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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
X QUARTERLY REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
- --- FOR THE QUARTER ENDED NOVEMBER 4, 2001.
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
- --- OF 1934 FOR THE TRANSACTION PERIOD FROM TO .
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COMMISSION FILE NUMBER: 0-25858
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DAVE & BUSTER'S, INC.
(Exact Name of Registrant as Specified in Its Charter)
MISSOURI 43-1532756
(State of Incorporation) (I.R.S. Employer Identification No.)
2481 MANANA DRIVE
DALLAS, TEXAS 75220
(Address of Principle Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(214) 357-9588
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of the Registrant's common stock, $.01 par value,
outstanding as of December 14, 2001 was 12,957,042 shares.
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
DAVE & BUSTER'S, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
13 Weeks Ended 39 Weeks Ended
------------------------- ------------------------
November 4, October 29, November 4, October 29,
2001 2000 2001 2000
---------- ---------- ---------- ----------
Food and beverage revenues $ 41,171 $ 39,782 $ 126,325 $ 117,252
Amusement and other revenues 40,200 39,462 126,878 117,407
---------- ---------- ---------- ----------
Total revenues 81,371 79,244 253,203 234,659
Cost of revenues 15,248 14,783 47,504 43,337
Operating payroll and benefits 26,573 24,780 79,207 71,336
Other store operating expenses 26,426 22,500 75,417 66,111
General and administrative expenses 5,120 4,811 15,374 14,465
Depreciation and amortization expense 7,407 6,706 21,315 18,688
Preopening costs 1,850 709 3,750 4,266
---------- ---------- ---------- ----------
Total costs and expenses 82,624 74,289 242,567 218,203
========== ========== ========== ==========
Operating (loss) income (1,253) 4,955 10,636 16,456
Interest expense, net (1,683) 2,587 6,063 6,126
---------- ---------- ---------- ----------
Income (loss) before provision for income taxes (2,936) 2,368 4,573 10,330
Provision for income taxes (1,063) 869 1,655 3,791
---------- ---------- ---------- ----------
Net income (loss) $ (1,873) $ 1,499 $ 2,918 $ 6,539
Basic net income (loss) per share $ (0.14) $ 0.12 $ 0.23 $ 0.50
Basic weighted average shares outstanding 12,956 12,953 12,955 12,953
Diluted net income (loss) per share $ (0.14) $ 0.12 $ 0.22 $ 0.50
Diluted weighted average shares outstanding 12,956 12,974 13,016 12,963
See accompanying notes to consolidated financial statements.
DAVE & BUSTER'S, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS November 4, February 4,
2001 2001
----------- -----------
(unaudited)
Current assets:
Cash and cash equivalents $ 3,379 $ 3,179
Inventories 24,056 21,758
Prepaid expenses 4,689 3,663
Other current assets 2,287 1,787
------------ ------------
Total current assets 34,411 30,387
Property and equipment, net 267,380 260,467
Goodwill, net of accumulated amortization of $2,517 and $2,263 7,191 7,445
Other assets 4,473 5,576
------------ ------------
Total assets $ 313,455 $ 303,875
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 5,500 $ 4,124
Accounts payable 16,553 9,291
Accrued liabilities 10,717 7,050
Income taxes payable 3,524 3,567
Deferred income taxes 1,221 1,229
------------ ------------
Total current liabilities 37,515 25,261
Deferred income taxes 8,143 7,667
Other liabilities 6,318 4,700
Long-term debt, less current installments 96,065 103,860
Commitments and contingencies
Stockholders' equity:
Preferred stock, 10,000,000 authorized; none issued -- --
Common stock, $0.01 par value, 50,000,000 authorized; 12,955,542
and 12,953,375 shares issued and outstanding
as of November 4, 2001 and February 4, 2001, respectively 131 131
Paid in capital 115,675 115,659
Restricted stock awards 336 243
Retained earnings 51,118 48,200
============ ============
167,260 164,233
Less: treasury stock, at cost (175,000 shares) 1,846 1,846
------------ ------------
Total stockholders' equity 165,414 162,387
------------ ------------
Total liabilities and stockholders' equity $ 313,455 $ 303,875
See accompanying notes to consolidated financial statements.
DAVE & BUSTER'S, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
Common Stock Paid in Restricted Retained Treasury
Shares Amount Capital Stock Awards Earnings Stock Total
--------- --------- --------- --------- --------- --------- ---------
Balance, February 4, 2001 12,953 $ 131 $ 115,659 $ 243 $ 48,200 $ (1,846) $ 162,387
Proceeds from exercising
stock options 3 -- 15 -- -- -- 15
Tax benefit related to stock
option exercises -- -- 1 -- -- -- 1
Amortization of
restricted stock awards -- -- -- 93 -- -- 93
Net income -- -- -- -- 2,918 -- 2,918
--------- --------- --------- --------- --------- --------- ---------
Balance, November 4, 2001 12,956 $ 131 $ 115,675 $ 336 $ 51,118 $ (1,846) $ 165,414
See accompanying notes to consolidated financial statements.
DAVE & BUSTER'S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
39 Weeks Ended
-----------------------------
November 4, October 29,
2001 2000
------------ ------------
Cash flows from operating activities
Net income $ 2,918 $ 6,539
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 21,315 18,688
Provision for deferred income taxes 468 --
Restricted stock awards 93 120
Changes in assets and liabilities
Inventories (2,298) (2,298)
Prepaid expenses (1,026) (2,336)
Other assets 594 (357)
Accounts payable 7,262 (1,698)
Accrued liabilities 3,667 3,950
Income taxes payable (43) 1,630
Other liabilities 1,618 1,637
------------ ------------
Net cash provided by operating activities 34,568 25,875
------------ ------------
Cash flows from investing activities:
Capital expenditures (35,211) (42,277)
Proceeds from sale of property and equipment 7,245 --
------------ ------------
Net cash used by investing activities (27,966) (42,277)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock, net 16 --
Borrowings under long-term debt 18,810 124,542
Repayments of long-term debt (25,228) (108,120)
------------ ------------
Net cash provided (used) by financing activities (6,402) 16,422
------------ ------------
Decrease in cash and cash equivalents 200 20
Beginning cash and cash equivalents 3,179 3,091
------------ ------------
Ending cash and cash equivalents $ 3,379 $ 3,111
See accompanying notes to consolidated financial statements.
DAVE & BUSTER'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 4, 2001
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NOTE 1: RESULTS OF OPERATIONS
The results of operations for the interim periods reported are not necessarily
indicative of results to be expected for the year. The information furnished
herein reflects all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary to fairly
present the results of operations and financial position for the interim
periods.
NOTE 2: BASIS OF PRESENTATION
BASIS OF PRESENTATION. The consolidated financial statements include the
accounts of Dave & Buster's, Inc. and wholly-owned subsidiaries (the "Company").
All material intercompany accounts and transactions have been eliminated in
consolidation. The consolidated balance sheet data presented herein for February
4, 2001 was derived from the Company's audited consolidated financial statements
for the fiscal year then ended. The preparation of financial statements in
accordance with generally accepted accounting principles requires the Company's
management to make certain estimates and assumptions for the reporting periods
covered by the financial statements. These estimates and assumptions affect the
reported amounts of assets, liabilities, revenues and expenses. Actual amounts
could differ from these estimates. The Company's one industry segment is the
ownership and operation of restaurant/entertainment Complexes (a "Complex" or
"Store") under the name "Dave & Buster's" which are principally located in the
United States.
CHANGE IN METHOD OF ACCOUNTING. The Company adopted Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities ("FAS 133") effective February 5, 2001. FAS 133 requires the Company
to recognize all derivatives on the balance sheet at fair value. Derivatives
that are not hedges must be adjusted to fair value through income. If the
derivative is a hedge, depending on the nature of hedge, changes in fair value
of derivatives will either be offset against the change in fair value of the
hedged assets, liabilities, or firm commitments through earnings or recognized
in other comprehensive income until the hedged item is recognized in earnings.
The ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings. During the current quarter, the Company has
entered into an agreement that expires in 2007, to fix its variable-rate debt to
fixed-rate debt (5.44% at November 4, 2001) on notional amounts aggregating
$52,503. The market risks associated with the agreements are mitigated because
increased interest payments under the agreement resulting from a decrease in
LIBOR are effectively offset by decreased payments under the debt obligation.
The Company is exposed to credit losses for periodic settlements of amounts due
under the agreements. Such amounts were not material at November 4, 2001.
NEW PRONOUNCEMENTS. In June 2001, the Financial Accounting Standards Board
issued Statements of Financial Accounting Standards No. 141, Business
Combinations, and No. 142, Goodwill and Other Intangible Assets ("Statements"),
effective for fiscal years beginning after December 15, 2001. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized but will be subject to annual impairment tests in accordance
with the Statements. Other intangible assets will continue to be amortized over
their useful lives.
The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
nonamortization provisions of the Statements is expected to result in an
increase in net income of $243 ($.02 per diluted share) in 2002 as a result of
nonamortization of existing goodwill. During 2002, the Company will perform the
first of the required impairment tests of goodwill and indefinite lived
intangible assets as of February 4, 2002. While the Company has not yet
determined what the effect of these tests will be on the earnings and financial
position, no assurance can be given that the Company will not be required to
write-off its goodwill of $7,191 upon the adoption of the new standard. Such
write off, if required, is to be recorded as a change in accounting principal.
NOTE 3: LONG-TERM DEBT
At November 4, 2001, long-term debt consisted of the following:
Long-term debt $108,810
Cash held for application to debt (7,245)
-------
101,565
Less current installments (5,500)
-------
$ 96,065
On November 19, 2001, the Company amended its senior secured revolving credit
and term loan facility. The amendment allows proceeds from sales/leaseback
transactions to be applied to both the revolving credit and the term loans. Cash
held for application to debt was allocated to the revolving credit and term
loans on November 19, 2001. At November 19, 2001, $4,347 was available under
this facility.
NOTE 4: CONTINGENCIES
The Company is subject to certain legal proceedings and claims that arise in the
ordinary course of its business. In the opinion of management, based on
discussions with and advice of legal counsel, the amount of ultimate liability
with respect to these actions will not materially affect the consolidated
results of operations or financial conditions of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (DOLLARS IN THOUSANDS)
Results of Operations - 13 Weeks Ended November 4, 2001 Compared to 13 Weeks
Ended October 29, 2000
Total revenues increased to $81,371 for the 13 weeks ended November 4, 2001 from
$79,244 for the 13 weeks ended October 29, 2000, an increase of $2,127 or 3%.
New stores opened in fiscal 1999 and 2000 and the first quarter of 2001
increased revenues during the period by $7,094. Revenues at comparable stores
decreased 6.7% for the 13 weeks ended November 4, 2001. The decrease in
comparable stores revenues was primarily attributable to the attack on New York
and Washington on September 11 and to a decline in company sponsored private
parties. Total revenues for the 13 weeks ended November 4, 2001 from licensing
agreements were $103.
Cost of revenues increased to $15,248 for the 13 weeks ended November 4, 2001
from $14,783 for the 13 weeks ended October 29, 2000, an increase of $465 or 3%.
As a percentage of revenues, cost of revenues increased to 18.7% in the 13 weeks
ended November 4, 2001 from 18.6% in the 13 weeks ended October 29, 2000 due to
higher beverage costs and higher amusement costs associated with redemption and
freight costs offset by lower food costs.
Operating payroll and benefits increased to $26,573 for the 13 weeks ended
November 4, 2001 from $24,780 for the 13 weeks ended October 29, 2000, an
increase of $1,793 or 7%. As a percentage of revenue, operating payroll and
benefits increased to 32.6% in the 13 weeks ended November 4, 2001 from 31.3% in
the 13 weeks ended October 29, 2000 due to higher fixed labor and fringe benefit
costs due to increased headcounts.
Other store operating expenses increased to $26,426 for the 13 weeks ended
November 4, 2001 from $22,500 for the 13 weeks ended October 29, 2000, an
increase of $3,926 or 17%. As a percentage of revenues, other store operating
expenses were 32.5% of revenues in the 13 weeks ended November 4, 2001 as
compared to 28.4% of revenues in the 13 weeks ended October 29, 2000. Other
store operating expenses as a percentage of revenue increased due to higher
utility, marketing and occupancy costs.
General and administrative increased to $5,120 for the 13 weeks ended November
4, 2001 from $4,811 for the 13 weeks ended October 29, 2000, an increase of $309
or 6%. As a percentage of revenues, general and administrative expenses
increased to 6.3% in the 13 weeks ended November 4, 2001 from 6.1% in the 13
weeks ended October 29, 2000.
Depreciation and amortization increased to $7,407 for the 13 weeks ended
November 4, 2001 from $6,706 for the 13 weeks ended October 29, 2000, an
increase of $701 or 10%. As a percentage of revenues, depreciation and
amortization increased to 9.1% from 8.5% for the comparable period due to new
store openings.
Preopening costs increased to $1,850 for the 13 weeks ended November 4, 2001
from $709 for the 13 weeks ended October 29, 2000. The timing of opening affects
the amount of such costs in any given period.
Interest expense decreased to $1,683 for the 13 weeks ended November 4, 2001
from $2,587 for the 13 weeks ended October 29, 2000. The decrease was primarily
due to lower interest rates in fiscal year 2001 offset by higher average debt.
The effective tax rate for the 13 weeks ended November 4, 2001 was 36.2% as
compared to 36.7% for the 13 weeks ended October 29, 2000.
Results of Operations - 39 Weeks Ended November 4, 2001 Compared to 39 Weeks
Ended October 29, 2000
Total revenues increased to $253,203 for the 39 weeks ended November 4, 2001
from $234,659 for the 39 weeks ended October 29, 2000, an increase of $18,544 or
8%. New stores opened in fiscal 1999 and 2000 and the first of 2001 increased
revenues during the period by $24,239. Revenues at comparable stores decreased
3.4% for the 39 weeks ended November 4, 2001. The decrease in comparable stores
revenues was primarily attributable to a decline in company sponsored private
parties and also to the September 11 tragedy. Total revenues for the 39 weeks
ended November 4, 2001 from licensing agreements were $398.
Cost of revenues increased to $47,504 for the 39 weeks ended November 4, 2001
from $43,337 for the 39 weeks ended October 29, 2000, an increase of $4,167 or
10%. As a percentage of revenues, cost of revenues increased to 18.7% in the 39
weeks ended November 4, 2001 from 18.4% in the 39 weeks ended October 29, 2000
due to higher amusement costs offset by lower food and beverage costs.
Operating payroll and benefits increased to $79,207 for the 39 weeks ended
November 4, 2001 from $71,336 for the 39 weeks ended October 29, 2000, an
increase of $7,871 or 11%. As a percentage of revenue, operating payroll and
benefits increased to 31.3% in the 39 weeks ended November 4, 2001 from 30.4% in
the 39 weeks ended October 29, 2000 due to higher headcounts which result in
higher fixed labor and fringe benefit costs offset by slightly lower variable
labor costs.
Other store operating expenses increased to $75,417 for the 39 weeks ended
November 4, 2001 from $66,111 for the 39 weeks ended October 29, 2000, an
increase of $9,306 or 14%. As a percentage of revenues, other store operating
expenses were 29.8% of revenues in the 39 weeks ended November 4, 2001 as
compared to 28.2% of revenues in the 39 weeks ended October 29, 2000. Other
store operating expenses were higher due to increased utility and marketing
costs at the stores.
General and administrative increased to $15,374 for the 39 weeks ended November
4, 2001 from $14,465 for the 39 weeks ended October 29, 2000, an increase of
$909 or 6%. As a percentage of revenues, general and administrative expenses
decreased to 6.1% in the 39 weeks ended November 4, 2001 from 6.2% in the 39
weeks ended October 29, 2000.
Depreciation and amortization increased to $21,315 for the 39 weeks ended
November 4, 2001 from $18,688 for the 39 weeks ended October 29, 2000, an
increase of $2,627 or 14%. As a percentage of revenues, depreciation and
amortization increased to 8.4% from 8.0% for the comparable period due to new
store openings.
Preopening costs decreased to $3,750 for the 39 weeks ended November 4, 2001
from $4,266 for the 39 weeks ended October 29, 2000. The timing of complex
openings affects the amount of such costs in any given period.
Interest expense decreased to $6,063 for the 39 weeks ended November 4, 2001
from $6,126 for the 39 weeks ended October 29, 2000. The decrease was primarily
due to lower interest rates in fiscal year 2001 offset by higher average debt.
The effective tax rate for the 39 weeks ended November 4, 2001 was 36.2% as
compared to 36.7% for the 39 weeks ended October 29, 2001 offset by higher
average debt.
Liquidity and Capital Resources
Cash flows from operations increased to $34,568 for the 39 weeks ended November
4, 2001 from $25,875 for the 39 weeks ended October 29, 2000. The increase was
attributable to an increase in depreciation and amortization, an increase in
operational receipts and the extension of vendor terms.
The Company has a $110,000 senior secured revolving credit and term loan
facility. The facility includes a five-year revolver and five and seven-year
term debt. Borrowing under the facility bears interest at a floating rate based
on LIBOR or, at the Company's option, the bank's prime rate plus, in each case,
a margin based upon financial performance (6.2% at November 4, 2001) and is
secured by all assets of the Company. The facility has certain financial
covenants including a minimum consolidated tangible net worth level, a maximum
leverage ratio, minimum fixed charge coverage and maximum level of capital
expenditures. On November 19,2001, the Company amended the facility to allow
proceeds from sale/leaseback transactions to be applied to both the revolving
credit and the term loans. At November 19, 2001, $4,347 was available under this
facility.
The Company has entered into an agreement that expires in 2007, to fix its
variable-rate debt to fixed-rate debt (5.44% at November 4, 2001) on notional
amounts aggregating $52,503. The market risks associated with the agreements are
mitigated because increased interest payments under the agreement resulting from
a decrease in LIBOR are effectively offset by decreased payments under the debt
obligation. The Company is exposed to credit losses for periodic settlements of
amounts due under the agreements. Such amounts were not material at November 4,
2001.
Through November 7, 2001, the Company opened a new store in Miami, Florida,
Frisco, Texas, Honolulu, Hawaii and in Cleveland, Ohio. The Company estimates
that its capital expenditures will be approximately $44,000 for 2001. For 2002
the Company plans to open one complex and estimates its capital expenditures
will be approximately $28,500. The Company intends to finance these capital
expenditures with cash flow from operations, the senior secured revolving credit
and term loan facility, and other additional resources which management is
currently pursuing.
NEW PRONOUNCEMENTS. In June 2001, the Financial Accounting Standards Board
issued Statements of Financial Accounting Standards No. 141, Business
Combinations, and No. 142, Goodwill and Other Intangible Assets ("Statements"),
effective for fiscal years beginning after December 15, 2001. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized but will be subject to annual impairment tests in accordance
with the Statements. Other intangible assets will continue to be amortized over
their useful lives.
The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
nonamortization provisions of the Statements is expected to result in an
increase in net income of $243 ($.02 per diluted share) in 2002 as a result of
nonamortization of existing goodwill. During 2002, the Company will perform the
first of the required impairment tests of goodwill and indefinite lived
intangible assets as of February 4, 2002. While the Company has not yet
determined what the effect of these tests will be on the earnings and financial
position, no assurance can be given that the Company will not be required to
write-off its goodwill of $7,191 upon the adoption of the new standard. Such
write off, if required, is to be recorded as a change in accounting principal.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995
Certain statements in this Report on Form 10-Q are not based on historical facts
but are "forward-looking statements" that are based on numerous assumptions made
as of the date of this report. Forward looking statements are generally
identified by the words "believes", "expects", "intends", "anticipates",
"scheduled", and certain similar expressions. Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance, or achievements of Dave & Buster's, Inc.
to be materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions;
competition; availability; locations and terms of sites for Complex development;
quality of management; changes in, or the failure to comply with, government
regulations; and other risks indicated in this filing and discussed under
"Risks" in the Company's Form 10-K filed with the Securities and Exchange
Commission.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1.2 Amendment No. 2 to Revolving Credit and Term Loan
Agreement dated as of November 19, 2001 by and among
the Company and its subsidiaries, Fleet National Bank
(as agent) and the financial institutions named
therein.
10.16 Agreement of Sale and Purchase dated October 1, 2001
between the Company, as seller, and General Electric
Capital Business Asset Funding Corporation, as
purchaser, for the Company's corporate headquarters
in Dallas, Texas.
10.17 Lease Agreement dated October 18, 2001 by and between
General Electric Capital Business Asset Funding
Corporation, as landlord, and the Company, as tenant,
for the Company's corporate headquarters in Dallas,
Texas.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the 13 weeks ended
November 4, 2001.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DAVE & BUSTER'S, INC.
Dated: December 14, 2001 by /s/ David O. Corriveau
------------------ --------------------------------
David O. Corriveau
Co-Chairman of the Board,
Co-Chief Executive Officer
and President
Dated: December 14, 2001 by /s/ William C. Hammett, Jr.
------------------ --------------------------------
William C. Hammett, Jr.
Vice President,
Chief Financial Officer
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.1.2 Amendment No. 2 to Revolving Credit and Term Loan Agreement
dated as of November 19, 2001 by and among the Company and its
subsidiaries, Fleet National Bank (as agent) and the financial
institutions named therein.
10.16 Agreement of Sale and Purchase dated October 1, 2001 between
the Company, as seller, and General Electric Capital Business
Asset Funding Corporation, as purchaser, for the Company's
corporate headquarters in Dallas, Texas.
10.17 Lease Agreement dated October 18, 2001 by and between General
Electric Capital Business Asset Funding Corporation, as
landlord, and the Company, as tenant, for the Company's
corporate headquarters in Dallas, Texas.
EXHIBIT 10.1.2
AMENDMENT NO. 2
TO
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This AMENDMENT NO. 2 TO REVOLVING CREDIT AND TERM LOAN AGREEMENT dated
as of November 19, 2001 (this "Amendment"), by and among DAVE & BUSTER'S, INC.
("D & B"), the Subsidiaries of D&B (D&B collectively with such subsidiaries, the
"Borrowers"), FLEET NATIONAL BANK ("FNB"), the other lending institutions listed
on Schedule 1 to the Credit Agreement (together with FNB, the "Banks"), FNB as
administrative agent for the Banks (the "Agent") and Bank One, NA as
documentation agent (the "Documentation Agent"), amends certain provisions of
the Revolving Credit and Term Loan Agreement, dated as of June 30, 2000 among
the Borrowers, the Banks, the Agent and the Documentation Agent (as amended and
in effect from time to time, the "Credit Agreement"). Each capitalized term used
herein without definition shall have the meaning assigned to such term in the
Credit Agreement.
WHEREAS, D&B has created a new subsidiary, D&B Leasing, Inc. (the "New
Subsidiary");
WHEREAS, pursuant to Section 9.17 of the Credit Agreement, the New
Subsidiariy is required to become a Borrower under the Credit Agreement and
party to the Security Documents;
WHEREAS, the Borrowers, the Banks and the Agent have agreed to amend
certain terms and conditions of the Credit Agreement as specifically set forth
in this Amendment;
NOW THEREFORE, in consideration of the mutual agreements contained in
the Credit Agreement and herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1. JOINDER TO CREDIT AGREEMENT AND SECURITY DOCUMENTS. The New
Subsidiary hereby joins the Credit Agreement and each of the Security Documents
as a "Borrower" as defined therein as if it were an original signatory thereto,
and further covenants and agrees that by its execution hereof it shall be bound
by and shall comply with all the terms and conditions of the Credit Agreement
and each of the Security Documents applicable to it as a Borrower.
SECTION 2. AMENDMENT TO SECTION 1 - DEFINITIONS. Section 1 of the
Credit Agreement is hereby amended as follows:
(a) by deleting the table within the definition of the term "Applicable
Margin" and substituting the following table therefor:
REVOLVING CREDIT LOANS TERM LOAN A TERM LOAN B
------------------------ -------------------- -------------------------
EURO-DOLLAR
BASE RATE LOANS BASE EURO-DOLLAR EURO-DOLLAR
RATE AND LETTERS RATE RATE BASE RATE RATE
LEVEL LEVERAGE RATIO LOANS OF CREDIT LOANS LOANS LOANS LOANS
- -------- --------------------- ------- ------------ ------- ----------- ---------- -----------
I < 1.25:1 0.75% 2.25% 0.75% 2.25% 1.75% 3.25%
II > 1.25:1 and < 1.75:1 1.50% 3.00% 1.50% 3.00% 2.25% 3.75%
-
III > 1.75:1 2.00% 3.50% 2.00% 3.50% 2.50% 4.00%
-
(b) by further amending the definition of the term "Applicable Margin"
by deleting the text of clause (a) in the second paragraph of such definition
and substituting the following therefor:
(a) for the period commencing on November 19, 2001 through the end of
the current Rate Adjustment Period, the Applicable Margin shall be that
percentage corresponding to Level II in the table above.
