EXHIBIT 10.11
 
EXECUTION COPY
 

 
LEASE AGREEMENT
 
 
between
 
HAVERTACQ 11 LLC
 
as Landlord
 
and
 
HAVERTY FURNITURE COMPANIES, INC.

as Tenant

 
 

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TABLE OF CONTENTS
 

   
Page
ARTICLE 1.
 
1
1.1
Lease of Premises; Title and Condition
1
1.2
Use
3
1.3
Terms
4
1.4
Rent
6
ARTICLE 2.
 
7
2.1
Net Lease
7
2.2
Taxes and Assessments; Compliance with Law
8
2.3
Liens
12
2.4
Indemnification
12
2.5
Maintenance and Repair
13
2.6
Permitted contests
14
2.7
Certain Deposits
15
2.8
Assignment to Lender
22
ARTICLE 3.
 
22
3.1
Procedure Upon Purchase
22
3.2
Condemnation and Casualty
23
3.3
Rejectable Offer and Substitution
25
3.4
Substitution
29
3.5
Rejection of Rejectable Offer or Rejectable Substitution Offer
38
3.6
Less than Jajor Condemnation or Casualty
39
3.7
Insurance
41
3.8
Alterations
47
3.9
Severable Alterations
51
3.10
Easements
51
3.11
Fixtures and Equipment
53
3.12
Right of First Offer
54
ARTICLE 4.
 
54
4.1
Assignment and Subletting
54
ARTICLE 5.
 
56
5.1
Conditional Limitations; Default Provisions
56
5.2
Bankruptcy or Insolvency
59
5.3
Additional Rights of landlord
62
5.4
Waivers
63
ARTICLE 6.
 
63
6.1
Notices and Other Instruments
63
6.2
Estoppel Certificates, Financial Information
65
ARTICLE 7.
 
67
7.1
Environmental Warranty
67
7.2
Environmental Covenants
69
7.3
Environmental Indemnity
72
7.4
Waiver of Surety Defenses
73
7.5
Survival
73
ARTICLE 8.
 
73
8.1
Holdover
73
ARTICLE 9.
 
74
9.1
Deferred Maintenance
74
9.2
Deferred Maintenance Work
74
ARTICLE 10.
 
75
10.1
No Merger
75
10.2
Surrender
75
10.3
Separability; Binding Effect
76
10.4
Table of Contents and Headings
77
10.5
Counterparts
77
10.6
Recording of Lease
77
10.7
Rating of the Transaction
77
10.8
No Brokers
79
10.9
Governing Law
79
10.10
Waiver of Jury Trial
79
10.11
Conveyance by Landlord
79
10.12
Intent; Relationship of the Parties
79
10.13
Representation by Counsel
80
10.14
Access to Premises
80
10.15
Showing
80
10.16
True Lease
80
10.17
Landlord’s Consent and Standards
80
10.18
Quiet Enjoyment
81
10.19
Force Majeure
81
10.20
[Intentionally Omitted]
81
10.21
Tenant’s Acknowledgement of Indemnities
81
10.22
Limitation on Landlord’s Liability
81

Schedule A -
Legal Descriptions
Schedule B -
Permitted Exceptions
Schedule C -
Lease Term
Schedule D -
Basic Rent
Schedule E -
Determination of Basic Rent Upon Release of Project or Payment of Net Proceeds
to Tenant
Schedule F -
Stipulated Loss Values
Schedule G -
Amounts Allocated to Projects
Schedule H -
Survey Requirements
Schedule I -
Form of Subordination, Non-Disturbance and Attornment Agreement
Schedule J -
Rent Coverage Ratio
Schedule K -
Certificate of Occupancy Covenant
Schedule L -
Deferred Maintenance

INDEX OF DEFINITIONS

 
Section
   
Acceptable Appraisal
3.3(a)
Acceptable Credit Rating
2.6(b)
ADA
9.1
Additional Rent
1.4(b)
Alterations
3.8(a)
Applicable Percentage
8.1
Approved Appraiser
3.4(c)
Architect
3.6(b)
Assignee
5.2(d)
Assurance
5.2(b)(ii)
Basic Rent
1.4(a)
Brand Standards
2.5(a)
Business Day
1.4(a)
Casualty
3.2(a)
Code
3.3(a)
Compensation
3.2(a)
Condemnation
3.2(a)
Contract of Sale
3.4(d)(xvi)
Consumer Price Index
3.6(b)
Default
5.1(a)
Deferred Maintenance
9.1
Depository
2.2(c)
EBITDAR
2.2(d)
Economically Obsolete
3.3(b)
Environmental Claim
7.2(g)(iv)
Environmental Laws
7.1(a)
Environmental Permits
7.1(b)
Environmental Report
10.2(b)
Environmental Violation
7.2(g)(iv)
Estimated Cost
3.8(a)
Estimated Premiums
3.7(h)
Event of Default
5.1(a)
Expiration Date
3.8(a)(xi)
Extended Terms
1.3
Fair Market Value
3.4(c)
F&E
1.1(a)(iii)
Force Majeure
10.19
Governmental Authority
7.2(b)
Guarantor
5.1(a)(iii)
Hazardous Substance
7.1(d)
Impositions
2.2(a)
Improvements
1.1(a)(ii)
Indemnified Environmental Losses
7.3
Indemnified Parties
2.4
Indenture
3.7(c)
Land
1.1(a)(i)
Landlord
Heading
Landlord Parties
10.22
Lease
Heading
Lease Termination Date
3.2(b)
Legal Requirements
2.2(b)
Lender
3.7(c)
Liquidated Damages
5.1(g)
Loan
3.4(d)(ii)
Loan Agreement
3.4(d)(xvi)
Lockup Period
3.3(a)(3)
Maor Casualty
3.2(b)
Major Condemnation
3.2(b)
Make Whole Premium
3.1(b)
Material Alteration
3.8(a)
Net Proceeds
3.2(a)
Net Worth
2.2(d)
Non-Disturbance Agreement
4.1(c)
Payment Dates
1.4(a)
Permitted Exceptions
1.1(a)
Premises
1.1(a)
Primary Term
1.3
Project
1.1(a)
Property
1.1(a)
Purchase Option
3.12
Purchase Option Closing Date
3.12
Rate
1.4(b)
Rating Agency
3.4(d)(ii)
Rejectable Offer
3.3(a)
Rejectable Substitution Offer
3.3(a)
Related Document
2.4
Release
7.1
Remedial Work
7.2(b)
REMIC
3.4(d)(iii)
Renovation Work
9.3
Rent
2.7(b)
Rent Coverage Ratio
2.2(d)
Replaced Project
3.4(a)
Responsible Officer
3.3(a)
Restoration Cost
3.6(a)
Seller
2.2(a)
Severable Alterations
3.9
Stipulated Loss Value
3.3(a)
Structural Work
3.8(a)
Subject Transfer
4.1(d)
Substitute Project
3.4(a)
Substitution
3.4(a)
Substitution Documents
3.3(a)
Tenant
Heading
Tenant’s Personal Property
1.1(a)
Term
1.3
Treasury Rate
5.1(g)
Work
3.8(a)

 
 

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LEASE AGREEMENT
 
THIS LEASE AGREEMENT, dated as of August 6, 2002 (this “Lease”), is made and
entered into between HAVERTACQ 11 LLC, a Delaware limited liability company
(together with its successors and assigns, hereinafter referred to as
“Landlord”) having an address as set forth in Section 6.1, and HAVERTY FURNITURE
COMPANIES, INC., a Maryland corporation (together with its successors and
assigns, hereinafter referred to as “Tenant”), having an address as set forth in
Section 6.1.
 
Landlord and Tenant hereby agree as follows:
 
ARTICLE 1.                                
 
1.1  
Lease of Premises; Title and Condition.

 
(a) In consideration of the rents and covenants herein stipulated to be paid and
performed by Tenant and upon the terms and conditions herein specified, Landlord
hereby leases to Tenant, and Tenant hereby leases from Landlord, the premises
(the “Premises”) consisting of:
 
(i) each of those certain eleven (11) parcels of land more particularly
described on Schedule A attached hereto and made a part hereof, together with
all of the Landlord’s right, title and interest, if any, in and to (1) all
easements, rights-of-way, appurtenances, and other rights and benefits belonging
to each of the parcels of land, and (2) all public or private streets, roads,
avenues, alleys, or passageways, open or proposed, on or abutting each of the
parcels of land, and any award made or to be made in lieu thereof (collectively,
the “Land”); and
 
(ii) all buildings located on the Land, together with all plumbing, electrical,
ventilating, heating, cooling, lighting and other utility systems, equipment,
ducts and pipes attached to or comprising a part thereof (collectively, the
“Improvements”); and
 
(iii) all furnaces, boilers, machinery, motors, compressors, elevators,
fittings, piping, conduits, ducts, air conditioners, partitions, mechanical,
electrical and HVAC systems and apparatus of every kind and all other fixtures,
equipment and other personalty owned by Landlord and located on, attached,
affixed or incorporated into the Land and Improvements including, without
limitation, all lighting, lighting fixtures (other than track lighting),
television wiring and jacks, and other miscellaneous fixtures and equipment now
or hereafter located on the Land and used in the operation of the Improvements,
including, without limitation, all replacements thereof (collectively, the
“F&E”).
 
Notwithstanding anything to the contrary in the foregoing, the Premises and the
F&E shall not under any circumstances include any of the following property of
Tenant or any sublessee:  inventory (including without limitation all seating,
tables, beds, draperies, cabinetry, chairs, mirrors, nightstands, furniture,
furniture accessories, bathroom accessories, floor coverings, curtains,
appliances,  tableware, table accessories), tradenames or trademarks or the
right to use the same, proprietary computer software, moveable signage,
including without limitation building-mounted and/or monument-mounted sign
panels, portable modular walls and partitioning, warehouse racks and lifts,
surveillance cameras and related moveable security equipment, track lighting,
audio-visual equipment, office furniture, office and conference accessories,
moveable “Musak” equipment, telecommunications and computer equipment or
stand-alone computer generators (collectively, the “Tenant’s Personal
Property”), which shall remain the property of Tenant, or its affiliates, as the
case may be.  Each of the eleven (11) parcels of Land, together with the
Improvements and F&E located thereon is sometimes hereinafter referred to as a
“Project” or a "Property".  In addition, Tenant may from time to time own or
hold under lease from persons other than Landlord, Tenant’s Personal Property
and personal property located on or about the Land and Improvements that are not
subject to this Lease.
 
The Premises are leased to Tenant in their present condition without
representation or warranty by Landlord and subject to the rights of parties in
possession, to the existing state of title and any state of facts which an
accurate survey or physical inspection might reveal, to all applicable Legal
Requirements (as hereinafter defined) now or hereafter in effect and subject to
those matters listed in Schedule B attached hereto and made a part hereof (the
“Permitted Exceptions”).
 
