***CONFIDENTIAL TREATMENT REQUESTED
***
Exhibit 10.2
Confidential terms of this agreement
which have been redacted are marked (“[*****]”). The
omitted materials have been filed separately with the Securities
and Exchange Commission.
GROUND LEASE
by and between
HUNTING FOX ASSOCIATES I,
L.P.
and
, LLC
Dated as of
, 20
***CONFIDENTIAL TREATMENT REQUESTED
***
GROUND LEASE
THIS GROUND LEASE
(this “ Lease ”)
is entered into as of
, 20 by and
between HUNTING FOX ASSOCIATES I, L.P., a Pennsylvania limited
partnership having offices at 1001 East Hector Street, Suite 100,
Conshohocken, Pennsylvania 19428 (“ Landlord ”),
and
, LLC, a
limited liability company having offices at
(“ Tenant ”).
RECITALS:
WHEREAS, Landlord owns the real property located at the
intersection of Fox Street and Roberts Avenue in Philadelphia, PA
comprising approximately eighteen (18) acres and more
particularly described on Exhibit A attached hereto
and made a part hereof (the “ Property
”);
WHEREAS, the parties hereto are also parties to that
certain Options Agreement dated as of September 30, 2005 (the
“Options Agreement”), pursuant to which Tenant was
granted, inter alia , the right to enter into this Lease;
and
WHEREAS, Landlord and Tenant have reached agreement with
respect to Landlord’s leasing and demising to Tenant, and
Tenant’s taking and hiring from Landlord, the Premises (as
hereinafter defined) on and subject to the terms and conditions
hereinafter set forth.
NOW, THEREFORE,
in consideration of the mutual
covenants and conditions herein contained and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties intending to be legally bound
hereby agree as follows:
1. Lease of Premises; Title
Matters; Modification of Property.
(a) Lease Grant. Landlord hereby leases
and lets to Tenant, and Tenant hereby takes and hires from
Landlord, upon and subject to the terms, conditions, covenants and
provisions hereof, the Property together with any and all
appurtenances, rights, privileges and easements benefiting same
(all the foregoing, collectively, the “ Premises
”).
(b) Title Matters and Improvements.
Tenant shall hold legal title to and possession of all improvements
constructed on the Property by or for the benefit of Tenant
immediately upon installation thereof. The separation of title to
the Property from title to such improvements shall not change the
character of such improvements as real property, but any personal
property included in such improvements shall not lose their
character as personal property. Tenant acknowledges and agrees that
the Premises are demised and let subject to the matters listed on
Exhibit B attached hereto and made a part hereof (the
“ Permitted Exceptions ”). Title to the
improvements, other than furniture, fixtures, equipment and all
personalty (“ FF&E ”), shall, upon the
termination or expiration of this Lease, automatically vest in
Landlord. Any FF&E which is not removed from the Property prior
to the expiration (or within ninety (90) days following the
termination) of this Lease shall be considered abandoned and
Landlord may dispose of and/or store same as it deems expedient
with the cost thereof borne by Tenant. Notwithstanding anything
herein to the contrary, for so long as a gaming facility and uses
from time to time appurtenant thereto are being developed,
constructed, reconstructed and/or operated on the Premises, Tenant
shall have the right from time to time, to demolish, remove, alter
and/or replace any improvements on the Premises in its sole and
absolute discretion; provided, however, that Tenant shall inform
Landlord promptly and in writing of the plans and specifications
for the construction and/or alteration of the improvements. If
anything other than a gaming facility and uses from time to time
appurtenant thereto is being constructed or operated on the
Premises, the exterior and structure of any improvements being
constructed and/or altered on the Premises must be approved by
Landlord in writing (such approval not to be unreasonably withheld,
conditioned or delayed).
1
***CONFIDENTIAL TREATMENT REQUESTED
***
(c) Modification of Property. Landlord
covenants and agrees, upon the request of Tenant, to assist and
cooperate with Tenant, at no out-of-pocket cost to Landlord, in
connection with the potential acquisition by Tenant from third
parties of one or more additional real property interests
contiguous to the Property (the “ Additional Tracts
”). In the event Tenant acquires fee title to one or more of
the Additional Tracts, Tenant shall have the right (but not the
obligation), on or before the expiration of the second (2
nd
) Lease Year (as
hereinafter defined) and upon thirty (30) days’ notice
to Landlord, to convey fee title to such Additional Tracts to
Landlord in exchange for fee title to such portion(s) of the
Property as Landlord and Tenant may agree, acting in good faith and
in a commercially reasonable manner, provided (i) the fair
market value of such exchanged lands (valued without regard to the
existence of this Lease) are within ten (10%) percent of one
another when taken as a whole, and (ii) Landlord shall not be
obligated to incur any out-of-pocket costs with respect to the
foregoing exchange (including, without limitation, any costs for
title insurance, transfer taxes or adjustments for taxes). If
Tenant elects to acquire fee title to one or more Additional Tracts
and to exchange same for a portion(s) of the Property, the parties
shall contemporaneously therewith amend this Lease to include such
Additional Tracts as a part of the “Property” described
herein and to exclude such exchanged Property from the
“Property” described herein.
