Exhibit 10.2
SUBLEASE
between
LAKE ▇▇▇▇▇▇ ISLANDS DEVELOPMENT AUTHORITY,
Sublessor
and
KSL LAKE ▇▇▇▇▇▇, INC.,
Sublessee
Dated: As of _________, 19__
Location: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
TABLE OF CONTENTS
Page
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1. Basic Provisions and Definitions..................................... 1
2. Premises............................................................. 8
3. Term................................................................. 9
4. Rent................................................................. 10
5. Sublessor's Lien..................................................... 14
6. Tax Payments......................................................... 15
7. Use.................................................................. 17
8. Alterations and Improvements......................................... 19
9. Repairs and Maintenance.............................................. 25
10. Insurance and Indemnity.............................................. 27
11. Utilities............................................................ 31
12. Assignment, Mortgaging and Subletting................................ 31
13. Access............................................................... 49
14. Sublessee's Property................................................. 49
15. Casualty Damage...................................................... 49
16. Eminent Domain....................................................... 52
17. Events of Default.................................................... 56
18. Sublessor's Remedies................................................. 58
19. Curing Sublessee's and Sublessor's Defaults.......................... 63
20. Surrender............................................................ 64
21. Quiet Enjoyment...................................................... 64
22. Estoppel Certificates................................................ 65
23. Memorandum of Sublease............................................... 66
24. Notices.............................................................. 66
25. Brokers.............................................................. 67
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Page
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26. Miscellaneous........................................................ 67
27. Guarantor............................................................ 69
28. Time of the Essence.................................................. 69
29. Sublease Subject to Other Agreements; Covenant to
Perform Obligations.................................................. 69
30. Force Majeure........................................................ 74
31. Purchase Option...................................................... 74
32. Proration of Income and Expenses..................................... 75
33. Liquor Licenses...................................................... 75
34. Hotel Tax............................................................ 75
35. Due Authorization, Execution and Delivery of Sublease................ 76
36. Right of First Refusal............................................... 76
37. Assignments by Sublessor to Certain Parties.......................... 80
38. Maintenance by Sublessor............................................. 81
39. Financial Statements................................................. 81
-ii-
Schedule of Exhibits First Reference
-------------------- ---------------
Exhibit "A" - Description of Premises........................ss.1.17, p. 6
Exhibit "B" - Existing Title Exceptions......................ss.1.18, p. 6
Exhibit "C" - Description of Prime Lease.....................ss.1.19, p. 6
Exhibit "D" - Description of LLIDA Sublease..................ss.1.21, p. 6
Exhibit "E" - Percentage Rent Rider..........................ss.1.24, p. 7
Exhibit "F" - Use Restrictions................................ss.1.7, p. 2
Exhibit "G" - Hazardous Wastes Rider..........................ss.7.1,p. 15
Exhibit "H" - Memorandum of Lease.............................ss.23, p. 55
Exhibit "I" - Guaranty........................................ss.27, p. 57
Exhibit "J" - Corps Consent, Estoppel and
Non-Disturbance Agreement....................ss.1.28, p. 7
Exhibit "K" - DNR Consent, Estoppel and
Non-Disturbance Agreement....................ss.1.29, p. 7
Exhibit "L" - KSL Development Plan...........................ss.1.30, p. 7
Exhibit "M" - Closing Statement..............................ss.1.31, p. 7
Exhibit "N" - Property Pledged Under
Sublessor's Lien.............................ss.5.1, p. 12
Exhibit "O" - Intentionally Omitted
Exhibit "P" - Form of Mortgagee Recognition
Agreement................................ss.12.7(H), p. 36
Exhibit "Q" - Form of LLIDA Consent, Estoppel &
Non-Disturbance Agreement................ss.12.6(A), p. 29
Exhibit "R" - Improvements to be Owned by
Sublessee......................................ss.8.5, p. 19
Exhibit "S" - Schedule of Minimum Sub-sublease
Requirements..................................ss.12.1,p.26
Exhibit "T" - Schedule of 1995 Gross
Revenue...................(Exhibit "S"), ss.1 (a)(i), p. 1
Exhibit "U" - Liquor License Requirements.......................ss.33,p.62
Exhibit "V" - Form of Environmental Hazard
Insurance Policy............................ss.10.2, p. 24
Exhibit "W" - Schedule of Existing Conditions...............ss.10.5, p. 25
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SCHEDULE OF DEFINITIONS
DEFINED TERM FIRST REFERENCE
------------ ---------------
1972 Act.......................................................Exhibit "C", p. 2
AAA...........................................................ss.18.12(c), p. 51
Additional Premises............................................Exhibit "C", p. 1
Additional Rent..................................................ss.4.1(c), p. 9
Address of Guarantor...............................................ss.1.16, p. 6
Address of Sublessee................................................ss.1.5, p. 2
Address of Sublessor.................................................ss.1.3, p.2
Aggregate Revenue..............................................Exhibit "E", p. 1
Allocated Annual Sales Base....................................Exhibit "S", p. 1
Annual Basic Rent Rate.............................................ss.1.11, p. 5
Annual Sales Base..............................................Exhibit "E", p. 1
Approved Sublease Form............................................ss.12.1, p. 26
Army............................................................Exhibit "C", p.1
Assignee.........................................................ss.36(b), p. 64
Assignment 1...................................................Exhibit "C", p. 1
Authority......................................................ss.29.1(a), p. 58
Basic Rent........................................................ss.41(a), p. 9
Bridge Maintenance Agreement.....................................ss.19(b), p. 52
Change Order....................................................ss.8.2(e), p. 18
Closing Statement..................................................ss.1.31, p. 7
Commencement Date...................................................ss.1.8, p. 4
Contract.......................................................Exhibit "C", p. 2
Corps......................................................................p. 68
Corps of Engineers.................................................ss.1.26, p. 7
Corps Consent, Estoppel and Non-Disturbance
Agreement.......................................................ss.1.28, p. 7
Date of this Sublease...............................................ss.1.1, p. 1
DEP............................................................Exhibit "G", p. 1
DNR................................................................ss.1.27, p. 7
DNR Consent, Estoppel and Non-Disturbance
Agreement.......................................................ss.1.29, p. 7
Environmental Complaint........................................Exhibit "G", p. 1
EPA............................................................Exhibit "G", p. 1
Event of Default..................................................ss.17.1, p. 47
Execution Date......................................................ss.1.6, p. 2
Existing Improvements..............................................ss.9.3, p. 22
Existing Title Exceptions..........................................ss.1.18, p. 6
Expiration Date.....................................................ss.1.9, p. 4
Extension Option.................................................ss.3 2(a), p. 8
Extension Period.................................................ss.3.2(a), p. 8
Fifth Supplemental Agreement...................................Exhibit "C", p. 1
First Partial Lease Year.......................................Exhibit "E", p. 1
First Supplemental Agreement...................................Exhibit "C", p. 1
Fourth Supplemental Agreement..................................Exhibit "C", p. 1
GAAP...........................................................Exhibit "E", p. 2
GDOT.............................................................ss.19(b), p. 52
Gross Revenue..................................................Exhibit "E", p. 2
Guarantor..........................................................ss.1.15, p. 6
Hall County Agreement...............................................ss.34, p. 62
Hazardous Discharge............................................Exhibit "G", p. 1
-iv-
SCHEDULE OF DEFINITIONS - CONTINUED
DEFINED TERM FIRST REFERENCE
------------ ---------------
Impositions........................................................ss.1.10, p. 4
Incurable Defaults.............................................ss.12.7(E), p. 32
Individual Sublease...............................................ss.12.8, p. 38
Individual Subleases..............................................ss.12.8, p. 38
Initial Premises...............................................Exhibit "C", p. 1
Insurance Costs...................................................ss.10.1, p. 23
Insurance Requirements.............................................ss.1.13, p. 5
KSL Conceptual Plan................................................ss.1.30, p. 7
Last Partial Lease Year........................................Exhibit "E", p. 5
Late Payment Interest Rate..........................................ss.4.4, p. 9
Lease..........................................................Exhibit "C", p. 1
Leasehold Mortgage................................................ss.1.13A, p. 5
Leasehold Mortgagee.............................................ss.1.13(B), p. 5
Lease Year.........................................................ss.1.24, p. 7
Lessee.........................................................ss.29.1(a), p. 57
Legal Requirements.................................................ss.1.14, p. 5
LLIDA..............................................................ss.1.20, p. 6
LLIDA Sublease.....................................................ss.1.21, p. 6
LLIDC...............................................................ss.1.22, p.6
Major Event.....................................................ss.4.5(a), p. 10
Material Portion of the Premises...........................ss.16.1(a)(ii), p. 44
Minimum Sublease Rent.............................................ss.12.1, p. 26
Mortgagee Sublease.............................................ss.12.7(G), p. 33
Net Sailing Academy Revenue....................................Exhibit "E", p. 3
Net ▇▇▇▇▇▇▇▇ Revenue...........................................Exhibit "E", p. 3
New Improvements...................................................ss.9.3, p. 22
Notice of Contest.............................................ss.18.12(a), p. 51
Notices.............................................................ss.24, p. 55
Parks..........................................................Exhibit "C", p. 1
Percentage Rent..................................................ss.4 1(b), p. 9
Percentage Rent Rate...........................................Exhibit "E", p. 1
Permitted Use.......................................................ss.1.7, p. 2
Personal Property...................................................ss.31, p. 62
Preapproved Project...............................................ss.12.4, p. 28
Preapproved Projects..............................................ss.12.4, p. 28
Premises...........................................................ss.1.17, p. 6
Prime Lease........................................................ss.1.19, p. 6
Proration Date......................................................ss.32, p. 62
Recognized Sub-sublease........................................ss.12.6(A), p. 29
Recognized Sub-sublessee.......................................ss.12.6(A), p. 29
Rent................................................................ss.4.1, p. 9
Rent Reduction..................................................ss.4.5(b), p. 11
Reserve Account....................................................ss.9.4, p. 22
Reserve Deposit....................................................ss.9.4, p. 22
Reserve Deposits...................................................ss.9.4, p. 22
Sailing Academy License........................................Exhibit "E", p. 3
Second Supplemental Agreement..................................Exhibit "C", p. 1
▇▇▇▇▇▇▇▇ Sublease..................................................ss.1.23, p. 6
Sublessee...........................................................ss.1.4, p. 2
Sublessee's Accountants........................................Exhibit "E", p. 6
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SCHEDULE OF DEFINITIONS - CONTINUED
DEFINED TERM FIRST REFERENCE
------------ ---------------
Sublessor...........................................................ss.1.2, p. 1
Sublessor's Accountants........................................Exhibit "E", p. 7
Sublessor's Lien...................................................ss.1.12, p. 5
Substantial Completion.............................................ss.8.3, p. 18
Successors and Assigns.........................................Exhibit "I", p. 4
▇▇▇▇▇▇▇▇'▇ Sublessee...............................................ss.1.25, p. 7
Term................................................................ss.3.1, p. 8
Third Supplemental Agreement...................................Exhibit "C", p. 1
Title Objections.................................................ss.36(d), p. ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Persons........................................ss.36(b)(ii), p. 64
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AGREEMENT OF SUBLEASE -- LAKE ▇▇▇▇▇▇ ISLANDS
THIS SUBLEASE ("Sublease"), made and entered into as of ____________, 19__
(referred to herein as the "date of this Sublease"), by and between LAKE ▇▇▇▇▇▇
ISLANDS DEVELOPMENT AUTHORITY, a body corporate and politic created and existing
under the laws of the State of Georgia, as sublessor ("Sublessor") and KSL LAKE
▇▇▇▇▇▇, INC., a Delaware corporation, as sublessee ("Sublessee");
W I T N E S S E T H :
WHEREAS under and by virtue of the "LLIDA Sublease" (as hereinafter
defined), Sublessor is the sublessee and the owner and holder of a subleasehold
estate in certain property in Hall County, Georgia commonly known as "Lake
▇▇▇▇▇▇ Islands"; and
WHEREAS, Sublessor has determined, in the exercise of the authority vested
in it by law, that a privatization of the operation of the recreational resort
development on said property is the appropriate means to achieve the objectives
contemplated by Official Code of Georgia Annotated Section 12-3-318; and
WHEREAS, Sublessee is experienced in the operation of such recreational
resort developments and desires to enter into a sub-sublease of said property
and the improvements thereon from Sublessor; and
WHEREAS, Sublessor has determined that it is in the best interests of the
Sublessor and the State of Georgia for Sublessor to enter into such sub-sublease
with Sublessee;
NOW, THEREFORE, for and in consideration of the premises recited above,
the covenants and agreements hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Sublessor and Sublessee do hereby covenant and agree as follows:
1. Basic Provisions and Definitions.
This Paragraph 1 is an integral part of this Sublease and all of the terms
hereof are incorporated into this Sublease in all respects. In addition to the
other terms which are defined in this Sublease, the following capitalized terms,
whenever used in this Sublease, shall have the meanings set forth in this
Paragraph 1, and only such meanings, unless such meanings are expressly
contradicted, limited or expanded elsewhere herein:
1.1 Date of this Sublease: As of __________, 19__.
1.2 Sublessor: LAKE ▇▇▇▇▇▇ ISLANDS DEVELOPMENT AUTHORITY.
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1.3 Address of Sublessor: Lake ▇▇▇▇▇▇ Islands Development
Authority
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇,
Interim Executive Director
1.4 Sublessee: KSL LAKE ▇▇▇▇▇▇, INC.
1.5 Address of Sublessee: KSL Lake ▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
With a copy to: KSL Lake ▇▇▇▇▇▇, Inc.
▇▇-▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Billing Address of
Sublessee: KSL Lake ▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
1.6 Execution Date: The date of actual execution and delivery of this
Sublease, which the parties acknowledge to be 19__ [insert date of release from
escrow].
1.7 Permitted Use: The following uses, to the extent consistent with the
KSL Development Plan, as the same may be modified as provided herein, permitted
by the Corps of Engineers, and subject to the use restrictions set forth in
Exhibit "F", as the same may be modified as provided herein:
(a) Public park and recreational purposes, including, without
limitation, theme and amusement parks, resort attractions, resort uses, resort
rentals, hiking trails, swimming pools and water related amenities;
(b) Hotels and related uses, including, without limitation, hotel
villas, suites, lodges, conference rooms, ballrooms, restaurant and hotel retail
facilities, sales and marketing facilities, office spaces related to the hotel
operations, and educational and classroom facilities;
(c) Vacation services, including, but not limited to, tourist and
travel agency services, vacation related activities, including summer camps,
family events, dances and dining, rentals of resort villas, cabins, campground
spaces, boat rental operations and uses incidental thereto, including sale of
fuel and service and repair facilities for rental boats, and horseback and
stable operations;
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(d) Sports and entertainment uses, including, without limitation,
golf and tennis facilities, fitness and health facilities, fishing tournaments,
fishing schools and teaching facilities and other facilities relating to
fishing, dining areas and beverage establishments, entertainment venues,
jogging, biking and hiking improvements, theaters, amphitheaters and festival
venues, golf practice areas, golf clubhouse and lodging facilities, golf retail
and restaurant facilities, golf schools and teaching facilities, tennis practice
facilities, tennis clubhouse and lodging facilities, tennis retail and
restaurant facilities, tennis schools and teaching facilities;
(e) Retail stores and other commercial uses (such as, without
limitation, restaurants, gift shops, apparel boutiques, drug stores, convenience
stores, sporting goods stores, nightclubs, laundries and dry cleaners, fishing
and camping retail sales outlets, arts and crafts stores, recreational clothing
and merchandise stores, boat and water related equipment sales facilities,
subject to Paragraph 1(x) on the attached Exhibit "F", containing certain
restrictions on boat and related sales) consistent with a recreational resort;
(f) Restaurant and related uses, including, without limitation,
restaurants, food and beverage facilities, and related facilities, related
office areas for restaurant and related activities, catering and sales marketing
facilities;
(g) Office and other uses relating to operations on the Premises by
any partnership, association, corporation or other entity owned or controlled by
Sublessee or which owns or controls Sublessee, or which is under common control
with Sublessee (an "Affiliate"); office and other uses incidental to any other
Permitted Use by parties which are otherwise conducting on the Premises any of
the Permitted Uses;
(h) Office uses by Affiliates of Sublessee not relating to
operations on the Premises by such Affiliates, provided that the usable square
footage occupied by all such Affiliates in connection with such unrelated uses
does not exceed, in the aggregate, 25,000 usable square feet;
(i) Office uses by parties other than Affiliates of Sublessee, which
office uses are not incidental to any other Permitted Use by such party,
provided that the usable square footage occupied by all such parties does not
exceed, in the aggregate, 150,000 usable square feet (excluding square footage
occupied in connection with or incidental to other Permitted Uses by such
parties);
(j) Ancillary infrastructure and support facilities, including,
without limitation, utilities, roads, parking lots or structures,
telecommunications facilities, heating, ventilation and air conditioning
facilities, boiler room facilities and other
4
mechanical facilities and equipment, maintenance areas and structures;
(k) Theme attractions, including aerial and ground rides, aquariums,
dinner cruise boat attractions, and facilities typically found in water parks,
theme parks or other daily fee attraction venues;
(l) Docks, moorings, wharves, and other similar facilities, which
may be located on the waters of Lake ▇▇▇▇▇▇ within the areas permitted by the
Prime Lease and this Sublease. Sublessee shall not construct or operate marinas
(consisting of docks the primary purpose of which is the storage of boats by the
general public, and boat repair facilities), except as may be approved in
writing by the Corps of Engineers. This provision shall not be deemed to
prohibit the acquisition, ownership or operation by Sublessee, or an Affiliate
of Sublessee, or by a joint venture or other entity in which Sublessee or its
Affiliate is a venture partner or other beneficial owner, of the Holiday on Lake
▇▇▇▇▇▇ ▇▇▇▇▇▇ located adjacent to the Premises, or of an operating or other
agreement or arrangement between Sublessee and the owner, lessee or operator of
the Holiday on Lake ▇▇▇▇▇▇ ▇▇▇▇▇▇, or of the expansion thereof with the prior
approval of the Corps of Engineers within the cove adjacent to the Holiday on
Lake ▇▇▇▇▇▇ ▇▇▇▇▇▇;
1.8 Commencement Date: The date of commencement of the Term shall be the
Execution Date.
1.9 Expiration Date: The Expiration Date shall be 12:00 midnight on
_________, 20__ [insert date which is two days prior to expiration of Prime
Lease], subject to earlier termination as provided in this Sublease, and subject
to extension as provided in Paragraph 3.2 of this Sublease.
1.10 Impositions: All taxes, assessments, use and occupancy taxes, transit
taxes, water and sewer charges, rates and rents, charges for public utilities,
excises, levies, license and permit fees and other charges, general and special,
ordinary and extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever, which shall or may during the Term (as hereinafter defined) be
assessed, levied, charged, confirmed or imposed upon or accrue or become due or
payable out of or on account of or become a lien on the Premises or any portion
thereof, the appurtenances thereto, or the rent and income [including rents and
other income received by or for the account of Sublessee from any subtenants or
for any use or occupation of the Premises or any portion thereof, and such
franchises, licenses and permits as may be appurtenant to the use of the
Premises or any portion thereof, or any documents to which Sublessee is a party
(which documents create or transfer any interest or estate in the Premises or
any portion thereof, payable to any governmental body)]. Impositions shall not
include any income taxes, capital levy, estate, succession,
5
inheritance or transfer taxes or similar tax payable by or imposed upon
Sublessor or DNR or any franchise taxes imposed upon any owner of the fee of the
Premises or any income, profits or revenue tax, assessment or charge imposed
upon the rent or other benefit received by Sublessor under this Sublease, by any
municipality, county or state, the United States of America or any governmental
body, or any tax or other assessment (other than the hotel tax described in
Paragraph 34 below) levied by Sublessor or DNR solely against the Premises or
any portions thereof, or solely against properties or assets such as the
Premises which have been privatized by the State of Georgia; provided, however,
that if at any time during the Term, the present method of taxation or
assessment shall be so changed that the whole or any part of the taxes,
assessments, levies, impositions or charges now levied, assessed or imposed on
real estate and the improvements thereon shall be discontinued and as a
substitute therefor, taxes, assessments, levies, impositions or charges shall be
levied, assessed and/or imposed wholly or partially as a capital levy or
otherwise on the rental received from said real estate or the rents reserved
herein or any part thereof, then such substitute taxes, assessments, levies,
impositions or charges, to the extent so levied, assessed or imposed, shall be
deemed to be included within the term "Impositions" to the extent that such
substitute tax would be payable if Premises were the only property of Sublessor
subject to such tax. Impositions shall not include any taxes (including, without
limitation, any state, county or local ad valorem real estate taxes) which are
imposed on the interest of Sublessor hereunder, or on the interest of DNR in the
Premises, or which are hereafter imposed as the result of any transfer by
Sublessor or DNR to any party to whom the tax exemptions currently available to
DNR and Sublessor are not available or applicable.
1.11 Annual Basic Rent Rate: Three Million and No/100 Dollars
($3,000,000.00) per annum ($250,000.00 per month) during the Term.
1.12 Sublessor's Lien: As defined in Paragraph 5 hereof.
1.13 Insurance Requirements: All requirements of any insurance policy
required under this Sublease covering or applicable to any part of the Premises
or the use thereof; all requirements of the issuer of any such policy, and all
orders, rules, regulations, and other requirements of the Association of Fire
Underwriters, Factory Mutual Insurance Companies, the Insurance Services
Organization, and any other body exercising the same or similar functions and
having jurisdiction or cognizance of any part of the Premises. Insurance
Requirements shall not include any requirements, orders, rules, regulations or
recommendations imposed by the Georgia Department of Administrative Services or
any successor office or department which carries or coordinates insurance for
Sublessor, DNR or the State of Georgia.
6
1.13A Leasehold Mortgage: as defined in Paragraph 12.7 hereof.
1.13B Leasehold Mortgagee: as defined in Paragraph 12.7 hereof.
1.14 Legal Requirements: All laws, statutes and ordinances (including
building codes and zoning regulations and ordinances, to the extent the same are
applicable to the Premises) and the orders, rules and regulations of all
federal, state, county and city departments, bureaus, boards, agencies, offices,
commissions and other subdivisions thereof, or of any official thereof, or of
any other governmental, public or quasi-public authority, whether now or
hereafter in force, which may be applicable to the Premises, or any part
thereof, all requirements, obligations and conditions of all Existing Title
Exceptions and all requirements, obligations and conditions of all future
instruments of record to which Sublessee is a party or consents in writing.
Legal Requirements shall not include any order, rule, regulation, directive or
requirement of the State of Georgia or any such state, county or city
department, bureau, board, agency, office, commission or other subdivision
thereof, or of any official thereof, or of Sublessor, (a) which is applicable
solely to the Premises or any portions thereof (except any such orders,
directives or requirements pursuant to laws and regulations of general
application, such as enforcement of violations of health codes of general
application), or (b) which is applicable solely to properties or assets such as
the Premises which have been privatized by the State of Georgia, to the extent
that any such order, rule, regulation, directive or requirement is in conflict
or inconsistent with the provisions of this Sublease, or imposes additional
duties or obligations on Sublessee which are not contained in this Sublease.
1.15 Guarantor: KSL Recreation Corporation, a Delaware corporation.
1.16 Address of Guarantor: KSL Recreation Corporation
▇▇-▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
1.17 Premises: Those certain premises consisting of approximately 1,040.7
acres of land located in Hall County, Georgia, and being more particularly
described on Exhibit "A" attached hereto and made a part hereof, together with
the improvements thereon, said land and improvements being commonly known as
Lake ▇▇▇▇▇▇ Islands; together with all rights, members, easements and
appurtenances benefiting or appertaining thereto; together with all intervening
lands between the lands otherwise described on Exhibit "A" and the water's edge
of Lake ▇▇▇▇▇▇ ▇▇▇▇▇▇, as it may vary due to water level fluctuations; together
with the right to place recreational facilities and establish protected swimming
areas in and upon the adjacent water areas of
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Lake ▇▇▇▇▇▇ ▇▇▇▇▇▇ subject to the provisions of the Prime Lease, it being
understood that, upon construction of such facilities and establishment of such
protected swimming areas, the Premises shall then include, without further
amendment of this Sublease, the area occupied by, and land and water area within
100 feet of, such approved recreation facilities and protected swimming areas.
1.18 Existing Title Exceptions: The matters set forth on Exhibit "B"
attached hereto.
1.19 Prime Lease: That certain lease described in Exhibit "C" attached
hereto.
1.20 LLIDA: Lake ▇▇▇▇▇▇ Islands Development Authority, a body corporate
and politic created and existing under the laws of the State of Georgia.
1.21 LLIDA Sublease: That certain sublease described in Exhibit "D"
attached hereto.
1.22 LLIDC: Lake ▇▇▇▇▇▇ Islands Development Commission, a former
department of the executive branch of the State of Georgia.
1.23 ▇▇▇▇▇▇▇▇ Sublease: That certain Lease Agreement dated February 26,
1973, by and between LLIDC and LLIDA, as lessor, and ▇▇▇▇▇▇ Islands Inn
Associates (the "Partnership"), a general partnership originally composed of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. Rate, as amended by Amendment
to Lease Agreement dated March 26, 1974 and recorded in Deed Book 559, page 376,
Hall County, Georgia records, by and between LLIDC and LLIDA, as lessor, and the
Partnership, as lessee (through its partners ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇),
as further amended by Amendment to Lease Agreement dated June 18, 1976, by and
between LLIDC and LLIDA, as lessor, and the Partnership, as lessee (through its
partners ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, E. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, W. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇), as further amended by Amendment to Lease Agreement dated October 28,
1976, by and between LLIDC and LLIDA, as lessor, and the Partnership, as lessee
(through its partners ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, W. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇), and
assigned by the Partnership to The ▇▇▇▇▇▇▇▇ Corporation, an Ohio Corporation as
of February 25, 1977, and recorded in Deed Book 621, page 429, aforesaid
records, and further assigned by The ▇▇▇▇▇▇▇▇ Corporation to The ▇▇▇▇▇▇▇▇ Hotel
Company pursuant to that certain Transfer and Assignment of Lessee's Interest in
Lease, dated September 15, 1989 and recorded in Deed Book 1415, page 151,
aforesaid records, and as further assigned by The ▇▇▇▇▇▇▇▇ Hotel Company to the
current ▇▇▇▇▇▇▇▇'▇ Sublessee.
