EXHIBIT 10.64
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GROUND LEASE AGREEMENT
by and between
WOLF MOUNTAIN RESORTS, L.C.
("Landlord")
and
ASC UTAH
("Tenant")
dated as of
July 3, 1997
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TABLE OF CONTENTS
Page
RECITALS.......................................................................1
AGREEMENT......................................................................1
ARTICLE I......................................................................1
1.01 Premises.........................................................1
1.02 Lease Attributes.................................................1
ARTICLE II.....................................................................2
2.01 Initial Term.....................................................2
2.02 Extended Term....................................................2
2.03 Grace Period.....................................................2
ARTICLE III....................................................................2
3.01 Rent.............................................................2
3.02 Rent to be Net to Landlord.......................................5
ARTICLE IV.....................................................................5
4.01 Taxes and Utility Expenses.......................................5
ARTICLE V......................................................................7
ARTICLE VI.....................................................................7
6.01 Improvements.....................................................7
6.02 Improvement Conditions...........................................7
6.03 Maintenance......................................................8
6.04 Demolition.......................................................8
6.05 Improvement Ownership............................................8
6.06 Disposition at Lease Termination.................................8
ARTICLE VII....................................................................8
7.01 Requirements of Public Authority.................................8
ARTICLE VIII...................................................................9
ARTICLE IX....................................................................10
ARTICLE X.....................................................................10
10.01 Subletting.....................................................10
10.02 Assignment.....................................................10
ARTICLE XI....................................................................10
ARTICLE XII...................................................................11
12.01 Liability Insurance............................................11
12.02 Property Insurance.............................................11
12.03 Blanket Policy.................................................11
12.04 Waiver of Subrogation..........................................12
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TABLE OF CONTENTS
(Cont'd)
Page
12.05 Adjustment.....................................................12
ARTICLE XIII..................................................................12
13.01 Casualty.......................................................12
13.02 Demolition.....................................................12
13.03 No Abatement...................................................12
ARTICLE XIV...................................................................13
14.01 Condemnation...................................................13
14.02 Prosecuting Takings Claims.....................................13
ARTICLE XV....................................................................14
ARTICLE XVI...................................................................14
16.01 Mortgage.......................................................14
16.02 Further Agreement..............................................16
ARTICLE XVII..................................................................17
17.01 Quiet Enjoyment................................................17
17.02 Representations, Warranties and Covenants......................17
17.03 Remedies.......................................................20
17.04 General Provisions.............................................20
ARTICLE XVIII.................................................................20
18.01 Defaults.......................................................20
18.02 Cure...........................................................21
18.03 Remedies.......................................................22
ARTICLE XIX...................................................................22
ARTICLE XX....................................................................23
ARTICLE XXI...................................................................23
ARTICLE XXII..................................................................23
ARTICLE XXIII.................................................................24
ARTICLE XXIV..................................................................24
ARTICLE XXV...................................................................25
25.01 Grant of Option................................................25
25.02 Option Payments................................................25
25.03 Mandatory Exercise of Option...................................27
25.04 Option Price...................................................27
25.05 Option Price Payment...........................................27
25.06 Owned Property.................................................27
25.07 Development Commitment.........................................28
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TABLE OF CONTENTS
(Cont'd)
Page
25.08 Closing........................................................28
25.09 Restrictions Against Encumbrance...............................28
ARTICLE XXVI..................................................................28
26.01 Governing Law..................................................28
26.02 Partial Invalidity.............................................28
26.03 Short Form Lease...............................................28
26.04 Interpretations................................................29
26.05 entire Agreement...............................................29
26.06 Parties........................................................29
26.07 Restriction on use of Landlord's Adjacent Land.................29
GUARANTY COMMITMENT...........................................................31
SCHEDULE A....................................................................32
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This Ground Lease Agreement is made and entered into by and between Wolf
Mountain Resorts, L.C., a limited liability company organized under the law of
the State of Utah with a principal place of business in Summit County, Utah
("Landlord"), and ASC Utah, a corporation organized and existing under the laws
of the State of Maine with its principal place of business at Bethel, Maine
("Tenant").
RECITALS
1. Landlord owns and leases certain land and other interests in real
property located in Summit and Salt Lake Counties, Utah more particularly
described in Article I of this Lease known generally as the Wolf Mountain Ski
Resort.
2. Contemporaneously herewith, Landlord is selling all of Seller's assets
constituting the Wolf Mountain Ski Resort, except the property leased or
subleased hereunder, to Tenant pursuant to a Purchase and Sale Agreement dated
of even date herewith ("Purchase and Sale Agreement").
3. Landlord desires to maintain its fee or leasehold interests in the
leased premises described in Article I and lease the same to Tenant on a ground
lease basis.
4. Landlord and Tenant desire to provide a mechanism whereby Landlord
could sell to Tenant and Tenant could purchase from Landlord its fee interest in
certain parcels within the leased premises for development by Tenant as more
particularly described in Article XXV hereof.
AGREEMENT
NOW, THEREFORE, it is mutually agreed by and between the parties hereto as
follows:
ARTICLE I
PREMISES
1.01 Premises. Landlord hereby leases and lets to Tenant, and Tenant
hereby takes and hires from Landlord, upon and subject to the terms, conditions,
covenants and provisions hereof, all of the tracts, pieces and parcels of land,
situated in Summit County, Utah, more particularly described in Schedule A
annexed hereto and made a part hereof, together with any and all appurtenances,
rights, privileges and easements benefiting, belonging or pertaining thereto
(all of the foregoing hereinafter sometimes referred to as the "demised
premises", "leased premises" or the "premises").
1.02 Lease Attributes. The leased premises consists of two different types
of property interests, land owned in fee by Landlord ("Fee Land") and land
leased by Landlord ("Leased Land"). The Fee Land and Leased Land are separately
identified in Schedule A as such. This lease shall constitute a direct lease of
all Fee Land and a sublease of all Leased Land, subject to the terms and
conditions of the prime leases.
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ARTICLE II
TERM
2.01 Initial Term. The initial term of this Lease shall commence on the
date hereof (hereinafter referred to as the "Commencement Date") and shall
continue for a period of Fifty (50) years.
2.02 Extended Term. Tenant may by right extend the term of this Lease on
the same terms and conditions as provided herein for up to three (3) additional
periods of fifty (50) years each by sending Landlord written notice of the
exercise of each extension right not less than 12 months prior to expiration of
the then current term, together with a payment of an extension fee of One
Million Dollars ($1,000,000) for each 50-year extension right exercised. Upon
such receipt of the written notice and payment of the fee, the Lease term shall
be automatically extended.
2.03 Grace Period. In the event Tenant fails to exercise an extension
option pursuant to Section 2.02, Tenant shall not be deemed to have lost its
right to exercise such option until thirty (30) days following written notice
thereof from Landlord, during which period Tenant shall retain its right to
exercise such extension option in accordance with Section 2.02 above. If no such
notice shall have been given by Landlord prior to the expiration of the initial
term or any extended term of this Lease (other than an expiration by virtue of
the exercise by Landlord of its remedies pursuant to Article XVIII below), this
Lease shall not terminate, but rather shall become a tenancy at will on the same
terms and conditions set forth herein, subject to termination by Landlord after
expiration of such thirty (30) days written notice to Tenant.
ARTICLE III
RENT
3.01 Rent. Tenant covenants and agrees to pay Landlord, for the demised
premises, rent at the following rates and times:
(a) Tenant shall pay to Landlord the sum of four percent (4%) of
Gross S&L Revenues, as hereinafter defined. Said sums shall be payable on
or before September 15 of each year during the term of this Lease and
shall be determined with reference to the Gross S&L Revenues actually
received by Tenant for its preceding 12-month fiscal year ended July 31.
Rent shall be prorated for any partial year included in the term.
(b) The payment by Tenant to Landlord shall be accompanied by a
statement of Tenant's Chief Financial Officer setting forth the Gross S&L
Revenues actually received by Tenant for the period involved and the
method of computing the amount, if any, simultaneously being paid by
Tenant to Landlord in such detail as Landlord and Tenant shall from time
to time reasonably agree. The term "Gross S&L Revenues" shall mean any and
all revenues determined in accordance with generally accepted accounting
principles attributable to the use or ownership of the leased premises and
any additional property owned by the Tenant, or its successors or assigns
or any affiliates of any such parties, now or at any time in the future
used and operated on an integrated basis as a part
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of what is now known as the Wolf Mountain Ski Resort or any successor
thereto (including without limitation, any of the land included in Section
25.06 below and any of the property designated on the Parcel Maps as [UPC
Mines, Lehmer, BLM, Sun Peak, ▇. ▇▇▇▇▇▇▇▇, UWSP and Hi Ute Ranch]), or
from any buildings, lodges, restaurants, sports facilities, condominium
units, lifts or other structures located thereon, including without
limitation, any sales, charges, dues, rentals, concessions, fees, or other
revenues relating thereto, excluding only:
(i) sales or excise taxes; and
(ii) proceeds of sales of real property interests, with the term
"sales" to include any lease of real estate for a term
exceeding ten (10) years, that are conveyed to Tenant pursuant
to Article XXV below.