(b) Tenant has examined the Premises and title to the Premises and has found all
of the same satisfactory for its intended purposes under this Lease.  Tenant
acknowledges that Tenant is fully familiar with the physical condition of the
Premises and that the Landlord makes no representation or warranty, express or
implied, with respect to same.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
LEASE, THE LEASE OF THE PREMISES IS ON AN “AS IS” BASIS, IT BEING AGREED THAT
TENANT WILL LEASE THE PREMISES IN THEIR PRESENT CONDITION, WITH ALL FAULTS AND
LANDLORD HEREBY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE RELATIVE TO THE PREMISES
OR ANY COMPONENT PART THEREOF.  Tenant acknowledges and agrees that no
representations or warranties have been made by Landlord, or by any person, firm
or agent acting or purporting to act on behalf of Landlord, as to (i) the
presence or absence on or in the Premises of any particular materials or
substances (including, without limitation, Hazardous Substances as defined in
Section 7.1), (ii) the condition or repair of the Premises or any portion
thereof, (iii) the value, expense of operation or income potential of the
Premises, (iv) the accuracy or completeness of any title, survey, structural
reports, environmental audits or other information provided to Tenant by any
third party contractor relative to the Premises (regardless of whether the same
were retained or paid for by Landlord), or (v) any other fact or condition which
has or might affect the Premises or the condition, repair, value, expense of
operation or income potential thereof.  Tenant is relying solely on Tenant’s
inspections of the Premises in leasing the Premises.  THE PROVISIONS OF THIS
PARAGRAPH HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND
NEGATION BY THE LANDLORD OF, AND THE LANDLORD DOES HEREBY DISCLAIM, ANY AND ALL
WARRANTIES BY THE LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES OR
ANY PORTION THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR
ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE, AND TENANT HEREBY
ACKNOWLEDGES AND ACCEPTS SUCH EXCLUSION, NEGATION AND DISCLAIMER.
 
1.2  
Use.

 
(a) Tenant may use the Premises for any lawful retail purpose (including without
limitation showrooms for display and sale of inventory, storage of inventory,
and related office functions) and no other purpose; provided, however, that no
such use shall involve the location of gas stations on the land or any material
likelihood that Tenant, Landlord or Lender could incur material liability under
any Environmental Laws as defined in Section 7.1.  Landlord and its agents and
designees may enter upon and examine the Premises at reasonable times, subject
to the provisions of Section 10.14.  Tenant shall not use, occupy or permit any
Project to be used or occupied, nor do or permit anything to be done in or on a
Project in a manner which would (i) violate any certificate of occupancy or
equivalent certificate affecting any of the Projects or violate any zoning or
other law, ordinance or regulation, (ii) violate any use restriction or other
contractual restriction applicable with respect to such Project, (iii) make void
or voidable any insurance then in effect with respect to any of the Projects,
(iv) materially and adversely affect in any manner the ability of Tenant to
obtain fire and other insurance which Tenant is required to furnish under this
Lease, (v) cause any material injury or damage to the Improvements which is not
repaired in accordance with the provisions of this Lease, or (vi) constitute a
public or private nuisance or waste, provided that all of the foregoing shall be
qualified to the extent otherwise provided elsewhere in this Lease.
 
(b) Tenant shall operate each Project on a continuous basis; provided, however,
that Tenant may cease operations at any Project for a period not to exceed
eighteen (18) months in the aggregate for each Project; and provided, further,
however, that not more than two (2) Projects shall be dark (that is, not being
operated in the ordinary course of business) at the same time (it being
understood that a Project under renovation for three months or less or, in
connection with a Condemnation or Casualty, under repair in accordance with the
terms hereof (including without limitation the immediately succeeding provisio),
shall not be deemed to be dark); and provided, further, however, that the
Project located at 2150 Paul Jones Way, Lexington, Kentucky, shall not be
permitted to go dark prior to December 10, 2003 and the Project located at 11101
Pecan Park Boulevard, Austin, Texas, shall not be permitted to go dark for more
than 150 consecutive days (plus an additional 100 days if in connection with
repair, renovation or remodeling after a Casualty (as hereinafter defined))
during the term of this Lease.  If Tenant shall violate the prohibition with
respect to the Project located at 11101 Pecan Park Boulevard, Austin, Texas set
forth above, Tenant shall thereupon immediately and without further action by
Landlord be deemed to have made a Rejectable Offer (as hereinafter defined) to
purchase Landlord's interest in such Project on a Lease Termination Date (as
hereinafter defined) twenty-five (25) days following the date of such violation
for a price equal to (i) the "Stipulated Loss Value" as specified in Schedule F
attached hereto and made a part hereof, plus (ii) any Make-Whole Premium
required by the Indenture, plus (iii) any release premium required by the
Indenture to release the Project from the lien of the Indenture, plus (iv) all
Basic Rent, Additional Rent and other sums accrued or due and payable under this
Lease with respect to such Project as of the applicable Lease Termination
Date.  Such Rejectable Offer shall be deemed to be accepted unless Landlord
shall have rejected such offer within 10 days of the Lease Termination Date.  In
connection with any failure to consummate such deemed Rejectable Offer, Landlord
shall, in addition to any other  remedy provided under this Lease or at law or
in equity, be entitled to the remedy of specific performance, and Tenant hereby
agrees to the exercise of such remedy.
 
1.3  
Terms.

 
(a) The Premises are leased for a primary term of twenty (20) years (the
“Primary Term”), and, at Tenant’s option, for up to two (2) consecutive
additional five (5) year terms (the “Extended Terms”), unless and until the term
of this Lease shall earlier expire or be terminated pursuant to any provision
hereof.  The Primary Term, each Extended Term and each Wintergreen Extended Term
(as hereinafter defined) or FMV Extended Term (as hereinafter defined)
(collectively, the “Term”) shall commence and expire (except as otherwise
required by Section 1.3(b)) on the dates set forth in Schedule C attached hereto
and made a part hereof.  Subject to Section 5.2(g) below, and provided that on
the date Tenant elects to exercise its option to extend the Term of this Lease
for an Extended Term and on the first day of such Extended Term, no Default or
Event of Default shall have occurred and be continuing, Tenant may elect to
exercise its option to extend the Term of this Lease for an Extended Term by
giving written notice thereof to Landlord not later than (i) twenty-four (24)
months prior to expiration of the Primary Term with respect to the first
Extended Term, and (ii) twelve (12) months prior to the expiration of the
existing Term, with respect to each Extended Term.  Each notice of election to
extend the Term of this Lease given in accordance with the provisions of this
Section 1.3 shall automatically extend the Term of this Lease for the Extended
Term, Wintergreen Extended Term or FMV Extended Term, as the case may be,
selected, without further writing; provided, however, either party, upon request
of the other, shall execute and acknowledge, in form suitable for recording, an
instrument confirming any such extension.  Each Extended Term, Wintergreen
Extended Term or FMV Extended Term, as the case may be, shall be upon the same
terms as provided in this Lease for the Primary Term, except as otherwise stated
herein.  Tenant shall not be entitled to extend the Term of this Lease for any
Extended Term, Wintergreen Extended Term or FMV Extended Term, as the case may
be, unless Tenant shall have extended the Term of this Lease for the preceding
Extended Term, Wintergreen Extended Term or FMV Extended Term, as the case may
be, if any.  Tenant may not exercise an option to extend with respect to
individual Projects (and any attempt to do so shall be null and void and of no
force and effect), but may exercise each such option only with respect to all
Projects covered by this Lease at the time of such exercise.
 
(b) Not less than twenty-four (24) months prior to the expiration of the second
Extended Term, subject to Section 5.2(g) and provided that on the date Tenant
elects to exercise its option to extend the Term of this Lease for a Wintergreen
Extended Term and on the first day of such Wintergreen Extended Term no Event of
Default shall have occurred and be continuing, Tenant shall deliver to Landlord
notice of the Tenant's intent to renew this Lease at the end of such Extended
Term for the initial Wintergreen Extended Term (as hereinafter defined), which
shall be the first extended term provision of a period up to three (3)
consecutive five (5) year terms (collectively, the "Wintergreen Renewal Lease
Term") which in no event shall exceed (i) and (ii) below and shall be divided
into five year increments (each, a "Wintergreen Extended Term"), or with respect
to such final Wintergreen Extended Term, such fewer full year increments as will
permit such final Wintergreen Extended Term to comply with this Section 1.3(b)),
and which shall satisfy the following criteria:  (i) the aggregate of the
proposed Wintergreen Renewal Lease Term, the Extended Terms and the Primary Term
is expected to be not more than 80% of the estimated remaining useful life of
any of the Projects, measured from the Closing Date and determined not more than
24 months prior to the end of the second Extended Term and (ii) on the last date
of such proposed Wintergreen Renewal Lease Term, the estimated Fair Market Value
of each of the Projects is expected to be not less than 20% of the Purchase
Price of such Project (without taking into account inflation or deflation
subsequent to the Closing Date).  If items (i) and (ii) in the immediately
preceding sentence cannot be satisfied, the Wintergreen Renewal Lease Term may
be reduced to such number of Wintergreen Extended Terms as shall satisfy items
(i) and (ii).  Items (i) and (ii) above shall be determined by an Approved
Appraiser selected by Tenant and reasonably acceptable to Landlord.  Tenant may
withdraw any notice given in accordance with this Section 1.3(b) by written
notice of such withdrawal to Landlord, on or prior to the date which is (12)
months before the commencement of the proposed Wintergreen Renewal Lease Term,
in which case the right to renew this Lease for all or any portion of the
Wintergreen Renewal Lease Term shall terminate.  Each Wintergreen Extended Term
shall commence on the date immediately succeeding the expiration of the
immediately preceding Extended Term or Wintergreen Extended Term, as the case
may be.  Tenant may not exercise the Wintergreen Renewal Lease Term with respect
to individual Projects (and any attempt to do so shall be null and void and of
no force and effect), but may exercise the Wintergreen Renewal Lease Term only
with respect to all Projects covered by this Lease at the time of such exercise.
 
(c) In the event that items (i) and (ii) set forth in Section 1.3(b) above
cannot be satisfied with respect to the Wintergreen Renewal Lease Term, or in
lieu of the Wintergreen Renewal Lease Term, not less than twelve (12) months
prior to the expiration of the Extended Term, subject to Section 5.2(g) and
provided that on the date Tenant elects to exercise its option to extend the
Term of this Lease for a FMV Extended Term (as hereinafter defined) and on the
first day of such FMV Extended Term no Default or Event of Default shall have
occurred and be continuing, Tenant shall have the option to deliver to Landlord
notice of Tenant's intent to renew this Lease for up to three (3) consecutive
additional five (5) year terms (the "FMV Extended Terms") unless and until the
Term of this Lease shall expire or be terminated pursuant to any provision
hereof; provided, however, that no FMV Extended Term shall extend beyond the
date that would exceed ninety percent (90%) of the economic useful life of any
Project (as set forth in the most recent of (a) the Closing Appraisal, and (b)
the appraisal obtained in connection with the proposed Wintergreen Renewal Lease
Term).  Each FMV Extended Term will commence on the date immediately succeeding
the expiration of the last Extended Term or immediately preceding FMV Extended
Term, as the case may be.  The rent payable on each date as set forth in
Schedule D shall be equal to the fair market rental value, as agreed by Tenant
and Landlord, at the end of the last Extended Term or the applicable FMV
Extended Term (determined not more than twenty four (24) months prior to the
beginning of any FMV Extended Term).  Tenant may not exercise an option to
extend with respect to individual Projects (and any attempt to do so shall be
null and void and of no force and effect), but may exercise each such option
only with respect to all Projects covered by this Lease at the time of such
exercise.
 