8
1.24 Lease Year: As defined in Exhibit "E" hereto.
1.25 ▇▇▇▇▇▇▇▇'▇ Sublessee: the holder of the interest of the sublessee
under the ▇▇▇▇▇▇▇▇ Sublease.
1.26 Corps of Engineers: The United States Army Corps of Engineers
1.27 DNR: The State of Georgia acting through its Department of Natural
Resources.
1.28 Corps Consent, Estoppel and Non-Disturbance Agreement: That certain
Consent, Estoppel and Non-Disturbance Agreement executed by the Corps of
Engineers in favor of Sublessee and its permitted assignees and sublessees, a
copy of which is attached hereto as Exhibit "J".
1.29 DNR Consent, Estoppel and Non-Disturbance Agreement: That certain
Consent, Estoppel and Non-Disturbance agreement executed by DNR in favor of
Sublessee and its permitted assignees and sublessees, a copy of which is
attached hereto as Exhibit "K".
1.30 KSL Development Plan: That certain conceptual plan shown on the
document referenced on Exhibit "L"attached hereto, which plan has been approved
by Sublessor and DNR, as the same may be modified or amended from time to time
with the approval of Sublessor, DNR and the Corps of Engineers. The approval of
Sublessor to any such modifications of such conceptual plan shall not be
unreasonably withheld, delayed or conditioned. In addition, Sublessor will
assist and cooperate with Sublessee in obtaining the approval of the Corps of
Engineers to such conceptual plan, and will assist and cooperate with Sublessee
in obtaining the approval of the Corps of Engineers and DNR to any such
modifications of such conceptual plan which are or are required to be approved
by Sublessor under this Sublease.
1.31 Closing Statement: That certain Closing Statement which is executed
by the Sublessee and Sublessor contemporaneously with this Sublease and which
relates to the proration, adjustments, and other economic information between
the parties relating to the transfer of the Premises from Sublessor to
Sublessee, a copy of which is attached hereto as Exhibit "M".
2. Premises.
2.1 Sublessor hereby demises and leases to Sublessee and Sublessee hereby
leases, rents and hires from Sublessor, the Premises, subject, however, to the
Existing Title Exceptions and terms and conditions of this Sublease. It is the
specific intent and agreement of the parties hereto that this Sublease shall
create and vest in Sublessee an estate for years in and to the Premises, and not
a usufruct.
9
3. Term.
3.1 The term of this Sublease (the "Term") shall commence on the
Commencement Date, as set forth in Paragraph 1.8 hereof, and shall end at
midnight on the Expiration Date, as set forth in Paragraph 1.9 hereof, unless
the Term shall sooner terminate or be extended pursuant to any of the terms or
conditions of this Sublease.
3.2 (a) Sublessor and Sublessee acknowledge and agree that the term of the
Prime Lease currently expires on _________, 20__ [insert date of expiration of
Prime Lease, not later than 50 years from release from escrow] [***and the term
of the LLIDA Sublease currently expires _________, 20__ [insert date which is
one day prior to date of expiration of Prime Lease]]. Sublessor agrees that
Sublessee shall have the right (the "Extension Option") to extend the Term of
this Sublease from the expiration date of the Term of this Sublease to
_________, 2056 [insert date which is ten years after initial expiration of this
Sublease] (the "Extension Period") upon the same terms and conditions set forth
in this Sublease (including, without limitation, Basic Rent and Percentage
Rent), provided that the term of the Prime Lease is extended so as to expire no
earlier than _________, 2056 [insert date which is ten years after initial
expiration of Prime Lease]. Sublessor agrees that it will assist Sublessee in
the presentation of any request for any such extension of the term of the Prime
Lease to the Corps of Engineers, and use its reasonable efforts to obtain
approval by the Corps of Engineers. DNR has agreed that, if the Prime Lease is
extended as described in this Paragraph 3.2(a), the LLIDA Sublease will be
extended for the same period of time. If the Prime Lease is extended by the
Corps of Engineers to a date which is earlier than ________, 2056 [insert date
which is 10 years after initial expiration of Prime Lease], the Extension Period
shall expire on the day which is two (2) days prior to the expiration date of
the Prime Lease, as so extended, and the Extension Option shall be deemed to
apply to such shorter Extension Period. Sublessee shall give Sublessor written
notice on or before _________, 2008 [insert day of month which is two days prior
to expiration day of month of Prime Lease in 2056] whether Sublessee desires to
exercise the Extension Option.
(b) It is further understood and agreed that during the term of this
Sublease it is contemplated by Sublessor and Sublessee that Sublessee will
develop improvements on the Premises. To the extent it becomes necessary or
desirable to extend the expiration of the Term of this Sublease beyond the then
balance of the Term to a new term for a full fifty (50) years from the date of
the request for extension, Sublessor will consider in good faith a request for
such an extension. Sublessor reserves the right to require changes in this
Sublease for the period of the new extension, provided that, except as
hereinabove set forth, no changes shall be made in the rent and other terms of
the Sublease applicable to any extension of the
10
Term during the Extension Period. Sublessor also agrees that it will assist
Sublessee in the presentation of a request to the Corps of Engineers and DNR for
any such extension of the Prime Lease and the LLIDA Sublease approved by
Sublessor, and use its reasonable efforts to obtain approval by the Corps of
Engineers and DNR.
4. Rent.
4.1 Sublessee shall pay to Sublessor during the Term, in lawful money (by
good check evidencing immediately available funds) of the United States, without
any prior demand therefor and without any offsets or deductions whatsoever
except as may be other~vise expressly provided herein, the following sums
(collectively, "Rent"):
(a) fixed rent ("Basic Rent") at the Annual Basic Rent Rate for the
period commencing on the Execution Date and ending on the Expiration Date. In
addition, an amount equal to the amount of Basic Rent which would have been
payable for the period beginning on (and as though the Term of this Sublease had
commenced on) the Proration Date and ending on the day prior to the Execution
Date shall be due and payable on the Execution Date.
(b) percentage rent ("Percentage Rent") at the rate specified in,
and on the terms and conditions set forth in, the Percentage Rent Rider attached
hereto as Exhibit "E"; and
(c) additional rent ("Additional Rent") consisting of all other sums
of money as shall become due from and be payable by Sublessee hereunder (for
default in the payment of which Sublessor shall have the same remedies as for a
default in the payment of Basic Rent). Basic Rent, Percentage Rent and
Additional Rent are sometimes collectively referred to herein as "Rent".
4.2 Except as expressly provided in Paragraph 4.1 hereof, Basic Rent shall
be payable in advance in equal monthly installments beginning on the Execution
Date and continuing on the first day of each calendar month thereafter during
the Term. In addition, an amount equal to the amount of Basic Rent which would
have been payable for the period beginning on (and as though the Term of this
Sublease had commenced on) the Proration Date and ending on the day prior to the
Execution Date shall be due and payable on the Execution Date.
4.3 The amount payable on the Execution Date calculated based upon the
Proration Date, as set forth above, shall be prorated on the basis of the actual
number of days in the month in which the Proration Date occurs. In the event the
Expiration Date shall occur on a day other than the last day of a calendar
month, then the amount of the monthly installment of the Basic Rent for the last
month or portion thereof in which the
11
Expiration Date occurs shall be prorated on the basis of the actual number of
days in such month, and any excess prepaid Basic Rent and Additional Rent shall
be refunded by Sublessor to Sublessee on the Expiration Date.
4.4 If Sublessee shall fail to pay any rents, charges or other sums after
the same become due and payable, such unpaid amounts shall bear interest at the
per annum rate of one percent (1%) in excess of the rate from time to time
announced by NationsBank, N.A. (or any successor thereto) as its "prime rate"
("Late Payment Interest Rate"), calculated on the basis of actual days elapsed,
based on a three hundred sixty (360) day year, from the fifth (5th) business day
following the due date of such rents, charges or other sums to the date of
payment; except that such interest shall never exceed the maximum legal rate
from time to time permitted by applicable law; provided, however, if the payment
is more than thirty (30) days late, the Late Payment Interest Rate, from and
after such thirtieth (30th) day, shall be increased by three (3) percentage
points, except that such interest shall never exceed the maximum legal rate from
time to time permitted by applicable law The provisions herein for Additional
Rent shall not be construed to extend the date for payment of any sums required
to be paid by Sublessee hereunder or to relieve Sublessee of its obligation to
pay all such sums at the time or times herein stipulated. Notwithstanding the
imposition of such Additional Rent, Sublessee shall be in default under this
Sublease if any or all payments required to be made by Sublessee are not made
within ten (10) days following written notice that any such amounts are past
due, which notice shall identify in reasonable detail the items required to be
paid, and the exact amount required to cure such default. Notwithstanding
anything to the contrary in this Sublease, Sublessee shall not be in default
with respect to payment of Percentage Rent until the expiration of ten (10) days
following written notice received by Sublessee of the final determination of the
amount thereof following any dispute with respect thereto, which shall be
resolved in accordance with the provisions of the Percentage Rent Rider attached
hereto as Exhibit "E", provided that Sublessee shall have paid, on or before the
due date or within any applicable notice and grace period, the amount of
Percentage Rent which is undisputed.
4.5 (a) For purposes of this Paragraph 4.5, a "Major Event" shall mean any
of the following events: (i) Sublessee is prevented from charging such prices,
rates and charges as it chooses in its sole discretion for products and services
on the Premises because of the relationship of Sublessor or DNR to the Premises,
or by reason of legal requirements specifically applicable only to the Premises
or applicable solely to properties or assets such as the Premises which have
been privatized by the State of Georgia; (ii) Sublessee is prevented from
charging such prices, rates and charges as the result of controls imposed by the
Corps in a manner inconsistent with the Corps Consent, Estoppel and
Non-Disturbance Agreement; (iii)
12
Sublessee fails to obtain liquor licenses in accordance with the terms of
Paragraph 33 hereof, Sublessee having otherwise complied in all respects with
all of the terms and conditions set forth therein, due to (A) the nonexistence
of Sublessor, (B) Sublessor's failure or refusal to issue such liquor licenses
for any reason other than Sublessee's failure to comply with the usual and
customary requirements of Sublessor, or failure to comply with the terms of
Paragraph 33 hereof, which failure Sublessee fails to cure within thirty (30)
days after receipt of written notice that any such liquor license will not be
issued, which notice shall set forth in reasonable detail the reason that such
liquor license will not be issued and any action required to satisfy the
objections of Sublessor, or (C) the lack of authority of Sublessor to issue
liquor licenses; (iv) the hotel tax described in Paragraph 34 is no longer
imposed by Sublessor, and/or (subject to the limitations on the applications of
such funds described in Paragraph 34 below) Sublessee no longer may use its
discretion in determining how such funds may be utilized in promoting and
marketing the Premises, due to (A) the nonexistence of Sublessor, (B)
Sublessor's failure or refusal to impose such tax, or (C) the lack of authority
of Sublessor to impose such tax; (v) the Corps target level of the waters of
Lake ▇▇▇▇▇▇ is permanently reduced below an elevation of 1059 feet based on
National Geodetic Vertical Datum; and (vi) the State of Georgia (or any other
agency or instrumentality thereof) levies any tax or other assessment solely
against the Premises or any portions thereof, or solely against properties or
assets such as the Premises which have been privatized by the State of Georgia.
The event described in subclause (iv) above shall not be a Major Event if such
hotel tax is no longer imposed by Sublessor by reason of a general repeal of
such tax.
(b) The parties agree that the occurrence of a Major Event may
damage Sublessee, and that a reduction in the rental paid by Sublessee to
Sublessor under this Sublease will be appropriate. Sublessor and Sublessee agree
that in the event of the occurrence of any Major Event, Sublessee shall be
entitled to a reduction of Basic Rent and Percentage Rent in an amount equal to
the losses, costs, damages and expenses incurred by Sublessee by reason of such
Major Event, including, without limitation, start-up costs, marketing and
promotional costs and expenses, and a reasonable, good faith estimate by
Sublessee of lost profits and returns on investment opportunities eliminated by
reason of the occurrence of such Major Event (the total amount of such losses,
costs, damages and expenses is hereinafter referred to collectively as the "Rent
Reduction"). The parties will use good faith efforts to reach an agreement as to
the amount of the Rent Reduction and amend this Sublease to reduce the Rent by
the amount of the Rent Reduction. Upon the occurrence of any Major Event, and
until the amendment of this Sublease to effect the Rent Reduction, or the
termination of this Sublease as hereinafter provided, all Basic Rent and
Percentage Rent under this Sublease shall be tolled in full commencing on the
expiration of one hundred twenty (120) days after the date of
13
such occurrence, provided that the inability of the parties to reach an
agreement as to the amount of the Rent Reduction and to amend this Sublease as
provided above is not the result of any challenge by Sublessee of the
enforceability of any of the provisions of this Paragraph 4.5(b). Any Rent which
is determined to be payable by Sublessee during any period that the rent is
tolled pursuant to the provisions of the preceding sentence shall be paid in
full by Sublessee within ten (10) days after the date of determination of the
amount of the Rent Reduction. The Rent Reduction shall be retroactive to the
date of the occurrence of the Major Event. Any Rent which is determined not to
be payable by Sublessee with respect to the period after the date of occurrence
of a Major Event but which has been previously paid by Sublessee shall be
refunded by Sublessor within ten (10) days after the date of determination of
the amount of the Rent Reduction and, if not so refunded by Sublessor within
such ten (10) day period, Sublessee shall have a right of offset against the
Rent subsequently payable hereunder with respect to the amount not refunded. In
determining the amount of the Rent Reduction, the parties and the appraisers to
be appointed pursuant to Paragraph 4.5(c) below, shall take into account any
reduction in the return on the investment of Sublessee and its permitted
assignees and sublessees of the $9,000,000 payment made by Sublessee
contemporaneously with the execution of this Sublease, and any capital
expenditures made by Sublessee, and its permitted assignees and sublessees, to
the time of determination of such loss.
(c) If the parties are unable to reach agreement as to the amount of
the Rent Reduction, the Rent Reduction, and the amount of the losses, costs,
damages and expenses incurred by Sublessee by reason of such occurrence, shall
be determined by the following appraisal process: Sublessor and Sublessee shall
each appoint one appraiser to determine the Rent, and each shall promptly notify
the other of such appointment. If either party shall fail or refuse so to
appoint an appraiser and give notice thereof within thirty (30) days after
written request from the other party, the appraiser appointed by such other
party shall within an additional thirty (30) days thereafter individually make
any such appraisal. If the parties have each so appointed an appraiser, the two
appraisers thus appointed shall make such determination within thirty (30) days
after the date of the later notice of appointment. If such two appraisers are
unable to agree on such determination within said thirty (30) days, they shall,
within an additional ten (10) days thereafter, jointly appoint a third
appraiser; if they fail so to appoint such third appraiser within said ten (10)
days, the third appraiser shall, within an additional ten (10) days thereafter,
be appointed jointly by Sublessor and Sublessee (or upon their inability to
agree, by the American Institute of Real Estate Appraisers, or its successor).
The three appraisers so appointed shall then, within thirty (30) days after the
appointment of the third appraiser, make such determination by majority vote.
Any determination made pursuant to this Paragraph 4.5(c) shall be
14
binding and conclusive upon Sublessor and Sublessee, without any right of
appeal. All appraisers appointed hereunder shall be competent, qualified by
training and experience, disinterested, independent, and members in good
standing of the American Institute of Real Estate Appraisers, or its successor.
All appraisal reports shall be rendered in writing and signed by the appraiser
or appraisers making the report. Each party shall pay all fees and expenses
charged or incurred by the appraiser appointed by such party; fees and expenses
charged or incurred by the third appraiser and fees and expenses which cannot be
reasonably attributed to any one appraiser shall be borne equally by Sublessor
and Sublessee.
(d) In the event that any Major Event terminates or ceases to occur,
the Rent payable hereunder prior to any Rent Reduction shall be reinstated as of
the date on which such Major Event terminates or ceases to occur.
(e) Upon any such occurrence, if the amount of the Rent Reduction is
insufficient to compensate Sublessee for all losses, costs, damages and expenses
incurred and to be incurred by Sublessee by reason of such occurrence, Sublessee
shall have the further right to terminate this Sublease by providing written
notice of termination to Sublessor within one hundred eighty (180) days after
receipt of written notice by Sublessee of the final determination of the amount
of the Rent Reduction, in which event this Sublease shall terminate on the date
set by Sublessee for termination in such notice, which date shall be not later
than one (1) year after the date of such notice.
(f) If Sublessee elects to terminate this Sublease pursuant to
Paragraph 4.5(e) above, Sublessee shall be entitled to receive from Sublessor
reimbursement for the unamortized costs (based on then current book value and
using the straight-line method of depreciation, based upon useful lives used by
Sublessee for tax purposes) of all buildings, structures and improvements
constructed upon the Premises by Sublessee or its sub-sublessees, and any
unamortized portion of the $9,000,000 payment made by Sublessee to Sublessor
contemporaneously with the execution of this Sublease. Proof of such unamortized
costs must be provided to Sublessor prior to reimbursement. In addition, all
items of income and expense under this Sublease or otherwise with respect to the
Premises shall be prorated as of midnight of the day prior to the effective date
of termination, consistent with the manner in which such items of income and
expense were prorated between Sublessor and Sublessee contemporaneously with the
execution of this Sublease.
5. Sublessor's Lien.
5.1 In addition to Sublessor's statutory landlord's lien as security for
the faithful performance of the undertakings, duties and obligations of
Sublessee under this Sublease, Sublessee hereby grants to Sublessor a security
interest in and lien
15
("Sublessor's Lien") on certain equipment and other personal property described
in Exhibit "N" attached hereto and by this reference incorporated herein.
Sublessee agrees to execute such security agreements and UCC financing
statements as Sublessor may require in form and substance reasonably
satisfactory to Sublessor and Sublessee to evidence Sublessor's Lien
5.2 Sublessor's Lien shall be released at such time as Sublessee has
expended $3,000,000.00 for capital improvements and additions to and upon the
Premises, exclusive of the amount of capital expenditures funded from the
Reserve Account established pursuant to Paragraph 9.4 below. The amount secured
by Sublessor's Lien shall be reduced, dollar for dollar, by the amount expended
by Sublessee from time to time for such improvements and additions to and upon
the Premises, exclusive of such amounts funded from the Reserve Account.
5.3 If, upon the date on which Sublessor's Lien is required to be released
under Section 5.2, above, and in any event upon the expiration of the Term,
Sublessee shall have well and truly performed all of the undertakings, duties
and obligations required of Sublessee under this Sublease including, but not
limited to, the payment of the Rent and all other sums owed by Sublessee to
Sublessor hereunder, then the Sublessor's Lien, to the extent not theretofore
released in accordance with subparagraph 5.2, shall be terminated by Sublessor.
At such time as Sublessor is required to release or terminate Sublessor's Lien,
Sublessor shall execute a UCC Financing Statement Termination Statement and file
the same in the appropriate UCC records, evidencing the release or termination
of Sublessor's Lien.
5.4 Sublessor does hereby waive any right to any lien, including any
statutory landlord's lien, in or on any logos, trademarks, tradenames,
characters or other intellectual property owned by Sublessee and used in
connection with the ownership or operation of all or any part of the Premises.
6. Tax Payments.
6.1 As Additional Rent during the Term, Sublessee will pay or cause to be
paid all Impositions, as and when the same shall become due, except that all
Impositions for the fiscal years or tax years in which this Sublease commences
and expires shall be apportioned so that Sublessee shall pay the portions of the
Impositions that are applicable to the period during the Term of this Sublease
and Sublessor shall pay the portion thereof applicable before and after the
Term. Sublessee shall pay all such Impositions directly to the taxing authority,
and within thirty (30) days thereafter deliver to Sublessor satisfactory
evidence of such payment. The certificate, advice, ▇▇▇▇ or statement issued or
given by the appropriate officials authorized or designated by law to issue or
give the same or receive payment of any of the Impositions, of the existence,
nonpayment or amount
16
of such Impositions shall be prima facie evidence of the existence, payment,
non-payment and amount of such Impositions. The parties acknowledge and agree
that Sublessee shall also be responsible for, and hereby agrees to pay to
Sublessor, an amount equal to all Impositions payable by Sublessor with respect
to the period from and after the Proration Date and ending on the day prior to
the Execution Date.
6.2 Sublessee, if Sublessee shall so desire, may contest the validity or
amount of any Impositions, in which event Sublessee may defer payment thereof
during the pendency of such contest provided that, prior to the date the same
shall have become delinquent, Sublessee shall take such action as shall be
required to postpone the collection of such Imposition. Nothing herein
contained, however, shall be construed to allow such items to remain unpaid for
such length of time as shall permit the Premises, or any part thereof, to be
sold by any governmental or quasi-governmental authority or a lien with respect
thereto foreclosed for the non-payment of the same.
6.3 Commencing on the Execution Date, Sublessee shall render and return
the Premises for taxing to all taxing jurisdictions and may, if Sublessee shall
so desire, endeavor at any time or times to obtain a lowering of the assessed
valuation upon the Premises, for any year for the purpose of reducing
Impositions thereon. In such event, Sublessor will offer no objection, and, at
the request of Sublessee, will cooperate with Sublessee, but without expense to
Sublessor, in effecting such a reduction. Sublessee shall be authorized to
collect any tax refund payable as a result of any proceeding Sublessee may
institute for that purpose and any such refund shall be the property of
Sublessee to the extent to which it may be based on a payment made by Sublessee,
subject, however, to any apportionment between Sublessor and Sublessee with
respect to taxes paid or contributed by Sublessor in the year in which this
Sublease commences or expires, after deducting from such refund the reasonable
costs and expenses, including reasonable legal fees, incurred in connection with
obtaining such refund.
6.4 Sublessor shall not be required to join in any action or proceeding
referred to in Paragraphs 6.2 or 6.3 unless required by law or any rule or
regulation in order to make such action or proceeding effective, in which event
any such action or proceeding may be taken by Sublessee in the name of, but
without expense to, Sublessor. Sublessee shall save Sublessor harmless from all
costs, expenses, claims, losses or damages by reason of, in connection with, on
account of, growing out of or resulting from any such action or proceeding.
6.5 Sublessee agrees to pay prior to delinquency any and all taxes and
assessments levied, assessed or imposed during the Term upon or against (i) all
furniture, fixtures, signs and equipment and any other personal property
installed or located within the Premises, (ii) all alterations, additions,
betterments
17
or improvements of whatsoever kind or nature made by or on behalf of Sublessee
to the Premises, as the same may be separately levied, taxed and assessed
against or imposed directly upon Sublessee by the tax authorities, and (iii) the
rentals payable hereunder by Sublessee to Sublessor (other than Sublessor's
Federal, State and local income taxes thereon, if any), provided such taxes are
not duplicative hereunder. Sublessee may contest the validity or amount of any
such taxes and assessments, subject to the same procedures and provisions as are
applicable to contests of Impositions, as set forth in Paragraph 6.2 above. The
parties acknowledge and agree that Sublessee shall also be responsible for, and
hereby agrees to pay to Sublessor, an amount equal to all such taxes and
assessments payable by Sublessor with respect to the period from and after the
Proration Date and ending on the day prior to the Execution Date.
6.6 Should any governmental authority require that a tax, other than the
Impositions above mentioned, be paid by Sublessee, but collected by Sublessor,
for and on behalf of said governmental authority, and from time to time
forwarded by Sublessor to said governmental authority, the same shall be paid by
Sublessee to Sublessor payable in advance, subject to the right of Sublessee to
contest the validity or amount of any such tax, on the same terms and provisions
as are applicable to contests of Impositions, as set forth in Paragraph 6.2
above.
6.7 With respect to any Impositions for which Sublessee is responsible
hereunder, the official tax ▇▇▇▇ shall be conclusive evidence of the amount of
Impositions levied (subject to the right of Sublessee, as set forth above, to
contest the validity or amount of any such Imposition, and the final
determination of any such contest), assessed, or imposed, as well as of the
items taxed. A copy of such tax ▇▇▇▇ shall, upon request of Sublessee, be
submitted by Sublessor to Sublessee annually.
6.8 Notwithstanding anything to the contrary herein, Sublessee shall have
no liability or responsibility, under this Sublease or otherwise, for the
payment of any Impositions on the interest of the ▇▇▇▇▇▇▇▇ Sublessee under the
▇▇▇▇▇▇▇▇ Sublease, or (with respect to the period during the term of the
▇▇▇▇▇▇▇▇ Sublease) the property affected thereby. Sublessee acknowledges that
the ▇▇▇▇▇▇▇▇'▇ Sublessee pays the hotel tax described in Paragraph 34 below
directly to Sublessor, but Sublessor acknowledges that the proceeds of such
payments will be applied as described in said Paragraph 34.
7. Use.
7.1 Sublessee may use the Premises solely for the Permitted Use, as set
forth in Paragraph 1.7 hereof. Sublessee will not use or permit, or suffer the
use of the Premises for any other business or purpose or in any manner or for
any use which would violate or contravene the restrictions set forth on Exhibit
"F" attached hereto, and Sublessee shall comply with its obligations
18
set forth on Exhibit "G" attached hereto. Sublessee shall not commit waste,
perform any acts or carry on any practice which may injure the Premises or be a
nuisance or menace to subtenants in the Premises. Without limiting Sublessor's
other rights and remedies at law, in equity, under this Sublease or otherwise,
if Sublessee violates the terms of this Paragraph 7, Sublessor shall have the
right to injunctive or other equitable relief and, if Sublessor is unsuccessful
in obtaining such equitable relief, to recover from Sublessee any damages caused
by Sublessee's breach.
7.2 Sublessor acknowledges and agrees that Sublessee will be operating the
Premises as a for-profit business, and that so long as Sublessee develops,
leases, operates, manages and maintains the Premises in accordance with the
provisions of this Sublease, Sublessee shall be entitled to operate the Premises
in such manner as to generate revenues and profits and to keep and retain for
its own account all revenues and profits generated from the Premises, and to
distribute such revenues and profits to its shareholders.