2. Term.
(a) Initial Term. The initial term (the
“ Initial Term ”) of this Lease shall be fifty
(50) years commencing on the date hereof (the “
Commencement Date ”) and ending at 11:59 p.m. on the
day immediately preceding the fiftieth (50 th ) anniversary of the
Commencement Date (the “ Expiration Date ”)
unless sooner terminated in accordance with the terms
hereof.
(b) Renewal Term. Tenant shall have the
right to extend the term of this Lease for nine
(9) consecutive ten (10) year renewal periods (each, a
“ Renewal Term ”), upon all of the terms and
conditions set forth in this Lease. Tenant may do so only if no
uncured Event of Default then exists hereunder, and by giving
Landlord notice thereof (an “ Extension Notice
”) not less than one hundred eighty (180) days’
prior to the expiration of the Initial Term or the immediately
previous Renewal Term, as the case may be. The Initial Term and
each exercised Renewal Term are collectively referred to herein as
the “ Term ”. Notwithstanding anything herein to
the contrary, Tenant’s right to extend the Term of this Lease
shall not terminate or be extinguished due to Tenant’s
failure to give Landlord an Extension Notice as herein provided
unless and until (i) Landlord shall have notified each
Leasehold Mortgagee (as hereinafter defined), if any, of such
failure; and (ii) no Leasehold Mortgagee shall exercise the
renewal option on behalf of Tenant within thirty (30) days of
such Leasehold Mortgagee’s receipt of the notice referred to
in clause (i) above. Tenant hereby agrees to be legally bound
by the exercise of any renewal option by any Leasehold
Mortgagee.
3. Permitted Use; Undertakings
by Tenant; Landlord Covenants.
(a) Permitted Use. Landlord and Tenant
acknowledge and agree that Tenant intends to use the Premises for a
gaming facility and uses, from time to time, appurtenant thereto.
Tenant shall also have the right to use the Premises or allow the
Premises to be used for any lawful purpose, except those uses
identified in item 5 on Exhibit B.
(b) Undertakings by Tenant. Subject to
Section 1(b) hereinabove, Tenant shall have the right (but
shall not be obligated), at its sole cost and expense, from time to
time, to demolish, remove, alter, replace and/or repair any
improvements presently on the Property and construct and/or install
and thereafter demolish, remove, alter, replace and/or repair any
buildings, structures or other improvements thereon including, but
not limited to, entry and exitways, surface and/or elevated parking
facilities, gaming facilities, facilities to accommodate uses from
time to time appurtenant thereto (including, but not
limited
2
***CONFIDENTIAL TREATMENT REQUESTED
***
to, retail and/or other facilities), signage and
such other improvements and infrastructure as Tenant deems
desirable in its sole and absolute discretion. In the event Tenant
commences any of the foregoing, Tenant shall conduct same in
accordance with all applicable federal, state and local laws,
statutes, ordinances, rules, regulations and orders (“
Applicable Laws ”). Landlord covenants and agrees to
allow Tenant, at no out-of-pocket costs to Landlord, to
(i) pursue the foregoing in Landlord’s name and/or to
execute and deliver such instruments and/or documents (including,
but not limited to, applications for land development and/or
permits) which may be required to be executed by the record owner
of the Property in order to facilitate the foregoing, provided that
all documents executed in Landlord’s name are approved by
Landlord in writing (such approval not to be unreasonably withheld,
conditioned or delayed), and (ii) cooperate and/or participate
with Tenant, to the extent reasonably required by Tenant, in the
pursuit of all applications, permits, consents and
approvals.
(c) Landlord Covenants. Landlord
covenants and agrees that no real property in which Landlord or any
entity owned or controlled by, owning or controlling, or under
common control with, Landlord or any member, shareholder, partner,
officer or director of any of the foregoing (each, an “
Affiliate ”) has any controlling interest and which is
located within a one-half (1/2) mile radius of the Property
shall be used or allowed to be used at any time during the Term of
this Lease for any Prohibited Use, except to the extent permitted
under any presently existing lease (provided that Landlord
covenants and agrees not to consent to any change in use of
presently existing leased property to include any Prohibited Use).
Upon the request of Tenant from time to time, Landlord shall cause
the aforementioned real property to be subjected to an instrument
of record, in form and substance reasonably satisfactory to Tenant,
setting forth the foregoing provisions.
4. Delivery of Premises. Landlord
shall deliver sole and exclusive possession and control of the
Premises to Tenant on the Commencement Date, free of all tenants,
occupants and others with a right to or claiming possession (except
as set forth in the Permitted Exceptions), and otherwise in
generally the same condition as existed on September 30, 2005,
ordinary wear and tear (including deterioration due to continued
exposure to weather), damage caused by Trump, Tenant, or any
affiliate thereof or any of their respective agents, employees or
contractors, and work required of Landlord pursuant to the Options
Agreement excepted.