1.4  
Rent.

 
(a) Tenant shall pay to Landlord by federal funds wire transfer in immediately
available funds (in U.S. Dollars) as basic rent for the Premises the amounts set
forth in Schedule D attached hereto and made a part hereof (the “Basic Rent”) on
the dates set forth therein (or if any such date falls on a day which is not a
Business Day (as hereinafter defined), the next succeeding Business Day, the
“Payment Dates”), to such account or to such other account or to such address or
to such other person as Landlord from time to time may designate.  In addition,
during all Extended Terms and Wintergreen Extended Terms, the Basic Rent shall
be as set forth in Schedule D.  Tenant's liability for use of the Projects shall
be equal to the Basic Rent allocable to each month.  A “Business Day” is defined
as any day other than a Saturday or Sunday or other day on which the banks in
New York, New York are authorized or required to be closed.  If, with respect to
any month (with such month starting on the 15th day of the month prior to such
month and ending on the 14th day of such month), the Basic Rent due and
allocable with respect to such month is for a period of days less than the full
number of days in such month, the Basic Rent due for such month shall be pro
rated to an amount equal to the Basic Rent specified for such month multiplied
by a fraction the numerator of which is the number of days the Lease is in
effect for such month and the denominator of which is the number of days in such
month.
 
(b) All taxes, costs, expenses and amounts which Tenant is required to pay
pursuant to this Lease (other than Basic Rent), together with every fine,
penalty, interest and cost which may be added for non-payment or late payment
thereof, shall constitute additional rent (“Additional Rent”).  Additional Rent
shall also include all sums and other charges payable by Tenant to Landlord
pursuant to any other agreement between Landlord and Tenant, which specifies
that such sums or charges constitute Additional Rent.  All Additional Rent shall
be paid directly by Tenant to the party to whom such Additional Rent is
due.  Tenant shall pay and discharge all Additional Rent before the imposition
of any fine, lien, interest or penalty with respect thereto, but if such a fine,
lien, penalty or interest is imposed, Tenant shall also pay such amount as
Additional Rent.  If Tenant shall fail to pay any such Additional Rent or any
other sum due under this Lease prior to the time when the same shall become
delinquent, Landlord shall have all rights, powers and remedies with respect
thereto as are provided herein or by law in the case of non-payment of any Basic
Rent and shall, except as expressly provided herein, have the right to pay the
same on behalf of Tenant.  Tenant shall pay to Landlord any penalty or late
charge (to the extent arising out of an Event of Default under this Lease)
payable to Lender (or that would have been payable to Lender but for an advance
of funds by the Landlord) under the Loan, plus interest, at a rate (the “Rate”)
equal to the lesser of (i) the default rate of interest per annum under the
Indenture (provided that if there is more than one Indenture, then reference
shall be made to the Indenture which constitutes a first mortgage lien on
Landlord’s interest in the Premises and provided further, that at any time that
no such first mortgage shall exist, the Rate under this clause (i) shall be the
Prime Rate (as hereinafter defined)) plus five percent (5%), and (ii) the
maximum rate permitted by law, on all overdue Basic Rent, all overdue Additional
Rent and all other sums due under this Lease, in each case, from the due date
thereof until paid.  After the occurrence and during the continuance of an event
of default under the Loan Agreement to the extent arising out of an Event of
Default under this Lease, Tenant shall pay, as Additional Rent, any additional
interest payable by Landlord to Lender as a consequence thereof.  In addition,
if Tenant fails to make any payment of Basic Rent, Additional Rent or other sums
payable under this Lease to Landlord within two (2) Business Days (with respect
to Basic Rent) or five (5) Business Days with respect to Additional Rent or
other sums after delivery of written notice to Tenant that any such Basic Rent,
Additional Rent, or other sum payable under this Lease has not been paid on the
due date thereof, Tenant shall pay a late charge equal to five percent (5%) of
the amount past due.  Landlord and Tenant agree that any such late charge shall
be deemed to be liquidated damages for breach of Tenant's obligation to pay Rent
when due, that the amount of actual damages suffered by Landlord as a result of
such breach cannot be ascertained as of the date hereof, that such amount is a
reasonable sum considering the circumstances on the date hereof and that such
amount is not a penalty.  Tenant shall perform all its obligations under this
Lease at its sole cost and expense, and shall pay all Basic Rent, Additional
Rent and any other sum due under this Lease when due and payable, without
offset, notice or demand.
 
ARTICLE 2.                                
 
2.1  
Net Lease.

 
(a) This Lease is a net lease and, any present or future law to the contrary
notwithstanding, shall not terminate except as otherwise expressly provided
herein, nor shall Tenant be entitled to any abatement, reduction (except as
otherwise expressly provided herein in connection with termination with respect
to a Project), diminution (except as otherwise expressly provided herein in
connection with termination with respect to a Project), set-off, counterclaim,
defense (except for the defense that the performance or payment has been made)
or deduction with respect to any Basic Rent, Additional Rent or other sums
payable under this Lease, nor shall Tenant be excused from the performance of
its obligations under this Lease, by reason of (except as otherwise expressly
provided herein in connection with termination with respect to a Project in
accordance with Article 3 hereof):  any damage to or destruction of any or all
of the Projects or any portion thereof; any defect in the condition, design,
operation or fitness for use of any or all of the Projects or any portion
thereof; any taking of any or all of the Projects or any part thereof by
condemnation or otherwise; any prohibition, limitation, interruption, cessation,
restriction or prevention of Tenant’s use, occupancy or enjoyment of any or all
of the Projects, or any interference with such use, occupancy or enjoyment by
any person; any eviction by paramount title or otherwise; any default by
Landlord under this Lease or under any other agreement; the impossibility or
illegality of performance by Landlord, Tenant or both; any action of any
governmental authority (including, without limitation, changes in Legal
Requirements); construction on or renovation of any or all of the Projects; or
any failure in any or all of the Projects to comply with applicable laws, Legal
Requirements, or any other cause whether similar or dissimilar to the
foregoing.  All costs, expenses and obligations of every kind and nature
whatsoever relating to the Premises and the appurtenances thereto and the use
and occupancy thereof by Tenant and/or its successors, assigns, or sublessees
which may arise or become due and payable with respect to the period which ends
on the expiration or earlier termination of the Term in accordance with the
provisions hereof (whether or not the same shall become payable during the Term
or thereafter) shall be paid by Tenant, except as otherwise expressly provided
herein.  It is the purpose and intention of the parties to this Lease that the
Basic Rent, Additional Rent and other sums payable to Landlord under this Lease
shall be absolutely net to Landlord and that this Lease shall yield, net to
Landlord, the Basic Rent, Additional Rent (except in such instances in which
Additional Rent is required to be paid directly by Tenant to a third party to
whom such Additional Rent is due), and other sums payable to Landlord as
provided in this Lease.  The parties intend that the obligations of Tenant under
this Lease shall be separate and independent covenants and agreements and shall
continue unaffected unless such obligations shall have been modified or
terminated pursuant to an express provision of this Lease.
 
(b) Tenant shall remain obligated under this Lease in accordance with its terms
and, except as otherwise expressly provided herein, shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any bankruptcy,
insolvency, reorganization, liquidation, dissolution or other proceeding
affecting Landlord or any action with respect to this Lease which may be taken
by any trustee, receiver or liquidator or by any court.
 
(c) Except as otherwise expressly provided herein in connection with the
termination of a Project, Tenant waives all rights to terminate or surrender
this Lease, or to any abatement or deferment of Basic Rent, Additional Rent or
other sums payable under this Lease.
 
2.2  
Taxes and Assessments; Compliance with Law.

 
(a) Subject to Tenant’s right to contest pursuant to Section 2.6 of this Lease,
Tenant shall pay on an after tax basis, prior to delinquency, all “Impositions”,
which are defined as:  (i) all taxes (including, without limitation, those
described in (iii) below), assessments (including, without limitation, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not commenced or completed
within the Term of this Lease), excises, levies, fees (including, without
limitation, license, permit, inspection, authorization and similar fees), water
and sewer rents and charges, ground lease rents, and all other governmental and
quasi-governmental charges, general and special, ordinary and extraordinary,
foreseen and unforeseen, and any interest and penalties thereon which are, at
any time prior to or during the Primary Term or any Extended Term, Wintergreen
Extended Term or FMV Extended Term hereof, imposed or levied upon or assessed
against or which arise with respect to (A) the Premises, (B) any Basic Rent,
Additional Rent or other sums payable under this Lease, (C) this Lease or the
leasehold estate hereby created, or (D) the operation, possession or use of the
Premises or (E) the transactions contemplated by this Lease and other related
documents; (ii) all gross receipts taxes or similar taxes (i.e., taxes based
upon gross income which fail to take into account deductions with respect to
depreciation, interest, taxes or ordinary and necessary business expenses, in
each case relating to the Premises) imposed or levied upon, assessed against or
measured by any Basic Rent, Additional Rent or other sums payable under this
Lease; (iii) all sales (including those imposed on lease rentals), value added,
ad valorem, gross receipts, use and similar taxes at any time levied, assessed
or payable on account of the acquisition, ownership, leasing, operation,
possession or use of the Premises; (iv) all transfer, recording, stamp and real
property gain taxes incurred upon the sale or transfer, or other disposition of
the Premises or any interest therein to the Landlord (specifically excluding any
real property gain taxes payable by Landlord upon the sale of the Premises or
any Project to a third party other than in connection with the exercise of
remedies in connection with an Event of Default) or to Tenant, (v) all offers,
claims and demands of mechanics, laborers, materialmen and others which, if
unpaid, might create a lien on the Premises, (vi) all charges of utilities,
communications and similar services serving the Premises, and (vii) any other
tax relating to the Premises resulting from any law enacted or adopted or
amended after the date of this Lease imposed on Landlord pursuant to the
Indenture (as hereinafter defined).  Notwithstanding clause (i) above, Tenant
shall not be required to pay any franchise, estate, inheritance, transfer, net
income or similar tax of Landlord unless such tax is imposed, levied or assessed
in substitution for any other tax, assessment, charge or levy which Tenant is
required to pay pursuant to this Section 2.2(a), provided that if during the
Term, there shall be assessed, levied, charged or imposed on Landlord a capital
levy or other tax directly on the rents received therefrom or upon the value of
the Premises or any then existing or proposed improvements on the Premises, then
all such levies and taxes shall be payable by Tenant before
delinquency.  Subject to Tenant’s right to contest pursuant to Section 2.6 of
this Lease, Tenant shall furnish to Landlord, within thirty (30) days after the
due date thereof, proof of payment of all Impositions.  If any such Imposition
may legally be paid in installments without the accrual of interest thereon,
Tenant may pay such Imposition in installments; in such event, Tenant shall be
liable only for Taxes attributed to the Primary Term and any Extended Term,
Wintergreen Extended Term or FMV Extended Term hereof.
 
(b) Tenant shall comply with and cause each of the Projects to comply with and
shall assume all obligations and liabilities with respect to (i) all laws,
ordinances and regulations, and other governmental and quasi-governmental rules,
orders and determinations presently in effect or hereafter enacted, made or
issued, both foreseen and unforeseen and ordinary and extraordinary applicable
to the applicable Project or the ownership, operation, use or possession thereof
and (ii) all contracts (including, but not limited to, insurance policies
(including, without limitation, to the extent necessary to prevent cancellation
thereof and to insure full payment of any claims made under such policies)),
agreements, covenants (including the covenant set forth on Schedule K),
conditions and restrictions now or hereafter applicable to each Project or the
ownership, operation, use or possession thereof  (collectively, “Legal
Requirements”), including but not limited to all such Legal Requirements which
require structural, unforeseen or extraordinary changes; provided that any such
requirement to make structural, unforeseen or extraordinary changes shall be
subject to the terms and provisions of Article 3 hereof to the extent such
Article 3 applies).  Notwithstanding the foregoing, Legal Requirements shall not
include any contracts, agreements, covenants, conditions or restrictions
applicable to a Project which are hereafter voluntarily entered into by Landlord
without the consent or approval of Tenant (which approval shall not be
unreasonably withheld or delayed), unless Landlord is required to enter into
such contract, agreement, covenant, condition or restriction by any governmental
or quasi-governmental entity.
 
