COMMERCIAL GROUND LEASE

 

 

COMMERCIAL GROUND LEASE

 

This Commercial Ground Lease (this “Lease”) is entered into as of May 2, 2000 by and between BELLWOOD ASSOCIATES, L.P., a Massachusetts limited partnership (“Landlord”), and FESTIVAL FUN PARKS, LLC, a Delaware limited liability company (“Tenant”), with reference to the recitals set forth below.

 

RECITALS

 

A.                                    Landlord is the owner of that certain real property (the “Premises”), the legal description of which is attached hereto and incorporated herein as Exhibit “A” , commonly known as:

 

WATER COUNTRY

2300 LAFAYETTE ROAD

PORTSMOUTH, NEW HAMPSHIRE

 

B.                                      Landlord previously leased the Premises to Water Country Corporation, a New Hampshire corporation, which lease has been terminated and a Notice of Lease Termination (as defined herein) is recorded with the Rockingham County Registry of Deeds concurrently herewith.

 

C.                                      Landlord desires to lease the Premises to Tenant, and Tenant desires to lease the Premises from Landlord pursuant to the provisions of this Lease.

 

Section 1.

 

DEFINITIONS

 

The following terms, when used in this Lease, shall have the meaning set forth in this Section.

 

1.1                                  Lease Year . The term “Lease Year” shall mean the first twelve (12) full calendar months following the Commencement Date (as defined herein) and each subsequent twelve (12) month period thereafter during the Term and any extensions. If the Commencement Date (as hereinafter defined) shall not be the first day of a calendar month, the first Lease Year shall include the partial month during which the Commencement Date shall have occurred.

 

1.2                                  Hazardous Material . The term “Hazardous Material” means any substance, material, or waste which is toxic, ignitable, reactive, or corrosive and which is or becomes regulated by the local or state governmental authority or the United States Government. The term “Hazardous Material” includes, without limitation, any material or substance which is (i) defined as a “hazardous waste,” “extremely hazardous waste,” “restricted hazardous waste,” “hazardous substance,” or “hazardous material,” by any local, state or federal law, (ii) oil and petroleum products and their by-products, (iii) asbestos, or asbestos-containing materials, (iv)

 

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designated as a “hazardous substance” pursuant to the Federal Water Pollution Control Act, (v) defined as a “hazardous waste” pursuant to the Federal Resource Conservation and Recovery Act, or (vi) defined as a “hazardous substance” pursuant to the Comprehensive Environmental Response. Compensation and Liability Act.

 

1.3                                           Environmental Law . The term “Environmental Law” shall mean any law, statute, regulation, order, or rule now or hereafter promulgated by any governmental entity, whether local, state, or federal, relating to air pollution, water pollution, noise control, and/or transporting, storing, handling, discharge of or disposal of Hazardous Material, including, without limitation, the following: the Clean Air Act; the Resource Conservation and Recovery Act, as amended by the Hazardous Waste and Solid Waste Amendments of 1984; the Comprehensive Environmental Response Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act of 1986; the Toxic Substances Control Act; the Federal Insecticide, Fungicide and Rodenticide Act, as amended; the Safe Drinking Water Act; OSHA: the Hazardous Liquid Pipeline Safety Act; the Hazardous Materials Transportation Act; and the National Environmental Policy Act, as the same may be amended from time to time.

 

Section 2.

 

PREMISES

 

2.1                                             Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises on the terms and conditions set forth in this Lease. Tenant has examined the Premises and title to the Premises and has found all of the same satisfactory for all purposes. Tenant acknowledges that Tenant is fully familiar with the physical condition of the Premises and that the Landlord makes no representation or warranty, express or implied, with respect to same. TENANT AGREES TO ACCEPT DELIVERY OF POSSESSION OF THE PREMISES ON AN “AS IS” BASIS, IT BEING AGREED THAT TENANT WILL LEASE THE PREMISES IN THEIR THEN-EXISTING CONDITION, WITH ALL FAULTS. LANDLORD HEREBY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE RELATIVE TO THE PREMISES OR ANY COMPONENT PART THEREOF. Tenant acknowledges and agrees that no representations or warranties have been made by Landlord, or by any person, firm or agent acting or purporting to act on behalf of Landlord, as to (i) the presence or absence on or in the Premises of any particular materials or substances (including, without limitation, Hazardous Material), (ii) the condition or repair of the Premises or any portion thereof, (iii) the value, expense of operation or income potential of the Premises, (iv) the accuracy or completeness of any title, survey, structural reports, environmental audits or other information provided to Tenant by any third party contractor relative to the Premises (regardless of whether the same were retained or paid for by Landlord), or (v) any other fact or condition which has or might affect the Premises or the condition, repair, value, expense of operation or income potential thereof. Tenant represents that the officers of Tenant are knowledgeable and experienced in the leasing of properties comparable to the Premises and agrees that Tenant will be relying solely on Tenant’s inspections of the Premises in leasing the Premises. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION BY THE LANDLORD OF, AND THE LANDLORD DOES

 

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HEREBY DISCLAIM, ANY AND ALL WARRANTIES BY THE LANDLORD,  EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES OR ANY PORTION THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE, AND TENANT HEREBY ACKNOWLEDGES AND ACCEPTS SUCH EXCLUSION, NEGATION AND DISCLAIMER.

 

Section 3.