(c) by deleting the text of the definition of the term "Leverage Ratio"
in its entirety and substituting the following therefor:
Leverage Ratio. As at the end of any fiscal quarter of the Borrowers,
the ratio of (a) Consolidated Funded Indebtedness at such date (less,
for purposes of calculating the Leverage Ratio as at the end of the
fiscal quarter of the Borrower ending November 4, 2001, any
Indebtedness to be repaid pursuant to Section 4.4.2.1 on November 19,
2001 with Net Cash Proceeds from Permitted Sale-Leasebacks received
prior to November 19, 2001) to (b) Consolidated EBITDA for the period
of the four (4) consecutive fiscal quarters then ending minus with
respect to any Unit which was the subject of a Permitted Sale-Leaseback
during such period, the difference between (i) the amount of rental
expense which would have been incurred in respect of such Unit if such
Permitted Sale-Leaseback had occurred immediately prior to the
beginning of such four-quarter period (assuming the monthly rental rate
for such Unit throughout such four-quarter period equaled the monthly
rental rate in effect at the end of such period and (ii) the amount of
rental expense actually incurred in respect of such Unit during such
four-quarter period and already deducted in calculating Consolidated
EBITDA for such period.
2
SECTION 3. AMENDMENT TO SECTION 2 - RESTRICTION ON REVOLVING CREDIT
USAGE. Section 2 of the Credit Agreement is hereby amended by inserting at the
end thereof the following new Section 2.10:
2.10. RESTRICTION ON REVOLVING CREDIT USAGE. Notwithstanding
anything to the contrary set forth herein, in the event that the
Borrowers have prepaid Revolving Credit Loans as required pursuant to
Sections 3.2 and 4.4.2 with Net Cash Proceeds received in connection
with Permitted Sale-Leasebacks, (a) on or prior to April 30, 2002, the
Borrowers shall not be permitted to reborrow under this Section 2 more
than $6,000,000 of the amount so repaid from such proceeds without the
prior written consent of those Banks holding in aggregate at least
fifty-one percent (51%) of the Total Revolving Credit Commitment as in
effect at such time and (b) after April 30, 2002, the Borrowers shall
not be permitted to reborrow under this Section 2 more than $4,000,000
of the amount so repaid from such proceeds without the prior written
consent of those Banks holding in aggregate at least fifty one percent
(51%) of the Total Revolving Credit Commitment as in effect at such
time.
SECTION 4. AMENDMENT TO SECTION 3 - MANDATORY PREPAYMENT OF REVOLVING
CREDIT LOANS. Section 3.2 of the Credit Agreement is hereby amended by inserting
after the first sentence thereof the following new sentences:
In addition to the mandatory prepayment required by the preceding
sentence, the Borrowers shall also prepay the Revolving Credit Loans as
required pursuant to Section 4.4.2. In the event that the Borrowers
have prepaid Revolving Credit Loans as required pursuant to Section
4.4.2 with Net Cash Proceeds received in connection with Permitted
Sale-Leasebacks and thereafter have reborrowed under Section 2 more
than $4,000,000 of the amount so repaid, then to the extent that the
aggregate principal amount of the Revolving Credit Loans so reborrowed
and still outstanding on April 30, 2002 exceeds $4,000,000, the
Borrowers shall also repay on April 30, 2002 any Revolving Credit Loans
in an aggregate principal amount equal to such excess. For purposes of
calculating the outstanding principal amount of Revolving Credit Loans
so reborrowed and outstanding on April 30, 2002, (i) any voluntary
repayments of Revolving Credit Loans received by the Agent after such
reborrowing shall be deemed to have been applied to repay such
reborrowed Revolving Credit Loans and (ii) no mandatory prepayments
required pursuant to Section 4.4.2 shall be deemed to have been applied
to repay such reborrowed Revolving Credit Loans unless and until no
other Revolving Credit Loans remain outstanding on April 30, 2002.
3
SECTION 5. AMENDMENT OF SECTION 4.4.2.1 - MANDATORY PREPAYMENTS FROM
NET CASH PROCEEDS. Section 4.4.2.1 of the Credit Agreement is hereby amended as
follows:
(a) by inserting after the word "then" at the beginning of the text
following the comma at the end of clause (f) the parenthetical phrase "(except
as provided otherwise in the next paragraph with respect to Existing Unit
Permitted Sale-Leasebacks completed on or prior to April 15, 2002 and the
Cleveland, Ohio New Unit Permitted Sale-Leaseback if completed on or prior to
April 15, 2002)";
(b) by inserting after the reference to "Section 4.4.2.1" in the
sentence which begins "Any insurance proceeds, awards from taking or
condemnation of properties or Net Cash Proceeds from the disposition of a New
Unit Permitted Sale-Leaseback described in this Section 4.4.2.1 . . ." which
appears in the text following the comma at the end of clause (f) the
parenthetical phrase "(except Net Cash Proceeds from the disposition of the
Cleveland, Ohio New Unit Permitted Sale-Leaseback if and to the extent that such
Net Cash Proceeds are required to be applied as set forth in the next
paragraph)"; and
(c) by inserting after the text following the comma at the end of
clause (f) the following new paragraph:
Notwithstanding anything to the contrary set forth above, if
the Borrowers receive Net Cash Proceeds from any Existing Unit
Permitted Sale-Leaseback completed on or prior to April 15, 2002 or
from a New Unit Permitted Sale-Leaseback of the Cleveland, Ohio Unit if
completed on or prior to April 15, 2002, the Borrowers shall, within
three Business Days following such receipt (or if such receipt occurred
prior to November 19, 2001, on or prior to November 26, 2001), apply:
(x) with respect to the first $7,500,000 of such Net Cash Proceeds, (I)
forty percent (40%) to prepay the Term Loans and (II) sixty percent
(60%) to repay outstanding Revolving Credit Loans; (y) with respect to
the next $17,500,000 of such Net Cash Proceeds, (I) eighty percent
(80%) to prepay the Term Loans and (II) twenty percent (20%) to repay
outstanding Revolving Credit Loans; and (z) with respect to any such
Net Cash Proceeds in excess of $25,000,000, one hundred percent (100%)
to prepay the Term Loans. No amount repaid with respect to a Term Loan
may be reborrowed. The Revolving Credit Commitments shall not be
reduced by the amounts required to be applied to prepay the Revolving
Credit Loans pursuant to this paragraph; provided, however, that the
Borrowers' right to reborrow the amount of the Revolving Credit Loans
so repaid shall be restricted as set forth in Section 2.10.
Notwithstanding anything to the contrary set forth in Section 4.4.2.3,
the amount of the mandatory prepayments of the Term Loans required to
be made pursuant to this paragraph shall be applied forty-five percent
(45%) to repay the Term Loan A and fifty-five percent (55%) to repay
Term Loan B
4
subject to application pursuant to Section 4.4.2.4 if and to the extent
that any Bank holding any portion of Term Loan B declines such
prepayment. In the event that at the time of any repayment required
pursuant to this paragraph, the aggregate principal amount of any
outstanding Revolving Credit Loans is less than the amount which would
otherwise be required to be applied to repay Revolving Credit Loans
hereunder, such excess amount shall be applied to prepay the Term Loans
as provided in this paragraph. All mandatory prepayments of Term Loan A
or Term Loan B, as the case may be, shall be applied against the
remaining scheduled installments of such Term Loan in the inverse order
of their maturity. Any prepayment of any portion of the principal of
either Term Loan or any Revolving Credit Loan shall include all
interest accrued on such portion of such Term Loan or Revolving Credit
Loan to the date of prepayment. The provisions of Section 6.9 shall
apply to each prepayment pursuant to this paragraph. Within two
Business Days after any Borrower receives any Net Cash Proceeds from
any Existing Unit Permitted Sale-Leaseback completed on or prior to
April 15, 2002 or from a New Unit Permitted Sale-Leaseback of the
Cleveland, Ohio Unit if completed on or prior to April 15, 2002 (or if
the receipt of such Net Cash Proceeds occurred prior to November 19,
2001, then on or prior to November 26, 2001), the Borrowers shall
deliver to the Agent written notice of such receipt, which notice shall
specify the amount of such Net Cash Proceeds then received, the
aggregate amount of such Net Cash Proceeds received to date (inclusive
of the amount then received), the portion of such Net Cash Proceeds
then received which is to be applied to prepay the Revolving Credit
Loans, Term Loan A and Term Loan B in accordance with the terms hereof
and the repayment amount to be received by each Bank in respect of such
Bank's Revolving Credit Loans, such Bank's Term A Commitment Percentage
of the Term Loan A and/or such Bank's Term B Commitment Percentage of
the Term Loan B, as applicable.
SECTION 6. AMENDMENT OF SECTION 4.4.2.3 - APPLICATION OF PREPAYMENTS.
Section 4.4.2.3 of the Credit Agreement is hereby amended by inserting the
phrase "Except as otherwise provided in the last paragraph of Section 4.4.2.1,"
at the beginning to the first sentence thereof and changing the first letter of
the word "All" immediately following such phrase to lower case.
SECTION 7. AMENDMENT OF SECTION 6 - INTEREST AFTER DEFAULT. Section
6.10.1 and Section 6.10.2 of the Credit Agreement are hereby amended by deleting
the phrase "two percent (2%)" where it appears in each such section and
substituting therefor the phrase "three percent (3%)".
SECTION 8. AMENDMENT OF SECTION 9 - INSPECTION OF PROPERTIES AND BOOKS,
ETC. Section 9 of the Credit Agreement is hereby amended by inserting the
following new Section 9.9.4 at the end thereof:
5
9.9.4 OUTSIDE CONSULTANT. In the event that the comparative
sales report prepared by the Borrowers in a manner consistent with past
practice for the fourth quarter of Fiscal Year 2002 (ending February 2,
2002) indicates a decline of five percent (5%) or more in same Unit
sales from the fourth quarter of Fiscal Year 2001, the Agent may, and
upon the request of the Majority Banks shall, appoint an outside
consultant to assist the Banks in analyzing the business and financial
condition of the Borrowers and any proposals relating to this Credit
Agreement, the Loans outstanding hereunder or the Borrowers' business.
The Borrowers shall pay any fees, costs and expenses incurred by or
payable to such consultant. Contemporaneously with the delivery to the
Banks of the financial statements of the Borrowers required to be
delivered pursuant to Section 9.4(b) for the fourth quarter of Fiscal
Year 2002, the Borrower shall deliver to the Agent its comparative
sales report for the fourth quarter of Fiscal Year 2002 prepared in a
manner consistent with past practice and showing same Unit sales for
the corresponding quarter of Fiscal Year 2001.
SECTION 9. AMENDMENT OF SECTION 10.3 - LOANS TO EMPLOYEES. Section 10.3
of the Credit Agreement is hereby amended by deleting the text of Section
10.3(i) in its entirety and substituting in place thereof the following:
(i) Investments consisting of loans and advances to employees in an
aggregate amount not to exceed $500,000 at any time outstanding;
provided that (x) other than loans or advances to employees for moving,
entertainment, travel and other similar expenses incurred in the
ordinary course of the Borrowers' business in an aggregate amount at
any one time outstanding not to exceed $100,000, no new loans or
advances shall be made to employees after November 19, 2001 until March
31, 2002, and (y) other than loans and advances permitted pursuant to
clause (x) above, new loans or advances may not be made to employees
after March 31, 2002 unless prior to making any such loan or advance,
the Borrowers deliver to the Agent a certificate signed by a financial
officer of the Borrowers demonstrating that at the time of making such
loan or advance the sum of the (i) the Borrowers' cash on hand plus
(ii) the amount by which the Total Revolving Credit Commitment exceeds
the sum of (A) the Outstanding amount of Revolving Credit Loans plus
(B) the Maximum Drawing Amount, plus (C) all Unpaid Reimbursement
Obligations exceeds $6,000,000 after giving effect to any Investments
then contemplated to be made under Section 10.3(i) and any Revolving
Credit Loans to be advanced to finance such Investment;
SECTION 10. AMENDMENT OF SECTION 11 - LEVERAGE RATIO. Section 11.1 of
the Credit Agreement is hereby amended by deleting the text thereof in its
entirety and substituting the following therefor:
6
11.1 LEVERAGE RATIO. The Borrowers will not permit the
Leverage Ratio, determined at the end of and for any period of four
consecutive fiscal quarters of the Borrowers ending during any period
described in the table below, to be greater than the ratio set forth
opposite such period in the column labeled Unadjusted Ratio in such
table; provided that for any period of four consecutive fiscal quarters
of the Borrowers ending from and after the date on which the Borrowers
receive Net Cash Proceeds in an aggregate amount in excess of
$12,500,000 from Existing Unit Permitted Sale-Leasebacks and a New Unit
Permitted Sale-Leaseback in respect to the Cleveland, Ohio Unit, the
Borrowers will not permit the Leverage Ratio, determined at the end of
and for such four quarter period to be greater than the ratio set forth
below in the column labeled "Adjusted Ratio" opposite the period during
which such four quarter period ends:
Period Unadjusted Adjusted
(inclusive of end dates) Ratio Ratio
----------------------- ---------- --------
Fiscal Year 2002 (ending 2/3/02) 2.00:1 1.75:1
Fiscal Year 2003 (ending 2/2/03) 1.75:1 1.50:1
Fiscal Year 2004 and thereafter 1.50:1 1.50:1
SECTION 11. AMENDMENT OF SECTION 11.4 - CAPITAL EXPENDITURES AND NEW
LEASES. Section 11.4 of the Credit Agreement is hereby amended by deleting the
text thereof in its entirety and substituting in place thereof the following:
11.4. NEW UNIT CAPITAL EXPENDITURES; NEW LEASES. The Borrowers
will not, nor will they permit any of their Subsidiaries or Affiliates
to (a) make aggregate New Unit Capital Expenditures in excess of
$15,000,000 during any fiscal year, (b) permit more than one new Unit
to open or become operational in the Fiscal Year 2003 of the Borrower,
(c) permit any new Unit to open or become operational in any twelve
(12) month period ending thereafter, without the prior written
unanimous consent of the Banks, (d) make aggregate New Unit Capital
Expenditures in excess of $12,500,000 in connection with any single
Unit during such Unit's first full year of operation, (e) with respect
to any single Unit opening in a particular fiscal year, expend more
than the Per-Unit Start-Up Cost Cap in Consolidated Start-Up Costs in
connection with such Unit, (f) commit to the construction, acquisition
or opening of new Units at any time that the Leverage Ratio at the end
of the most recently ended fiscal quarter for which the Borrowers' have
delivered the Compliance Certificate exceeds the Incurrence Ratio, or
(g) sign any new real property leases without the prior written
unanimous consent of the Banks.
7
SECTION 12. AMENDMENT OF SECTION 11 - MINIMUM EBITDA REQUIREMENT.
Section 11 of the Credit Agreement shall be amended by inserting the following
new Section 11.5 at the end thereof:
11.5. MINIMUM CONSOLIDATED EBITDA. The Borrowers will not
permit the sum of (i) Consolidated EBITDA for each fiscal quarter of
the Borrowers specified in the table below plus (ii) to the extent
deducted from Consolidated EBITDA of the Borrowers for such fiscal
quarter, any rental expense incurred by the Borrowers in respect of
each Unit which is the subject of a Permitted Sale-Leaseback
transaction occurring after October 1, 2001 to be less than the minimum
amount set forth opposite such fiscal quarter in the table below:
MINIMUM
CONSOLIDATED
FISCAL QUARTER EBITDA
-------------- ------------
Q4 -FY 2002 (ending 2/3/02) $15,750,000
Q1 - FY 2003 $14,250,000
Q2 - FY 2003 $11,500,000
Q3 - FY 2003 $ 9,500,000
Q4 - FY 2003 (ending 2/2/03) $16,000,000
SECTION 13. AMENDMENT TO SCHEDULE 8.18. Schedule 8.18 to the Credit
Agreement is hereby amended by deleting such Schedule 8.18 in its entirety and
substituting in place thereof the Schedule 8.18 attached to this Amendment and
made a part hereof.
SECTION 14. AFFIRMATION AND ACKNOWLEDGMENT. Each Borrower hereby
ratifies and confirms all of its Obligations to the Banks and the Agent,
including, without limitation, the Loans, and the Borrowers hereby affirm their
joint and several absolute and unconditional promise to pay to the Banks the
Loans, the Reimbursement Obligations, and all other amounts due under the Credit
Agreement as amended hereby. Each Borrower hereby confirms that the Obligations
are and remain secured pursuant to the
8
Security Documents and pursuant to all other instruments and documents executed
and delivered by each Borrower as security for the Obligations.
SECTION 15. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby
represents and warrants to the Banks and the Agent as follows:
(a) The execution and delivery by each Borrower of this Amendment and
the performance by each Borrower of its obligations and agreements under this
Amendment and the Credit Agreement as amended hereby are within the corporate
authority of such Borrower, have been duly authorized by all necessary corporate
proceedings on behalf of such Borrower, and do not and will not contravene any
provision of law, statute, rule or regulation to which such Borrower is subject
or any of such Borrower's charter, other incorporation papers, by-laws or any
stock provision or any amendment thereof or of any agreement or other instrument
binding upon such Borrower.
(b) Each of this Amendment and the Credit Agreement as amended hereby
constitutes the legal, valid and binding joint and several obligation of each
Borrower, enforceable in accordance with its respective terms, except as limited
by bankruptcy, insolvency, reorganization, moratorium or other laws relating to
or affecting generally the enforcement of creditors' rights.
(c) No approval or consent of, or filing with, any governmental agency
or authority is required to make valid and legally binding the execution,
delivery or performance by each Borrower of this Amendment and the Credit
Agreement as amended hereby.
(d) The representations and warranties contained in Section 8 of the
Credit Agreement are true and correct at and as of the date made and as of the
date hereof, except to the extent of changes resulting from transactions
contemplated or permitted by the Credit Agreement and the other Loan Documents
and changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and to the extent that such
representations and warranties relate expressly to an earlier date.
(e) Each Borrower has performed and complied in all material respects
with all terms and conditions herein required to be performed or complied with
by it prior to or at the time hereof, and as of the date hereof, after giving
effect to the provisions hereof, there exists no Event of Default or Default.
SECTION 16 EFFECTIVENESS. This Amendment shall become effective on
November 19, 2001 upon the satisfaction of the following conditions precedent:
SECTION 16.1. MAJORITY BANK APPROVAL. Each section of this
Amendment other than the sections specified in Section 16.2 shall
become effective upon the written consent of the Borrowers and the
written consent of the Majority Banks.
9
SECTION 16.2. UNANIMOUS BANK APPROVAL. Sections 4, 5 and 6
hereof shall become effective upon the written consent of the Borrowers
and the written consent of each of the Banks.
SECTION 16.3. JOINDER DOCUMENTS. The New Subsidiary shall duly
execute and deliver to the Agent allonges to each of the Revolving
Credit Notes and the Term Notes, an Agency Account Agreement, and
certificates of insurance, in form and substance reasonably
satisfactory to the Agent. D&B shall deliver to the Agent to be held
under the Stock Pledge Agreement as security for the Obligations, stock
certificates representing all of the issued and outstanding capital
stock of the New Subsidiary, together with stock powers duly executed
in blank in form and substance reasonably satisfactory to the Agent for
the New Subsidiary.
SECTION 16.4. AMENDMENT FEES. The Borrowers shall have paid to
the Agent, for the account of each Bank, an amendment fee in an amount
equal to one fifteenth of one percent (0.15%) of the sum of each such
Bank's Revolving Credit Commitment on November 1, 2001 plus the
aggregate principal amount of such Bank's Term Loans outstanding on
November 1, 2001.
SECTION 16.5. CORPORATE ACTION. All corporate action necessary
for the valid execution, delivery and performance by the New Subsidiary
of this Amendment and each of the other related documents to which it
is or is to become a party, shall have been duly and effectively taken,
and evidence thereof reasonably satisfactory to the Agent shall have
been provided to the Agent.
SECTION 16.6. CERTIFIED COPIES OF CHARTER DOCUMENTS; GOOD
STANDING. The Agent shall have received from the New Subsidiary (i) a
certified copy of its charter documents and by-laws and (ii) a good
standing certificate for the New Subsidiary issued by the secretary of
state of the jurisdiction under the laws of which such New Subsidiary
is incorporated.
SECTION 16.7. INCUMBENCY CERTIFICATE. The Agent shall have
received from the New Subsidiary an incumbency certificate, dated as of
the date of this Amendment, signed by a duly authorized officer of the
New Subsidiary, and giving the name and bearing a specimen signature of
each individual who shall be authorized: (i) to sign, in the name and
on behalf of the New Subsidiary, this Amendment; (ii) to make Revolving
Credit Loan Requests and Conversion Requests and to apply for Letters
of Credit; and (iii) to give notices and to take other action on its
behalf under the Loan Documents.
SECTION 16.8. VALIDITY OF LIENS. The Security Documents shall
be effective to create in favor of the Agent for the benefit of the
Banks and the Agent a legal, valid and enforceable first (except for
Permitted
10
Liens entitled to priority under applicable law) security interest in
and lien upon the Collateral. All filings, recordings, deliveries of
instruments and other actions necessary or desirable in the opinion of
the Agent to protect and preserve such security interests shall have
been duly effected. The Agent shall have received evidence thereof in
form and substance satisfactory to the Agent.
SECTION 16.9. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS.
The Agent shall have received from the New Subsidiary a completed and
fully executed Perfection Certificate.
SECTION 16.10. LEGAL OPINIONS. The Agent shall have received
or made arrangements for the receipt within thirty days following the
execution and delivery of this Amendment of a legal opinion from legal
counsel to the New Subsidiary, which legal opinion shall be in form and
substance satisfactory to the Agent. In the event that the Agent does
not receive such legal opinion contemporaneously with the execution and
delivery of this Amendment, the failure of the Agent to receive such a
legal opinion within thirty days thereafter shall be considered an
Event of Default under the Credit Agreement.
SECTION 16.11. NO MATERIAL ADVERSE CHANGE. The Majority Banks
shall be satisfied that there shall have occurred no material adverse
change in the business, operations, assets, management, properties,
financial condition, income or prospects of the Borrowers and their
Subsidiaries taken as a whole since February 4, 2001.
SECTION 16.12. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT.
Each of the representations and warranties of any of the
Borrowers and their Subsidiaries contained in this Amendment, the
Credit Agreement, the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with this Amendment
or the Credit Agreement shall be true as of the date as of which they
were made (except to the extent of changes resulting from transactions
contemplated or permitted by this Amendment or the Credit Agreement and
the other Loan Documents and changes occurring in the ordinary course
of business that singly or in the aggregate are not materially adverse,
and to the extent that such representations and warranties relate
expressly to an earlier date) and no Default or Event of Default shall
have occurred and be continuing.
SECTION 16.13. PROCEEDINGS AND DOCUMENTS. All proceedings in
connection with the transactions contemplated by this Amendment and all
other documents incident hereto shall be reasonably satisfactory in
substance and in form to the Agent.
SECTION 17. MISCELLANEOUS PROVISIONS.
11
(a) Except as otherwise expressly provided by this Amendment, all of
the terms, conditions and provisions of the Credit Agreement shall remain the
same. It is declared and agreed by each of the parties hereto that the Credit
Agreement, as amended hereby, shall continue in full force and effect, and that
this Amendment and the Credit Agreement shall be read and construed as one
instrument.
(b) This Amendment is intended to take effect as an agreement under
seal and shall be construed according to and governed by the laws of the
Commonwealth of Massachusetts.
(c) This Amendment may be executed in any number of counterparts, but
all such counterparts shall together constitute but one instrument. In making
proof of this Amendment, it shall not be necessary to produce or account for
more than one counterpart signed by each party hereto by and against which
enforcement hereof is sought.
(d) Each Borrower hereby agrees to pay to the Agent, on demand by the
Agent, all reasonable out-of-pocket costs and expenses incurred or sustained by
the Agent in connection with the preparation of this Amendment (including legal
fees).
12
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
a document under seal as of the date first above written.
DAVE & BUSTERS, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: CFO
DAVE & BUSTER'S I, L.P.
By: DAVE & BUSTER'S, INC.,
as general partner
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
DAVE & BUSTER'S OF ILLINOIS, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
DAVE & BUSTER'S OF GEORGIA, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
DAVE & BUSTER'S OF PENNSYLVANIA, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
13
DANB TEXAS, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
DAVE & BUSTER'S OF MARYLAND, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
DAVE & BUSTER'S OF CALIFORNIA, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
DAVE & BUSTER'S OF COLORADO, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
DAVE & BUSTER'S OF NEW YORK, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
DAVE & BUSTER'S OF FLORIDA, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
14
DAVE & BUSTER'S OF PITTSBURGH, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
DAVE & BUSTER'S OF HAWAII, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
D&B REALTY HOLDING, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
D&B LEASING, INC.
By: /s/ Charles Michel
----------------------------------
Name: Charles Michel
Title: Treasurer
15
FLEET NATIONAL BANK, individually and
as Agent
By: /s/ J. Nicholas Cole
----------------------------------
Name: J. Nicholas Cole
Title: Managing Director
16
BANK OF AMERICA, N.A.
