or desirable for the development of the Property in
accordance with its Primary Intended Use.
12.3 COOPERATION OF LANDLORD. On the Commencement Date Landlord
shall make available to Tenant the sum of Two Hundred Thousand Dollars
($200,000) (the "Initial Improvements Funding") for capital improvements and
certain other expense described in this Section 12.3 ("Capital
Improvements"). Landlord shall also make available the amount necessary to
enable Tenant to relocate hole number 11 and to make related changes to holes
12, 16 and 17 and the items outlined in Section 3 of Exhibit J to the
Agreement if and to the extent that the amounts paid for by such capital
improvements are not paid for or reimbursed by third parties. Tenant shall
be responsible for securing bids and estimates for the work and for
supervising such work and shall endeavor to ensure that the work is done in a
timely manner and in a good and workman-like fashion. Tenant shall not be
entitled to any construction management or other fee in connection with the
completion of the Capital Improvements. An estimated schedule of the
construction of the Capital Improvements is more particularly
32
described in EXHIBIT F attached hereto. Prior to the disbursement of any
funds for Capital Improvements, Tenant shall submit to Landlord for approval
(i) plans and specifications for such Capital Improvements; (ii) a detailed
budget for such Capital Improvements including the cost of permits and
related items; and (iii) a construction schedule for such Capital
Improvements. Landlord's approval of such items shall be at its sole
discretion, provided Landlord shall consult with Tenant in good faith prior
to making any determination respecting the Capital Improvements.
Landlord shall also 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 any Tenant Improvement approved by
Landlord in accordance with Section 12.1 of this Lease 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 or
payable out of the Capital Replacement Fund), and will not cause Landlord to
be in violation of any law, ordinance or regulation.
Landlord shall have the right at any time and from time to time to
post and maintain upon the Property such notices as may be necessary to
protect Landlord's interest from mechanics' liens, materialmen's liens or
liens of a similar nature.
12.4 CAPITAL REPLACEMENT FUND. Solely from the payment of
additional rent received pursuant to Section 4.9 of this Lease, Landlord
shall be obligated to accrue the Capital Replacement Reserve. The Capital
Replacement Reserve shall accrue quarterly based on the Officer's Certificate
and shall be placed in the Capital Replacement Fund. Amounts in the Capital
Replacement Fund from time to time shall be deemed to accrue interest at a
money market rate as reasonably determined by Landlord and such interest
shall be credited to the Capital Replacement Fund. Upon the written request
by Tenant to Landlord stating the specific use to be made and subject to the
approval of Landlord, the Capital Replacement Fund shall be made available to
Tenant for Capital Expenditures; PROVIDED, HOWEVER, no portion of amounts
credited to the Capital Replacement Fund shall be used to purchase property
to the extent that doing so would cause Landlord to recognize income other
than "rents from real property" as defined in Section 856(d) of the Code.
Tenant shall have no rights with respect to any amounts in the Capital
Replacement Fund except as provided herein. Subject to Landlord's approval
of the Capital Expenditures, Landlord shall make available to Tenant amounts
from the Capital Replacement Fund under the following conditions:
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(a) No Event of Default exists and is continuing;
(b) Tenant presents paid qualifying receipts for reimbursement, or
qualifying invoices for direct payment to the vendor;
(c) Such expenditures are included in the Capital Budget submitted
to and approved by Landlord in accordance with Section 12.7; and
(d) If from time to time Tenant shall expend monies beyond the
balance in the Capital Replacement Fund, then Tenant shall be afforded
the opportunity to present such paid invoices for reimbursement at later
dates when the Tenant's reserve balance shall be replenished to a level
that can support such expenditure.
12.5 RIGHTS IN TENANT IMPROVEMENTS. All Tenant Improvements shall
be the property of Landlord. However, Tenant shall be entitled to all
federal and state income tax benefits associated with any Tenant Improvement
during the Lease Term exclusive of any Capital Expenditures paid for from
amounts credited to the Capital Replacement Fund, as to which Landlord shall
be entitled all income tax benefits.
12.6 LANDLORD'S RIGHT TO AUDIT CALCULATION OF GROSS REVENUE.
Landlord, at its own expense except as provided hereinbelow, shall have the
right from time to time directly or though its accountants to audit the
information set forth in the Officer's Certificate referred to in Section 4.4
and in connection with such audits to examine Tenant's book and records with
respect thereto (including supporting data, sales tax returns and Tenant's
work papers). If any such audit discloses a deficiency in the payment of
Percentage Rent, Tenant shall forthwith pay to Landlord the amount of the
deficiency as finally agreed or determined, together with interest at the
Overdue Rate from the date when said payment should have been made to the
date of payment thereof; PROVIDED, HOWEVER, that as to any audit that is
commenced more than twelve (12) months after the date Gross Revenue for any
Fiscal Year is reported by Tenant to Landlord in the Officer's Certificate,
the deficiency, if any, with respect to such Gross Revenue shall bear
interest as permitted herein only from the date such determination of
deficiency is made unless such deficiency is the result of gross negligence
or willful misconduct on the part of Tenant. If any such audit discloses
that the Gross Revenue actually received by Tenant for any Fiscal Year
exceeds the Gross Revenue reported by Tenant in the Officer's Certificate by
more than two percent (2%), then Tenant shall pay all reasonable costs of
such audit and examination; provided Tenant shall have the right to submit
the audit determination to arbitration in accordance with the procedures set
forth in Article 27. Landlord shall also have the right to review and audit
from time to time Tenant's business
34
operations including all books, records and financial statements of Tenant.
Tenant shall promptly provide to Landlord copies of all such books, records,
financial statements or any other documentation of Tenant's business
operations reasonably requested by Landlord.
12.7 ANNUAL BUDGET. Not later than forty-five (45) days prior to
the commencement of each Fiscal Year, Tenant shall prepare and submit to
Landlord an operating budget (the "Operating Budget") and a capital budget
(the "Capital Budget") prepared in accordance with the requirements of this
Section 12.7. The Operating Budget and the Capital Budget (together, the
"Annual Budget") shall be prepared in a form approved by Landlord for use
throughout the Lease Term and show by quarter and for the year as a whole the
following:
(a) Tenant's reasonable estimate of Gross Revenue (including
membership dues, daily use fees and other sources of Gross Revenue) and other
revenue for the forthcoming Fiscal Year itemized on schedules on a quarterly
basis as approved by Landlord and Tenant, together with assumptions, in
narrative form, forming the basis of such schedules.
(b) An estimate of any amounts Landlord will be requested to
provide for Capital Expenditures during the next four Fiscal Years, subject
to the limitations set forth in Section 12.4.
(c) A monthly cash flow projection.
(d) A narrative description of any anticipated significant events,
including, if requested by Landlord, a narrative description of any category
of operating expenses that decrease or increase by five percent (5%) or more
from the prior year's expenses.
(e) Tenant's reasonable estimate for each Fiscal Quarter of the
Percentage Rent to be paid for such quarter.