(c) If required by Landlord by notice in writing to Tenant, Tenant agrees that
it shall deposit with Landlord, or, if directed by Landlord, to Lender (or its
designee) (in the event such deposits are required, Landlord hereby irrevocably
directs Tenant to make such deposits with Lender as long as the Indenture shall
remain outstanding, and Tenant hereby grants a security interest in such
account, if such is established, to Landlord and consents to the pledge of and
the granting of a security interest in such account, if such is established, by
Landlord to Lender) on each Payment Date, as Additional Rent, one twelfth (1/12)
of all Impositions for the Premises during the next twelve (12) months in order
to accumulate sufficient funds to pay all such Impositions at least thirty (30)
days prior to their respective dates as reasonably estimated by Landlord
according to the most recent tax bills or assessment and tax rate notices.  To
the extent permitted by applicable law, neither Landlord nor Lender or its
designee (each of Landlord and Lender or such designee hereinafter referred to
as "Depository"), as the case may be, shall be required to maintain such amounts
in an account separate from other funds of such party or to deposit any such
amounts in an interest-bearing account.  If required by Landlord by notice in
writing to Tenant, Tenant shall deposit with Depository, prior to the date which
is thirty (30) days prior to the delinquency date of any Imposition, such
additional amount as may be necessary to provide Depository with sufficient
funds in such deposit account to pay each such charge at least thirty (30) days
in advance of the delinquency date thereof.  Depository shall apply the
aforesaid deposits and interest, if any, thereon for such purpose not later than
the last day on which any such charges may be paid without penalty or interest
or disburse or cause Depository to disburse them to Tenant upon presentation of
evidence of payment and a certificate of an officer of Tenant in form and
substance satisfactory to Landlord.  If, at any time, the amount of any
Imposition is increased or Landlord or Lender receives information that such
Imposition will be increased, or if Landlord shall determine in its reasonable
judgment that the amounts of such deposit will be insufficient for the payments
due,  and if the monthly deposits then being made by Tenant for this purpose (if
continued) would not make up a fund sufficient to pay such Imposition thirty
(30) days prior to the due date, said monthly deposits thereupon shall be
increased and Tenant immediately shall deposit with the Depository, on demand,
sufficient moneys so that the moneys then on hand for the payment of said
Imposition, plus the increased payments and such additional sums demanded, shall
be sufficient so that the Depository shall have received from Tenant adequate
amounts to pay such Imposition at least thirty (30) days before such Imposition
becomes due and payable.  In the event the amount of the funds deposited by
Tenant exceeds the amount of the estimated Impositions, then the Landlord shall
decrease the amount required for subsequent deposits under this Section
2.2(c).  For purposes of determining whether the Depository has on hand
sufficient moneys to pay any particular Imposition at least thirty (30) days
prior to the due date therefor, deposits for each category of Imposition shall
be treated separately, it being the intention that the Depository shall not be
obligated to use moneys deposited for the payment of an item not yet due and
payable to the payment of an item that is due and payable.  Notwithstanding the
foregoing, it is understood and agreed that (i) to the extent permitted by
applicable law, deposits provided for hereunder may be held by the Depository in
a single bank account and commingled with other funds of the Depository, and
(ii) the Depository may, if Tenant fails to make any deposit required hereunder,
apply deposits made for any one Imposition for the payment of the same, any
other Imposition or any outstanding Basic Rent or Additional Rent.  If an Event
of Default shall have occurred and be continuing under this Lease, all deposits
then held by the Depository shall be applied on account of any and all sums due
under this Lease and Tenant shall forthwith pay the resulting deficiency in
accordance with the terms hereof.  If Landlord ceases to have any interest in
any Project, Landlord shall direct the Depository to transfer to the person or
entity who owns or acquires such interest in such Project and is the transferee
of the Landlord's interest in this Lease, the deposits made pursuant to the
provisions hereof.  In addition, in the event that Lender (or a servicing agent
on Lender's behalf) is the Depository, Lender shall have the right to transfer
the deposits (or to cause its servicing agent to transfer such deposits) to any
transferee of the Indenture or to the holder of any substitute Indenture.  Upon
any such transfer of the deposits, after acknowledgement of such transfer by the
transferee and notice thereof to Tenant, the transferor shall be deemed to be
released from all liability with respect thereto and Tenant agrees to look to
the transferee solely with respect thereto, and the provisions hereof shall
apply to each successive transfer of the said deposits.  Tenant shall be deemed
the owner of any such deposit and shall pay all taxes associated therewith.
 
(d) Tenant shall not be required to make the deposits required by Section 2.2(c)
so long as (i) subject to Section 2.6, Tenant shall pay all Impositions as the
same become due and payable before delinquency, (ii) Tenant shall, upon request,
furnish to Landlord receipts for payment of all Impositions or other evidence of
such payment reasonably satisfactory to Landlord, (iii) no Event of Default
shall have occurred and be continuing, (iv) Tenant has a Net Worth in excess of
$100,000,000 and (v) Tenant is maintaining a Rent Coverage Ratio (as hereinafter
defined) with respect to all Projects of at least 1.25:1.  Tenant's obligation
to make the deposits required by Section 2.2(c) shall immediately resume and
shall continue (x) in the event of the failure of any condition set forth in
clauses (i), (ii) or (iii) above, until the expiration or earlier termination of
this Lease, (y) in the event of the failure of the condition set forth in clause
(iv) above, until such time as Tenant's Net Worth shall be equal to or greater
than $150,000,000 and (z) in the event of the failure of the condition set forth
in clause (v) above, until such time as Tenant's Rent Coverage Ratio with
respect to all Projects is equal to or greater than 1.5:1.  For purposes of this
Lease, "Rent Coverage Ratio" shall mean, as of any date, with respect to any
Project, the ratio of (i) Tenant's EBITDAR with respect to such Project for the
Rent Coverage Determination Period, as certified to by the chief financial
officer, treasurer or chief accounting officer of Tenant, to (ii) the Basic Rent
payable under this Lease with respect to such Project for such Rent Coverage
Determination Period, subject to the audit rights of Landlord and Lender if the
allocation or operating expenses with respect to such Project is materially
different than with respect to Tenant as a whole, for such period.  Any time
Rent Coverage Ratio is to be calculated with respect to all Projects, such
calculation shall be made on an aggregate basis.  The Rent Coverage Ratio with
respect to each Project and as to all Projects as of the most recent fiscal year
end prior to the Closing is set forth in Schedule J, together with the
calculations relating thereto.  For purposes of this Lease, "Rent Coverage
Determination Period" shall mean, as of any date, the 12-month period ending
with the most recently completed calendar quarter not less than 30 days prior to
such date (or, at any date that (i) Tenant shall have Net Worth greater than
$150,000,000 and (ii) the Rent Coverage Ratio as of the date of the last
calculation shall be equal to or greater than 1.5.1, the 12-month period ending
with the most recently completed fiscal year.  For purposes of this Lease,
"EBITDAR" shall mean for any period, with respect to any Project, (i) net
merchandise sales at such Project, plus (ii) delivery and services income at
such Project, plus, (iii) all other income from such Project, minus (iv) cost of
goods sold at such Project, minus (v) profit center and branch expenses
allocable to such Project (including, without limitation, advertising costs,
selling costs, occupancy costs, warehouse charges, delivery costs, general and
administrative expenses) minus (vi) credit costs, losses, discounts and charges
allocable to goods sold at such Project.  For purposes of the foregoing, (i) no
deduction shall be made for interest expense, corporate income taxes,
depreciation, amortization, rent payable under this Lease or general corporate
overhead (except to the extent such expenses are customarily allocated to
individual stores), and (ii) the calculations shall be made in accordance with
generally accepted accounting principles, and (iii) allocations of income or
expense among Tenant's stores, profit centers or regions shall be fairly
allocated and consistent with Tenant's internal accounting methodology as
certified by Tenant’s chief financial officer, treasurer or chief accounting
officer.  For purposes of this Lease, "Net Worth" shall mean, as of a given
date, (x) the total assets of Tenant as of such date less (y) Tenant's
liabilities as of such date determined in accordance with generally accepted
accounting principles; provided, however, that at any time that Tenant is
subject to the reporting requirements of Sections 13 and 15(d) of the Securities
and Exchange Act of 1934, as amended, Net Worth shall be as set forth in
Tenant's most recent Form 10-K or Form 10-Q filed with the Securities and
Exchange Commission.
 

 
2.3  
Liens

 
.  Subject to Tenant’s right to contest pursuant to Section 2.6 of this Lease,
Tenant will promptly remove and discharge any charge, lien, security interest or
encumbrance upon any Project or any Basic Rent, Additional Rent or other sums
payable under this Lease which arise for any reason, including all liens which
arise out of the possession, use, occupancy, construction, repair or rebuilding
of a Project or by reason of labor or materials furnished or claimed to have
been furnished to Tenant or for any Project, but not including (i) the Permitted
Exceptions, and (ii) the Indenture and any other mortgage, charge, lien,
security interest or encumbrance created by Landlord without the consent of
Tenant or encumbrance created due to Landlord’s gross negligence or willful
misconduct subject to the provisions in Section 10.17(b) hereof.  Nothing
contained in this Lease shall be construed as constituting the consent or
request of Landlord, express or implied, to or for the performance by any
contractor, laborer, materialman, or vendor of any labor or services or for the
furnishing of any materials for any construction, alteration, addition repair or
demolition of or to any Project or any part thereof which would result in any
liability of the Landlord for the payment therefor.  Notice is hereby given that
Landlord will not be liable for any labor, services or materials furnished or to
be furnished to Tenant, or to anyone holding an interest in any of the Projects
or any part thereof 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 a Project.
 