By: /s/ Santiago Marchant
----------------------------------
Name: Santiago Marchant
Title: Senior Vice President
17
BANK ONE, NA
(MAIN OFFICE, CHICAGO, ILLINOIS)
By: /s/ Wyatt Dickson
----------------------------------
Name: Wyatt Dickson
Title: Vice President
18
GUARANTY BANK
By: /s/ Robert S. Hays
----------------------------------
Name: Robert S. Hays
Title: Senior Vice President
19
TRANSAMERICA EQUIPMENT FINANCIAL
SERVICES CORPORATION
By: /s/ R.E. Linn
----------------------------------
Name: R.E. Linn
Title: VP Region Credit Mgr
20
THE FROST NATIONAL BANK
By: /s/ Chris W. Holder
----------------------------------
Name: Chris W. Holder
Title: Senior Vice President
21
HELLER FINANCIAL LEASING, INC.
By: /s/ Suzanne Stafford for Ron E. Lis
----------------------------------------
Name: Robert E. Lis
Title: Vice President, Portfolio Manager
22
ORIX FINANCIAL SERVICES, INC.
By: /s/ Terry Standifer
----------------------------------
Name: R. Terry Standifer
Title: Vice President
23
EXHIBIT 10.16
AGREEMENT OF SALE AND PURCHASE
by and between
DAVE & BUSTER'S, INC.,
a Missouri corporation,
as Seller
and
GENERAL ELECTRIC CAPITAL BUSINESS
ASSET FUNDING CORPORATION,
as Purchaser
Corporate Headquarters
&
Warehouse
Dallas, Texas
TABLE OF CONTENTS
PAGE
ARTICLE I. Sale and Purchase: Property............................................................................1
Section 1.1 Sale and Purchase............................................................................1
ARTICLE II. Consideration.........................................................................................2
Section 2.1 Purchase Price...............................................................................2
Section 2.2 Earnest Money................................................................................2
ARTICLE III. Survey...............................................................................................3
Section 3.1 Survey.......................................................................................3
ARTICLE IV. Title.................................................................................................4
Section 4.1 Title Commitment.............................................................................4
ARTICLE V. Inspection.............................................................................................5
Section 5.1 Inspection Period............................................................................5
Section 5.2 Document Review..............................................................................6
Section 5.3 Inspection Obligations.......................................................................7
Section 5.4 Right of Termination.........................................................................7
Section 5.5 Property Conveyed "AS IS"....................................................................8
Section 5.6 Investigative Studies.......................................................................11
Section 5.7 Purchaser Represented by Counsel............................................................11
ARTICLE VI. Closing..............................................................................................12
Section 6.1 Closing Date................................................................................12
Section 6.2 Closing Matters.............................................................................12
Section 6.3 Closing Costs...............................................................................13
Section 6.4 Real Estate Commission......................................................................14
ARTICLE VII. Remedies............................................................................................14
Section 7.1 Seller's Remedies...........................................................................14
Section 7.2 Purchaser's Remedies........................................................................14
Section 7.3 Attorneys' Fees.............................................................................15
Section 7.4 Disposition of Earnest Money................................................................15
ARTICLE VIII. Representations, Warranties, and Covenants.........................................................16
Section 8.1 Purchaser's Representations and Warranties..................................................16
Section 8.2 Seller's Representations and Warranties.....................................................16
Section 8.3 Seller's Covenants..........................................................................17
Section 8.4 Survival of Representations and Warranties..................................................17
Section 8.5 Knowledge Standard..........................................................................18
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ARTICLE IX. Condemnation.........................................................................................18
Section 9.1 Condemnation................................................................................18
ARTICLE X. Risk of Loss..........................................................................................19
Section 10.1 Risk of Loss.............................................................................19
Section 10.2 Material Loss............................................................................19
Section 10.3 Non-Material Loss........................................................................20
Section 10.4 Delay in Completion of Repairs...........................................................20
Section 10.5 Postponement of Closing..................................................................20
ARTICLE XI. Miscellaneous........................................................................................20
Section 11.1 Entire Agreement.........................................................................20
Section 11.2 Agreement Binding on Parties; Assignment.................................................21
Section 11.3 Effective Date...........................................................................21
Section 11.4 Notice...................................................................................21
Section 11.5 Time of the Essence......................................................................23
Section 11.6 Place of Performance.....................................................................23
Section 11.7 Currency.................................................................................23
Section 11.8 Section Headings.........................................................................23
Section 11.9 Obligations..............................................................................23
Section 11.10 Business Days............................................................................23
Section 11.11 No Recordation...........................................................................23
Section 11.12 Multiple Counterparts....................................................................24
Section 11.13 Severability.............................................................................24
Section 11.14 Taxpayer ID..............................................................................24
Section 11.15 Section 1031 Exchange....................................................................25
Exhibits
Exhibit A - Legal Description of Land
Exhibit B - Deed
Exhibit C - Bill of Sale
Exhibit D - Certificate of Non-Foreign Status
Exhibit E - Assignment of Warranties
Exhibit F - Lease
Exhibit G Environmental Certificate
ii
AGREEMENT OF SALE AND PURCHASE
THIS AGREEMENT OF SALE AND PURCHASE (this "AGREEMENT") is made by and
between DAVE & BUSTER'S, INC., a Missouri corporation (the "SELLER"), and
GENERAL ELECTRIC CAPITAL BUSINESS ASSET FUNDING CORPORATION (the "PURCHASER").
WITNESSETH:
WHEREAS, Seller desires to sell and Purchaser desires to purchase the
property described in Section 1.1 below, on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
SALE AND PURCHASE: PROPERTY
Section 1.1 Sale and Purchase.
Seller agrees to sell and convey unto Purchaser, and Purchaser agrees
to purchase and accept from Seller, subject to the Permitted Exceptions
(as defined in Section 4.1(c)) and the terms, covenants, conditions,
and provisions herein set forth, the following:
(a) All of that certain land more particularly described on
Exhibit A attached hereto (the "LAND"), including all
structures, improvements, and fixtures (the "IMPROVEMENTS")
thereon. The Improvements consist of an approximately 47,000
square foot, two-story office building, and an approximately
30,000 square foot single-story warehouse, all located at 2481
Manana Drive, Dallas, Texas. The Land and the Improvements are
sometimes referred to herein collectively as the "REAL
PROPERTY";
(b) All right, title, and interest, if any, of Seller, in and to
any land lying in the bed of any dedicated street, road, or
access way, opened or proposed, in front of, at a side of or
adjoining the Real Property (the "PROPERTY RIGHTS");
(c) All right, title, and interest of Seller, reversionary or
otherwise, in and to all easements in or upon the Land and all
other rights and appurtenances belonging or in anywise
pertaining thereto, if any (the "APPURTENANCES");
(d) Any and all equipment and machinery owned by Seller and
presently affixed or attached to, or sufficiently placed or
situated upon the Real
1
Property so as to become fixtures, and used in connection with
the ownership, operation, and occupancy of the Real Property,
but specifically excluding items of personal property owned by
any third party (the "PERSONALTY");
(e) All right, title, and interest, if any, of Seller in and to
any and all transferable licenses, permits, certificates,
approvals, authorizations, variances, and consents (the
"PERMITS") issued or granted by governmental or
quasi-governmental bodies, officers, or authorities with
respect to the ownership of the Real Property;
(f) All warranties and guaranties covering any of the
Improvements, if any (the "WARRANTIES");
(g) Any service contracts, management agreements, and maintenance
contracts encumbering the Land as designated by Seller and
agreed to by Purchaser during the Inspection Period
(collectively, the "SERVICE CONTRACTS");
(h) Seller's interest in all plans, specifications, drawings,
reports, studies, and other similar matters, relating to the
Land and in the possession of Seller, but only to the extent
assignable (the "PLANS").
The items described in (a) through (h) of this Section 1.1 are
hereinafter collectively called the "PROPERTY".
ARTICLE II.
CONSIDERATION
Section 2.1 Purchase Price.
The purchase price (the "PURCHASE PRICE") to be paid by Purchaser to
Seller for the sale and conveyance of the Property is Seven Million
Seven Hundred Ninety Thousand and No/100 Dollars ($7,790,000), which is
payable to Seller at the closing of the transaction contemplated hereby
(the "CLOSING") by wire transfer and which funds must be delivered in a
manner to permit the Closing Agent (defined in Section 2.2) to deliver
good funds to the Seller or its designee on the Closing Date (defined
in Section 6.1).
Section 2.2 Earnest Money.
(a) It is a condition precedent to the effectiveness of this
Agreement that within five (5) days of the execution of this
Agreement by Purchaser, Purchaser shall deposit with Republic
Title of Texas, Inc., 2626
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Howell Street, 10th Floor, Dallas, Texas 75204, Attn: Paulette
Hubbard (the "CLOSING AGENT"), by wire transfer or delivery of
a cashier's check, immediately available federal funds in the
amount of Ten Thousand Dollars ($10,000) (along with any
accrued interest, the "EARNEST MONEY").
(b) On the Closing Agent's receipt of the Earnest Money, the
Closing Agent shall deposit such Earnest Money into an
interest-bearing money market account maintained at a
federally insured bank or savings and loan association located
in Dallas County, Texas. Such account shall have no penalty
for early withdrawal, and Purchaser agrees and acknowledges
that Seller shall have no responsibility or liability for any
loss of the Earnest Money or any portion thereof. If the
Earnest Money to be delivered pursuant to Section 2.2(a) is
not timely delivered by Purchaser to the Closing Agent, Seller
may terminate this Agreement by delivering written notice of
such termination to Purchaser. Upon said termination, (i)
neither Seller nor Purchaser shall have any further obligation
or liability to the other hereunder, except as provided in
Sections 5.3. and 6.4 hereof, and (ii) Purchaser shall deliver
to Seller all of the Documents and Purchaser's Information (as
defined in Section 5.2(c)).
(c) Upon execution hereof, Purchaser shall deliver to Seller the
sum of $100.00 which shall be independent consideration for
this Agreement (the "INDEPENDENT CONSIDERATION").
(d) If the transaction contemplated hereby is consummated in
accordance with the terms and provisions hereof, the Earnest
Money shall be credited against the Purchase Price at Closing.
All interest earned shall be reported to the Internal Revenue
Service as income of Purchaser and Purchaser shall promptly
execute all forms reasonably requested by the Closing Agent
with respect thereto.
(e) The balance of the Purchase Price, as adjusted by the
prorations and credits specified herein, less the Earnest
Money and less the amount of the Note, shall be paid on the
Closing Date in t/he manner set forth in Section 6.2.
ARTICLE III.
SURVEY
Section 3.1 Survey.
Seller shall deliver to Purchaser, simultaneously with the
execution hereof (as defined in Section 11.3), a copy of the
as-built survey (the "SURVEY") of the Real Property in
Seller's possession. Purchaser shall be solely responsible for
ordering
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any updates to the Survey that it desires, and shall do so in
a diligent and timely manner. Seller shall pay for the cost of
the updated Survey.
ARTICLE IV.
TITLE
Section 4.1 Title Commitment.
(a) Delivery.Simultaneously with the execution hereof, Seller
shall deliver to Purchaser a copy of its owner's title policy
covering the Property. Seller shall, within ten (10) days of
the Effective Date, cause First American Title Insurance
Company (the "TITLE COMPANY"), acting through the Closing
Agent, to furnish to Purchaser a title commitment (the
"COMMITMENT") along with copies of all exception documents, by
the terms of which Title Company agrees to issue to Purchaser
at Closing a Texas Standard Coverage Owner's Policy of Title
Insurance (the "TITLE POLICY") in the amount of the Purchase
Price and insuring Purchaser's fee simple title to the Real
Property to be good and indefeasible, subject to the Permitted
Exceptions and the other terms of the Title Policy.
(b) Objections and Cure. If the Title Commitment or Survey or
their updates disclose exceptions to title or any other matter
objectionable to Purchaser, Purchaser shall so notify Seller
in writing (the "OBJECTION NOTICE") on or before the tenth
(10th) day following the date of the last to be received of
the Title Commitment and Survey, and Seller shall have fifteen
(15) days from the date of Seller's actual receipt of the
Objection Notice in which it may, but shall have no obligation
to have each such objectionable exception to title or Survey
removed or correct each such other matter, in each case to the
reasonable satisfaction of Purchaser. Notwithstanding the
foregoing, Seller shall have each mortgage and lien removed,
and shall also cause any other matter than can be removed by
payment of $10,000 or less to be removed prior to the
Inspection Period Expiration Date. If, within the time
specified, Purchaser does not deliver an Objection Notice, all
title and survey matters shall be deemed approved. If, within
the time specified, Seller does not have each such
objectionable exception removed or corrected, Purchaser must,
as its sole and exclusive remedy, either (i) terminate this
Agreement, in which event this Agreement, without further
action of the parties, shall become null and void and neither
party shall have any further rights or obligations under this
Agreement, except in accordance with Sections 5.3 and 6.4, and
the Earnest Money shall be returned to Purchaser, or (ii)
elect to accept title to the Property as it then exists,
without reduction to the Purchase Price. If Purchaser fails to
timely make either such election, Purchaser shall be deemed to
have elected option (ii).
4
(c) Permitted Exceptions. As used in this Agreement, the term
"PERMITTED EXCEPTIONS" shall mean all matters either shown on
the Survey or in the Title Commitment, and all matters which
Purchaser has accepted or has been deemed to accept. Seller
has no obligation to ensure that the Title Company will
provide any endorsements to the Title Policy, including,
without limitation, any deletion of the printed survey
exception, all of which, if Purchaser elects to obtain any
such endorsements, shall be Purchaser's responsibility and
shall be at Purchaser's expense.
(d) Termination. In the event of termination of this Agreement
pursuant to this Section 4.1, the Earnest Money shall be
delivered to Purchaser, except for the Independent
Consideration, which shall be paid to Seller, and thereafter
neither party shall have any further rights or obligations
hereunder, except for the rights and obligations arising
pursuant to Sections 5.3 and 6.4.
ARTICLE V.
INSPECTION
Section 5.1 Inspection Period.
Seller, subject to the provisions of the Lease, shall permit Purchaser
and its authorized agents and representatives to enter upon the Real
Property at all reasonable times during normal business hours to
inspect and conduct reasonably necessary tests which are approved in
writing by Seller, which approval shall not be unreasonably withheld.
Such entry and inspections may be conducted only during the period (the
"INSPECTION PERIOD") commencing on the Effective Date and ending at
5:00 p.m., Dallas, Texas time on the date (the "INSPECTION PERIOD
EXPIRATION DATE") that is forty-five (45) days following the Effective
Date; provided, however, that so long as this Agreement has not been
terminated, Purchaser shall have the right, subject to the operations
of the restaurant, to enter upon the Real Property at all reasonable
times during normal business hours subsequent to the Inspection Period
Expiration Date and prior to the Closing for the purposes of continuing
its inspection of the same so long as Purchaser complies with each of
the provisions of this Agreement, including, without limitation, the
provisions of this Article V relating to such entry and inspection.
Notwithstanding the foregoing, in no event shall such entry and
inspection subsequent to the Inspection Period Expiration Date serve to
extend Purchaser's right to terminate this Agreement on or before the
Inspection Period Expiration Date as provided in Section 5.4 hereof.
Purchaser shall notify Seller, in writing, of its intention, or the
intention of its agents or representatives, to enter the Real Property
at least forty-eight (48) hours prior to such intended entry, and
obtain Seller's prior written consent to any tests to be conducted
thereon. At Seller's option, Seller may be present for any inspection
or test.
5
Section 5.2 Document Review.
(a) Documents. Within three (3) days after the Effective Date,
Seller shall deliver to Purchaser the following, if in the
possession of Seller (collectively, the "DOCUMENTS"):
(i) copies of any Plans;
(ii) to the extent allowed by the author, copies of all
existing soil, engineering, architectural, and
environmental reports covering the Property in
Seller's possession;
(iii) copies of all Service Contracts, if any; and
(iv) copies of all Permits in Seller's possession.
(b) Return of Documents. Purchaser shall return all of the
Documents, any and all copies Purchaser has made of the
Documents, and all copies of any studies, reports, or test
results obtained by Purchaser (and actually paid for by
Seller) in connection with its inspection of the Property
(collectively, the "PURCHASER'S INFORMATION") on the earlier
to occur of (i) such time as Purchaser determines that it
shall not acquire the Property, or (ii) such time as this
Agreement is terminated for any reason.
(c) No Representation or Warranty by Seller. Purchaser hereby
acknowledges that Seller has not made and does not make any
warranty or representation regarding the truth, accuracy, or
completeness of the Documents or the source(s) thereof, and
that Seller has not undertaken any independent investigation
as to the truth, accuracy, or completeness of the Documents
and is providing the Documents solely as an accommodation to
Purchaser. Seller expressly disclaims and Purchaser waives any
and all liability for representations or warranties, express
or implied, statements of fact, and other matters contained in
the Documents, or for any omissions from the Documents, or in
any other written or oral communications transmitted or made
available to Purchaser. Except as provided in Section 8.2 and
the Environmental Certificate (as hereinafter
defined)Purchaser shall rely solely upon its own investigation
with respect to the Property, including, without limitation,
the Property's physical, environmental, or economic condition,
compliance or lack of compliance with any ordinance, order,
permit, or regulation or any other attribute or matter
relating thereto.
6
Section 5.3 Inspection Obligations.
(a) Purchaser's Responsibilities. In conducting any inspections,
investigations, examinations, or tests of the Property,
Purchaser and its agents and representatives shall: (i) not
interfere with the operation and maintenance of the Property;
(ii) not damage any part of the Property or any personal
property; (iii) not injure or otherwise cause bodily harm to
Seller or its agents, guests, invitees, contractors and
employees; (iv) maintain commercial general liability
(occurrence basis) insurance in terms and amounts reasonably
satisfactory to Seller covering any accident arising in
connection with the presence of Purchaser, its agents, and its
representatives on the Property, (v) promptly pay when due the
costs of all tests, investigations, and examinations done with
regard to the Property; (vi) not permit any liens to attach to
the Real Property by reason of the exercise of its rights
hereunder; (vii) fully restore the Land and the Improvements
to the condition in which the same were found before any such
inspection or tests were undertaken; (viii) not reveal or
disclose any information obtained during the Inspection Period
concerning the Property and the Documents to anyone outside
Purchaser's organization, except in accordance with the
confidentiality standards set forth in Section 5.2(b) hereof,
and (ix) deliver to Seller a copy of all Purchaser's
Information.
(b) PURCHASER'S AGREEMENT TO INDEMNIFY. PURCHASER SHALL INDEMNIFY,
DEFEND, AND HOLD SELLER HARMLESS FROM AND AGAINST ANY AND ALL
LIENS, CLAIMS, CAUSES OF ACTION, DAMAGES, LIABILITIES, AND
EXPENSES (INCLUDING REASONABLE LEGAL FEES AND EXPENSES)
ARISING OUT OF PURCHASER'S INSPECTIONS OR TESTS OR ANY
VIOLATION OF THE PROVISIONS OF THIS SECTION 5.3. THIS
INDEMNITY SHALL SURVIVE THE CLOSING OR EARLIER TERMINATION OF
THIS AGREEMENT.
Section 5.4 Right of Termination.
If, during the Inspection Period, Purchaser shall, for any reason, in
Purchaser's sole discretion, judgment, and opinion, be dissatisfied
with any aspect of the Property or any item examined by Purchaser
pursuant to this Agreement, Purchaser shall be entitled, as its sole
remedy, to terminate this Agreement by giving written notice to Seller
on or before the Inspection Period Expiration Date (but no later than
3:00 p.m., Dallas, Texas time on the Inspection Period Expiration
Date), whereupon all of the provisions of this Agreement (except
Sections 5.3 and 6.4) shall terminate. Upon such termination, neither
Seller nor Purchaser shall have any further obligation or liability to
the other hereunder, except as provided in Sections 5.3 and 6.4 hereof,
and upon Purchaser's delivery to Seller of the Documents and
Purchaser's Information, the Earnest Money shall
7
be returned to Purchaser, less the Independent Consideration which
shall be paid to Seller.
Section 5.5 Property Conveyed "AS IS".
(a) DISCLAIMER OF REPRESENTATIONS AND WARRANTIES BY SELLER.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IT
IS UNDERSTOOD AND AGREED THAT EXCEPT AS EXPRESSLY SET FORTH IN
SECTION 8.2 HEREOF, AND IN THE ENVIRONMENTAL CERTIFICATE TO BE
DELIVERED AT CLOSING, SELLER HAS NOT MADE AND IS NOT NOW
MAKING, AND SELLER SPECIFICALLY DISCLAIMS AND PURCHASER
WAIVES, ANY WARRANTIES, REPRESENTATIONS, OR GUARANTIES OF ANY
KIND OR CHARACTER, EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST,
PRESENT, OR FUTURE, WITH RESPECT TO THE PROPERTY, INCLUDING,
BUT NOT LIMITED TO, WARRANTIES, REPRESENTATIONS OR GUARANTIES
AS TO (I) MATTERS OF TITLE (OTHER THAN SELLER'S WARRANTY OF
TITLE SET FORTH IN THE DEED DESCRIBED IN SECTION 6.2(A)(IV) TO
BE DELIVERED AT CLOSING); (II) ENVIRONMENTAL MATTERS RELATING
TO THE PROPERTY OR ANY PORTION THEREOF; (III) GEOLOGICAL
CONDITIONS, INCLUDING, WITHOUT LIMITATION, SUBSIDENCE,
SUBSURFACE CONDITIONS, WATER TABLE, UNDERGROUND WATER
RESERVOIRS, LIMITATIONS REGARDING THE WITHDRAWAL OF WATER AND
EARTHQUAKE FAULTS AND THE RESULTING DAMAGE OF PAST AND/OR
FUTURE EARTHQUAKES; (IV) WHETHER AND THE EXTENT TO WHICH, THE
REAL PROPERTY OR ANY PORTION THEREOF IS AFFECTED BY ANY STREAM
(SURFACE OR UNDERGROUND), BODY OF WATER, FLOOD PRONE AREA,
FLOOD PLAIN, FLOODWAY OR SPECIAL FLOOD HAZARD; (V) DRAINAGE;
(VI) SOIL CONDITIONS, INCLUDING THE EXISTENCE OF INSTABILITY,
PAST SOIL REPAIRS, SOIL ADDITIONS OR CONDITIONS OF SOIL FILL,
OR SUSCEPTIBILITY TO LANDSLIDES, OR THE SUFFICIENCY OF ANY
UNDERSHORING; (VII) ZONING TO WHICH THE REAL PROPERTY OR ANY
PORTION THEREOF MAY BE SUBJECT; (VIII) THE AVAILABILITY OF ANY
UTILITIES TO THE PROPERTY OR ANY PORTION THEREOF, INCLUDING,
WITHOUT LIMITATION, WATER, SEWAGE, GAS, AND ELECTRIC; (IX)
USAGES OF ADJOINING PROPERTY; (X) ACCESS TO THE REAL PROPERTY
OR ANY PORTION THEREOF; (XI) THE VALUE, COMPLIANCE WITH THE
PLANS AND SPECIFICATIONS, SIZE, LOCATION, AGE, USE, DESIGN,
QUALITY, DESCRIPTION, SUITABILITY, STRUCTURAL INTEGRITY,
OPERATION, TITLE
8
TO, OR PHYSICAL OR FINANCIAL CONDITION OF THE PROPERTY OR ANY
PORTION THEREOF, OR ANY INCOME, EXPENSES, CHARGES, LIENS,
ENCUMBRANCES, RIGHTS, OR CLAIMS ON OR AFFECTING OR PERTAINING
TO THE PROPERTY OR ANY PART THEREOF; (XII) THE PRESENCE OF
HAZARDOUS SUBSTANCES IN (AS DEFINED IN SECTION 5.5(C)) IN ON,
UNDER, OR IN THE VICINITY OF THE REAL PROPERTY; (XIII) THE
CONDITION OR USE OF THE PROPERTY OR COMPLIANCE OF THE PROPERTY
WITH ANY OR ALL PAST, PRESENT OR FUTURE FEDERAL, STATE OR
LOCAL ORDINANCES, RULES, REGULATIONS, OR LAWS, BUILDING FIRE
OR ZONING ORDINANCES, CODES OR OTHER SIMILAR LAWS; (XIV) THE
EXISTENCE OR NON-EXISTENCE OF UNDERGROUND STORAGE TANKS; (XV)
ANY OTHER MATTER AFFECTING THE STABILITY OR INTEGRITY OF THE
REAL PROPERTY; (XVI) THE POTENTIAL FOR FURTHER DEVELOPMENT OF
THE REAL PROPERTY; (XVII) THE EXISTENCE OF VESTED LAND USE,
ZONING, OR BUILDING ENTITLEMENTS AFFECTING THE REAL PROPERTY;
(XVIII) THE MERCHANTABILITY OF THE PROPERTY OR FITNESS OF THE
PROPERTY FOR ANY PARTICULAR PURPOSE (PURCHASER AFFIRMING THAT
PURCHASER HAS NOT RELIED ON SELLER'S SKILL OR JUDGMENT TO
SELECT OR FURNISH THE PROPERTY FOR ANY PARTICULAR PURPOSE, AND
THAT SELLER MAKES NO WARRANTY THAT THE PROPERTY IS FIT FOR ANY
PARTICULAR PURPOSE); OR (XIX) TAX CONSEQUENCES (INCLUDING, BUT
NOT LIMITED TO, THE AMOUNT, USE, OR PROVISIONS RELATING TO ANY
TAX CREDITS).