Landlord shall have sixty (60) days after the date on which it
receives the Annual Budget to review, approve or disapprove the Annual
Budget. If the parties are not able to reach agreement on the Annual Budget
for any Fiscal Year during Landlord's thirty (30) day review period, the
parties shall attempt in good faith during the subsequent thirty (30) day
period to resolve any disputes, which attempts shall include, if requested by
either party, at least one (1) meeting of executive-level officers of
Landlord and Tenant and one (1) meeting with the directors of the Advisory
Association. In the event the parties are still not able to reach agreement
on the Annual Budget for any particular Fiscal Year after complying with the
foregoing requirements of this Section 12.7, the parties shall adopt such
portions of the Operating Budget and the Capital
35
Budget as they may have agreed upon, and any matters not agreed upon shall be
referred to a dispute resolution committee composed of three (3) members of
the Advisory Association unaffiliated with Tenant and two (2) members of the
board of directors of the Company. Such committee shall be responsible for
resolving any such disagreement and the parties agree that the determination
of such dispute resolution committee shall be binding on the parties.
Pending the results of such resolution or the earlier agreement of the
parties, (i) if the Operating Budget has not been agreed upon, the Property
will be operated in a manner consistent with the prior year's Operating
Budget until a new Operating Budget is adopted, and (ii) if the Capital
Budget has not been agreed upon, no Capital Expenditures shall be made unless
the same are set forth in a previously approved Capital Budget or are
specifically required by Landlord or are otherwise required to comply with
Legal Requirements or Insurance Requirements. Tenant shall operate the
Property in a manner reasonably consistent with the Annual Budget.
12.8 FINANCIAL STATEMENTS.
(a) Tenant shall utilize, or cause to be utilized, an accounting
system for the Property in accordance with its usual and customary practice,
and in accordance with GAAP, that will accurately record all data necessary
to compute Percentage Rent, and Tenant shall retain for at least five (5)
years after the expiration of each Fiscal Year, reasonably adequate records
conforming to such accounting system showing all data necessary to compute
Percentage Rent. The books of account and all other records relating to or
reflecting the operation of the Property shall be kept either at the Property
or at Tenant's offices in West Palm Beach, Florida. Such books and records
shall be available to Landlord and its representatives for examination,
audit, inspection and transcription.
(i) Tenant shall furnish to Landlord within ten (10) days after
the end of each month, a report detailing the number of rounds of golf played
on the Property, the revenue generated from the Property and a profit and
loss statement for the Property for the preceding calendar month.
(b) Tenant shall furnish to Landlord within twenty (20) days of
the end of each Fiscal Quarter unaudited financial statements for the Fiscal
Quarter and year to date, together with the same information for the
comparable prior Fiscal Quarter and year to date, including the following:
results of operations, a balance sheet, statements of cash flows and
statement of changes in owner's equity. If Landlord requests, Tenant shall
provide reviewed financial statements for such Fiscal Quarter; provided,
however, such review shall be at Landlord's expense. Each quarterly report
shall also include a narrative explaining any deviation in any major revenue
or expense category or operating expenses (by category) of more than ten
percent (10%) from the
36
amounts set forth on the Annual Budget, together with, if appropriate a
revised Annual Budget, which budget shall be subject to Landlord's review and
approval as provided in Section 12.7. Each quarterly report shall also
forecast any projected Percentage Rent payable for the following Fiscal
Quarter.
(c) For each Fiscal Year, Tenant shall deliver to Landlord within
sixty (60) days of the end of such Fiscal Year financial statements prepared
in accordance with GAAP and audited by an independent accounting firm
approved by Landlord, in its reasonable discretion. Notwithstanding the
foregoing, Landlord shall only require audited financial statements of Gross
Revenue if Tenant's financial statements are not required to be separately
stated by the Securities and Exchange Commission.
(d) If requested by Landlord, Tenant will make available to
Landlord and the Company and their respective lenders, underwriters, counsel,
accountants and advisors such additional information and financial statements
with respect to Tenant and the Property as Landlord may reasonably request
without any additional cost to Tenant, and Tenant agrees to reasonably
cooperate with Landlord and the Company in effecting public or private debt
or equity financings by the Landlord or the Company, without any additional
cost to Tenant, modifications to this Lease or the requirement of additional
collateral from Tenant.
ARTICLE 13
LIENS, ENCROACHMENTS AND OTHER TITLE MATTERS
13.1 LIENS. Subject to the provisions of Article 14 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 Property or any
attachment, levy, claim or encumbrance emanating from Tenant's actions or
negligence, not including, however:
(a) this Lease;
(b) the matters, if any, that existed as of the Commencement Date,
as set forth on the title policy received by Landlord;
(c) restrictions, liens and other encumbrances which are consented
to in writing by Landlord, or any easements granted pursuant to the
provisions of Section 9.4 of this Lease;
(d) liens for those taxes of Landlord which Tenant is not required
to pay hereunder;
37
(e) subleases or licenses permitted by Article 23;
(f) 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 14;
(g) 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 14) or not yet due;
and
(h) any liens which are the responsibility of Landlord pursuant to
the provisions of Article 25.
13.2 ENCROACHMENTS AND OTHER TITLE MATTERS. Subject to Article 21
and excepting any matters granted or created by Landlord after the
Commencement Date or matters existing as of the Effective Date (which matters
shall be the responsibility of Landlord unless set forth in the Survey
previously delivered to Tenant and then only to the extent that no material
expenditure shall be required by Tenant), if any of the Improvements shall,
at any time, encroach upon any property, street or right-of-way adjacent to
the Property, or shall violate the agreements or conditions contained in any
lawful restrictive covenant or other agreement affecting the Property, or any
part thereof, or shall impair the rights of others under any easement or
right-of-way to which the Property is subject, or the use of the 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 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, the Company and
Affiliates of the Company 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
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 Improvements, and in any event take
all such actions as may be necessary in order to be able to continue the
operation of the
38
Improvements for the Primary Intended Use substantially in the manner and to
the extent the Improvements were operated prior to the assertion of such
violation or encroachment. Tenant's obligation under this Section 13.2 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.
ARTICLE 14
PERMITTED CONTESTS
14.1 AUTHORIZATION. 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,
validity or application, in whole or in part, of any Imposition or any Legal
Requirement or Insurance Requirement, or any lien, attachment, levy,
encumbrance, charge or claim not otherwise permitted by Section 13.1;
provided, however, that nothing in this Section 14.1 shall limit the right of
Landlord to contest the amount, validity or application, in whole or in part,
of any Imposition, Legal Requirement, Insurance Requirement, or any lien,
attachment, levy, encumbrance, charge or claim with respect to the Property
(and Tenant shall reasonably cooperate with Landlord with respect to such
contest), and, FURTHER 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 Property, and neither the Property nor any Rent therefrom nor any
part thereof or interest therein would 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 material civil liability for failure to comply
therewith pending the outcome of such proceedings. Nothing in this
Section 14.1(b), however, shall permit Tenant to delay compliance with
any requirement of an 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 Property or
the Rent by reason of such non-payment or noncompliance,
39
PROVIDED, HOWEVER, the provisions of this Article 14 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 Property;
(e) in the case of an Insurance Requirement, the coverage required
by Article 15 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.