5. Rent.
(a) Base Rent. Commencing on
the Commencement Date, Tenant shall pay to Landlord, at the address
of Landlord specified at the top of this Lease, or at such other
address as Landlord shall have designated, from time to time, by
notice to Tenant, the “ Base Rent ” set forth
below, which Base Rent shall thereafter be due and payable to
Landlord on the first (1st) day of each Lease Quarter (as
hereinafter defined) in advance and without further notice. As used
herein, “ Lease Year ” shall mean each
consecutive twelve (12) month period beginning with the
Commencement Date, and “ Lease Quarter ” shall
mean each consecutive three (3) month period constituting
one–quarter of each Lease Year. If the Commencement Date
shall be any day other than the first day of a calendar month, then
(y) the first Lease Year shall end on the last day of the
calendar month in which the first anniversary of the Commencement
Date occurs, and (z) Base Rent and other charges for the first
and last Lease Quarter of such first Lease Year shall be pro rated
on a per diem basis. For the period commencing on the
Commencement Date and ending on the earlier of (i) the date
Tenant is open for business at the Premises, or
(ii) August 31, 2010, the Base Rent shall be [*****]
Dollars ($[*****]) per Lease Year (or [*****]Dollars ($[*****]) per
Lease Quarter). Commencing on the next following day (the “
Increased Rent Commencement Date ”), the Base Rent
shall be [*****] Dollars ($[*****]) per Lease Year (or [****]
Dollars ($[*****]) per Lease Quarter), which amount shall increase
by [*****] percent ([***]%) on the expiration of each fifth
(5th) Lease Year from and after the Increased Rent
Commencement Date (including prior to and during each Renewal Term
hereunder).
3
***CONFIDENTIAL TREATMENT REQUESTED
***
(b) Percentage Rent. In
addition to the Base Rent payable hereunder, Tenant shall pay to
Landlord percentage rent (“ Percentage Rent ”)
equal to the amount by which (i) the sum of (y) [*****]
multiplied by Gross Gaming Revenue (as hereinafter defined)
generated from the Premises during the then current Lease Year,
exceeds (ii) the Base Rent payable in connection with such
Lease Year. Tenant will pay Percentage Rent to Landlord in arrears
no later than the tenth (10 th ) day following Tenant’s
submission to Landlord of a Gross Gaming Revenue Statement (as
hereinafter defined). Following the first Lease Year, Tenant shall
pay estimated quarterly Percentage Rent payments to Landlord at the
time of each Base Rent payment. Each quarterly estimated Percentage
Rent payment shall be equal to [*****] ([*****]%) percent of the
annual Percentage Rent amount payable in the immediately preceding
Lease Year, if any. In the event Tenant’s aggregate quarterly
estimated Percentage Rent payments in any Lease Year exceed the
Percentage Rent payable with respect to such Lease Year, such
excess shall be repaid to Tenant by Landlord no later than the
tenth (10 th ) day following Tenant’s
submission to Landlord of a Gross Gaming Revenue Statement
evidencing same.
(c) Gross Gaming Revenue. As
used herein, “ Gross Gaming Revenue ” shall mean
the gross revenue derived from the Premises, regardless of the
operator, from all slot machines and other licensed gaming
activities (other than the sale of lottery tickets by subtenants
and/or licensees of Tenant). Gross Gaming Revenue shall not include
revenue from any non-gaming activity at the Premises including, but
not limited to, hotel charges, retail sales, service charges (such
as spa, limousine and other non-room/retail services provided by
casino hotels) and/or rental income from subtenants and/or
licensees. Within sixty (60) days after the end of each Lease
Year, Tenant shall submit to Landlord a statement certified by an
officer of Tenant of Vice President or higher indicating the Gross
Gaming Revenue for the immediately preceding Lease Year (each, a
“ Gross Gaming Revenue Statement ”). Landlord
shall have the right, at any time within one hundred twenty
(120) days following Tenant’s issuance of a Gross Gaming
Revenue Statement, to audit the books and records of the operator
of the Premises’ gaming facility to verify the accuracy of
the applicable Gross Gaming Revenue Statement. The acceptance of
any payment of Percentage Rent based upon any Gross Gaming Revenue
Statement shall be without prejudice to Landlord’s right of
examination as set forth herein. If any audit by Landlord shall
reveal an error in the Gross Gaming Revenue Statement, such error
shall be promptly corrected and the related underpayment or
overpayment shall be made by the appropriate party within ten
(10) days. If Landlord’s audit reveals an underreporting
of Gross Gaming Revenues of more than three (3%) percent, the
reasonable cost of such audit shall be promptly reimbursed by
Tenant. Landlord’s failure to conduct an audit and to raise
objections within the time period specified herein shall constitute
Landlord’s waiver of such audit rights with respect to the
Lease Year in question.