2.4  
Indemnification

 
.  Tenant shall defend all actions against any of  (i) Landlord, (ii) any owner,
beneficial owner, trustee, partner, member, officer, director, shareholder or
agent of Landlord, and of any of Landlord’s partners or members, and (iii) the
holder of any indebtedness of Landlord secured by a mortgage, deed of trust or
other security interest in the Premises, including without limitation, Lender
(as hereinafter defined), or any owner, beneficial owner, partner, member,
officer, director, shareholder, or agent of any such holder, including without
limitation, Lender, (iv) together with their respective successors and
assigns  (herein, collectively, “Indemnified Parties”) with respect to, and
shall pay, protect, indemnify and save harmless the Indemnified Parties from and
against, any and all liabilities, losses, damages, costs, expenses (including
reasonable attorneys’ fees and expenses), causes of action, suits, claims,
demands or judgments of any nature (SPECIFICALLY INCLUDING CLAIMS RESULTING FROM
THE STRICT OR ABSOLUTE LIABILITY OF AN INDEMNIFIED PARTY OR FROM THE NEGLIGENCE
OF AN INDEMNIFIED PARTY, but specifically excluding claims resulting from the
gross negligence or willful misconduct of an Indemnified Party, subject to the
provisions of Section 10.17(b) and excluding consequential or punitive damages
assessed against Landlord as a result of the commission of an overt act by
Landlord constituting gross negligence or willful misconduct, subject to the
provisions of Section 10.17(b))) (a) to which any Indemnified Party is subject
because of Landlord’s estate in any Project or the receipt of any Basic Rent or
Additional Rent under this Lease or (b) arising from:  (i) any accident, injury
to or death of any person or loss of or damage to property occurring in, on or
about any Project or portion thereof or on the adjoining sidewalks, curbs,
parking areas, streets or ways; (ii) any use, non-use or condition in, on or
about, or ownership, possession, alteration, repair, operation, maintenance,
leasing, subleasing or management of, any Project or any portion thereof or on
the adjoining sidewalks, curbs, parking areas, streets or ways; (iii) the
construction, design, purchase, acceptance, rejection, modification,
substitution or condition of any Project, including without limitation claims or
penalties arising from any violation of Legal Requirements, without regard to
whether compliance therewith is required by the terms of this Lease or liability
in tort (strict or otherwise); (iv) any failure on the part of Tenant to perform
or comply with any of the terms, covenants or conditions of this Lease or any
other instrument, contract, document or agreement to which Tenant is a party
relating to the Premises or any Project (a “Related Document”); (v) any
representation or warranty made herein, in any certificate delivered in
connection herewith or in any other Related Document, or pursuant thereto, being
false or misleading in any material respect as of the date that such
representation or warranty was made; (vi) performance of any labor or services
or the furnishing of any materials or other property in respect to any Project
or any portion thereof; (vii) subject to Section 2.2, any Imposition, including
without limitation, any Imposition attributable to the execution, delivery,
filing or recording of any Related Document, this Lease or memorandum thereof;
(viii) any lien, encumbrance or claim arising on or against any Project or any
portion thereof under any Legal Requirement or otherwise which Tenant is
obligated to remove and discharge pursuant to Section 2.3 or any liability
asserted against the Indemnified Parties with respect thereto; (ix) the claims
of any subtenants (of any tier), licensees or other persons claiming through or
under Tenant of all or any portion of any Project or any other Person acting
through or under Tenant or otherwise acting under or as a consequence of this
Lease or any sublease (of any tier); (x) any act or omission of Tenant or its
agents, contractors, employees, licensees, subtenants or invitees or of any of
the Persons described in clause (ix), and (xi) any contest referred to in
Section 2.6; provided, however, that Tenant shall not be required to indemnify
an Indemnified Party under this Section 2.4 with respect to any liability
arising with respect to a Project to the extent attributable to acts or events
which occur after (and are not attributable to acts or events occurring or
accruing prior to) the later of (A) the expiration or earlier termination of
this Lease with respect to such Project and (B) the surrender of possession of
such Project to the Landlord.
 
The indemnities contained in this Section 2.4 shall survive (i) the expiration
or earlier termination of this Lease with respect to any or all of the Projects,
and (ii) any conveyance of Landlord’s interest in any or all of the Projects to
Tenant pursuant to this Lease.
 
2.5  
Maintenance and Repair.

 
(a) Tenant acknowledges that it has received the Premises in good order and
repair.  Tenant, at its own expense, will:  (i) maintain all parts of the
Premises in as good repair and condition as at the commencement of this Lease,
except for ordinary wear and tear; (ii) maintain the Premises in accordance with
all Legal Requirements; (iii) comply with the standards imposed by any insurance
policies required to be maintained hereunder which are in effect at any time
with respect to any Project or any part thereof; and (iv) take all action and
make all structural and non-structural, foreseen and unforeseen and ordinary and
extraordinary changes and repairs and replacements which may be required to keep
all parts of the Premises in good repair and condition and as shall be necessary
to maintain each Project in accordance with the Brand Standards.  For the
purposes of this Lease, “Brand Standards” shall mean the design, construction,
operational, and maintenance, service and repair standards for the typical
retail furniture store then franchised or operated by Tenant or its affiliates
or subsidiaries, under the “Havertys Furniture” trade name, including its rules
of operation and other standards and policies regarding, without limitation,
life safety and security standards, all as may be amended from time to time by
Tenant in its reasonable discretion, provided that such standards, taken as a
whole, shall not be materially lower than such standards in existence as of the
date hereof.  Landlord shall not be required to maintain, repair or rebuild all
or any part of the Premises.  Tenant waives the right to (x) require Landlord to
maintain, repair or rebuild all or any part of the Premises, or (y) make repairs
at the expense of Landlord pursuant to any Legal Requirement, contract,
agreement, covenant, condition or restriction set forth in Section 2.2(b)(ii),
at any time in effect.
 
(b) In the event that all or any part of the Improvements shall encroach upon
any property, street or right-of-way adjoining or adjacent to any Project, or
shall violate the agreements or conditions affecting any Project or any part
thereof, or any Legal Requirement, or shall hinder, obstruct or impair any
easement or right-of-way to which a Project is subject, then, promptly after
written request of Landlord (unless such encroachment, violation, hindrance,
obstruction or impairment is a Permitted Exception) or of any person so
affected, Tenant shall, at its expense, either (i) obtain valid and effective
waivers or settlements of all claims, liabilities and damages resulting
therefrom, or (ii) make such changes, including alteration or removal, to the
Improvements and take such other action as shall be necessary to remove or
eliminate such encroachments, violations, hindrances, obstructions or
impairments, provided that, if Landlord’s consent is required for such changes
pursuant to this Lease, Landlord’s consent shall have been obtained, which
consent shall not be unreasonably withheld.
 
2.6  
Permitted Contests.

 
(a) Tenant shall not be required, nor shall Landlord have the right, to pay,
discharge or remove an Imposition, lien or encumbrance, or to comply with any
Legal Requirement applicable to the Premises or the use thereof, as long as no
Event of Default under this Lease shall have occurred and be continuing and
Tenant shall, in good faith, contest the existence, amount or validity thereof
by appropriate proceedings diligently pursued; and provided, that (i) with
respect to a failure to pay such Imposition, lien or encumbrance or failure to
perform such Legal Requirement, Tenant shall have provided security as set forth
in Section 2.6(b), which shall be deposited with Landlord or, as required by the
Indenture, Lender prior to the commencement of such contest, (ii) Tenant shall
give Landlord prior written notice of Tenant’s intent to contest such matter
(other than in connection with customary real property tax contests that require
payment in full of the contested tax as a condition to such contest), (iii) such
contest and/or failure or delay to pay such Imposition, lien or encumbrance or
perform such Legal Requirement will not (1) subject Landlord or Lender to any
risk of criminal or any risk of civil penalties or fines (other than de minimus
charges) or to any risk of prosecution for a crime, (2) subject any Project or
any part thereof to being condemned, vacated, forfeited or otherwise impaired,
(3) have the effect of interrupting or preventing the collection of any
contested amount or other realization of value from any Project or any part
thereof or interest therein, the Basic Rent, Additional Rent or any other sums
payable under this Lease or any portion thereof to satisfy the claim, (4)
subject any Project, any portion thereof or interest therein, the Basic Rent,
Additional Rent or any other sums payable under this Lease or any portion
thereof to satisfy the claim, (5) subject any Project, any portion thereof or
interest therein, the Basic Rent, Additional Rent or any other sums payable
under this Lease or any portion thereof, to any reasonable likelihood of sale,
forfeiture, interruption or loss by reason of such proceedings or (6) affect the
ownership, lease or occupancy of any Project or Landlord’s ability or right to
exercise its remedies under this Lease, or Lender’s ability or right to exercise
its remedies under the Indenture, including without limitation, foreclosure
against the applicable Project and (iv) Tenant shall pay any interest, late
charges, fines and/or penalties resulting from any such contest by Tenant;
provided, further, that prior to the date on which such Imposition or charge
would otherwise have become delinquent Tenant shall have given Landlord and
Lender prior notice of such contest.  To the extent that the consent of Landlord
is required with respect to any contest of Tenant, Landlord agrees not to
unreasonably withhold such consent, and upon such consent, Landlord shall
reasonably cooperate with Tenant to the extent so required of Tenant’s contest
at Tenant’s sole cost and expense.
 
(b) Tenant shall give such security (including a bond) as may be reasonably
required by Landlord or, as required by the Indenture, Lender to ensure ultimate
payment of such Imposition, lien or encumbrance (including any interest, late
charges, fines and/or penalties incurred in connection therewith) and compliance
with Legal Requirements and to prevent any sale, forfeiture, interruption or
loss of any Project or any portion thereof, any Basic Rent, Additional Rent or
other sums required to be paid by Tenant under this Lease, by reason of such
non­payment or noncompliance.  Notwithstanding the preceding sentence, during
such time as no Event of Default shall have occurred and be continuing and
either Tenant or a Guarantor (as hereinafter defined) has a solicited long term
unsecured debt rating (or, if neither Tenant nor any Guarantor has a solicited
long term unsecured debt rating, a corporate credit rating) of, to the extent
rated by any of the following, (i) not less than BB by Standard & Poor's Rating
Group, and Ba2 by Moody's Investors Service, Inc., and NAIC 3 rating, in each
case "stable" (an "Acceptable Credit Rating"), Tenant shall not be required to
provide such security with respect to a contest if the contest involves claims
for less than $250,000 for any particular Project and if claims for less than
$500,000 are then being contested for all Projects.
 
2.7  
Certain Deposits.

 
(a) Tenant acknowledges that Landlord has required the establishment of a
Capital Reserve Account (related to capital expenditures) and a Rollover Reserve
Account, which initially are to be left unfunded.  Anything contained herein to
the contrary notwithstanding, if required by Landlord by notice in writing to
Tenant, Tenant agrees that it shall deposit with Landlord, or, if directed by
Landlord, to Lender (or its designee) (in the event such deposits are required,
Landlord hereby irrevocably directs Tenant to make such deposits with Lender as
long as the Indenture shall remain outstanding, and Tenant hereby grants a
security interest in such account to Landlord and consents to the pledge of and
the granting of a security interest in such account by Landlord to Lender) such
amount as reasonably determined by Landlord in each such account on each Payment
Date, as Additional Rent, one twelfth (1/12) of all amounts required by Landlord
to be deposited to any such account for the Premises for the next twelve (12)
months as reasonably estimated by Landlord.  To the extent permitted by
applicable law, neither Landlord nor Lender or its designee, as the case may be,
shall be required to maintain such amounts in an account separate from other
funds of such party or to deposit any such amounts in an interest-bearing
account, provided, however, in the event such amounts are maintained in an
interest bearing account and no Event of Default shall have occurred and be
continuing hereunder, Tenant shall be entitled to receive any interest earned
thereon on a quarterly basis.  Tenant shall deposit with Depository, prior to
the date which is thirty (30) days prior to the delinquent date of any such
charge, such additional amount as may be necessary to provide Depository with
sufficient funds in such deposit account to pay each such charge at least thirty
(30) days in advance of the delinquent date thereof.  Depository shall apply the
aforesaid deposits and interest, if any thereon for such purpose not later than
the last day on which any such charges may be paid without penalty or
interest.  If, at any time, the amount of any such requirement is increased or
Landlord or Lender receives information that the cost of the related replacement
or repair will be increased, and if the monthly deposits then being made by
Tenant for this purpose (if continued) would not make up a fund sufficient to
pay such amounts thirty (30) days prior to the delinquent date, or if Landlord
shall determine in its reasonable judgement that the amounts of such deposit
will be insufficient for the payments due, said monthly deposits thereupon shall
be increased and Tenant immediately shall deposit with the Depository, on
demand, sufficient moneys so that the moneys then on hand for the payment of
said amounts, plus the increased payments and such additional sums demanded,
shall be sufficient so that the Depository shall have received from Tenant
adequate amounts to pay such amounts at least thirty (30) days before such
Imposition becomes due and payable. In the event the amount of the funds
deposited by Tenant exceeds the amount necessary to fully fund the required
deposits, then the Landlord shall decrease the amount  required for subsequent
deposits under this Section 2.7(a).  For purposes of determining whether the
Depository has on hand sufficient moneys to pay the costs of any particular
replacement or repair at least thirty (30) days prior to the due date therefor,
deposits for each category of replacement or repair shall be treated separately,
it being the intention that the Depository shall not be obligated to use moneys
deposited for the payment of an item not yet due and payable to the payment of
an item that is due and payable.  Notwithstanding the foregoing, it is
understood and agreed that (i) to the extent permitted by applicable law,
deposits provided for hereunder may be held by the Depository in a single bank
account and commingled with other funds of the Depository, and (ii) the
Depository may, if Tenant fails to make any deposit required hereunder, apply
deposits made for any one replacement or repair for the payment of the same, any
other replacement or repair or any outstanding Basic Rent or Additional
Rent.  If an Event of Default shall have occurred and be continuing under this
Lease, all deposits then held by the Depository shall be applied on account of
any and all sums due under this Lease and Tenant shall forthwith pay the
resulting deficiency in accordance with the terms hereof.  If Landlord ceases to
have any interest in any Project, Landlord shall direct the Depository to
transfer to the person or entity who owns or acquires such interest in such
Project and is the transferee of the Landlord's interest in this Lease, the
deposits made pursuant to the provisions hereof.  In addition, in the event that
Lender (or a servicing agent on Lender's behalf) is the Depository, Lender shall
have the right to transfer the deposits (or to cause its servicing agent to
transfer such deposits) to any transferee of the Indenture or to the holder of
any substitute Indenture. Upon any such transfer of the deposits, after
acknowledgement of such transfer by the transferee and notice thereof to Tenant,
the transferor shall be deemed to be released from all liability with respect
thereto and Tenant agrees to look to the transferee solely with respect thereto,
and the provisions hereof shall apply to each successive transfer of the said
deposits.  Tenant shall be deemed the owner of any such deposit and shall pay
all taxes associated therewith.  Tenant's obligations under this Section 2.7
shall survive expiration or early termination of the Lease.
 