14.2 INDEMNIFICATION OF LANDLORD. Landlord, at Tenant's expense,
shall execute and deliver to Tenant such authorizations 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 15
INSURANCE
15.1 GENERAL INSURANCE REQUIREMENTS. During the Lease Term, Tenant
shall at all times keep the Property, and all property located in or on the
Property, including all Tenant's Personal Property and any Tenant
Improvements, insured with the kinds and amounts of insurance described
below. This insurance shall be written by companies authorized to do
insurance business in the State, and shall otherwise meet the requirements
set forth in Section 15.5 of this Lease. The policies must name Landlord as
an additional insured or loss payee, as applicable. Losses shall be payable
to Landlord and/or Tenant as provided in this Article 15. In addition, the
policies shall name as a loss payee any Facility Mortgagee by way of a
standard form of mortgagee's loss payable endorsement. Any loss adjustment
shall require the written consent of Landlord, Tenant, and each Facility
Mortgagee, if any. Evidence of insurance shall be deposited with Landlord
and, if requested, with any Facility Mortgagee(s). The policies on the
Property, including the Improvements, Fixtures, Tangible and Intangible
Personal Property and any Tenant Improvements, shall insure against the
following risks:
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(a) ALL RISK. Loss or damage by all risks or perils including, but
not limited to, fire, vandalism, malicious mischief and extended coverages,
including sprinkler leakage, in an amount not less than 100% of the then
Full Replacement Cost thereof covering all structures built on the Property
and all Tangible Personal Property; and further provided the Tangible
Personal Property may be insured at its fair market value.
(b) LIABILITY. Claims for personal injury or property damage under a
policy of comprehensive general public liability insurance with amounts not
less than five million dollars ($5,000,000) per occurrence and in the
aggregate.
(c) FLOOD. Flood insurance (when the Property is located in whole or
in material part a designated flood plain area) in an amount similar to the
amount insured by comparable golf course properties in the area.
Notwithstanding the foregoing, Tenant shall not be required to participate
in the National Flood Insurance Program or otherwise obtain flood insurance
to the extent not available at commercially reasonable rates; provided
Tenant shall give Landlord written notice thereof prior to cancelling or
not obtaining any flood insurance. Tenant may opt to insure the structures
only, and not the Land, subject to the approval of Landlord, in Landlord's
reasonable discretion.
(d) WORKER'S COMPENSATION. Adequate worker's compensation insurance
coverage for all Persons employed by Tenant on the Property in accordance
with the requirements of applicable federal, state and local laws. Tenant
shall have the option to self-insure up to five thousand dollars ($5,000)
of the amount of insurance required in the event State law permits such
self-insurance, subject to the approval of Landlord, in Landlord's sole and
absolute discretion.
15.2 OTHER INSURANCE. Such other insurance on or in connection
with any of the Property as Landlord or any Facility Mortgagee may reasonably
require, which at the time is usual and commonly obtained in connection with
properties similar in type of building size and use to the Property and
located in the geographic area where the Property is located.
15.3 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 Lease Term, it shall have the right to have such Full
Replacement Cost redetermined by 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
41
binding on the parties hereto, and Tenant shall forthwith increase, or may
decrease, the amount of the insurance carried pursuant to this Section 15.3,
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.
15.4 WAIVER OF SUBROGATION. All insurance policies carried by
either party covering the 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.
15.5 FORM SATISFACTORY, ETC. All of the policies of insurance
referred to in this Article 15 shall be written in a form reasonably
satisfactory to Landlord and by insurance companies rated not less than XV by
A.M. Best's Insurance Guide. Tenant shall pay all premiums for the policies
of insurance referred to in Sections 15.1 and 15.2 and shall deliver
certificates thereof to Landlord prior to their effective date (and with
respect to any renewal policy, at least ten (10) days prior to the expiration
of the existing policy). In the event Tenant fails to satisfy its
obligations under this Article 15, Landlord shall be entitled, but shall have
no obligation, to effect such insurance and pay the premiums therefore, which
premiums shall be repayable to Landlord upon written demand as Additional
Charges. Each insurer issuing policies pursuant to this Article 15 shall
agree, by endorsement on the policy or policies issued by it, or by
independent instrument furnished to Landlord, that it will give to Landlord
thirty (30) days' written notice before the policy or policies in question
shall be altered, allowed to expire or cancelled. 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 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 Mortgagee
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 Property.
15.6 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 Sections 15.1 and 15.2 is
either excessive or insufficient, the parties shall endeavor to agree on the
proper
42
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 Article 15; 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.
15.7 BLANKET POLICY. Notwithstanding anything to the contrary
contained in this Article 15, 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 15 are otherwise satisfied. The amount of this
total insurance allocated to each of the Leased Properties, which amount
shall be not less than the amounts required pursuant to Sections 15.1 and
15.2, shall be specified either (i) in each such "blanket" or umbrella 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" or umbrella policy shall promptly be delivered to Landlord and
Facility Mortgagee.
15.8 INSURANCE PROCEEDS. All proceeds of insurance payable by
reason of any loss or damage to the Property, or any portion thereof, and
insured under any policy of insurance required by this Article 15 shall (i)
if greater than $100,000, be paid to Landlord and held by Landlord and (ii)
if less than such amount, be paid to Tenant and held by Tenant. All such
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 Property, or any portion thereof.
15.9 DISBURSEMENT OF PROCEEDS. Any proceeds held by Landlord or
Tenant shall be paid out by Landlord or Tenant from time to time for the
reasonable costs of such reconstruction or repair; PROVIDED, HOWEVER, that
Landlord shall disburse proceeds subject to the following requirements:
(a) prior to commencement of restoration, (i) 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 (ii) appropriate waivers of mechanics' and
materialmen's liens shall have been filed;
43
(b) Tenant shall have obtained and delivered to Landlord copies of
all necessary governmental and private approvals necessary to complete the
reconstruction or repair, including building permits, licenses, conditional
use permits and certificates of need;
(c) at the time of any disbursement, subject to Article 14, no
mechanics' or materialmen's liens shall have been filed against any of the
Property and remain undischarged, unless a satisfactory bond shall have
been posted in accordance with the laws of the State;
(d) 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 (i) 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, (ii) waivers of liens, (iii) a satisfactory bring down of
title insurance and (iv) other evidence of cost and payment so that
Landlord and Facility Mortgagee can verify that the amounts disbursed from
time to time are represented by work that is completed, in place and free
and clear of mechanics' and materialmen's lien claims;
(e) each request for disbursement shall be accompanied by a
certificate of Tenant, signed by a senior member or officer 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;
(f) to the extent actually held by Landlord and not a Facility
Mortgagee, (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
(g) 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.
15.10 EXCESS PROCEEDS, DEFICIENCY OF PROCEEDS. Any excess
proceeds of insurance remaining after the completion of the restoration or
reconstruction of the Property (or in the event neither Landlord nor Tenant
is required to or elects to repair and restore) shall be paid to Landlord and
deposited in
44
the Capital Replacement Fund except for any portion specifically applicable
to Tenant's merchandise and inventory. All salvage resulting from any risk
covered by insurance shall belong to Landlord.