(d) Additional Rent. From and
after the Commencement Date and throughout the Term of this Lease,
Tenant shall pay as additional rent hereunder (“
Additional Rent ”, and together with Base Rent and the
Percentage Rent, collectively “ Rent ”), all
costs and expenses and other payments which Tenant has agreed to
assume or discharge pursuant to the terms of this Lease. Except as
set forth in Sections 15(c) and 20(f) hereof, any and all payments
of Base Rent and Percentage Rent shall be paid to Landlord without
notice or set-off.
6. Net Lease . Except as expressly
set forth herein to the contrary, it is the intention of the
parties that the Base Rent and Percentage Rent payable hereunder
shall be net to Landlord, so that this Lease shall yield to
Landlord the net annual Base Rent and Percentage Rent specified
herein during the Term of this Lease. More specifically, it is
intended that the provisions of this Lease shall require that,
except as expressly set forth herein to the contrary, Tenant shall
pay all costs and expenses attributable to the Premises during the
Term as if Tenant owned the Premises during the Term, including
without limitation, all Taxes (as hereinafter defined), insurance
premiums, and maintenance and repair costs and expenses,
attributable to the Premises and the Term of this Lease.
4
***CONFIDENTIAL TREATMENT REQUESTED
***
7. Taxes.
(a) Tenant’s Obligation to Pay
Taxes. Except as expressly set forth herein to the contrary,
Tenant shall pay or cause to be paid all taxes, assessments,
general and special assessments, excises, levies, use and occupancy
taxes, licenses and permit fees and other governmental charges,
general or special, ordinary or extraordinary, foreseen or
unforeseen, which, at any time during the Term, are imposed, levied
or assessed against the Premises, or arise in respect of the
operation, possession or use of the Premises, and in each case
relate to the Term of this Lease (collectively, “
Taxes ”). To the extent not prohibited under
Applicable Law, Tenant shall have the right to pay any assessment
in installments and only that portion of an assessment as relates
to the Term shall be due and payable by Tenant. Taxes attributable
to a fiscal or tax period which covers a period of time both within
and outside the Term of this Lease shall be prorated as between
Landlord and Tenant. Tenant will furnish to Landlord, promptly
after demand therefor, proof of payment of all Taxes which are
payable by Tenant.
(b) Tax Apportionment. Landlord and
Tenant shall use commercially reasonable efforts to cause all real
property taxing and assessing authorities to assess and tax the
Premises separately from any other real property and/or
improvements owned by Landlord as soon as possible. In the event
the Premises are not assessed and taxed separately from any other
real property and/or improvements owned by Landlord, Landlord and
Tenant shall apportion the real property taxes between them as
follows: real property taxes attributable to the Property (or part
thereof within the applicable tax parcel) shall be apportioned in
relation to the square footage thereof during the applicable taxing
period; real property taxes attributable to the improvements on the
Property (or part thereof within the applicable tax parcel) shall
be allocated in relation to the cost to construct such improvements
during the applicable taxing period; and, all such allocations
shall be prorated in the event the lease period and applicable tax
year do not coincide. Each party covenants and agrees to
immediately forward copies of any notices relating to Taxes which
such party receives and is or may reasonably be believed to relate
to or be payable by the other party.
(c) Tenant Not Obligated to Pay
Landlord’s Taxes. Nothing contained in this Lease shall
obligate or be deemed to obligate Tenant to pay to or on behalf of
Landlord, Landlord’s assignee, transferee or successor
(i) any federal tax on income and items of tax preference or
federal tax in lieu of an income tax, (ii) any state tax
imposed on or measured by Landlord’s income, or any other
state franchise or similar tax in lieu thereof, (iii) any
county, municipal or local tax imposed on or measured by income,
and/or (iv) any income or capital gains taxes payable by
Landlord upon a sale or disposition by it of the
Premises.
(d) Right to Contest. Tenant shall have
the right, at its sole cost and expense and from time to time, to
contest the amount and/or validity of any Tax by appropriate
proceedings diligently conducted in good faith, provided that,
Tenant shall either continue to pay all Taxes during the pendency
of the foregoing proceedings, or provide Landlord with reasonably
satisfactory security to ensure Tenant’s satisfying such
obligations in the event of a negative outcome, and Landlord shall
not be required to pay same during such contest. Upon the
conclusion of such proceedings, Tenant shall pay the amount of such
Tax as is finally determined in such proceedings, the payment of
which shall have been deferred pursuant to this provision, together
with all costs, fees, interest and penalties incurred in connection
therewith. Upon the request of Tenant, Landlord shall permit Tenant
to pursue the foregoing in Landlord’s name and/or execute and
deliver to Tenant such instruments and/or documents which may be
required to be executed by the record owner of the Property in
order to facilitate the foregoing and to cooperate and/or
participate with Tenant, to the extent reasonably required by
Tenant, in the pursuit of tax relief, provided that all reasonable
out-of-pocket costs incurred by Landlord in connection therewith
are paid by Tenant and Landlord approves any and all documentation
to be signed by Landlord (such approval not to be unreasonably
withheld, conditioned or delayed).