7.3 Sublessee takes the Premises subject to all applicable zoning
regulations and ordinances now or hereafter in force including, but not limited
to, those as to building line and setback. Sublessee, in its discretion and at
its own cost and expense, may, in good faith, institute rezoning proceedings or
contest and litigate the validity of any zoning ordinance, rule, regulation,
resolution or statute of any governmental body affecting the Premises or
Sublessee's use or occupancy thereof; provided, however, that Sublessee shall
first give Sublessor written notice thereof. The Sublessor shall execute any and
all documents reasonably requested by Sublessee in connection with any such
proceedings or litigation and which are consistent with the terms and provisions
of this Sublease. Sublessee shall indemnify Sublessor from any and all liability
which might arise by reason of any such proceedings or litigation. Sublessor
agrees to cooperate with and assist Sublessee, but without expense to Sublessor,
in preserving and maintaining the inapplicability to the Premises of the zoning
regulations and ordinances of Hall County, Georgia or any other municipality or
political subdivision.
7.4 Sublessee, at its sole cost and expense, shall comply with all Legal
Requirements and shall comply in all material respects with all Insurance
Requirements relating to or affecting the Premises, or respecting work performed
by Sublessee, and subject to the provisions of Paragraph 33 below, shall procure
all permits necessary for the Permitted Use. Sublessor shall cooperate with
Sublessee in connection with any Legal Requirements and Insurance Requirements,
and shall execute any and all documents reasonably requested by Sublessee which
are necessary for Sublessee to obtain permits or otherwise comply with such
Legal Requirements and Insurance Requirements.
19
7.5 In the event that Sublessee and all Recognized Sub-sublessees, if any,
cease all operations on the Premises for the entirety of any period of twelve
(12) consecutive months during the Term, Sublessor may, as its sole and
exclusive remedy for such event, terminate this Sublease by providing ninety
(90) days prior written notice to Sublessee and all Recognized Sub-sublessees,
if any, and upon payment to Sublessee and all Recognized Sub-sublessees, on or
before the expiration of such ninety (90) day period, of an amount equal to the
unamortized costs (based on then current book value and using the straight-line
method of depreciation, based upon useful lives used by Sublessee for tax
purposes) of all buildings, structures and improvements constructed upon the
Premises by Sublessee or its sub-sublessees, and any unamortized portion of the
$9,000,000 payment made by Sublessee to Sublessor contemporaneously with the
execution of this Sublease; provided, however, that Sublessor shall not be
required to pay such unamortized portion of such $9,000,000 payment unless,
contemporaneously with the payment of such sum, Sublessee shall convey to
Sublessor all of the improvements and personal property conveyed by Sublessor to
Sublessee upon the execution of this Sublease, or replacements thereof, which
conveyance shall be made by limited warranty deed and ▇▇▇▇ of sale substantially
identical to the limited warranty deed and ▇▇▇▇ of sale pursuant to which such
improvements and personal property were conveyed to Sublessee. Such improvements
and personal property shall be conveyed by Sublessee substantially in the same
condition as on the Proration Date, subject to normal wear and tear, damage by
fire or other casualty not required to be restored by Sublessee under the
provisions of Paragraph 15 below, condemnation, obsolescence and damage caused
by the gross negligence or wilful misconduct of Sublessor, its agents and
employees. Upon the date of any such termination, the obligations of Guarantor
under the guaranty executed in connection with this Sublease shall automatically
be deemed to be terminated with respect to the period from and after the date of
such termination. The provisions of this Paragraph 7.5 shall not apply with
respect to any cessation of operations by reason of force majeure (as described
in Paragraph 30 below), by reason of any casualty or condemnation of the
improvements on the Premises, or in connection with the construction of new
improvements, or the repair or renovation of existing improvements on the
Premises.
8. Alterations and Improvements.
8.1 Provided Sublessee has received all necessary approvals from the Corps
of Engineers in accordance with this ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ covenants and agrees
that Sublessee and/or its Recognized Sub-sublessees (as defined in Paragraph
12.6 below) shall expend in the aggregate not less than $5,000,000.00 for
capital improvements and additions to and upon the Premises, exclusive of the
amount of capital expenditures funded from the Reserve Account established
pursuant to Paragraph 9.2 below, during the five (5) Lease Years commencing with
the Lease Year in
20
which Gross Revenue (as defined in Exhibit "E") for the Premises is not less
than $20,000,000. The obligations of Sublessee under the preceding sentence
shall be null and void and of no force or effect if the amount of the Rent
Reduction, if any, imposed under the provisions of Paragraph 4.5 above, is less
than the amount of the losses, costs, damages and expenses incurred by Sublessee
as a result of the matters described in Paragraph 4.5(a) above, provided,
however, that such obligation shall be reinstated effective as of the date on
which any Major Event terminates or ceases to occur and the Rent payable prior
to the date of such Major Event is reinstated pursuant to the provisions of
Paragraph 4.5(d) above. Any improvements, alterations, changes or additions may
be made without the consent of Sublessor, provided that Sublessee complies with
the provisions of Paragraph 8.2 below, including obtaining the approval of the
Corps of Engineers and Sublessor required thereunder, and provided that any such
improvements, alterations, changes or additions are in compliance with the KSL
Development Plan, and are for a Permitted Use.
8.2 The approval process for improvements to be constructed by Sublessee
or any sub-sublessees of Sublessee shall be as follows:
a. The KSL Development Plan (i) has been and is hereby approved by
Sublessor and (ii) has been approved by the Corps of Engineers as
evidenced by the execution and delivery of the Corps Consent,
Estoppel and Non-Disturbance Agreement, a copy of which is attached
hereto as Exhibit "J".
b. Sublessee shall have the right to amend the KSL Development Plan
with the approval of Sublessor, and Sublessor agrees that it will
not unreasonably withhold, delay or condition its approval. Any such
amendment will be subject to approval by the Corps of Engineers and,
if the amendment has been approved by Sublessor, Sublessor agrees to
assist Sublessee in the presentation of the amendment to the KSL
Development Plan to the Corps of Engineers and will use its
reasonable efforts to obtain approval by the Corps of Engineers. In
the event that (i) Sublessor fails to approve or disapprove such
proposed amendment within thirty (30) days after the receipt of a
request for such approval from Sublessee, and (ii) if Sublessee
provides to Sublessor a second written request for such approval or
disapproval upon the expiration of such thirty (30) day period, and
Sublessor fails to approve or disapprove such proposed amendment
within thirty (30) days after the receipt of such second written
request, then, such proposed amendment shall be deemed approved. If
Sublessor disapproves such amendment, Sublessor will describe in
reasonable detail the reasons for such disapproval and the action,
if any,
21
which may be taken or changes, if any, which may be made to obtain
Sublessor's approval.
c. At such time as Sublessee or its sub-sublessees plan the
construction of specific improvements on the Premises, a preliminary
site plan for such improvements will be prepared and submitted to
Sublessor for its approval. Such preliminary site plan shall show
the location of the footprint for such improvements and generally
indicate the location of parking lots, driveways and related
facilities. The proposed preliminary site plan shall be subject to
the approval of Sublessor and Sublessor agrees that it will not
unreasonably withhold, delay or condition its approval of the
proposed preliminary site plan.
d. The preliminary site plan will be subject to the approval of the
Corps of Engineers and, if the preliminary site plan has been
approved by Sublessor, Sublessor will assist Sublessee in the
presentation of the preliminary site plan to the Corps of Engineers
for its approval and will use reasonable efforts to obtain approval
thereof by the Corps of Engineers.
e. It is understood and agreed that in the construction of the
improvements in accordance with the plans and specifications,
certain change orders to the plans and specifications may become
necessary or appropriate, and Sublessor agrees that, subject to the
approval of the Corps of Engineers, Sublessee may without the
consent or approval of Sublessor, order, authorize or perform any
change, substitute work or materials in prosecuting the construction
of the improvements ("Change Order"), provided (i) any such Change
Order does not cause the improvements to be constructed for a
purpose or use which is not a Permitted Use; and (ii) any such
Change Order (individually or in the aggregate with all other Change
Orders) does not result in a material change in the preliminary site
plan approved by Sublessor as provided above. Neither plans and
specifications for such improvements other than such preliminary
site plan, nor the identity of the architect, contractors, engineers
or consultants, nor the construction contract, architect's contract,
engineering contract nor any other documentation in connection with
the construction requires the approval of Sublessor, nor shall this
Sublease be deemed to require the approval of the Corps of Engineers
of any such matters.
8.3 As soon as practicable (however, in no event to exceed three (3)
calendar months) after the substantial completion of the improvements, Sublessee
will furnish to Sublessor, at Sublessee's own cost and expense, (A) one complete
set of final "as-built" plans and specifications of the completed
22
improvements, and (B) a current, accurate, properly labeled, and certified plat
of survey prepared by a Georgia registered land surveyor or professional
engineer depicting to scale the exact location of the completed improvements,
and any other physical objects, as the same have been constructed. The term
"substantial completion" as used in this Sublease shall be deemed to mean such
completion as will make the improvements sufficient, suitable and ready for
immediate occupancy and for the use intended.
8.4 Sublessee shall complete the construction of the proposed improvements
substantially in accordance with the preliminary site plan approved by Sublessor
or permitted without Sublessor's approval as hereinabove set forth.
8.5 The fee title to all improvements, alterations, changes and additions
described on Exhibit "R" attached hereto and incorporated herein, and fee title
to all improvements, alterations, changes and additions constructed by Sublessee
or its permitted sub-sublessees on the Premises from and after the Proration
Date, shall be vested in Sublessee or its permitted assignees or sub-sublessees,
as the case may be, until the termination or expiration of this Sublease, at
which time all title to and ownership of said improvements shall automatically
and immediately be surrendered with the Premises and vest (without the necessity
of any further action being taken by Sublessee or Sublessor or any instrument
being executed and delivered by Sublessee to Sublessor) in Sublessor. In the
event that title to any improvements, alterations, changes or additions shall be
vested in a sub-sublessee of Sublessee, such title shall automatically and
immediately be surrendered to and vest (without the necessity of any further
action being taken by Sublessee or such sub-sublessee or any instrument being
executed and delivered by such sub-sublessee to Sublessee) in Sublessee upon the
termination or expiration of such sub-sublease until the termination or
expiration of this Sublease, at which time such title shall vest in Sublessor in
accordance with the provisions of the preceding sentence. All permanent
(non-trade and/or non-movable) fixtures installed in the Premises during the
period from and after the Proration Date shall be treated in the same manner as
improvements constructed by Sublessee, as described in the first sentence of
this Paragraph 8.5. Sublessee shall have only leasehold title to all
improvements, alterations, changes and additions currently existing on the
Premises as of the Proration Date (other than those items described on the
attached Exhibit "R") for the Term of this Sublease, and upon the termination or
expiration of this Sublease, such leasehold title shall terminate automatically
without the necessity of any further action being taken by Sublessee or
Sublessor or any instrument being executed and delivered by Sublessee to
Sublessor. All improvements and fixtures surrendered to Sublessor on the
termination or expiration of this Sublease shall be surrendered subject to
normal wear and tear, damage by fire or other casualty not required to be
restored by Sublessee under the
23
provisions of Paragraph 15 below, condemnation, and damage caused by the gross
negligence or wilful misconduct of Sublessor, its agents and employees.
8.6 Any removal of Sublessee's personal property and trade fixtures from
the Premises shall be accomplished in a manner which will minimize any damage or
injury to the Premises and any such damage or injury shall be promptly repaired
by Sublessee at its sole cost and expense. Any personal property of Sublessee
not removed by Sublessee prior to the Expiration Date or date of sooner
termination of this Sublease shall, at Sublessor's option, either become the
property of Sublessor or shall be disposed of or stored by Sublessor at
Sublessee's sole risk and expense.
8.7 No approval of any site plan, plans or specifications by Sublessor or
consent by Sublessor allowing Sublessee to make improvements, alterations,
changes or additions to the Premises shall in any way be deemed to be an
agreement by Sublessor that the contemplated work complies with any Legal
Requirements or Insurance Requirements or the certificate of occupancy for the
Premises, or deemed to be a waiver by Sublessor of any of the provisions of this
Sublease. Notice is hereby given that neither Sublessor, nor Sublessor's agents,
nor the lessor under the Prime Lease or the LLIDA Sublease, shall be liable for
any labor or materials furnished or to be furnished to Sublessee upon credit,
and that no mechanic's or other claims for such labor or materials shall attach
to or affect any estate or interest of Sublessor or any other such party in and
to the Premises.
8.8 While any construction (which term as used throughout this Sublease
shall also include any alteration, renovation, demolition, reconstruction,
repair, maintenance, restoration or replacement) is being done on or to the
Premises, Sublessee shall protect such property and all adjacent property. In
connection with such protection, Sublessee agrees that it will obtain, or
require the general or prime contractor retained to perform such construction to
obtain, or in the event there is no general or prime contractor retained to
perform such construction then require the person(s) or entity(ies) performing
such construction to obtain, and keep in force at all times during the
performance of such construction, in addition to the insurance required to be
carried pursuant to Paragraph 10 of this Sublease, insurance coverage under a
policy or policies of builder's risk and comprehensive liability insurance
covering the operations of such construction. Such policy or policies of
liability insurance shall have combined single limits of not less than
$2,000,000.00, except that for any construction project involving construction
costs in excess of $5,000,000.00, such policy or policies of liability insurance
shall have combined single limits of not less than $5,000,000.00, as such limits
shall be increased from time to time by the percentage increase of the CPI-U (as
hereinafter defined) above the CPI-U published for the month in which the
Execution Date occurs. For purposes of this Paragraph 8.8, the "CPI-U" means the
Consumer Price Index for All Urban
24
Consumers-U.S. City Average (1982-84 = 100), published by the U.S. Department of
Labor Statistics. If such Index shall be discontinued, then any successor
Consumer Price Index of the United States Bureau of Labor Statistics, or
successor agency thereto, for the Atlanta, Georgia metropolitan area shall be
used, with appropriate adjustments, and if there is no such successor Consumer
Price Index, the parties shall attempt to agree upon a substitute Index or
formula, and in the event that the parties are unable to agree upon a substitute
Index or formula, then the matter shall be referred to arbitration in accordance
with the provisions of Paragraph 18.12 below.
8.9 Sublessee covenants and agrees to pay, currently as they become due
and payable, all bills for labor, materials, insurance, and all fees of
architects, engineers, contractors, and subcontractors and all other costs and
expenses incident to any construction in or on the Premises; provided, however,
that Sublessee may, in good faith, at its sole cost and expense and in its own
name, dispute and contest any such ▇▇▇▇, fee, cost or expense, and in such
event, any such item need not be paid until adjudged to be valid; provided,
however, Sublessee shall first notify Sublessor in writing of such dispute and
contest and shall furnish to Sublessor, if requested in writing by Sublessor,
reasonable security for the payment of any such item so contested unless
Sublessee shall have prevented the execution of any lien or judgment relating
thereto by bond or otherwise. Unless so contested by Sublessee, all such items
shall be paid by Sublessee within the time provided by law, and if contested,
any such item shall be paid before the issuance of an execution on a final
judgment with respect thereto.
8.10 Sublessee's rights, as well as the rights of anyone else, including,
but not limited to, any mortgagee, architect, engineer, contractor, assignee,
sublessee, subcontractor, independent contractor, prime or general contractor,
mechanic, laborer, materialman or other lien or claim holder, shall always be
and remain subordinate, inferior, and junior to Sublessor's reversionary title,
interest and estate in the Premises, subject to the provisions of Paragraph 12.7
below.
8.11 Sublessee covenants and agrees that in the event Sublessee abandons
or fails to complete the construction of improvements undertaken by Sublessee
upon the Premises substantially in accordance with all the requirements of this
Sublease, and does not remove such construction and restore the Premises to its
original condition, or recommence such construction, within sixty (60) days
after the receipt by Sublessee of written notice of the intention of Sublessor
to exercise its rights under this Paragraph 8.11, Sublessor may, at its option
(but without any obligation so to do and without prejudice to any other rights
Sublessor may have under this Sublease) complete the construction of the
improvements undertaken by Sublessee at the cost and expense of Sublessee and,
as nearly as practicable and proper, according to the site plan
25
previously approved by Sublessor. Sublessee shall, at the time of execution of a
contract with the architect who created the plans and specifications for
Sublessee, obtain the written agreement of such architect to furnish to
Sublessor and to permit Sublessor to use the plans and specifications, without
charge to Sublessor, in the event Sublessor elects to complete the construction
of the improvements undertaken by Sublessee or any part or parts thereof.
8.12 In the event that, at any time during the Term of this Sublease, any
alteration, demolition, renovation, repair, replacement or maintenance of any
building, other structure or improvement in or on the Premises or any other work
of any nature whatsoever shall be required or ordered, or becomes necessary on
account of any law, ordinance or governmental regulation now in effect or
hereafter adopted (other than any such laws, ordinances or governmental
regulations enacted by the State of Georgia, or any department, agency or
instrumentality thereof, which are applicable solely to the Premises, or solely
to assets which have been the subject of the State of Georgia's privatization
effort), Sublessee shall be solely liable for the entire cost and expense
thereof, regardless of when the same shall be incurred or become due, and in no
event shall Sublessor be required to contribute thereto, participate therein, or
do or pay for any work performed, materials furnished, or obligations incurred
by Sublessee. Sublessee shall have the right to contest the validity of any such
law, ordinance or regulation.
9. Repairs and Maintenance.
9.1 Sublessee shall, at all times during the Term of this Sublease,
totally at Sublessee's own cost and expense, keep and maintain the Premises, and
appurtenances and every part thereof, and any and all buildings, other
structures or improvements that may exist on, in, or be made a part of the
Premises, in good and sanitary order, condition and repair, ordinary wear and
tear (subject to the obligation of Sublessee to consistently maintain such
buildings, structures or improvements) excepted. The obligation of Sublessee to
restore and maintain buildings, structures and improvements damaged by fire or
other casualty or condemnation is governed by the provisions of Paragraphs 15
and 16 below, rather than by the provisions of this Paragraph 9.
9.2 Subject to the provisions of Paragraph 9.3 below, Sublessee shall have
the right to demolish any buildings or improvements which, in Sublessee's
judgment, in its sole discretion (provided that such judgment is made in good
faith), are obsolete or not commercially necessary or appropriate for the
Premises, or can be replaced with improvements which better serve the Premises
and generate more revenue for the Premises, or which are otherwise detrimental
to the operation of the Premises, and provided that such demolition, in
Sublessee's good faith business judgment, will be in the best interest of the
Premises. No material improvements shall be demolished during the last five
26
(5) years of the Term without Sublessor's prior written consent, which may be
given or withheld in Sublessor's sole discretion.
9.3 Notwithstanding the provisions of Paragraph 9.1 above, in the event
that Sublessee elects to demolish any buildings or improvements which are
located on the Premises as of the Execution Date, or which are constructed by
Sublessee in compliance with the capital improvement obligations set forth in
Paragraph 8.1 above (hereinafter referred to collectively as "Existing
Improvements"), Sublessee shall replace such Existing Improvements with
improvements of substantially equivalent value as the demolished buildings or
improvements, unless Sublessee shall have previously constructed buildings or
improvements in excess of such capital improvement obligations under said
Paragraph 8.1 (all improvements constructed by Sublessee after the date hereof
in excess of the capital improvement obligations of Sublessee under said
Paragraph 8.1 are hereinafter referred to collectively as "New Improvements"),
in which event (i) the obligation of Sublessee to rebuild improvements upon
demolition of Existing Improvements shall be deemed to have been satisfied to
the extent of the costs incurred by Sublessee in the construction of such New
Improvements, and (ii) such obligation to rebuild shall thereafter be deemed to
be apply to such New Improvements, to the extent of the value of the demolished
Existing Improvements which are not replaced.
9.4 Sublessee will, at its sole cost and expense, establish and maintain a
segregated, interest bearing capital expenditure reserve account (the "Reserve
Account"). Commencing with the first payment of Rent due under this Sublease and
simultaneously with the making of such payment and on the date of each Rent
payment due thereafter, Sublessee shall pay into the Reserve Account an amount
equal to five percent (5%) of Sublessee's Gross Revenue (as defined in Exhibit
"E" hereto) for the preceding month (each a "Reserve Deposit" and collectively
the "Reserve Deposits"), which will be held in the Reserve Account to be used as
a capital expenditure reserve for the Premises. All interest earned on the
Reserve Deposits will be added to and become a part of the Reserve Deposits.
Sublessee may make withdrawals from the Reserve Account in accordance with the
budget hereinafter described in this Paragraph 9.4, in order to make capital
expenditures with respect to the Premises from time to time, and in accordance
with the other terms of this Paragraph 9.4; provided, however, that during each
calendar year of the Term Sublessee shall expend a minimum of five percent (5%)
of Sublessee's annual Gross Revenue during the preceding calendar year for
capital expenditures, of which four percent (4%) of Gross Revenue must be used
for capital replacements, and renovation of existing improvements, furniture,
fixtures and equipment, and up to one percent (1%) of Gross Revenue may be used
for any new capital additions, improvements, construction or installations on
the Premises. Within 120 days from the commencement of each calendar year during
the Term of this Sublease, Sublessee shall submit to Sublessor for its review
and
27
approval (which approval shall not be unreasonably withheld, delayed or
conditioned) a budget for expenditures of the Reserve Deposits equal to five
percent (5%) of Sublessee's annual Gross Revenue for the preceding calendar
year. Any portions of any such annual budget which, with Sublessor's consent,
which shall not be unreasonably withheld, delayed or conditioned, are not
expended in the current calendar year shall be retained in the Reserve Account
until expended in accordance with a subsequent budget approved by Sublessor.
Sublessee hereby grants a security interest to Sublessor in the Reserve Account,
which security interest shall be subject and subordinate to the security
interest of any Leasehold Mortgagee, provided that such Leasehold Mortgagee
agrees that the proceeds in the Reserve Account shall be used in accordance with
the provisions of this Paragraph 9.4.
10. Insurance and Indemnity.
10.1 Throughout the Term, Sublessee shall have all buildings, other
structures and improvements insured against any loss or damage caused by fire,
lightning, windstorm, hurricane, tornado, cyclone, hail, explosion, riot, civil
commotion, aircraft, smoke, land vehicles, boiler explosion, collapse, vandalism
and sprinkler leakage, and any other risks customarily included under either
fire and extended coverage or so-called all-risk insurance policies, and loss of
rents for up to twelve (12) months resulting from any insured event, with
responsible insurance companies, legally licensed and authorized to transact
business in the State of Georgia, said insurance to be in the amount of the full
insurable replacement value [one hundred percent (100%)] of said buildings,
other structures and improvements. The contracts of insurance required by this
subparagraph 10.1 shall contain standard loss payable clauses in favor of
Sublessee, any permitted sublessees of such buildings, structures and
improvements, Sublessor, the lessors under the Prime Lease and the LLIDA
Sublease, and Leasehold Mortgagees, as their respective interests may appear.
The phrase "full insurable replacement value" shall mean the actual replacement
cost at the time in question (excluding costs of excavations, foundations,
footings, underground pipes, conduits, flues and drains) without diminution of
such costs for depreciation or obsolescence. The costs to Sublessee of all such
required insurance under this Paragraph 10.1 are hereinafter called the
"Insurance Costs". From and after the date of this Sublease, Sublessee shall pay
the Insurance Costs when invoiced and prior to the due date thereof and provide
Sublessor a statement showing the total amount thereof and a receipted invoice
or other reasonable evidence of payment thereof. Sublessee shall also be
responsible for payment of Insurance Costs from and after the Proration Date.
The policy shall name Sublessor, any permitted sublessees of such buildings,
structures and improvements, Sublessee, the lessors under the Prime Lease and
the LLIDA Sublease, and Leasehold Mortgagees as additional insureds, and shall
contain a clause that the insurer will not cancel or change the insurance
without first giving Sublessor twenty (20) days
28
prior written notice. Said insurance shall be with an insurance company, having
a Best's rating of A-VII or better, and a copy of the policy shall be delivered
to Sublessor. If Sublessee fails to secure and maintain insurance policies
complying with the provisions of this Paragraph 10.1, then Sublessor may, but
shall not be required to, secure and maintain such insurance policies and
Sublessee shall pay the cost thereof to Sublessor, as Additional Rent, upon
demand. Sublessor may require increases in the aforesaid coverage to reflect
inflation.
10.2 Sublessee shall, at all times during the Term and during any period
of holding over thereafter, keep in full force and effect a policy of insurance
upon Sublessee's fixtures, equipment and other personal property against loss or
damage by hazards insured under either a fire and extended coverage policy or a
so-called all-risk policy, including collapse, vandalism and sprinkler leakage,
in an amount equal to one hundred percent (100%) of the full replacement cost
thereof. Notwithstanding the foregoing, Sublessee shall have the right to
self-insure against the foregoing risks with respect to Sublessee's fixtures,
equipment and other personal property so long as Sublessee maintains a plan of
self-insurance adequate to provide coverage equal to such policy and shall
furnish Sublessor with an affidavit by a principal officer of Sublessee to such
effect. Sublessee shall also, at all times during the Term and during any period
of holding over thereafter, keep in full force and effect a policy of insurance
insuring against loss or damage by certain environmental hazards on or at the
Premises or emanating from the Premises, which policy of insurance shall be in
the amount of not less than $10,000,000.00 per occurrence and $10,000,000.00 in
the aggregate, and shall cover substantially all of the risks covered under the
form of insurance policy attached to this Sublease as Exhibit "V". Subject to
the immediately succeeding sentence, such policy shall not be required to cover
environmental hazards on or at or emanating from the property affected by the
▇▇▇▇▇▇▇▇ Sublease during the term thereof, but such policy shall cover the
property affected by the ▇▇▇▇▇▇▇▇ Sublease to the same extent as the balance of
the Premises is covered by such policy, at such time as the ▇▇▇▇▇▇▇▇ Sublease is
terminated or expires. Notwithstanding the preceding sentence, during the term
of the ▇▇▇▇▇▇▇▇ Sublease such policy shall cover any liability of Sublessor or
Sublessee with respect to environmental hazards on or at or emanating from the
property affected by the ▇▇▇▇▇▇▇▇ Sublease.