Gross S&L Revenues includes such revenues generated through
operations of any business enterprises or person affiliated with Tenant.
Affiliated parties shall mean any persons or business organizations that
control, are controlled by, or are under common control with the Tenant,
whether directly or indirectly through one or more intermediaries. Control
shall mean the ability to control the management or operations of the
person or organization whether through voting or capital interests or
through any management contracts or other arrangements that provide for
effective control. Gross S&L Revenues shall include any revenues or the
value of any other consideration that are diverted from what is now known
as the Wolf Mountain Ski Resort operations to some other location or
source within the Tenant's or any affiliated party's organization through
establishing a contract, agreement or other business arrangement at what
is now known as the Wolf Mountain Ski Resort that is less favorable than
would be established on an independent arm's length basis.
(c) Tenant shall pay the following additional rent based upon the
volume of paid skier visits achieved at the demised premises. Beginning
with the 1997-98 ski season, a one-time rent payment shall be made within
45 days following the close of any fiscal year of Tenant in which the ski
resort of which the demised premises are included achieves, for the first
time, the paid skier visit volumes set forth below. Each such payment
shall be accompanied by a statement of Tenant's Chief Financial Officer
setting forth the skier visits during such period in accordance with the
terms of this subsection in such detail as Landlord and Tenant shall from
time to time reasonably agree. Paid skier visits shall be determined by
Tenant using the same methodology employed by American Skiing Company and
its affiliated parties at all of their ski resorts, which shall be
consistent in all material respects with the methodologies employed
generally within the industry.
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Skier Visits One-Time Rent Payment
------------ ---------------------
100,000 $ 250,000
200,000 $ 500,000
300,000 $ 750,000
400,000 $1,000,000
500,000 $2,000,000
600,000 $3,000,000
700,000 $2,000,000
800,000 $2,000,000
900,000 $2,000,000
1,000,000 $2,000,000
The following example is provided for illustrative purposes:
If 1997 - 1998 skier visits equal 300,000, Tenant shall pay $250,000 and
$500,000 and $750,000 (for a total of $1,500,000) to Landlord prior to September
15, 1998. If 1998 - 1999 skier visits equal 400,000 skier visits, Tenant shall
pay $1,000,000 to Landlord on or before September 15, 1999.
d) It is expressly understood and agreed that nothing in this Lease
contained shall be deemed or construed to grant or otherwise provide
Landlord with any authority over, or other rights to control or direct,
the operation of the resort at the demised premises.
e) All rent hereunder shall be paid either at the address of
Landlord set forth below with regard to notices, or at such other places
of which Landlord shall have given Tenant written notice at least thirty
(30) days in advance, or in the case of Section 25.02, as therein
provided.
f) As hereinafter used the term "rent" shall be deemed for reference
purposes to include all rent covered by this Article III, the Additional
Rent described in Article IV, if any, payable by Tenant to Landlord
hereunder and all Option Payments described in Section 25.02 below.
g) Tenant shall prepare and retain true and accurate books of
account and records, relating to the demised premises conforming to
generally accepted accounting principals consistently applied to the
extent applicable, including but not limited to, Gross S&L Revenues and a
record of skier visits sufficient to comply with the foregoing
requirements of this Article III.
h) Landlord shall have the right, at any time, upon reasonable
advance notice (and not more often than once per quarter) to audit or
inspect all of Tenant's books and records relating to Gross S&L Revenues,
skier visits and any of the other obligations of Tenant under this Lease,
which shall be maintained and made available at Tenant's offices in Summit
County, Utah. Tenant shall make all such books and records available for
such examination. Landlord's right to conduct an audit or inspection
includes the
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right to do whatever is reasonably necessary to complete the audit or
inspection. If the audit or inspection reveals an underpayment of rent,
Tenant shall pay the amount of same, together with interest on such amount
at 18% from the date due until paid. If Landlord conducts an audit or
inspection and the audit or inspection reveals an understatement of Gross
S&L Revenues or skier visits for a particular calendar year by more than
five percent (5%), Tenant shall pay all reasonable costs of the audit or
inspection. If the audit or inspection reveals an overpayment of
percentage rent, Landlord shall refund same, plus interest at the rate
specified above. Any audits and inspections may be made by Landlord's
employees or by any certified public accountant selected by Landlord.
3.02 Rent to be Net to Landlord. It is the intention of the parties that
the rent payable by Tenant to Landlord pursuant to this Article III shall be net
to Landlord so that this Lease shall yield to Landlord the net annual rent
specified in Article III herein during the term of this Lease, and that all
costs, expenses and obligations of every kind and nature whatsoever relating to
the demised premises shall be paid by Tenant, except as otherwise expressly
provided herein. Without limiting the generality of the foregoing, Landlord and
Tenant hereby agree that Tenant shall be responsible for paying and shall pay
all of the payments due under the leases covering the portion of the land
described as the Leased Land in Schedule A attached hereto, including any
modifications or amendments thereto with Tenant's prior consent. Except as
specifically provided herein, in no event shall Tenant be entitled to any
abatement, reduction, set off, counterclaim, defense or reduction with respect
to the payment of any rent hereunder.
ARTICLE IV
ADDITIONAL RENT
4.01 Taxes and Utility Expenses.
(a) (1) Tenant shall, during the term of this Lease, as additional
rent, pay and discharge punctually, as and when the same shall become due
and payable, all taxes, special and general assessments, water rents,
rates and charges, sewer rents and other governmental impositions and
charges of every kind and nature whatsoever, extraordinary as well as
ordinary, (hereinafter referred to as "Taxes"), and each and every
installment thereof which shall or may during the term of this Lease be
charged, levied, laid, assessed imposed, become due and payable, or a lien
upon, or for, or with respect to, the demised premises or any part
thereof, or any buildings, appurtenances or equipment owned by Tenant
thereon or therein or any part thereof, together with all interest and
penalties thereon, under or by virtue of all present or future laws,
ordinances, requirements, orders, directives, rules or regulations of the
federal, sate, county and municipal governments and of all other
governmental authorities whatsoever (all of which shall also be included
in the term "Taxes" as heretofore defined); and all sewer rents and
charges for water, steam, gas, heat, hot water, electricity, light and
power, and other services or services furnished to the demised premises or
the occupants thereof during the term of this Lease (hereinafter referred
to as "Utility Expenses").
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(2) To the extent that the same may be permitted by law,
Tenant or its designees shall have the right to apply for the conversion
of any assessment for local improvements assessed during the term of this
Lease in order to cause the same to be payable in annual installment, and
upon such conversion, Tenant shall pay and discharge punctually said
installments as they shall become due and payable during the term of this
Lease. Landlord agrees to permit the application for the foregoing
conversion to be filed in Landlord's name, if necessary, and shall execute
any and all documents requested by Tenant to accomplish the foregoing
result.
(3) Tenant shall be deemed to have complied with the covenants
of this paragraph (a) if payment of such Taxes shall have been made either
within any period allowed by law or by the governmental authority imposing
the same during which payment is permitted without penalty or interest or
before the same shall become a lien upon the demised premises, and Tenant
shall produce and exhibit to Landlord satisfactory evidence of such
payment, if Landlord shall demand the same in writing.
(b) All such Taxes, including assessments which have been converted
into installments as set forth in the preceding paragraph (a), which shall
become payable during each of the calendar or fiscal tax years, as the
case may be, in which the term of this Lease commences or terminates,
shall be apportioned pro rata between Landlord and Tenant in accordance
with the respective portions of such year during which such term shall be
in effect.
(c) (1) Tenant or its designee shall have the right to contest or
review all such Taxes by legal proceedings, or in such other manner as it
may deem suitable (which, if instituted, Tenant or its designees shall
conduct promptly at its own cost and expense, and, if necessary, in the
name of Landlord with the cooperation of Landlord and Landlord shall
execute all documents reasonable necessary to accomplish the foregoing).
Notwithstanding the foregoing, Tenant shall promptly pay all such taxes if
at any time the demised premises or any part thereof shall then be
immediately subject to forfeiture, or if Landlord shall be subject to any
criminal liability arising out of the nonpayment thereof.
(2) The legal proceedings referred to in the preceding
subparagraph (1) shall include appropriate certiorari proceedings, and
appeals from orders therein and appeals from any judgments, decrees, or
orders. In the event of any reduction, cancellation or discharge, Tenant
shall pay the amount finally levied or assessed against the demised
premises or adjudicated to be due and payable on any such contested Taxes.
(d) Landlord covenants and agrees that if there shall be any refunds
or rebates on account of the Taxes paid by Tenant under the provisions of
this Lease, such refund or rebate shall belong to Tenant. Any refunds
received by Landlord shall be deemed trust funds and as such are to be
received by Landlord in trust and paid to Tenant forthwith. Landlord will,
upon the written request of Tenant, sign any receipts which may be
necessary to secure the payment of any such refund or rebate, and will pay
over to Tenant such refund or rebate as received by Landlord. Landlord
further covenants and agrees on
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request of Tenant at any time, and from time to time, but without cost to
Landlord, to make application individually (if legally required) or to
join in Tenant's application (if legally required) for separate tax
assessments for such portions of the demised premises as Tenant shall at
any time, and from time to time, designate. Landlord hereby agrees upon
reasonable request of Tenant to execute such instruments and to give
Tenant such assistance in connection with such applications as shall be
required by Tenant.