5
***CONFIDENTIAL TREATMENT REQUESTED
***
(e) Tax Refunds; Tax Abatements. If there
shall be any refunds or rebates on account of the Taxes paid by
Tenant hereunder, such refunds and/or rebates shall belong solely
to Tenant. Any refunds and/or rebates received by Landlord shall be
deemed trust funds and as such shall be received by Landlord in
trust and paid to Tenant forthwith. Landlord shall, upon the
request of Tenant, sign any receipts which may be necessary to
secure the payment of any such refund and/or rebate, and shall pay
over to Tenant such refund and/or rebate when and as received by
Landlord. Landlord covenants and agrees to use commercially
reasonable efforts, at no out-of-pocket cost to Landlord, to obtain
and/or keep in force and effect any tax abatement available to the
Premises and/or the use thereof.
(f) Realty Transfer Taxes. In the event
that any federal, state or local realty transfer tax (or other tax
or obligation in lieu thereof) shall be imposed as a result of the
execution of this Lease, the exercise of any renewal option or the
recording of a short form lease or memorandum in connection with
any of the foregoing, then the parties shall each pay fifty
(50%) percent of such tax or other amount at the time such tax
or other amount is due and payable.
8. Utilities. Tenant shall have
the right to make full use of the Premises as contemplated herein,
and in connection therewith, Tenant shall have the right to make
use of all water, sewer, electric, gas, telecommunications and
other utilities now or hereafter servicing the Premises (the
“ Utilities ”). In furtherance thereof, Tenant
shall have the right, from time to time, to grant, modify, relocate
and/or terminate such easements and/or other rights as Tenant deems
reasonably necessary to accommodate the design, installation,
construction, connection, operation and repair of such Utilities,
whether now existing or hereafter created. Landlord covenants and
agrees to allow Tenant to pursue the foregoing in Landlord’s
name and/or execute and deliver such instruments and/or documents
in recordable form (including, but not limited to, easements and/or
rights-of-way of record) which may be required to be executed by
the record owner of the Property in order to facilitate the
foregoing and to cooperate and/or participate with Tenant, to the
extent reasonably required by Tenant, in the pursuit of such
utility rights, provided that all reasonable out-of-pocket costs
incurred by Landlord in connection therewith are paid by Tenant and
Landlord approves any and all documentation to be signed by
Landlord (such approval not to be unreasonably withheld,
conditioned or delayed). Landlord further covenants and agrees,
with respect to real property owned or controlled by Landlord
and/or any Affiliate of Landlord, to execute and deliver (or cause
to be executed and delivered) such instruments and/or documents in
recordable form (including, but not limited to, easements and/or
rights-of-way of record) and burdening such real property which
Tenant determines, acting in good faith and in a commercially
reasonable manner, are necessary or expedient in order to
facilitate the foregoing and to cooperate and/or participate with
Tenant, to the extent reasonably required by Tenant, in the pursuit
of such utility rights, provided that all reasonable out-of-pocket
costs incurred by Landlord in connection therewith are paid by
Tenant and Landlord approves any and all documentation to be signed
by Landlord (such approval not to be unreasonably withheld,
conditioned or delayed).
9. Liens. Subject to the right to
incur and maintain liens in accordance with the terms of
Section 23 hereof, Tenant will promptly remove and discharge,
or secure the payment and discharge, of any charge, lien, security
interest or other encumbrance upon the Property that arises out of
the use or occupancy of, or any construction on, the Property by or
on behalf of Tenant, but specifically excluding any mortgage, deed
of trust, charge, lien, security interest or encumbrance created or
suffered by Landlord or anyone claiming by or through Landlord
other than Tenant or anyone claiming by or through Tenant. Provided
Tenant has arranged for commercially reasonable security (or title
insurance protection) therefor, Tenant shall have the right to
contest any charge, lien, security interest or other encumbrance
and shall not be obligated to satisfy same until the conclusion of
such contest. Landlord covenants and agrees to allow Tenant to
pursue the foregoing in Landlord’s name and/or execute and
deliver such instruments and/or documents which may be required to
be executed by the record owner of the Property in order to
facilitate the foregoing and to cooperate and/or participate with
Tenant, to the extent reasonably required by
6
***CONFIDENTIAL TREATMENT REQUESTED
***
Tenant, in the pursuit of such contest, provided
that all reasonable out-of-pocket costs incurred by Landlord in
connection therewith are paid by Tenant and Landlord approves any
and all documentation to be signed by Landlord (such approval not
to be unreasonably withheld, conditioned or delayed). Nothing
contained in this Lease shall be construed as constituting the
consent or request of Landlord, express or implied, to or for the
performance by any contractor, laborer, materialman or vendor of
any labor or services or for the furnishing of any materials for
any construction, alteration, addition, repair or demolition of or
to the Property. Notice is hereby given that Landlord will not be
liable for any labor, services or materials furnished or to be
furnished to Tenant, or to anyone holding the Premises or any part
thereof through or under Tenant and that no mechanic’s,
construction or other liens for any such labor, services or
materials shall attach to or affect the interest of Landlord in and
to the Premises or the Property.
10.
Indemnification.