(b) SALE "AS IS". PURCHASER HAS NOT RELIED UPON AND WILL NOT RELY
UPON, EITHER DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR
WARRANTY OF SELLER OR ANY OF ITS AGENTS AND ACKNOWLEDGES THAT
NO SUCH REPRESENTATIONS HAVE BEEN MADE, EXCEPT AS PROVIDED IN
SECTION 8.2 AND THE ENVIRONMENTAL CERTIFICATE. PURCHASER
REPRESENTS THAT IT IS A KNOWLEDGEABLE, EXPERIENCED, AND
SOPHISTICATED PURCHASER OF REAL ESTATE AND THAT IT IS RELYING
SOLELY ON ITS OWN EXPERTISE AND THAT OF PURCHASER'S
CONSULTANTS IN PURCHASING THE PROPERTY. PURCHASER WILL CONDUCT
SUCH INSPECTIONS AND INVESTIGATIONS OF THE PROPERTY AS
PURCHASER DEEMS NECESSARY, INCLUDING, BUT NOT LIMITED TO, THE
PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AND SHALL RELY
UPON SAME. UPON CLOSING, PURCHASER SHALL ASSUME THE RISK THAT
ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO,
9
ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE
BEEN REVEALED BY PURCHASER'S INSPECTIONS AND INVESTIGATIONS
AND HEREBY WAIVES ANY CLAIM PURCHASER MAY HAVE (EXCEPT AS MAY
ARISE IN CONNECTION WITH THE ENVIRONMENTAL CERTIFICATE), NOW
OR IN THE FUTURE, IN CONNECTION WITH ANY SUCH ADVERSE MATTERS,
INCLUDING, WITHOUT LIMITATION, ANY RIGHT OF CONTRIBUTION.
PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING, SELLER
SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT
THE PROPERTY "AS IS, WHERE IS," WITH ALL FAULTS. PURCHASER
FURTHER ACKNOWLEDGES AND AGREES THAT THERE ARE NO ORAL
AGREEMENTS, WARRANTIES OR REPRESENTATIONS, COLLATERAL TO OR
AFFECTING THE PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY
THIRD PARTY. THE TERMS AND CONDITIONS OF THIS SECTION 5.5
SHALL EXPRESSLY SURVIVE THE CLOSING, AND NOT MERGE WITH THE
PROVISIONS OF ANY CLOSING DOCUMENTS. SELLER IS NOT LIABLE OR
BOUND IN ANY MANNER BY ANY ORAL OR WRITTEN STATEMENTS,
REPRESENTATIONS, OR INFORMATION PERTAINING TO THE PROPERTY
FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT,
OR OTHER PERSON, UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR
REFERRED TO HEREIN. PURCHASER ACKNOWLEDGES THAT THE PURCHASE
PRICE REFLECTS THE "AS IS" NATURE OF THIS SALE AND ANY FAULTS,
LIABILITIES, DEFECTS OR OTHER ADVERSE MATTERS THAT MAY BE
ASSOCIATED WITH THE PROPERTY. PURCHASER HAS FULLY REVIEWED THE
DISCLAIMERS, ASSUMPTIONS, AND WAIVERS SET FORTH IN THIS
AGREEMENT WITH ITS COUNSEL AND UNDERSTANDS THE SIGNIFICANCE
AND EFFECT THEREOF. PURCHASER FURTHER ACKNOWLEDGES AND AGREES
THAT THE PROVISIONS OF THIS ARTICLE V AND IN PARTICULAR THIS
SECTION 5.5 ARE AN INTEGRAL PART OF THIS AGREEMENT AND THAT
SELLER WOULD NOT HAVE AGREED TO SELL THE PROPERTY TO PURCHASER
FOR THE PURCHASE PRICE WITHOUT SUCH PROVISIONS.
(c) Hazardous Substances Defined. For purposes hereof, "HAZARDOUS
SUBSTANCES" means any hazardous, toxic or dangerous waste,
substance or material, pollutant or contaminant, as defined
for purposes of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. Sections
9601 et seq.), as amended, or the Resource Conservation and
Recovery Act (42 U.S.C. Sections 6901 et seq.), as amended, or
any other federal, state, or local law, ordinance, rule, or
regulation applicable to the Property, or any substance which
is toxic,
10
explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous, or any
substance which contains gasoline, diesel fuel or other
petroleum hydrocarbons, polychlorinated biphenyls (pcbs),
radon gas, urea formaldehyde, asbestos, lead or
electromagnetic waves.
Section 5.6 Investigative Studies.
As additional consideration for the transaction contemplated
herein, Purchaser agrees that it will provide to Seller,
immediately following the receipt of same by Purchaser, copies
of any and all reports, tests, or studies involving structural
or geologic conditions or environmental, hazardous waste, or
Hazardous Substances contamination of the Property which
reports, tests or studies shall be addressed to both Seller
and Purchaser; provided, however, Purchaser shall have no
obligation to cause any such tests or studies to be performed
on the Property. In the event that such reports, tests or
studies indicate that additional investigation may be
required, either Seller or Purchaser may request (at the cost
of the party requesting same) that such additional
investigation be completed, provided that neither Seller nor
Purchaser shall be obligated to undertake any such additional
investigation and either Purchaser or Seller shall be entitled
to terminate this Agreement rather than proceed with any such
additional investigation. No deadline or time period in this
Agreement shall be extended by virtue of any such additional
investigation. Seller hereby acknowledges that Purchaser has
not made and does not make any warranty or representation
regarding the truth or accuracy of any such studies or reports
and has not undertaken any independent investigation as to the
truth or accuracy thereof. Purchaser shall have no liability
or culpability of any nature as a result of having provided
such information to Seller or as a result of Seller's reliance
thereon. Purchaser shall be responsible for any and all costs,
claims, damages, and liabilities caused by any testing
performed or required by Purchaser.
Section 5.7 Purchaser Represented by Counsel.
Purchaser hereby represents and warrants to Seller that: (i)
Purchaser is not in a significantly disparate bargaining
position in relation to Seller; (ii) Purchaser is represented
by legal counsel in connection with the transaction
contemplated by this Agreement; and (iii) Purchaser is
purchasing the Property for business, commercial, investment,
or other similar purpose and not for use as Purchaser's
residence.
11
ARTICLE VI.
CLOSING
Section 6.1 Closing Date.
The Closing shall be held in the offices of Closing Agent, or
such other location as may be mutually agreed upon by Seller
and Purchaser, at 10:00 a.m. (Dallas, Texas time) on the
fifteenth (15th) day following the Inspection Period
Expiration Date (the "CLOSING DATE"), or at such other time as
mutually agreed by Seller and Purchaser.
Section 6.2 Closing Matters.
(a) Seller's Deliveries. At Closing, expressly conditioned upon
Purchaser's performance of its obligations under Section
6.2(b), Seller shall deliver:
(i) possession of the Property, subject to the Permitted
Exceptions;
(ii) copies of all Permits, if any;
(iii) an executed and acknowledged special warranty deed
(the "DEED") in the form set forth in Exhibit B
conveying the Real Property subject to the Permitted
Exceptions;
(iv) a bill of sale in substantially the form of Exhibit C
(the "BILL OF SALE"), executed and acknowledged by
Seller, conveying without warranty the Personalty;
(v) an executed Assignment and Assumption of Warranties
in substantially the form of Exhibit E (the
"ASSIGNMENT OF WARRANTIES");
(vi) a certificate of Seller respecting the non-foreign
status of Seller in the form set forth in Exhibit D
attached hereto;
(vii) the originals of the Warranties, Service Contracts,
Plans and Permits in Seller's possession;
(viii) an executed Lease between Purchaser and Dave &
Buster's, Inc. ("TENANT") in the form attached hereto
as Exhibit F (the "LEASE");
(ix) an opinion of Seller's counsel, in form and substance
reasonably acceptable to Purchaser, concerning Tenant
and the Lease;
(x) the Environmental Certificate in substantially the
form of Exhibit G (the "ENVIRONMENTAL CERTIFICATE");
and
12
(xi) such other documents as may be reasonably required by
Closing Agent or Purchaser, including, but not
limited to, documents evidencing the authority of
Seller to consummate the sale of the Property in
accordance with this Agreement and designating those
persons authorized to execute and deliver all
necessary documents at Closing.
(b) Purchaser's Deliveries. At Closing, expressly conditioned upon
Seller's performance of its obligations under Section 6.2(a),
Purchaser shall deliver:
(i) the remaining funds for the Purchase Price to the
Closing Agent, sent by wire transfer of immediately
available federal funds to the account designated by
Closing Agent and available for disbursement no later
than 11:00 a.m. (Dallas, Texas time) on the Closing
Date;
(ii) the Assignment of Warranties, duly executed and
acknowledged by Purchaser;
(iii) the Lease, duly executed and acknowledged by
Purchaser; and
(iv) such other documents as may be reasonably required by
Seller or Closing Agent, including, but not limited
to, a certified copy of documents evidencing the
authority of Purchaser to consummate the purchase of
the Property in accordance with this Agreement and
designating those persons authorized to execute and
deliver all necessary documents at Closing.
(c) Prorations. Ad valorem taxes will not be prorated. Tenant is
solely liable for all taxes under the Lease.
(d) Preparation of Documents. All of the documents that are not
attached hereto as exhibits to be executed at Closing shall be
in form prepared to the reasonable satisfaction of Seller and
Purchaser.
Section 6.3 Closing Costs.
Except as otherwise provided in Section 7.3, each party shall
be responsible for the payment of its own attorneys' fees
incurred in connection with the transaction that is the
subject of this Agreement. Any escrow fee charged by the Title
Company shall be paid by Seller. Except as otherwise expressly
and specifically provided to the contrary in this Section 6.3
or otherwise in this Agreement, Seller shall pay the filing
fees for recording the Deed, the basic premium for the Title
13
Policy, the escrow fees, the cost of the updated Survey, and
shall reimburse Purchaser for reasonable third-party costs
actually incurred by Purchaser in its inspection of the
Property, but excluding any ADA review. Except as otherwise
expressly provided to the contrary in this Section 6.3 or
otherwise in this Agreement, Purchaser shall pay any and all
other costs, including, without limitation, one-half ( 1/2) of
the escrow fees, all premiums associated with extended
coverage or any endorsements to the Title Policy, and all
other closing costs of any nature and costs of any inspections
or tests Purchaser authorizes or conducts.
Section 6.4 Real Estate Commission.
Seller agrees to pay, at Closing, to Staubach Retail Services,
Inc. (the "BROKER"), a real estate commission in accordance
with a separate written contract. Seller and Purchaser each
represent and warrant to the other that no real estate
brokerage commission is payable to any person or entity in
connection with the transaction contemplated hereby (other
than as described above in this Section 6.4), and each agrees
to and does hereby indemnify and hold the other harmless
against the payment of any commission to any person or entity
(other than as described above in this Section 6.4) claiming
by, through or under Seller or Purchaser, as applicable. This
indemnification shall extend to any and all claims,
liabilities, costs, and expenses (including reasonable
attorneys' fees and litigation costs) arising as a result of
such claims and shall survive the Closing.
ARTICLE VII.
REMEDIES
Section 7.1 Seller's Remedies.
Other than the matters provided in Sections 5.3 and 6.4
hereof, in the event Purchaser fails to perform any of its
obligations pursuant to this Agreement for any reason except
failure by Seller to perform hereunder, Seller, as its sole
and exclusive remedy, shall be entitled to terminate this
Agreement and recover the Earnest Money as liquidated damages
and not as penalty, in full satisfaction of claims against
Purchaser hereunder. Seller and Purchaser agree that the
Seller's damages resulting from Purchaser's default are
difficult, if not impossible, to determine and the Earnest
Money is a fair and reasonable estimate of those damages which
has been agreed to in an effort to cause the amount of said
damages to be certain.
Section 7.2 Purchaser's Remedies.
In the event Seller fails to perform its obligations pursuant
to this Agreement (other than a breach of representation or
warranty) for any reason except failure by Purchaser to
perform hereunder, Purchaser may elect, as its sole remedy (i)
to
14
terminate this Agreement by giving Seller timely written
notice of such election prior to or at Closing and recover the
Earnest Money in accordance with Section 7.4 (less the
Independent Consideration which shall be paid to Seller), and
recover the Default Payment (as hereinafter defined) or (ii)
seek the remedy of specific performance against Seller. As
used herein, "DEFAULT PAYMENT" shall mean a sum of money equal
to Purchaser's third party expenses actually incurred in the
negotiation of this Agreement, its due diligence regarding the
Property, and all other expenses attributable to this
Agreement to the date of Seller's default, not to exceed
$50,000. In the event that Purchaser elects to recover the
Default Payment, it shall have first given Seller ten (10)
days' written notice and opportunity to cure its default
(except for failure to convey title at Closing). In the event
of a material breach of representation or warranty by Seller
discovered by Purchaser after Closing, Purchaser's remedies
are limited to those described in Section 8.4. IN NO EVENT
SHALL SELLER, ITS DIRECT OR INDIRECT PARTNERS, SHAREHOLDERS,
OWNERS, OR AFFILIATES, ANY OFFICER, DIRECTOR, EMPLOYEE,
ATTORNEY, OR AGENT OF THE FOREGOING, OR ANY AFFILIATE OR
CONTROLLING PERSON THEREOF HAVE ANY LIABILITY, BEYOND ITS
INTEREST IN THE REAL PROPERTY, FOR ANY CLAIM, CAUSE OF ACTION,
OR OTHER LIABILITY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE PROPERTY, WHETHER BASED ON CONTRACT, COMMON
LAW, STATUTE, EQUITY, OR OTHERWISE (COLLECTIVELY, THE
"CLAIMS"), AND PURCHASER HEREBY WAIVES THE CLAIMS.
Section 7.3 Attorneys' Fees.
In the event either party hereto is required to employ an
attorney in connection with claims by one party against the
other arising from the operation of this Agreement, the
non-prevailing party shall pay the prevailing party all
reasonable fees and expenses, including attorneys' fees,
incurred in connection with such transaction.
Section 7.4 Disposition of Earnest Money.
In the event of a termination of this Agreement by either
Seller or Purchaser, Closing Agent is authorized to deliver
the Earnest Money to the party hereto entitled to same
pursuant to the terms hereof on or before the fifth (5th) day
following receipt by the Closing Agent and non-terminating
party of written notice of such termination from the
terminating party, unless the other party hereto notifies the
Closing Agent that it disputes the right of the other party to
receive the Earnest Money. In such event, the Closing Agent
may interplead the Earnest Money into a court of competent
jurisdiction in Dallas County, Texas. All attorneys' fees and
costs and Closing Agent's costs and expenses incurred in
connection with such interpleader shall be assessed against
the party that is not
15
awarded the Earnest Money or if the Earnest Money is
distributed in part to both parties, then in the inverse
proportion of such distribution.
ARTICLE VIII.
REPRESENTATIONS, WARRANTIES, AND COVENANTS
Section 8.1 Purchaser's Representations and Warranties.
(a) Authority of Purchaser. Purchaser represents and warrants that
Purchaser has full right, power, and authority to enter into
this Agreement and, at Closing, will have full right, power
and authority to consummate the sale provided for herein.
(b) No Bankruptcy or Receivership.
That at no time on or before the Closing Date, shall any of
the following have occurred with respect to Purchaser, and if
Purchaser is a partnership, to any general partners of
Purchaser: (i) the commencement of a case under Title 11 of
the United States Code, as now constituted or hereafter
amended, or under any other applicable federal or state
bankruptcy law or other similar law; (ii) the appointment of a
trustee or receiver of any property interest; (iii) an
assignment for the benefit of creditors; (iv) an attachment,
execution or other judicial seizure of a substantial property
interest; (v) the taking of, failure to take, or submission to
any action indicating an inability to meet its financial
obligations as they accrue; or (vi) a dissolution or
liquidation, death or incapacity.
Section 8.2 Seller's Representations and Warranties.
(a) Seller is a Missouri corporation validly existing and in good
standing, and Seller is qualified to do business in all states
in which qualification is necessary to conduct its business,
and has the authority to execute this Agreement and conclude
the transactions contemplated therein.
(b) There is no pending or, to the knowledge of Seller, threatened
condemnation or similar proceeding or special assessment
(inclusive of assessments for street widening, repair, or
improvement), or change in zoning affecting the Real Property.
(c) Seller has received no written notice concerning the Property
from any Governmental Authority (as defined below in this
Section 8.2) about a violation of any federal, state, county,
or city statute, ordinance, code, rule, or regulation or
stating that any investigation has commenced or is
contemplated regarding any violation.
16
(d) There is no pending or, to Seller's knowledge, threatened
litigation or administrative proceeding affecting the
ownership or use of the Property.
(e) There are no attachments, executions, assignments for the
benefit of creditors, or voluntary or involuntary proceedings
in bankruptcy or under other debtor relief laws contemplated
by, pending, or threatened against Seller.
(f) Seller has no reason to believe that any of the Documents are
materially false or misleading.
The term "GOVERNMENTAL AUTHORITY" means the United States of
America, the state, county, and city where the Property is
located, and any other political subdivision in which the
Property is located or which exercises jurisdiction over the
Property, and any agency, department, commission, board,
bureau, property owners association, utility district, flood
control district, improvement district, or similar district,
or other instrumentality of any of them.
Section 8.3 Seller's Covenants. Seller hereby covenants and agrees with
Purchaser as follows:
(a) At all times from the Effective Date until the Closing Date,
Seller shall maintain (or cause to be maintained, in
accordance with the terms of the Lease) in force, fire and
extended coverage insurance upon the Real Property for not
less than the full replacement value of the Real Property, and
commercial general liability insurance with respect to injury
or death to persons and damage to property in an amount not
less than $1,000,000; and
(b) Prior to the Closing, Seller shall maintain the Improvements
in their present condition and repair, except for normal wear
and tear and any casualty or condemnation, and Seller shall
not remove any fixtures, equipment, furnishings and other
personalty from the Improvements without replacing them with
new items.
Section 8.4 Survival of Representations and Warranties.
Except as otherwise expressly set forth herein, the representations and
warranties set forth in Section 8.2 shall be continuing and shall be
true and correct on and as of the Closing Date with the same force and
effect as if made at that time, and such representations and warranties
shall survive the Closing for a period of one (1) year, at which time
they shall expire and terminate and be of no further force and effect
unless a claim for breach thereof has been instituted within such one
(1) year period; PROVIDED, HOWEVER, Purchaser shall have the right to
bring an
17
action thereon only if Purchaser has given the Seller written notice of
the circumstances giving rise to the alleged breach within such one (1)
year period. Purchaser hereby waives and relinquishes all right to seek
punitive or consequential damages.
Section 8.5 Knowledge Standard.
For purposes of this Agreement, wherever the terms "SELLER'S KNOWLEDGE"
or "TO THE BEST OF SELLER'S KNOWLEDGE" is used, it shall be limited to
the actual knowledge (being the current, conscious awareness of facts
or other information, without investigation or implied duty to
investigate) of Chas Michel, John Davis, and Bryan Spain (the "SELLER
REPRESENTATIVES"); provided, however, the foregoing individuals are
acting for and on behalf and in their respective capacities as officers
of Seller or one or more of Seller's affiliates and are in no manner
expressly or impliedly making any of these representations in their
individual capacities and Purchaser hereby waives any right to sue or
to seek any judgment or claim against any of them on an individual
basis. The term "TO SELLER'S KNOWLEDGE" or "TO THE BEST OF SELLER'S
KNOWLEDGE" shall not include knowledge imputed to the Seller from any
other person. Seller represents and warrants to Purchaser that the
Seller Representatives are the employees of Seller most likely to be
informed as to the Property.
ARTICLE IX.
CONDEMNATION
Section 9.1 Condemnation.
If, prior to Closing, any governmental authority or other entity having
condemnation authority shall institute an eminent domain proceeding or
take any steps preliminary thereto (including the giving of any direct
or indirect notice of intent to institute such proceedings) with regard
to a Material Portion (as hereinafter defined) of the Real Property,
and the same is not dismissed on or before ten (10) days prior to
Closing, Purchaser shall be entitled, as its sole remedy, to terminate
this Agreement by giving written notice to Seller on or before the
earlier to occur of (a) ten (10) days following notice by Seller to
Purchaser of such condemnation, or (b) the Closing Date. In the event
Purchaser does not terminate this Agreement pursuant to the preceding
sentence, Purchaser shall be conclusively deemed to have elected to
close the acquisition of the Property subject to such condemnation,
without any reduction in Purchase Price, and waives any right to
terminate this Agreement as a result thereof. For purposes of this
Section 9.1, a "MATERIAL PORTION" shall mean that portion of the Real
Property which, if taken or condemned, would reduce the value of the
Property by not less than $250,000.00. Notwithstanding anything to the
contrary herein, if any eminent domain proceeding is instituted (or
notice of which is given) solely for the taking of any subsurface
rights for utility easements or for any right-of-way
18
easement, and the surface may, after such taking, be used in
substantially the same manner as though such rights had not been taken,
Purchaser shall not be entitled to terminate this Agreement as to any
part of the Real Property, but any award resulting therefrom shall be
the exclusive property of Purchaser upon Closing. In the event
Purchaser elects to terminate this Agreement under this Section 9.1,
the Earnest Money (less the Independent Consideration) shall be
returned to Purchaser, and neither party to this Agreement shall
thereafter have any further rights or obligations hereunder except as
otherwise provided in Sections 5.3 and 6.4 hereof. If Purchaser waives
(or is deemed to have waived) the right to terminate this Agreement as
a result of such a condemnation, despite such condemnation, Seller and
Purchaser shall close this Agreement in accordance with the terms
hereof with no reduction in the Purchase Price, and Seller shall assign
to Purchaser at Closing all of Seller's right, title and interest in
and to all proceeds resulting or to result from said condemnation.
ARTICLE X.
RISK OF LOSS
Section 10.1 Risk of Loss.
Until Closing, Seller alone shall bear the risk of loss should there be
damage to any of the Improvements by fire or other casualty
(collectively, "CASUALTY"). If, prior to the Closing, any of the
Improvements shall be damaged by a Casualty, Seller shall deliver to
Purchaser written notice ("CASUALTY LOSS NOTICE") of such Casualty
after it has made its determination provided for in Section 10.2
hereof.
Section 10.2 Material Loss.
For the purposes of Sections 10.2 and 10.3, "MATERIAL DAMAGE" shall
mean damage to the Improvements of such nature that the cost of
restoring the same to their condition prior to the Casualty will, in
Seller's determination, exceed $250,000.00, whether or not such damage
is covered by insurance. If, in Seller's determination, the
Improvements have sustained Material Damage by a Casualty, Seller may,
at its option, terminate this Agreement by delivering written notice to
Purchaser on or before Closing, and neither party hereto shall have any
further rights or obligations hereunder (except pursuant to Sections
5.3 and 6.4 hereof). In the event Seller does not so terminate this
Agreement, Purchaser may, at its sole option, within fifteen (15) days
after delivery of the Casualty Loss Notice, either (a) terminate this
Agreement by delivering written notice of same to Seller, or (b) waive
its right of termination and proceed to close this transaction in
accordance with the terms hereof without reduction to the Purchase
Price (the "WAIVER OPTION"). Failure of Purchaser to deliver written
notice of termination within said fifteen (15) day period shall be
conclusively deemed to be an election by Purchaser of the Waiver
Option. In the event Seller or Purchaser elects to terminate this
Agreement under this Section 10.2, the Earnest Money (less the
19
Independent Consideration) shall be returned to Purchaser and
thereafter neither party to this Agreement shall thereafter have any
further rights or obligations hereunder, except as otherwise provided
in Sections 5.3 and 6.4 hereof. If Purchaser elects the Waiver Option,
then Seller shall repair the Improvements to substantially their
condition prior to such damage.
Section 10.3 Non-Material Loss.
In the event, in Seller's determination, the Improvements have
sustained less than Material Damage by a Casualty, the rights and
obligations of the parties shall not be affected thereby and Seller
shall repair the Improvements to substantially their condition prior to
such damage.
Section 10.4 Delay in Completion of Repairs.
If Seller has undertaken repairs and if the repairs cannot be completed
by the Closing Date, Seller shall postpone the Closing Date until five
(5) days following substantial completion of the repairs.
Section 10.5 Postponement of Closing.
If, as a result of a Casualty any determination, election or agreement
required by the terms of this Article X is not made by the Closing
Date, the Closing Date shall be extended until twenty (20) days after
said determination, election or agreement is made, subject to such
further extension as may be allowed by the terms of this Article X,
notwithstanding anything in Section 6.1 of this Agreement to the
contrary; provided, however, if said determination, election or
agreement has not been made within thirty (30) days following the
originally scheduled Closing Date, this Agreement shall automatically
terminate, and neither party shall have any further rights or
obligations hereunder (except pursuant to Sections 5.3 and 6.4 hereof)
and the Earnest Money (less the Independent Consideration) shall be
returned to Purchaser.