If the costs of restoration or reconstruction exceeds the amount of
proceeds received by Landlord or Tenant from insurance, Tenant shall pay for
such excess cost of restoration or reconstruction, except that Tenant may
petition Landlord for withdrawal from the Capital Replacement Fund to cover
some or all of such excess, subject to the approval of Landlord in Landlord's
sole and absolute discretion.
15.11 RECONSTRUCTION COVERED BY INSURANCE.
-----------------------------------
(a) DESTRUCTION RENDERING PROPERTY UNSUITABLE FOR ITS PRIMARY
USE. If during the term the Property is totally or partially destroyed
from a risk covered by the insurance described in Article 15 and the
Property thereby is rendered Unsuitable For Its Primary Intended Use as
reasonably determined by Landlord, Tenant shall, at its election, either
(i) diligently restore the Property to substantially the same condition as
existed immediately before the damage or destruction, or (ii) terminate the
Lease and assign all of its rights to any insurance proceeds required under
this Lease to Landlord.
(b) DESTRUCTION NOT RENDERING PROPERTY UNSUITABLE FOR ITS
PRIMARY USE. If during the term, the Property is totally or partially
destroyed from a risk covered by the insurance described in Article 15, but
the Real Property is not thereby rendered Unsuitable For Its Primary
Intended Use, Tenant shall diligently restore the Property to substantially
the same condition as existed immediately before the damage or destruction;
PROVIDED, HOWEVER, Tenant shall not be required to restore certain Tangible
Personal Property and/or any Tenant Improvements if failure to do so does
not adversely affect the amount of Rent payable hereunder or the Primary
Intended Use in substantially the same manner immediately prior to such
damage or destruction. Such damage or destruction shall not terminate this
Lease; PROVIDED FURTHER, HOWEVER, if Tenant cannot within eighteen (18)
months obtain all necessary governmental approvals, including building
permits, licenses, conditional use permits and any certificates of need,
after diligent efforts to do so in order to be able to perform all required
repair and restoration work and to operate the Property for its Primary
Intended Use in substantially the same manner immediately prior to such
damage or destruction, Tenant may terminate the Lease.
15.12 RECONSTRUCTION NOT COVERED BY INSURANCE. If during the
Term, the Property is totally or materially destroyed
45
from a risk not covered by the insurance described in Article 15, whether or
not such damage or destruction renders the Property Unsuitable For Its
Primary Intended Use, Tenant shall restore the Property to substantially the
same condition as existed immediately before the damage or destruction.
Tenant shall have the right to use proceeds from the Capital Replacement Fund
to perform such work, subject to the conditions set forth in Section 12.4
hereof.
15.13 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.
15.14 WAIVER. Tenant hereby waives any statutory rights of
termination which may arise by reason of any damage or destruction of the
Property which Landlord or Tenant is obligated to restore or may restore
under any of the provisions of this Lease.
15.15 DAMAGE NEAR END OF TERM. Notwithstanding any other
provision to the contrary in this Article 15, if damage to or destruction of
the Property occurs during the last twenty-four (24) months of the Lease
Term, and if such damage or destruction cannot reasonably be expected by
Landlord to be fully repaired or restored prior to the date that is twelve
(12) months prior to the end of the then-applicable Term, then either
Landlord or Tenant shall have the right to terminate the Lease on thirty (30)
days' prior notice to the other by giving notice thereof within sixty (60)
days after the date of such damage or destruction. Upon any such
termination, Landlord shall be entitled to retain all insurance proceeds,
grossed up by Tenant to account for the deductible or any self-insured
retention. If Landlord shall give Tenant a notice under this Section 15.15
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 3.2 or thirty (30) days after Landlord's notice
given under this Section 15.15.
ARTICLE 16
CONDEMNATION
------------
16.1 TOTAL TAKING. If at any time during the Term the Property is
totally and permanently taken by Condemnation, this Lease shall terminate on
the Date of Taking and Tenant shall
46
promptly pay all outstanding rent and other charges through the date of
termination.
16.2 PARTIAL TAKING. If a portion of the Property is taken by
Condemnation, this Lease shall remain in effect if the Property is not
thereby rendered Unsuitable For Its Primary Intended Use, but if the Property
is thereby rendered Unsuitable For Its Primary Intended Use, this Lease shall
terminate on the Date of Taking.
16.3 RESTORATION. If there is a partial taking of the Property and
this Lease remains in full force and effect pursuant to Section 16.2,
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.
If Tenant receives an Award under Section 16.4, Tenant shall repair or
restore any Tenant Improvements up to but not exceeding the amount of the
Award payable to Tenant therefor.
16.4 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) the loss of Tenant's business during the remaining
term, (ii) any Tenant Improvements and (iii) the leasehold interest of Tenant
under this Lease.
16.5 TEMPORARY TAKING. The taking of the 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 (6) months. During any such six (6) month
period, which shall be 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
Lease Term, whether paid by way of damages, rent or otherwise, shall be paid
to Tenant.
ARTICLE 17
EVENTS OF DEFAULT
-----------------
17.1 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 ten (10) days after
receipt of notice from Landlord; provided, however, Tenant is only entitled
to three (3) such notices per twelve (12) month period and that
47
such notice shall be in lieu of and not in addition to any notice required
under applicable law;
(b) if 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 diligently completes the curing thereof
within one hundred twenty (120) days of receipt of notice from Landlord of
the default; PROVIDED, HOWEVER, that such notice shall be in lieu of and
not in addition to any notice required under applicable law; PROVIDED
FURTHER, HOWEVER, that the cure period shall not extend beyond thirty
(30) days as otherwise provided by this Section 17.1(b) if the facts or
circumstances giving rise to the default are creating a further harm to
Landlord or the 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;
(c) if Tenant shall:
(i) admit in writing its inability to pay its debts 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) be unable to pay its debts as they mature,
(v) consent to the appointment of a receiver of itself or of the
whole or any substantial part of its property, or
(vi) 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;
(d) 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
48
judgment, order or decree shall not be vacated or set aside or stayed
within sixty (60) days from the date of the entry thereof;
(e) if Tenant shall be liquidated or dissolved, or shall begin
proceedings toward such liquidation or dissolution;
(f) if the estate or interest of Tenant in the 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 14); PROVIDED, HOWEVER, that such
notice shall be in lieu of and not in addition to any notice required under
applicable law;
(g) if, except as a result of damage, destruction or a partial or
complete Condemnation or other Unavoidable Delays, Tenant voluntarily
ceases operations on the Property for a period in excess of ten (10) days;
(h) any representation or warranty made by Tenant herein or in any
certificate, demand or request made pursuant hereto is proven to be
incorrect, in any material respect; or
(i) an "Event of Default" (as defined in such lease) by Tenant or any
Affiliate of Tenant with respect to any Other Leased Property, or an "Event
of Default" under the Pledge Agreement;
THEN, Tenant shall be declared to have breached this Lease.
Landlord may terminate this Lease by giving Tenant not less than ten (10)
days' notice (or no notice for clauses (c), (d), (e), (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.
Landlord shall have all rights at law and in equity available to Landlord as
a result of Tenant's breach of this Lease.
17.2 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.