(b) Tenant shall not be required to make the deposits with respect to the
Capital Reserve Account required by Section 2.7(a) so long as (i) no Event of
Default has occurred and is continuing hereunder, (ii) Tenant shall have
permitted Landlord or Lender, subject to Section 10.14, to make periodic
inspections of each Project and such inspections taken as a whole shall not
demonstrate the need for deferred maintenance (i.e., repairs and/or maintenance
which in the reasonable opinion of the Landlord or Lender based on a property
condition report prepared by an engineer selected by Landlord or Lender in its
sole discretion should have been previously performed in accordance with the
requirements of this Lease) in excess of the Capital Reserve Trigger Amount in
the aggregate.  Tenant's obligation to make the deposits required with respect
to the Capital Reserve Account under Section 2.7(a) shall immediately resume and
shall continue in the event of the failure of the conditions set forth in
clauses (i) or (ii) above until the expiration or earlier termination of this
Lease; provided that, Tenant's obligation to make the deposits required with
respect to the Capital Reserve Account under Section 2.7(a) by reason of the
failure of the condition set forth in clause (ii) above shall not resume unless
such failure continues for 30 days after Tenant receives notice thereof from
Landlord (provided, however, that if such condition cannot reasonably be
satisfied within such 30-day period, and Tenant shall have commenced to satisfy
such condition within such 30-day period and thereafter diligently and
expeditiously proceeds to satisfy the same, such 30-day period shall be extended
for an additional period of time as is reasonably necessary for Tenant in the
exercise of due diligence to satisfy such condition).  If Tenant's obligation to
make the deposits required with respect to the Capital Reserve Account under
Section 2.7(a) is triggered by the failure of the condition set forth in clause
(ii), then in addition to the obligation to make the payments required under
Section 2.7(a), Tenant shall also deposit into the Capital Reserve Account 125%
of the estimated cost of the deferred maintenance (as estimated by Landlord) and
shall promptly perform such repairs.  For purposes of this Lease, "Capital
Reserve Trigger Amount" shall mean $250,000, adjusted annually by a percentage
equal to the increase in the Consumer Price Index in years subsequent to the
date of this Lease, but in no event by an amount in excess of 2.5% annually. For
purposes of this Section 2.7(b), "Consumer Price Index" shall mean the Consumer
Price Index for All Urban Consumers published by the Bureau of Labor Statistics
of the United States Department of Labor, New York Metropolitan Statistical
Area, All Items (1982-84 = 100), or any successor index thereto, approximately
adjusted.  In the event that the Consumer Price Index is converted to a
different standard reference base or otherwise revised, the determination of
adjustments provided for herein shall be made with the use of such conversion
factor, formula or table for converting the Consumer Price Index as may be
published by the Bureau of Labor Statistics or, if said Bureau shall not publish
the same, then with the use of such conversion factor, formula or table as may
be published by Prentice-Hall, Inc., or any other nationally recognized
publisher of similar statistical information.  If the Consumer Price Index
ceases to be published, and there is no successor thereto, (x) such other index
as Landlord and Tenant shall agree upon in writing or (y) Landlord and Tenant
cannot agree, such other index as reasonably selected by Landlord, shall be
substituted for the Consumer Price Index.  The amount of any deposit required by
Section 2.7(a) with respect to the Capital Reserve Account shall be limited to
an amount per year equal to the product obtained by multiplying $0.16 by the
aggregate number of rentable square feet of space in all Projects.
 
(c) Tenant shall not be required to make the deposits required under
Section 2.7(a) with respect to the Rollover Reserve Account provided that (i) no
Event of Default shall have occurred and be continuing hereunder, (ii) Tenant
has a net worth in excess of $100,000,000, and (iii) Tenant is maintaining a
Rent Coverage Ratio with respect to all Projects of at least 1.25:1.  Tenant's
obligation to make the deposits required under Section 2.7(a) with respect to
the Rollover Reserve Account shall immediately resume and shall continue (A) in
the event of the failure of any condition set forth in clause (i) of this
Section 2.7(c) until the expiration or earlier termination of this Lease, and
(B) in the event of a failure of the condition set forth in clause (ii) or
(iii), until such time as the condition set forth in each of clauses (ii) and
(iii) shall have been satisfied as of the end of any calendar
quarter.  Notwithstanding anything to the contrary set forth in this Section
2.7(c), at any time Tenant shall have a Net Worth equal to or less than
$150,000,000 or the Rent Coverage Ratio with respect to all Projects is less
than 1.5:1, Tenant shall be required to make the monthly deposits required with
respect to the Rollover Reserve Account under Section 2.7(a) (but only such
portion of the monthly deposits attributable to the affected Project or
Projects) with respect to any Project where Tenant (or a subtenant of Tenant
pursuant to a sublease entered into in accordance with this Lease) is not in
occupancy and open for business (unless such Project is not open for business
(x) for a period of up to three months in connection with renovation or (y) for
a period of less than eighteen months in connection with repairs to a Project
that Tenant is permitted to rebuild, replace or repair and is rebuilding,
replacing or repairing in accordance with the provisions of Section 3.6 and in
good faith intends to reopen for business).  Tenant's obligation to make the
required deposits in accordance with the preceding sentence shall continue until
such time as Tenant shall have a Net Worth in excess of $150,000,000 and a Rent
Coverage Ratio with respect to all of the Projects at least equal to 1.5:1.  If
Tenant shall at any time become obligated to make the required monthly deposits
with respect to the Rollover Reserve Account set forth in Section 2.7(a) (or a
portion of such monthly deposits in accordance with this Section 2.7(c)) then
Tenant shall, in addition to making such monthly deposits, deposit into the
Rollover Reserve Account an amount equal to the aggregate deposits Tenant would
have made into the Rollover Reserve Account if Tenant had been required to make
such deposits in accordance with Section 2.7(a) from the initial date of this
Lease.  Provided no Default or Event of Default shall have occurred and be
continuing, the balance of the Rollover Reserve Account (or, with respect to a
release of funds pursuant to clause (iii) below, such portion of the balance of
the Rollover Reserve Account attributable to the subject Project) shall be
released to Tenant within 5 days of Tenant’s request therefor, if, as of any
calendar quarter (i) Tenant shall have a Net Worth in excess of $150,000,000 and
(ii) Tenant shall maintain a Rent Coverage Ratio with respect to all of the
Projects at least equal to 1.5:1 or (iii) with respect to any Project for which
a deposit was made because neither Tenant nor any subtenant pursuant to a
sublease entered into in accordance with this Lease are open for business, upon
either (A) Landlord's and Lender’s receipt of an estoppel certificate from such
subtenant or a replacement subtenant pursuant to which such subtenant or
replacement subtenant certifies to Landlord and Lender that (1) such subtenant
or replacement subtenant has taken occupancy of its demised premises, (2) such
subtenant or replacement subtenant has commenced the payment of rent under its
sublease and (3) that such subtenant or replacement subtenant is obligated
pursuant to its sublease to occupy its demised premises and pay rent under its
sublease for a period of no less than five years from the date of such estoppel
certificate or (B) Landlord's and Lender’s receipt of evidence reasonably
satisfactory to each of them that Tenant has opened for business at such Project
and has continuously operated its business at such Project for twelve
consecutive months.  The amount of any deposit required by Section 2.7(a) with
respect to the Rollover Reserve Account is initially anticipated to be an amount
per year equal to the product obtained by multiplying $0.50 by the aggregate
number of square feet of selling space in the Projects and shall in no event
exceed $3,000,000 in the aggregate.
 
(d) Landlord shall disburse, or shall cause Lender to disburse, funds held in
the Capital Reserve Account to Tenant, within 15 days after the delivery by
Tenant to Landlord and Lender of a request therefor (but not more often than
once per month), in increments of at least $5,000 provided that (i) such
disbursement is for a capital expense approved in advance by Landlord; (ii)
Landlord shall have (if it desires) verified (by an inspection conducted at
Tenant's expense) performance of the work associated with such capital expense;
and (iii) the request for disbursement is accompanied by (A) a certificate of
Tenant's chief financial officer certifying (1) that such funds will be used to
pay or reimburse Tenant for such capital expenses and a description thereof, (2)
that the same has not been the subject of a previous disbursement and (3) that
all previous disbursements have been used to pay the previously identified
approved capital expenses, and (B) lien waivers or other evidence of payment
satisfactory to Landlord, (C) at Landlord's option, a title search for the
applicable Project or Projects indicating that such Project or Projects are free
from all liens, claims and other encumbrances not previously approved by
Landlord and (D) such other evidence as Landlord shall reasonably request that
the capital expenditures at the subject Project or Projects to be funded by the
requested disbursement have been completed and are paid for or will be paid upon
such disbursement to Tenant.
 
(e) Landlord shall disburse, or shall cause Lender to disburse, funds held in
the Rollover Reserve Account to Tenant, within 15 days after the delivery by
Tenant to Landlord of a request therefor (but not more often than once per
month), in increments of at least $5,000, provided (i) such disbursement is for
a leasing expense approved by Landlord; (ii) Landlord shall have (if it desires)
verified (by an inspection conducted at Tenant's expense) performance of any
construction work associated with such leasing expense; and (iii) the request
for disbursement is accompanied by (A) a certificate of Tenant's chief financial
officer certifying (w) that such funds will be used only to pay (or reimburse
Tenant for) such approved leasing expenses and a description thereof, (x) that
the same has not been the subject of a previous disbursement, and (y) that all
previous disbursements have been used only to pay (or reimburse Tenant for) the
previously identified approved leasing expenses, and (B) reasonably detailed
supporting documentation as to the amount, necessity and purpose therefor.
 