 

TERM

 

3.1                                  Term . The effective date (the “Commencement Date”) of this Lease shall be the date upon which escrow is deemed closed pursuant to that certain Agreement for Purchase and Sale of Assets (the “Purchase Agreement”) of even date herewith by and between Water Country Corporation and Bellwood Associates, L.P., as sellers and Landlord, and Tenant, as purchaser under the Purchase Agreement. Landlord previously leased the Premises to Water Country Corporation under that certain lease dated                  which lease has been terminated by Landlord and a notice of lease termination (“Notice of Lease Termination”) has been or will be recorded in the Rockingham County Registry of Deeds concurrently with recording of the Memorandum of Lease, the form of which is attached hereto and incorporated herein as Exhibit “B”.  The expiration date of the Term of this Lease shall be last day of the month thirty-four and one-half (34 ¹ / ₂ ) years following the Commencement Date (the “Initial Term”), unless extended as set forth in Sections 3.2, 3.3 and 3.4. It is understood and agreed that the Initial Term and the first Extension Period (to the extent exercised by Tenant) shall expire in the middle of a Lease Year. Therefore, the final Lease Year of the Initial Term and of the First Extension Period shall consist of a partial Lease Year, and the first day of each Extension Period shall commence a new Lease Year. References to the “Term” of this Lease shall include such extensions, to the extent exercised by Tenant.  Except as otherwise expressly stated, the terms and conditions of this Lease shall remain in effect during any extension, renewal, or holdover of the Initial Term.

 

3.2                                  First Option to Extend . On or before twenty-four (24) calendar months prior to the expiration of the Initial Term, Tenant shall have the right to extend the Term of this Lease for an additional sixty-six (66) months by notifying Landlord of such intention in writing (the “First Extension Period”). The maximum Term of this Lease with the First Extension Period is forty (40) years.

 

3.3                                  Second Option to Extend . On or before twenty-four (24) calendar months prior to the expiration of the First Extension Period, Tenant may extend the term of this Lease for an additional sixty (60) months by notifying Landlord of such intention in writing (the “Second Extension Period”). The maximum Term of this Lease with the Second Extension Period is forty-five (45) years.

 

3.4                                  Third Option to Extend . On or before twenty-four (24) calendar months prior to the expiration of the Second Extension Period, Tenant may extend the Term of this Lease for an additional sixty (60) months by notifying Landlord of such intention in writing (the

 

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“Third Extension Period”). The maximum Term of this Lease with the Third Extension Period is fifty (50) years.

 

3.5                                  Time is of the Essence . Time is of the essence with respect to Tenant’s exercise of its right to extend the Term of this Lease for each applicable Extension Period. Notwithstanding anything to the contrary set forth in Sections 3.2, 3.3 or 3.4 above. Tenant’s exercise of its right to extend the Term for the applicable Extension Period shall be null and void and of no force or effect if, at the time such election is made, Landlord has delivered a notice of termination of this Lease following an Event of Default hereunder with respect to Tenant’s failure to pay Monthly Rent, and such Event of Default remains uncured.

 

Section 4.

 

MONTHLY RENT

 

4.1                                  Net-Net-Net Lease . This is a net-net-net lease. It is the intention of Landlord and Tenant that the Monthly Rent (as defined below) and other sums and charges provided herein shall be absolutely net to Landlord. Tenant shall pay all costs, charges, obligations, assessments, and expenses of every kind and nature against or relating to the Premises or the use, occupancy, area, possession, leasing, operation, management, maintenance, or repair thereof, which may arise or become due during the term hereof, or which may pertain to this transaction which concerns the Premises, whether or not now customary or within the contemplation of the parties hereto, and which, except for the execution and delivery of this Lease, would have been payable by Landlord. Tenant shall not be entitled to any abatement. reduction, diminution, set-off, counterclaim, defense or deduction with respect to any Monthly Rent, additional rent or other sums payable hereunder, nor shall the obligations of Tenant hereunder be affected, by reason of: any damage to or destruction of any or all portions of the Premises or any portion of the Improvements thereof; any defect in the condition, design, operation or fitness for use of any or all of the Improvements, the Premises or any portion thereof; any taking of any or all of the Premises or any part thereof by condemnation or otherwise (except as otherwise specifically provided herein); any prohibition, limitation, interruption, cessation, restriction or prevention of Tenant’s use, occupancy or enjoyment of the Premises, or any interference with such use, occupancy or enjoyment by any person; any eviction by paramount title or otherwise; any default by Landlord hereunder or under any other agreement; the impossibility or illegality of performance by Landlord, Tenant or both; any action of any governmental authority (including, without limitation, changes in legal requirements); construction on or renovation of any Improvements by Tenant; or any failure of the Premises to comply with applicable laws, legal requirements, or any other cause whether similar or dissimilar to the foregoing. All costs, expenses and obligations of every kind and nature whatsoever relating to the Premises and the appurtenances thereto and the use and occupancy thereof which may arise or become due and payable with respect to the period which ends on the expiration or earlier termination of the Term in accordance with the provisions hereof (whether or not the same shall become payable during the Term or thereafter) shall be paid by Tenant. The parties intend that the Obligations of Tenant hereunder shall be separate and independent covenants and agreements and shall continue unaffected unless such obligations shall have been modified or terminated pursuant to an express provision of this Lease.

 

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Except as otherwise expressly provided herein. Tenant waives all rights to terminate or surrender this Lease, or to any abatement or deferment of Monthly Rent, additional rent or other sums payable hereunder.

 

4.2                                  Monthly Rent . Tenant shall pay to Landlord as monthly rent (the “Monthly Rent”) during the first Lease Year (with Monthly Rent for subsequent Lease Years (including, without limitation, all Lease Years within any applicable Extension Period) determined pursuant to Section 5 below) determined pursuant to Sections 4.3 and 5 below) an amount equal to Seventy Four Thousand Three Hundred and Seventy-Five Dollars ($74,375). Monthly Rent shall be payable by Tenant to Landlord in advance in equal monthly installments commencing upon the Commencement Date and on the first day of each calendar month thereafter, without prior notice, invoice, demand, deduction, or offset whatsoever. The Monthly Rent for any partial month shall be prorated based upon a thirty (30) day month. Landlord shall have the right to accept all rent and other payments, whether full or partial, and to negotiate checks and payments thereof without any waiver of rights, irrespective of any conditions to the contrary sought to be imposed by Tenant. All rent shall be paid to Landlord at the address to which notices to Landlord are given.

 

4.3                                  Monthly Rent During the Extension Periods . In the event Tenant exercises one or more of its options to extend the Term of this Lease as set forth in Sections 3.2, 3.3, and 3.4 above, the Monthly Rent for the first Lease Year of each of the First through Third Extension Periods shall be the Monthly Rent paid during the previous Lease Year, as adjusted for such first and for each subsequent Lease Year of the applicable Extension Period pursuant to Section 5 hereof (such applicable Monthly Rent to be payable on the first day of each month of each such Extension Period).