10.3 Sublessee shall, at all times during the Term and during any period
of holding over thereafter, keep in full force and effect a policy of commercial
general liability insurance with respect to the Premises, and the business
conducted by Sublessee and any subtenants of Sublessee in the Premises, with a
combined single limit of liability of not less than One Million Dollars
($1,000,000.00), subject to commercially reasonable deductible amounts, for
bodily injury to or personal injury or death of any person and consequential
damages arising therefrom,
29
and for property damage, arising out of any one occurrence. Sublessee shall also
keep in full force and effect an umbrella general liability policy with a limit
of not less than $25,000,000.00, subject to commercially reasonable deductible
amounts. The policies shall name Sublessor, any permitted sublessees of such
buildings, structures and improvements, Sublessee, the lessors under the Prime
Lease and the LLIDA Sublease, and Leasehold Mortgagees as additional insureds,
and shall contain a clause that the insurer will not cancel or change the
insurance without first giving Sublessor twenty (20) days prior written notice.
Said insurance shall be with an insurance company, having a Best's rating of
A-VII or better, and a copy of the policies shall be delivered to Sublessor. If
Sublessee fails to secure and maintain insurance policies complying with the
provisions of this Paragraph 10.3, then Sublessor may, but shall not be required
to, secure and maintain such insurance policies and Sublessee shall pay the cost
thereof to Sublessor, as Additional Rent, upon demand. Sublessor may require
increases in the aforesaid coverage to reflect inflation. Such insurance
policies shall contain primary coverage endorsements, pursuant to which such
policies are non-contributing with any other coverage available to Sublessor.
10.4 Sublessee agrees that it will not keep, use, sell or offer for sale
in or upon the Premises any article which may be prohibited by Sublessee's fire
insurance policy. Sublessee agrees to pay any increase in premiums for fire and
extended coverage or so-called all-risk insurance that may be charged during the
Term resulting from Sublessee's use or manner of use of the Premises. In
determining whether increased premiums are the result of Sublessee's use of the
Premises, a schedule, issued by the organization establishing the insurance rate
for the Premises, showing the various components of such rate, shall be
conclusive evidence of the several items and charges which make up the fire
insurance rate on the Premises.
10.5 Sublessee, as a material part of the consideration to be rendered to
Sublessor in this Sublease, agrees to be responsible for, to indemnify Sublessor
and the lessors under the Prime Lease and the LLIDA Sublease against, and to
save and hold harmless Sublessor and the lessors under the Prime Lease and the
LLIDA Sublease from, any and all liability, damages, expense, claims, actions or
demands for any injury or death of any person(s) or damages to any property(ies)
if such injury, death or damage to property arises from or in any manner grows
out of, any act or neglect on or about the Premises by Sublessee or Sublessee's
sublessees, subtenants, assignees, licensees, concessionaires, partners, agents,
servants, employees, invitees, trespassers, contractors and subcontractors, or
their partners, representatives, agents or employees, or which arises from or in
any manner grows out of, any defect in any undertaking hereunder by Sublessee or
any failure of Sublessee to comply with the provisions of this Sublease. The
agreement of Sublessee to indemnify, save and hold harmless such parties as
provided in
30
this Paragraph 10.5 shall not apply to the matters described on the schedule
attached hereto as Exhibit "W" (which Exhibit "W" consists of a schedule of
conditions on the Premises to be corrected and for which Sublessee has been
compensated, in full or in part, contemporaneously with the execution hereof),
until the expiration of a reasonable period of time after the Execution Date for
the correction by Sublessee of each of such matters, at which time the agreement
of Sublessee to indemnify, save and hold harmless such parties as provided in
this Paragraph 10.5 shall become applicable.
10.6 Notwithstanding anything in this Sublease to the contrary, if either
party hereto is made or becomes a party to any litigation commenced by or
against the other party involving the enforcement of any such other party's
obligations hereunder or elsewhere in this Sublease, then the prevailing party
in such litigation, or the party becoming involved in such litigation because of
a claim against such other party, as the case may be, shall receive from the
other party all costs and reasonable attorneys' fees incurred by such party in
such litigation to the extent not covered by insurance.
10.7 Sublessor and Sublessee hereby waive any claim each may have against
the other by way of subrogation or otherwise from any and all liability for any
loss or damage to property, whether caused by the negligence or fault of the
other party, to the extent such loss or damage is covered or required to be
covered by the fire and extended coverage policy or so-called all-risk policy
with respect to the Premises or any plan of self-insurance with respect to risks
which would be insured against under such policies, notwithstanding the failure
to obtain such policies. For purposes of this Paragraph 10.7, the amount of any
deductible or co-insurance payment shall be deemed as having been covered under
the applicable property damage insurance policy. Each of Sublessor and Sublessee
shall cause any fire insurance and extended coverage or so-called all-risk
policies which it maintains in respect of the Premises to contain a provision
whereby the insurer waives any rights of subrogation against the other party.
10.8 Sublessee agrees and covenants that it will not do or permit to be
done in, to, or about the Premises any act or thing which will invalidate any
insurance pertaining to any buildings, -other structures or improvements now
located thereon or therein or hereafter constructed and located thereon or
therein; and, further, that Sublessee will not permit any buildings, other
structures or improvements at any time to be put, kept or maintained on the
Premises in such condition that the same cannot be insured in the amount of the
full insurable replacement value [one hundred percent (100%)] thereof.
10.9 Sublessee shall, not less than fifteen (15) days prior to the
expiration date of any and all insurance policies required to be carried by
Sublessee in accordance with this Sublease,
31
furnish to the Sublessor duplicate receipts or satisfactory evidence of the
payment of all premiums on all such insurance.
11. Utilities.
11.1 Sublessee shall be solely responsible for and shall promptly pay all
charges for heat, water, gas, electricity or any other utility used or consumed
in the Premises. In no event shall Sublessor be liable for an interruption or
failure in the supply of any such utilities to the Premises. Subject to the
preceding sentence, Sublessor agrees to cooperate with and assist Sublessee in
good faith in obtaining and maintaining public telephone service at the Hilton
Hotel presently located on the Premises, and at other locations on the Premises
designated by Sublessee, including obtaining and maintaining such public
telephones in the name of Sublessor, if reasonably necessary, but at the sole
cost and expense of Sublessee. Sublessee shall indemnify Sublessor from any and
all liability which might arise by reason of the obtaining and maintaining of
such public telephones in the name of Sublessor.
12. Assignment, Mortgaging and Subletting.
12.1 Except as otherwise set forth herein, Sublessee shall not (a) assign
or otherwise transfer this Sublease or the Term and estate hereby granted, (b)
sublet all or part of the Premises or allow the same to be used or occupied by
others or in violation of Paragraph 7 hereof, or (c) mortgage, pledge or
encumber this Sublease or all or any part of the Premises in any manner by
reason of any act or omission on the part of Sublessee, without the prior
written consent of Sublessor in each instance, which consent shall not be
unreasonably withheld, delayed or conditioned. In exercising such right of
consent to any proposed assignment, subletting or other transfer as described in
subparagraphs (a) and (b) of this Paragraph 12.1, Sublessor shall be entitled to
take into account any factor or factors relevant to such decision, and the
factors which may cause Sublessor to reasonably withhold its consent shall
include, but are not limited to, the following: (i) failure of any use proposed
by any such proposed sublessee or assignee to comply with the KSL Development
Plan; or (ii) failure of any use proposed by any such proposed sublessee or
assignee to comply with the Permitted Use or, if applicable, such use as shall
be approved in writing by Sublessor; or (iii) failure to utilize a sublease or
assignment form approved by Sublessor; or (iv) failure of such sublessee,
assignee or other transferee (A) to have a net worth of at least $5,000,000.00
or, if less, demonstrable financial resources sufficient to perform the project
to be undertaken pursuant to such sublease, assignment or other transfer, as
reasonably determined by Sublessor or (B) to be of good character and
reputation; or (v) failure of the rent provided for in such sublease, assignment
or other transfer, together with any Recognized Sub-subleases (as hereinafter
defined) then in effect, to be sufficient to satisfy the minimum rent
requirements set
32
forth on the attached Exhibit "S" (the minimum rent which would be sufficient to
satisfy the requirements of this clause (v) is hereinafter referred as the
"Minimum Sublease Rent"). Sublessor agrees that the sublease form used by
Sublessee shall be acceptable to Sublessor if any such sublease form is
substantially identical to the form of this Sublease, without material changes
other than as may be necessary or appropriate to reflect the business terms of
the sublease transaction, the parties to the transaction, or which are not
adverse to or detrimental to the interests of Sublessor, with such other changes
as may be approved by Sublessor, which approval shall not be unreasonably
withheld, delayed or conditioned, provided that the sublease form satisfies the
requirements set forth on the Schedule of Minimum Sub-sublease Requirements
attached hereto as Exhibit "S" and incorporated herein (a sublease form which
satisfies the requirements of this sentence is hereinafter referred to as an
"Approved Sublease Form"). Any assignment or subletting, if consented to by
Sublessor, shall be further subject to and conditioned upon the following: (a)
at the time of any proposed subletting or assignment, Sublessee shall not be in
default beyond any applicable grace period under any of the terms, provisions or
conditions of this Sublease; (b) the sublessee or assignee shall occupy only the
Premises and conduct its business in accordance with the KSL Development Plan
and the Permitted Use or, if applicable, such use as was approved in writing by
Sublessor; (c) prior to occupancy, Sublessee and its assignee or sublessee shall
execute, acknowledge and deliver to Sublessor a fully-executed counterpart of a
written assignment of lease or sublease, as the case may be (consented to by any
Guarantor of this Sublease) on a form approved by Sublessor, by the terms of
which: (i) in case of an assignment, Sublessee will assign to such assignee
Sublessee's entire interest in this Sublease, and all prepaid rents hereunder,
and the assignee will accept said assignment and assume and agree to perform as
the obligation of such assignee directly to and for the benefit of Sublessor and
enforceable by Sublessor, all of the terms, covenants and conditions of this
Sublease on Sublessee's part to be performed with respect to the period from and
after the date of such assignment; or (ii) in case of a subletting, the sublease
in all respects will be subject and subordinate to all of the terms, covenants
and conditions of this Sublease; and (d) notwithstanding any such assignment or
subletting under the terms of this Paragraph, both Sublessee and any Guarantor
will acknowledge that, notwithstanding any such assignment or subletting and the
consent of Sublessor thereto, neither Sublessee nor said Guarantor, if any, is
released or discharged from any liability whatsoever under this Sublease and
both shall continue liable with the same force and effect as though no
assignment or sublease has been made. Notwithstanding the foregoing provisions
of this Paragraph 12.1 and notwithstanding anything to the contrary contained
elsewhere in this Sublease, Sublessee shall be entitled to enter into subleases
with respect to portions of the Premises other than for Preapproved Projects (as
hereinafter defined) pursuant to Paragraph 12.4 below, and
33
other than to Affiliates pursuant to Paragraph 12.5 below, to sublessees who are
not entitled to the benefits of a Recognized Sub-Sublessee pursuant to Paragraph
12.6 below, without the consent of Sublessor.
12.2 Should Sublessee desire to assign this Sublease or sublet the
Premises or any portion thereof and such assignment or sublease requires
Sublessor's prior consent hereunder, Sublessee shall give Sublessor written
notice of such desire, which notice shall contain (1) the name and address of
the proposed assignee or sublessee and its form of organization, (2) the
material terms and conditions of the proposed sublease or assignment (including,
without limitation, the financial terms of such proposed assignment or
subletting and the proposed commencement date of the proposed assignment or
sublease), and (3) financial statements for the three (3) most recently
completed fiscal years of the proposed assignee or sublessee and such other
financial information as Sublessor shall reasonably request (or if the proposed
assignee or sublessee has not been extant for at least three [3] years, such
financial statements as are available), together with the request that Sublessor
approve such assignment or sublease. Sublessor shall have a period of thirty
(30) days following receipt of such written notice within which to notify
Sublessee in writing that Sublessor elects (A) to deny Sublessee the right to
consummate such assignment or sublease, or (B) permit Sublessee to assign this
Sublease or sublet the Premises. In the event Sublessor fails to respond to such
written request for approval within thirty (30) days of receipt of such request,
Sublessor shall be deemed to have approved such request. In the event of a
denial of approval of one or more projects, Sublessor shall specify in
reasonable detail the reasons for such disapproval.
12.3 If this Sublease be assigned, whether or not in violation of the
terms of this Sublease, Sublessor may collect rent from the assignee. If the
Premises or any part thereof be sublet or be used or occupied by anybody other
than Sublessee, whether or not in violation of this Sublease, Sublessor may,
after default by Sublessee and expiration of Sublessee's time to cure such
default, if any, collect rent from the subtenant or occupant. In either event,
Sublessor may apply the net amount collected to the Rent herein reserved. The
consent by Sublessor to an assignment, transfer, encumbering or subletting
pursuant to any provision of this Sublease shall not in any way be considered to
relieve Sublessee from obtaining the express prior consent of Sublessor to any
other or further assignment, transfer, encumbering or subletting. Neither any
assignment of this Sublease nor any subletting, occupancy or use of the Premises
or any part thereof by any person other than Sublessee, nor any collection of
rent by Sublessor from any person other than Sublessee, nor any application of
any such rent as provided in this Paragraph 12 shall, under any circumstances,
be deemed a waiver of any of the provisions of Paragraph 12.1 hereof, or
relieve, impair, release or discharge Sublessee of its
34
obligations fully to perform the terms of this Sublease on Sublessee's part to
be performed and Sublessee shall remain fully and primarily liable therefor.
Sublessor shall have no liability for brokerage commissions arising out of a
transfer by Sublessee and Sublessee shall and does hereby indemnify Sublessor
and hold it harmless from any and all liability for brokerage commissions
arising out of any such transfer.
12.4 Without further approval by Sublessor but subject to the terms and
conditions set forth below in this Paragraph 12.4, Sublessee shall have the
right to sublease to third parties up to three (3) proposed projects included
within the KSL Development Plan. Each such project is hereinafter referred to as
a "Preapproved Project" and such projects are hereinafter collectively referred
to as the "Preapproved Projects"). Sublessee shall have the right to enter into
subleases for the Preapproved Projects without the further consent or approval
of Sublessor subject to the following terms and conditions:
(a) Construction of a Preapproved Project must commence within five (5)
years after the Execution Date;
(b) Any sublease of a Preapproved Project: (i) shall be in compliance with
the KSL Development Plan or modifications thereof approved by Sublessor;
(ii) shall provide for use of the Preapproved Project in accordance with
the Permitted Use or, if applicable, such use as shall be approved in
writing by Sublessor; (iii) shall be on an Approved Sublease Form; (iv)
shall be a sublease to a sublessee having a net worth of at least
$5,000,000.00 or, if less, having demonstrable financial resources
sufficient to perform the -project to be undertaken by the sublessee
pursuant to such sublease, as reasonably determined by Sublessor; and (v)
the rent provided for in such sublease shall not be less than the Minimum
Sublease Rent;
(c) Any subleases approved by Sublessor under Paragraph 12.1 above shall
not be included in the three (3) Preapproved Projects for which no
approval of Sublessor is required under this Paragraph 12.4; and
(d) Sublessee shall provide to Sublessor, prior to the execution of a
sublease under this Paragraph 12.4, written notice of Sublessee's
intention to execute such sublease and evidence reasonably satisfactory to
Sublessor that the terms and conditions set forth above have been
satisfied.
12.5 Without further approval by Sublessor but subject to the terms and
conditions set forth below in this Paragraph 12.5 and elsewhere in this
▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇ shall have the right to assign this Sublease or to
sublease all or portions of the Premises to any Affiliate of Sublessee. Any such
sublease of all or portions of the Premises to an Affiliate without the
35
further consent or approval of Sublessor shall be subject to the following terms
and conditions:
(i) such sublease shall be in compliance with the KSL Development Plan or
modifications thereof approved by Sublessor; (ii) such sublease shall
provide for use of the subleased portion of the Premises in accordance
with the Permitted Use or, if applicable, such use as shall be approved in
writing by Sublessor; and (iii) such sublease shall be on an Approved
Sublease Form; and (iv) the rent provided for in such sublease shall not
be less than the Minimum Sublease Rent, except that the minimum rent
provided for in such sublease may be less than the Minimum Sublease Rent
if such sublease to an Affiliate is not to be treated as a Recognized
Sub-Sublease pursuant to the provisions of the last sentence of Paragraph
12.1 above, and such Affiliate shall not be entitled to the benefits of a
Recognized Sub-Sublessee pursuant to Paragraph 12.6 below.
(ii) Sublessee shall provide to Sublessor, prior to the execution of a
sublease under this Paragraph 12.5, written notice of Sublessee's
intention to execute such sublease and evidence reasonably satisfactory to
Sublessor that the terms and conditions set forth above have been
satisfied.
12.6 (A) Any sublease for a Preapproved Project or to an Affiliate,
meeting all of the terms and conditions for entering into such sublease without
the prior approval of Sublessor, and any other sublease expressly approved by
Sublessor pursuant to this Paragraph 12 shall be entitled to recognition in
accordance with this Paragraph 12.6. In the event the portion of the Premises as
to which any such recognition is made is also a portion of the Premises as to
which there exists any Leasehold Mortgage, such sublease shall be accompanied by
evidence of the written consent thereto by any such Leasehold Mortgagee.
Sublessor shall, upon request by Sublessee, promptly execute, acknowledge and
deliver agreements evidencing and agreeing to the recognition of any such
subleases, and agreeing to recognize the rights of the sub-sublessee under its
sublease, and to accept the attornment of such sub-sublessee in the event of the
termination of this Sublease, in the form of the Consent, Estoppel and
Non-Disturbance Agreement attached hereto as Exhibit "Q". Any sublease which is
or is required to be recognized by Sublessor pursuant to the provisions of this
Paragraph 12.6 shall be hereinafter sometimes referred to as a "Recognized
Sub-sublease," and the sublessee thereunder shall be hereinafter sometimes
referred to as a "Recognized Sub-sublessee."
(B) If this Sublease is terminated prior to the expiration of the
Term as provided for herein, whether or not Sublessor enters into a Mortgagee
Sublease (as hereinafter defined) with any Leasehold Mortgagee as provided for
in Paragraph 12.7 hereof, Sublessor agrees that any such premature termination
of this Sublease shall not result in the termination
36
of any Recognized Sub-sublease. Each Recognized Sub-sublease shall continue for
the duration of its term as a direct lease between Sublessor and each such
Recognized Sub-sublessee, with the same force and effect as if Sublessor had
originally entered into the Recognized Sub-sublease as the lessor thereunder.
(C) Any other provisions of this Sublease or of any Recognized
Sub-sublease to the contrary notwithstanding, in no event shall Sublessor have
any greater obligations to any Recognized Sub-sublessee than Sublessor has to
Sublessee under this Sublease, and in no event shall any Recognized
Sub-sublessee have any greater rights as against Sublessor than Sublessee has as
against Sublessor under this Sublease.
12.7 Sublessee, and every successor and assign of Sublessee (and any
Recognized Sub-sublessee and every successor and assign of a Recognized
Sub-sublessee pursuant to Paragraph 12.6), shall have the right in addition to
any other rights granted in this Sublease to encumber its interest in this
Sublease (or any Recognized Sub-sublease) without Sublessor's consent, under one
or more Leasehold Mortgages (as hereinafter defined), upon the condition that
all rights acquired under the Leasehold Mortgage or Mortgages shall be subject
to each of the provisions set forth in this Sublease (and, if applicable, such
Recognized Sub-sublease) and to all rights and interest of the Sublessor (and,
if applicable, the sublessor under such Recognized Sub-sublease) therein and
shall be further subject to the Prime Lease and the LLIDA Sublease. If, from
time to time, Sublessee or Sublessee's successors and assigns (or Recognized
Sub-sublessees or their successors and assigns) shall encumber this Sublease or
any Recognized Sub-sublease with a Leasehold Mortgage, and if the Leasehold
Mortgagee (as hereinafter defined) registers with Sublessor by delivering to
Sublessor a copy of such recorded Leasehold Mortgage certified by the Clerk or
any Deputy Clerk of the Superior Court of Hall County, Georgia, together with
written notice specifying the name and address of the Leasehold Mortgagee and
the pertinent recording data with respect to the Leasehold Mortgage, Sublessor
agrees that, anything in this Sublease to the contrary notwithstanding, from and
after the date of receipt by Sublessor of such notice and so long as such
Leasehold Mortgage shall remain unsatisfied of record or until written notice of
satisfaction of such Leasehold Mortgage is given by the Leasehold Mortgagee to
Sublessor, the provisions of this Paragraph 12.7 shall apply to each such
Leasehold Mortgagee. Sublessor shall, promptly upon receipt of such notice under
this Paragraph 12.7, acknowledge in writing receipt of such notice to Sublessee
and such Leasehold Mortgagee as satisfying the requirements of this Paragraph
12.7 or, in the alternative, reject in writing said notice as not complying with
the provisions of this Paragraph 12.7 and specify the grounds for such
rejection. Upon the request of such Leasehold Mortgagee, Sublessor shall
acknowledge receipt of the satisfactory notice by an instrument in recordable
form. Upon satisfaction of the
37
requirements of this Paragraph 12.7 by such Leasehold Mortgagee, the following
provisions shall apply:
(A) The term "Leasehold Mortgage," as used in this Sublease shall
mean and refer to any encumbrance of this Sublease (or any Recognized
Sub-sublease) or the interest of Sublessee hereunder (or the interest of a
Recognized Sub-sublessee under a Recognized Sub-sublease), or the interest of
Sublessee or a Recognized Sub-sublessee in the improvements located on the
Premises as security for any indebtedness Sublessee, or Sublessee's successors
and permitted assigns or any Recognized Sub-sublessee and its successors and
assigns, may incur, whether by deed to secure debt, mortgage, deed of trust, or
other security instrument. The term "Leasehold Mortgagee" shall mean and refer
to the holder of the indebtedness secured by any Leasehold Mortgage; provided,
however, that such Leasehold Mortgagee must be a national bank, commercial,
national or state savings bank or trust company (whether acting on its own
behalf or as trustee), investment or merchant bank, any foreign bank agency
licensed in Georgia or authorized to make loans in the United States, charitable
foundation, real estate investment fund, insurance company, credit company,
pension or retirement fund or fund which is in turn funded substantially by a
pension or retirement fund, real estate investment trust, venture capital firm,
mortgage banking house, international bank or investment company, hospitality,
resort- or recreation-based company or other like institutional lender and any
other lenders which perform functions similar to any of the foregoing, in each
such case having assets in excess of $50,000,000 at the time of the execution of
the Leasehold Mortgage. Leasehold Mortgagee shall also include any Sublessee
hereunder, and any of its successors and assigns (to the extent that any such
successors or assigns would otherwise qualify as a Leasehold Mortgagee
hereunder, or to whom this Sublease is assigned in good faith, and not for the
purpose of evading the qualifications of a Leasehold Mortgagee hereunder), who
take back a purchase money security interest in all or any portion of the
leasehold estate created hereby or such improvements upon a sale or assignment
of the same. If Sublessee or its successors or assigns become the holder of such
purchase money security interest, and Sublessee or a successor or assign becomes
the owner of the interest of Sublessee hereunder by reason of the exercise of
remedies under its Leasehold Mortgage, any further assignment or subleasing by
Sublessee or such successor and assign thereafter shall be subject to the
limitations on assignment or subletting applicable to Sublessee without regard
to the fact that Sublessee or such successor or assign was a Leasehold
Mortgagee.
(B) There shall be no cancellation, surrender or modification of
this Sublease by Sublessor and/or Sublessee without the prior written consent of
any Leasehold Mortgagee. Nothing herein contained shall be deemed to prohibit
Sublessor from terminating this Sublease for default of Sublessee as provided in
this Sublease, subject to the provisions of this
38
Paragraph 12.7. Without limiting the generality of the foregoing, any Leasehold
Mortgage may provide that no rejection of this Sublease by Sublessee or by a
trustee in bankruptcy for Sublessee shall be effective as to any Leasehold
Mortgagee unless consented to in writing by such Leasehold Mortgagee, provided
that this sentence shall not create any duty or obligation from Sublessor to any
Leasehold Mortgagee in the event of any such rejection of this Sublease by
Sublessee or by a trustee in bankruptcy for Sublessee.
(C) Sublessor, upon serving Sublessee with any notice of default,
shall simultaneously serve a copy of such notice on any Leasehold Mortgagee. No
notice of default from Sublessor to Sublessee shall be deemed to have been duly
given unless and until a copy thereof has been provided to every Leasehold
Mortgagee of this Sublease in the manner specified herein, and no such notice
from Sublessor to any Leasehold Mortgagee shall be deemed to have been duly
given unless and until a copy thereof has been so provided to Sublessee in the
manner specified herein. The Leasehold Mortgagee shall then have the same period
after service of the notice on it to remedy or cause to be remedied the default
complained of, and Sublessor shall accept performance by or at the instigation
of any Leasehold Mortgagee as if it has been done by Sublessee. Any notice
required to be given to any Leasehold Mortgagee shall be addressed to the
Leasehold Mortgagee at the address and to the attention of the person designated
to Sublessor by such Leasehold Mortgagee to receive copies of such notices, and
shall otherwise be given and effective in accordance with the provisions of
Paragraph 24 below. Sublessor hereby authorizes entry upon the Premises by each
Leasehold Mortgagee, and its agents, representatives, contractors and employees,
for the purpose of curing defaults hereunder, subject to the rights of Sublessee
and its Sub-sublessees.
(D) In addition to the rights granted to any Leasehold Mortgagee
under subparagraph (C) of this Paragraph 12.7, a Leasehold Mortgagee shall have
an additional period of thirty (30) days to remedy or cause to be remedied any
default complained of, provided such Leasehold Mortgagee shall reimburse
Sublessor, at the time of so remedying the default, for all costs and expenses
to Sublessor of maintaining, protecting, insuring and operating the Premises
during the additional thirty (30) day period.