(f) Tenant shall have the option, at any time when no Event of Default exists,
to deliver a Letter of Credit in a face amount equal to the sum then required to
be on deposit in the Capital Reserve Account and having a term of one year (the
“Capital Reserve L/C”).  Upon the delivery by Tenant of the Capital Reserve L/C,
Landlord shall return or cause to be returned to Tenant the then balance in the
Capital Reserve Account.  Tenant’s delivery of the Capital Reserve L/C in
accordance with this Section 2.7(f) shall not reduce Tenant's obligation to make
subsequent deposits into the Capital Reserve Account as required in accordance
with Section 2.7(a).  Provided no Event of Default then exists, Landlord shall
return or cause to be returned the Capital Reserve L/C to Tenant upon the
satisfaction of the conditions to the release of the balance of the Capital
Reserve Account set forth in Section 2.7(d); provided that, at such time as
Tenant is entitled to a partial disbursement of proceeds from the Capital
Reserve Account in accordance with Section 2.7(d), Landlord shall, provided no
Event of Default then exists, agree to accept a new Capital Reserve L/C or an
amendment to the Capital Reserve L/C which will have the effect of reducing the
Capital Reserve L/C to an amount equal to the then aggregate required balance of
the Capital Reserve Account.  Landlord (or Lender) shall have the right, but not
the obligation, to draw down all or any portion of the Capital Reserve L/C and
deposit the proceeds thereof into the Capital Reserve Account to be held in
accordance with this Section 2.7, upon the occurrence of any of the following:
 
(i)  
if Landlord and Lender receive a Non-Renewal Notice (as hereinafter defined),
twenty-five days before the expiration of the Capital Reserve L/C, but only if
Tenant has not previously delivered a replacement Capital Reserve L/C;

 
(ii)  
if Landlord receives a notice from the issuer of the Capital Reserve L/C that
the Capital Reserve L/C will be terminated, twenty-five days before the
effective date of the termination, but only if Tenant has not previously
delivered a replacement Capital Reserve L/C; or

 
(iii)  
ten Business Days after Landlord has notified Tenant that the issuer of the
Capital Reserve L/C is no longer an Approved Bank, but only if Tenant has not
previously delivered a replacement Capital Reserve L/C.

 
Notwithstanding anything to the contrary contained in this Section 2.7 or
elsewhere in this Lease, neither Landlord nor Lender shall have any obligation
to draw on the Capital Reserve L/C upon the happening of an event described in
clauses (i) through (iv) above, and neither Landlord nor Lender shall be liable
for any losses sustained by Tenant due to the insolvency of the issuer of the
Capital Reserve L/C, notwithstanding that neither Landlord nor Lender elected to
draw on the Capital Reserve L/C.  If for any reason the Capital Reserve L/C
shall expire without a replacement Capital Reserve L/C having been delivered to
Landlord, Tenant shall within 5 days after demand, unless Landlord or Lender
shall have drawn on the Capital Reserve L/C prior to its expiration, deliver to
Landlord a new Capital Reserve L/C.  "Letter of Credit" shall mean an
irrevocable, unconditional, transferable, clean sight draft, letter of credit in
favor of Landlord, or, at any time the Loan is in place, Lender, and entitling
Landlord or Lender, as the case may be, to draw thereon in New York, New York,
issued by a domestic Approved Bank or the U.S. agency or branch of a foreign
Approved Bank, to Tenant or an applicant/obligor that is an Affiliate of Tenant,
which letter of credit shall provide that such letter of credit shall be deemed
to be automatically renewed, without amendment, for consecutive periods of one
year each, unless the issuing bank sends a written notice (a "Non-Renewal
Notice") to Landlord and Lender by certified or registered mail, return receipt
requested, not less than thirty (30) days next preceding the then expiration
date of such letter of credit, that it elects not to have such letter of credit
renewed.  "Approved Bank" shall mean a bank whose long term unsecured debt
obligations are rated at least “AA” by Standard & Poor's Rating Group or,
provided that Tenant delivers a confirmation to the effect described in Section
3.4(d)(ii), such other bank whose long term unsecured debt obligations are rated
at least "A" by Standard & Poor's Rating Group; provided, however, that any
Letter of Credit supplied in connection with the immediately preceding proviso
shall be for an amount not in excess of $100,000.
 
(g) Tenant shall have the option, at any time when no Event of Default exists,
to deliver a Letter of Credit in a face amount equal to the sum then required to
be on deposit in the Rollover Reserve Account and having a term of one year (the
“Rollover Reserve L/C”).  Upon the delivery by Tenant of the Rollover Reserve
L/C, Landlord shall return or cause to be returned to Tenant the then balance in
the Rollover Reserve Account.  Tenant’s delivery of the Rollover Reserve L/C in
accordance with this Section 2.7(g) shall not reduce Tenant's obligation to make
subsequent deposits into the Rollover Reserve Account as required in accordance
with Section 2.7(a).  Provided no Event of Default then exists, Landlord shall
return or cause to be returned the Rollover Reserve L/C to Tenant upon the
satisfaction of the conditions to the release of the balance of the Rollover
Reserve Account set forth in Section 2.7(e); provided that, at such time as
Tenant is entitled to a partial disbursement of proceeds from the Rollover
Reserve Account in accordance with Section 2.7(e), Landlord shall, provided no
Event of Default then exists, agree to accept a new Rollover Reserve L/C or an
amendment to the Rollover Reserve L/C which will have the effect of reducing the
Rollover Reserve L/C to an amount equal to the then aggregate required balance
of the Rollover Reserve Account.  Landlord (or Lender) shall have the right, but
not the obligation, to draw down all or any portion of the Rollover Reserve L/C
and deposit the proceeds thereof into the Rollover Reserve Account to be held in
accordance with this Section 2.7, upon the occurrence of any of the following:
 
(i)  
Landlord and Lender receive a Non-Renewal Notice, twenty-five days before the
expiration of the Rollover Reserve L/C, but only if Tenant has not previously
delivered a replacement Rollover Reserve L/C;

 
(ii)  
if Landlord receives a notice from the issuer of the Rollover Reserve L/C that
the Rollover Reserve L/C will be terminated, twenty-five days before the
effective date of the termination, but only if Tenant has not previously
delivered a replacement Rollover Reserve L/C; or

 
(iii)  
ten Business Days after Landlord has notified Tenant that the issuer of the
Rollover Reserve L/C is no longer an Approved Bank, but only if Tenant has not
previously delivered a replacement Rollover Reserve L/C.

 
Notwithstanding anything to the contrary contained in this Section 2.7 or
elsewhere in this Lease, neither Landlord nor Lender shall have any obligation
to draw on the Rollover Reserve L/C upon the happening of an event described in
clauses (i) through (iv) above, and neither Landlord nor Lender shall be liable
for any losses sustained by Tenant due to the insolvency of the issuer of the
Rollover Reserve L/C, notwithstanding that neither Landlord nor Lender elected
not to draw on the Rollover Reserve L/C.  If for any reason the Rollover Reserve
L/C shall expire without a replacement Rollover Reserve L/C having been
delivered to Landlord, Tenant shall within 5 days after demand, unless Landlord
or Lender shall have drawn on the Rollover Reserve L/C prior to its expiration,
deliver to Landlord a new Rollover Reserve L/C.
 

2.8  
Assignment to Lender

 
.  Tenant acknowledges that Landlord will assign this Lease, together with any
security deposit to be posted hereunder, to Lender as collateral for the Loan
and consents thereto.
 
ARTICLE 3.                                
 
3.1  
Procedure Upon Purchase.

 
(a) If Tenant shall purchase one or more Projects pursuant to this Lease,
Landlord shall convey or cause to be conveyed title thereto on an "as is, where
is" basis and without recourse to or warranty by the Landlord, and Tenant or its
designee shall accept such title, subject to the condition of the applicable
Project on the date of purchase, the Permitted Exceptions, all liens and
encumbrances created by, through, under or with the consent of Tenant and all
applicable Legal Requirements (including, without limitation, the power of
eminent domain), and subject to the same disclaimers as set forth in Section 1.1
(b), but free of the lien of the Indenture and of liens and encumbrances
resulting from acts of Landlord taken without the consent of Tenant.
 
(b) Upon the date fixed for any purchase of any Project, Tenant shall, by wire
transfer of immediately available funds, pay to Landlord, or as Landlord may
direct in writing, the purchase price therefor specified herein, together with
all Basic Rent, Additional Rent, the Make Whole Premium (as hereinafter
defined), if applicable, and other sums then accrued or due and payable under
this Lease with respect to the applicable Project to and including such date of
purchase, and there shall be delivered to Tenant a deed to or other conveyance
of the interests in the applicable Project or portion thereof then being sold to
Tenant and any other instruments necessary to convey the title thereto described
in Section 3.1(a) and to assign any other property then required to be assigned
by Landlord pursuant hereto.  Tenant shall pay, on an after-tax basis, (i) all
charges incident to such conveyance and assignment, including, without
limitation, reasonable counsel fees, escrow fees, recording fees, title
insurance premiums, transfer taxes and all other applicable taxes (other than
any income or franchise taxes of Landlord) which may be imposed by reason of
such conveyance and assignment and the delivery of said deed or conveyance and
other instruments, (ii) all costs and expenses (other than the Make Whole
Premium) incurred by Landlord in connection with a defeasance of all or any
portion of the indebtedness secured by the Indenture, including, without
limitation, reasonable attorneys’ fees and expenses of Landlord, Lender and the
Rating Agencies (as hereinafter defined), any revenue, documentary stamp or
intangible taxes, or any other tax or charge due in connection with the transfer
or creation of the note or notes which evidence the indebtedness secured by the
Indenture or the defeased indebtedness, and (iii) all costs and expenses
associated with the release of the lien of the Indenture from the applicable
Project. Upon the completion of any purchase of an entire Project (but not of
any lesser interest than an entire Project) but not prior thereto (whether or
not any delay or failure in the completion of such purchase shall be the fault
of Landlord), this Lease shall terminate with respect to such Project, except
with respect to obligations and liabilities of Tenant under this Lease, actual
or contingent, which have arisen on or prior to such completion of purchase or
which, pursuant to the provisions of this Lease, survive such termination.  The
“Make Whole Premium” shall have the meaning set forth in the Indenture, or if
not defined in the Indenture, shall mean the amount which Landlord is obligated
to pay in excess of outstanding principal and accrued interest in connection
with a full or partial prepayment or defeasance of the Indenture, which
prepayment or defeasance arises as a result of the event giving rise to the Make
Whole Premium; provided that notwithstanding any other provision of this Lease
to the contrary, Tenant shall not be liable to Landlord or Lender for any Make
Whole Premium in the event of a purchase by Tenant of a Project pursuant to a
Rejectable Offer (as hereinafter defined) in the event of a Major Casualty or
Major Condemnation (as hereinafter defined).  To the extent that the provisions
of this Lease require Tenant to pay sums then accrued or due and payable under
this Lease with respect to a Project on a Lease Termination Date (as hereinafter
defined) and such Lease Termination Date does not occur on a Payment Date, such
accrued amounts shall include all Basic Rent allocated to the applicable Project
(such amount to be determined by multiplying the then annual Basic Rent by a
fraction, the numerator of which is the allocated adjustment amount allocated to
the applicable Project in Schedule G attached hereto and made a part hereof, and
the denominator of which is the aggregate amount allocated in Schedule G to all
Projects then subject to this Lease) from and including the immediately
preceding Payment Date, through and including such Lease Termination Date
(allocated on a per diem basis based on a 360-day year for the annual Basic Rent
and the actual number of days elapsed) plus any additional interest (which may
include interest attributable to a period subsequent to the Lease Termination
Date if such Lease Termination Date is other than the first day of a month (or
such other date in which a loan payment is due under the Loan Agreement)) or
other expenses payable under the Loan in connection with prepayment of the
Loan.  Tenant acknowledges that, notwithstanding certain provisions permitting
rights of purchase or substitution in connection with a Major Casualty, a Major
Condemnation or a Project becoming Economically Obsolete, this Lease is a single
unitary master lease, that the entering into by Tenant of this single, unitary
master lease was a material inducement to Landlord to purchase the Projects from
the Seller and that Landlord would not have purchased any Project independently
or the Projects as a whole without the inducement of this single, unitary master
lease.
 