17.3 CERTAIN REMEDIES. If an Event of Default shall have occurred
and be continuing, whether or not this Lease has been terminated pursuant to
Section 17.1, Tenant shall, to the extent permitted by law, if required by
Landlord to do so,
49
immediately surrender to Landlord the Property pursuant to the provisions of
Section 17.1 and quit the same and Landlord may enter upon and repossess the
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 Property subject to any requirement of law.
17.4 DAMAGES. None of the following events shall relieve Tenant of
its liability and obligations hereunder, all of which shall survive any such
termination, repossession or reletting: (a) the termination of this Lease
pursuant to Section 17.1, (b) the repossession of the Property, (c) the
failure of Landlord, notwithstanding reasonable good faith efforts, to relet
the 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. In the event of any such termination, Tenant shall forthwith pay
to Landlord all Rent due and payable with respect to the 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, and not as a penalty, either:
(a) the sum of:
(i) the worth at the time of award of the unpaid Rent which had
been earned at the time of termination,
(ii) 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 unpaid Rent that Tenant
proves could have been reasonably avoided,
(iii) 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 unpaid Rent that Tenant proves could be
reasonably avoided, and
(iv) 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.
In making the above determinations, the "worth at the time of the
award" in subsections (i) and (iii) shall be determined by the court having
jurisdiction thereof including interest at the Overdue Rate and the "worth at
the time of the award" in subsection (iii) shall be determined by the court
having jurisdiction thereof using a discount rate equal to the discount rate
of the Federal Reserve Bank of San Francisco at the time of the award plus
one percent (1%) and the Percentage Rent
50
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
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 Overdue Rate from the date when due
until paid, and Landlord may enforce, by action or otherwise, any other term
or covenant of this Lease.
17.5 ADDITIONAL REMEDIES. Landlord has all other remedies that may
be available under applicable law.
17.6 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, as a matter or right, to the appointment of a receiver or receivers
acceptable to Landlord of the Property and of the revenues, earnings, income,
products and profits thereof, pending such proceedings, with such powers as
the court making such appointment shall confer.
17.7 WAIVER. If this Lease is terminated pursuant to Section 17.1,
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.
17.8 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 (and such payment is made to Landlord rather than Tenant
due to the existence of an Event of Default) shall be applied to Tenant's
obligations in the order which Landlord may determine or as may be prescribed
by the laws of the State.
17.9 IMPOUNDS. Landlord shall have the right during the
continuance of an Event of Default 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 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 account of Tenant. Landlord shall apply the Impound Payments to
the payment of the Impound Charges in such order or priority as Landlord
shall
51
determine or as 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 ten (10) days after Landlord's demand
therefor, shall pay the amount of the deficiency to Landlord.
ARTICLE 18
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 provided in Article 17, 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 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 18
shall survive the expiration or earlier termination of this Lease.
ARTICLE 19
LEGAL REQUIREMENTS
------------------
Subject to Article 14 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 Property, whether or not compliance therewith shall
require structural changes in any of the Improvements or interfere with the
use and enjoyment of the Property; and (b) procure, maintain and comply with
all licenses and other authorizations required for any use of the Property
then being made, and for the proper erection, installation, operation and
maintenance of the Property or any part thereof.
ARTICLE 20
HOLDING OVER
------------
If Tenant shall for any reason remain in possession of the Property
after the expiration of the Term or earlier termination of the Term hereof,
such possession shall be deemed
52
to be a tenant at sufferance during which time Tenant shall pay as rental
each month, 125% of the aggregate of (i) the aggregate Base Rent and monthly
portion of the Percentage Rent payable with respect to that month in the last
Fiscal Year; (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 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 Property. Nothing contained herein
shall 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
RISK OF LOSS
------------
During the Lease Term, the risk of loss or of decrease in the
enjoyment and beneficial use of the Property as a consequence of the damage
or destruction thereof by fire, flood, the elements, casualties, thefts,
riots, wars or otherwise, or in consequence of foreclosures, attachments,
levies or executions (other than by Landlord and those claiming from, through
or under Landlord) is assumed by Tenant. In the absence of gross negligence,
willful misconduct or breach of this Lease by Landlord pursuant to Section
28.2, Landlord shall in no event be answerable or accountable therefor nor
shall any of the events mentioned in this Article 21 entitle Tenant to any
abatement of Rent.
ARTICLE 22
INDEMNIFICATION
---------------
22.1 TENANT'S INDEMNIFICATION OF LANDLORD. Notwithstanding the
existence of any insurance provided for in Article 15, and without regard to
the policy limits of any such insurance, Tenant will protect, indemnify, save
harmless and defend Landlord, the Company and Affiliates of the Company from
and against all liabilities, obligations, claims, actual or consequential
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, the Company or
Affiliates of the Company by reason of:
(a) any accident, injury to or death of persons or loss of or damage
to property occurring on or about the Property or adjoining property,
including, but not limited to, any accident, injury to or death of Person
or loss of or damage to property resulting from golf balls, golf clubs,
53
golf shoes, lawn mowers or other equipment, pesticides, fertilizers or
other substances, golf carts, tractors or other motorized vehicles present
on or adjacent to the Property;
(b) any use, misuse, non-use, condition, maintenance or repair of the
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) any so-called "dram shop" liability associated with the sale
and/or consumption of alcohol at the Property;
(f) the non-performance of any of the terms and provisions of any and
all existing and future subleases of the Property to be performed by the
landlord (Tenant) thereunder; or
(g) any liability Landlord may incur or suffer as a result of any
permitted contest by Tenant pursuant to Article 14.
Notwithstanding the foregoing or any other provision of this
Lease, including, without limitation, Section 7.2, Article 10, Article 11, or
Article 13 hereof, Tenant shall not be liable or otherwise be required to
indemnify Landlord or to incur any costs in connection with: (i) any
conditions on the Property prior to the Commencement Date and not caused by
Tenant (as, for example, title problems, encroachments, environmental
matters, etc.); or (ii) any matters that arise after the Commencement Date
that are not caused by Tenant or that are directly caused by the breach by
Landlord of the terms of this Lease.
22.2 LANDLORD'S INDEMNIFICATION OF TENANT. Notwithstanding
anything to the contrary in this Lease, Landlord shall protect, indemnify,
save harmless and defend Tenant from and against all liabilities,
obligations, claims, actual or consequential 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 (i) Landlord's
active, gross negligence or willful misconduct; (ii) Landlord's
non-performance of its obligations under this Lease; or (iii) any conditions
existing on the Property prior to the Commencement Date and not caused by
Tenant (as, for example, title problems, encroachments, environmental
matters, etc.).
22.3 MECHANICS OF INDEMNIFICATION. As soon as reasonably practicable
after receipt by the indemnified party of
54
notice of any liability or claim incurred by or asserted against the
indemnified party that is subject to indemnification under this Article 22,
the indemnified party shall give notice thereof to the indemnifying party.
The indemnified party may at its option demand indemnity under this Article
22 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 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.