 

Section 5.

 

CONSUMER PRICE INDEX RENTAL INCREASE

 

5.1                                  The capitalized terms used herein are defined below. Effective on each Adjustment Date, Monthly Rent shall be increased over the Monthly Rent payable by Tenant during the immediately preceding calendar month, by the increases in the CPI with the percentage increase to be determined by multiplying the Initial Monthly Rent by a fraction, the numerator of which shall be the Variable Index and the denominator of which shall be the Base Index. The product thus obtained shall be payable in advance in consecutive monthly installments on the first day of each month until the next Adjustment Date, or the expiration of the term; as the case may be. Notwithstanding anything contained herein to the contrary, in no event shall the new Monthly Rent be less than the previous Monthly Rent. Landlord’s delay or the failure of Landlord, beyond commencement of any Adjustment Date, in computing or billing for these adjustments will not impair the continuing obligation of Tenant to pay the rent adjustments. In the event the applicable increase in Monthly Rent is not determined by the applicable Adjustment Date, Tenant shall continue to pay Monthly Rent in the amount payable during the month immediately preceding the Adjustment Date, and the first payment of the

 

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newly-increased amount of Monthly Rent shall include a lump sum payment to account for any deficiencies in Monthly Rent paid subsequent to the Adjustment Date. In applying the foregoing formula for adjustments to the Monthly Rent, the following terms shall have the following meanings:

 

5.2                                  Adjustment Date . “Adjustment Date” shall mean, as the case may require, the first day of each Lease Year subsequent to the Commencement Date (including, without limitation, the first day of each Lease Year during any Extension Period).

 

5.3                                  Base Index . “Base Index” shall mean the CPI for the first month of the first Lease Year.

 

5.4                                  CPI . “CPI” shall mean the Consumer Price Index for All Urban Consumers, All Items, U.S.A. Area, 1982-84=100, as published by the Bureau of Labor Statistics, United States Department of Labor (U.S. City Average). If such index is discontinued, CPI shall then mean the most nearly comparable index published by the Bureau of Labor Statistics or other official agency of the United States Government as determined by Landlord.

 

5.5                                  Initial Monthly Rent . “Initial Monthly Rent” shall mean the Monthly Rent payable by Tenant for the first full calendar month of the first Lease Year.

 

5.6                                  Variable Index . “Variable Index” shall mean the CPI for the month in which the Adjustment Date occurs.

 

Section 6.

 

INTENTIONALLY DELETED

 

This Section was deleted intentionally.

 

Section 7.

 

SECURITY DEPOSIT

 

No security deposit shall be paid by Tenant to Landlord.

 

Section 8.

 

USE OF THE PREMISES

 

8.1                                  Tenant shall use the Premises only for a family entertainment center, amusement center and/or water park and/or any other legal use and uses related or ancillary thereto, and no other uses without the prior written consent of Landlord which consent shall not be unreasonably withheld or delayed. Tenant has satisfied itself that such use is lawful and conforms to all applicable zoning and other use restrictions and regulations applicable to the

 

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Premises. Tenant shall, at Tenant’s expense, comply promptly with all applicable statutes, laws, ordinances, rules, regulations, orders, covenants and restrictions of record, and any other requirements that are enacted after the Commencement Date and otherwise during the Term or any part of the Term hereof, regulating or affecting the Premises, including, without limitation, the obligation at Tenant’s cost, to alter, maintain, or restore the Premises in compliance and conformity with all laws relating to the condition, use, or occupancy of the Premises during the Term (including any and all requirements as set forth in the Americans with Disabilities Act) and regardless of (i) whether such laws require structural or non-structural improvements, (ii) whether the improvements were foreseen or unforeseen, and (iii) the period of time remaining in the Term. In no event shall the Premises or any portion thereof be used for any purpose which violates any of the provisions of this Lease or other recorded covenants, restrictions or agreements which are applicable to the Premises. Tenant shall not use, occupy or permit the Premises to be used or occupied, nor do or permit anything to be done in or on the Premises in a manner which would (i) violate any certificate of occupancy or equivalent certificate affecting the Premises or violate any applicable zoning or other law, ordinance or regulation, (ii) make void or voidable any insurance then in effect with respect to the Premises, (iii) adversely affect in any manner the ability of Tenant to obtain fire and other insurance which Tenant is required to furnish hereunder, (iv) cause any injury or damage to the Improvements (hereinafter defined), or (v) constitute a public or private nuisance or waste. Tenant shall obtain, at its sole cost and expense, any and all certificates of occupancy, permits, licenses and consents applicable to the Premises from any and all appropriate governmental authorities and shall conduct its business operation at the Premises in compliance with any such certificate of occupancy, permit, license and consent.

 

It is understood and agreed that any violation of zoning setback requirements shown on the ALTA Survey (hereinafter defined) shall not constitute a default by Tenant under this Lease; provided, however, Tenant shall continue to be obligated to comply with all applicable law. For the purposes of this paragraph, the “ALTA Survey” shall refer to that certain survey dated March 6, 2000, prepared by Millette, Sprague & Colwell, Inc., entitled “ALTA/ACSM Land Title Survey of Water Country Fun Park, Bellwood Associates Limited Partnership”, Sheet 1 of 3.

 

Section 9.

 

PROPERTY TAXES, ASSESSMENTS AND UTILITIES

 

9.1                                  Tenant’s Required Payments . Tenant shall (i) pay directly to the applicable authority at least fifteen (15) days before delinquency and as additional rent, all Property Taxes and Other Taxes, attributable solely to the Premises or Tenant’s use and occupancy thereof (as such terms are defined herein) that accrue during or are otherwise allocable to the Term of this Lease; and (ii) concurrently provide Landlord with evidence of payment thereof. Property Taxes and Other Taxes together are referred to herein as “Taxes.” Tenant shall provide Landlord with proof of payment of Taxes as soon as reasonably possible.