(e) Nothing herein or in this Lease otherwise contained shall
require or be construed to require Tenant to pay any sales, rent,
inheritance, estate, succession, transfer, gift, franchise, income or
profit taxes, by whatever name the same may be called, that are or may be
imposed upon Landlord, its successor or assigns.
ARTICLE V
USE
The demised premises may be used for any lawful purpose consistent with
existing covenants, conditions and restrictions of record applicable to the
premises. The premises shall not be used for commercial timbering operations
except in connection with development and construction of ski terrain and other
improvements at the premises.
ARTICLE VI
MAINTENANCE, REPAIRS AND IMPROVEMENTS
6.01 Improvements. Subject to the provisions of Section 6.02 below, Tenant
shall have the right, at its own cost and expense, to construct on the demised
premises such buildings, improvements and other facilities as Tenant may desire
and determine appropriate in connection with its operations at the premises.
6.02 Improvement Conditions. The rights of Tenant set forth in Section
6.01 are subject to the following conditions:
(a) The premises being zoned by Summit County so as to permit the
construction and operation of the improvements contemplated by Tenant.
(b) Adequate utilities (including sewer, water and necessary energy
utilities) being located on the premises or in property immediately
adjoining the premises and being available for use on the premises.
(c) There being no covenant or restriction affecting the property or
any restriction under any state, county, or local laws or ordinances,
which would prohibit the improvements and the use of the premises
contemplated thereby.
(d) There being no easement, covenant or restriction on the portion
of the premises to be improved which, in the opinion of Tenant, would
adversely affect the construction or operation thereon of the
improvements.
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(e) The receipt of all necessary permits, licenses and approvals of
the appropriate governmental authorities for the construction and
operation of the contemplated improvements in a manner and location, and
under such conditions, as are acceptable to Tenant in its sole judgment.
6.03 Maintenance. Tenant alone shall be responsible for maintaining and
shall maintain, the buildings and improvements currently located on, or at any
time erected on, the demised premises in good condition comparable to conditions
maintained at other American Skiing Company ("ASC") resorts. Landlord shall not
be required to furnish any services or facilities or to make any improvements,
repairs or alterations in or to the demised premises during the term of this
Lease.
6.04 Demolition. Tenant may, at its option and at its own cost and
expense, at any time and from time to time, make such alterations, changes,
replacements, improvements and additions in and to the buildings and
improvements currently located on the demised premises, subject to the
conditions specified in Section 6.02, as it may deem desirable, including the
removal or demolition of any building(s) and improvement(s) and/or structure(s)
that now or hereafter may be situated or erected on the demised premises.
6.05 Improvement Ownership. Until the expiration or sooner termination of
this Lease (subject, however, to the rights of the holder of any leasehold
Mortgagee(s) to obtain a new lease as set forth in Section 16 hereof), title to
any building or buildings or improvements situate or erected on the demised
premises and the building equipment and other items installed thereon and any
alterations, changes or additions thereto shall remain solely in Tenant; and
Tenant alone shall be entitled to deduct all depreciation on Tenant's income tax
returns for any such building or buildings, building equipment and/or other
items, improvements, additions, changes or alterations.
6.06 Disposition at Lease Termination. On the last day or sooner
termination of the term of this Lease, Tenant shall quit and surrender to
Landlord the demised premise, and any buildings and permanent improvements then
located thereon, provided, however, that notwithstanding anything in this Lease
to the contrary, Tenant shall have the right, but not the obligation, at the end
of the term, to remove any buildings or other improvements made, constructed or
installed by Tenant upon the premises, provided that such removal shall be
accomplished within sixty (60) days following the end of the term.
ARTICLE VII
GOVERNMENTAL REQUIREMENTS
7.01 Requirements of Public Authority.
(a) During the term of this Lease, Tenant shall, at its own cost and
expense, promptly observe and comply with all present and future laws,
ordinances, requirements, orders, directives, rules and regulations of the
federal, state, county, municipal governments and of all other
governmental authorities affecting the demised premises or appurtenances
thereto or any part thereof whether the same are in force at the
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commencement of the term of this Lease or may in the future be passed,
enacted or directed.
(b) Tenant shall have the right to contest by appropriate legal
proceedings diligently conducted in good faith, in the name of the Tenant,
or Landlord (if legally required), or both (if legally required), without
cost or expense to Landlord, the validity or application of any law,
ordinance, rule, regulation or requirement of the nature referred to in
paragraph (a) of this Section and, if by the terms of any such law,
ordinance, order, rule, regulation or requirement, compliance therewith
may legally be delayed pending the prosecution of any such proceeding,
Tenant may delay such compliance therewith until the final determination
of such proceeding.
(c) Landlord agrees to execute and deliver any appropriate papers or
other instruments which may be necessary or proper to permit Tenant so to
contest the validity or application of any such law, ordinance, order,
rule, regulation or requirement and to fully cooperate with Tenant in such
contest.
ARTICLE VIII
COVENANT AGAINST LIENS
If, because of any act or omission of Tenant, any mechanic's lien shall be
filed against Landlord or any portion of the demised premises, Tenant shall, at
its own cost and expense, cause the same to be discharged of record or bonded
within one hundred twenty (120) days (or such earlier date as may be necessary
to prevent the claimant hereunder from exercising its rights thereunder) after
written notice from Landlord to Tenant, of the filing thereof; and Tenant shall
indemnify and save harmless Landlord against and from all costs, liabilities,
suits, penalties, claims and demands resulting therefrom.
Nothing contained herein shall constitute any consent or request by
Landlord, express or implied, to or for the performance of any labor or services
or the furnishing of any materials or other property in respect of the premises,
nor as giving Tenant any right, power or authority to contract for or permit the
performance of any labor or services or the furnishing of any materials or other
property in such fashion as would permit the making of any claim against
Landlord in respect thereof. NOTICE IS HEREBY GIVEN THAT LANDLORD WILL NOT,
UNDER ANY CIRCUMSTANCES, BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS
FURNISHED TO TENANT OR TO ANYONE HAVING AN INTEREST IN THE PREMISES OR ANY PART
THEREOF THROUGH OR UNDER TENANT, AND NO MECHANIC'S OR OTHER LIEN FOR ANY SUCH
LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE REVERSIONARY OR OTHER
INTEREST OF LANDLORD IN AND TO THE PREMISES, OR IN AND TO ANY ALTERATIONS,
ADDITIONS OR IMPROVEMENTS TO BE MADE OR ERECTED THEREON.
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ARTICLE IX
ACCESS TO PREMISES
Landlord shall have the right to enter upon the demised premises at all
reasonable times to examine the same provided such entry shall not interfere
with the business then being conducted on the demised premises.
ARTICLE X
ASSIGNMENT AND SUBLETTING
10.01 Subletting. Tenant shall be entitled to sublease any portion of the
premises to an affiliated party or to anyone else for a period of ten (10) years
or less without the consent or approval of Landlord. Any sublease in excess of
ten (10) years to a party not affiliated with Tenant shall require the prior
written consent of Landlord, not to be unreasonably withheld or delayed. Tenant
and Holdings shall remain fully liable to perform their respective obligations
under this Lease and the related Guaranty with respect to any subleased portion
of the premises.
10.02 Assignment. Tenant shall not assign all or any portion of the Lease
without obtaining the prior written consent of Landlord to any such assignment,
which consent Landlord may not unreasonably withhold or delay. Notwithstanding
the foregoing, Tenant shall not be prohibited from assigning all or any portion
of its interest hereunder to any entity affiliated with Tenant. Except as
provided below, Tenant and Holdings shall remain fully liable to perform their
respective obligations under this Lease and the related Guaranty,
notwithstanding any assignment permitted hereunder.
A sale of all or substantially all Tenant's assets, or a transfer of
record or beneficial ownership of more than 50% of the voting stock of Tenant to
a party unaffiliated with Tenant, whether by merger, consolidation, or other
reorganization, shall constitute an "assignment" for purposes of this Section
10.02. In such event, Landlord may not unreasonably withhold or delay its
consent provided that the proposed successor or assign of Tenant shall be a
person or business organization with financial condition and operating
capability and expense reasonably adequate to operate the premises in a manner
consistent with other comparably sized ski resorts throughout the United States.
ARTICLE XI
INDEMNITY
Tenant shall indemnify and save harmless Landlord from and against any and
all liability, damage, penalties or judgments arising from injury to person or
property sustained by anyone in and about the demised premises resulting from
any act or acts or omission or omissions of Tenant, or Tenant's officers,
agents, servants, employees or contractors. Tenant shall, at its own cost and
expense, defend any and all suits or actions which may be brought against
Landlord or in which Landlord may be impleaded with others upon any such
above-mentioned matter, claim or claims, except as may result from the
Landlord's gross negligence or the gross negligence of its officers, agents,
servants, employees or contractors. Excepting such acts, Landlord shall not be
responsible or liable for any damage or injury to any property, fixtures,
buildings or other
10
improvements, or to any person or persons, at any time on the demised premises,
including any damage or injury to Tenant or to any of Tenant's officers, agents,
servants, employees, contractors, customers or sublessees.