(E) If Sublessor shall elect to terminate this Sublease by reason of
any default of Sublessee, the Leasehold Mortgagee shall also have the right to
postpone and extend the date of termination as fixed by the provisions of this
Sublease until the later of (i) a period of not more than six (6) months from
the expiration of the cure period specified in subparagraph (D) of this
Paragraph 12.7, or (ii) the date which is ten (10) days after the receipt by
Leasehold Mortgagee of a separate notice of Sublessor's intention to terminate
this Sublease, provided that the Leasehold Mortgagee shall have cured or shall
39
have caused to be cured any then existing defaults and meanwhile shall pay the
Rent and other charges required to be paid under this Sublease, except that such
Leasehold Mortgagee shall not be required to comply with (i) obligations of
Sublessee to satisfy or otherwise discharge any lien, charge or encumbrance
against Sublessee's interest hereunder or in the Premises junior in priority to
the lien of the Leasehold Mortgage held by such Leasehold Mortgagee, or (ii)
obligations then in default and not reasonably susceptible of being cured by
such Leasehold Mortgagee, which shall not include defaults which can be cured by
the payment of money (including the reimbursement obligations of Sublessee under
Paragraph 19 below), or physical conditions on the Premises, provided that
Leasehold Mortgagee has access to the Premises and is not stayed or enjoined
from curing any such conditions (such obligations not reasonably susceptible of
being cured by such Leasehold Mortgagee are hereinafter referred to collectively
as "Incurable Defaults"); and provided, further, that the Leasehold Mortgagee
shall forthwith take steps necessary to acquire or sell Sublessee's interest and
estate in this Sublease by foreclosure of its Leasehold Mortgage, or otherwise,
and shall prosecute such action to completion with due diligence. If at the end
of the six (6) month period, the Leasehold Mortgagee shall be actively engaged
in steps to acquire or sell Sublessee's interest in this Sublease (if not
enjoined or stayed), and shall have otherwise complied with the requirements of
this Paragraph 12.7, the time for Leasehold Mortgagee to comply with the
provisions of this sub-paragraph (E) of this Paragraph 12.7 shall be extended
for so long as such Leasehold Mortgagee is enjoined or stayed and thereafter for
such period as shall be reasonably necessary to complete these steps with
reasonable diligence and continuity. The Leasehold Mortgagee shall not be
required to cure or commence to cure any defaults consisting of Sublessee's
failure to satisfy and discharge any lien, charge or encumbrance against
Sublessee's interest hereunder or in the Premises junior in priority to the lien
of the Leasehold Mortgage held by such Leasehold Mortgagee. If a Leasehold
Mortgagee complies with the provisions of this Paragraph 12.7(E), then, upon the
acquisition of Sublessee's right, title and interest herein by such Leasehold
Mortgagee, or its designee, or any other purchaser or assignee at a foreclosure
sale or otherwise, this Sublease shall continue in full force and effect as if
Sublessee had not defaulted hereunder.
(F) Sublessor agrees that in the event of any foreclosure under any
Leasehold Mortgage, either by judicial proceedings or under power of sale
contained therein, all right, title and interest encumbered by such Leasehold
Mortgage may, without the consent of Sublessor, be assigned to and vested in the
purchaser at such foreclosure sale or an assignee from such purchaser of this
Sublease or a Recognized Sub-sublease subject and subordinate, however, to the
rights, title and interests of Sublessor and further subject to the Prime Lease
and the LLIDA Sublease and (in the case of a Leasehold Mortgage encumbering all
or any part of the estate of any Recognized Sub-sublessee)
40
subject and subordinate to the rights, title and interest of Sublessee. In the
event that Leasehold Mortgagee or its designee shall become the owner of the
interest of Sublessee hereunder by foreclosure, deed in lieu of foreclosure, or
otherwise, such Leasehold Mortgagee or its designee shall have the right to
transfer and assign its interest hereunder to any other party without the prior
written consent of Sublessor, without complying with any restrictions on
assignment contained in this Sublease, and no such assignment or conveyance
shall be deemed to constitute a default or event of default hereunder.
(G) Sublessor agrees that in the event of a termination of this
Sublease by reason of any default by Sublessee or by reason of any other cause
(including, without limitation, a rejection of this Sublease by Sublessee's
trustee in bankruptcy pursuant 11 U.S.C. ss.365 or any equivalent provision of
law), and subject to the rights herein granted to Leasehold Mortgagees,
Sublessor shall provide each Leasehold Mortgagee with written notice that this
Sublease has been terminated, together with a statement of all sums then due to
Sublessor under this Sublease and all other defaults hereunder (identifying in
reasonable detail the action required to correct the same), and Sublessor will
enter into a lease (hereinafter referred to as a "Mortgagee Sublease") of the
Premises with the Leasehold Mortgagee or its designee for the remainder of the
term effective as of the date of termination, at the same Rent and upon the same
terms, provisions, covenants and agreements as contained in this Sublease
(including, without limitation any and all options to extend or renew the Term
of this Sublease) and subject to the Prime Lease and the LLIDA Sublease and to
no additional exceptions or encumbrances other than those set forth in Exhibit
"B" hereof and to the rights, if any, of the parties then in possession (actual
or constructive) of any part of the Premises (subject to any agreement between
such parties and the Leasehold Mortgagee), and Sublessor shall convey to such
Leasehold Mortgagee or its designee title to the improvements owned by Sublessee
as provided in Paragraph 8.5 of this Sublease by quitclaim deed, subject to the
right of reversion contained in such Paragraph 8.5; provided:
(1) The Leasehold Mortgagee shall make written request upon
Sublessor for the execution of such a Mortgagee Sublease within sixty (60)
days after the date of receipt by such Leasehold Mortgagee of such notice
of termination required under this Paragraph (G), and the written request
is accompanied by payment to Sublessor of all sums then due to Sublessor
under this Sublease, as set forth in such notice of termination to
Leasehold Mortgagee.
(2) The Leasehold Mortgagee or its designee shall pay to
Sublessor at the time of the execution and delivery of the Mortgagee
Sublease any sums that at the time of its execution and delivery would be
due pursuant to this Sublease but for the termination, and, in addition,
all
41
reasonable attorney's fees which Sublessor shall have incurred by reason
of the default. Sublessor shall allow as an offset against the sums
otherwise due under this Paragraph (G), an amount equal to the net income,
if any, derived by Sublessor from the Premises during the period from the
date of termination of this Sublease to the date of beginning of the Term
of such Mortgagee Sublease. In the event of a controversy as to the amount
to be paid to Sublessor pursuant to this Paragraph (G), the payment
obligation shall be satisfied in the event that Sublessor shall be paid
the amount not in controversy, and such Leasehold Mortgagee or its
designee shall agree to pay any additional sum ultimately determined to be
due plus interest at the per annum rate of one percent (1%) in excess of
the rate from time to time announced by NationsBank, N.A. (or any
successor thereto) as its "prime rate", calculated on the basis of the
actual days elapsed, from the day following the due date of such payments
to the date of payment.
(3) The Leasehold Mortgagee or its designee shall perform and
observe all covenants contained in the Mortgagee Sublease on Sublessee's
part to be performed during such period of time commencing with the date
of execution of the Mortgagee Sublease and terminating upon the
abandonment or surrender of possession of the Premises under the said
Mortgagee Sublease and shall further remedy any other conditions that
Sublessee was obligated to perform under the terms of this Sublease (other
than Incurable Defaults), and specifically identified in such notice of
termination provided by Leasehold Mortgagee under this Paragraph (G).
(4) Unless otherwise agreed in writing by the Leasehold
Mortgagees, in the event that more than one Leasehold Mortgagee shall make
written request upon Sublessor for a Mortgagee Sublease, then the
Mortgagee Sublease shall be entered into pursuant to the request of the
Leasehold Mortgagee whose Leasehold Mortgage shall be most junior in lien,
provided (1) the holder of any Leasehold Mortgage prior in lien who makes
such written request upon Sublessor shall have been paid all installments
of interest and amortization of principal then due and owing to such
Leasehold Mortgagee, plus all expenses, including reasonable attorney's
fees, incurred by such Leasehold Mortgagee in connection with the
termination of this Sublease, the execution and delivery of the Mortgagee
Sublease and the execution and delivery of all documents reasonably
necessary to protect the priority of its Leasehold Mortgage; (2) the new
sublessee will assume, in writing, all of the covenants, agreements and
obligations on the part of the defaulted Sublessee under any Leasehold
Mortgage prior in lien to be kept, observed and performed on the part of
Sublessee, subject nevertheless to the terms and conditions of such
Leasehold Mortgage, and shall execute and deliver to all holders of any
Leasehold Mortgage prior in
42
lien who have made a written request upon Sublessor pursuant to this
Paragraph (G) such documents as are necessary to keep such Leasehold
Mortgages in full force and effect, and (3) the holder of any Leasehold
Mortgage prior in lien shall have received from the title insurance
company insuring such Leasehold Mortgage assurances (at no expense to it)
satisfactory to such Leasehold Mortgagee that its Leasehold Mortgage
continues, with respect to the Mortgagee Sublease, in the same manner and
order of priority of lien as was in existence with respect to this
Sublease and that the leasehold estate of the new sublessee created by
such Mortgagee Sublease shall be subject to the lien of any Leasehold
Mortgage prior in lien in the same manner and order of priority of lien as
was in existence with respect to the leasehold estate created under this
Sublease. All holders of Leasehold Mortgages prior in lien who have
delivered a written request to Sublessor pursuant to this Paragraph (G)
shall act in good faith and cooperate with the holder of the Leasehold
Mortgage junior in lien so as to permit such junior Leasehold Mortgagee to
take advantage of the provisions of this Paragraph (G). In the event that
all of the conditions of clauses (1), (2) and (3), above, shall not have
been satisfied by or with respect to such junior Leasehold Mortgagee, the
next most junior Leasehold Mortgagee who shall have delivered a written
request to Sublessor pursuant to this Paragraph (G) shall have paramount
rights to the benefits set forth in this subparagraph. In the event the
conditions of clauses (1), (2) and (3), above, shall not be satisfied with
respect to such next most junior Leasehold Mortgagee, the provisions of
this subparagraph shall apply with respect to each Leasehold Mortgagee
next most junior until such conditions are satisfied. In the event of any
dispute as to the respective senior and junior priorities of any such
Leasehold Mortgages, the certification of such priorities by a title
company doing business in the State of Georgia, satisfactory to Sublessor,
shall be conclusively binding on all parties concerned. Sublessor's
obligation to enter into a Mortgagee Sublease with any junior Leasehold
Mortgagee shall be subject to the receipt by Sublessor of evidence
reasonably satisfactory to it that the conditions of clauses (1), (2) and
(3), above, have been satisfied with respect to all senior Leasehold
Mortgages.
(5) The new sublessee under any such Mortgagee Sublease shall
be liable to perform the obligations imposed on such sublessee by such
Mortgagee Sublease only during the period such person has an ownership of
the leasehold estate created by such Mortgagee Sublease.
(6) Sublessor shall have the right, without the consent of
Sublessee, at all times to encumber Sublessor's interest in the Premises
and Sublessor's interest in this Sublease, provided that each such
security instrument placed
43
on the Premises by Sublessor shall by its terms be subject to this
Sublease, to the right, title and interest of Sublessee in the Premises
and the improvements thereon, and to the rights and interests of any
Leasehold Mortgagee hereunder in this Sublease (including, without
limitation, the right of any Leasehold Mortgagee to enter into a Mortgagee
Sublease) and the interest of Sublessee in the leasehold estate hereby
created. Upon the request of Sublessee or any Leasehold Mortgagee,
Sublessor shall obtain (at Sublessee's sole cost and expense) an agreement
in recordable form in which the holder of the mortgage on Sublessor's
interest in the Premises and Sublessor's interest in this Sublease
acknowledges that such mortgage is subject to this Sublease and to the
rights of Sublessee and such Leasehold Mortgagee as set forth above.
(7) The new sublessee under such Mortgagee Sublease shall,
upon entering into such Mortgagee Sublease, acquire all of the right,
title and interest of Sublessee in and to any and all subleases of all or
any part of the Premises and the improvements and upon the request of such
new sublessee, Sublessee shall execute, acknowledge and deliver to such
new sublessee an assignment in recordable form evidencing such conveyance.
(8) The Mortgagee Sublease shall be expressly made subject to
the Prime Lease and the LLIDA Sublease and to the rights, if any, of the
Sublessee under this Sublease and to the rights, if any, of the Recognized
Sub-sublessees (and any other person or entity claiming by, through or
under any Recognized Sub-sublessee) under any Recognized Sub-sublease
pursuant to Paragraph 12.6 hereof, subject to any agreement between the
Leasehold Mortgagee and the Recognized Sub-sublessee.
(9) The Leasehold Mortgagee (the lessee under the Mortgagee
Sublease) shall assume all of the obligations of Sublessor under any
Recognized Sub-sublease, subject to any agreement between the Leasehold
Mortgagee and the Recognized Sub-sublessee.
(10) The lessee (Leasehold Mortgagee) under the Mortgagee
Sublease shall have the same right, title and interest in and to the
Premises and the right to use the buildings and improvements thereon as
Sublessee had under this Sublease.
(H) Sublessor, upon request, shall execute, acknowledge and deliver
to any Leasehold Mortgagee an agreement, in the form attached hereto as Exhibit
"P" and incorporated herein or in such other form as shall be reasonably
satisfactory to Leasehold Mortgagee and Sublessor, by and between Sublessor,
Sublessee and Leasehold Mortgagee (provided the same has been previously
executed by Sublessee and Leasehold Mortgagee)
44
agreeing to all of the provisions of this Paragraph 12.7 of this Sublease.
Sublessee agrees to pay all reasonable costs and expenses incurred by Sublessor
in connection with the preparation and/or execution of said agreement.
(I) Subject to the provisions of Paragraph 12.7(G)(4) above, the
rights granted a Leasehold Mortgagee under this Paragraph 12.7 shall not extend,
as to any one portion of the Premises, to more than three (3) such Leasehold
Mortgagees at any one time, but shall, as among Leasehold Mortgagees whose
Leasehold Mortgages encumber the same estate, be exercisable by said Leasehold
Mortgagees in the order of the respective priority of their Leasehold Mortgages,
to the exclusion of those Leasehold Mortgages junior in priority and those
Leasehold Mortgagees whose Leasehold Mortgages encumber a lesser estate (unless
any of such Leasehold Mortgagees agree otherwise in writing).
(J) Sublessor agrees that any Leasehold Mortgagee or its designee
permitted under this Sublease shall in no manner or respect whatsoever be liable
or responsible for any of Sublessee's obligations or covenants under this
Sublease, unless and until such Leasehold Mortgagee or its designee becomes the
owner of said leasehold estate by foreclosure, sale in lieu of foreclosure or
otherwise, in which event such Leasehold Mortgagee or its designee shall remain
liable for such obligations and covenants only so long as it remains the owner
of said leasehold estate.
(K) In the event that a Leasehold Mortgagee or its designee shall
become the holder of the leasehold estate hereby created, and in the event that
the improvements located on the Premises shall have been or become materially
damaged on, before or after the date such Leasehold Mortgagee or its designee
becomes such holder, such Leasehold Mortgagee or its designee shall be obligated
to repair, replace or reconstruct such improvements only to the extent of the
net insurance or condemnation proceeds received by such Leasehold Mortgagee or
its designee by reason of such damage. In the event that such net insurance or
condemnation proceeds are insufficient to repair, replace or reconstruct such
improvements to the extent required by this Sublease and such Leasehold
Mortgagee or its designee elects not to fully reconstruct such improvements to
the extent required by this Sublease, such failure shall constitute a default
under this Sublease.
(L) All proceeds of policies of insurance maintained hereunder and
the award from any condemnation or taking of the Premises shall be paid to and
held by the first in priority Leasehold Mortgagee in trust for the benefit of
Sublessor and Sublessee upon the condition that said Leasehold Mortgagee agrees
in a written agreement with Sublessor that is reasonably satisfactory to
Sublessor that the insurance proceeds or award from any taking shall be applied
in the manner specified in this Sublease and shall be paid to Sublessor to the
extent that
45
Sublessor shall be entitled thereto pursuant to the provisions of this Sublease.
Such Leasehold Mortgagee is hereby authorized to participate in any actions,
proceedings or negotiations in connection with the collection, settlement or
compromise of any such proceeds or awards. In the event that the first in
priority Leasehold Mortgagee is a person or entity the principal place of
business of which is not located in the United States, such proceeds shall be
held by the next in priority Leasehold Mortgagee, the principal place of
business of which is located in the United States. If no Leasehold Mortgagee has
a principal place of business in the United States, such proceeds shall be held
by an escrow agent located in the Atlanta, Georgia metropolitan area reasonably
acceptable to Sublessor, Sublessee and the first in priority Leasehold
Mortgagee. Notwithstanding the foregoing, all proceeds of policies and insurance
resulting from damage to any improvements in existence as of the Proration Date
or which are required to be constructed by Sublessee hereunder shall be paid to
and held by a third party escrow agent reasonably satisfactory to Sublessor,
Sublessee and the first in priority Leasehold Mortgagee, in trust for the
benefit of Sublessor, Sublessee and such Leasehold Mortgagee, to be applied in a
manner specified in this Sublease.
(M) Sublessor and Sublessee shall cooperate in including in this
Sublease by suitable amendment from time to time any provision which may be
reasonably requested by any proposed Leasehold Mortgagee or may otherwise be
reasonably necessary to implement the provisions of this Paragraph 12; provided,
however, that any such amendment shall not in any way affect the Term or affect
adversely any rights of Sublessor under this Sublease.
(N) So long as any Leasehold Mortgage is in existence, unless all
Leasehold Mortgagees shall otherwise expressly consent in writing, the fee title
to the Premises, the leasehold estate of Sublessor and DNR and any leasehold
estate of Sublessee herein created shall not merge but shall remain separate and
distinct, notwithstanding the acquisition of said fee title and any of said
leasehold estates by Sublessor or by Sublessee, or by a third party by purchase
or otherwise. Nothing contained in this Paragraph (N) shall limit or affect any
right of termination on the part of Sublessor contained in any other provision
of this Sublease.
(O) In the event that Sublessor should become subject to any
bankruptcy proceeding, Sublessee shall not accept any rejection by Sublessor or
Sublessor's trustee in bankruptcy as terminating this Sublease, but, instead,
shall remain in possession of the Premises to the full extent permitted by law.
Without limiting the foregoing, no such acceptance of any rejection of this
Sublease shall be effective as to any Leasehold Mortgagee unless consented to in
writing by such Leasehold Mortgagee
46
(P) In the event Sublessee shall fail to appoint an arbitrator or
appraiser in any arbitration or appraisal proceedings after notice from
Sublessor, as provided in any provision of this Sublease providing for
arbitration or appraisal by arbitrators or appraisers to be appointed by
Sublessor and/or Sublessee, the Leasehold Mortgagee shall have an additional
period of thirty (30) days, after notice by Sublessor that Sublessee has failed
to appoint such arbitrator or appraiser, to make such appointment, and the
arbitrator or appraiser so appointed shall thereupon be recognized in all
respects as if such arbitrator or appraiser had been appointed by Sublessee.
(Q) Notices from Sublessor to the Leasehold Mortgagees shall be
mailed to the address furnished to Sublessor pursuant to this Paragraph 12, and
those from the Leasehold Mortgagee to Sublessor shall be mailed to the address
designated pursuant to the provisions of Paragraph 24 hereof. Such notices,
demands and requests shall be given in the manner described in Paragraph 24 and
shall in all respects be governed by the provisions of Paragraph 24.
(R) Sublessor does hereby subordinate any and all lien or claim of
lien against Sublessee, the Premises, the improvements located on the Premises
and all other trade fixtures, fixtures, equipment, furniture and other property
of Sublessee located on the Premises, and any capital reserve or other reserve
account established hereunder, arising from this Sublease or the relationship of
Sublessor and Sublessee (including, without limitation, any lien created
pursuant to O.C.G.A. Section ▇▇-▇▇-▇▇▇, but specifically excluding Sublessor's
lien in the equipment and other personal property described in the attached
Exhibit "N" granted pursuant to the provisions of Paragraph 5.1 above) to the
liens created under any and all Leasehold Mortgages, whether now or hereafter
existing.
12.8 Sublessor shall at any time, and from time to time during the term of
this Sublease, upon the written request of Sublessee, amend this Sublease and
enter into one or more individual leases (herein referred to in this Sublease as
"Individual Sublease" or "Individual Subleases" as the context requires)
covering any portion or portions of the Premises in accordance with the
following terms and conditions:
(a) Each Individual Sublease shall conform to the following
requirements and limitations:
(i) It shall name Sublessor as lessor and Sublessee or its
designee or Affiliate as lessee thereunder;
(ii) It shall specifically describe as the premises demised
thereunder such portion of the Premises which shall be
designated by Sublessee, and shall in no event include
any
47
additional real property beyond the boundaries of the
property described in Exhibit "A" hereof, except that it
may include non-exclusive easements which are
appurtenant in part or in whole to the premises demised
thereunder and which non-exclusive easements have
theretofore been granted pursuant to the provisions of
this Sublease. The legal description contained in each
such Individual Sublease shall be prepared on the basis
of and from a current, accurate, properly labeled plat
of survey obtained at the expense of Sublessee from and
certified by a Georgia registered and licensed land
surveyor or professional engineer, which shall show and
have labeled across the face thereof (i) the portion of
the Premises which will be the premises demised under
the Individual Sublease, and (ii) any portion of the
Premises that has theretofore been demised under
Individual Subleases. Such plat of survey shall also
include thereon a certification and labeling by the said
surveyor or engineer as to the total gross acreage (also
expressed in square footage) contained within the
boundaries of (i) the portion of the Premises demised
under the Individual Sublease, (ii) the portion(s), if
any, of the Premises theretofore demised under
Individual Subleases and (iii) all of the remainder of
the Premises;
(iii) It shall provide for the payment of Rent according to
the provisions of Paragraph 4 of this Sublease, as
modified pursuant to paragraph (c) below;
(iv) It shall not contain any term or condition of this
Paragraph 12.8 or any equivalent to the terms and
conditions contained in this Paragraph 12.8; and
(v) Except as otherwise provided in this Paragraph 12.8, it
shall contain precisely the same provisions as are set
forth in this Sublease.
(b) Each Individual Sublease shall be submitted by Sublessee to
Sublessor accompanied by:
(i) A proposed form of an amendment of this Sublease
prepared in accordance with the provisions of
Subparagraph 12.8(d); and
48
(ii) Five (5) copies of the plat of survey referred to in
subparagraph 12.8(a)(ii).
(c) The amount of the Basic Rent and Percentage Rent under each
Individual Sublease shall not be less than the minimum Rent
required under any Recognized Sub-sublease, as described on
the attached Exhibit "S".
(d) Upon the execution of each such Individual Sublease, this
Sublease shall be amended as follows:
(i) Paragraph 2 of this Sublease shall be amended to remove
and discharge that portion of the Premises demised under
each such Individual Sublease in all respects from the
provisions set forth in this Sublease;
(ii) Paragraph 4 of this Sublease shall be amended to reduce
the annual Rent by a sum equivalent to the amount of the
rental payable under any such Individual Sublease;
(iii) Any such amendment shall provide that except as
specifically therein provided for, and except as
theretofore amended by prior amendments, this Sublease
shall continue in full force and effect as legally
binding obligations of Sublessor and Sublessee, and
(iv) Any other provisions of this Sublease to the contrary
notwithstanding, in no event shall the cumulative sum of
(i) the annual Rent payable under this Sublease (as such
amount is amended from time to time by reason of
amendments to this Sublease) plus (ii) the sum of all
annual Rent payable pursuant to all Individual Subleases
which have been executed pursuant to this Sublease, fail
to be equal to or greater than the Rent as originally
provided for in Paragraph 4 of this Sublease.
12.9 Sublessor will execute, for the benefit of any sub-sublessee which is
permitted under the provisions of this Sublease without the consent or approval
of Sublessor, and for the benefit of any sub-sublessee which is otherwise
approved by Sublessor, a consent, estoppel and non-disturbance agreement,
substantially in the form of the Consent, Estoppel and Non-Disturbance Agreement
attached hereto as Exhibit "Q" and incorporated herein, with such changes
therein as may be reasonably requested by the sub-sublessee. Sublessor shall
assist and cooperate with Sublessee, but at no expense to
49
Sublessor, in obtaining for the benefit of such sublessees a Subleasehold
Recognition Agreement from DNR and the Corps of Engineers, in forms heretofore
approved by DNR and the Corps of Engineers.
12.10 Sublessor acknowledges that this Sublease has been entered into with
the expectation that Sublessee will further sub-sublease portions of the
Premises in order to facilitate the development of the Premises, and that the
agreement of Sublessor not unreasonably to withhold, delay or condition consents
to subleases other than those with respect to which no further approval is
required hereunder is a material inducement to Sublessee to enter into this
Sublease. Sublessor agrees that it will promptly, diligently and in good faith
review requests by Sublessee for approval of sub-subleases which comply with the
requirements of this Paragraph 12.
13. Access.
Sublessor, its authorized representatives, agents, employees and attorneys
may, but shall be under no duty to, enter the Premises at reasonable times and
hours, upon reasonable advance notice, subject to the rights of tenants in
possession, if any, to inspect the Premises in order to determine whether
Sublessee is complying with its undertakings, duties and obligations under this
Sublease.
14. Sublessee's Property.
Sublessor shall not be liable for any damage to property of Sublessee or
of others located in the Premises, nor for the loss of or damage to any property
of Sublessee or of others by theft or otherwise, unless the result of the gross
negligence or wilful misconduct of Sublessor, its agents or employees. Sublessor
shall not be liable for any latent or patent defect in the Premises unless
identified in a written agreement between Sublessor and Sublessee executed on or
before the Execution Date, which agreement sets forth obligations of Sublessor
with respect to such defects. All property of Sublessee kept or stored on the
Premises shall be so kept or stored at the risk of Sublessee only and Sublessee
shall hold Sublessor harmless from and hereby waives any claims arising out of
damage to the same or damage to Sublessee's business, including subrogation
claims by Sublessee's insurance carrier.