 

9.1.1                         “Property Taxes” shall mean all taxes, assessments, excises, levies, fees and charges (and any tax, assessment, excise, levy, fee, or charge levied wholly or partly in lieu thereof or as a substitute therefor or as an addition thereto) of every kind and description, general or special, ordinary or extraordinary, secured or unsecured, whether or not now

 

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customary or within the contemplation of Landlord and Tenant, that are levied, assessed, charged, confirmed, or imposed on or against, or otherwise solely with respect to, the Premises, the Improvements (hereinafter defined), the Permanent Improvements (hereinafter defined) or any part thereof or any personal property used in connection solely with the Premises. It is the intention of Landlord and Tenant that all new and increased taxes, assessments, levies, fees, and charges, and all similar taxes, assessments, levies, fees and charges attributable to the Premises, the Improvements, the Permanent Improvements, such personal property or any portion thereof be included within the definition of Property Taxes for the purpose of this Lease.

 

9.1.2                         “Other Taxes” shall mean all taxes, assessments, excises, levies, fees, and charges of every kind and description, ordinary or extraordinary, foreseen or unforeseen (including, without limitation, charges relating to the cost of providing facilities or services, and charges relating to documents or instruments of record affecting or encumbering the Premises), whether or not now customary or within the contemplation of Landlord and Tenant, that are levied, assessed, charged, confirmed, or imposed upon, or measured by, or reasonably attributable to (a) the Premises; (b) the cost or value of the Improvements or of Tenant’s furniture, fixtures, equipment, or personal property located in the Premises or the cost or value of any leasehold improvements made in or to the Premises by or for Tenant, regardless of whether title to such improvements is vested in Tenant or Landlord; (c) rents payable under this Lease, including, if applicable, Property Taxes, Other Taxes, insurance, maintenance and other costs incurred by Tenant; (d) the possession, leasing, operation, management, maintenance, alteration, repair, use, or occupancy by Tenant of the Premises; and (e) this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises. Other Taxes shall include any charge, imposition, assessment or other payments required in connection with any easements or rights of way benefiting the Premises.

 

9.2                                  Payments Not Required by Tenant . Tenant shall not be required to pay any property taxes or assessments or other taxes attributable to the Premises which is not a part or portion of the Premises (including any easement or right of way areas which benefit the Premises) or any municipal, county, state, or federal income or franchise taxes of Landlord, or any municipal, county, state, or federal estate, succession, inheritance, or transfer taxes of Landlord (except to the extent the same are imposed, in whole or in part, in lieu of Property Taxes or Other Taxes).

 

9.3                                  Assessments . If any assessment for a capital improvement made by public or governmental authority shall be levied or assessed against the Premises, and the assessment is payable either in a lump sum or on an installment basis, then Tenant shall have the right to elect the basis of payment; provided, however, (a) throughout the entire Term of this Lease, Tenant shall pay all assessments that accrue during or are otherwise allocable to the Term of this Lease, and (b) the entire amount of such assessment shall be paid by Tenant prior to the expiration of the Term.

 

9.4                                  Utility Payments . Tenant shall promptly pay when due all charges for water, gas. electricity, and all other utilities furnished to or used upon the Premises, including all charges for installation, termination, and relocations of such services.

 

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9.5                                  Tenant’s Right to Contest Utility Charges . Contest Taxes and Seek Reduction of Assessed Valuation of the Premises . Tenant, at Tenant’s sole cost and expense, shall have the right, at any time, to seek a reduction in the assessed valuation of the Premises or to lawfully contest any taxes or utility charges that are to be paid by Tenant; provided, however. Tenant shall (i) give Landlord written notice of any such intention to contest at least thirty (30) days before any delinquency could occur; (ii) indemnify and hold Landlord harmless from all liability on account of such contest; (iii) take such action as is necessary to remove the effect of any lien which attached to the Premises or the improvements thereon due to such contest, or in lieu thereof, at Landlord’s election, furnish Landlord with adequate security for the amount of the Taxes due plus interest and penalties; and (iv) in the event of a final determination adverse to Tenant, prior to enforcement, foreclosure or sale, pay the amount involved together with all penalties, fines, interest, costs, and expenses which may have accrued. Tenant may use any means allowed by statute to protest Taxes or utility charges as defined in this Section 9 as long as Tenant remains current as to all other terms and conditions of this Lease. If the protested Taxes have not been paid, then at Landlord’s request Tenant shall furnish to Landlord a surety bond issued by an insurance company qualified to do business in the state where the Premises are located. The amount of bond shall equal one hundred percent (100%) of the total amount of taxes in dispute. The bond shall hold Landlord and the Premises harmless from any damage arising out of the proceeding or contest and shall insure the payment of any judgment that may be rendered. If Tenant seeks a reduction or contests any Taxes or utility charges, the failure on Tenant’s part to pay the Taxes or utility charges shall not constitute a default as long as Tenant complies with the provisions of this Section.

 

9.6                                  Landlord Not Required to Join in Proceedings or Contest Brought by Tenant . Landlord shall not be required to join in any proceeding or contest brought by Tenant unless the provisions of the law require that the proceeding or contest be brought by or in the name of Landlord or the owner of the Premises. In that case, Landlord shall join in the proceeding or contest or permit it to be brought in Landlord’s name as long as Landlord is not required to bear any cost. Tenant, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered, together with all costs, charges, interest, and penalties incidental to the decision or judgment.

 

9.7                                  Tax Period and Adjustment of Taxes . For the purpose of this Lease, the calculation of Taxes payable by Tenant for any particular Lease Year shall be based upon the Taxes actually due and payable in accordance with applicable law during such Lease Year even though such Taxes may relate to a different period of time (such as the taxing authority’s fiscal year). Current practice provides for two (2) semi-annual tax bills (i.e. one bill issued in June, applicable to the period from April 1 of such calendar year through September 30 of such calendar year, and a second bill issued in December, applicable to the period from October 1 of such calendar year through March 31 of the following calendar year). The parties hereby understand that, notwithstanding the foregoing, Taxes payable by Tenant in accordance with the terms of this Lease shall be appropriately adjusted for any partial Lease Year.