ARTICLE XII
INSURANCE
12.01 Liability Insurance. Tenant shall provide at its expense, and keep
in force during the term of this Lease, general liability insurance in a good
and solvent insurance company or companies licensed to do business in the State
of Utah, selected by Tenant, and reasonably satisfactory to Landlord, or through
a self insurance program approved by all necessary governmental authorities, in
the amount of at least Ten Million Dollars ($10,000,000) with respect to injury
to or death of any one person and Five Million Dollars ($5,000,000) with respect
to injury to or death of more than one person in any one accident or other
occurrence, and One Million Dollars ($1,000,000) with respect to damages to
property. Such policy, policies or programs shall include Landlord as an
additional insured. Tenant agrees to deliver certificates of such insurance to
Landlord at the beginning of the term of this Lease and thereafter not less than
ten (10) days prior to the expiration of any such policy. Such insurance shall
be noncancellable without ten (10) days' written notice to Landlord.
12.02 Property Insurance. During the term of this Lease, Tenant shall keep
all buildings and improvements presently at the premises or hereafter erected by
Tenant on the demised premises at any time insured for the benefit of Landlord
and Tenant and the holder of any leasehold mortgage permitted pursuant to
Section 16 hereof, as their respective interests may appear, against loss or
damage by fire, and those casualties covered by the customary extended coverage
endorsements, in a minimum amount necessary to avoid the effect of coinsurance
provisions of the applicable policies. All proceeds payable at any time and from
time to time by any insurance company under such policies shall be payable to
such leasehold mortgagee, if any, or, if none, to Tenant. Any proceeds paid to
Tenant shall be retained by Tenant and Landlord shall not be entitled to, and
shall have no interest in, such proceeds or any part thereof, EXCEPT THAT Gross
S&L Revenues shall include any proceeds of business interruption insurance
received by Tenant with respect thereto. Landlord shall, at Tenant's cost and
expense, cooperate fully with Tenant in order to obtain consents and other
instruments and take all other actions necessary or desirable in order to
effectuate the same and to cause such proceeds to be paid as hereinbefore
provided and Landlord shall not carry any insurance concurrent in coverage and
contributing in the event of loss with any insurance required to be furnished by
Tenant hereunder if the effect of such separate insurance would be to reduce the
protection or the payment to be made under Tenant's insurance.
12.03 Blanket Policy. Any insurance required to be provided by Tenant
pursuant to this Lease may be provided by blanket insurance covering the demised
premises and other locations of Tenant provided such blanket insurance complies
with all of the other requirements of this Lease with respect to the insurance
involved.
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12.04 Waiver of Subrogation. All insurance policies carried by either
party covering the demised premises, including but not limited to contents, fire
and casualty insurance, shall expressly waive any right on the part of the
insurer against the other party. The parties hereto agree that their policies
will include such waiver clause or endorsement so long as the same shall be
obtainable without extra cost, or if extra cost shall be charged therefor, so
long as the other party pays such extra cost. If extra cost shall be chargeable
therefor, each party shall advise the other thereof and of the amount of the
extra cost, and the other party, as its election, may pay the same, but shall
not be obligated to do so.
12.05 Adjustment. Every ten (10) years during the term, Landlord and
Tenant shall review the nature and levels of insurance coverage to update the
insurance requirements of this lease to the type, coverages and levels of
insurance customarily being maintained by comparable ski resorts located in the
United States.
ARTICLE XIII
DESTRUCTION
13.01 Casualty.
(a) In the event that, at any time during the term of this Lease,
any one or more of the buildings on the demised premises shall be
destroyed or damaged in whole or in part by fire or other cause within the
extended coverage of the Lease, then, Tenant, at its own cost and expense,
shall, subject to the provisions of paragraph (b) of this Section cause
the same to be repaired, replaced or rebuilt within a period of time
which, under all prevailing circumstances, shall be reasonable, but Tenant
shall not be required hereby to expend any sums in excess of the insurance
proceeds recovered by Tenant by reason of such destruction or damage.
(b) In the event that at any time during the term of this Lease any
one or more of the buildings on the demised premises shall have been
damaged or destroyed by fire or any other cause whatsoever, and such
damage or destruction shall amount to fifteen percent (15%) or more of the
sound insurable value of said building or buildings, or if such damage or
destruction shall occur during the last ten (10) years of the term or any
extended term hereof, Tenant shall have the right, but not the obligation,
to elect not to repair, replace or rebuild such building or improvements.
13.02 Demolition. If Tenant shall elect not to restore any damaged
property pursuant to the provisions of Section 13.01 (b) hereof, it shall, prior
to, or immediately commence and diligently prosecute to completion, the
demolition and removal of any damaged buildings or structures which are upon the
demised premises, and shall remove all rubble.
13.03 No Abatement. Tenant shall not be entitled to any suspension or
abatement of rent by reason of any destruction or damage to the demised
premises.
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ARTICLE XIV
EMINENT DOMAIN
14.01 Condemnation. If the whole or any part of the demised premises shall
be taken for any public or quasi-public use under any statute or by right of
eminent domain or by private purchase in lieu thereof, then this Lease shall
continue and the taking shall be administered in the manner specified in Section
14.02 below.
14.02 Prosecuting Takings Claims. In the event of a taking (or purchase)
the parties hereto agree to cooperate in applying for and in prosecuting any
claim for such taking and further agree, that the aggregate net award pertaining
to the demised premises, after deducting all expenses and costs, including
attorney's fees, incurred in connection therewith, payable to both Landlord and
Tenant (herein called the "Fund") shall be paid and distributed as follows:
(a) Landlord shall be paid an amount out of the Fund equal to the
value of Landlord's continuing fee interest in the land after taking into
account the remaining term of this Lease, including the extended terms,
plus net present value of the rent and additional rent to be paid to
Landlord hereunder over the remaining term, including the extended terms,
of this Lease, all determined as of the date of taking (or purchase),
together with interest thereon from the date of taking (or purchase) to
the date of payment at the rate paid on said award, and if such value
shall be officially determined and stated in the condemnation proceedings,
then the amount thereof shall control for the purposes hereof, otherwise
the same, unless agreed upon by the parties to this Lease, shall be
determined by arbitration.
(b) Any part of the Fund then remaining after the payment to
Landlord specified in subparagraph (a) hereinabove shall be paid to the
holder of any leasehold Mortgage permitted under the provisions of Section
16 hereof, to be applied in accordance with the terms of such Mortgage,
and if no such Mortgage, or there remains any excess after payment of all
amounts due under the mortgage, then to Tenant.
(c) (1) In the event of a partial taking (or purchase) Tenant shall,
at its own cost and expense, make all repairs to the buildings and
improvements on the demised premises affected by such taking (or purchase)
to the extent necessary to restore the same to a complete architectural
unit (to the extent permitted, however, taking into consideration the
amount of land remaining after any such takings or purchase), provided,
however, that Tenant shall not be obligated to expend an amount in excess
of the proceeds of the net award available to Tenant for such purposes, as
hereinafter provided.
(2) All compensation available or paid to Landlord and Tenant
upon such a partial taking (or purchase), shall be paid to Tenant for the
purpose of paying towards the cost of such restoration, or, in the event
that the parties hereto agree that only a portion of the aggregate award
is sufficient to so restore, then only such portion as agreed upon shall
be paid to Tenant for such purpose and the balance shall be distributed
pursuant to subparagraph (3) below.
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(3) All compensation available or paid to Landlord and Tenant
upon such a partial taking (or purchase) in excess of the amount thereof
needed by Tenant to repair and restore the buildings and improvements
shall be distributed in the same manner as is provided in subparagraphs
(a) and (b) this Section 14.02, except that all compensation for any
temporary taking of five (5) years or less shall be distributed to Tenant
without participation by Landlord.
ARTICLE XV
UTILITY EASEMENTS AND HIGHWAY ALIGNMENT
Tenant shall have the right to enter into agreements with utility
companies and/or public authorities which provide necessary utilities, creating
easements, subleases or other necessary property interests in favor of such
companies and/or authorities as are required in order to service the occupants
of the buildings and the improvements on the demised premises, and Landlord
covenants and agrees to provide any reasonably required consent thereto and to
execute any and all documents, agreements and instruments, and to take all other
actions, in order to effectuate such consent all at Tenant's cost and expense.
Landlord further covenants and agrees, upon request of Tenant to convey without
compensation therefor, insubstantial portions of the demised premises for
highway, roadway or utility purposes to any applicable governmental body.