15. Casualty Damage.
15.1 Repair of Damaged Improvements.
(a) Should any building, other structures or improvements
constructed and located on or within the Premises be damaged or destroyed by
fire or any other casualty whatsoever during the Term of this Sublease,
Sublessee, except as hereinafter provided in this Paragraph 15.1, shall, within
sixty
50
(60) days following the date of the casualty, commence the preparation of plans
and specifications for the repair, reconstruction, restoration or replacement of
such improvements, it being specifically understood and agreed, however, that
Sublessee may elect, in its sole discretion, not to restore or replace such
improvements. Notwithstanding the preceding sentence or anything else to the
contrary in this subparagraph 15.1(a), Sublessee shall be obligated to restore
or replace such improvements when required under the provisions of Paragraph
15.1(b). If such improvements are to be restored or replaced, then, (i) within
one hundred twenty (120) days after the date of such casualty, Sublessee shall
submit the preliminary site plan required to be approved by Sublessor under this
Sublease and by the Corps of Engineers for approval; (ii) on or before one
hundred eighty (180) days after the date of such casualty, or, if such approvals
are required, ninety (90) days after obtaining any required approvals from
Sublessor and the Corps of Engineers, Sublessee shall commence the work of
repair, reconstruction, restoration, or replacement; and (iii) Sublessee shall
prosecute the same with all reasonable dispatch, and complete the same as soon
as reasonably practicable. Sublessor acknowledges and agrees that Sublessee may
elect in its sole discretion to demolish and remove the remainder of the damaged
improvements and replace such improvements with new improvements which are
consistent with the KSL Development Plan, as modified in accordance with this
Sublease, or not to restore or replace such improvements. Sublessor and
Sublessee specifically agree that, except as otherwise provided in this
Sublease, damage to or destruction of any buildings, other structures or
improvements on or within the Premises at any time during the Term of this
Sublease, by fire or any other casualty whatsoever, shall not cause or result in
a termination of this Sublease or authorize Sublessee or those claiming by,
through or under Sublessee to quit or surrender possession of the Premises or
any part thereof, and shall not release Sublessee in any way from its liability
to pay Sublessor the Rent herein provided for (except to the extent that Gross
Revenue is reduced by reason of such damage or destruction), or from any of the
provisions of this Sublease. However, if any buildings, other structures or
improvements constructed and located by Sublessee on or within the Premises
shall be damaged or destroyed at any time within the last five (5) years of the
Term of this Sublease, Sublessee shall be relieved of any obligation to repair,
reconstruct, restore, or replace the said damaged or destroyed buildings, other
structures or improvements or to construct replacement improvements. If any
buildings, other structures or improvements shall be damaged or destroyed, and
Sublessee is not obligated under this Paragraph to repair, reconstruct, restore
or replace the same under the provisions of this Sublease, and Sublessee elects
not to do so, Sublessee shall pay to Sublessor the portion of the insurance
proceeds resulting from such damage or destruction, after deducting the cost of
collection thereof, and the demolition and clearing costs, equal to the total
amount of such insurance proceeds multiplied by a fraction, the numerator of
which is the
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value of Sublessor's reversionary interest in the damaged or destroyed
improvements, as determined by the appraisal procedures set forth in Paragraph
16.4, below, and the denominator of which is the value of the improvements prior
to such damage or destruction, as determined by such appraisal procedure. The
balance of such proceeds of insurance shall be retained by Sublessee, subject to
the rights of Leasehold Mortgagees. In the event that any such damaged or
destroyed improvements are not repaired, reconstructed, restored or replaced,
Sublessee shall clear the Premises of any debris or remains of the said damaged
or destroyed buildings, other structures or improvements, and may use the
proceeds of insurance for such clearing.
(b) Sublessee shall restore any Existing Improvements (as defined in
Paragraph 9.3 above) which are damaged or destroyed by fire or other casualty
during the Term of this Sublease, or shall replace such Existing Improvements
with improvements of substantially equivalent value as the damaged or destroyed
improvements, unless Sublessee shall have previously constructed New
Improvements, in which event (i) the obligation of Sublessee to restore or
replace such Existing Improvements shall be deemed to have been satisfied to the
extent of the costs incurred by Sublessee in the construction of such New
Improvements, and (ii) such obligation to restore or replace shall thereafter be
deemed to apply to such New Improvements to the extent of the value of the
damaged or destroyed Existing Improvements which are not restored or replaced.
Notwithstanding the foregoing, Sublessee may elect not to restore or replace
such Existing Improvements damaged or destroyed at any time within the last five
(5) years of the Term, in which event the insurance proceeds resulting from such
damage or destruction shall be paid to Sublessor and Sublessee as provided in
subparagraph 15.1(a) above.
15.2 Failure to Comply with Repair Obligation. If the repair,
reconstruction, restoration or replacement of damaged or destroyed buildings,
other structures, or improvements, or the construction of replacement
improvements, is not substantially completed in accordance with subparagraph
15.1 hereof within the time periods provided therein (provided that Sublessee
shall have elected to restore or replace such improvements), or if Sublessee
shall fail diligently and in good faith to prosecute the same to completion,
upon the expiration often (10) days after written notice from Sublessor,
Sublessor shall be entitled to assume control of such repair, reconstruction,
restoration or replacement, and Sublessee or the Leasehold Mortgagee shall make
all insurance proceeds available to Sublessor for such completion.
15.3 ▇▇▇▇▇▇▇'▇ Compensation Insurance. At all times prior to the
termination of this Sublease during any construction in or on the Premises,
Sublessee agrees, at its own cost and expense, to obtain and maintain ▇▇▇▇▇▇▇'▇
compensation insurance in any amount required by applicable law.
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15.4 Use of Proceeds of Insurance. The proceeds of all insurance obtained
in accordance with Paragraph 10.1 of this Sublease shall be used for the repair,
reconstruction, restoration, or replacement of buildings, other structures or
improvements located on or within the Premises unless Sublessee shall be
relieved of Sublessee's obligation to so repair, reconstruct, restore, or
replace such damaged or destroyed buildings, other structures or improvements
pursuant to subparagraph 15.1 of this Sublease. The proceeds of such insurance,
if not required to be used for the repair, reconstruction, restoration or
replacement of the Premises, shall, subject to the rights of Leasehold
Mortgagees and the rights of Sublessor under Paragraph 15.1 above if such
improvements are not restored or replaced, be paid over or assigned to Sublessee
or as Sublessee may direct. All sums necessary to effect such repair,
reconstruction, restoration or replacement over and above the amount available
from said insurance proceeds shall be at the sole cost and expense of Sublessee.
All such insurance proceeds shall be made available to Sublessee pursuant to a
procedure reasonably satisfactory to the Leasehold Mortgagee and Sublessor to
the extent such proceeds are required to defray the expense of such repair,
reconstruction, restoration or replacement, and may be held by such Leasehold
Mortgagee or a third party escrow agent reasonably satisfactory to Sublessor,
Sublessee and the first in priority Leasehold Mortgagee, as trustee for
Sublessor, Sublessee and such Leasehold Mortgagee, as more particularly provided
in Paragraph 12 above.
15.5 Termination Prior to Completion of Repair. Subject to the rights of
Leasehold Mortgagees under Paragraph 12.7 above, if Sublessee has elected or is
otherwise obligated to restore or replace improvements which have been damaged
or destroyed, and has commenced the restoration or replacement of such
improvements, in the event of the termination of this Sublease before the
expenditure of the full amount of such insurance proceeds, Sublessor shall be
entitled to the portion of such proceeds as would have been paid to Sublessor if
Sublessee had elected not to restore or replace such improvements as permitted
under the provisions of Paragraph 15.1 above, or the entire amount of any
unexpended balance of the full amount of such insurance proceeds, if Sublessee
is required to restore or replace such improvements under Paragraph 15.1 above.
All other insurance proceeds shall be retained by Sublessee, subject to the
rights of Leasehold Mortgagees and the rights of Sublessor under Paragraph 15.1
above if such improvements are not restored or replaced.
16. Eminent Domain.
16.1 Sublease Termination.
(a) Total Condemnation or Condemnation by State. (i) If all of the
Premises, or such portion thereof as make the
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continued operation of the Premises commercially unfeasible, in Sublessee's
reasonable opinion, is condemned, this Sublease shall, at the option of
Sublessee, to be exercised by written notice to Sublessor, to be delivered on or
before the expiration of one hundred eighty (180) days after the date of receipt
by Sublessor of written notice of such condemnation, terminate on the date title
to the Premises or the condemned portion thereof vests in the condemnor;
provided, however, that such termination shall not benefit the condemnor and
shall be without prejudice to the rights of either Sublessor or Sublessee to
recover just and adequate compensation from any such condemnor.
(ii) If the State of Georgia, DNR, Sublessor, or any other
department, agency or instrumentality of the State of Georgia condemns any
portion of the Premises for the purpose of utilizing such condemned portion of
the Premises for any Permitted Use other than the use described in Paragraph
1.7(j), or in the event that, within five (5) years after the date of any such
condemnation, such condemned portion of the Premises is used for any Permitted
Use other than the use described in Paragraph 1.7(j), or in the event that the
State of Georgia, DNR, Sublessor, or any other department, agency or
instrumentality of the State of Georgia shall condemn any material portion of
the Premises (as hereinafter defined), this Sublease shall, at the option of
Sublessee, to be exercised by written notice to Sublessor, to be delivered on or
before the expiration of one hundred eighty (180) days after the date of receipt
by Sublessor of written notice of such condemnation, terminate on the date title
to the Premises or the condemned portion thereof vests in the condemnor;
provided, however, that such termination shall not benefit the condemnor and
shall be without prejudice to the rights of either Sublessor or Sublessee to
recover just and adequate compensation from any such condemnor. For purposes of
this Paragraph 16.1 (a)(ii), a "material portion of the premises" shall mean any
portion of the Premises consisting of five (5) acres or more, excluding any
portion of the Premises with respect to which only easements for utilities are
condemned.
(b) Partial Condemnation. In the event the operation of the residue
of the Premises is commercially feasible in Sublessee's reasonable opinion, and
this Sublease is not terminated pursuant to Paragraph 16.1(a) above, then the
Rent otherwise payable throughout the remainder of the Term of this Sublease
shall be reduced as follows: the percentage which the value of the residue of
the Premises (including all structures and improvements thereon and replacements
thereof, but excluding and disregarding any such structures and improvements
constructed after the Proration Date) after condemnation bears to the value of
the Premises (including all structures and improvements thereon and replacements
thereof, but excluding and disregarding any such structures and improvements
constructed after the Proration Date) immediately prior to such condemnation
shall be determined by appraisal as hereinafter provided, and the percentage
determined by said appraisal shall be multiplied by
54
the amount of Basic Rent otherwise payable under the provisions of Paragraph 4
of this Sublease and the product thereof shall thereafter be payable as the
Basic Rent hereunder; and in such event, Sublessee may, but shall not be
obligated to, repair or rebuild the improvements remaining on such residue of
the Premises, or construct replacement improvements, to the extent that it is
economically feasible for Sublessee to do so. In such event the percentage
determined by said appraisal shall also be multiplied by the Annual Sales Base
(as defined in Exhibit "E" hereto), and the product thereof shall thereafter be
deemed to be the Annual Sales Base for purposes of the terms and provisions of
Exhibit "E" hereto.
16.2 Separate Awards. The court in such condemnation proceeding shall, if
not prohibited by law, be requested to make separate awards to Sublessor and
Sublessee, and Sublessor and Sublessee agree to request such action by the
court. This Paragraph 16 of this Sublease shall be construed as superseding and
being hereby substituted for any statutory provisions now in force or hereafter
enacted concerning condemnation proceedings to the extent permitted by law.
16.3 Awards. Sublessor and Sublessee hereby agree to petition the court in
any condemnation proceeding to make separate awards to Sublessor and Sublessee,
if said separate awards are not prohibited by law. In the event such court is
prohibited by law from making separate awards to Sublessor and Sublessee or
declines to do so and if this Sublease is terminated pursuant to Paragraph
16.1(a) above, the award shall be divided between Sublessor and Sublessee so
that each party shall receive that portion of the award which bears the same
proportion of the total award as the value of such party's interests in the
Premises bears to the total value of all interests in the Premises, determined
by appraisal as hereinafter provided. The value of Sublessor's interests shall
include the net present value of the reversionary interests in the land upon the
expiration or termination of this Sublease (discounted for time at an
appropriate discount rate); the value of Sublessor's interest in this Lease had
the Premises not been condemned, including the right to receive payment of all
sums required to be paid by Sublessee to Sublessor hereunder for the remainder
of the Term; and the value of Sublessor's residual right to the buildings and
improvements upon termination of this Lease. The value of the Sublessee's
interests shall include: the value of the buildings and improvements reduced by
the value of Sublessor's reversionary interest therein; and the value of
Sublessee's leasehold estate hereunder had the Premises not been condemned,
including the right to use and occupy the Premises for the remainder of the Term
subject to the obligation of Sublessee to pay Rent hereunder.
In the event such court is prohibited by law from making separate awards
to Sublessor and Sublessee or declines to do so and this Sublease is not
terminated pursuant to the provisions of
55
Paragraph 16.1(a) above, the award shall be divided between Sublessor and
Sublessee as follows: Sublessor shall receive such portion of the award as shall
represent the net present value of the reversionary interest in the part of the
land so taken (discounted for time at an appropriate discount rate), together
with the reversionary interest in any improvements so taken which are not
restored; Sublessee shall receive such portion of the award as shall represent
the value of the improvements so taken less the amount of the reversionary
interest to be paid to Sublessor, which portion of the award may be applied to
the costs of restoration as provided in Paragraph 15 hereof; Sublessee shall
also receive the value of Sublessee's leasehold estate hereunder had the
Premises not been condemned, including the right to use and occupy the Premises
for the remainder of the Term subject to the obligation of Sublessee to pay Rent
hereunder. If Sublessee elects to restore the improvements, the entire amount of
the award representing the value of the improvements so taken shall be paid to
Sublessee to be applied to the costs of restoration; and if there shall remain
any balance of the award after restoration as aforesaid, an amount shall be paid
to Sublessor equal to the amount of such balance multiplied by the percentage of
the entire award as would have been paid to Sublessor if such improvements had
not been restored, and the balance shall be paid to Sublessee, subject to the
rights of Leasehold Mortgagees. It is specifically understood and agreed that in
the event of any partial condemnation, and regardless of whether this Sublease
is terminated as provided above, Sublessee may elect, in its sole discretion,
not to restore any improvements except to the extent necessary to maintain the
structural integrity of any such partially condemned improvement or to restore
the same to an architectural whole.
16.4 Appraisals. For the purpose of determining the appropriate reduction
in the Rent payable hereunder in the event of a partial condemnation of the
Premises as set forth in subparagraph 16.1 of this Paragraph 16 and for the
purpose of determining any value or amount which is to be determined by
appraisal pursuant to subparagraph 16.3 of this Paragraph 16, Sublessor and
Sublessee shall use good faith efforts to reach an agreement as to such Rent
reduction, or other value or amount. If Sublessor and Sublessee are unable to
agree on such reduction, value or amount within thirty (30) days from the date
of receipt by Sublessee of written notice of such condemnation, Sublessor and
Sublessee shall each appoint one appraiser to determine the applicable value(s)
or amount(s), and each shall promptly notify the other of such appointment. If
either party shall fail or refuse so to appoint an appraiser and give notice
thereof within thirty (30) days after written request from the other party, the
appraiser appointed by such other party shall within an additional thirty (30)
days thereafter individually make any such appraisal. If the parties have each
so appointed an appraiser, the two appraisers thus appointed shall make such
determination within thirty (30) days after the date of the later notice of
appointment. If such two appraisers are unable to agree on such
56
determination within said thirty (30) days, they shall, within an additional ten
(10) days thereafter, jointly appoint a third appraiser; if they fail so to
appoint such third appraiser within said ten (10) days, the third appraiser
shall be appointed jointly by Sublessor and Sublessee (or upon their inability
to agree, by the American Institute of Real Estate Appraisers, or its
successor). The three appraisers so appointed shall then promptly make such
determination by majority vote. Any determination made pursuant to this
subparagraph 16.6 shall be binding and conclusive upon Sublessor and Sublessee,
without any right of appeal. All appraisers appointed hereunder shall be
competent, qualified by training and experience, disinterested, independent, and
members in good standing of the American Institute of Real Estate Appraisers, or
its successor. All appraisal reports shall be rendered in writing and signed by
the appraiser or appraisers making the report. Each party shall pay all fees and
expenses charged or incurred by the appraiser appointed by such party; fees and
expenses charged or incurred by the third appraiser and fees and expenses which
cannot be reasonably attributed to any one appraiser shall be borne equally by
Sublessor and Sublessee.
16.5 Other Evidence. Except as provided in subparagraphs 16.3 and 16.4 of
this Paragraph 16, and for the specific limited purpose set forth therein,
nothing herein contained to the contrary shall be deemed to prohibit Sublessor
or Sublessee from introducing into any such condemnation proceeding or
proceedings such appraisals or other estimates of value, loss and damage as each
of them may see fit.
16.6 Reformation. Subject to the foregoing provisions of this Paragraph
16, Sublessor and Sublessee agree that upon any condemnation of the Premises or
any portion thereof or any interest of Sublessee therein, this Sublease and all
of Sublessee's covenants, agreements, obligations, duties, rights, powers and
privileges created thereby shall automatically be deemed to be apportioned and
to apply to and affect solely that portion of the Premises or that interest of
Sublessee in and to the Premises or any portion thereof which is owned by
Sublessee under this Sublease following any such condemnation.
This Paragraph 16 of this Sublease shall not constitute an acknowledgment
by Sublessor or Sublessee or either or both of them that Sublessor's rights as a
Sovereign in and to the reversionary fee simple estate in the Premises are in
any manner subject to any power of eminent domain vested in any government or
other legal entity.
17. Events of Default.
17.1 The occurrence of any one or more of the following events and the
continuation thereof beyond the applicable grace period herein provided, if any,
shall constitute an "Event of Default":
57
(a) if Sublessee shall default in the payment of (i) Basic Rent or
Percentage Rent, if any (subject to the provisions of the Percentage Rent Rider
attached hereto as Exhibit "E", providing for the determination of the amount of
Percentage Rent payable hereunder) and such default shall continue for a period
of twenty (20) days after written notice from Sublessor of such default, which
notice shall specify the exact amount due; provided, however, that said written
notice to Sublessee shall not be required with respect to failure to pay Basic
Rent if Sublessor has delivered to Sublessee written notices pursuant to this
Paragraph 17.1 (a) with respect to failure to pay Basic Rent two (2) or more
times within the preceding twelve (12) months, or (ii) any item of Additional
Rent and such default shall continue for a period of thirty (30) days after
written notice from Sublessor of such default, which notice shall specify the
exact amount due; or
(b) if Sublessee shall default in the observance or performance of
any of its covenants or obligations under this Sublease (other than the payment
of Basic Rent, Percentage Rent and Additional Rent), and shall not have cured
such default within thirty (30) days after written notice from Sublessor of such
default, which notice shall specify in reasonable detail the nature of such
default and the action required to be taken to cure the same, or, if such
default is of such a nature that it can be cured but cannot be completely
remedied within said thirty (30) days, Sublessee shall fail (i) within such
thirty (30) day period to advise Sublessor of Sublessee's intention to institute
all steps necessary to remedy such situation, and to institute and thereafter
diligently prosecute to completion all steps necessary to remedy the same, and
(ii) complete such remedy within a reasonable time after the date of the giving
of said notice by Sublessor and in any event prior to such time as would either
subject Sublessor or Sublessor's agents to prosecution for a crime or cause a
default under the Prime Lease or the LLIDA Sublease; or
(c) if Sublessee shall file a voluntary petition in bankruptcy or
insolvency, or commence a case under the Federal Bankruptcy Code, or shall be
adjudicated a bankrupt or insolvent, or shall file any petition or answer
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future federal bankruptcy
act or any other present or future applicable federal, state or other statute or
law (foreign or domestic), or shall make an assignment for the benefit of
creditors or shall seek or consent to or acquiesce in the appointment of any
trustee, receiver or liquidator of Sublessee or of all or any part of
Sublessee's personal property; or
(d) if, within ninety (90) days after Sublessee becomes aware of the
commencement of any proceeding against Sublessee, whether by the filing of a
petition or otherwise, seeking any reorganization, arrangement, composition,
58
readjustment, liquidation, dissolution or similar relief under any present or
future federal bankruptcy act or any other present or future applicable federal,
state or other statute or law (foreign or domestic), such proceeding shall not
have been dismissed, or if, within ninety (90) days after Sublessee becomes
aware of the appointment of any trustee, receiver or liquidator of Sublessee or
of all or any part of Sublessee's personal property, without the consent or
acquiescence of Sublessee, such appointment shall not have been vacated or
otherwise discharged, or if any execution or attachment shall be issued against
Sublessee or any of Sublessee's personal property pursuant to which the
Premises, or any part thereof, shall be taken or occupied or attempted to be
taken or occupied.
17.2 If, at any time, (a) Sublessee shall be comprised of two or more
persons, or (b) Sublessee's obligations under this Sublease shall have been
guaranteed by any person, or (c) Sublessee's interest in this Sublease shall
have been assigned, "Sublessee", as used in subdivisions (c) and (d) of
Paragraph 17.1 hereof, shall mean any one or more of the persons primarily,
co-primarily or secondarily liable for Sublessee's obligations under this
Sublease. Any monies received by Sublessor from or on behalf of Sublessee during
the pendency of any proceeding of the types referred to in subdivisions (c) and
(d) of Paragraph 17.1 hereof and the acceptance of any such compensation by
Sublessor shall not be deemed a waiver on the part of Sublessor of any rights
under this Sublease.
18. Sublessor's Remedies.
18.1 In the case of any Event of Default as hereinabove provided (not
cured within the applicable cure period, if any, set forth in this Sublease),
Sublessor shall have the immediate right, without terminating this Sublease, to
reenter the Premises and to dispossess Sublessee and all other occupants
therefrom and remove and (subject to the rights of any Leasehold Mortgagee)
dispose of all property therein or, at Sublessor's election, to store such
property in a public warehouse or elsewhere at the cost and for the account
of-Sublessee, and without Sublessor being deemed guilty of trespass or becoming
liable for any loss or damage which may be occasioned thereby. Upon the
occurrence of any such Event of Default, Sublessor shall also have the right, at
its option, in addition to and not in limitation of any other right or remedy,
to terminate this Sublease by giving Sublessee notice of such termination and
upon the giving of such notice, this Sublease, and the Term shall cease and
terminate as fully and completely as if the date of termination were the
Expiration Date and thereupon, unless Sublessor shall have theretofore demanded
possession of the Premises, Sublessor shall have the immediate right of
possession, in the manner aforesaid, and Sublessee and all other occupants shall
quit and surrender the Premises to Sublessor, but Sublessee shall remain liable
as hereinafter mentioned.
59
18.2 If by reason of the occurrence of any such Event of Default, the Term
shall end before the Expiration Date, or Sublessor shall take lawful possession
of the Premises, or Sublessee shall be ejected, dispossessed, or removed
therefrom by summary proceedings or in any other lawful manner, whether or not
specifically enumerated in this Sublease, Sublessor at any time thereafter may
relet the Premises, or any part or parts thereof, either in the name of
Sublessor or as agent for Sublessee, for a term or terms which may, at
Sublessor's option, be less than or exceed the period of the remainder of the
Term, and at such rent or rentals and upon such other conditions, which may
include concessions and free rent periods, as Sublessor, in its sole discretion,
shall determine. Sublessor shall receive the rents from such reletting and shall
apply the same first, to the payment of such expenses as Sublessor may have
incurred in connection with reentering, ejecting, removing, dispossessing,
reletting, repairing, subdividing or otherwise preparing the Premises for
reletting, including market brokerage and reasonable, actual attorneys' fees and
expenses; second, to the payment of any indebtedness other than Rents, charges
and other sums due hereunder from Sublessee to Sublessor; and the residue, if
any, Sublessor shall apply to the fulfillment of the terms, covenants and
conditions of Sublessee hereunder and Sublessee hereby waives all claims to the
surplus, if any. Sublessee shall be and hereby agrees to be liable for and to
pay Sublessor any deficiency between the Rents, charges and other sums reserved
hereunder and the net rentals, as aforesaid, of reletting, if any, for each
month of the period which otherwise would have constituted the balance of the
Term. Sublessee hereby agrees to pay such deficiency in monthly installments on
the rent payment days specified in this Sublease, and any suit or proceeding
brought to collect the deficiency for any month, either during the Term or after
any termination thereof, shall not prejudice or preclude in any way the rights
of Sublessor to collect the deficiency for any subsequent month by a similar
suit or proceeding. Sublessor shall in no event be liable in any way whatsoever
for the failure to relet the Premises or in the event of such reletting, for
failure to collect the rents reserved thereunder; however, in the event of
termination of Sublessee's rights of possession due to an Event of Default, and
provided Sublessee has vacated the Premises and is not contesting Sublessor's
right to possession of the Premises, Sublessor agrees to use reasonable efforts
to relet the Premises so as to minimize the damages suffered by Sublessor and
payable by Sublessee. Sublessee agrees that Sublessor's agreement to use
reasonable efforts to relet the Premises shall not be deemed to impose any
obligation on Sublessor to relet the Premises (i) for any purposes which would
be inconsistent with or which would breach any covenant of Sublessor in the
Prime Lease or the LLIDA Sublease, or (ii) to any lessee who is not reputable or
who is not financially capable of performing the duties and obligations imposed
upon such lessee under the applicable lease or who does not have experience in
successfully operating a business of the type and size which such lessee
proposes to conduct in the
60
Premises. Sublessee further agrees that the agreement by Sublessor to use
reasonable efforts to relet the Premises shall not impose any obligation on
Sublessor to relet the Premises in preference to the leasing by Sublessor of any
other property or premises of Sublessor. Sublessor is hereby authorized and
empowered to make such repairs, alterations, decorations, subdivision or other
preparations for the reletting of the Premises as Sublessor shall deem
advisable, without in any way releasing Sublessee from any liability hereunder,
as aforesaid.