 

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Section 10.

 

BUILDING AND IMPROVEMENTS; TRADE FIXTURES

 

10.1                            Building and Improvements . The buildings and all other improvements in, on, or about the Premises and all additions, alterations, modifications, and replacements thereto and thereof (collectively, the “Improvements”) at all times during the Term of this Lease shall be the property of Tenant. During the Term of this Lease and any extension term thereof, provided Landlord has not delivered a notice of termination of this Lease following an Event of Default hereunder for Tenant’s failure to pay Monthly Rent, and such Event of Default remains uncured, Tenant shall have the right to lease and otherwise convey for the Term of this Lease, any or all of such Improvements without Landlord’s consent (subject to all other terms and conditions of this Lease). Subject to Sections 10.3 and 10.4 below, all right, title, and interest of Tenant in and to the Improvements shall cease, expire and vest exclusively in Landlord on the expiration or any termination of this Lease. From and after an Event of Default hereunder, and for so long as such Event of Default remains uncured. Tenant shall not remove from the Premises any Improvements which, pursuant to New Hampshire Law, constitute part of the real property or are deemed to be a permanent leasehold improvement (collectively, the “Permanent Improvements”). During the three (3) year period prior to the expiration of the Term (or the expiration of any applicable Extension Period), Tenant shall only have the right to remove Permanent Improvements from the Premises if Tenant either replaces the same with Permanent Improvements of like quality, or restores that which remains of the Premises to a safe and sightly condition. During the entire Term, the Tenant shall maintain all Improvements and Permanent Improvements in good order, condition and repair.

 

10.2                            Depreciation and Investment Tax Credit . During the Term of this Lease, only Tenant (or at Tenant’s option, a subtenant, tenant or other designee of Tenant) shall be able to claim depreciation and investment tax credit for taxation purposes on any Improvements and Trade Fixtures.

 

10.3                            Trade Fixtures . Notwithstanding anything contained herein to the contrary, Landlord acknowledges and agrees that the furniture, trade fixtures, equipment, machinery, furnishings, signs, and other articles of personal property (collectively, “Trade Fixtures”) now located or hereafter placed or installed in, on, or about the Premises shall be and remain the property of Tenant. Tenant shall have the right, at any time during the Term of this Lease, at Tenant’s sole cost and expense, to install and affix in, to, or on the Premises, such Trade Fixtures for use in Tenant’s trade or business as Tenant, in its sole and absolute discretion, may deem advisable (subject to all legal requirements and the terms and conditions of the Lease). Subject to Tenant’s repair of any damage occasioned thereby as set forth in the next sentence and the remaining terms and conditions of this Lease, Trade Fixtures shall remain the property of Tenant and may be removed or replaced by Tenant at any time or times prior to the expiration or earlier termination of this Lease and as provided in Section 10.4 below. Any damage occasioned to the Premises by the removal of the Trade Fixtures shall be repaired at the sole cost and expense of Tenant.

 

10.4                            Removal of Trade Fixtures . At the expiration or earlier termination of this Lease, Tenant may remove the Trade Fixtures from the Premises and retain such Trade Fixtures for Tenant’s benefit without any compensation to Landlord therefor. All Permanent Improvements and other non-removable leasehold improvements, alterations and additions to the

 

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Premises, HVAC equipment, non-removable lighting fixtures, electric switch boxes, plumbing, restroom fixtures, floor coverings, and other like items which are permanently affixed to the Premises, or commonly defined as fixtures shall become the property of the Landlord immediately following the expiration or any termination of this Lease. Any of the Trade Fixtures not removed within thirty (30) days following the expiration or earlier termination of this Lease shall be deemed abandoned by Tenant and, at Landlord’s option, shall become the property of Landlord as owner of the real property to which they are affixed. Any damage occasioned to the Premises by the removal of the Trade Fixtures at the expiration or termination of this Lease shall be fully repaired at the sole cost and expense of Tenant. Upon the expiration or earlier termination of this Lease, Tenant shall leave the Premises in a neat, clean and safe condition, normal wear and tear excepted, free of trash and other debris.

 

10.5                            Financing of Trade Fixtures and Improvements . For purposes of Tenant’s financing or leasing of the Trade Fixtures or the Improvements, Landlord covenants and agrees that to the extent that the Trade Fixtures or the Improvements are leased or financed, then any interest of Landlord in the Trade Fixtures and the Improvements, as applicable, shall be subject, subordinate, and inferior to any lien(s) (and all renewals, extension, or replacements thereof) now or hereafter imposed by Tenant upon the Trade Fixtures and the Improvements; provided, however, the enforcement of any lien shall not increase any of Landlord’s obligations hereunder. Landlord agrees to execute such reasonable and necessary documents to confirm Landlord’s foregoing covenant in favor of Tenant’s lien holders or mortgagees within ten (10) days after receiving Tenant’s written request therefor.

 

Section 11.

 

TENANT’S MAINTENANCE OBLIGATIONS

 

11.1                            Obligation to Maintain . During the Term of this Lease, Tenant shall, at its own expense, keep and maintain the entire Premises, and all Improvements, Permanent Improvements and Trade Fixtures situated thereon, in good order and repair, including, but not limited to, the interior, exterior, foundations, floors, walls, roof, and structure of all buildings and other Improvements; and the sidewalks, curbs, walls, trash enclosures, landscaping with sprinkler system (if installed), light-standards, and parking areas which are a part of the Premises. Tenant shall, during the Term of this Lease, make such repairs and replacements, structural and non-structural, foreseen and unforeseen, as may be necessary to comply with the immediately foregoing sentence, regardless of whether the benefit of such repair or replacement extends beyond the Term of this Lease. Landlord shall not be required to maintain, repair or rebuild all or any part of the Premises or any Improvements or Permanent Improvements thereon. Tenant waives the right to (i) require Landlord to maintain, repair or rebuild all or any part of the Premises, or (ii) make repairs at the expense of Landlord pursuant to any legal requirements, contract, agreement, covenant, condition or restriction at any time in effect. Subject to the provisions of Section 10, the Premises, including all the Improvements and Permanent Improvements, shall be returned to Landlord at the termination or expiration of this Lease in good condition and repair, normal wear and tear excepted. Notwithstanding the foregoing, in the event of destruction of the Premises by fire or casualty, or condemnation, the condition of the

 

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Premises upon termination of this Lease shall be governed by Section 14 or Section 15, respectively.