ARTICLE XVI
LEASEHOLD MORTGAGES
16.01 Mortgage. Tenant and every successor and assign of Tenant is hereby
given the right by Landlord in addition to any other rights herein granted,
without Landlord's prior written consent, but only with prior written notice to
Landlord, to mortgage Tenant's interests in this Lease, or any part or parts
thereof, under one or more leasehold Mortgage(s), and to assign this Lease, or
any part or parts thereof, and any subleases, or parts thereof, as collateral
security for such Mortgage(s), upon the condition that all rights acquired under
such Mortgage(s) shall be subject to each and every one of the covenants,
conditions and restrictions set forth in this Lease, and to all rights and
interests of Landlord herein, none of which covenants, conditions or
restrictions is or shall be waived by Landlord by reason of the right given so
to mortgage such interest in this Lease, except as expressly provided herein.
Notwithstanding the foregoing, Tenant is prohibited from mortgaging the
leasehold solely for the purposes of effecting a transfer of its leasehold
interest to a third party in any transaction that does not involve a
contemporaneous exchange of equivalent value determined on independent, arm's
length basis. If Tenant and/or Tenant's successors and assigns shall mortgage
this leasehold or any part or parts thereof, and if the holder(s) of such
Mortgage(s) shall send to Landlord written notice of such Mortgage(s) specifying
the name and address of the Mortgagee(s) and the pertinent recording data with
respect to such Mortgage(s), Landlord agrees that so long as any such leasehold
Mortgage(s) shall remain unsatisfied of record or until written notice of
satisfaction is given by the holder(s) to Landlord, the following provisions
shall apply.
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(a) There shall be no cancellation, surrender or material
modification of this Lease by joint action of Landlord and Tenant without
at least ten (10) days advance written notice to the leasehold Mortgagee
given in accordance with Section XXIII below.
(b) Landlord shall, upon serving Tenant with any notice of default,
simultaneously serve a copy of such notice upon the holder(s) of such
leasehold Mortgagee(s), and no such notice of default to Tenant shall be
effective unless and until a copy of such notice is served upon each such
holder. The leasehold Mortgagee(s) shall thereupon have the same period,
after service of such notice upon it, to remedy or cause to be remedied
the defaults complained of, and Landlord shall accept such performance by
or at the instigation of such leasehold Mortgagee(s) as if the same had
been done by Tenant.
(c) If the Landlord shall elect to terminate this Lease by reason of
any default of Tenant, the leasehold Mortgagee(s) shall have the right by
delivering written notice thereof to Landlord prior to the effective date
of such termination, to postpone and extend the specified date for the
termination of this Lease as fixed by Landlord in its notice of
termination, for a period reasonably sufficient to allow the leasehold
Mortgagee to conduct a foreclosure of its mortgage, but in no event more
than six (6) months from the date of Landlord's termination notice,
provided that such leasehold Mortgagee(s) shall cure or cause to be cured
any then existing monetary defaults and meanwhile pay all rent, additional
rent and other monetary payments due hereunder, and comply with and
perform all of the other terms, conditions and provisions of this Lease on
Tenant's part to be complied with or performed, other than past
non-monetary defaults which cannot reasonably be cured by such Mortgagee,
and provided further, that the leasehold Mortgagee(s) shall forthwith take
steps to acquire or sell Tenant's interest in this Lease by foreclosure of
the Mortgage(s) or otherwise and shall prosecute the same to completion
with all due diligence. If, during said six (6) month period, the
leasehold Mortgagee(s) shall have promptly commenced and shall have
actively engaged in steps to acquire or sell Tenant's interest herein, but
shall not have acquired or sold such interest at the end of such period,
the time of said Mortgagee to comply with the provisions of this Section
16.01 shall be extended for such period as shall be reasonably necessary
to complete such steps with reasonable diligence and continuity.
(d) Landlord agrees that in the event of foreclosure by such
mortgagee on this Lease by reason of any default by Tenant that Landlord
will enter into a new lease of the demised premises directly with the
leasehold Mortgagee(s) or its nominee(s), for the remainder of the term,
effective as of the date of such termination, at the rent and additional
rent and upon the terms, provisions, covenants and agreements as herein
contained and subject only to all matters of record and all rights, if
any, of the parties then in possession of any part of the demised
premises, provided:
(i) Said Mortgagee(s) or its nominee(s) shall make written
request upon Landlord for such new lease within fifteen
(15) days after the date of such foreclosure and such
written request is accompanied
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by payment to Landlord of all sums then due to Landlord
under this Lease.
(ii) Said Mortgagee(s) or its nominee(s) shall pay to
Landlord at the time of the execution and delivery of
said new lease, any and all sums which would at the time
of the execution and delivery thereof, be due pursuant
to this Lease but for such termination, and in addition
thereto, any expenses, including reasonable attorney's
fees, to which Landlord shall have been subjected by
reason of such default.
(iii) Said Mortgagee(s) or its nominee(s) shall perform and
observe all covenants herein contained on Tenant's part
to be performed and shall further remedy any other
conditions which Tenant under the terminated lease was
obligated to perform under the terms of this Lease.
(iv) Landlord shall not warrant possession of the demised
premises to the Tenant under the new lease.
(v) Such new lease shall be expressly made subject to the
rights, if any, of Tenant under the terminated lease.
(vi) The Tenant under such new lease shall have the same
right, title and interest in and to the buildings and
improvements on the demised premises as Tenant had under
the terminated lease.
(vii) Nothing herein contained shall require the leasehold
Mortgagee(s) or its nominee(s) to cure any default of
Tenant referred to in Article XIX hereof.
(viii) The proceeds from any insurance policies or arising from
a condemnation are to be held by any leasehold
Mortgagee(s) and distributed pursuant to the provisions
of this Lease, but the leasehold Mortgagee(s) may
reserve its right to apply to the mortgage debt all, or
any part, of Tenant's share of such proceeds pursuant to
such mortgage(s).
16.02 Further Agreement. Landlord shall upon request, execute, acknowledge
an deliver to each leasehold Mortgagee(s), an agreement prepared at the sole
cost and expense of Tenant in form satisfactory to Landlord and such leasehold
Mortgagee(s) between Landlord, Tenant and the leasehold Mortgagee(s), agreeing
to (a) all of the provisions of Section 16.01 and (b) such other provisions as
are reasonably customary in mortgaging long-term leaseholds in connection with
large commercial development projects.
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ARTICLE XVII
LANDLORD'S WARRANTIES
17.01 Quiet Enjoyment. Tenant, upon paying the rent and additional rent
and all other sums and charges to be paid by it as herein provided, and
observing and keeping all covenants, warranties, agreements and conditions of
this Lease on its part to be kept, shall quietly have and enjoy the demised
premises during the term of this Lease, without hindrance or molestations,
subject to encumbrances listed in Schedule B.
17.02 Representations, Warranties and Covenants. Landlord warrants,
represents and covenants to Tenant, upon which warranty representation and
covenants Tenant has relied in the execution of this Lease and in the payment of
the initial installments of rent hereunder.
(a) That it has and will maintain good and marketable fee simple
title to the demised premises constituting Fee Land, free and clear of all
encumbrances, liens, defects in title, leases, tenancies, easements,
restrictions and agreements, except for this Lease and the restrictions
set forth in Schedule B, none of which materially impair the current
operation of the demised premises as a ski resort.
(b) Landlord represents, warrants and covenants as follows with
respect to the sublease of Leased Land:
(i) Each underlying lease of Leased Land is in full force
and effect as of the date hereof. A true, accurate and
correct copy of each lease is attached hereto as a part
of Schedule A, and such leases have not been amended or
revised except as shown in Schedule A. Except as set
forth in Schedule 17.02(b), there are no material
defaults, breaches or violations of such leases by
lessee or, to Landlord's Knowledge, by the lessor
existing as of the date hereof, and there have occurred
no events which with the passage of time, giving of
notice, or both, would constitute a default, breach or
violation of any such leases by Landlord or, to
Landlord's Knowledge, by any such lessor.
(ii) Landlord shall timely perform all its obligations under
such leases in accordance with the terms thereof, and
shall undertake all such actions as may be necessary or
appropriate to maintain such leases in full force and
effect, in accordance with their terms.
(iii) Landlord hereby grants to Tenant the right, power and
authority to enter into independent negotiations with
each owner of Leased Land to change, revise, amend,
restate or otherwise alter the underlying leases. Tenant
shall not enter into any change, revision, amendment,
alteration or restatement without the Landlord's prior
written consent, which shall not be unreasonably
withheld or delayed.
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Landlord shall obtain from each owner of Leased Land and
deliver to Tenant a Landlord's Consent and Estoppel in
the form attached hereto as Schedule C.
(d) The execution and delivery of this Lease by Landlord and the
performance by Landlord of the obligations to be performed hereunder have
been duly authorized by all necessary and appropriate action by Landlord
under its Operating Agreement. Except as listed in Schedule 17.02(d), the
consummation of the transactions contemplated hereby and thereby do not
and will not (i) conflict with, or result in a breach of, or default
under, or permit acceleration of any obligation under, any of the terms,
conditions, or provisions of any note, bond, mortgage, indenture, license,
material agreement or other material instrument or obligation to which
Landlord is a party, or by which it or any of its properties or assets may
be bound or affected or (ii) violate any order, writ, injunction, decree
or statute, or any rule, regulation, permit, license or conditions
thereto, or (iii) result in the creation or imposition of any lien, charge
or encumbrance of any nature upon any of the demised premises. This Lease
is a valid and binding obligation of Landlord enforceable in accordance
with its terms, subject to equitable principles and applicable bankruptcy
and other creditors' rights laws, regulations and rulings.