18.3 No such reentry or taking possession of the Premises by Sublessor
shall be construed as an election on its part to terminate this Sublease unless
Sublessor gives written notice to Sublessee of such intention. Notwithstanding
any such reletting without termination, Sublessor may at any time thereafter
elect to terminate this Sublease for such previous default.
18.4 In the event this Sublease is terminated pursuant to the foregoing
provisions of this Paragraph 18, Sublessor may recover from Sublessee all
damages it may sustain by reason of Sublessee's default, including the cost of
recovering the Premises and reasonable, actual attorneys' fees and expenses and,
upon so electing Sublessor shall be entitled to recover from Sublessee, as and
for agreed upon liquidated damages, and not as a penalty, an amount equal to the
difference between (i) the Rent, charges and other sums reserved hereunder for
the period which otherwise would have constituted the balance of the Term from
the latest of the date of termination of this Sublease, the date of reentry or
the date through which monthly deficiencies shall have been paid in full and
(ii) the rental value of the Premises at the time of such election, for such
period, both discounted to present worth at the then rate of interest applicable
to a United States treasury ▇▇▇▇ or note, as the case may be, maturing as close
as possible to what otherwise would have been the natural date of expiration of
this Sublease, all of which shall immediately be due and payable by Sublessee to
Sublessor. Nothing herein contained, however, shall limit or prejudice the right
of Sublessor to prove and obtain as damages by reason of such termination an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, such damages are to be
proved, whether or not such amount be greater, equal to, or less than the
amounts referred to in this Paragraph 18.4.
18.5 The parties hereby waive trial by jury in any action, proceeding or
counterclaim brought by either party against the other on any matter whatsoever
arising out of or in any way connected with this Sublease, the relationship of
Sublessor and Sublessee created hereby, Sublessee's use or occupancy of the
Premises or any claim for injury or damage.
18.6 Sublessee hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event Sublessee shall be
evicted or dispossessed from the
61
Premises for any cause, or Sublessor reenters the Premises following the
occurrence of any Event of Default hereunder, or this Sublease is terminated
before the Expiration Date.
18.7 In the event of any breach or threatened breach by Sublessee of any
of the terms and provisions of this Sublease, Sublessor shall have the right to
injunctive relief and declaratory relief as if no other remedies were provided
herein for such breach.
18.8 The rights and remedies herein reserved by or granted to Sublessor
and Sublessee are distinct, separate and cumulative, and the exercise of any one
of them shall not be deemed to preclude, waive or prejudice Sublessor's or
Sublessee's right to exercise any or all others. Whether or not specifically
enumerated in this Sublease, Sublessor hereby reserves all rights and remedies
at law and in equity and nothing contained in this Sublease shall be construed
as a limitation of any such rights or remedies.
18.9 Sublessor and Sublessee hereby expressly waive any right to assert a
defense based on merger and agree that neither the commencement of any action or
proceeding, nor the settlement thereof nor the entry of judgment therein shall
bar Sublessor or Sublessee from bringing any subsequent actions or proceeding.
18.10 The words "reenter", "reentry" and "reentered" as used in this
Sublease shall not be deemed to be restricted to their technical legal meanings.
18.11 If either party commences any suit or action against the other
party, the prevailing party shall be reimbursed by the losing party for the
prevailing party's court costs and attorneys' fees.
18.12 Arbitration. If the parties are unable to agree on any matter under
or with respect to this Sublease, or any Event of Default or alleged Event of
Default hereunder (other than the payment of Basic Rent), or with respect to the
rights, duties, obligations, liabilities and authority of the parties hereto,
then such matters shall be settled pursuant to the provisions of this Paragraph
18 12.
(a) If a party receiving a notice of default hereunder does not
agree that it has failed to comply with or perform in any material respect any
of the terms, covenants or conditions of this Sublease to be complied with or
performed by it, it may, within thirty (30) days after receipt of such notice of
default, notify the other party hereto in writing of such disagreement; or in
the event of any inability of the parties to agree with respect to any other
matter hereunder, a party may notify the other in writing of the exact matter in
dispute (such written notice with respect to a disputed default or other matter
is hereinafter referred to as a "Notice of Contest"). Upon such
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Notice of Contest being given, no termination of this Sublease under the
provisions of Paragraph 18.1 shall be effective, and no rights shall accrue to
either party as a result of such matter in dispute, unless and until a final
determination of such matter in dispute, or that an Event of Default has
occurred, has been made as hereinafter provided.
(b) Upon the delivery and receipt of a Notice of Contest hereunder,
Sublessor and Sublessee shall promptly enter into good faith negotiations to
resolve the dispute concerning whether the party receiving the notice of default
has in fact failed to comply with or perform in any material respect any of the
terms, covenants or conditions of this Sublease, or to resolve any other dispute
which is the subject of such Notice of Contest. If such negotiations do not
result in the resolution of such dispute within ten (10) days from the delivery
and receipt of such Notice of Contest, then Sublessor and Sublessee shall submit
the dispute to a mediator, selected jointly by Sublessor and Sublessee, to
settle such dispute through mediation. In the event Sublessor and Sublessee
cannot agree on the selection of a mediator, Sublessor and Sublessee shall
engage the services of Resolution Resources Corporation, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ as the mediator. In the event
Resolution Resources Corporation, its successor or a comparable organization
ceases to exist or ceases to perform mediation services in the metropolitan
Atlanta, Georgia area, the party issuing the Notice of Contest shall petition
the Superior Court of ▇▇▇▇▇▇ County, Georgia to appoint a mediator to resolve
the subject dispute.
(c) If within fourteen (14) days after the selection or appointment
of a mediator the subject dispute has not been resolved through mediation, the
party issuing the Notice of Contest shall secure from the American Arbitration
Association (the "AAA") and deliver to the other party a list of not less than
twenty-five (25) persons who may serve as arbitrators under this Sublease.
Within five (5) days of delivery of such list to the parties hereto, Sublessor
and Sublessee shall each select one arbitrator from such list and the
arbitrators so selected shall jointly select one other arbitrator, for a total
of three (3) arbitrators. The arbitration shall be conducted in the City of
Atlanta, Georgia, and except as otherwise expressly provided herein, in
accordance with the commercial arbitration rules of the AAA then in effect.
(d) The parties hereto shall prepare for the subject dispute to be
heard by the selected arbitrators no later than thirty (30) days after the
selection of the third arbitrator and shall jointly request in writing that the
arbitrators expeditiously render to the parties hereto their decision as to
whether the party receiving the notice of default has failed to comply with or
perform its obligations under this Sublease in the manner specified in the
notice of default, or as to any other matter in dispute as specified in the
Notice of Contest. The
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arbitrators shall have no authority whatsoever to set aside or to modify the
terms, conditions or provisions of this Sublease. The decision of the
arbitrators shall contain the findings of fact upon which their decision is
based and, if applicable, the conclusions of law supporting their decision. The
decision of the arbitrators shall become conclusive and binding on the parties
hereto and shall not be subject to appeal to any court, although such decision
may be challenged on the basis of fraud or mistake.
(e) Each party hereto shall bear its own costs of mediation and, if
applicable, arbitration. Any and all charges of mediators or arbitrators shall
be borne equally by the parties hereto.
(f) The provisions of this Paragraph 18.12 shall survive the
expiration or any termination of this Sublease.
19. Curing Sublessee's and Sublessor's Defaults.
(a) If Sublessee shall default in the performance of any term of
this Sublease on Sublessee's part to be performed, Sublessor, without thereby
waiving such default, may, but shall not be obligated to, after having given any
required notice and after the expiration of any applicable cure period
hereunder, perform the same for the account and at the expense of Sublessee,
without notice in case of emergency and upon twenty (20) days' prior notice
(after the expiration of any applicable cure period) in all other cases.
Sublessor may enter the Premises at any time to cure any default without thereby
incurring any liability to Sublessee or anyone claiming through or under
Sublessee. Reasonable bills for any expenses incurred by Sublessor in connection
with any such performance or involved in collecting or endeavoring to collect
Rent or enforcing or endeavoring to enforce any rights against Sublessee under
or in connection with this Sublease or pursuant to law, including any cost,
expense and disbursement involved in instituting and prosecuting summary
proceedings (so long as Sublessor prevails therein), as well as reasonable bills
for any property, material, labor or services provided, furnished or rendered,
including reasonable actual attorneys' fees and expenses, shall be paid by
Sublessee as Additional Rent on demand. In the event that Sublessee is in
arrears in payment of Rent, Sublessee waives Sublessee's right, if any, to
designate the items against which any payments made by Sublessee are to be
credited and Sublessor may apply any payments made by Sublessee to any items
Sublessor sees fit, irrespective of and notwithstanding any designation or
requests by Sublessee as to the items against which any such payments shall be
credited.
(b) Notwithstanding anything to the contrary contained in this
Sublease, Sublessee may offset against any Rent payable under this Sublease (i)
the amount, if any, of any final judgment not subject to further appeals which
Sublessee may have obtained
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against Sublessor in connection with the performance by Sublessor of Sublessor's
duties and obligations under this Sublease; and (ii) the amount, if any, of any
final judgment not subject to further appeals which Sublessee may obtain against
the Georgia Department of Transportation ("GDOT") in connection with the failure
of GDOT to perform the maintenance obligations of GDOT under that certain
_____________, dated ____________, by and between GDOT and Sublessor [insert
description of bridge maintenance agreement] (hereinafter referred to as the
"Bridge Maintenance Agreement").
20. Surrender.
On the Expiration Date or sooner termination of the Term or upon reentry
by Sublessor upon the Premises, Sublessee shall surrender, vacate and deliver to
Sublessor the Premises, including all buildings, other structures and
improvements thereon, and any and all additions, alterations and replacements
thereto, "broom clean" and in good order, condition and repair except for
ordinary wear and damage by fire or other casualty, to the extent Sublessee is
not required to restore the same pursuant to Paragraph 15 hereof, and except for
damage caused by the grossly negligent or wilful misconduct of Sublessor, its
agents or employees, or which result from any condemnation, to the extent
Sublessee is not required to restore any condemned improvements under the
provisions of this Sublease. If the Premises are not surrendered upon the
Expiration Date or sooner termination of the Term, such holding over shall not
be deemed to extend the Term or renew this Sublease or to have created or be
construed as a tenancy. However, Sublessee shall pay, until such time as
Sublessee complies with this Paragraph 25, in monthly installments in advance,
on the first day of each and every month of such holding over, (a) one and
one-half (1-1/2) times the monthly installment of Basic Rent payable during the
last month of the Term; and (b) all other Percentage Rent and Additional Rent
due under this Sublease. In addition to such monthly installments to be paid by
Sublessee during such holdover, to the extent Sublessee holds over more than one
(1) month, Sublessee hereby indemnifies Sublessor against liability resulting
from delay by Sublessee in so surrendering the Premises, including any claims
made by any succeeding tenant or prospective tenant founded upon such delay, but
only if Sublessor provided written notice to Sublessee, prior to the scheduled
expiration date of this Sublease, that it was required to deliver the Premises
to a succeeding or prospective tenant by a specified date. Sublessee's
obligations under this Paragraph 20 shall survive the expiration or sooner
termination of the Term.
21. Quiet Enjoyment.
Sublessee shall have the peaceable and quiet possession of the Premises
during the Term free of the claims of Sublessor or anyone claiming by, through
or under Sublessor, subject to the terms of this Sublease, the Prime Lease and
the LLIDA Sublease,
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until the occurrence of an event of default and the expiration of any applicable
cure period. This covenant shall be construed as a covenant running with the
land and shall not be construed as a personal covenant or obligation of
Sublessor, except to the extent of Sublessor's interest in this Sublease and
then subject to the terms of Paragraph 23 hereof. Sublessor makes no
representation or warranty as to the condition of the Premises, except as may be
expressly provided in any written agreement between Sublessor and Sublessee
executed contemporaneously with this Sublease. Sublessee hereby acknowledges
that it has fully inspected the Premises and that the same is in satisfactory
condition for the use intended to be made of the same by Sublessee. Sublessee
further acknowledges that no representation or warranty as to the condition of
the Premises has been made to it by Sublessor, or any agent, employee,
representative or attorney of Sublessor, except as may be expressly provided in
any written agreement between Sublessor and Sublessee executed contemporaneously
with this Sublease. Sublessor shall not be required, during the Term of this
Sublease, to make any repair or alteration to the Premises or in any manner to
supply any services, utilities or maintenance to or for the Premises, except as
provided in Paragraph 38, below, pursuant to which Sublessor has agreed to cause
GDOT to maintain the bridge providing access to the Premises pursuant to the
Bridge Maintenance Agreement.
22. Estoppel Certificates.
Sublessee and Sublessor at any time or from time to time at the written
request of the other party, at the request of the lessor under the Prime Lease
or the lessor under the LLIDA Sublease, or at the request of any Leasehold
Mortgagee or Recognized Sub-sublessee, will execute, acknowledge and deliver to
the party so requesting, a certificate certifying:
(a) that this Sublease has not been modified, changed, altered or
amended in any respect and is in full force and effect (or, if there have been
modifications, stating the modifications and that this Sublease is in full force
and effect as modified);
(b) that this Sublease is the only Sublease between Sublessor and
Sublessee affecting the Premises;
(c) to the extent true, that Sublessee has accepted the Premises (or
part thereof), and is paying Rent hereunder, for which it is then liable on a
current basis;
(d) that, to the best of such party's knowledge, there are then
existing no credits, offsets or defenses against the enforcement of any
provisions of this Sublease (or, if so, specifying the same);
(e) the dates, if any, to which the Rent or other charges due
hereunder have been paid in advance and that there
66
has been no prepayment of Rent other than as provided for in this Sublease:
(f) that, to the best of such party's knowledge, there are no
existing defaults by the other party under this Sublease (or, if so, specifying
such default);
(g) that, to the best of such party's knowledge, there are no
actions, whether voluntary or otherwise, pending against such party under the
bankruptcy laws of the United States or any state thereof; and
(h) such further information with respect to this Sublease or the
Premises as Sublessor, or such lessor, Leasehold Mortgagee, Recognized
Sub-sublessee, may reasonably request.
Any such certificate may be relied upon by any prospective purchaser of the
Premises or of the interest of Sublessor or Sublessee in any part thereof, by a
lessor or prospective lessor under the Prime Lease or the LLIDA Sublease, or by
any lessee or prospective lessee thereof, Leasehold Mortgagee, prospective
Leasehold Mortgagee, Recognized Sub-sublessee or prospective sub-sublessee. The
failure of either party to execute, acknowledge and deliver to the other party a
statement in accordance with the provisions of this Paragraph 22 within fifteen
(15) days after written request therefor shall constitute an acknowledgment by
such party, which may be relied on by any person who would be entitled to rely
upon any such statement, that such statement as submitted by the other party is
true and correct.
23. Memorandum of Sublease.
Neither Sublessor nor Sublessee shall record this Sublease or any
amendment to this Sublease (although a memorandum of this Sublease may be
recorded) without the prior written consent of the other party and in the event
such consent is given the party requesting such consent shall pay all transfer
taxes, recording fees and other charges in connection with such recording
notwithstanding any provision of law imposing liability therefor upon the other
party. In the event Sublessee records a memorandum of sublease, same shall be in
the form attached hereto and made part hereof as Exhibit "H" and shall also be
in substance reasonably satisfactory to Sublessor.
24. Notices.
Except as otherwise expressly set forth herein all notices, requests,
demands, approvals or consents required hereunder or by law (collectively,
"Notices") shall be in writing and shall be given by mailing the same, certified
or registered mail, return receipt requested, postage prepaid, or by a reliable
overnight courier service providing for delivery against receipt (such as
Federal Express) addressed to Sublessor at the address of
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Sublessor, as set forth in Paragraph 1.3 hereof and a copy to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LLP, Suite 5200,600 Peachtree Street, N.E., Atlanta, Georgia 30308-2216, Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. or Managing partner, and if to Sublessee, et the
address of Sublessee, as set forth in Paragraph 1.5 hereof and a copy to ▇▇▇▇ ▇.
▇▇▇▇, Esq., KSL Recreation Corporation, ▇▇-▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇▇ ▇. Click, Esq., Long, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. Notices shall be
deemed given on the next business day if sent by overnight courier, or on the
fourth business day after the same is deposited in the United States Mail and
addressed as set forth above, with postage thereon fully prepaid. The persons
designated for the receipt of Notices, and the addresses to which Notices may be
given or made by either party, may be changed or supplemented by Notice given by
such party to the other.
25. Brokers.
Sublessor and Sublessee each warrant to the other that it has not employed
nor had any dealings or discussions with any broker or agent who is entitled to
any commission, finder's fee or any similar compensation in connection with the
negotiation or execution of this Sublease. Sublessor and Sublessee each agree to
indemnify the other party and hold such other party harmless from and against
any and all liability for commissions or other compensation or charges and all
costs and expenses incurred in defense of the claim if this warranty is
breached. In the event of a suit on any such claim, Sublessor shall notify and
implead Sublessee, or Sublessee may intervene.
26. Miscellaneous.
26.1 No agreement to accept a surrender of this Sublease shall be valid
unless in writing signed by Sublessor. The delivery of keys or possession to
Sublessor or any agent or employee of Sublessor shall not operate as a
termination of this Sublease or surrender of the Premises.
26.2 No provision of this Sublease shall be deemed to have been waived by
Sublessor or Sublessee unless such waiver be in writing signed by the party
making such waiver. The failure of Sublessor or Sublessee to seek redress for
violation of, or to insist upon strict performance of, any covenant or condition
of this Sublease shall not be deemed a waiver thereof or prevent a subsequent
act, which would have originally constituted a violation, from having all the
force and effect of an original violation.
26.3 The receipt by Sublessor of Basic Rent and/or any items of Additional
Rent or Percentage Rent, if any, with knowledge of the breach of any covenant of
this Sublease shall not be deemed a waiver of such breach. No payment by
Sublessee or receipt by Sublessor of a lesser amount than the Basic Rent,
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Additional Rent or Percentage Rent, if any, herein stipulated shall be deemed to
be other than on account of the earliest Basic Rent, Additional Rent or
Percentage Rent, if any, reserved hereby which is due and owing at the time such
payment is received by Sublessor. No endorsement or statement on any check or
any letter accompanying any check or payment of any such rent shall be deemed an
accord and satisfaction, and Sublessor may accept such check or payment without
prejudice to Sublessor's rights and remedies provided in this Sublease.
26.4 The captions used in this Sublease are for convenience only and do
not in any way limit or amplify the terms and provisions hereof. Whenever herein
the singular number is used, the same shall include the plural, and words of any
gender shall include each other gender.
26.5 Exhibits "A" through "W", all attached hereto, are hereby
incorporated into this Sublease and made a part hereof as if fully set forth
herein.
26.6 This Sublease and all other agreements and instruments signed
contemporaneously herewith contain the entire agreement between the parties, and
no agreement, representation or inducement shall be effective to change, modify
or terminate this Sublease in whole or in part unless such agreement,
representation or inducement is in writing and signed by both parties hereto.
26.7 If any provision of this Sublease should be held to be invalid or
unenforceable, the validity and enforceability of the remaining provisions of
this Sublease shall not be affected thereby.
26.8 The terms, provisions and covenants contained in this Sublease shall
apply to, inure to the benefit of, be enforceable by and against, and be binding
upon the parties hereto and their respective heirs, personal representatives,
successors and permitted assigns.
26.9 Sublessee hereby expressly waives any and all rights granted by or
under any present or future laws to redeem Sublessor's reversionary interest in
the Premises. In addition, in the event of any lawful termination of the Term or
any repossession of the Premises by reason of Sublessee's default hereunder,
Sublessee waives (i) any notice of reentry or of the institution of legal
proceedings to that end, (ii) any right of redemption, reentry or repossession,
and (iii) the benefit of any laws now or hereafter in force exempting property
from liability for rent or otherwise. The provisions of this Paragraph shall
survive the expiration or sooner termination of the Term.
26.10 This Sublease shall be deemed to be made under and shall be
construed in accordance with and governed by the
69
internal laws of the State of Georgia, without regard to principles of conflicts
of laws.
26.11 Sublessee expressly acknowledges that neither Sublessor nor
Sublessor's agents have made or are making, and Sublessee, in executing and
delivering this Sublease, is not relying upon, any warranties, representations,
promises or statements, except to the extent that the same are expressly set
forth in this Sublease, and no rights, easements or licenses are or shall be
acquired by Sublessee by implication or otherwise unless expressly set forth in
this Sublease.
26.12 The parties agree that neither party shall be deemed to have drafted
this Sublease; accordingly, ambiguities shall not be interpreted against either
Sublessee or Sublessor.
27. Guarantor.
As a material inducement for Sublessor's agreeing to enter into this
Sublease with Sublessee, Sublessee shall cause Guarantor to execute the guaranty
attached hereto as Exhibit "I" contemporaneously with the execution of this
Sublease. If such guaranty is not executed by Guarantor contemporaneously with
the execution of this Sublease, this Sublease shall automatically be rescinded
nunc pro tunc. Sublessor agrees that it shall consider in good faith any request
by Guarantor for a release from liability under this Sublease and such guaranty
and the substitution of a new guarantor in connection with any permitted
assignment of this Sublease in accordance with the provisions hereof, and to
which Sublessor is willing or obligated to consent pursuant to the provisions of
Paragraph 12 above.
28. Time of the Essence.
Time is of the essence with respect to all time periods set forth herein.
29. Sublease Subject to Other Agreements; Covenant to
Perform Obligations.
29.1 (a) All rights of the parties hereto are subject to and subordinate
to the Prime Lease and the LLIDA Sublease in all instances and under all
circumstances. Sublessee agrees to be bound by and shall comply with all of the
terms, conditions and covenants of the Prime Lease and the LLIDA Sublease
applicable to the Premises and Sublessee's use of the Premises and manner of
access thereto during and with respect to the period from and after the
Execution Date. It is expressly understood and agreed that: (i) Sublessee may
perform no act or omit to perform any act that would cause a default of
Sublessor as "Lessee" under the Prime Lease or the "Authority" under the LLIDA
Sublease; (ii) wherever in this Sublease rights or privileges are granted to the
Sublessee with respect to any matter or thing, such rights or privileges shall
be exercisable by the Sublessee only insofar as
70
Sublessor as "Lessee" under the Prime Lease and the "Authority" under the LLIDA
Sublease has the right to exercise the same and only insofar as the same are not
inconsistent with, or in violation of, the covenants and conditions of the Prime
Lease or the LLIDA Sublease with respect to the same matter or thing, and the
terms, covenants, and conditions of the Prime Lease and the LLIDA Sublease shall
be deemed to be a limitation upon the rights and privileges granted to the
Sublessee herein. For purposes of this paragraph, all of the provisions of the
Prime Lease and the LLIDA Sublease shall be subject to, for the purpose of
determining the obligations of Sublessee hereunder, the provisions contained in
that certain Consent, Estoppel and Non-Disturbance Agreement, executed by the
Corps of Engineers in favor of Sublessee, and that certain Consent, Estoppel and
Non-Disturbance Agreement, executed by DNR in favor of Sublessee.
(b) Notwithstanding the provisions of subparagraph 29.1(a) above,
Sublessor agrees that, for the purpose of determining the obligations of
Sublessee hereunder:
(i) In the event of any conflict or inconsistency between the
terms and provisions of the Prime Lease or the LLIDA Sublease and the
terms and provisions of this Sublease, the terms and provisions of this
Sublease shall control.
(ii) Sublessor shall not surrender or relinquish the LLIDA
Sublease, or any of the rights of the sublessee thereunder, without the
prior written consent of Sublessee in its sole discretion.
(iii) Compliance by Sublessee with the express provisions of
this Sublease shall be deemed to constitute compliance with the provisions
of subparagraph 29.1(a), above. No provision of the Prime Lease or the
LLIDA Sublease shall be deemed to impose additional obligations on
Sublessee which are not contained in this Sublease.
(iv) Sublessee shall have no obligation to pay any rental or
other amounts payable to DNR under the LLIDA Sublease or to the Corps
under the Prime Lease, and the provisions of Condition 12 of the Prime
Lease are not applicable to and are not required to be performed by
Sublessee.
(v) Sublessee shall not be required to comply with any
provisions of the Prime Lease or the LLIDA Sublease requiring the removal
of any improvements or the restoration of the Premises, except to the
extent that such requirements are not in conflict with the terms and
provisions of this Sublease.
(vi) Sublessee shall not be required to comply with the
requirements of the Prime Lease for the submission
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of budgets and approval thereof by the Corps under the Prime Lease, and
Sublessor agrees that it shall comply in full with such requirements.
Sublessee agrees that Sublessor may provide to DNR and the Corps any
information required to be delivered by Sublessee to Sublessor hereunder
in connection with the performance of the obligations of DNR and LLIDA
under the LLIDA Sublease and the Prime Lease.
(vii) Sublessee shall not be bound by or required to perform
or comply with any terms or provisions of the Prime Lease or the LLIDA
Sublease which are not presently contained therein, or with the terms and
provisions of any rules or regulations hereafter promulgated or imposed by
the Corps, DNR or LLIDA which are in conflict or inconsistent with the
terms and provisions of this Sublease, or which impose or purport to
impose any obligations on Sublessee which are not contained in this
Sublease. Notwithstanding the foregoing, Sublessee shall comply with the
provisions of subparagraph 27(c) of the Prime Lease, requiring the
submission of an annual pest control plan for anticipated pesticide usage
during the ensuing year, and a report of actual pesticide usage during the
preceding calendar year. Copies of such annual plan and report shall be
provide simultaneously to LLIDA and to the Corps, and shall be provided at
the times and in the form required under the Prime Lease.