ARTICLE XI.
MISCELLANEOUS
Section 11.1 Entire Agreement.
This Agreement contains the entire agreement of the parties hereto.
There are no other agreements, oral or written, and this Agreement can
be amended only by written agreement signed by the parties hereto, and
by reference, made a part hereof.
20
Section 11.2 Agreement Binding on Parties; Assignment.
This Agreement, and the terms, covenants, and conditions herein
contained, shall inure to the benefit of and be binding upon the heirs,
personal representatives, successors, and assigns of each of the
parties hereto. Purchaser may assign its rights under this Agreement
only upon the following conditions: (i) all of the Earnest Money must
have been delivered in accordance with Section 2.2, (ii) the Inspection
Period shall be deemed to have ended, (iii) Purchaser shall remain
primarily liable for the performance of Purchaser's obligations, and
(iv) a copy of the fully executed written assignment and assumption
agreement along with the taxpayer identification number of the proposed
assignee, shall be delivered to Seller at least ten (10) days prior to
Closing. No transfer or assignment in violation of this Section 11.2 is
valid or enforceable.
Section 11.3 Effective Date.
The Effective Date of this Agreement shall be the date on which the
Closing Agent acknowledges its receipt of a copy of this Agreement
executed by both Seller and Purchaser and receipt of the Earnest Money.
The execution hereof by Seller shall constitute an offer by Seller to
Purchaser to sell the Property on the terms and conditions herein
stated, which must be accepted by Purchaser on or before September 26,
2001. If Seller's offer is not timely accepted, this Agreement shall
thereafter be null and void.
Section 11.4 Notice.
All notices, requests, approvals, consents, and other communications
required or permitted under this Agreement ("NOTICES") must be in
writing and are effective:
(a) on the business day sent if (i) sent by telecopier prior to
5:00 p.m. Dallas, Texas time, (ii) the sending telecopier
generates a written confirmation of sending, and (iii) a
confirming copy is sent on the same business day by one of the
other methods specified below.
(b) on the next business day after delivery, on a business day, to
a nationally recognized overnight courier service for prepaid
overnight delivery.
(c) 3 days after being deposited in the United States mail,
certified, return receipt requested, postage prepaid, or
(d) upon receipt if delivered by any method other than the methods
specified above.
21
All Notices must be sent to the address for each party
specified below or to any other address any party specifies by
ten (10) days' prior notice to the other party.
Seller: Dave & Buster's, Inc.
2481 Manana Drive
Dallas, Texas 75220
Attn: Chas Michel
Fax: (214) 357-1536
Email: chas_michel@daveandbusters.com
With a copy to: Kane, Russell, Coleman & Logan, P.C.
3700 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Attn: Scott A. Dyche
Fax: (214) 777-4299
Email: sdyche@krcl.com
and to: Staubach Retail Services, Inc.
15601 Dallas Parkway
Suite 400
Addison, Texas 75001
Attn: Mike Holsomback
Fax: (972) 361-5909
Email: holsomback@staubach.com
Purchaser: General Electric Capital Business
Asset Funding Corporation
10900 NE 4th Street, Suite 500
Bellevue, Washington 98004
Attn: Patrick J. Pearson
Fax: (425) 450-3498
Email: pat.pearson@gecapital.com
With a copy to: Dechert Price & Rhoads
Ten Post Office Square South
Boston, Massachusetts 02109
Attn: Lewis A. Burleigh
Fax: (617) 426-6567
Email: lewis.burleigh@dechert.com
Closing Agent/ Republic Title of Texas, Inc.
Title Company: 2626 Howell Street
Tenth Floor
Dallas, Texas 75204
Attn: Paulette Hubbard
Fax: (214) 855-8889
Email: phubbard@republictitle.com
22
Section 11.5 Time of the Essence.
Time is of the essence in all things pertaining to the performance of
this Agreement.
Section 11.6 Place of Performance.
This Agreement is made and shall be performable in Dallas, Texas, and
shall be construed in accordance with the laws of the State of Texas,
without regard to principles of conflicts of law, unless otherwise
expressly stated herein.
Section 11.7 Currency.
All dollar amounts are expressed in United States currency.
Section 11.8 Section Headings.
The section headings contained in this Agreement are for convenience
only and shall in no way enlarge or limit the scope or meaning of the
various and several sections hereof.
Section 11.9 Obligations.
To the extent necessary to carry out the terms and provisions hereof,
and unless otherwise specifically provided elsewhere herein, the terms,
conditions, obligations and rights set forth herein shall not be deemed
terminated at the time of Closing, nor will they merge into the various
documents executed and delivered at the time of Closing.
Section 11.10 Business Days.
In the event that any date or any period provided for in this Agreement
shall end on a Saturday, Sunday, or legal holiday in the state defined
in Section 11.6 hereof, the applicable date or period shall be extended
to the first business day following such Saturday, Sunday, or legal
holiday.
Section 11.11 No Recordation.
Without the prior written consent of Seller, there shall be no
recordation of either this Agreement or any memorandum hereof, or any
affidavit pertaining hereto and
23
any such recordation of this Agreement or memorandum hereto by
Purchaser without the prior written consent of Seller shall constitute
a default hereunder by Purchaser, whereupon this Agreement shall, at
the option of Seller, terminate and be of no further force and effect.
Upon termination, all Earnest Money shall be immediately delivered to
Seller, whereupon the parties shall have no further duties or
obligations one to the other except as provided in Sections 5.3 and
6.4.
Section 11.12 Multiple Counterparts.
This Agreement may be executed in multiple counterparts, each of which
is to be deemed an original for all purposes. This Agreement may be
executed by facsimile signature.
Section 11.13 Severability.
If any provision of this Agreement or application to any party or
circumstance shall be determined by any court of competent jurisdiction
to be invalid and unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person or
circumstances, other than those as to which it is so determined invalid
or unenforceable, shall not be affected thereby, and each provision
hereof shall be valid and shall be enforced to the fullest extent
permitted by law.
Section 11.14 Taxpayer ID.
Purchaser's Taxpayer ID Number is (to be provided prior to Closing).
24
Section 11.15 Section 1031 Exchange.
Purchaser may elect, upon notice to Seller given prior to the
Closing Date, to exchange the fee title in the Property for other
property of like kind and qualifying use within the meaning of Section
1031 of the Internal Revenue Code of 1986, as amended, and the
Regulations promulgated thereunder (the "1031 EXCHANGE TRANSACTION").
In order to facilitate the 1031 Exchange Transaction, Purchaser may
retain the services of a Qualified Intermediary within the meaning of
Treas. Reg. 1.1031(k)-1(g)(4), which shall provide services to
Purchaser in connection with Purchaser's 1031 Exchange Transaction.
Purchaser expressly reserves the right to assign its rights under this
Agreement to a Qualified Intermediary on or before the Closing Date.
However, this assignment in no way relieves Purchaser of any
obligations or duties under this Agreement. By executing this
Agreement, Seller agrees to cooperate with Purchaser and the Qualified
Intermediary, at no additional cost to Seller, to effect the 1031
Exchange Transaction and to execute and deliver any and all documents
which reasonably may be required to effect the 1031 Exchange
Transaction.
SELLER:
DAVE & BUSTER'S, INC.,
a Missouri corporation
DATE: September 26, 2001 By: /s/ Chas Michel
--------------------------------------
Name: Chas Michel
------------------------------------
Title: Chief Financial Officer
-----------------------------------
25
PURCHASER:
GENERAL ELECTRIC CAPITAL BUSINESS
ASSET FUNDING CORPORATION
DATE: September 25, 2001 By: /s/ Linda K. Bracken
--------------------------------------
Name: Linda K. Bracken
------------------------------------
Title: Vice President
-----------------------------------
JOINDER BY CLOSING AGENT
Republic Title of Texas, Inc., referred to in this Agreement as the
Closing Agent hereby acknowledges that it received this Agreement executed by
Seller and Purchaser and the Earnest Money on the 1st day of October, 2001 (the
"EFFECTIVE DATE"), and accepts the obligations of the of the Closing Agent as
set forth herein. The Closing Agent hereby agrees to hold and distribute the
Earnest Money in accordance with the terms and provisions of this Agreement.
REPUBLIC TITLE OF TEXAS, INC.
By: /s/ Carol Hall
------------------------------------
Name: Carol Hall
----------------------------------
Title: Escrow Officer
---------------------------------
EXHIBIT 10.17
================================================================================
LEASE AGREEMENT
By and Between
GENERAL ELECTRIC CAPITAL BUSINESS
ASSET FUNDING CORPORATION,
a Delaware corporation
(As Landlord)
AND
DAVE & BUSTER'S, INC.,
a Missouri corporation
(As Tenant)
October 18, 2001
Corporate Headquarters/Warehouse
Dallas, Texas
TABLE OF CONTENTS
Page
----
1. Demise of Premises.......................................................................................1
2. Certain Definitions......................................................................................1
3. Title and Condition......................................................................................4
4. Use of Leased Premises; Quiet Enjoyment..................................................................6
5. Term.....................................................................................................6
6. Rent.....................................................................................................7
7. Net Lease; Non-Terminability.............................................................................8
8. Payment of Impositions; Compliance with Legal Requirements and Insurance Requirements....................9
9. Liens; Recording and Title..............................................................................10
10. Indemnification.........................................................................................10
11. Maintenance and Repairs.................................................................................11
12. Alterations.............................................................................................12
13. Condemnation............................................................................................13
14. Insurance...............................................................................................15
15. Restoration.............................................................................................19
16. Subordination to Financing..............................................................................20
17. Assignment or Subleasing................................................................................21
18. Permitted Contests......................................................................................22
19. Conditional Limitations; Default Provisions.............................................................24
20. Additional Rights of Landlord and Tenant................................................................26
21. Notices.................................................................................................27
i
22. Estoppel Certificates...................................................................................29
23. Surrender and Holding Over..............................................................................29
24. No Merger of Title......................................................................................30
25. Definition of Landlord..................................................................................30
26. Hazardous Substances....................................................................................31
27. Entry by Landlord.......................................................................................32
28. No Usury................................................................................................32
29. Separability............................................................................................32
30. Miscellaneous...........................................................................................33
31. Additional Rent.........................................................................................33
32. Financial Statements....................................................................................34
ii
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "LEASE") made as of the 18th day of October
2001, by and between GENERAL ELECTRIC CAPITAL BUSINESS ASSET FUNDING
CORPORATION, a Delaware corporation, having an office at 10900 NE 4th Street,
Suite 500, Bellevue, WA 98004 ("LANDLORD"), and DAVE & BUSTER'S, INC., a
Missouri corporation, having its principal office at 2481 Manana Drive, Dallas,
Texas 75220 ("TENANT").
In consideration of the rents and provisions herein stipulated to be
paid and performed, Landlord and Tenant, intending to be legally bound, hereby
covenant and agree as follows:
1. Demise of Premises. Landlord hereby demises and leases to Tenant and
Tenant hereby takes and leases from Landlord for the term and upon the
provisions hereinafter specified the following described property (the "LEASED
PREMISES"): (i) the lot or parcel of land described on Exhibit A attached hereto
and made a part hereof, together with the easements, rights, and appurtenances
hereunto belonging or appertaining ("LAND"); (ii) the buildings, structures, and
other improvements on the Land (collectively, the "IMPROVEMENTS"); and (iii) the
machinery and equipment which is attached to the Improvements in such a manner
as to become fixtures under applicable law, together with all additions and
accessions thereto, substitutions therefor and replacements thereof permitted by
this Lease (collectively, the "EQUIPMENT"), excepting therefrom the Trade
Fixtures (as hereinafter defined).
2. Certain Definitions.
"ADDITIONAL RENT" shall mean Additional Rent as defined in
Paragraph 31.
"ADJOINING PROPERTY" shall mean all sidewalks, curbs, gores,
and vault spaces adjoining the Leased Premises.
"ALTERATION" or "ALTERATIONS" shall mean any or all changes,
additions (whether or not adjacent to or abutting any then existing buildings),
expansions (whether or not adjacent to or abutting any then existing buildings),
improvements, reconstructions, removals, or replacements of any of the
Improvements or Equipment, both interior or exterior, and ordinary and
extraordinary.
"BASIC RENT" shall mean Basic Rent as defined in Paragraph 6.
"BASIC RENT PAYMENT DATES" shall mean the Basic Rent Payment
Dates as defined in Paragraph 6.
"COMMENCEMENT DATE" shall mean the Commencement Date as
defined in Paragraph 5.
1
"CONDEMNATION" shall mean a Taking and/or a Requisition.
"DEFAULT RATE" shall mean the Default Rate as defined in
Paragraph 19(b)(iv).
"EQUIPMENT" shall mean the Equipment as defined in Paragraph
1.
"EVENT OF DEFAULT" shall mean an Event of Default as defined
in Paragraph 19(a).
"FINANCIAL STATEMENTS" shall mean, for so long as Tenant is a
publicly traded company, Form 10 Q for quarterly reports, and Form 10K for
annual reports. If the Tenant is no longer publicly traded, quarterly reports
shall be unaudited and annual reports shall be audited, and each shall be in
accordance with generally accepted accounting principles, consistently applied.
"IMPOSITIONS" shall mean the Impositions as defined in
Paragraph 8.
"IMPROVEMENTS" shall mean the Improvements as defined in
Paragraph 1.
"INSURANCE REQUIREMENT" or "INSURANCE REQUIREMENTS" shall
mean, as the case may be, any one or more of the terms of each insurance policy
required to be carried by Tenant under this Lease and the requirements of the
issuer of such policy, and whenever Tenant shall be engaged in making any
Alteration or Alterations, repairs or construction work of any kind
(collectively, "WORK"), the term "INSURANCE REQUIREMENT" or "INSURANCE
REQUIREMENTS" shall be deemed to include a requirement that Tenant obtain or
cause its contractor to obtain completed value builder's risk insurance when the
estimated cost of the Work in any one instance exceeds the sum of One Hundred
Thousand Dollars ($100,000.00) and that Tenant or its contractor shall obtain
worker's compensation insurance or other adequate insurance coverage covering
all persons employed in connection with the Work, whether by Tenant, its
contractors or subcontractors and with respect to whom death or bodily injury
claims could be asserted against Landlord.
"LAND" shall mean the Land as defined in Paragraph 1.
"LAW" shall mean any constitution, statute, or rule of law.
"LEASED PREMISES" shall mean the Leased Premises as defined in
Paragraph 1.
"LEGAL REQUIREMENT" or "LEGAL REQUIREMENTS" shall mean, as the
case may be, any one or more of all present and future laws, codes, ordinances,
orders, judgments, decrees, injunctions, rules, regulations and requirements,
even if unforeseen or extraordinary, of every duly constituted governmental
authority or agency (but excluding those which by their terms are not applicable
to and do not impose any obligation on Tenant, Landlord, or the Leased Premises)
and all covenants, restrictions and conditions now of record which may be
applicable to Tenant,
2
Landlord (with respect to the Leased Premises) or to all or any part of or
interest in the Leased Premises, or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration, repair or reconstruction of the
Leased Premises, even if compliance therewith (i) necessitates structural
changes or improvements (including changes required to comply with the
"Americans with Disabilities Act of 1990") or results in interference with the
use or enjoyment of the Leased Premises or (ii) requires Tenant to carry
insurance other than as required by the provisions of this Lease.
"LENDER" shall mean an entity identified as such in writing to
Tenant which makes a Loan to Landlord, secured by a Mortgage and evidenced by a
Note or which is the holder of the Mortgage and Note as a result of an
assignment thereof.
"LOAN" shall mean a loan made by a Lender to Landlord secured
by a Mortgage and evidenced by a Note.
"MORTGAGE" shall mean a first priority mortgage or similar
security instrument hereafter executed covering the Leased Premises from
Landlord to Lender.
"NET AWARD" shall mean the entire award payable to Landlord by
reason of a Condemnation, less any reasonable expenses incurred by Landlord in
collecting such award.
"NET PROCEEDS" shall mean the entire proceeds of any insurance
required under clauses (i), (iv), (v) or (vi) of Paragraph 14(a), less any
actual and reasonable expenses incurred by Landlord in collecting such proceeds.
"NOTE" or "NOTES" shall mean a Promissory Note or Notes
hereafter executed from Landlord to Lender, which Note or Notes will be secured
by a Mortgage and an assignment of leases and rents.
"PERMITTED ENCUMBRANCES" shall mean those covenants,
restrictions, reservations, liens, conditions, encroachments, easements, and
other matters of title that affect the Leased Premises as of the date of
Landlord's acquisition thereof, excepting, however, any such matters arising
from the acts of Landlord (such as liens arising as a result of judgments
against Landlord).
"REPLACED EQUIPMENT" or "REPLACEMENT EQUIPMENT" shall mean the
Replaced Equipment and Replacement Equipment, respectively, as defined in
Paragraph 11(d).
"REQUISITION" shall mean any temporary condemnation or
confiscation of the use or occupancy of the Leased Premises by any governmental
authority, civil or military, whether pursuant to an agreement with such
governmental authority in settlement of or under threat of any such requisition
or confiscation, or otherwise.
3
"RESTORATION" shall mean the Restoration as defined in
Paragraph 13(c)(i).
"STATE" shall mean the State of Texas.
"TAKING" shall mean any taking of the Leased Premises in or by
condemnation or other eminent domain proceedings pursuant to any law, general or
special, or by reason of any agreement with any condemner in settlement of or
under threat of any such condemnation or other eminent domain proceedings or by
any other means, or any de facto condemnation.
"TERM" shall mean the Term as defined in Paragraph 5.
"TERMINATION DATE" shall mean the Termination Date as defined
in Paragraph 13(b)(i)(A).
"TRADE FIXTURES" shall mean all fixtures, equipment and other
items of personal property (whether or not attached to the Improvements) which
are owned by Tenant and used in the operation of the business conducted on the
Leased Premises.
3. Title and Condition.
a. The Leased Premises are demised and let subject to (i) the
Permitted Encumbrances, (ii) all Legal Requirements and Insurance Requirements,
including any existing violation of any thereof, and (iii) the condition of the
Leased Premises as of the commencement of the Term without representation or
warranty by Landlord; it being understood and agreed, however, that the recital
of the Permitted Encumbrances herein shall not be construed as a revival of any
thereof which for any reason may have expired.
b. LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL
TAKE THE LEASED PREMISES "AS IS", AND TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER
ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT
MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY
WARRANTY OR REPRESENTATION AS TO ITS FITNESS FOR USE OR PURPOSE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE, AS TO THE QUALITY OF THE MATERIAL
OR WORKMANSHIP THEREIN, LATENT OR PATENT, AS TO LANDLORD'S TITLE THERETO, OR AS
TO VALUE, COMPLIANCE WITH SPECIFICATIONS, LOCATION, USE, CONDITION,
MERCHANTABILITY, QUALITY, DESCRIPTION, DURABILITY OR OPERATION, IT BEING AGREED
THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. Tenant acknowledges
that the Leased Premises are of its selection and that the Leased Premises have
been inspected by Tenant and are satisfactory to it. In the event of any defect
or deficiency in any of the Leased Premises of any nature, whether patent or
latent, Landlord shall not have any responsibility or liability with respect
thereto or for any incidental or consequential damages
4
(including strict liability in tort). The provisions of this Paragraph 3 (b)
have been negotiated, and the foregoing provisions are intended to be a complete
exclusion and negation of any warranties by Landlord, express or implied, with
respect to any of the Leased Premises, arising pursuant to the Uniform
Commercial Code as adopted by the State or any other law or regulation now or
hereafter in effect or otherwise.
c. Landlord hereby assigns, without recourse or warranty
whatsoever, to Tenant, all warranties, guaranties, and indemnities, express or
implied, and similar rights which Landlord may have, if any, against any
architect, manufacturer, seller, engineer, contractor, subcontractor, supplier,
or builder with respect to any of the Leased Premises, including, but not
limited to, any rights and remedies existing under contract or pursuant to the
Uniform Commercial Code as adopted by the State (collectively, the
"GUARANTIES"). Such assignment shall remain in effect until the termination of
this Lease. Landlord shall also retain the right to enforce any Guaranties
assigned in the name of Tenant upon the occurrence of an Event of Default.
Landlord hereby agrees to execute and deliver at Tenant's expense such further
documents, including powers of attorney, as Tenant may reasonably request in
order that Tenant may have the full benefit of the assignment effected or
intended to be effected by this Paragraph 3(d). Upon the termination of this
Lease, the Guaranties shall automatically revert to Landlord. The foregoing
provision of reversion shall be self-operative and no further instrument of
reassignment shall be required. In confirmation of such reassignment Tenant
shall execute and deliver promptly any certificate or other instrument which
Landlord may reasonably request. Any monies collected by Tenant under any of the
Guaranties after the occurrence of and during the continuation of an Event of
Default shall be held in trust by Tenant and promptly paid over to Landlord;
said monies will then be used by Landlord to cure (to the extent sufficient) any
Event of Default for which the payment is applicable.
d. Landlord agrees to enter into, at Tenant's expense, such
easements, covenants, waivers, approvals or restrictions for utilities, parking
or other matters as desirable for operation of the Leased Premises or properties
adjacent thereto (collectively, "EASEMENTS") as reasonably requested by Tenant,
subject to Lender's and Landlord's approval of the form thereof, not to be
unreasonably withheld or delayed; provided, however, that no such Easement shall
result in any diminution in the value or utility of the Leased Premises for its
Use (as hereinafter defined), and further provided that no such Easement shall
render the use of the Leased Premises dependent upon any other property or
condition the use of the Leased Premises upon the use of any other property,
each of which Tenant shall certify to Landlord and Lender in writing delivered
with Tenant's request with respect to such Easement. Tenant's request shall also
include Tenant's written undertaking acknowledging that Tenant shall remain
liable hereunder as principal and not merely as a surety or guarantor
notwithstanding the establishment of any Easement.
e. Tenant agrees that Tenant is obligated to and shall perform
all obligations of the owner of the Leased Premises under and pay all expenses
which the owner of the Leased Premises may be required to pay in accordance with
any reciprocal easement agreement or any other agreement or document of record
now (if expressly consented to in writing by Tenant) or in the future affecting
the Leased Premises (herein referred to collectively as the "REA"), and that
Tenant shall comply with all of the terms and conditions of any REA during the
Term of this
5
Lease. Tenant further covenants and agrees to indemnify, defend, and hold
harmless Landlord and Lender against any claim, loss, or damage suffered by
Landlord or Lender by reason of Tenant's failure to perform any obligations or
pay any expenses as required under any REA or comply with the terms and
conditions of any REA as hereinabove provided during the Term of this Lease.
4. Use of Leased Premises; Quiet Enjoyment.
a. Tenant may use the Leased Premises for a world headquarters
(office) and warehouse use (the "USE"), or any lawful use that does not violate
the terms of any REA. In no event shall the Leased Premises be used for any
purpose that would violate any Permitted Encumbrance or any covenants,
restrictions, or agreements hereafter created by or consented to by Tenant
applicable to the Leased Premises. Tenant agrees that with respect to the
Permitted Encumbrances and any covenants, restrictions, or agreements hereafter
created by or consented to by Tenant, Tenant shall observe, perform and comply
with and carry out the provisions thereof required therein to be observed and
performed by Landlord.
b. Subject to Tenant's rights under Paragraph 18 hereof,
Tenant shall not permit any unlawful occupation, business, or trade to be
conducted on the Leased Premises or any use to be made thereof contrary to
applicable Legal Requirements or Insurance Requirements. Subject to Tenant's
rights under Paragraph 18, Tenant shall not use, occupy, or permit any of the
Leased Premises to be used or occupied, nor do or permit anything to be done in
or on any of the Leased Premises, in a manner which would (i) make void or
voidable any insurance which Tenant is required hereunder to maintain then in
force with respect to any of the Leased Premises, (ii) affect the ability of
Tenant to obtain any insurance which Tenant is required to furnish hereunder, or
(iii) cause any injury or damage to any of the Improvements unless pursuant to
Alterations permitted under Paragraph 12 hereof.
c. Subject to all of the provisions of this Lease, so long as
no Event of Default exists hereunder, Landlord covenants to do no act to disturb
the peaceful and quiet occupation and enjoyment of the Leased Premises by
Tenant.