(e) Except as set forth in Schedule 17.02(e) Landlord does not have
any Landlord's Knowledge of any violation of any applicable federal, state
and local laws, rules, regulations, ordinances, codes or orders ("Laws")
governing the demised premises and the operation of the Wolf Mountain Ski
Resort business, including without limitation environmental and health and
safety laws rules and regulations, and will not knowingly violate any such
laws during the term hereof, and (b) has not received written notification
of any asserted material past or present failure to operate the demised
premises and the Wolf Mountain Ski Resort business in accordance with any
such law, ordinance or regulation, or of any event that has occurred which
with notice or the passage of time would constitute any such failure.
(f) (i) No permits, licenses, approvals, clearances or other
governmental consents are required for the execution and
delivery of this Lease, except for the transfer or
reissuance of the governmental licenses, permits,
authorizations, approvals and certificates identified in
Section 17.02(f).
(ii) The Landlord has not disposed of or permitted to lapse
any license, permit or other authorization from any
federal, state or local authorities related to the
demised premises that is currently required for the
operation of the Wolf Mountain Ski Resort business.
(iii) Except as reported in Schedule 17.02(f), the Licenses
and Permits listed on Schedule 17.02(f) are all of the
governmental licenses, permits, authorizations,
approvals and certificates which are, to
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Landlord's Knowledge, required for the current use of
the demised premises.
(g) The existing uses of the demised premises by Landlord are
permitted uses within the zoning districts in which they are located and
otherwise permitted under applicable federal, state and local laws, rules
and regulations and under the permits identified in Section 17.02(g).
(h) Except as provided in Schedule 17.02(h) there is, to Landlord's
Knowledge, no action, suit, proceeding at law or in equity by any person
or entity, or any arbitration or any administrative or other proceeding by
or before any governmental or other instrumentality or agency, pending,
threatened, against Landlord with respect to the Wolf Mountain Ski Resort
business or any portion of the demised premises.
(i) Except as provided in Schedule 17.02(i), Landlord (i) has timely
filed all tax returns, tax information returns and other tax reports
required to be filed with any applicable governmental authorities through
the date hereof which relate to the demised premises and, the Wolf
Mountain Ski Resort business, and has paid all taxes and other charges
which have become due pursuant to such returns and reports, or pursuant to
any assessment received by it, except for any taxes the validity of which
Landlord may be contesting in good faith in appropriate proceedings, and
(ii) shall continue to timely file all such returns and reports and pay
all such taxes relating to Landlord, but not those relating to the demised
premises, the Wolf Mountain Ski Resort or that Tenant is otherwise
obligated to file or pay hereunder. Landlord is not delinquent in the
payment of any tax assessment or governmental charge which relates to any
of the demised premises, no written notices asserting deficiencies for any
taxes which relate to any of the demised premises have been received by
Landlord, and no requests for waivers of the time to assess or pay any
such tax are pending. There are no tax liens upon any fee portion of the
demised premises and, to Landlord's Knowledge, no tax liens upon any
leased portion of the demised premises and no such liens will arise as a
result of the transaction contemplated hereby except as listed in Schedule
17.02(i) or that will be paid and discharged at Closing. For the purposes
of this Lease, the term "tax" shall include all federal, state, local and
foreign income, property, sales, excise and other taxes of any nature
whatsoever.
(j) Except as disclosed in Schedule 17.02(j), there are to
Landlord's Knowledge, no outstanding or threatened actions, claims,
proceedings, determinations or judgments by any party, including, but not
limited to, any governmental authority or agency, against or involving the
Landlord, arising under the Clear Air Act, the Federal Water Pollution
Control Act of 1972, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Solid Waste Disposal Act, the
Resource Conservation and Recovery Act and the Toxic Substances Control
Act, and any amendments or extensions of the foregoing statutes, and all
other applicable environmental requirements or any other federal, state,
local or other environmental, health or safety law, regulation, order or
requirement, requiring the remediation or
19
removal of an existing environmentally contaminated condition or
substance. Except as listed in Schedule 17.02(j), there are, to Landlord's
Knowledge, no outstanding or threatened orders, determinations or notices
of violation issued by any federal, state, local or other governmental
authority administering environmental or health and safety laws in
connection with operation of the demised premises or the Wolf Mountain Ski
Resort business, which have not been complied with or resolved to the
satisfaction of such governmental authority.
17.03 Remedies. In the event Landlord fails to undertake the actions, or
refrain from taking action, required pursuant to subparagraph 17.02 (b) above,
then Tenant shall have the right, but not the obligation, to perform all such
acts and pay all sums of money necessary, on behalf of Landlord, to maintain the
lease in full force and effect, and Landlord hereby appoints Tenant as its true
and lawful attorney in fact for purposes of undertaking all such action on
behalf of and in the name of Landlord as Tenant deems necessary or appropriate
to maintain any or all underlying leases in full force and effect. The power of
attorney herein granted is coupled with an interest and is therefore irrevocable
during the term of this Lease. Tenant may offset against any and all amounts due
hereunder any cost and expense incurred by Tenant in exercising its rights under
this subsection 17.03. Prior to offsetting against rent due hereunder Tenant
shall provide Landlord with notice of its intent to offset and Landlord shall
have a period of 30 days to advise Tenant that it objects to or disputes the
offset, in which case any such dispute shall be submitted to arbitration in
accordance with the provisions hereof. Tenant shall use reasonable efforts to
mitigate any damages resulting from Landlord's breach or default.
17.04 General Provisions. The term "Landlord's Knowledge" shall have the
same meaning as the term "Seller's Knowledge" under Section 6.17(c) of the
Purchase and Sale Agreement. Seller expressly disclaims any express or implied
warranties not specifically set forth in this Lease, the Purchase and Sale
Agreement, or any other agreement entered into by and between Landlord and
Tenant.
ARTICLE XVIII
DEFAULT
18.01 Defaults. In the event of any one or more of the following events
("Events of Default") shall have occurred and shall not have been remedied as
hereinafter provided: (1) the occurrence of any event set forth in Article XIX
hereof, without the curing of same as therein provided; (2) Tenant's failure to
pay any installment of basic rent, additional rent or any other monetary
payments when the same shall be due and payable and the continuance of such
failure for a period of ten (10) days after receipt by Tenant of notice in
writing from Landlord specifying in detail the nature of such failure, provided,
however that Tenant shall pay interest at the rate of 18% per annum during any
period in which any payment is delinquent; (3) Tenant's failure to pay any
option payments pursuant to Section 25.02 hereof when the same shall be due and
payable and the continuance of such failure for a period of 10 days after
receipt by Tenant of notice in writing from Landlord of such failure; provided,
however, that Tenant shall be entitled to only two such notices during any 360
day period, after which no such notice shall be required, and provided further
that Tenant shall pay interest on any delinquent payment at the rate of 18%
20
per annum during the period of any such delinquency; (4) a material default by
Tenant, and the expiration of any grace, notice or cure period required thereby,
under any of the other agreements then existing between Landlord and Tenant,
including without limitation, the promissory notes referred to in Section 25.05
below and the Promissory Note referred to in Section 4.01(c) of the Purchase and
Sale Agreement; and (5) Tenant's failure to perform any of the other covenants,
conditions and agreements herein contained on Tenant's part to be kept or
performed and the continuance of such failure for a period of sixty (60) days
after receipt by Tenant of notice in writing from Landlord specifying in detail
the nature of such failure, and provided Tenant shall not cure said failure as
provided in Section 18.02 hereof; then, Landlord may, at its option, give to
Tenant a notice of election to end the term of this Lease upon a date specified
in such notice, which date shall be not less than thirty (30) business days
(Saturdays, Sundays and legal holidays excluded) after the date of receipt by
Tenant of such notice from Landlord, and upon the date specified in said notice,
the term and estate hereby vested in Tenant shall cease and any and all other
right, title and interest of Tenant hereunder shall likewise cease without
further notice or lapse of time, as fully and with like effect as if the entire
term of this Lease had elapsed, but Tenant shall continue to be liable to
Landlord as hereinafter provided. Simultaneously with the sending of the notice
to Tenant, hereinabove provided for, Landlord shall send a copy of such notice
to any leasehold Mortgagee(s) as to which Landlord has received written notice.
The curing of any default(s) in the manner provided hereinabove by any of the
aforesaid parties or combinations thereof, shall constitute a curing of any
default(s) hereunder with like effect as if Tenant had cured the same hereunder.
18.02 Cure.
(a) In the event that Landlord gives notice of a default of such a
nature that it cannot reasonably be cured within such sixty (60) day
period, then such cure period shall be deemed to continue so long as
Tenant, after receiving such notice, proceeds to cure the default as soon
as reasonably possible and continues to take all steps necessary to
complete the same within a period of time which, under all prevailing
circumstances, shall be reasonable; provided that, in no event shall any
cure period extend for a period longer than 180 days after the Landlord's
notice of default under Section 18.01. No cure period shall be deemed to
end if and so long as Tenant shall be prevented from curing the same by
any of the causes constituting Force Majeure.