(a) Indemnification of
Landlord. Tenant shall defend, with counsel reasonably
satisfactory to Landlord, indemnify and save Landlord harmless from
and against any and all claims, damages, losses, costs and expenses
including, but not limited to, reasonable attorneys’ fees and
court costs, suffered or incurred by Landlord that result from
(i) the use, operation and/or management of the Premises or
any improvements thereon, whether by Tenant or anyone claiming or
holding through Tenant (including, but not limited to, any
employees, contractors, subtenants, licensees, invitees or agents
of Tenant), (ii) any breach or default on the part of Tenant
(or anyone claiming or holding through Tenant) in the observance
of, or performance of its obligations under, this Lease,
(iii) any injury to or death of any person, or damage to or
loss of property on or by reason of activity on the Premises, but
in each case only to the extent relating to the Term of this Lease
or to the extent caused by the negligence or wanton or willful
misconduct of Tenant or anyone claiming or holding through Tenant
(including, but not limited to, any employees, contractors,
subtenants, licensees, invitees or agents of Tenant), and not
having arisen by reason of or in connection with (y) the
negligence or wanton or willful misconduct of Landlord or
Landlord’s employees, agents or contractors, and/or
(z) Landlord’s breach or default in the observance of,
or performance of its obligations under, this Lease or the Options
Agreement.
(b) Indemnification of
Tenant. Landlord shall defend, with counsel reasonably
satisfactory to Tenant, indemnify and save Tenant harmless from and
against any and all claims, damages, losses, costs and expenses
including, but not limited to, reasonable attorneys’ fees and
court costs, suffered or incurred by Tenant that result from
(i) the use, operation and/or management of the Premises or
any improvements thereon, whether by Landlord or anyone claiming or
holding through Landlord (other than Tenant or anyone claiming or
holding through Tenant or any employees, contractors, subtenants,
licensees, invitees or agents of Tenant and such third parties)
prior to the Commencement Date, (ii) any breach or default on
the part of Landlord (or anyone claiming or holding through
Landlord, other than Tenant or anyone claiming or holding through
Tenant or any employees, contractors, subtenants, licensees,
invitees or agents of any of the foregoing) in the observance of,
or performance of its obligations under, this Lease or the Options
Agreement, (iii) any injury to or death of any person, or
damage to or loss of property on or by reason of activity on the
Premises, but in each case only to the extent relating to the
period prior to the Commencement Date or subsequent to the
expiration or earlier termination of this Lease, and not having
arisen by reason of or in connection with (y) the negligence
or wanton or willful misconduct of Tenant or anyone claiming or
holding through Tenant or any employees, contractors, subtenants,
licensees, invitees or agents of any of the foregoing, and/or
(z) Tenant’s breach or default in the observance of, or
performance of its obligations under, this Lease; but specifically
excluding in the case of each of clauses (i), (ii) and (iii),
liability, if any, for which Landlord is to be indemnified under
the Options Agreement.
(c) Notice of Claim. Any
party seeking indemnification hereunder shall give prompt notice to
the other party of the basis therefore. The failure on the part of
such party to give such notice shall not relieve the other party
from its obligations hereunder, except to the extent that the
failure to give such notice results in actual loss or damage to the
indemnifying party.
7
***CONFIDENTIAL TREATMENT REQUESTED
***
(d) Survival. The obligations
of the parties pursuant to this Section shall survive the
expiration or termination of this Lease.
11.
Condemnation.
(a) Notices. Each party shall
immediately notify the other in the event such party receives
notice of a Taking (as hereinafter defined).
(b) Tenant Right to
Intervene. If the use, occupancy or title to the Property, or
any part thereof, or any buildings or improvements thereon, is
permanently taken, requisitioned, sold or impaired in, by or on
account of any actual or threatened eminent domain proceeding or
other action by any person having the power of eminent domain
(each, a “ Taking ”) during the Term, Tenant
shall have the right, subject to the rights of Leasehold
Mortgagees, to appear in any such proceeding or action, to
negotiate, prosecute and adjust any claim for any award or
compensation on account of its interests therein, and to collect
any such award or compensation.
(c) Complete Taking. If a
Taking occurs that (i) results in a taking of substantially
all of the Property, or (ii) in Tenant’s determination,
acting in good faith and in a commercially reasonable manner,
renders the remaining Premises uneconomic or unviable for
Tenant’s continued use (which determination may include, but
shall not be limited to, that a Taking less than five
(5) years before the end of the Term renders reconstruction of
the Premises uneconomic and/or unviable) (each, a “
Substantial Condemnation ”), then, at Tenant’s
option by notice to Landlord, this Lease (except as it relates to
allocation of the condemnation award) shall terminate on the date
when the condemning authority has acquired title to or taken
possession of any portion of the Premises (the “
Condemnation Effective Date ”). In the event of such a
termination, all Rent shall be apportioned as of the Condemnation
Effective Date and any Condemnation award shall be allocated in
accordance with the parties’ respective interests in the
Premises.
(d) Temporary Condemnation.