22.4 SURVIVAL OF INDEMNIFICATION OBLIGATIONS; AVAILABLE INSURANCE
PROCEEDS. Tenant's or Landlord's liability for a breach of the provisions of
this Article 22 arising during the term hereof shall survive any termination
of this Lease. Notwithstanding anything herein to the contrary, each party
agrees to look first to the available proceeds from any insurance it carries
in connection with the Property prior to seeking indemnification or otherwise
seeking to recover any amounts to compensate a party for its damages and then
to seek indemnification only to the extent of any loss not covered by their
available insurance proceeds.
ARTICLE 23
SUBLETTING AND ASSIGNMENT
-------------------------
23.1 PROHIBITION AGAINST ASSIGNMENT. Tenant shall not, without the
prior written consent of Landlord, which consent Landlord may withhold in its
sole discretion, assign, mortgage, pledge, hypothecate, encumber or otherwise
transfer (except to an
55
Affiliate of Tenant or a Permitted Assignee) the Lease or any interest
therein, all or any part of the Property, whether voluntarily, involuntarily
or by operation of law. For purposes of this Article 23, a Change in Control
of the Tenant shall constitute an assignment of this Lease.
23.2 SUBLEASES.
---------
(a) PERMITTED SUBLEASES. Tenant shall not, without the prior
written consent of Landlord, which consent Landlord may withhold in its
sole discretion, further sublease or license portions of the Property to
third parties, including concessionaires or licensees. Without limiting
the foregoing, Tenant's proposed sublease or any of the following transfers
shall require Landlord's prior written consent, which consent Landlord may
withhold in its sole discretion:
(i) sublease or license to operate golf courses;
(ii) sublease or license to operate golf professionals'
shops;
(iii) sublease or license to operate golf driving ranges;
(iv) sublease or license to provide golf lessons by other
than a resident professional;
(v) sublease or license to operate restaurants;
(vi) sublease or license to operate bars;
(vii) sublease or license to operate spa or health clubs; and
(viii) sublease or license to operate any other portions
(but not the entirety) of the Property customarily associated with or
incidental to the operation of the golf course.
(b) TERMS OF SUBLEASE. Each sublease with respect to the
Property shall be subject and subordinate to the provisions of this Lease.
No sublease made as permitted by this Section 23.2 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.
56
(c) COPIES. Tenant shall, not less than sixty (60) days prior
to any proposed assignment or sublease, deliver to Landlord written notice
of its intent to assign or sublease, which notice shall identify the
intended assignee or sublessee by name and address, shall specify the
effective date of the intended assignment or sublease, and shall be
accompanied by an exact copy of the proposed assignment or sublease.
Tenant shall provide Landlord with such additional information or documents
reasonably requested by Landlord with respect to the proposed transaction
and the proposed assignee or subtenant, and an opportunity to meet and
interview the proposed assignee or subtenant, if requested.
(d) 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 Property, and all extensions, modifications and renewals
thereof and all rents, issues and profits therefrom. Landlord hereby
grants to Tenant a license to collect and enjoy all rents and other sums of
money payable under any sublease of any of the 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) 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.
(e) LICENSES, ETC. For purposes of this Section 23.2, subleases
shall be deemed to include any licenses, concession arrangements,
management contracts (except to an Affiliate of the Lessee) or other
arrangements relating to the possession or use of all or any part of the
Property.
23.3 TRANSFERS. No assignment or sublease shall in any way impair
the continuing primary liability of Tenant hereunder, as a principal and not
as a surety or guarantor, and no consent to any assignment or sublease in a
particular instance shall be deemed to be a waiver of the prohibition set
forth in Section 23.1. Any assignment shall be solely of Tenant's entire
interest in this Lease. Any assignment or other transfer of all or any
portion of Tenant's interest in the Lease in contravention of the terms of
this Lease shall be voidable at Landlord's option. Anything in this Lease to
the contrary notwithstanding,
57
Tenant shall not sublet all or any portion of the Property or enter into any
other agreement which has the effect of reducing the Percentage Rent payable
to Landlord hereunder.
23.4 REIT LIMITATIONS. Anything contained in this Lease to the
contrary notwithstanding, Tenant shall not (i) sublet or assign or enter into
other arrangements such that the 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 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; or (iii) sublet or
assign the 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
23.4 shall likewise apply to any further subleasing by any subtenant.
23.5 RIGHT OF FIRST OFFER OF LANDLORD TO ACQUIRE LEASEHOLD. In
addition to Landlord's rights in Section 23.1, Landlord or its designee shall
have, for a period of sixty (60) days following receipt of the written notice
of Tenant's intent to assign its interest in the Lease to a third party
unaffiliated with Tenant (and in which management of the Tenant shall have no
continuing management or ownership interest), the right to elect to purchase
the leasehold interest on the terms and conditions at which Tenant proposes
to sell or assign its interest. If Landlord or its designee elects not to
purchase such interest of Tenant, then Tenant shall be free to sell its
interest to a third party, subject to Landlord's prior written consent as
provided in Section 23.1. However, if (i) the price at which Tenant intends
to sell its interest is reduced by five percent (5%) or more, or (ii) the
assignment to the third party is not completed within one hundred eighty
(180) days of Landlord's receipt of written notice of Tenant's intention to
assign its interest in the Lease, then Tenant shall again offer Landlord the
right to acquire its interest; provided, however, that in the case of a
change in price, Landlord shall have only fifteen (15) days to accept such
revised offer.
23.6 BANKRUPTCY LIMITATIONS.
(a) Tenant acknowledges that this Lease is a lease of
nonresidential real property and therefore agrees that Tenant, as the debtor
in possession, or the trustee for Tenant (collectively, the "Trustee") in
any proceeding under Title 11 of the United States Bankruptcy Code relating
to Bankruptcy, as amended (the "Bankruptcy Code"), shall not seek or request
any extension of time to assume or reject this Lease or to perform
58
any obligations of this Lease which arise from or after the order of relief.
(b) If the Trustee proposes to assume or to assign this Lease or
sublet the Property (or any portion thereof) to any Person which shall have
made a bona fide offer to accept an assignment of this Lease or a subletting
on terms acceptable to the Trustee, the Trustee shall give Landlord, and
lessors and mortgagees of Landlord of which Tenant has notice, written notice
setting forth the name and address of such person and the terms and
conditions of such offer, no later than twenty (20) days after receipt of
such offer, but in any event no later than ten (10) days prior to the date on
which the Trustee makes application to the bankruptcy court for authority and
approval to enter into such assumption and assignment or subletting.
Landlord shall have the prior right and option, to be exercised by written
notice to the Trustee given at any time prior to the effective date of such
proposed assignment or subletting, to receive and assignment of this Lease or
subletting of the Property to Landlord or Landlord's designee upon the same
terms and conditions and for the same consideration, if any, as the bona fide
offer made by such person, less any brokerage commissions which may be
payable out of the consideration to be paid by such person for the assignment
or subletting of this Lease.
(c) The Trustee shall have the right to assume Tenant's rights and
obligations under this Lease only if the Trustee: (a) promptly cures any
Event of Default then existing or provides adequate assurance that the
Trustee will promptly compensate Landlord for any actual pecuniary loss
incurred by Landlord as a result of Tenant's default under this Lease; and
(c) provides adequate assurance of future performance under this Lease.