(b) Notwithstanding anything to the contrary contained in this
Article XVIII, in the event that any default(s) of Tenant shall be cured
in any manner hereinabove provided, Tenant's right hereunder shall
continue unaffected by such default(s).
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18.03 Remedies.
(a) Upon any Event of Default pursuant to Section 18.01, or at any
time thereafter, Landlord may, in addition to and without prejudice to any
other rights and remedies Landlord shall have at law or in equity,
including termination, reenter the demised premises, and recover
possession thereof and dispossess any or all occupants of the demised
premises in the manner prescribed by the applicable laws relating to
summary proceedings, or similar laws; but Tenant in such case shall remain
liable to Landlord as hereinafter provided.
(b) In case of any such default, reentry, expiration and/or
dispossess by Landlord: (1) the rent shall become due thereupon and be
paid up to the time of such reentry, expiration and/or dispossess; (2)
Landlord may relet the demised premises or any part or parts thereof,
either in the name of Landlord or otherwise, for a term or terms which
may, at Landlord's option, be less than or exceed the period which would
otherwise have constituted the balance of the term of this Lease and (3)
Landlord may pursue any and all other remedies allowed to Landlord under
applicable law, including without limitation, the collection of all future
rent and other monetary payments provided for hereunder. Landlord, at
Landlord's option and Tenant's expense, may make such alteration, repairs,
and/or replacements in the demised premises as are reasonably necessary
for the purpose of reletting and premises; and the making of such
alterations, repairs, replacements and/or decorations shall not operate or
be construed to release Tenant from liability hereunder as aforesaid.
Landlord agrees to use reasonable efforts to mitigate all damages and to
relet the demised premises in the event of any default specified herein.
ARTICLE XIX
BANKRUPTCY AND INSOLVENCY
If, after the commencement of the term of this Lease: (a) the Tenant then
having the title to the leasehold estate created hereunder shall while having
such title be adjudicated a bankrupt or adjudged to be insolvent; (b) a receiver
or trustee shall be appointed for the aforesaid Tenant's property and affairs;
(c) the aforesaid Tenant shall make an assignment for the benefit of creditors
or shall file a petition in bankruptcy or insolvency or for reorganization or
shall make application for the appointment of a receiver; or (d) any execution
or attachment shall be issued against the aforesaid Tenant or any of the
aforesaid Tenant's property, whereby the demised premises or any building or
buildings or any improvements thereon shall be taken or occupied or attempted to
be taken or occupied by someone other than the aforesaid Tenant, except as may
herein be permitted, and such adjudication, appointment, assignment, petition,
execution or attachment shall not be set aside, vacated, discharged or bonded
within ninety (90) days after the issuance of the same, then an Event of a
Default hereunder shall be deemed to have occurred. Notwithstanding anything to
the contrary hereinabove contained, upon the occurrence of a default pursuant to
this Article, if the rent and other monetary payments due and payable hereunder
shall continue to be paid and the other covenants, conditions and agreements of
this
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Lease on Tenant's part to be kept and performed shall continue to be kept
and performed, no event of default shall have been deemed to have occurred.
ARTICLE XX
WAIVERS
Failure of Landlord or Tenant to complain of any act or omission on the
part of the other party no matter how long the same may continue, shall not be
deemed to be a waiver by said party of any of its rights hereunder. No waiver by
Landlord or Tenant at any time, express or implied, of any breach of any
provision of this Lease shall be deemed a waiver of a breach of any other
provision of this Lease or a consent to any subsequent breach of the same or any
other provision. No acceptance by Landlord of any partial payment shall
constitute an accord or satisfaction but shall only be deemed a part payment on
account.
ARTICLE XXI
GOVERNMENT APPROVALS
Landlord covenants and agrees to cooperate fully with Tenant in any and
all applications and proceedings and appeals made or prosecuted by Tenant in
connection with obtaining any necessary permits, licenses, approvals or consents
under the zoning, land use, environmental and/or building regulations,
ordinances, codes, laws and directives of all of the federal, state county and
other authorities having jurisdiction over the development and use of the
demised premises, including without limitation, the Summit County Planning
Board. Landlord shall execute any and all documents, instruments, consents and
authorizations requested by Tenant which shall be reasonably necessary or
desirable with respect thereto. Tenant may prosecute such applications,
proceedings and appeals in its own name and through counsel of its choice, but
shall do so at its own cost and expense and shall reimburse Landlord for
Landlord's reasonable expenses incurred in such cooperative efforts.
ARTICLE XXII
FORCE MAJEURE
In the event that Landlord or Tenant shall be delayed, hindered in or
prevented from the performance of any act (except for monetary payments)
required hereunder by reason of strikes, lock-outs, organized labor disputes,
unavailability of materials, extended failure of power, governmental laws or
regulations prohibiting performance of any obligation hereunder, riots,
insurrection, war or civil strife, or other reason beyond such party's
reasonable control, then performance of such act shall be excused for the period
of the delay and the proof for the performance of any such act shall be extended
for a period equivalent to the period of such delay.
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ARTICLE XXIII
NOTICES
Every notice, approval, consent or other communication authorized or
required by this Lease shall not be effective unless the same shall be in
writing and sent postage prepaid by United States registered or certified mail,
return receipt requested, directed to the other party at its address set forth
hereinbelow, or such other address as either party may designate by notice given
form time to time in accordance with this Article. Unless otherwise directed by
Landlord, rent payable by Tenant hereunder shall be paid to Landlord at the same
place where a notice to Landlord is herein required to be directed. All such
notices and other communications initially shall be addressed as follows:
Tenant:
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Chief Administrative Officer and General Counsel
American Skiing Company
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Landlord:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇/▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ Place
Houston, TX 77002-2781
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
All such notices shall be deemed to have been given and received as of the
date of deposit of such notice in a depository of the U.S. Postal Service.
ARTICLE XXIV
CERTIFICATES
Either party shall, without charge, at any time and from time to time
hereafter, within thirty (30) days after written request of the other, certify
by written instrument duly executed and acknowledged to any mortgagee or
purchaser, or proposed mortgagee or proposed purchaser, or any other person,
firm or corporation specified in such request: (a) as to whether this Lease has
been supplemented or amended, and if so, the substance and manner of such
supplement or amendment; (b) as to the validity and force and effect of this
Lease, in accordance with its tenor as then constituted; (c) as to the existence
of any known default thereunder; (d) as to the existence of any offsets,
counterclaims or defense thereto on the part of such other party; (e) as to the
commencement and expiration dates of the term of this lease; and (f) as to any
other matters as may reasonably be so requested. Any such certificate may be
relied upon by the party
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requesting it and any other person, firm or corporation to whom the same may be
exhibited or delivered, and the contents of such certificate shall be binding on
the party executing same.
ARTICLE XXV
DEVELOPMENT RIGHTS
25.01 Grant of Option. Landlord hereby gives and grants to Tenant, its
successors and assigns, an exclusive option to purchase any portion of the
demised premises now or hereafter owned in fee by Landlord upon which Tenant
desires to construct any buildings or improvements of any nature, at any time
during the term of this Lease , or any extended term.
25.02 Option Payments. As consideration for the option granted pursuant to
Section 25.01 above, Tenant shall pay to Landlord the following amounts on first
day of each of the months specified below:
Amount Due Payment Date
---------- ------------
3,532,340 June, 1997
47,007 July, 1997
157,340 August, 1997
32,340 September, 1997
47,007 October, 1997
157,340 November, 1997
1,232,340 December, 1997
180,340 January, 1998
157,340 February, 1998
32,340 March, 1998
47,007 April, 1998
15,167 May, 1998
15,167 June, 1998
29,834 July, 1998
140,167 August, 1998
15,167 September, 1998
29,834 October, 1998
140,167 November, 1998
15,167 December, 1998
2,748,000 January, 1999
125,000 February, 1999
0 March, 1999
14,667 April, 1999
875,000 May, 1999
0 June, 1999
14,667 July, 1999
125,000 August, 1999
0 September, 1999
14,667 October, 1999
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Amount Due Payment Date
---------- ------------
125,000 November, 1999
0 December, 1999
148,000 January, 2000
125,000 February, 2000
0 March, 2000
14,667 April, 2000
125,000 May, 2000
0 June, 2000
14,667 July, 2000
125,000 August, 2000
0 September, 2000
14,667 October, 2000
125,000 November, 2000
0 December, 2000
548,000 January, 2001
125,000 February, 2001
0 March, 2001
0 April, 2001
125,000 May, 2001
0 June, 2001
0 July, 2001
Tenant shall have the right to accelerate payment of any or all of
such amounts, in which case Tenant shall pay to Landlord the net present
value of any payments made on an accelerated basis. Net present value of
such payments shall be determined in a manner and at a discount rate
reasonably acceptable to both Tenant and Landlord.