If a Taking of the temporary right to use or occupy all or a part
of the Premises occurs (a “ Temporary Condemnation
”), and such Temporary Condemnation relates to a period
longer than one hundred twenty (120) days, then Tenant may, by
notice to Landlord within thirty (30) after the entry of the
final order (or its equivalent) for such Temporary Condemnation,
terminate this Lease effective as of the Condemnation Effective
Date in which event all Rent shall be apportioned as of the
Condemnation Effective Date and any Condemnation award shall be
allocated in accordance with the parties’ respective
interests in the Premises. If the Temporary Condemnation relates to
a shorter period, or if Tenant does not terminate this Lease as
aforesaid, then this Lease shall continue as to that portion of the
Premises not so taken (and resume as to the entire Premises
immediately following the cessation of such Taking), all Rent and
all other obligations under this Lease shall continue without
adjustment, and Tenant shall receive all condemnation awards, if
any (to the extent for periods within the Term).
(e) Partial Taking. If any
Taking occurs except a Substantial Condemnation resulting in a
termination of this Lease, or a Temporary Condemnation, then this
Lease shall continue, all Base Rent shall be equitably adjusted
and, subject to the rights of Leasehold Mortgagees, all
condemnation awards shall be paid to Tenant.
(f) Survival. The obligations
of the parties pursuant to this Section shall survive the
expiration or termination of this Lease.
8
***CONFIDENTIAL TREATMENT REQUESTED
***
12.
Insurance.
(a) Insurance. Tenant shall,
at Tenant’s sole cost and expense, maintain comprehensive
public liability insurance against claims for bodily injury, death
or property damage occurring on, in or about the Premises, and
against contractual liability for any such claims, such insurance
to afford not less than $3,000,000 of coverage per occurrence and
$3,000,000 annual aggregate, or in such higher amount, together
with excess coverage in commercially reasonable amounts as Landlord
and Tenant, acting in good faith and in a commercially reasonable
manner, may agree to be necessary. Landlord, each Leasehold
Mortgagee and any first mortgagee of the Property designated by
Landlord in writing (the “ Fee Mortgagee ”)
shall be named as additional insureds under all such policies.
Tenant shall also insure, at Tenant’s sole cost and expense,
the improvements on the Premises with a causes of loss –
special form policy of insurance at their full replacement value,
exclusive of foundations and footings.
(b) General Requirements.
Without limitation of the foregoing, the following provisions shall
apply to each and every policy of insurance which Tenant is
required to carry: (i) on or prior to the Commencement Date,
Tenant shall cause each carrier to deliver its certificate of
insurance to Landlord and the Fee Mortgagee, certifying the
applicable insurance provisions herein required, (ii) each
certificate shall state that the applicable policy has been prepaid
by Tenant for a minimum of one (1) year (or in lieu thereof,
Tenant shall provide Landlord with reasonable evidence of such
prepayment), (iii) each certificate shall set forth that
thirty (30) days’ written notice by the carrier to
Landlord and the Fee Mortgagee shall be required prior to any
cancellation, expiration, amendment or lapse thereof, (iv) at
least thirty (30) days prior to the expiration of each policy,
Tenant shall provide Landlord and the Fee Mortgagee with
certificates of renewal or replacement policies (or certificates of
insurance evidencing same), which shall comply with clauses
(ii) and (iii) above, (v) each policy shall be
issued by a carrier licensed in the Commonwealth of Pennsylvania,
and (vi) in the event a default by Tenant with respect to its
obligations pertaining to insurance is not cured within ten
(10) days of written notice from Landlord where at least
fifteen (15) days remains before the cancellation, expiration,
amendment or lapse thereof (and without notice or opportunity to
cure where less than fifteen (15) days remains), then
Landlord, at its option but without being obligated to do so, and
in addition to any other rights and remedies that Landlord may have
on account of such default, shall immediately have the right to
cure such default (including, but not limited to, the right to
purchase single interest coverage protecting only the interest of
Landlord and the Fee Mortgagee, the right to make premium payments
and the right to cause changes to be made to policies then carried
by Tenant so as to cause same to comport with the provisions of
this Lease), whereupon all costs and expenses reasonably incurred
by Landlord in curing such default, shall be paid by Tenant within
five (5) days of a demand therefor.
13. Casualty. Neither Tenant nor
Landlord shall have the right to terminate this Lease if there is a
fire or other casualty, unless same occurs when there is less than
five (5) years remaining in the then Term. In that event,
Tenant shall have the right to terminate this Lease upon written
notice to Landlord within ninety (90) days of such fire or
other casualty; provided, however, that Tenant must deliver to
Landlord all insurance proceeds received by Tenant and an
assignment of Tenant’s rights with respect to all additional
insurance proceeds, in each case, however, limited to the value of
the improvements on the Property (as opposed to proceeds of
insurance related to the value of the FF&E, business
interruption proceeds or other assets of Tenant). If this Lease is
not so terminated, all insurance proceeds in respect of a fire or
other casualty shall belong to Tenant and Tenant shall be obligated
to either restore the improvements remaining on the Premises to
complete architectural units or demolish same. The obligations of
the parties pursuant to this Section shall survive the expiration
or termination of this Lease.