29.2 (a) Subject to the provisions of subparagraph 29.2(b) below, in
consideration of the benefits to be derived from the Premises by Sublessee,
Sublessee agrees to perform, and to be responsible for, all obligations and
duties of Sublessor, in each case with respect to the period from and after the
Proration Date, under the LLIDA Sublease and under any other contract,
agreement, lease, easement, license or use, however designated, for the use,
enjoyment, development and operation of the Premises, specifically including,
without limitation, the ▇▇▇▇▇▇▇▇ Sublease and that certain License Agreement
dated March 30, 1995, by and between Sublessor and ▇▇▇▇▇▇ Sailing Academy, Inc.
Notwithstanding the foregoing, Sublessor shall perform all obligations under the
▇▇▇▇▇▇▇▇ Sublease to the extent that Sublessee is not entitled or does not have
the authority to do so, and shall cooperate with and assist Sublessee,
reasonably and in good faith, to the extent necessary or appropriate in
connection with the performance of such obligations, or to the extent
necessitated by the failure or refusal by the ▇▇▇▇▇▇▇▇'▇ Sublessee to permit
such performance by Sublessee, and regardless of whether the ▇▇▇▇▇▇▇▇'▇
Sublessee is entitled to so refuse to permit such performance by Sublessee.
Specifically, but without limitation of the foregoing, Sublessor shall comply
with the obligation to deliver possession of the property affected by the
▇▇▇▇▇▇▇▇ Sublease, with any representations, warranties or covenants regarding
the title of Sublessor to the property affected by the ▇▇▇▇▇▇▇▇ Sublease,
including any covenant of quiet enjoyment, any requirements for the delivery to
mortgagees
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or sublessees under the ▇▇▇▇▇▇▇▇ Sublease of any agreement, recognition, consent
or other instrument, and any requirements for the execution by the Sublessor
under the ▇▇▇▇▇▇▇▇ Sublease of any certificates or instruments, or the granting
of any consents or approvals, but only to the extent such certificates, consents
or approvals are acceptable to Sublessee. In addition, Sublessor shall, upon
request by Sublessee, collect all rents and other payments under the ▇▇▇▇▇▇▇▇'▇
Sublease and remit the same to Sublessee. Sublessor does hereby irrevocably
constitute and appoint Sublessee the agent and attorney-in-fact of Sublessor
(which power of attorney shall be irrevocable during the Term of this Sublease,
shall be deemed coupled with an interest, shall survive the voluntary or
involuntary dissolution of Sublessor and shall not be affected by any disability
or incapacity suffered by Sublessor subsequent to the date hereof), with full
power of substitution, subject to the terms of this Sublease, to exercise all
rights of Sublessor under the ▇▇▇▇▇▇▇▇ Sublease, including, without limitation,
the rights set forth in Article 4, Section 2, relating to the books and records
of the ▇▇▇▇▇▇▇▇'▇ Sublessee. Sublessee does hereby indemnify and agreed to
defend and hold harmless Sublessor from and against any and all liabilities,
losses, costs, damages and expenses (including reasonable attorneys' fees)
arising, resulting, sustained or incurred, or which can or may arise, result, be
sustained or incurred by Sublessor in connection with the performance by
Sublessor of its obligations under this Paragraph 29.2(a), in accordance with
the provisions and limitations contained herein, or in connection with the
performance by Sublessee of the agency and power of attorney provided above.
(b) Notwithstanding anything to the contrary herein, Sublessor
acknowledges and agrees that Sublessee shall have no duties or obligations
whatsoever under this Sublease with respect to the property affected by the
▇▇▇▇▇▇▇▇ Sublease during the term thereof, other than the performance of the
obligations of the Sublessor thereunder with respect to the period from and
after the Proration Date. Specifically, but without limitation of the foregoing,
any provision of this Sublease which requires the payment of any sums or the
performance of any obligations by Sublessee, such as, but without limitation,
Paragraph 6, with respect to the payment of Impositions, Paragraph 7, with
respect to Permitted Uses, Permits, and Compliance with Legal Requirements and
Insurance Requirements, Paragraph 8, requiring the making of improvements
required under legal requirements, Paragraph 9, pertaining to repairs and
maintenance of improvements on the Premises, and Paragraph 11, providing for the
payment of utilities, and Exhibit "G", pertaining to Hazardous Discharges and
Environmental Complaints, and containing certain indemnities with respect
thereto, shall be inapplicable to the property affected by the ▇▇▇▇▇▇▇▇ Sublease
during the term of the ▇▇▇▇▇▇▇▇ Sublease to the extent of any obligations of
Sublessee under any such provisions, except that Sublessee shall provide the
insurance described in Paragraph 10.2 above. For the purposes of Paragraph 3 of
Exhibit "G", the property affected by
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the ▇▇▇▇▇▇▇▇ Sublease shall be deemed not to be in the possession of Sublessee
or otherwise included in the Premises during the term of the ▇▇▇▇▇▇▇▇ Sublease.
29.3 Sublessor does hereby certify to Sublessee, to the best of
Sublessor's knowledge, with the knowledge that such certification will be relied
upon by Sublessee in executing and delivering this Sublease, the following:
(a) The LLIDA Sublease is in full force and effect. The copy of the
LLIDA Sublease previously provided to Sublessee by Sublessor and certified as
such by DNR is a true, correct and complete copy thereof and has not been
modified. Sublessor is the holder of all of the interest of the sublessee under
the LLIDA Sublease, and, to the best of Sublessor's knowledge, DNR is the
current holder of all of the interest of the lessor under the LLIDA Sublease.
Sublessor has not transferred or assigned any of its rights, duties or
obligations under the LLIDA Sublease.
(b) No notice of default has been received by Sublessor with respect
to the LLIDA Sublease. To the best of Sublessor's knowledge, neither DNR nor
Sublessor is in default under the LLIDA Sublease nor is Sublessor aware of any
condition which, with the giving of notice or the passage of time, or both,
would constitute a default by DNR and/or Sublessor under the LLIDA Sublease. No
notice of default has been sent by Sublessor with respect to the LLIDA Sublease.
(c) The term of the LLIDA Sublease is currently scheduled to expire
on _______, 20__, and neither DNR nor Sublessor has any right to terminate the
LLIDA Sublease prior to that date.
(d) There are no base rents (except for $1.00 per year) or
percentage rents of any kind due by the lessee under the terms of the LLIDA
Sublease either for the period through and including the Proration Date or for
the remainder of the term of the LLIDA Sublease.
(e) All of the existing improvements on the Premises and all of the
existing subleases or licenses on the Premises, including, without limitation,
the ▇▇▇▇▇▇▇▇ Sublease and the Hilton Inns, Inc. license affecting the Hilton
Hotel on the Premises, are in compliance with the terms of the LLIDA Sublease.
All improvements and existing leases and licenses on or with respect to the
Premises have been approved by DNR.
29.4 Sublessor does hereby agree that, with respect to the LLIDA Sublease,
so long as this Sublease remains in full force and effect:
(a) The LLIDA Sublease will not be amended or modified in any way
whatsoever without the prior written consent of Sublessee, in its sole
discretion, and any such amendment or
74
modification without the prior written consent of Sublessee will not be binding
upon Sublessee. So long as this Sublease remains in full force and effect,
Sublessor shall not surrender the LLIDA Sublease.
(b) Sublessor will not consent to the modification of either the
U.S. Army Engineers' Master Plan nor the implementing General Development Plan
without the written agreement of Sublessee.
(c) Sublessor shall not do or omit to do anything which would result
in a default or event of default under the LLIDA Sublease or the Prime Lease,
and shall promptly cure any default or event of default of which it becomes
aware resulting from acts or omissions of Sublessor.
30. Force Majeure.
For the purposes of any of the provisions of this Sublease, except such
provisions as require or concern the payment of monies, neither Sublessor nor
Sublessee, as the case may be, shall be considered in breach of, or default in,
the obligations thereof with respect to this Sublease in the event of enforced
delay in the performance of such obligations due to unforeseeable causes beyond
the control and without the fault or negligence thereof, including, but not
restricted to, acts of God, acts of the public enemy, acts of the federal
government, fires, floods, epidemics, quarantine restrictions, strikes, freight
embargoes and unusually severe weather or delays due to such causes; it being
the purpose and intent of this Paragraph 30 that in the event of the occurrence
of any such enforced delay, the time or times for performance of the obligations
of Sublessor or Sublessee, as the case may be, with respect to this Sublease
shall be extended for the period of the enforced delay. The party seeking the
benefit of the provisions of this Paragraph 30 shall, within seven (7) days
after the beginning of any such enforced delay, advise the other party of such
enforced delay by notice in accordance with this Sublease, and of the cause or
causes thereof, provided that the failure of such party to so advise the other
party shall not be deemed to be a condition to the applicability of this
Paragraph 30.
31. Purchase Option.
Concurrently with the execution and delivery of this Sublease, Sublessor
has transferred and conveyed to Sublessee by ▇▇▇▇ of sale title to certain
movable trade fixtures, equipment, machinery, boats, vehicles and other personal
property (collectively, the "Personal Property"), a description of which is
appended to said ▇▇▇▇ of sale. Upon the expiration or earlier termination of the
Term of this Sublease for any reason whatsoever, Sublessor shall have the first
right and exclusive option to purchase the Personal Property from Sublessee (and
any accessions thereto or replacements thereof) for the price equal
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to unamortized costs thereof (based on then current book value and using the
straight-line method of depreciation, based upon useful lives used by Sublessee
for tax purposes). Notwithstanding anything to the contrary in this Sublease,
Sublessee shall not be required to surrender to Sublessor upon the expiration or
earlier termination of this Sublease, or to sell to Sublessor pursuant to this
Paragraph 31, any rights or interests in any intangible property, including
intellectual property, tradenames and trademarks, owned by Sublessee.
32. Proration of Income and Expenses.
Sublessor and Sublessee acknowledge and agree that all income and expenses
of the Premises shall be prorated between Sublessor and Sublessee as of 11:59
p.m. on May 14, 1996 (said date and time of proration hereinafter referred to as
the "Proration Date"), in the manner set forth in the Closing Statement attached
hereto as Exhibit "M" and made a part hereof.
33. Liquor Licenses.
It is understood and agreed that alcoholic beverage service is an
extremely important factor in the delivery of the various services and products
which Sublessee plans for the Premises and a very important factor in the
generation of revenues from which Rent and, particularly, Percentage Rent is
paid to Sublessor. Subject to the terms and provisions of this Paragraph 33,
Sublessor agrees that it will continue to issue liquor licenses for the Premises
during the Term of this Sublease, both for locations covered by existing liquor
licenses, and for such other and additional locations as may be proposed by
Sublessee from time to time. Liquor licenses will be issued to Sublessee and to
its sublessees and assignees upon request of such parties provided such parties
comply with all requirements of general application for the issuance of liquor
licenses by the State of Georgia, and comply with the procedures and
requirements of Sublessor set forth on the Liquor License Requirements attached
hereto as Exhibit "U" and made a part hereof. Sublessee acknowledges that the
liquor licenses issued by Sublessor relate to what would otherwise be a county
or municipal license and that Sublessee is also required and will continue to be
required to obtain an additional and separate license from the State of Georgia.
34. Hotel Tax.
Sublessor acknowledges and agrees that it currently imposes upon the
Premises a hotel excise tax equal to 5% of room revenues from the Hilton Hotel
and from the ▇▇▇▇▇▇▇▇ Renaissance Hotel. Of the proceeds received from such tax,
approximately 40% is paid to Hall County in accordance with an agreement between
Hall County and Sublessor (the "Hall County Agreement"). A true and correct copy
of the Hall County Agreement has been delivered to Sublessee. Sublessor and
Sublessee agree that the Hall County
76
Agreement is not being assigned to Sublessee in connection with this Sublease.
Sublessor agrees that Sublessor will not extend the term of the Hall County
Agreement without the prior, written consent of Sublessee, which may be given or
withheld in the sole discretion of Sublessee. Sublessor agrees that during the
term of this Sublease Sublessor will continue to impose the hotel tax in
substantially the manner currently imposed and to apply the proceeds, less an
amount equal to Sublessor's administrative services and costs in connection with
the imposition and collection of such tax and administration of expenditures in
connection therewith, for the benefit of the Premises in the manner and to the
extent directed by Sublessee, subject to the provisions of O.C.G.A. Section
48-13-50(6), as in effect on the Proration Date.
35. Due Authorization, Execution and Delivery of Sublease.
35.1 Sublessor acknowledges and agrees that the Sublease (i) is within the
powers granted to Sublessor by the State of Georgia, (ii) has been duly
authorized, executed and delivered by Sublessor, (iii) constitutes the binding
agreement of Sublessor, and (iv) is enforceable against Sublessor in accordance
with its terms. Sublessor has the right to enter into and perform the Sublease.
35.2 Sublessee acknowledges and agrees that the Sublease (i) is within the
powers granted to Sublessee, (ii) has been duly authorized, executed and
delivered by Sublessee, (iii) constitutes the binding agreement of Sublessee,
and (iv) is enforceable against Sublessee in accordance with its terms.
Sublessee has the right to enter into and perform the Sublease.
36. Right of First Refusal.
In the event that Sublessor should desire to assign all or any portion of
its interest as Sublessor under this Sublease, or any interest therein, and
receives from a prospective assignee a bona fide offer for the purchase of such
interest, or a portion thereof or an interest therein which Sublessor desires to
accept, then, Sublessor shall promptly give to Sublessee written notice of the
receipt of such offer, and to the extent permitted by law, shall make an offer
to sell and assign such interest to Sublessee or an Affiliate or designee of
Sublessee in accordance with the following provisions:
(a) Offer to Sell. Together with such written notice of the receipt
of such bona fide offer, Sublessor shall deliver to Sublessee an offer to sell
such interest for the price and on the terms and conditions of the bona fide
offer received by Sublessor. Sublessee shall have a period of thirty (30) days
after the date of receipt of such offer from Sublessor within which to notify
Sublessor in writing that Sublessee, or an Affiliate or designee of Sublessee,
elects to purchase such interest. In the event such offer is not accepted by
Sublessee
77
within the time set forth above, then, Sublessor shall have the right to
consummate the sale and assignment to said prospective assignee within one
hundred eighty (180) days after the expiration of said thirty (30) day period.
In the event of any change in the identity of said prospective assignee or in
the terms of the prospective sale and assignment, or in the event the sale to
said prospective assignee is not closed within said one hundred eighty (180) day
period, then Sublessor shall not sell, convey, transfer or assign such interest
without first making a new offer to Sublessee in accordance with the provisions
of this Paragraph 36. In the event that Sublessee or its Affiliate or designee
elects to purchase such interest within the time and in the manner set forth
above, then Sublessor and Sublessee shall close such transaction at the time and
place and on the date designated by Sublessee by written notice to Sublessor,
which closing date shall be not more than thirty (30) days after the date on
which Sublessee or its Affiliate or designee accepts such offer.
(b) Closing Documents. At the closing, Sublessor shall execute and
deliver to Sublessee, or its Affiliate or designee (the "Assignee"), the
following documents:
(i) An assignment, properly executed and witnessed and
notarized for recording, conveying to the Assignee the subleasehold interest
being assigned, subject only to Existing Title Exceptions, and any and all
rights of third parties or other matters of title consented to, created or
suffered by Sublessee. Sublessor shall not be obligated to convey any portion of
the Premises as shall have been taken by condemnation.
(ii) An affidavit, in form and substance reasonably
satisfactory to Sublessee, stating Sublessor's U.S. taxpayer identification
number, that Sublessor and all persons holding beneficial interests in the
Premises are "United States Persons", as defined by Internal Revenue Code
Sections 1445(f)(3) and 7701(g), and that the purchase of the leasehold interest
by the Assignee pursuant to this Sublease is not subject to the withholding
requirements of Section 1445(a) of the Internal Revenue Code.
(iii) An affidavit pursuant to O.C.G.A. Section 48-7-128 that
Sublessor is not subject to Georgia tax withholding.
(iv) A Georgia transfer tax declaration.
(v) An affidavit regarding commercial real estate brokers, in
form reasonably satisfactory to Assignee and its title insurance company
pursuant to the Real Estate Broker Lien Act, O.C.G.A. Section ▇▇-▇▇-▇▇▇, et seq.
78
Sublessor and the Assignee shall also execute and deliver such other documents
and instruments as are necessary or appropriate in connection with the closing,
including a limited warranty deed conveying Sublessor's right, title and
interest in and to the improvements on the Premises, a ▇▇▇▇ of sale for personal
property, and such other assignments, affidavits and agreements as the Assignee
or the title insurance company insuring the Assignee's title in the Premises
shall reasonably require, including, without limitation, evidence, reasonably
satisfactory to the Assignee or the Assignee's title insurance company, that any
deed of trust, mortgage or other lien affecting Sublessor's interest in the
Premises, or any portion thereof, has been satisfied and canceled of record, and
evidence of the authority of Sublessor and the signatories for Sublessor with
respect to the transaction.
(c) Closing Costs and Prorations. All costs and expenses incurred in
connection with the closing of the conveyance shall be paid by the party by whom
payment is required under the terms of the offer, as accepted by the Assignee.
(d) Title Matters. On or before thirty (30) days after the date of
acceptance of such offer by the Assignee, the Assignee may deliver to Sublessor
a written statement of objections, if any, to title matters affecting
Sublessor's interest in the Premises. Prior to, or concurrently with, closing,
Sublessor may cure or remove or cause to be affirmatively insured against any
such title matters to which Sublessee has objected which are not Existing Title
Exceptions or otherwise permitted under the provisions of this Paragraph 36 (the
"Title Objections"). In the event that prior to closing Sublessor fails or
refuses to cure or remove or cause to be affirmatively insured against the Title
Objections, Sublessee shall have the right to terminate and rescind the
acceptance of such offer and any obligation of Sublessee to purchase the
Premises, in which event Sublessee shall be deemed not to have accepted such
offer and the rights of the parties shall be determined under this Paragraph 36
accordingly. Sublessor shall cure or remove or cause to be affirmatively insured
against any Title Objections which can be cured solely by the payment of money,
such as a deed to secure debt, mechanic's or materialman's lien or similar
matters, and any Title Objection resulting from the actions of Sublessor
occurring after the date of Sublessor's written notice to Sublessee under the
first sentence of this Paragraph 36. In the event that prior to closing
Sublessor fails or refuses to cure or remove or cause to be affirmatively
insured against any of the Title Objections described in the immediately
preceding sentence, Sublessor shall be in default and Sublessee shall have the
right to any and all remedies available at law or in equity and, without
limitation of the foregoing, Sublessee shall have the right to terminate and
rescind the acceptance of such offer and any obligation of Sublessee to purchase
the interest of Sublessor under this Paragraph 36.
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(e) Casualty. If all or any portion of the improvements on the
Premises is destroyed by fire or other casualty at any time after the acceptance
of such offer and prior to closing, then, at the option of the Assignee, (i) the
acceptance of such offer shall be deemed to be rescinded, and Sublessor shall
not be obligated to assign, and the Assignee shall not be obligated to purchase,
such interest pursuant to the acceptance of such offer, provided that such
rescission shall not affect the right of Sublessee subsequently to accept an
offer within the time period permitted under this Sublease, or (ii) the
acceptance of such offer shall not be deemed to be rescinded, and Sublessor, at
the time of closing, shall transfer and assign to the Assignee all of
Sublessor's right, title and interest in and to the insurance proceeds received
or to be received by reason of such damage or destruction, said option to be
exercisable by the Assignee by delivering to Sublessor written notice of such
exercise on or before the thirtieth (30th) day following the date on which such
damage or destruction occurs, but in no event later than the date of closing
hereunder, provided that the last date for closing shall be extended for a
period of thirty (30) days in the event of any such damage or destruction. If
the Assignee fails to exercise said option within said period, then, the
Assignee shall be deemed to have elected the alternative set forth in subclause
(ii), above.
(f) Condemnation. If, at any time after the date of acceptance of
such offer and prior to closing, any action or proceeding is filed or
threatened, under which the Premises, or any portion thereof or any interest
therein, or any portion of the improvements located on the Premises, may be
taken by condemnation or right of eminent domain, then, at the option of the
Assignee, (i) the acceptance of such offer shall be deemed to be rescinded, and
Sublessor shall not be obligated to assign, and the Assignee shall not be
obligated to purchase, such interest pursuant to the acceptance of such offer,
provided that such rescission shall not affect the right of Sublessee
subsequently to accept an offer within the time period permitted under this
Sublease, or (ii) the acceptance of such offer shall not be deemed to have been
rescinded, and Sublessor, at the time of closing hereunder, shall transfer and
assign to the Assignee all of Sublessor's right, title and interest in and to
any proceeds received or which may be received by reason of such condemnation,
said option to be exercisable by the Assignee by delivering to Assignor written
notice of such exercise on or before the thirtieth (30th) day following the date
on which the Assignee received written notice that such suit has been filed or
is threatened, but in no event later than the date of closing hereunder,
provided that the last date for closing shall be extended for thirty (30) days
in the event any such action or proceeding is filed or threatened. If the
Assignee fails to exercise said option within said period, then, the Assignee
shall be deemed to have elected the alternative set forth in subclause (ii)
above.
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(g) Brokers. At the closing, Sublessor and the Assignee shall each
represent and warrant to the other that they have dealt with no brokers or
finders in connection with such Assignment other than brokers or finders
specifically identified in such representation and warranty. The Assignee shall
indemnify and agree to hold Sublessor harmless from and against any and all
causes, claims, demands, losses, liabilities, fees, commissions, settlements,
judgments, damages, expenses and fees (including attorneys' fees and court
costs) in connection with any claim for commissions, fees, compensation or other
charges relating in any way to such assignment, or the consummation thereof,
which may be made by any person, firm or entity as the result of any of the
Assignees' acts, or the acts of the Assignee's representatives, including the
brokers or finders, if any, specifically identified as described above.
Sublessor shall agree to be responsible for and to pay to Sublessee the amount
of any causes, claims, demands, losses, liabilities, fees, commissions,
settlements, judgments, damages, expenses and fees (including attorneys' fees
and court costs) in connection with any claim for commissions, fees,
compensation or other charges relating in any way to such assignment, or the
consummation thereof, which may be made by any person, firm or entity as the
result of any Sublessor's acts or the acts of Sublessor's representatives.
(h) Default and Remedies. If the assignment of the interest of
Sublessor is not closed by reason of any default by Sublessor, Sublessee or the
Assignee, then, the non-defaulting party may avail itself of any and all
remedies at law or in equity under applicable laws, including a suit for
specific performance of the obligations of the defaulting party hereunder.
(i) Time of the Essence. Time is of the essence of each and all of
the provisions of this Paragraph 36.
37. Assignments by Sublessor to Certain Parties.
Without the written consent of Sublessee, Sublessor shall not have the
right to assign this Sublease, or its interest as Sublessor hereunder, or any of
its rights or interests hereunder, to any party which does not have the power
and authority to impose the hotel excise tax described in Paragraph 34 above, or
to issue liquor licenses for the Premises in accordance with the agreement of
Sublessor under Paragraph 33 above, and any attempted assignment by Sublessor in
violation of the provisions of this Paragraph 37 shall be null and void and of
no force and effect whatsoever. The provisions of the preceding sentence
prohibiting assignments to a party which does not have the power and authority
to issue liquor licenses for the Premises shall be inapplicable at any time that
Hall County, Georgia or any other political subdivision has the power and
authority to issue such liquor licenses for all of the Premises.
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38. Maintenance by Sublessor.
Notwithstanding anything to the contrary contained in this Sublease,
Sublessor agrees that it will or will cause GDOT to maintain the bridge
providing access to the Premises in accordance with the provisions of the Bridge
Maintenance Agreement, solely at the expense of Sublessor.
39. Financial Statements.
Sublessee agrees to make available at the Premises for inspection by
Sublessor, its agents and representatives, as soon as available, and in any
event within one hundred twenty (120) days after the end of each Lease Year or
Partial Lease Year (including the last Partial Lease Year hereof), as to which
Sublessee's obligations shall survive the Expiration Date, audited financial
statements of Sublessee, including a balance sheet, statement of income and
expenses and statement of cash flow for the fiscal year then ended, prepared in
accordance with GAAP, in comparative form and accompanied by the unqualified
opinion of a nationally recognized firm of independent certified public
accountants regularly retained by Sublessee and acceptable to Sublessor.
Sublessor acknowledges and agrees that all such financial statements shall be
treated as confidential (unless made generally available to the public by
Sublessee), except in any litigation or proceeding between the parties and,
except further that Sublessor may disclose such information to the lessors under
the Prime Lease and the LLIDA Sublease, the Internal Revenue Service, or other
governmental agency or pursuant to any subpoena or judicial process or where
otherwise required by law, except that, notwithstanding the foregoing,
Sublessor, and its agents and representatives, shall not be permitted to do
anything with any such statements or other information inspected or available
hereunder such that such statements or information becomes available to or
subject to
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inspection by third parties under any applicable open records act or other
similar provisions of law.
IN WITNESS WHEREOF, the parties hereto have executed this Sublease as of
the day, month and year first above written.
Sublessor: LAKE ▇▇▇▇▇▇ ISLANDS
DEVELOPMENT AUTHORITY
By:
----------------------------------
Title:
-------------------------------
-------------------------------
Witness
(CORPORATE SEAL)
Sublessee: KSL LAKE ▇▇▇▇▇▇, INC.
By:
----------------------------------
Title:
-------------------------------
-------------------------------
Witness
(CORPORATE SEAL)
83
THE UNITED STATES OF AMERICA, DEPARTMENT OF THE ARMY, ACTING BY AND
THROUGH THE UNITED STATES ARMY CORPS OF ENGINEERS (the "Corps"), does hereby
approve and consent to the sub-subleasing of the entire Premises by Sublessor to
Sublessee pursuant to and in accordance with the provisions of this Sublease,
and does hereby approve and consent to all of the terms and conditions of this
Sublease.
IN WITNESS WHEREOF, the Corps hereby approves and consents to this
Sublease as of the ____ day of ________, 19__.
THE UNITED STATES OF AMERICA
------------------------------- BY: U.S. ARMY CORPS OF ENGINEERS, BY
Witness AUTHORITY OF THE SECRETARY OF
THE ARMY
By:
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief, Real Estate
Division
U.S. Army Engineer
District, Mobile