(b) All option payments made by Tenant shall be placed in a
segregated bank account established at a banking institution acceptable to
both parties ("Option Escrow Account") in the name of both Landlord and
Tenant. Amounts shall be disbursed from the account under signature of
authorized representatives of both Landlord and Tenant solely and
exclusively for purposes of satisfying the following obligations of
Landlord (the "Underlying Obligations"):
Obligation Date Principal Amount
---------- ---- ----------------
Nine Star Development Note February 2, 1995 2,600,000
Snyderville Land Co. Purchase June 16, 1997 3,500,000
and Sale Agreements
▇▇▇▇▇▇▇ Retirement Trust Note February 2, 1995 750,000
▇▇▇▇▇▇▇ Note January 18, 1995 533,333
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Obligation Date Principal Amount
---------- ---- ----------------
Vitesse Ski Properties Note March 8, 1994 2,194,000
(or substitute Note to be
identified by Landlord upon
refinancing Vitesse)
Wasatch Capital Corp. Note Even date herewith 5,000,000
Songbird Note December 12, 1996 1,200,000
In the event, and to the extent Tenant accelerates its option payments
hereunder, Landlord shall exercise reasonable efforts to accelerate a
corresponding amount of the Underlying Obligations so as to minimize the
amounts on deposit from time to time in the Option Escrow Account.
25.03 Mandatory Exercise of Option. Tenant shall not be permitted to
exercise its option until such time, from time to time, as Tenant has received
all necessary permits, licenses and approvals for any real estate development
project to be located upon the portion of the demised premises to be released by
Landlord involving the construction of any buildings constituting residential or
commercial real estate being developed with the intent to resell any material
portion of such building(s), as evidenced by the description of such real estate
development project(s) in the application(s) for necessary permits and
approvals. Said option shall be exercised by Tenant, its successors or assigns,
by giving written notice of the election to exercise said option to purchase to
Landlord, addressed to the place then provided for the sending of notices under
this Lease, which notice shall specify a date, time and place of closing which
shall take no more than one hundred twenty (120) days after the posting of said
notice.
25.04 Option Price. The purchase price for the portion of the demised
premises purchased by Tenant shall be an amount equal to eleven percent (11%) of
the full capitalized cost of construction of buildings or improvements on the
option parcel (less any capitalized interest on financing for the improvements
and less up to 5% of such capitalized costs attributable to any internal
overhead costs capitalized by Tenant) as reflected upon Tenant's books of
account maintained in accordance with generally accepted accounting principles,
consistently applied.
25.05 Option Price Payment. The purchase price shall be paid at closing by
a promissory note in the full amount of the purchase price, bearing interest at
a rate equal to the prime rate in effect as of the date of the closing as
reported in The Wall Street Journal under the heading "Money Rates - Prime
Rate," and maturing upon the issuance of a certificate of occupancy for the
development project. The note shall be secured by a mortgage or deed of trust
with priority subordinate only to Tenant's financing for the construction cost
of the improvements, which mortgage or deed of trust and form of subordination
shall be in form reasonably acceptable to Landlord.
25.06 Owned Property. As additional consideration for the options granted
pursuant to Section 25.01 above, Tenant hereby agrees to deliver to Landlord
additional option payments at the time development is commenced on the property
more particularly described in Schedule
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25.06 hereto in the same amount and in the same manner as if such property were
covered by this Lease and the options described in Section 25.01, and Tenant was
otherwise purchasing such property in accordance with terms of Section 25.04 and
25.05.
25.07 Development Commitment. Tenant agrees to produce and submit to
Summit County for approval, and exercise its best efforts to maintain in place,
a master plan for the demised premises (which may be a continuation of the
master plan submitted by Landlord in April, 1997, or a derivation thereof) that
contemplates a minimum of three million (3,000,000) square feet of residential
and commercial real estate development on that portion of the demised premises
denominated the base area as reflected on the Landlord's current master plan and
two million (2,000,000) square feet of residential and commercial development on
that portion of the demised premises denominated the mid-mountain village as
reflected on the Landlord's current master plan. The master plan may not alter
the designation of Willow Draw as a subdivision for single family detached
dwellings without Landlord's prior written consent.
25.08 Closing. At closing, Tenant shall deliver the required promissory
note against delivery by Landlord of a warranty deed in form acceptable to
Tenant conveying good and marketable title to the development parcel free an
clear of all liens, encumbrances, restrictions, defects in title, leases,
tenancies easements and agreements, except as set forth in Schedule A, and
except any which may arise by reason of this Lease.
25.09 Restrictions Against Encumbrance. Landlord, its successors and
assigns covenants and agrees that during the term hereof it shall not,
voluntarily or by operation of law, place or allow placement of any liens,
encumbrances or restrictions of any nature on the Landlord's interest in the
demised premises, including without limitation, mortgage liens, trust deeds,
mechanics liens, judgment liens or any other liens or encumbrances similar or
dissimilar to the foregoing.
ARTICLE XXVI
MISCELLANEOUS
26.01 Governing Law. This Lease and the performance thereof shall be
governed, interpreted, construed and regulated by the laws of the State of Utah.
26.02 Partial Invalidity. If any term, covenant, condition or provision of
this Lease or the application thereof to any person or circumstance shall, at
any time or to any extent, be invalid or unenforceable, the remainder of this
Lease, or the application of such term or provision to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant, condition and provision of this Lease
shall be valid and enforceable to the fullest extent permitted by law.
26.03 Short Form Lease. The parties will at any time, at the request of
either one, promptly execute duplicate originals of an instrument, in recordable
form reasonably satisfactory to both parties, which will constitute a short form
of lease, setting forth a description of the demised premises, the term of this
Lease and any other portions thereof, excepting the rental provisions, as either
party may request.
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26.04 Interpretations. Wherever herein the singular number is used, the
same shall include the plural, and the masculine gander shall include the
feminine and neuter genders, and vice versa, as the context shall require. The
section headings used herein are for reference and covenance only, and shall not
enter into the interpretation hereof. This Lease may be executed in several
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument. The terms "Landlord" and "Tenant"
whenever used herein shall mean only the owner for the time being of Landlord's
or Tenant's interest herein, and upon any sale or assignment of the interest of
either Landlord or Tenant herein, their respective successors in interest and/or
assigns shall, during the term of their ownership of their respective estates
herein, be deemed to be Landlord or Tenant, as the case may be.
26.05 Entire Agreement. No oral statements or prior written matter shall
have any force or effect. Tenant agrees that it is not relying on any
representations or agreements other than those contained in this Lease. This
Agreement shall not be modified or canceled except by writing subscribed by all
parties.
26.06 Parties. Except as herein otherwise expressly provided, the
covenants, conditions and agreements contained in this lease shall bind and
inure to the benefit of Landlord and Tenant and their respective heirs,
successors, administrators and assigns.
26.07 Restriction on use of Landlord's Adjacent Land. Attached as Schedule
26.07 is a list of all real estate owned beneficially or of record by Landlord,
by ▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or by any entities in which ▇▇▇▇▇ or
▇▇▇▇▇▇▇▇ own any interest, located within a five mile radius of the leased
premises. Landlord hereby agrees that during the term of this Lease, with the
exception of the A-2 and Cox and ▇▇▇▇▇▇ parcels described in such Schedule
26.07, none of the Landlord, ▇▇▇▇▇ or ▇▇▇▇▇▇▇▇, or entities in which they have a
controlling interest shall use the restricted property designated in such
Schedule 26.07 for a motel, hotel, inn, restaurant or other type of place of
lodging or guest entertainment (other than single family residences). The
restriction imposed hereby for the benefit of Tenant is intended to run with the
land and be enforceable against Landlord's successors in title to such land.
29
IN WITNESS WHEREOF, the parties hereto have executed this Lease under seal
as of the day and year first above written.
WOLF MOUNTAIN RESORTS, L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its Managing Member
ASC UTAH
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Its Vice President
30
GUARANTY COMMITMENT
ASC Holdings, Inc., a Maine corporation with a principal place of business
at Newry, Maine ("ASC"), does hereby agree to execute the guaranty described in
Exhibit ____ attached hereto. In connection therewith, ASC covenants and agrees
as follows:
ASC is a corporation duly organized, validly existing and in good standing
under the laws of Maine with full power and authority to own or lease its
property and to carry on its businesses as now conducted.
The execution and delivery of this Agreement and the Related Agreements by
ASC and the performance by ASC of the obligations to be performed hereunder and
thereunder have been duly authorized by all necessary and appropriate action by
the directors of ASC and no shareholder approval is required in connection
therewith. The execution and delivery of this Agreement and the Related
Agreements and the consummation of the transactions contemplated hereby and
thereby do not and will not conflict with or result in a breach of, or
constitute a default under, the terms and conditions of ASC's Certificate of
Incorporation, By-Laws, any court or administrative order or process by which
ASC is bound, or any agreement or instrument to which ASC is a party or is
bound. This Agreement and the Related Agreements are the valid and binding
obligations of ASC, enforceable in accordance with their terms, subject to
equitable principles and applicable bankruptcy and other creditors' rights,
laws, regulations and rulings.
ASC HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Its: Vice President
31