5. Term.
a. Subject to the provisions hereof Tenant shall have and hold
the Leased Premises for an initial term commencing on October 18, 2001 (the
"COMMENCEMENT DATE"), and ending October 31, 2021 (the "EXPIRATION DATE") (such
initial term, together with any Renewal Term, hereinafter defined, which comes
into effect as hereinafter provided, is herein called the "TERM").
b. Provided this Lease shall not have been terminated pursuant
to the provisions of Paragraphs 13(b) or 19, Tenant shall have the option to
renew this Lease for four (4) consecutive five (5) year periods (collectively,
the "RENEWAL TERMS" and individually, a "RENEWAL TERM"). Tenant shall give the
Landlord written notice ("RENEWAL TERM NOTICE") of
6
its intent to renew the Lease at least one (1) year prior to the Expiration Date
or the expiration date of the first Renewal Term, as applicable. Each Renewal
Term shall be subject to all of the provisions of this Lease, and all such
provisions shall continue in full force and effect, except that the Basic Rent
for each Renewal Term shall be the amounts determined in accordance with the
schedule set forth in Exhibit B attached hereto and made a part hereof. If
Tenant shall fail to timely give a Renewal Term Notice, then all options with
regard to subsequent Renewal Terms shall expire and be null and void, but only
after Landlord delivers to Tenant a written notice of failure to deliver the
Renewal Term Notice, and ten (10) days from the date of the written notice in
which Tenant may cure the failure. Notwithstanding the foregoing, if Tenant has
failed to deliver a Renewal Term Notice, and Landlord fails to send Tenant a
notice of its failure to deliver a Renewal Term Notice, all options with regard
to subsequent Renewal Terms shall expire and be null and void, without any
further action required of Landlord, on the date that is eleven (11) months
prior to the Expiration Date, or the expiration date of the applicable Renewal
Term.
6. Rent.
a. Tenant shall pay to Landlord (or to Lender, if directed by
Landlord), as minimum annual rent for the Leased Premises during the Term, the
amounts set forth in Exhibit B attached hereto ("BASIC RENT"), commencing on the
Commencement Date for the succeeding, prorated month, and continuing regularly
on the first (1st) calendar day of each month thereafter during the Term, in
advance (the said days being called the "BASIC RENT PAYMENT Dates"), and shall
pay the same at Landlord's address set forth below, or at such other place as
Landlord from time to time may designate to Tenant in writing, in funds which at
the time of such payment shall be legal tender for the payment of public or
private debts in the United States of America and if required by Lender by wire
transfer in immediately available federal funds to such account in such bank as
Lender shall designate, from time to time.
b. Tenant shall pay and discharge before the imposition of any
fine, lien, interest or penalty may be added thereto for late payment thereof,
as Additional Rent, all other amounts and obligations which Tenant assumes or
agrees to pay or discharge pursuant to this Lease, together with every fine,
penalty, interest and cost which may be added by the party to whom such payment
is due for nonpayment or late payment thereof. In the event of any failure by
Tenant to pay or discharge any of the foregoing, Landlord shall have all rights,
powers and remedies provided herein, by law or otherwise, in the event of
nonpayment of Basic Rent.
c. If any installment of Basic Rent is not paid within ten
(10) days after written notice is given by Landlord or Lender (or Lender's
servicer or other designee of Lender) to Tenant that the same is overdue, Tenant
shall pay to Landlord or Lender, as the case may be, on demand, as Additional
Rent, a late charge equal to five percent (5%) (the "LATE CHARGE") on such
overdue installment of Basic Rent, but in no event more than the maximum amount
allowed by law.
d. Landlord and Tenant agree that this Lease is a true lease
and does not represent a financing arrangement. Each party shall reflect the
transactions represented by this
7
Lease in all applicable books, records, and reports (including, without
limitation, income tax filings) in a manner consistent with "true lease"
treatment rather than "financing" treatment.
7. Net Lease; Non-Terminability.
a. This is a net Lease and Basic Rent, Additional Rent, and
all other sums payable hereunder by Tenant shall be paid, except as otherwise
expressly set forth in this Lease, without notice, demand, setoff, counterclaim,
recoupment, abatement, suspension, deferment, diminution, deduction, reduction,
or defense.
b. Except as otherwise expressly provided in this Lease, this
Lease shall not terminate and Tenant shall not have any right to terminate this
Lease during the Term. Except as otherwise expressly provided in this Lease,
Tenant shall not be entitled to any setoff, counterclaim, recoupment, abatement,
suspension, deferment, diminution, deduction, reduction, or defense of or to
Basic Rent, Additional Rent, or any other sums payable under this Lease; and
except as otherwise expressly provided in this Lease, and the obligations of
Tenant under this Lease shall not be affected by any interference with Tenant's
use of any of the Leased Premises for any reason, including but not limited to
the following: (i) any damage to or destruction of any of the Leased Premises by
any cause whatsoever, (ii) any Condemnation, (iii) the prohibition, limitation,
or restriction of Tenant's use of any of the Leased Premises, (iv) any eviction
by paramount title or otherwise, (v) Tenant's acquisition of ownership of any of
the Leased Premises other than pursuant to an express provision of this Lease,
(vi) any default on the part of Landlord under this Lease or under any other
agreement, (vii) any latent or other defect in, or any theft or loss of any of
the Leased Premises, (viii) the breach of any warranty of any seller or
manufacturer of any of the Equipment, (ix) any violation of Paragraph 4(c) by
Landlord, or (x) any other cause, whether similar or dissimilar to the
foregoing, any present or future Law to the contrary notwithstanding. It is the
intention of the parties hereto that the obligations of Tenant under this Lease
shall be separate and independent covenants and agreements, and that Basic Rent,
Additional Rent, and all other sums payable by Tenant hereunder shall continue
to be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal
thereto), and that the obligations of Tenant under this Lease shall continue
unaffected, unless this Lease shall have been terminated pursuant to an express
provision of this Lease.
c. Tenant agrees that it shall remain obligated under this
Lease in accordance with its provisions and that, except as otherwise expressly
provided herein, it shall not take any action to terminate, rescind or avoid
this Lease, notwithstanding (i) the bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding-up or other
proceeding affecting Landlord, (ii) the exercise of any remedy, including
foreclosure, under the Mortgage, or (iii) any action with respect to this Lease
(including the disaffirmance hereof) which may be taken by Landlord under the
Federal Bankruptcy Code or by any trustee, receiver or liquidator of Landlord or
by any court under the Federal Bankruptcy Code or otherwise.
d. This Lease is the absolute and unconditional obligation of
Tenant. Tenant waives all rights which are not expressly stated in this Lease
but which may now or hereafter otherwise be conferred by Law to the extent
permitted by applicable law (i) to quit, terminate or
8
surrender this Lease or any of the Leased Premises, (ii) to any setoff,
counterclaim, recoupment, abatement, suspension, deferment, diminution,
deduction, reduction or defense of or to Basic Rent, Additional Rent or any
other sums payable under this Lease, except as otherwise expressly provided in
this Lease, and (iii) for any statutory lien or offset right against Landlord or
its property.
8. Payment of Impositions; Compliance with Legal Requirements and
Insurance Requirements.
a. i) Subject to the provisions of Paragraph 18 hereof
relating to contests, Tenant shall, before interest or penalties are due
thereon, pay and discharge (all of the following being herein collectively
called the "IMPOSITIONS"): all taxes of every kind and nature (including real,
ad valorem, personal property) on or with respect to the Leased Premises; all
charges and/or taxes for any easement or agreement maintained for the benefit of
the Leased Premises; all general and special assessments, levies, permits,
inspection and license fees on or with respect to the Leased Premises; all water
and sewer rents and other utility charges on or with respect to the Leased
Premises; and all other public charges and/or taxes whether of a like or
different nature, even if unforeseen or extraordinary, imposed or assessed upon
or with respect to the Leased Premises, prior to or during the Term, against
Landlord, Tenant, or any of the Leased Premises as a result of or arising in
respect of the ownership, occupancy, leasing, use, maintenance, operation,
management, repair, or possession thereof, or any activity conducted on the
Leased Premises, or the Basic Rent or Additional Rent, including without
limitation, any gross income tax, sales tax, occupancy tax or excise tax levied
by any governmental body on or with respect to such Basic Rent or Additional
Rent. If received by Landlord, Landlord shall promptly deliver to Tenant any
bill or invoice with respect to any Imposition.
ii) Nothing herein shall obligate Tenant to pay, and the
term "IMPOSITIONS" shall exclude, federal, state or local (A) transfer taxes as
the result of a conveyance by (or suffered by) Landlord, (B) franchise, capital
stock or similar taxes if any, of Landlord, (C) income, excess profits or other
taxes, if any, of Landlord, determined on the basis of or measured by its net
income, or (D) any estate, inheritance, succession, gift, capital levy or
similar taxes, unless the taxes referred to in clauses (B) and (C) above are in
lieu of or a substitute for any other tax or assessment upon or with respect to
any of the Leased Premises which, if such other tax or assessment were in effect
at the commencement of the Term, would be payable by Tenant. In the event that
any assessment against any of the Leased Premises may be paid in installments,
Tenant shall have the option to pay such assessment in installments; and in such
event, Tenant shall be liable only for those installments which become due and
payable during the Term. Tenant shall prepare and file all tax reports required
by governmental authorities which relate to the Impositions. Tenant shall
deliver to Landlord and to Lender, within twenty (20) days after Landlord's
written request therefor, copies of all settlements and notices pertaining to
the Impositions which may be issued by any governmental authority and receipts
for payments of all Impositions made during each calendar year of the Term.
b. Subject to the provisions of Paragraph 18 hereof, Tenant
shall promptly comply with and conform to all of the Legal Requirements and
Insurance Requirements.
9
9. Liens; Recording and Title.
a. Subject to the provisions of Paragraph 18 hereof, Tenant
shall not, directly or indirectly, create or permit to be created or to remain,
and shall promptly discharge, any lien on the Leased Premises, on the Basic
Rent, Additional Rent or on any other sums payable by Tenant under this Lease,
other than the Mortgage, the Permitted Encumbrances and any mortgage, lien,
encumbrance or other charge created by or resulting from any act or omission by
Landlord or those claiming by, through or under Landlord (except Tenant). Notice
is hereby given that Landlord shall not be liable for any labor, services, or
materials furnished or to be furnished to Tenant, or to anyone holding any of
the Leased Premises through or under Tenant, and that no mechanic's or other
liens for any such labor, services or materials shall attach to or affect the
interest of Landlord in and to any of the Leased Premises.
b. Each of Landlord and Tenant shall execute, acknowledge and
deliver to the other a written Memorandum of this Lease to be recorded in the
appropriate land records of the jurisdiction in which the Leased Premises is
located, in order to give public notice and protect the validity of this Lease.
In the event of any discrepancy between the provisions of said recorded
Memorandum of this Lease and the provisions of this Lease, the provisions of
this Lease shall prevail.
c. Nothing in this Lease and no action or inaction by Landlord
shall be deemed or construed to mean that Landlord has granted to Tenant any
right, power or permission to do any act or to make any agreement which may
create, give rise to, or be the foundation for, any right, title, interest, or
lien in or upon the estate of Landlord in any of the Leased Premises.
10. Indemnification.
a. TENANT AGREES TO DEFEND, PAY, PROTECT, INDEMNIFY, SAVE AND
HOLD HARMLESS LANDLORD FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES,
DAMAGES, PENALTIES, COSTS, EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES AND
EXPENSES), CAUSES OF ACTION, SUITS, CLAIMS, DEMANDS, OR JUDGMENTS OF ANY NATURE
WHATSOEVER, HOWSOEVER CAUSED (EXCEPT BY GROSS NEGLIGENCE OR WILLFUL ACTS OF
LANDLORD), ARISING FROM THE LEASED PREMISES OR THE USE, NON-USE, OCCUPANCY,
CONDITION, DESIGN, CONSTRUCTION, MAINTENANCE, REPAIR, OR REBUILDING OF THE
LEASED PREMISES, AND ANY INJURY TO OR DEATH OF ANY PERSON OR PERSONS OR ANY LOSS
OF OR DAMAGE TO ANY PROPERTY, REAL OR PERSONAL, IN ANY MANNER ARISING THEREFROM
CONNECTED THEREWITH OR OCCURRING THEREON, WHETHER OR NOT LANDLORD HAS OR SHOULD
HAVE KNOWLEDGE OR NOTICE OF THE DEFECT OR CONDITIONS, IF ANY, CAUSING OR
CONTRIBUTING TO SAID INJURY, DEATH, LOSS, DAMAGE OR OTHER CLAIM; EXCEPT TO THE
EXTENT THAT ANY SUCH LIABILITY, LOSS, DAMAGE, PENALTY, COST, EXPENSE, CAUSE OF
ACTION, SUIT, CLAIM, DEMAND OR JUDGMENT IS THE RESULT OF THE GROSS NEGLIGENCE OF
LANDLORD OR THE INTENTIONAL WRONGFUL ACT OF LANDLORD. IN CASE ANY ACTION OR
PROCEEDING IS BROUGHT AGAINST LANDLORD BY REASON OF ANY SUCH CLAIM AGAINST WHICH
TENANT HAS AGREED TO DEFEND, PAY, PROTECT, INDEMNIFY, SAVE AND HOLD HARMLESS
PURSUANT TO THE PRECEDING SENTENCE, TENANT COVENANTS UPON NOTICE FROM LANDLORD
TO RESIST OR DEFEND LANDLORD IN SUCH ACTION, WITH THE EXPENSES OF SUCH DEFENSE
PAID BY TENANT, AND LANDLORD
10
WILL COOPERATE AND ASSIST IN THE DEFENSE OF SUCH ACTION OR PROCEEDING IF
REASONABLY REQUESTED SO TO DO BY TENANT.
b. The obligations of Tenant under this Paragraph 10 shall
survive for one year after the expiration or any termination of this Lease.
11. Maintenance and Repairs.
a. Except for any Alterations that Tenant is permitted to make
pursuant to this Lease, Tenant shall at all times, including any Requisition
period, put, keep, and maintain the Leased Premises (including, without
limitation, the roof, landscaping, walls, footings, foundations, and structural
components of the Leased Premises) and the Equipment in the same condition and
order of repair as exists as of the date of this Lease, except for ordinary wear
and tear, and shall promptly make all repairs and replacements of every kind and
nature, whether foreseen or unforeseen, which may be required to be made upon or
in connection with the Leased Premises in order to keep and maintain the Leased
Premises in the order and condition required by this Paragraph 11 (a). Tenant
shall do or cause others to do all shoring of the Leased Premises or of
foundations and walls of the Improvements and every other act necessary or
appropriate for preservation and safety thereof, by reason of or in connection
with any excavation or other building operation upon any of the Leased Premises,
whether or not Landlord shall, by reason of any Legal Requirements or Insurance
Requirements, be required to take such action or be liable for failure to do so.
Landlord shall not be required to make any repair, whether foreseen or
unforeseen, or to maintain any of the Leased Premises or Adjoining Property in
any way, and Tenant hereby expressly waives the right to make repairs at the
expense of the Landlord, which right may be provided for in any Law now or
hereafter in effect. Nothing in the preceding sentence shall be deemed to
preclude Tenant from being entitled to insurance proceeds or condemnation awards
for Restoration pursuant to Paragraphs 13(c) and 14(g) of this Lease. Tenant
shall, in all events, make all repairs for which it is responsible hereunder
promptly, and all repairs shall be in a good, proper and workmanlike manner.
b. In the event that any Improvement shall (i) violate any
Legal Requirements or Insurance Requirements, or (ii) encroach on any adjoining
property, and as a result of such violation or encroachment enforcement action
is threatened or commenced against Tenant or with respect to the Leased
Premises, then Tenant, at the request of Landlord, shall either (i) obtain valid
and effective waivers or settlements of all claims, liabilities and damages
resulting from each such violation, whether the same shall affect Landlord,
Tenant or both, or (ii) take such action as shall be necessary to remove such
violation, including, if necessary, any Alteration. Any such repair or
Alteration shall be made in conformity with the provisions of Paragraph 12 of
this Lease.
c. If Tenant shall be in default under any of the provisions
of this Paragraph 11, Landlord may after thirty (30) days written notice given
to Tenant and failure of Tenant to commence to cure during said period, but
without notice in the event of an emergency, do whatever is necessary to cure
such default as may be appropriate under the circumstances for the account of
and at the expense of Tenant. In the event of an emergency Landlord shall notify
11
Tenant of the situation by phone or other available communication. All
reasonable sums so paid by Landlord and all reasonable costs and expenses
(including, without limitation, attorneys' fees and expenses) so incurred,
together with interest thereon at the Default Rate from the date of payment or
incurring the expense, shall constitute Additional Rent payable by Tenant under
this Lease and shall be paid by Tenant to Landlord on demand.
d. Tenant shall from time to time replace with other
operational equipment or parts (the "REPLACEMENT EQUIPMENT") any of the
Equipment (the "REPLACED EQUIPMENT") which shall have become worn out or
unusable for the purpose for which it is intended, been taken by a Condemnation
as provided in Paragraph 13, or been lost, stolen, damaged or destroyed as
provided in Paragraph 14. Tenant shall repair at its sole cost and expense all
damage to the Leased Premises caused by the removal of Equipment or Replaced
Equipment or other personal property of Tenant or the installation of
Replacement Equipment. All Replacement Equipment shall become the property of
Landlord, shall be free and clear of all liens and rights of others and shall
become a part of the Equipment as if originally demised herein.
e. Landlord shall have no obligations for repairs,
replacements, or maintenance of the Leased Premises.
12. Alterations.
a. Tenant shall not make Alterations which would (after the
completion thereof) impair the structural integrity of the Leased Premises,
without Landlord's written consent. Tenant may make any other Alterations
without the prior written consent of the Landlord provided such Alterations
comply with all of the provisions of the following paragraph.
b. In the event that Landlord gives its prior written consent
to any Alterations, or if such consent is not required, Tenant agrees that in
connection with any Alteration: (i) the fair market value of the Leased Premises
shall not be lessened in any material respect after the completion of any such
Alteration, or its structural integrity impaired; (ii) the Alteration and any
Alteration theretofore made or thereafter to be made shall not in the aggregate
reduce the gross floor area of the Improvements; (iii) all such Alterations
shall be performed in a good and workmanlike manner, and shall be expeditiously
completed in compliance with all Legal Requirements; (iv) all work done in
connection with any such Alteration shall comply with all Insurance
Requirements; (v) Tenant shall promptly pay all costs and expenses of any such
Alteration, and shall (subject to the provisions of Paragraph 18 hereof)
discharge all liens filed against any of the Leased Premises arising out of the
same; (vi) Tenant shall procure and pay for all permits and licenses required in
connection with any such Alteration; (vii) all such Alterations shall be the
property of Landlord and shall be subject to this Lease; and (viii) all
Alterations shall be made (in the case of any Alteration the estimated cost of
which in any one instance exceeds Two Hundred Fifty Thousand Dollars
($250,000.00)) under the supervision of an architect or engineer and, in
accordance with plans and specifications which shall be submitted to Landlord
(for informational purposes only) prior to the commencement of the Alterations.
12
13. Condemnation.
a. Tenant, promptly after obtaining knowledge of the
institution of any proceeding for Condemnation, shall notify Landlord thereof
and Landlord shall be entitled to participate in any Condemnation proceeding.
Landlord, promptly after obtaining knowledge of the institution of any
proceeding for Condemnation, shall notify Tenant thereof and Tenant shall have
the right to participate in such proceedings. Subject to the provisions of this
Paragraph 13 and Paragraph 15, Tenant hereby irrevocably assigns to Lender or to
Landlord, in that order, any award or payment in respect of any Condemnation of
Landlord's interest in the Leased Premises, except that (except as hereinafter
provided) nothing in this Lease shall be deemed to assign to Landlord or Lender
any award relating to the value of the leasehold interest created by this Lease
or any award or payment on account of the Trade Fixtures, moving expenses and
out-of-pocket expenses incidental to the move, if available, to the extent
Tenant shall have a right to make a separate claim therefor against the
condemner, it being agreed, however, that Tenant shall in no event be entitled
to any payment that reduces the award to which Landlord is or would be entitled
for the condemnation of Landlord's interest in the Leased Premises.
Notwithstanding the foregoing, Tenant shall be entitled to any award or payment
on account of Tenant's leasehold interest under this Lease only in the event of
a Condemnation described in Paragraph 13(b)(i)(A) and then only to the extent
that when such award, added to all other awards to which Tenant is entitled
hereunder, is subtracted from the entire award in respect to all interests in
the Leased Premises, the remainder exceeds the amount set forth on Exhibit C
attached hereto and made a part hereof.
b. (i) (A) If (I) the entire Leased Premises or (II) at least
ten percent (10%) of the applicable Land or the building constructed on the Land
or any means of ingress, egress, or access to the Leased Premises, the loss of
which even after Restoration would, in Tenant's reasonable business judgment, be
substantially and materially adverse to the business operations of Tenant at the
Leased Premises, shall be subject of a Taking by a duly constituted authority or
agency having jurisdiction, then Tenant shall, not later than ninety (90) days
after a Taking has occurred, serve notice ("TENANT'S TERMINATION NOTICE") upon
Landlord of Tenant's intention to terminate this Lease on any Basic Rent Payment
Date specified in such Tenant's Termination Notice, which date (the "TERMINATION
DATE") shall be no sooner than the first Basic Rent Payment Date occurring at
least thirty (30) days after the date of such Tenant's Termination Notice.
(B) In the event that during the Initial Term or during
the first twenty-four (24) months of the first Renewal Term Tenant
shall serve a Tenant's Termination Notice upon Landlord, Tenant shall,
as part of such Tenant's Termination Notice offer (which offer may be
rejected by Landlord only with Lender's consent as set forth below in
Paragraph 13(b)(i)(E) if the Leased Premises are then subject to a
Mortgage) to purchase the Leased Premises and the award (or if no part
of the Leased Premises shall remain, the entire award) for the
applicable price (the "PURCHASE PRICE") computed in accordance with the
schedule annexed hereto and marked Exhibit C plus all other amounts
which may have accrued and be owing to Lender or Landlord under this
Lease (the "ADDITIONS TO PURCHASE PRICE").
13
(C) If Landlord and Lender shall elect to reject
Tenant's offer to purchase, Landlord shall give notice thereof to
Tenant within thirty (30) days after the giving of Tenant's Termination
Notice. Should said notices of Landlord and Lender rejecting Tenant's
offer to purchase not be served within said period of thirty (30) days,
then and in that event, the said offer shall be deemed accepted.
(D) Should an offer to purchase be rejected by Landlord
and Lender, this Lease shall be terminated as above provided and the
entire award made in the Condemnation proceeding with respect to the
Leased Premises shall be paid to Lender or to Landlord in that order.
(E) Landlord's notice to reject Tenant's offer to
purchase shall be void and of no effect unless accompanied by the
written notice of Lender (if the Leased Premises are then subject to a
Mortgage) to the effect that Lender also elects to reject Tenant's
offer to purchase. Alternatively, if Lender elects to accept Tenant's
offer to purchase by written notice to Tenant and Landlord delivered in
accordance herewith, then, notwithstanding any notice by Landlord to
the contrary, Tenant's offer to purchase shall be deemed accepted for
all purposes hereof.
(ii) In the event that Landlord and Lender shall accept or be
deemed to have accepted Tenant's offer to purchase, title shall close
and the Purchase Price and Additions to Purchase Price shall be paid as
hereinafter provided and in such event Tenant shall be entitled to and
shall receive any and all awards with respect to the Leased Premises
then or thereafter made in the Condemnation proceeding and Landlord
shall assign (or in case of any award previously made, deliver to
Tenant on the Closing Date) such award as may be made with respect to
the Leased Premises. In the event Landlord and Lender shall accept
Tenant's offer to purchase with respect to the Leased Premises, or be
deemed to have accepted such Tenant's offer, title shall close thirty
(30) days after the Termination Date hereinbefore defined (the "CLOSING
DATE"), at noon at the local office of Landlord's counsel, or at such
other time and place as the parties hereto may agree upon, this Lease
shall be automatically extended to and including the Closing Date (or,
if applicable, the extended Closing Date hereinafter described) and
Tenant shall pay the Purchase Price and Additions to Purchase Price by
transferring immediately available funds to such account or accounts
and in such bank or banks as Lender or Landlord, in that order, shall
designate, upon delivery to Tenant of a special warranty deed (or local
equivalent) conveying Leased Premises and all other required documents
including an assignment of any award in connection with the taking of
the Leased Premises. The special warranty deed (or local equivalent)
shall convey title, free from encumbrances other than (A) Permitted
Encumbrances, (B) liens or encumbrances created or suffered by Tenant
or arising by reason of the failure of Tenant to observe or perform any
of the terms, covenants or agreements herein provided to be observed
and performed by Tenant, (C) any installments of Impositions then
affecting the Leased Premises, and (D) this Lease. The Purchase Price
and Additions to Purchase Price payable as hereinabove provided shall
be charged or credited, as the case may be, on the Closing Date, to
reflect adjustments of Basic Rent paid or payable to and including the
Closing Date, apportioned as of the Closing Date. Tenant shall pay all
conveyance, transfer, sales and like taxes
14
required in connection with the purchase, regardless of who is required
to pay such taxes under State or local law or custom (and Tenant shall
also pay to Landlord any amount necessary to yield to Landlord a net
amount equal to the entire Purchase Price and Additions to Purchase
Price if as a matter of the Law of the State or locality such tax
cannot be paid directly by Tenant).