 

In the event that all or any part of the Improvements or Permanent improvements shall encroach upon any property, street or right-of-way adjoining or adjacent to the Premises, or shall violate the agreements or conditions affecting the Premises or any part thereof, or any legal requirements (subject to the last paragraph of Section 8.1 hereof), or shall hinder, obstruct or impair any easement or right-of-way to which the Premises are subject. Tenant shall, at its expense, either (i) obtain valid and effective waivers, variances, use permits, licenses or settlements of all claims, liabilities and damages resulting therefrom, or (ii) if Landlord consents thereto, which consent shall not be unreasonably withheld, make such changes, including alteration or removal, to the Improvements and Permanent Improvements and take such other action as shall be necessary to remove or eliminate such encroachments, violations, hindrances, obstructions or impairments.

 

11.2                            Obligation to Keep the Premises Clear . Tenant shall keep the Premises, including sidewalks adjacent to the Premises and all loading areas allocated for the use of Tenant, reasonably clean and free from rubbish and dirt at all times. Tenant shall store all trash and garbage within the Premises and arrange for regular pickup and cartage of such trash and garbage at Tenant’s expense.

 

Section 12.

 

REPAIRS AND ALTERATIONS

 

12.1                            Right to Make Alterations At all times during the Term of this Lease (except as provided in Section 17.7.2) and otherwise subject to all other terms and conditions of this Lease, Tenant shall have the right to make alterations, additions, and improvements, including the construction, removal or modification of Improvements (collectively, “Alterations”), to any portion of the Premises. Subject to the provisions of Section 10 above, any Alterations which may be made or installed by Tenant, to the extent in existence at the termination or expiration of this Lease, shall remain upon the Premises and, at the termination or expiration of this Lease, shall be surrendered with the Premises to Landlord in good condition and repair, normal wear and tear excepted. Any Alterations shall be subject to the following requirements: (i) all such Alterations shall be completed in compliance with all applicable legal requirements and the requirements of all insurance policies required to be maintained by Tenant hereunder, (ii) Tenant shall not make any Alterations in violation of the terms of any restriction, easement, condition, covenant or other matter affecting title to or use of the Premises, and (iii) Alterations shall only be commenced after all required municipal and other governmental permits, authorizations and approvals shall have been obtained by Tenant, at its own cost and expense.

 

Within sixty (60) days after completion of any such work, Tenant shall provide to Landlord “as-built” plans, building permits, governmental inspection reports and all other required governmental approvals, and proof of payment of all labor and materials subject to the following sentence. Subject to Section 12.2, Tenant shall pay when due all claims for labor and

 

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materials relating to work performed on the Premises and shall give Landlord at least ten (10) days' prior written notice of the commencement of any such work. Upon receipt of the foregoing ten (10) day notice, Landlord shall have the right to require Tenant to, and at Landlord’s request Tenant shall, post appropriate notices, including, but not limited to, notices of non-responsibility, protecting Landlord and Landlord’s interest in the Premises from any mechanics’ or materialsmens’ liens.

 

12.2                            Tenant Shall Not Render Premises Liable For Any Lien . Tenant shall have no right, authority, or power to bind Landlord, or any interest of Landlord in the Premises, nor to render the Premises liable for any lien or right of lien for the payment of any claim for labor, material, or for any charge or expense incurred to maintain, to repair, or to make alterations, additions, and improvements to the Premises. Tenant shall in no way be considered the agent of Landlord in the construction, erection, modification, repair, or alteration of the Premises. Notwithstanding the above, Tenant shall have the right to lawfully contest the legality or validity of any lien or claim filed against the Premises. No contest shall be carried on or maintained by Tenant after the time limits in the sale notice of the Premises for any such lien or claim unless Tenant (i) shall have duly paid the amount involved under protest; (ii) shall have procured and recorded a lien release bond from a bonding company acceptable to Landlord in an amount not less than one and one-quarter (1-1/4) times the amount involved; or (iii) shall have procured a stay of all proceedings to enforce foreclosure or collection. Upon a final adverse determination of any contest, Tenant shall pay and discharge the amount of the lien or claim determined to be due, together with any penalties, fines, interest, cost, and expense which may have accrued, and shall provide proof of payment to Landlord.

 

Section 13.

 

INDEMNITY AND INSURANCE

 

13.1                            Indemnification . Tenant shall defend all actions against Landlord or any owner, beneficial owner, partner, member, officer, director or shareholder of Landlord, together with any mortgagee of Landlord, together with their respective successors and assigns (herein collectively, “Indemnified Parties”) with respect to, and shall pay, protect, indemnify and save harmless the Indemnified Parties from any and all loss, cost, damage, expense, liability (including, without limitation, court costs and reasonable attorneys’ fees) incurred in connection with or arising at any time and from any cause whatsoever in or about the Premises, other than damages to the extent caused by reason of the negligence or willful misconduct of the Indemnified Parties, including, without limiting the generality of the foregoing: (i) any default or breach by Tenant in the observance or performance of any of the terms, covenants, or conditions of this Lease on Tenant’s part to be observed or performed; (ii) the use or occupancy of the Premises by Tenant or any person claiming by, through, or under Tenant; (iii) the condition of the Premises or any occurrence or happening on the Premises from any cause whatsoever, or (iv) any acts, omissions, or negligence of Tenant or any person claiming by, through, or under Tenant, or of the contractors, agents, servants, employees, visitors, or licensees of Tenant or any such person, in, on, or about the Premises, either prior to or during the Term of this Lease (including, without limitation, any holdovers in connection therewith), including, without limitation, any acts, omissions, or negligence in the making or performance of any

 

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Alterations. Tenant further agrees to indemnify and hold harmless the Indemnified Parties from and against any and all loss, cost, liability, damage, and expense (including, without limitation, reasonable attorneys’ fees) incurred in connection with or arising from any claims by any persons by reason of injury to persons or damage to property occasioned by any use, occupancy, condition, occurrence, happening, act, omission, or negligence of Tenant referred to in the preceding sentence other than claims to the extent caused by reason of the negligence or willful misconduct of the Indemnified Parties. The provisions of this Section shall survive the expiration or sooner termination of this Lease with respect to any claims or liability occurring prior to such expiration or termination, and shall not be limited by reason of any insurance carried by Landlord and Tenant. Tenant shall defend the Indemnified Parties with counsel selected by Tenant and reasonably acceptable to the Indemnified Parties.