Adequate assurance of future performance by the proposed assignee shall
include, as a minimum, that: (i) any proposed assignee of this Lease shall
provide to Landlord an audited financial statement, dated no later than six
(6) months prior to the effective date of such proposed assignment or
sublease, with no material change therein as of the effective date, which
financial statement shall show the proposed assignee to have a net worth
reasonably satisfactory to Landlord or, in the alternative, the proposed
assignee shall provide a guarantor of such proposed assignee's obligations
under this Lease, which guarantor shall provide an audited financial
statement meeting the requirements of (i) above and shall execute and deliver
to Landlord a guaranty agreement in form and substance acceptable to
Landlord; and (ii) any proposed assignee shall grant to Landlord a security
interest in favor of Landlord in all furniture, fixtures, and other personal
property to be used by such proposed assignee in the Property. All payments
required of Tenant under this Lease, whether or not expressly denominated as
such in this Lease, shall constitute rent for the purposes of Title 11 of the
Bankruptcy Code.
59
(d) The parties agree that for the purposes of the Bankruptcy code
relating to (a) the obligation of the Trustee to provide adequate assurance that
the Trustee will "promptly" cure defaults and compensate Landlord for actual
pecuniary loss, the word "promptly" shall mean that cure of defaults and
compensation will occur no later than sixty (60) days following the filing of
any motion or application to assume this Lease; and (b) the obligation of the
Trustee to compensate or to provide adequate assurance that the Trustee will
promptly compensate Landlord for "actual pecuniary loss." The term "actual
pecuniary loss" shall mean, in addition to any other provisions contained herein
relating to Landlord's damages upon default, obligations of Tenant to pay money
under this Lease and all attorneys' fees and related costs of Landlord incurred
in connection with any default of Tenant in connection with Tenant's
bankruptcy proceedings).
(e) Any person or entity to which this Lease is assigned pursuant
to the provisions of the Bankruptcy Code shall be deemed, without further act
or deed, to have assumed all of the obligations arising under this Lease and
each of the conditions and provisions hereof on and after the date of such
assignment. Any such assignee shall, upon the request of Landlord, forthwith
execute and deliver to Landlord an instrument, in form and substance
acceptable to Landlord, confirming such assumption.
23.7 MANAGEMENT AGREEMENT. Tenant shall not enter into any
management agreement that provides for the management and operation of the
entire Property by an unaffiliated third party without the prior written
consent of Landlord.
ARTICLE 24
OFFICER'S CERTIFICATES AND OTHER STATEMENTS
-------------------------------------------
24.1 OFFICER'S CERTIFICATES. At any time, and from time to time
upon Tenant's receipt of not less than ten (10) days' prior written request
by Landlord, Tenant will furnish to Landlord an Officer's Certificate
certifying that:
(a) 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);
(b) the dates to which the Rent has been paid;
(c) 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, specifying each such default of which
Tenant may have knowledge;
60
(d) 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
(e) responding to such other questions or statements of fact as
Landlord shall reasonably request.
Tenant's failure to deliver such Officer's Certificate within such
time shall constitute an acknowledgement 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
Officer's Certificate furnished pursuant to this Section 24.1 may be relied
upon by Landlord and any prospective lender or purchaser.
24.2 ENVIRONMENTAL STATEMENTS. Immediately upon Tenant's learning,
or having reasonable cause to believe, and except as set forth in the
Environmental Reports, that any Hazardous Material in a quantity sufficient
to require remediation or reporting under applicable law is located in, on or
under the Property or any adjacent property, Tenant shall notify Landlord in
writing of (a) the existence of any such Hazardous Material; (b) any
enforcement, cleanup, removal, or other governmental or regulatory action
instituted, completed or threatened; (c) any claim made or threatened by any
Person against Tenant or the Property relating to damage, contribution, cost
recovery, compensation, loss, or injury resulting from or claimed to result
from any Hazardous Material; and (d) 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 Property, including any complaints,
notices, warnings or asserted violations in connection therewith.
ARTICLE 25
LANDLORD MORTGAGES
------------------
25.1 LANDLORD MAY GRANT LIENS. Subject to Section 25.2, without
the consent of Tenant, Landlord may, from time to time, directly or
indirectly, create or otherwise cause to exist any Landlord's Encumbrance
upon the Property, or any portion thereof or interest therein, whether to
secure any borrowing or other means of financing or refinancing. 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 Property and to all renewals, modifications,
consolidations, replacements and
61
extensions of any such lease, mortgage, trust deed or like encumbrance. This
clause shall be self-operative and no further instrument of subordination
shall be required by any ground or underlying lessor or by any mortgagee or
beneficiary, affecting any lease or the Property. In confirmation of such
subordination, Tenant shall execute promptly any certificate that Landlord
may request for such purposes.
25.2 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.
25.3 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, 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.
ARTICLE 26
SALE OF FEE INTEREST
--------------------
26.1 RIGHT OF FIRST OFFER TO PURCHASE. If Landlord intends to sell
the Property during the Lease Term, and provided no Event of Default then
exists, Tenant shall have a right of first offer to purchase the Property
("Tenant's Right of First Offer to Purchase") on the terms and conditions at
which Landlord proposes to sell the Property to a third party. Landlord
shall give Tenant written notice of its intent to sell and shall indicate the
terms and conditions (including the sale price) upon which Landlord intends
to sell the Property to a third party. Tenant shall thereafter have sixty
(60) days to elect in writing to purchase the Property and execute a Purchase
and Sale Agreement with respect thereto and shall have an additional fifty
(50) days to close on the acquisition of the Property on the terms and
conditions set forth in the notice provided by Landlord to Tenant; provided
that prior to the execution of a binding purchase and sale agreement,
Landlord shall retain the right to elect not to sell the Property. If Tenant
does not elect to purchase the Property, then Landlord shall be free to sell
the Property to a third party. However, if the price at which Landlord
intends to sell the Property to a third party is less than 95% of the price
set forth in the notice provided by Landlord to Tenant, then Landlord shall
again offer Tenant the
62
right to acquire the Property upon the same terms and conditions, provided
that Tenant shall have only thirty (30) days thereafter to complete the
acquisition at such price, terms and conditions.
26.2 CONVEYANCE BY LANDLORD. If Landlord shall convey the 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 Property
of all liabilities and obligations of the Lease 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 Property. All
such future liabilities and obligations shall thereupon be binding upon the
new owner.
ARTICLE 27
ARBITRATION
-----------
27.1 ARBITRATION. In each case specified in this Lease in which it
shall become necessary to resort to arbitration, such arbitration shall be
determined as provided in this Section 27.1. The party desiring such
arbitration shall give notice to that effect to the other party, and an
arbitrator shall be selected by mutual agreement of the parties, or if they
cannot agree within thirty (30) days of such notice, by appointment made by
the American Arbitration Association ("AAA") from among the members of its
panels who are qualified and who have experience in resolving matters of a
nature similar to the matter to be resolved by arbitration.