(iii) In the event that after the first twenty-four (24)
months of the first Renewal Term, Tenant shall serve a Tenant's
Termination Notice upon Landlord, this Lease and the Term hereof shall
terminate on the Termination Date specified in the Termination Notice;
and in such event the entire award to the made in the Condemnation
proceeding shall be paid to Lender or to Landlord, in that order.
c. i) In the event of a Condemnation of any part of the Leased
Premises which does not result in a Termination of this Lease, subject to the
requirements of Paragraph 15, the Net Award of such Condemnation shall be
retained by Landlord subject to the provisions of (c)(ii) below; and promptly
after such Condemnation, Tenant shall commence and diligently continue to
restore the Leased Premises as nearly as possible to its value, condition and
character immediately prior to such Condemnation, in accordance with the
provisions of this Lease, including but not limited to the provisions of
Paragraphs 11 (a), 12 and 15 (such restoration following a Condemnation and
restoration following a casualty is, as the context shall require, herein called
a "Restoration").
ii) Upon the payment to Landlord of the Net Award of a Taking
which falls within the provisions of this Paragraph 13(c), Landlord and Lender
shall, to the extent received, make that portion of the Net Award equal to the
cost of Restoration (the "RESTORATION AWARD") available to Tenant for
Restoration, in accordance with the provisions of Paragraph 15, and promptly
after completion of the Restoration, the balance of the Net Award shall be paid
to Tenant. During a Restoration, all Basic Rent, Additional Rent, and other sums
payable hereunder shall continue unabated and unreduced.
iii) In the event of a Requisition of the Leased Premises,
Landlord shall apply the Net Award of such Requisition, to the extent available,
to the installments of Basic Rent, Additional Rent or other sums payable by
Tenant hereunder thereafter payable and Tenant shall pay any balance remaining
thereafter. Upon the expiration of the Term, any portion of such Net Award which
shall not have been previously credited to Tenant on account of the Basic Rent
and Additional Rent shall be retained by Landlord.
d. Except with respect to an award or payment to which Tenant is
entitled pursuant to the provisions of Paragraph 13(a), 13(b) and 13(c), no
agreement with any condemner in settlement of or under threat of any
Condemnation shall be made by either Landlord or Tenant without the written
consent of the other, and of Lender, if the Leased Premises are then subject to
a Mortgage, which consent shall not be unreasonably withheld or delayed.
14. Insurance.
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a. Tenant shall maintain at its sole cost and expense the
following insurance on the Leased Premises:
i) Insurance against loss or damage to the Improvements and
Equipment under a fire and broad form of all risk extended coverage insurance
policy (which shall include flood insurance if the Leased Premises is located
within a flood hazard area and which shall include earthquake insurance if the
Leased Premises is located in an area where earthquake insurance is customarily
maintained for similar commercial properties). Such insurance shall be in
amounts sufficient to prevent Landlord or Tenant from becoming a co-insurer
under the applicable policies, and in any event in amounts not less than the
full replacement cost of the Improvements and Equipment (excluding footings and
foundations and other parts of the Improvements which are not insurable) as
determined from time to time at Lender's request but not more frequently than
once in any 12-month period, by agreement of Landlord, Lender, and Tenant, or if
not so agreed, at Tenant's expense, by the insurer or insurers or by an
appraiser approved by Landlord. Such insurance policies may contain reasonable
exclusions and deductible amounts.
ii) Commercial general liability insurance (including
contractual indemnity) against claims for bodily injury, death or property
damage occurring on, in or about the Leased Premises, which insurance shall be
written on a so-called "Occurrence Basis," and shall provide minimum protection
with a combined single limit in an amount not less than Two Million Dollars
($2,000,000.00) (or in such increased limits from time to time to reflect
declines in the purchasing power of the dollar as Landlord may reasonably
request) and excess liability coverage of Ten Million Dollars ($10,000,000.00).
iii) Worker's compensation insurance covering all persons
employed by Tenant on the Leased Premises in connection with any work done on or
about any of the Leased Premises for which claims for death or bodily injury
could be asserted against Landlord, Tenant or the Leased Premises.
iv) During periods of war or national emergency, war risk
insurance in an amount not less than the actual replacement cost of the
Improvements and Equipment (excluding footings and foundations and other parts
of the Improvements which are not insurable), when and to the extent obtainable
from the United States Government or an agency thereof at reasonable cost.
v) Insurance against loss or damage from explosion of any
steam or pressure boilers or similar apparatus located in or about the
Improvements in an amount not less than the actual replacement cost of the
Improvements and Equipment (excluding footings and foundations and other parts
of the Improvements which are not insurable).
vi) Business interruption insurance in an amount equal to at
least one (1) year's Basic Rent.
16
vii) Such additional and/or other insurance with respect to
the Improvements located on the Leased Premises and in such amounts as at the
time is customarily carried by prudent owners or tenants with respect to
improvements similar in character, location and use and occupancy to the
Improvements located on the Leased Premises.
b. The insurance required by Paragraph 14(a) shall be written by
companies having a claims paying ability rating by Standard & Poors of not less
than A, and all such companies shall be authorized to do an insurance business
in the State, or otherwise agreed to by Landlord and Lender. The insurance
policies (i) shall be in amounts sufficient at all times to satisfy any
coinsurance requirements thereof, and (ii) shall (except for the worker's
compensation insurance referred to in Paragraph 14(a)(iii) hereof) name
Landlord, and Tenant and any Lender as additional insured parties or loss payee
(as appropriate), as their respective interests may appear. If said insurance or
any part thereof shall expire, be withdrawn, become void by breach of any
condition thereof by Tenant or become void or unsafe by reason of the failure or
impairment of the capital of any insurer, Tenant shall immediately obtain new or
additional insurance reasonably satisfactory to Landlord and Lender.
c. Each insurance policy referred to in clauses (i), (iv), (v),
(and (vi) if requested by Lender) of Paragraph 14(a), shall contain standard
non-contributory mortgagee clauses in favor of any Lender which holds a Mortgage
on the Leased Premises. Each policy shall provide that it may not be canceled
except after thirty (30) days prior notice to Landlord and any Lender. Each
policy shall also provide that any losses otherwise payable thereunder shall be
payable notwithstanding (i) any act or omission of Landlord or Tenant which
might, absent such provision, result in a forfeiture of all or a part of such
insurance payment, or (ii) the occupation or use of any of the Leased Premises
for purposes more hazardous than permitted by the provisions of such policy.
d. Tenant shall pay as they become due all premiums for the
insurance required by this Paragraph 14, shall renew or replace each policy, and
shall deliver to Landlord, and Lender, a certificate or other evidence
(reasonably satisfactory to Lender and Landlord) of the existing policy and such
renewal or replacement policy at least thirty (30) days prior to the Expiration
Date (as hereinafter defined) of each policy. Each such policy shall provide
that it shall not expire until the Landlord and the Lender shall receive a
notice from the insurer to the effect that a policy will expire on a date (the
"EXPIRATION DATE") which shall be thirty (30) days following the date of the
receipt by Landlord and Lender of such notice. In the event of Tenant's failure
to comply with any of the foregoing requirements of this Paragraph 14 within
five (5) business days of the giving of written notice by Landlord to Tenant,
Landlord shall be entitled to procure such insurance. Any sums expended by
Landlord in procuring such insurance shall be Additional Rent and shall be
repaid by Tenant, together with interest thereon at the Default Rate, from the
time of payment by Landlord until fully paid by Tenant immediately upon written
demand therefor by Landlord.
e. Anything in this Paragraph 14 to the contrary notwithstanding,
any insurance which Tenant is required to obtain pursuant to Paragraph 14(a) may
be carried under a "blanket" policy or policies covering other properties or
liabilities of Tenant, provided that such
17
"blanket" policy or policies otherwise comply with the provisions of this
Paragraph 14. In the event any such insurance is carried under a blanket policy,
Tenant shall deliver to Landlord and Lender evidence of the issuance and
effectiveness of the policy, the amount and character of the coverage with
respect to the Leased Premises and the presence in the policy of provisions of
the character required in the above sections of this Paragraph 14.
f. In the event of any casualty loss exceeding $100,000.00,
Tenant shall give Landlord immediate notice thereof. Tenant shall adjust,
collect and compromise any and all claims, with the consent of Lender and
Landlord, not to be unreasonably withheld or delayed, and Landlord and Lender
shall have the right to join with Tenant therein. If the estimated cost of
Restoration or repair shall be One Hundred Thousand Dollars ($100,000.00) or
less, all proceeds of any insurance required under clauses (i), (iv), and (v)
(and (vi) and (vii) if requested by Lender) of Paragraph 14(a) hereof shall be
payable to Tenant, provided that Tenant (or the guarantor of the Tenant's
obligations under this Lease) at such time shall have a tangible net worth of
not less than One Hundred Million Dollars ($100,000,000.00) as determined in
accordance with generally accepted accounting principles, consistently applied,
and in all other events to a Trustee which shall be a federally insured bank or
other financial institution, selected by Landlord and Tenant and reasonably
satisfactory to Lender (the "Trustee"). If the Leased Premises shall be covered
by a Mortgage, Lender, if it so desires, shall be the Trustee. Each insurer is
hereby authorized and directed to make payment under said policies directly to
such Trustee instead of to Landlord and Tenant jointly; and Tenant and Landlord
each hereby appoints such Trustee as its attorney-in-fact to endorse any draft
therefor for the purposes set forth in this Lease after approval by Tenant of
such Trustee, if Trustee is other than Lender. Except as stated in Paragraph
14(g) below, in the event of any casualty (whether or not insured against)
resulting in damage to the Leased Premises or any part thereof, the Term shall
nevertheless continue and there shall be no abatement or reduction of Basic
Rent, Additional Rent or any other sums payable by Tenant hereunder. The Net
Proceeds of such insurance payment shall be retained by the Trustee and,
promptly after such casualty, Tenant, as required in Paragraphs 11 (a) and 12,
shall commence and diligently continue to perform the Restoration to the Leased
Premises. Upon payment to the Trustee of such Net Proceeds, the Trustee shall,
to the extent available, make the Net Proceeds available to Tenant for
Restoration, in accordance with the provisions of Paragraph 15. Tenant shall,
whether or not the Net Proceeds are sufficient for the purpose, promptly repair
or replace the Improvements and Equipment in accordance with the provisions of
Paragraph 11 (a) and the Net Proceeds of such loss shall thereupon be payable to
Tenant, subject to the provisions of Paragraph 15 hereof. In the event that any
damage or destruction shall occur at such time as Tenant shall not have
maintained third-party insurance in accordance with Paragraph 14(a)(i),(iv),(v),
(vi) or (vii), Tenant shall pay to the Trustee the amount of the proceeds that
would have been payable had such insurance program been in effect (the "TENANT
INSURANCE PAYMENT").
g. Notwithstanding anything to the contrary contained herein, if
all or substantially all of the Leased Premises are damaged or destroyed by fire
or other casualty which, in the Tenant's good faith and reasonable judgment
renders the Leased Premises unsuitable for Restoration to allow continued use
and occupancy by the Tenant, then Tenant may elect to terminate the Lease, but
only if such election is made within ninety (90) days of the casualty. If Tenant
timely elects to terminate the Lease, then (i) if during the initial term, the
18
Tenant shall make a rejectable offer to purchase the Leased Premises following
the same procedures outlined in Paragraph 13(b) of this Lease, and (ii) if
during any Renewal Term, the Lease shall terminate, and Tenant shall assign all
insurance proceeds to the Landlord.
15. Restoration. Net Proceeds, Restoration Award and Tenant Insurance
Payment (the aggregate of which being herein defined as the "RESTORATION FUND")
shall be disbursed by the Trustee in accordance with the following conditions:
a. If the cost of Restoration will exceed $250,000.00, prior to
commencement of the Restoration, the architects, general contractor(s), and
plans and specifications for the Restoration shall be approved by Landlord,
which approval shall not be unreasonably withheld or delayed; and which approval
shall be granted to the extent that the plans and specifications depict a
Restoration which is substantially similar to the Improvements and Equipment
which existed prior to the occurrence of the Casualty or Taking, whichever is
applicable.
b. At the time of any disbursement, no Event of Default shall
exist and no mechanics' or materialmen's liens shall have been filed and remain
undischarged or unbonded, subject to the provisions of Paragraph 18 hereof.
c. Disbursements shall be made from time to time in an amount not
exceeding the hard and soft cost of the work and costs incurred since the last
disbursement upon receipt of (1) satisfactory evidence, including architects'
certificates of the stage of completion, of the estimated cost of completion and
of performance of the work to date in a good and workmanlike manner in
accordance with the contracts, plans and specifications, (2) conditional (based
upon payment) releases of liens, and (3) other reasonable evidence of cost and
payment so that Landlord can verify that the amounts disbursed from time to time
are represented by work that is completed in place or delivered to the site and
free and clear of mechanics' lien claims.
d. Each request for disbursement shall be accompanied by a
certificate of Tenant describing the work, materials or other costs or expenses,
for which payment is requested, stating the cost incurred in connection
therewith and stating that Tenant has not previously received payment for such
work or expense and the certificate to be delivered by Tenant upon completion of
the work shall, in addition, state that the work has been substantially
completed and complies with the applicable requirements of this Lease.
e. The Trustee may retain ten percent (10%) of the Restoration
Fund until the Restoration is substantially complete.
f. The Restoration Fund shall be kept in a separate
interest-bearing federally insured account by the Trustee or by Lender.
19
g. At all times the undisbursed balance of the Restoration Fund
held by Trustee plus any funds contributed thereto by Tenant shall be not less
than the cost of completing the Restoration, free and clear of all liens.
h. In addition, prior to commencement of Restoration and at any
time during Restoration, if the estimated cost of Restoration, as reasonably
determined by Landlord, exceeds the amount of the Net Proceeds, the Restoration
Award and Tenant Insurance Payment available for such Restoration, the amount of
such excess shall be paid by Tenant to the Trustee to be added to the
Restoration Fund or Tenant shall fund at its own expense the costs of such
Restoration until the remaining Restoration Fund is sufficient for the
completion of the Restoration. Any sum in the Restoration Fund which remains in
the Restoration Fund upon the completion of Restoration shall be paid to Tenant.
For purposes of determining the source of funds with respect to the disposition
of funds remaining after the completion of Restoration, the Net Proceeds or the
Restoration Award shall be deemed to be disbursed prior to any amount added by
Tenant.
16. Subordination to Financing.
a. i) Subject to the provisions of Paragraph 16 (a)(ii), and
subject to the execution and timely delivery to Tenant by Lender of an
instrument in accordance with Paragraph 16(d), Tenant agrees that this Lease
shall at all times be subject and subordinate to the lien of any Mortgage, and
Tenant agrees, upon demand, without cost, to execute instruments as may be
required to further effectuate or confirm such subordination.
ii) Except as expressly provided in this Lease by reason of
the occurrence of an Event of Default, Tenant's tenancy and Tenant's rights
under this Lease shall not be disturbed, terminated, or otherwise adversely
affected, nor shall this Lease be affected, by any default under any Mortgage,
and in the event of a foreclosure or other enforcement of any Mortgage, or sale
in lieu thereof, the purchaser at such foreclosure sale shall be bound to Tenant
for the Term of this Lease and any Renewal Term, the rights of Tenant under this
Lease shall expressly survive, and this Lease shall in all respects continue in
full force and effect so long as no Event of Default has occurred and is
continuing. Tenant shall not be named as a party defendant in any such
foreclosure suit, except as may be required by law. Any Mortgage to which this
Lease is now or hereafter subordinate shall provide, in effect, that during the
time this Lease is in force insurance proceeds and Restoration Award shall be
permitted to be used for Restoration in accordance with the provisions of this
Lease.
b. Notwithstanding the provisions of Paragraph 16(a), the holder
of any Mortgage to which this Lease is subject and subordinate shall have the
right, at its sole option, at any time, to subordinate and subject the Mortgage,
in whole or in part, to this Lease by recording a unilateral declaration to such
effect, provided that such holder shall have agreed that during the time this
Lease is in force, insurance proceeds and Restoration Award shall be permitted
to be used for restoration in accordance with the provisions of this Lease.
20
c. At any time prior to the expiration of the Term, Tenant
agrees, at the election and upon demand of any owner of the Leased Premises, or
of a Lender who has granted non-disturbance to Tenant pursuant to Paragraph
16(a) above, to attorn, from time to time, to any such owner or Lender, upon the
terms and conditions of this Lease, for the remainder of the Term. The
provisions of this Paragraph 16(c) shall inure to the benefit of any such owner
or Lender, shall apply notwithstanding that, as a matter of law, this Lease may
terminate upon the foreclosure of the Mortgage, shall be self-operative upon any
such demand, and no further instrument shall be required to give effect to said
provisions.
d. Each of Tenant, any owner and Lender, however, upon demand of
the other, hereby agrees to execute, from time to time, instruments in
confirmation of the foregoing provisions of Paragraphs 16(a) and 16(c),
reasonably satisfactory to the requesting party acknowledging such
subordination, non-disturbance and attornment as are provided in such
subsections and setting forth the terms and conditions of its tenancy.
e. Each of Tenant, Landlord and Lender agrees that, if requested
by any of the others, each shall, without charge, enter into a Subordination,
Non-Disturbance and Attornment Agreement reasonably requested by Lender,
provided such agreement contains provisions relating to non-disturbance in
accordance with the provisions of subparagraph (a), and Tenant hereby agrees for
the benefit of Lender that Tenant will not, (i) without in each case the prior
written consent of Lender, which shall not be unreasonably withheld, conditioned
or delayed, amend or modify the Lease (provided, however, Lender, in Lender's
sole discretion may withhold or condition its consent to any amendment or
modification which would or could (A) alter in any way the amount or time for
payment of any Basic Rent, Additional Rent or other sum payable hereunder, (B)
alter in any way the absolute and unconditional nature of Tenant's obligations
hereunder or materially diminish any such obligations, (C) result in any
termination hereof prior to the end of the initial term, or (D) otherwise, in
Lender's reasonable judgment, affect the rights or obligations of Landlord or
Tenant hereunder), or enter into any agreement with Landlord so to do, (ii)
without the prior written consent of Lender which may be withheld in Lender's
sole discretion, cancel or surrender or seek to cancel or surrender this Lease
or the Term hereof, or enter into any agreement with Landlord to do so (the
parties agreeing that the foregoing shall not be construed to affect the rights
or obligations of Tenant, Landlord or Lender with respect to any termination
permitted under the express terms hereof in connection with an offer to purchase
the Leased Premises following certain events of condemnation as provided in
Section 13 hereof), or (iii) pay any installment of Basic Rent more than one (1)
month in advance of the due date thereof or otherwise than in the manner
provided for in this Lease.
17. Assignment or Subleasing.
a. Notwithstanding anything contained in this Lease to the
contrary, Tenant may not assign its interest in this Lease without the prior
written consent of Landlord, which may be withheld in the sole and absolute
discretion of Landlord, unless such assignment is to a successor-by-merger or
related or affiliated entity. Tenant may not sublease the Demised Premises, in
whole or in part, without the prior written consent of Landlord, which may be
withheld in Landlord's sole and absolute discretion.
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b. Each sublease of the Leased Premises or any part thereof shall
be subject and subordinate to the provisions of this Lease. No assignment or
sublease shall affect or reduce any of the obligations of Tenant hereunder, and
all such obligations shall continue in full force and effect as obligations of a
principal and not as obligations of a guarantor, as if no assignment or sublease
had been made. Notwithstanding any assignment or subletting Tenant shall
continue to remain liable and responsible for the payment of the Basic Rent and
Additional Rent and the performance of all its other obligations under this
Lease. No assignment or sublease shall impose any obligations on Landlord under
this Lease except as otherwise provided in this Lease. Tenant agrees that in the
case of an assignment of the Lease, Tenant shall, within fifteen (15) days after
the execution and delivery of any such assignment, deliver to Landlord (i) a
duplicate original of such assignment in recordable form and (ii) an agreement
executed and acknowledged by the assignee in recordable form wherein the
assignee shall agree to assume and agree to observe and perform all of the terms
and provisions of this Lease on the part of the Tenant to be observed and
performed from and after the date of such assignment. In the case of a sublease,
Tenant shall, within fifteen (15) days after the execution and delivery of such
sublease, deliver to Landlord a duplicate original of such sublease.
c. Upon the occurrence of an Event of Default under this Lease,
Landlord shall have the right to collect and enjoy all rents and other sums of
money payable under any sublease of any of the Leased Premises, and Tenant
hereby irrevocably and unconditionally assigns such rents and money to Landlord,
which assignment may be exercised upon and after (but not before) the occurrence
of an Event of Default.
18. Permitted Contests.
a. After prior written notice to Landlord, Tenant shall not be
required to (i) pay any Imposition, (ii) comply with any Legal Requirement,
(iii) discharge or remove any lien referred to in Paragraphs 9 or 12, or (iv)
take any action with respect to any violation referred to in Paragraph 11 (b),
so long as Tenant shall contest, in good faith and at its expense, the
existence, the amount or the validity thereof, the amount of the damages caused
thereby, or the extent of its or Landlord's liability therefor, by appropriate
proceedings which shall operate during the pendency thereof to prevent (A) the
collection of, or other realization upon, the Imposition or lien so contested,
(B) the sale, forfeiture or loss of any of the Leased Premises, any Basic Rent
or any Additional Rent to satisfy the same or to pay any damages caused by the
violation of any such Legal Requirement or by any such violation, (C) any
interference with the use or occupancy of any of the Leased Premises, (D) any
interference with the payment of any Basic Rent or any Additional Rent, and (E)
the cancellation of any fire or other insurance policy.
b. In no event shall Tenant pursue any contest with respect to
any Imposition, Legal Requirement, lien, or violation, referred to above in such
manner that exposes Landlord or Lender to (i) criminal liability, penalty or
sanction, (ii) any civil liability, penalty or sanction for which Tenant has not
made provisions reasonably acceptable to Landlord and Lender or (iii) defeasance
of its interest the Leased Premises.
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c. Tenant agrees that each such contest shall be promptly and
diligently prosecuted to a final conclusion, except that Tenant shall, have the
right to attempt to settle or compromise such contest through negotiations.
Tenant shall pay and save Lender and Landlord harmless against any and all
losses, judgments, decrees and costs (including all attorneys' fees and
expenses) in connection with any such contest and shall, promptly after the
final determination of such contest, fully pay and discharge the amounts which
shall be levied, assessed, charged or imposed or be determined to be payable
therein or in connection therewith, together with all penalties, fines,
interest, costs and expenses thereof or in connection therewith, and perform all
acts the performance of which shall be ordered or decreed as a result thereof.
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19. Conditional Limitations; Default Provisions.
a. The occurrence of any one or more of the following events (any
such event being specified herein as a "failure" or "default") shall constitute
an Event of Default under this Lease: (i) a failure by Tenant to make
(regardless of the pendency of any bankruptcy, reorganization, receivership,
insolvency or other proceedings, in law, in equity or before any administrative
tribunal which had or might have the effect of preventing Tenant from complying
with the provisions of this Lease): (x) any payment of Basic Rent which
continues unremedied for a period of five (5) business days after written notice
in accordance with Paragraph 21 below ("NONPAYMENT NOTICE") thereof given to
Tenant by Landlord or Lender or Lender's designee, or (y) any payment of
Additional Rent or other sum herein required to be paid by Tenant which
continues unremedied for a period of ten (10) business days after a Nonpayment
Notice is given to Tenant by Landlord or Lender or Lender's designee; (ii)
failure by Tenant to perform and observe, or a violation or breach of, any other
provision in this Lease and such default shall continue for a period of thirty
(30) business days after written notice thereof is given by Landlord or Lender
or Lender's designee to Tenant or if such default is of such a nature that it
cannot reasonably be cured within such period of thirty (30) business days, such
period shall be extended for such longer time as is reasonably necessary
provided that Tenant has commenced to cure such default within said period of
thirty (30) business days and is actively, diligently and in good faith
proceeding with continuity to remedy such default; (iii) Tenant or any guarantor
of Tenant's obligations hereunder shall (A) voluntarily be adjudicated a
bankrupt or insolvent, (B) or voluntarily consent to the appointment of a
receiver or trustee for itself or for any of the Leased Premises, (C)
voluntarily file a petition seeking relief under the bankruptcy or other similar
laws of the United States, any state or any jurisdiction, or (D) voluntarily
file a general assignment for the benefit of creditors; (iv) a court shall enter
an order, judgment or decree appointing, with the voluntary consent of Tenant or
any guarantor of Tenant's obligations hereunder, a receiver or trustee for
Tenant or any guarantor of Tenant's obligations hereunder or for the Leased
Premises or approving a petition filed against Tenant or any guarantor of
Tenant's obligations hereunder which seeks relief under the bankruptcy or other
similar laws of the United States or any State, and such order, judgment or
decree shall remain in force, undischarged or unstayed, ninety (90) business
days after it is entered; (v) Tenant or any guarantor of Tenant's obligations
hereunder shall in any insolvency proceedings be liquidated or dissolved or
shall voluntarily commence proceedings towards its liquidation or dissolution;
or (vi) the estate or interest of Tenant in the Leased Premises shall be levied
upon or attached in any proceeding and such estate or interest is about to be
sold or transferred or such process shall not be vacated or discharged within
ninety (90) business days after such levy or attachment. Notwithstanding
anything to the contrary contained in this Section 19(a), it shall be an
immediate Event of Default without demand, notice, or opportunity to cure, if
Tenant fails to maintain any of the Insurance required by Section 14 of this
Lease.
b. If any Event of Default shall have occurred, Landlord shall
have the right at its option, then or at any time thereafter, to do any one or
more of the following without demand upon or notice to Tenant:
24
i) Landlord may give Tenant notice (following the occurrence
of an Event of Default) of Landlord's intention to terminate this Lease on a
date specified in such notice (which date shall be no sooner than thirty (30)
days after the date of the notice). Upon the date therein specified, unless the
Event of Default for which the termination is effected has been cured by Tenant,
the Term and the estate hereby granted and all rights of Tenant hereunder shall
expire and terminate as if such date were the date hereinabove fixed for the
expiration of the Term, but Tenant shall remain liable for all its obligations
hereunder through the date hereinabove fixed for the expiration of the Term,
including its liability for Basic Rent and Additional Rent as hereinafter
provided.
ii) Landlord may, whether or not the Term of this Lease shall
have been terminated pursuant to clause (i) above give Tenant notice (following
the occurrence of an Event of Default) to surrender the Leased Premises to
Landlord on a date specified in such notice (which date shall be no sooner than
thirty (30) days after the date of the notice), at which time Tenant shall
surrender and deliver possession of the Leased Premises to Landlord unless the
Event of Default for which the termination is effected has been cured by Tenant.