 

For the purposes of this Section 13.1 and all other indemnity provisions of this Lease, the “negligence or willful misconduct of the Indemnified Parties’” (or of Landlord) shall expressly exclude any action or omission after the date of this Lease of any employee of Tenant who, prior to the dale of this Lease, was in the employ of Landlord.

 

13.2                            Insurance Company Requirement . Insurance required by this Lease shall be issued by companies holding a general policyholder’s rating of at least A and a financial size category of not less than X as set forth in the most current issue of Best’s Insurance Guide and who are authorized to do business in the state in which the Premises are located. If this publication is discontinued, then another insurance rating guide or service generally recognized as authoritative shall be substituted by Landlord. No insurance policy maintained by Tenant hereunder shall provide for a deductible or self-insured retention in excess of $25,000.00.

 

13.3                            Insurance Certificate Requirements .

 

13.3.1                   Tenant shall deliver to Landlord evidence of the insurance policies required to be carried hereunder evidencing the existence and amounts of the insurance with loss payable clauses as required herein, with evidence of payment thereof. No policy shall be cancelable or subject to reduction of coverage or other modification except after thirty (30) days’ prior written notice to Landlord.

 

13.3.2                   The insurance required to be maintained herein may be carried under blanket policies. The casualty insurance shall provide for payment of loss to Tenant. A stipulated value or agreed amount endorsement deleting the co-insurance provision to the building policy shall be procured.

 

13.4                            Minimum Acceptable Insurance Coverage Requirements .

 

13.4.1                   Tenant shall, at Tenant’s expense, obtain and keep in full force during the Term of this Lease a policy of commercial general public liability insurance with a combined single limit bodily injury and property damage insurance on an occurrence basis insuring Tenant (with the Indemnified Parties as additional insureds) against any liability arising out of the ownership, use, occupancy, or maintenance of the Premises and all of its appurtenant areas. The insurance shall be in an amount not less than Five Million Dollars ($5,000,000) per

 

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occurrence (calendar year 2000 Dollars). The policy shall provide blanket contractual liability coverage. The limits of the insurance shall expressly not limit the liability of Tenant under this Lease. In addition, Tenant shall, at Tenant’s expense, obtain and keep in full force during the Term of this Lease an umbrella liability policy in an amount not less than Twenty Million Dollars ($20,000,000) (calendar year 2000 Dollars).

 

13.4.2                               Tenant shall keep in force during the entire Term, insurance with respect to the Improvements and Permanent Improvements against all perils included within the classification “Direct Risk of Physical Loss”, covering such risks as shall be customarily insured against with respect to improvements similar in construction, location and use to the Improvements and Permanent Improvements, with extended coverage, and in amounts not less than 100% of the actual replacement cost of the Improvements (exclusive of foundations and excavations), without regard to depreciation. If as of the date hereof, or at any time during the term of this Lease, the Premises are not in compliance with all legal requirements such that in the event of a partial or total casualty or destruction such legal requirements would prohibit Tenant from restoring or rebuilding the Premises and the Improvements and Permanent Improvements to the specifications and condition of the same prior to such casualty or destruction, then Tenant shall be required to carry agreed value insurance.

 

13.4.3                               Tenant shall also obtain and keep in force during the Term of this Lease a policy of Business Interruption insurance covering a period of one (1) year. This insurance shall cover all real estate taxes and insurance costs for the same period in addition to one (1) year’s rent payable under this Lease.

 

13.4.4                                 Tenant shall also obtain and keep in force during the Term of this Lease a worker’s compensation policy, insuring against and satisfying Tenant’s obligations and liabilities under the worker’s compensation laws of the state in which the Premises are located, including Employer’s Liability insurance, in an amount of not less than One Million Dollars ($1,000,000) or such greater amount as is reasonably necessary to protect Landlord against such claims.

 

13.4.5                                 During any period during which construction is conducted at the Premises and during which period the construction and materials are not covered by the existing policies, premium prepaid insurance policies covering the Premises (which during construction shall be on an “Direct Risk of Physical Loss” perils, including theft, “Builder’s Risk,” “Completed Value” form) in amounts equal to the replacement costs of the Improvements and Permanent Improvements (including construction materials and personal property on or off site) covering insurance risks no less broad than those covered under a Standard Multi Peril (SMP) policy form, which contains a 1987 Commercial ISO “Causes of Loss-Special Form,” with coverage for such other expenses as Landlord may reasonably require. Such insurance shall contain an agreed amount endorsement (such amount to include foundation and underground pipes) and bear a 100% co-insurance clause. Said policies shall contain a permission to occupy endorsement.