27.2 ARBITRATION PROCEDURES. In any arbitration commenced pursuant
to Section 27.1 a single arbitrator shall be designated and shall resolve the
dispute. The arbitrator's decision shall be binding on all parties and shall
not be subject to further review or appeal except as otherwise allowed by
applicable law. Upon the failure of either party (the "non-complying party")
to comply with his decision, the arbitrator shall be empowered, at the
request of the other party, to order such compliance by the non-complying
party and to supervise or arrange for the supervision of the non-complying
party. To the maximum extent practicable, the arbitrator and the parties,
and the AAA if applicable, shall take any action necessary to insure that the
arbitration shall be concluded within ninety (90) days of the filing of such
dispute. The fees and expenses of the arbitrator shall be shared equally by
Landlord and Tenant. Unless otherwise agreed in writing by the parties or
required by the arbitrator or AAA, if applicable, arbitration proceedings
hereunder shall be conducted in the State. Notwithstanding formal rules of
evidence, each party may submit such evidence as each party deems appropriate
to support its position and the arbitrator shall have access to and right to
examine all books
63
and records of Landlord and Tenant regarding the Property during the
arbitration.
ARTICLE 28
MISCELLANEOUS
-------------
28.1 TRANSFER OF INVENTORY. On the Commencement Date, Landlord
shall transfer to Tenant all Inventory (as defined in the Agreement) acquired
by Landlord pursuant to the Agreement and any income received by Landlord
pursuant to Section 6.6 of the Agreement.
28.2 LANDLORD'S RIGHT TO INSPECT. Tenant shall permit Landlord and
its authorized representatives to inspect the 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
Property, or imposed by law or applicable regulations. 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
28.2.
28.3 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. In no event shall any breach by Landlord permit
Tenant to terminate this Lease or permit Tenant to offset any Rent due and
owing hereunder or otherwise excuse Tenant from any of its obligations
hereunder.
28.4 COMPETITION BETWEEN LANDLORD AND TENANT. Landlord and Tenant
agree that neither party shall be restricted as to other relationships and
competition. Affiliates of Tenant shall be allowed to own, lease and/or
manage other golf courses that are not affiliated with Landlord, provided
that such other ownership, leasing or management arrangements are disclosed
to Landlord in writing. Landlord may acquire or own golf courses that may be
geographically proximate to one or more golf courses that Tenant or
Affiliates of Tenant may own, manage or lease.
64
28.5 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.
28.6 REMEDIES CUMULATIVE. To the extent permitted by law, each
legal, equitable or contractual rights, 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 simultaneous or subsequent exercise by
Landlord or Tenant of any or all of such other rights, powers and remedies.
28.7 ACCEPTANCE OF SURRENDER. No surrender to Landlord of this
Lease or of the 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.
28.8 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 Property.
28.9 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 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 any Landlord's Encumbrances.
28.10 NOTICES. All notices, demands, requests, consents,
approvals and other communications hereunder shall be in writing and
delivered or mailed (by registered or certified mail, return receipt
requested and postage prepaid), addressed to the respective parties, as set
forth below:
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If to Landlord: Golf Trust of America, L.P.
14 North Adger's Wharf
Charleston, South Carolina 29401
Attention: W. Bradley Blair, II
Scott D. Peters
If to Tenant: Emerald Dunes--Polo Trace, Inc.
2100 Emerald Dunes Drive
West Palm Beach, Florida 33411
Attn: Raymon R. Finch, III
28.11 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.
28.12 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.
28.13 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.
28.14 AMENDMENTS TO LEASE. Neither this Lease nor any
provision hereof may be changed, waived, discharged or terminated except by
an instrument in writing and in recordable form signed by Landlord and Tenant.
28.15 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 sublessees shall be subject to the terms
and provisions of this Lease.
28.16 TITLES. The headings in this Lease are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
28.17 GOVERNING LAW. This Lease shall be governed by and
construed in accordance with the laws of the State (but not including its
conflict of laws rules).
28.18 MEMORANDUM OF LEASE. Landlord and Tenant shall, promptly
upon the request of either, 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
66
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.
28.19 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.
28.20 NO THIRD PARTY BENEFICIARIES. Nothing in this Lease,
express or implied, is intended to confer any rights or remedies under or by
reason of this Lease on any Person other than the parties to this Lease and
their respective permitted successors and assigns, nor is anything in this Lease
intended to relieve or discharge any obligation of any third Person to any party
hereto or give any third Person any right of subrogation or action against any
party to this Lease.
28.21 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 Property 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 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 or 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.
28.22 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
Property or any of the Other Leased Properties or otherwise in the conduct of
their respective businesses.
28.23 RELETTING. If Tenant does not exercise its option to extend
or further extend the Term under Section 3.2 or if an Event of Default occurs,
then Landlord shall have the right during the remainder of the Term then in
effect to advertise the availability of the Property for sale or reletting and
to show the Property to prospective purchasers or tenants or their agents at
such reasonable times as Landlord may elect.
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LANDLORD: GOLF TRUST OF AMERICA, L.P.,
a Delaware limited partnership
By: GTA GP, Inc., a Maryland corporation
Its: General Partner
By: ________________________
Name:
Its:
TENANT: EMERALD DUNES--POLO TRACE, INC.,
a Florida corporation
By: _________________________
Its: ________________________
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
-----------------------------
EXHIBIT B
DESCRIPTION OF IMPROVEMENTS
---------------------------
The golf course, driving range, putting green, clubhouse facilities, snack
bar, restaurant, pro shop, buildings, structures, parkinglots, improvements,
fixtures and other items of real estate as located on the Land including
without limitation the following:
1. Clubhouse
2. Enclosed bulidings with golf maintenance facilities
3. Outhouses
EXHIBIT C
OTHER LEASED PROPERTIES
-----------------------
(i) Emerald Dunes Country Club
EXHIBIT D
PLEDGE AGREEMENT
----------------
To be agreed upon.
EXHIBIT E
---------
Intentionally Omitted
EXHIBIT F
SCHEDULE OF CAPITAL IMPROVEMENTS
--------------------------------
See Attached.
EXHIBIT G
GOLF PERCENTAGE RENT SCHEDULE
-----------------------------
----------------------------------------------------------
----------------------------------------------------------
Fiscal Year (1) Percentage Multiplier
----------------------------------------------------------
----------------------------------------------------------
1 33%
----------------------------------------------------------
2 34%
----------------------------------------------------------
3 35%
----------------------------------------------------------
4 36%
----------------------------------------------------------
5 37%
----------------------------------------------------------
6 38%
----------------------------------------------------------
7 39%
----------------------------------------------------------
8 40%
----------------------------------------------------------
9 41%
----------------------------------------------------------
10 42%
----------------------------------------------------------
Extension 45%
Terms
----------------------------------------------------------
----------------------------------------------------------
_______________________________
(1) The first Fiscal Year shall begin on the first day of the first Fiscal
Quarter following the Commencement Date.
G-1
EXHIBIT H
QUARTERLY ALLOCATIONS OF FOOD AND BEVERAGE REVENUE, MERCHANDISE REVENUE AND
GROSS GOLF REVENUE
Food Merchandise Gross
and Golf
BEVERAGE
------------- ------------ -------------
January 1 - March 31 $ $ $
April 1 - June 30 $ $ $
July 1 - September 30 $ $ $
October 1 - December 31 $ $ $
$ $ $
H-1