Upon or at any time after taking possession of the Leased Premises, Landlord may
remove any persons or property therefrom. Landlord shall be under no liability
for or by reason of any such entry, repossession or removal. No such entry or
repossession shall be construed as an election by Landlord to terminate this
Lease unless Landlord gives a written notice of such intention to Tenant
pursuant to clause (i) above.
iii) After repossession of any of the Leased Premises pursuant
to clause (ii) above, whether or not this Lease shall have been terminated
pursuant to clause (i) above, Landlord may relet the Leased Premises or any part
thereof to such tenant or tenants for such term or terms (which may be greater
or less than the period which would otherwise have constituted the balance of
the Term) for such rent, on such conditions (which may include concessions or
free rent) and for such uses as Landlord, in its reasonable discretion, may
determine; and Landlord shall collect and receive any rents payable by reason of
such reletting. The rents received on such reletting shall be applied (A) first
to the reasonable and actual expenses of such reletting and collection,
including without limitation necessary renovation and alterations of the Leased
Premises (but not including tenant improvement or construction allowances),
reasonable and actual attorneys' fees and any reasonable and actual real estate
commissions paid, and (B) thereafter toward payment of all sums due or to become
due Landlord hereunder. If a sufficient amount to pay such expenses and sums
shall not be realized or secured, then Tenant shall pay Landlord any such
deficiency monthly, and Landlord may bring an action therefor as such monthly
deficiency shall arise. Landlord shall not, in any event, be required to pay
Tenant any sums received by Landlord on a reletting of the Leased Premises in
excess of the rent provided in this Lease, but such excess shall reduce any
accrued present or future obligations of Tenant hereunder. Landlord's re-entry
and reletting of the Leased Premises without termination of this Lease shall not
preclude Landlord from subsequently terminating this Lease as set forth above.
Tenant agrees to pay Landlord, as Additional Rent, immediately upon demand, all
reasonable expenses incurred by Landlord in obtaining possession, in performing
repairs or maintenance in preparation for reletting any of the Leased Premises,
including fees and commissions of attorneys, architects, agents and brokers.
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iv) If Tenant shall fail to make payment of any installment of
Basic Rent or any Additional Rent after the date when each such payment is due
(after expiration of any applicable notice and cure periods), Tenant shall pay
to Landlord, a sum equal to two (2%) percent per annum above the then current
Prime Rate, as hereinafter defined, of the amount unpaid (the "DEFAULT RATE")
computed from the date such payment of Basic Rent or Additional Rent was due to
and including the date of payment. The term "PRIME RATE" shall mean the prime
rate of interest published in the Wall Street Journal or its successor, from
time to time.
v) Landlord may exercise any other right or remedy now or
hereafter existing by law or in equity, other than the right to accelerate rent.
c. In the event of any expiration or termination of this Lease or
repossession of any of the Leased Premises by reason of the occurrence of an
Event of Default, Tenant shall pay to Landlord Basic Rent, Additional Rent and
all other sums required to be paid by Tenant to and including the date of such
expiration, termination or repossession and, thereafter, Tenant shall, until the
end of what would have been the Term in the absence of such expiration,
termination or repossession, and whether or not any of the Leased Premises shall
have been relet, be liable to Landlord for and shall pay to Landlord as
liquidated and agreed current damages: (1) Basic Rent, Additional Rent, and all
other sums which would be payable under this Lease by Tenant in the absence of
such expiration, termination or repossession, less (ii) the net proceeds, if
any, of any reletting pursuant to paragraph 19(b)(iii), after deducting from
such proceeds all of Landlord's reasonable expenses in connection with such
reletting (including all reasonable repossession costs, brokerage commissions,
legal expenses, attorneys' fees, employees' expenses, costs of Alteration and
expenses of preparation for reletting). Tenant hereby agrees to be and remain
liable for all sums aforesaid and Landlord may recover such damages from Tenant
and institute and maintain successive actions or legal proceedings against
Tenant for the recovery of such damages. Nothing herein contained shall be
deemed to require Landlord to wait to begin such action or other legal
proceedings until the date when the Term would have expired by limitation had
there been no such Event of Default.
20. Additional Rights of Landlord and Tenant.
a. No right or remedy conferred upon or reserved to Landlord in
this Lease is intended to be exclusive of any other right or remedy; and each
and every right and remedy shall be cumulative and in addition to any other
right or remedy contained in this Lease. No delay or failure by Landlord or
Tenant to enforce its rights under this Lease shall be construed as a waiver,
modification or relinquishment thereof. In addition to the other remedies
provided in this Lease, Landlord and Tenant shall be entitled, to the extent
permitted by applicable law, to injunctive relief in case of the violation or
attempted or threatened violation of any of the provisions of this Lease, or to
specific performance of any of the provisions of this Lease.
b. Tenant hereby waives and surrenders for itself and all those
claiming under it, including creditors of all kinds, any right and privilege
which it or any of them may have under any present or future law to redeem any
of the Leased Premises or to have a
26
continuance of this Lease after termination of this Lease or of Tenant's right
of occupancy or possession pursuant to any court order or any provision hereof.
c. Landlord hereby waives any right to distrain or levy upon
Trade Fixtures or any property of Tenant and any Landlord's lien or similar lien
upon Trade Fixtures and any other property of Tenant regardless of whether such
lien is created or otherwise. Landlord agrees at the request of Tenant, to
execute a waiver of any Landlord's or similar lien for the benefit of any
present or future holder of a security interest in or lessor of any of Trade
Fixtures or any other personal property of Tenant.
d. Landlord acknowledges and agrees in the future to acknowledge
(in a written form reasonably satisfactory to Tenant) to such persons and
entities at such times and for such purposes as Tenant may reasonably request
that the Trade Fixtures are Tenant's property and not part of the Improvements
(regardless of whether or to what extent such Trade Fixtures are affixed to the
Improvements) or otherwise subject to the terms of this Lease.
e. Each of Tenant and Landlord (herein called "PAYING PARTY")
agrees to pay to the other party (herein called "DEMANDING PARTY") any and all
reasonable costs and expenses incurred by the Demanding Party in connection with
any litigation or other action instituted by the Demanding Party to enforce the
obligations of the Paying Party under this Lease, to the extent that the
Demanding Party has prevailed in any such litigation or other action. Any amount
payable by Tenant to Landlord pursuant to this Paragraph 20(e) shall be due and
payable by Tenant to Landlord as Additional Rent. No sum payable by Landlord to
Tenant under this subparagraph will be payable or recoverable from any sums
pledged or assigned (or intended to have been pledged or assigned) by Landlord
to Lender, Tenant's right to recover such sums from Landlord being subordinate
to the rights of Lender, such sums only being recoverable after payment to
Lender in full of the Loan as constituted on the date hereof.
21. Notices. All notices, demands, requests, consents, approvals,
offers, statements and other instruments or communications required or permitted
to be given pursuant to the provisions of this Lease (collectively "Notice" or
"NOTICES") shall be in writing and shall be deemed to have been given for all
purposes (i) three (3) days after having been sent by United States mail, by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the other party at its address as stated below, or (ii) one (1) day
after having been sent by Federal Express, United Parcel or other nationally
recognized overnight, air courier service.
To the Addresses stated below:
If to Landlord:
General Electric Capital Business Asset Funding Corporation
10900 NE 4th Street, Suite 500
Bellevue, Washington 98004
Attn: Patrick J. Pearson
27
With a copy to:
Dechert Price & Rhoads
Ten Post Office Square South
Boston, Massachusetts 02109
Attn: Lewis A. Burleigh
28
If to Tenant:
Dave & Buster's, Inc.
2481 Manana Drive
Dallas, Texas 75220
Attn: Legal Department
With a copy to:
Kane, Russell, Coleman & Logan, P.C.
3700 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Attn: Scott A. Dyche
If any Lender shall have advised Tenant by Notice in the manner aforesaid that
it is the holder of a Mortgage and states in said Notice its address for the
receipt of Notices, then simultaneously with the giving of any Notice by Tenant
to Landlord, Tenant shall send a copy of such Notice to Lender in the manner
aforesaid. For the purposes of this Paragraph 21, any party may substitute its
address by giving fifteen (15) days' notice to the other party in the manner
provided above. Any Notice may be given on behalf of any party by its counsel.
22. Estoppel Certificates. Landlord and Tenant shall at any time and
from time to time, upon not less than twenty (20) days' prior written request by
the other, execute, acknowledge and deliver to the other a statement in writing,
certifying (i) that this Lease is unmodified and in full effect (or, if there
have been modifications, that this Lease is in full effect as modified, setting
forth such modifications), (ii) the dates to which Basic Rent, payable hereunder
has been paid, (iii) that to the knowledge of the signer of such certificate no
default or Event of Default by either Landlord or Tenant has occurred and is
continuing hereunder, (iv) the remaining Term hereof, (v) with respect to a
certificate signed on behalf of Tenant, that to the knowledge of the signer of
such certificate, there are no proceedings pending or threatened against Tenant
before or by any court or administrative agency which if adversely decided would
materially and adversely affect the financial condition and operations of Tenant
or if any such proceedings are pending or threatened to said signer's knowledge,
specifying and describing the same, and (vi) such other matters as may
reasonably be requested by the party requesting the certificate. It is intended
that any such statements may be relied upon by Landlord, Tenant, Lender, the
recipient of such statements or their assignees or by any prospective purchaser,
assignee or subtenant of the Leased Premises.
23. Surrender and Holding Over.
a. Upon the expiration or earlier termination of this Lease,
Tenant shall peaceably leave and surrender the Leased Premises (except as to any
portion thereof with respect to which this Lease has previously terminated) to
Landlord. Tenant shall remove from the Leased Premises on or prior to such
expiration or earlier termination the Trade Fixtures and
29
personal property which is owned by Tenant or third parties other than Landlord,
and Tenant at its expense shall, on or prior to such expiration or earlier
Termination, repair any damage caused by such removal. Trade Fixtures and
personal property not so removed at the end of the Term or within thirty (30)
days after the earlier termination of the Term for any reason whatsoever shall
become the property of Landlord, and Landlord may thereafter cause such property
to be removed from the Leased Premises. The cost of removing and disposing of
such property and repairing any damage to any of the Leased Premises caused by
such removal shall be borne by Tenant. Landlord shall not in any manner or to
any extent be obligated to reimburse Tenant for any property which becomes the
property of Landlord as a result of such expiration or earlier termination.
b. Any holding over by Tenant of the Leased Premises after the
expiration or earlier termination of the Term of this Lease or any extensions
thereof, with the consent of Landlord, shall operate and be construed as tenancy
from month to month only, at one hundred twenty-five percent (125%) of the Basic
Rent reserved herein and upon the same terms and conditions as contained in this
Lease. Notwithstanding the foregoing, any holding over without Landlord's
consent shall entitle Landlord, in addition to collecting Basic Rent at a rate
of one hundred twenty-five percent (125 %) thereof, to exercise all rights and
remedies provided by law or in equity, including the remedies of Paragraph
19(b).
24. No Merger of Title. There shall be no merger of this Lease nor of
the leasehold estate created by this Lease with the fee estate in or ownership
of any of the Leased Premises by reason of the fact that the same person,
corporation, firm or other entity may acquire or hold or own, directly or
indirectly, (a) this Lease or the leasehold estate created by this Lease or an
interest in this Lease or in such leasehold estate and (b) the fee estate or
ownership of any of the Leased Premises or any interest in such fee estate or
ownership. No such merger shall occur unless and until all persons,
corporations, firms and other entities having any interest in (i) this Lease or
the leasehold estate created by this Lease and (ii) the fee estate in or
ownership of the Leased Premises or any part thereof sought to be merged shall
join in a written instrument effecting such merger and shall duly record the
same.
25. Definition of Landlord.
a. Except as provided in Section 12(d) and anything contained
herein to the contrary notwithstanding, any claim based on or in respect of any
liability of Landlord under this Lease shall be enforced only against the
Landlord's interest in the Leased Premises and shall not be enforced against the
Landlord individually or personally (except to the extent that it is necessary
to name Landlord as a defendant in an action for equitable relief).
b. The term "LANDLORD" as used in this Lease so far as covenants
or obligations on the part of Landlord are concerned, shall be limited to mean
and include only the owner or owners of the Leased Premises or holder of the
Mortgage in possession at the time in question of the Leased Premises and in the
event of any transfer or transfers of the title of the Leased Premises, the
Landlord herein named (and in case of any subsequent transfers or conveyances,
the then grantor) shall be automatically freed and relieved from and after the
date
30
of such transfer and conveyance of all personal liability as respects the
performance of any covenants or obligations on the part of Landlord contained in
this Lease thereafter to be performed.
26. Hazardous Substances.
a. Tenant agrees that it will not on, about, or under the Leased
Premises, make, release, treat, store or dispose of any "hazardous substances"
as that term is defined in the Comprehensive Environmental Response,
Compensation and Liability Act, and the rules and regulations promulgated
pursuant thereto, as from time to time amended, 42 U.S.C. Section 9601 et seq.
(the "ACT"); but the foregoing shall not prevent the use of any hazardous
substances in accordance with applicable laws and regulations. Tenant represents
and warrants that it will at all times comply with the Act and any other
federal, state or local laws, rules or regulations governing "Hazardous
Materials". "HAZARDOUS MATERIALS" as used herein shall mean all chemicals,
petroleum, crude oil or any fraction thereof, hydrocarbons, polychlorinated
biphenyls (PCBs), asbestos, asbestos containing materials and/or products, urea
formaldehyde, or any substances which are classified as "hazardous" or "toxic"
under the Act; hazardous waste as defined under the Solid Waste Disposal Act, as
amended 42 U.S.C. Section 6901; air pollutants regulated under the Clean Air
Act, as amended, 42 U.S.C. Section 7401, et seq.; pollutants as defined under
the Clean Water Act, as amended, 33 U.S.C. Section 1251, et seq., any pesticide
as defined by Federal Insecticide, Fungicide, and Rodenticide Act, as amended, 7
U.S.C. Section 136, et seq., any hazardous chemical substance or mixture or
imminently hazardous substance or mixture regulated by the Toxic Substances
Control Act, as amended, 15 U.S.C. Section 2601, et Seq., any substance listed
in the United States Department of Transportation Table at 45 CFR 172.101; any
chemicals included in regulations promulgated under the above listed statutes;
any explosives, radioactive material, and any chemical or other substance
regulated by federal, state or local statutes similar to the federal statutes
listed above and regulations promulgated under such federal, state or local
statutes.
b. To the extent required by the Act and/or any federal, state or
local laws, rules or regulations governing Hazardous Materials, Tenant shall
remove any hazardous substances (as defined in the Act) and Hazardous Materials
(as defined above) whether now or hereafter existing on the Leased Premises. In
addition to, and without limiting Paragraph 10 of this Lease Tenant shall and
hereby does agree to defend, indemnify and hold Lender and Landlord, their
officers, directors, shareholders, partners, beneficial owners, members and
employees, harmless from and against any and all causes of actions, suits,
demands or judgments of any nature whatsoever, losses, damages, penalties,
expenses, fees, claims, costs (including response and remedial costs), and
liabilities, including, but not limited to, reasonable attorneys' fees and costs
of litigation, arising out of or in any manner connected with (i) the violation
of any applicable federal, state or local environmental law with respect to the
Leased Premises or Tenant's or any other person's or entity's prior ownership of
the Leased Premises; (ii) the "release" or "threatened release" of or failure to
remove, as required by this Paragraph 26, "hazardous substances" (as defined in
the Act) and Hazardous Materials (as defined above) at or from the Leased
Premises or any portion or portions thereof, including any past or current
release and any release or threatened release during the initial term and any
extension or Renewal Term
31
whether or not arising out of or in any manner connected with Tenant's occupancy
of the Leased Premises during the initial Term or Renewal Term.
c. The Tenant agrees that it will not install any underground
storage tank at the Leased Premises without specific, prior written approval
from the Landlord. The Tenant agrees that it will not store combustible or
flammable materials on the Leased Premises in violation of the Act or any other
federal, state or local laws, rules or regulations governing Hazardous
Materials.
27. Entry by Landlord. Landlord and its authorized representatives
shall have the right upon reasonable notice (which shall be not less than two
(2) business days except in the case of emergency) to enter the Leased Premises
at all reasonable business hours (and at all other times in the event of an
emergency): (a) for the purpose of inspecting the same or for the purpose of
doing any work under Paragraph 11 (c), and may take all such action thereon as
may be necessary or appropriate for any such purpose (but nothing contained in
this Lease or otherwise shall create or imply any duty upon the part of Landlord
to make any such inspection or do any such work), and (b) for the purpose of
showing the Leased Premises to prospective purchasers and mortgagees and, at any
time within six (6) months prior to the expiration of the Term of this Lease for
the purpose of showing the same to prospective tenants. No such entry shall
constitute an eviction of Tenant but any such entry shall be done by Landlord in
such reasonable manner as to minimize any disruption of Tenant's business
operation.
28. No Usury. The intention of the parties being to conform strictly to
the applicable usury laws, whenever any provision herein provides for payment by
Tenant to Landlord of interest at a rate in excess of the legal rate permitted
to be charged, such rate herein provided to be paid shall be deemed reduced to
such legal rate.
29. Separability.
Each and every covenant and agreement contained in this Lease is, and shall
be construed to be, a separate and independent covenant and agreement, and the
breach of an such covenant or agreement by Landlord shall not discharge or
relieve Tenant from its obligation to perform the same. If any term or provision
of this Lease or the application thereof to any provision of this Lease or the
application thereof to any person or circumstances shall to any extent be
invalid and unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to the extent
permitted by law.
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30. Miscellaneous.
a. The paragraph headings in this Lease are used only for
convenience in finding the subject matters and are not part of this Lease or to
be used in determining the intent of the parties or otherwise interpreting this
Lease.
b. As used in this Lease the singular shall include the plural as
the context requires and the following words and phrases shall have the
following meanings: (i) "including," shall mean "including but not limited to";
(ii) "provisions" shall mean "provisions, terms, agreements, covenants and/or
conditions"; (iii) "lien" shall mean "lien, charge, encumbrance, title retention
agreement, pledge, security interest, mortgage and/or deed of trust"; and (iv)
"obligation" shall mean "obligation, duty, agreement, liability, covenant or
condition".
c. Any act which Landlord is permitted to perform under this
Lease may be performed at any time and from time to time by Landlord or any
person or entity designated by Landlord. Any act which Tenant is required to
perform under this Lease shall be performed at Tenant's sole cost and expense.
d. This Lease may be modified, amended, discharged or waived only
by an agreement in writing signed by the party against whom enforcement of any
such modification, amendment, discharge or waiver is sought, and consented to in
writing by Lender.
e. The covenants of this Lease shall run with the Land and bind
Tenant, the successors and assigns of Tenant and all present and subsequent
encumbrances and subtenants of any of the Leased Premises, and shall inure to
the benefit of and bind Landlord, its successors and assigns.
f. This Lease will be simultaneously executed in several
counterparts, each of which when so executed and delivered shall constitute an
original, fully enforceable counterpart for all purposes.
g. This Lease shall be governed by and construed according to the
laws of the State.
h. Wherever the consent or approval of Landlord is required
hereunder, Landlord agrees that it will not unreasonably withhold or delay such
consent or approval, unless otherwise expressly stated herein.
31. Additional Rent. The term "ADDITIONAL RENT" as used herein includes
all amounts, costs, expenses, liabilities and obligations (including but not
limited to Tenant's obligation to pay any Net Awards or Purchase Price
hereunder) which Tenant is required to pay pursuant to the terms of this Lease
other than Basic Rent.
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32. Financial Statements. Tenant shall provide to Landlord, on a
quarterly and annual basis, the Financial Statements. Tenant shall deliver such
Financial Statements as soon as is commercially reasonable following the end of
each fiscal quarter and fiscal year.
IN WITNESS WHEREOF, Landlord and Tenant have caused this instrument to
be executed under seal as of the day and year first above written.
(REMAINDER OF THIS PAGE INTENTIONALLY BLANK)
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LANDLORD:
GENERAL ELECTRIC CAPITAL
BUSINESS ASSET FUNDING
CORPORATION,
a Delaware corporation
By: /s/ Linda K. Bracken
--------------------------------
Name: Linda K. Bracken
------------------------------
Title: Vice President
-----------------------------
TENANT:
DAVE & BUSTER'S, INC.,
a Missouri corporation
By: /s/ Chas Michel
--------------------------------
Name: Chas Michel
------------------------------
Title: Chief Financial Officer
-----------------------------
35
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
BEING Lot 3, in Block G/6509, of DAVE AND BUSTER'S HQ ADDITION, an Addition to
City of Dallas, Dallas County, Texas, according to the Map thereof recorded in
Volume 97207, Page 4416, of the Map Records of Dallas County, Texas, being more
particularly described as follows:
BEING a tract of land situated in the JOHN L. HUNT SURVEY, ABSTRACT NO. 588,
Dallas County, Texas and being a portion of City of Dallas Block G/6509 and
being all of Lot 3, Block G/6509 of DAVE & BUSTER'S HQ. ADDITION, an addition to
the City of Dallas according to the plat as recorded in Volume 97207, Page 4416
of the Deed Records of Dallas County, Texas (DRDCT) and being more particularly
described as follows:
BEGINNING at a 5/8 inch iron rod set in the northerly right-of-way line of
MANANA DRIVE (a 60' right-of-way) and the southwesterly corner of a tract of
land described in a deed to The Moss Venturing, Inc., as recorded in Volume
2001068, Page 5185 (DRDCT), said iron rod also being located North 89 degrees 01
minute 36 seconds West along the northerly right-of-way line of said MANANA
DRIVE, a distance of 134.01 feet from its intersection with the westerly
right-of-way line of ELECTRONIC LANE (60' right-of-way);
THENCE along the northerly right-of-way line of said MANANA DRIVE, North 89
degrees 01 minute 36 seconds West, a distance of 475.00 feet to a 5/8 inch iron
rod found for corner;
THENCE departing the northerly right-of-way line of said MANANA DRIVE, North 00
degrees 15 minutes 35 seconds East, a distance of 490.33 feet to a 5/8 inch iron
rod set in the southerly line of a tract of land described in a deed to AAI
INVESTMENTS, INC. as recorded in Volume 95249, Page 2972 (DRDCT);
THENCE South 89 degrees 19 minutes 29 seconds East, a distance of 478.39 feet to
a 5/8 inch iron rod set in the southerly line of a tract of land described as
Tract II in a deed to EBE REALTY, INC. as recorded in Volume 89245, Page 4411
(DRDCT), said iron rod also being the northwesterly corner of a tract of land
described in a deed to RE-MMC, L.L.C. as recorded in Volume 98207, Page 4657
(DRDCT);
THENCE South 00 degrees 39 minutes 24 seconds West, a distance of 492.79 feet to
the POINT OF BEGINNING;
CONTAINING within these metes and bounds 5.379 acres or 234,314 square feet of
land more or less.
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EXHIBIT B
Primary Initial Term: Twenty (20) years
Number of Consecutive Renewal Terms: Four (4) (subject to Paragraph 5c)
Duration of each Renewal Term: Five (5) years
1. Basic Rent from the Commencement Date through the first anniversary
of the Commencement Date shall be $896,000 annually, payable in monthly
installments of $74,666.67 each.
2. Base Rent shall increase annually on each anniversary of the
Commencement Date by 1.35%, through and including any Renewal Terms.
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EXHIBIT C
Casualty and Condemnation Purchase Price
$7,790,000
38