14. Permitted Contests.
Notwithstanding anything herein to the contrary and so long as not
prohibited by Applicable Law, Tenant shall not be required, nor
shall Landlord have the right, to pay, discharge or remove any tax,
assessment, levy, lien or encumbrance, or to comply with any
Applicable Laws applicable to the Premises or the use thereof, as
long as (i) Tenant is diligently and in good faith
9
***CONFIDENTIAL TREATMENT REQUESTED
***
contesting the existence, amount or validity
thereof by appropriate proceedings, and (ii) Tenant shall give
such security as may be reasonably required by Landlord to insure
ultimate payment of such tax, assessment, levy, fee, rent, charge,
lien, encumbrance or compliance with Applicable Laws. Landlord
covenants and agrees to allow Tenant to pursue the foregoing in
Landlord’s name and/or execute and deliver such instruments
and/or documents which may be required to be executed by the record
owner of the Property in order to facilitate the foregoing and to
cooperate and/or participate with Tenant, to the extent reasonably
required by Tenant, in the pursuit of same, provided that all
reasonable out-of-pocket costs incurred by Landlord in connection
therewith are paid by Tenant and Landlord approves any and all
documentation to be signed by Landlord (such approval not to be
unreasonably withheld, conditioned or delayed).
15. Default
Provisions.
(a) Events of Default by
Tenant. The occurrence of any one or more of the following
shall constitute an “ Event of Default ”
hereunder:
(i) Tenant’s failure to pay
any Base Rent, Percentage Rent or Additional Rent when due and such
failure shall continue for ten (10) days after written notice
from Landlord (provided that, in the case of Base Rent and
Percentage Rent, Landlord shall not be obligated to provide notice
on more than two (2) occasions during any twelve
(12) consecutive month period prior to such payment default
becoming an Event of Default);
(ii) Tenant’s failure to
comply with or perform any other term or condition set forth in
this Lease to be satisfied by Tenant and such failure shall
continue for ninety (90) days after notice from Landlord to
Tenant, or in the case of any default which cannot reasonably be
cured within such ninety (90) day period, if Tenant fails to
promptly commence to cure same or thereafter fails to prosecute the
curing thereof with diligence to completion;
(iii) If Tenant or the issuer of a
guaranty of Tenant’s obligations hereunder (a
“Guarantor”) shall file a voluntary petition in
bankruptcy or shall be adjudicated a bankrupt or insolvent, or in
any action or proceeding shall file any petition or answer seeking
reorganization, arrangement, composition, readjustment,
liquidations, dissolution or similar relief under any present or
future federal or state bankruptcy, reorganization or debt
reduction law, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of Tenant or of
said guarantor or of all or substantially all of Tenant’s or
said guarantor’s property or of the Premises;
and/or
(iv) If within one hundred twenty
(120) days after the commencement of any proceeding against
Tenant or any Guarantor seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
relief under any present or future federal or state bankruptcy,
reorganization or debt reduction law, such proceeding shall not
have been stayed or dismissed; or if, within one hundred twenty
(120) days after the appointment, without the consent or
acquiescence of Tenant or Guarantor (as applicable) or of any
trustee, receiver or liquidator of Tenant or Guarantor or of all or
substantially all of Tenant’s or Guarantor’s property
or of the Premises, such appointment shall not have been stayed or
vacated; or if within one hundred twenty (120) days after the
expiration of any such stay, such appointment shall not have been
vacated.
10
***CONFIDENTIAL TREATMENT REQUESTED
***
(b) Landlord’s
Remedies. If an Event of Default shall have occurred and be
continuing, Landlord shall have all rights and remedies available
at law or in equity including, but not limited to the
following:
(i) Landlord shall have the right to
require payments of all rents collected by Tenant pursuant to any
sublease or occupancy agreement, provided Landlord applies such
amounts as are actually received by Landlord (after deduction for
costs of collection) against the obligations of Tenant hereunder
and pays the remaining balance, if any, to Tenant;
(ii) Landlord may give Tenant notice
of Landlord’s intention to terminate this Lease on a date
specified in said notice. Upon the giving of such notice, the Term
and the estate hereby granted shall expire and terminate on the
date set forth in said notice as fully and completely and with the
same effect as if such date were the date herein fixed for the
expiration of the Term, and this Lease shall expire and terminate.
If Landlord shall so elect to terminate this Lease, then Landlord
shall be entitled to recover from Tenant in addition to all accrued
but unpaid Rent, the Early Termination Fee (as hereinafter defined)
together with all costs and expenses incurred by Landlord in
securing possession from Tenant, in restoring the Premises to the
condition in which Tenant is obligated to surrender same pursuant
to this Lease, in reletting the Premises (including, but not
limited to, brokerage fees, tenant improvement costs and
maintaining and safeguarding the Premises), and in recovering said
damages from Tenant including, but not limited to, reasonable
attorneys’