 

13.5                       Additional Insureds . Tenant shall name as additional insureds or loss payees, as the case may be, on all insurance, Landlord, Landlord’s successor(s), assignee(s),

 

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nominee(s), nominator(s), corporate and individual general partners, and agents with an insurable interest as follows:

 

BELLWOOD ASSOCIATES. L.P., ITS PARTNERS AND ALL SUCCESSOR(S), ASSIGNEE(S), SUBSIDIARIES, CORPORATIONS, PARTNERSHIPS, PROPRIETORSHIPS, JOINT VENTURES, FIRMS, AND INDIVIDUALS AS HERETOFORE. NOW, OR HEREAFTER CONSTITUTED ON WHICH THE NAMED INSURED HAS THE RESPONSIBILITY FOR PLACING INSURANCE AND FOR WHICH SIMILAR COVERAGE IS NOT OTHERWISE MORE SPECIFICALLY PROVIDED, OR SUCH OTHER DESCRIPTION AS PROVIDED BY LANDLORD.”*

 

13.6                       Mortgage Endorsement . If requested by Landlord, the policies of insurance required to be maintained hereunder shall bear a standard first mortgage endorsement in favor of any holder or holders of a first mortgage lien or security interest in the fee or leasehold interest in the Premises, with loss payable to such holder or holders as their interests may appear.*

 

13.7                       Renewals, Lapses or Deficiencies . Tenant shall, at least thirty (30) days prior to the expiration of the insurance policies required under this Lease, furnish Landlord with renewal certificates of insurance or renewal binders for such insurance policies. Should Tenant fail to provide to Landlord the renewals or renewal binders, or in the event of a lapse or deficiency of any insurance coverage specified herein for any reason, Landlord shall notify Tenant of such lapse and, if not cured within ten (10) business days, Landlord may replace the deficient insurance coverage with a policy of insurance covering the Premises of the type and in the limits set forth above. Upon written notice from Landlord of the placement, of such insurance pursuant to the immediately foregoing sentence, Tenant shall promptly pay to Landlord, as additional rent, an amount equal to the total cost of premiums and expense of such insurance placement. Tenant shall not do or permit to be done anything which shall invalidate the insurance policies placed by Landlord. If Tenant does or permits to be done anything which shall increase the cost of the insurance policies placed by Landlord pursuant to this paragraph, then promptly following Landlord’s demand therefor, Tenant shall reimburse Landlord for any additional premiums charged to Landlord as a consequence of its taking out such policies attributable to any acts or omissions or operations of Tenant causing the increase in the cost of insurance.

 

Section 14.

 

PARTIAL AND TOTAL DESTRUCTION OF THE PREMISES

 

14.1                       In the event any part or all of the Premises shall at any time during the Term of this Lease be damaged or destroyed, regardless of cause, Tenant shall give prompt notice of such damage or destruction to Landlord. Tenant shall, promptly and with due diligence, repair and restore the Premises or, in Tenant’s reasonable discretion, Tenant may

 

*                  Provided, however, so long as Landlord has not delivered a notice of Termination of this lease following an Event of Default hereunder with respect to Tenant’s failute to pay Monthly Rent, Tenent shall have the right to apply all proceeds of [ILLEGIBLE] or other similar event to the restoration of the Premises.

 

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demolish and clear the Improvements and Permanent Improvements damaged so that the Premises are in a safe and sightly condition. Tenant shall hold Landlord free and harmless from any and all liability resulting from such repairs and restoration. Tenant shall pay for any cost of repair or restoration in excess of the proceeds available from insurance policies procured by Tenant. No such partial or total destruction of the Premises shall result in any abatement or reduction in rent and other charges payable by Tenant hereunder.

 

Section 15.

 

CONDEMNATION

 

In the event that the Premises (or such material portion thereof as shall render the remainder of the Premises unsuitable for its intended purposes) shall be taken or appropriated by eminent domain or shall be condemned for any public or quasi-public use, then (and in any such event), this Lease and the term hereof may be terminated at the election of Tenant by a notice in writing of its election so to terminate which shall be given to Landlord within thirty (30) days of the date upon which Tenant shall have been deprived of the use of the Premises by such taking, appropriation or condemnation.

 

This Lease and the term hereof shall terminate in accordance with the immediately preceding paragraph on or retroactively as of the date on which Tenant shall be deprived of the use of the Premises as aforesaid. In the event of any such termination, this Lease and the term hereof shall expire as of such effective termination date as though that were the original expiration date of the Term, and the Monthly Rent and all additional charges hereunder shall be apportioned as of such date.

 

If this Lease is not terminated as the result of any taking or condemnation. Tenant will, with reasonable diligence, either restore the remainder of the Premises as nearly as practicable to the same condition as obtained prior to such taking, appropriation or condemnation, or raze the remaining Improvements and restore the Premises to a safe and sightly condition, in which event a just proportion of the Monthly Rent, according to the nature and extent of the taking, appropriation or condemnation and the resulting permanent injury to the Premises and the means of access thereto, shall be permanently abated.

 

Notwithstanding anything to the contrary contained in this Section 15, in the event of a taking of the entire Premises, the total condemnation compensation and damages awarded shall be distributed as follows:

 

A.                                    Landlord shall first receive an amount equal to the greatest of:

 

(i)                                      amounts payable under a bona fide institutional first mortgage (or first mortgage from a non-institutional entity or individual on terms consistent with those then available in the relevant market) which then affects all or any part of the Premises. For the purposes hereof, Landlord agrees that the amount payable with respect to any such first mortgage affecting the

 

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Premises shall not exceed a principal amount calculated on the basis of 1:15 to 1 debt service coverage ratio; and

 

(ii)                                   the value of the Premises determined on an income capitalization basis. For the purposes of determining income available from the Premises demised hereunder, the actual rent payable by Tenant hereunder during the remainder of the Term (but for such earlier termination) shall be utilized to determine income; thereafter, rent for the Premises shall be calculated at fair market rental value; and

 

(iii)                                the residual value of the Premises, as of the expiration of the Term (exclusive of any Extension Periods not yet exercised or exercisable), but for such early termination.

 

B.                                      From the remainder of the award after payment to Landlord, Tenant shall receive an amount equal to the sum of (i) the unamortized value (as of the date of such taking) of Tenant’s Improvements, amortized on a straight-line basis over the entire term of this Lease, excluding any Extension Periods not yet exercised or exercisable, and (ii) the value of Tenant’s leasehold interest through the original expiration date of the Term (exclusive of any Extension Periods not yet exercised or exercisable).

 

C.                                      All remaining amounts of the award shall be allocated and paid to Landlord and Tenant upon the applicable