(c) In the event that this Lease shall be terminated with respect to a
particular Project upon purchase of such Project by Tenant or upon rejection of
a Rejectable Offer (as hereinafter defined) or a Rejectable Substitution Offer
(as hereinafter defined), the Basic Rent from and after the applicable Lease
Termination Date shall be adjusted to reflect the termination of the applicable
Project in the manner set forth in Schedule E attached hereto and made a part
hereof.  In the event of the termination of this Lease with respect to a
particular Project as a result of a substitution, the Basic Rent shall not be
adjusted.
 
3.2  
Condemnation and Casualty.

 
(a) General Provisions.  Subject to Tenant’s rights to utilize or obtain the
same in accordance with Section 3.2(b) and Section 3.6, Tenant hereby
irrevocably assigns to Landlord any award, compensation or insurance payment to
which Tenant may become entitled by reason of Tenant’s interest in the Premises
(i) if the use, occupancy or title of a Project or any part thereof is taken,
requisitioned or sold in, by or on account of any actual or threatened eminent
domain proceeding or other action by any person having the power of eminent
domain (“Condemnation”) or (ii) if a Project or any part thereof is damaged or
destroyed by fire, flood or other casualty (“Casualty”) (all awards,
compensations, and insurance payments on account of any Condemnation or Casualty
net of (A) any amounts applicable to Tenant’s Personal Property (B) provided
that no Event of Default shall have occurred and be continuing, any amounts
applicable to the interruption of Tenant’s business within the affected Project
hereinafter collectively called “Compensation”).  In the event of any Casualty,
or in the event of a Condemnation or threatened Condemnation with respect to a
Project, Tenant shall give prompt written notice thereof to Landlord, with a
copy to Lender, (which notice shall set forth Tenant’s good faith estimate of
the cost of repairing or restoring any damage or destruction caused thereby, or,
if Tenant cannot reasonably estimate the anticipated cost of restoration, Tenant
shall nonetheless give Landlord, with a copy to Lender prompt notice of the
occurrence of any such Casualty or Condemnation, and will diligently proceed to
obtain estimates to enable Tenant to quantify the anticipated cost of such
restoration, whereupon Tenant shall promptly notify Landlord, with a copy to
Lender, of such good faith estimate).  If a Casualty covered by any insurance
policy maintained in accordance with the terms hereof (an "Insured Casualty")
occurs where the loss does not exceed $250,000, provided no Default or Event of
Default has occurred and is continuing, Tenant may settle and adjust any claim
without the prior consent of Landlord; provided such adjustment is carried out
in a competent and timely manner, and Tenant is hereby authorized to collect and
receipt for the insurance proceeds (the "Proceeds").  In the event of an Insured
Casualty where the loss equals or exceeds $250,000 (a "Significant Casualty"),
Tenant may settle and adjust any claim, provided that (i) no Default or Event of
Default has occurred and is continuing, (ii) such claim is settled in a timely
and competent manner, (iii) each of Landlord and Lender may, at its option,
participate in the settlement and adjustment of any claim, (iv) Tenant shall not
settle any such claim without the prior written consent of each of Landlord and
Lender, which consent shall not unreasonably be withheld and (v) the Proceeds
shall be due and payable solely to Landlord or, if required by the Indenture,
Lender.  The expenses incurred by Landlord and Lender in the settlement,
adjustment and collection of the Proceeds shall be reimbursed by Tenant upon
demand.  In the event of a Condemnation, Tenant may settle and adjust any claim,
provided that (i) no Default or Event of Default has occurred and is continuing,
(ii) such claim is settled in a timely and competent manner, (iii) each of
Landlord and Lender may, at its option, participate in the settlement and
adjustment of any claim and (iv) Tenant shall not settle any such claim without
the prior written consent of each of Landlord and Lender, which consent shall
not be unreasonably withheld and (v) the proceeds of such Condemnation shall be
due and payable solely to Landlord or, if required by the Indenture,
Lender.  All Compensation shall be paid directly to Landlord (or at Landlord's
discretion, to Lender) and shall be applied pursuant to the applicable
provisions of Article 3, and all such Compensation (less the reasonable costs
and expenses of Landlord, Tenant and Lender, if applicable, in collecting such
Compensation), is herein called the “Net Proceeds”.
 
(b) Major Condemnation and Major Casualty.  If (i) a Condemnation shall take
more than twenty percent (20%) of the land area of a Project and is reasonably
likely to have a material adverse effect on Tenant's business conducted at the
Project, or (ii) the Net Proceeds of such Condemnation shall be for an amount in
excess of $2,000,000, or (iii) if a Casualty shall affect more than fifty
percent (50%) (or twenty percent (20%) if in connection with a Rejectable
Substitution Offer described in Section 3.3(a)(i)(B)) of the building area in a
Project, and any such event shall render such Project unsuitable for restoration
for continued use and occupancy in Tenant’s business, or (iv) there is taken or
conveyed, such that restoration is not practically or economically
feasible,  (A) a portion of the parking area contained within the applicable
Project such that the remaining portion of said parking area contains greater
than or equal to twenty percent (20%) fewer parking spaces than existed at such
Project immediately prior to such casualty or condemnation, or (B) any part of
the loading and maneuvering area serving the Premises such that loading or
maneuvering becomes impractical, or (C) any of the entrances or exits to the
Land, or (v) if as a result of such Casualty or Condemnation the affected
Project cannot be restored within eighteen (18) months to the affected Project's
pre-existing condition and utility as existed immediately prior to such Insured
Casualty or Condemnation and to an economic unit not less valuable and not less
useful than the same was immediately prior to such Insured Casualty or
Condemnation or (vi) if such Condemnation or Casualty shall otherwise render
such Project unsuitable for restoration for continued use and occupancy in
Tenant’s business and Tenant shall provide evidence thereof reasonably
acceptable to Landlord (herein, a “Major Casualty” and a “Major Condemnation”),
then Tenant may, and in connection with any event described in clause (v) shall,
not later than thirty (30) days after such Major Condemnation or Major Casualty,
as the case may be, deliver to Landlord (x) notice of its intention to terminate
this Lease with respect to such Project on the first Payment Date (herein, with
respect to any termination resulting from a Rejectable Offer or a Rejectable
Substitution Offer, the “Lease Termination Date”) which occurs not less than one
hundred twenty (120) days and not more than one hundred fifty (150) days after
the delivery of such notice (it being understood that in all events under this
Lease, the Lease Termination Date must be on a Payment Date) and (y) a
certificate of Tenant describing the event giving rise to such termination and
stating that Tenant has determined in good faith that such Major Condemnation or
Major Casualty, as the case may be, has rendered the applicable Project
unsuitable for restoration for continued use and occupancy in Tenant’s business,
and (z) documentation to the effect that termination of this Lease with respect
to such Project will not be in material violation of any agreement then in
effect with which Tenant is obligated to comply pursuant to this Lease.  If the
Lease Termination Date occurs during the Primary Term, such notice must be
accompanied by either a Rejectable Offer or a Rejectable Substitution Offer, as
described in Section 3.3, in which event the provisions of such Section shall be
controlling.
 
3.3  
Rejectable Offer and Substitution.

 
(a) In the event of a Major Casualty or Major Condemnation during the Primary
Term, Tenant shall deliver to Landlord, no later than thirty (30) days after
such Major Casualty or Major Condemnation, (i) either (A) an irrevocable
rejectable written offer (the “Rejectable Offer”) to purchase Landlord’s
interest in the affected Project on the Lease Termination Date for a price equal
to the “Stipulated Loss Value” as specified on Schedule F attached hereto and
made a part hereof, or (B) provided that the proposed Lease Termination Date is
after the earlier of (1) forty two (42) months from the date hereof and (2) two
(2) years from the "starting day" (within the meaning of Section 860G(a)(9) of
the Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder (the "Code")) of the securitization of the Loan (as hereinafter
defined) (the "Lockup Period") so long as no Event of Default shall have
occurred and be continuing, an irrevocable written offer (the “Rejectable
Substitution Offer”) to substitute a Substitute Project (as hereinafter
defined), for the affected Project on the Lease Termination Date in accordance
with Section 3.4, and (ii) a certificate from the president, the chief financial
officer or the treasurer of Tenant (herein, a “Responsible Officer”) which (A)
describes the event(s) giving rise to the Major Casualty or Major Condemnation,
as the case may be, and (B) states that Tenant has determined that such event
has rendered such Project unsuitable for restoration or for the continued use
and occupancy in Tenant’s business, and (iii) if Tenant delivers a Rejectable
Substitution Offer, the following items (herein, the “Substitution Documents”)
(A) a description of the proposed Substitute Project, (B) an Acceptable
Appraisal of the Replaced Project (as hereinafter defined), performed in
accordance with the criteria set forth in Section 3.4 from an Approved
Appraiser,  (C) a current appraisal of the proposed Substitute Project performed
in accordance with the criteria set forth in Section 3.4, (D) a current title
insurance commitment for the proposed Substitute Project satisfying the
requirements set forth in Section 3.4, (E) a current ALTA survey for the
proposed Substitute Project satisfying the requirements set forth in Section
3.4, (F) a current Phase I environmental report for the proposed Substitute
Project satisfying the requirements set forth in Section 3.4, (G) operating
statements for the proposed Substitute Project for the previous three (3) years
(or such shorter period of operation by Tenant or its Affiliate), (H) a current
engineering report for the proposed Substitute Project satisfying the
requirements of Section 3.4 and (I) an indemnity for adverse tax
consequences.  Within ninety (90) days of the date Landlord receives the items
required to be delivered in (i), (ii) and (iii) above, as applicable, (x) if
Landlord receives a Rejectable Offer, Landlord shall deliver written notice of
its election to either accept or reject Tenant’s Rejectable Offer (with a
failure to respond constituting an acceptance of such Rejectable Offer), and (y)
if Landlord receives a Rejectable Substitution Offer, Landlord shall deliver
written notice of its election to either accept or reject the Rejectable
Substitution Offer  (with a failure to respond constituting an acceptance of
such Rejectable Substitution Offer), provided that the Substitution (as
hereinafter defined) satisfies the conditions of Section 3.4 (it being
specifically understood that an acceptance of the Rejectable Substitution Offer
shall not constitute satisfaction of any of the conditions set forth in Section
3.4).  Any rejection by Landlord of a Rejectable Offer or Rejectable
Substitution Offer shall comply with and be accomplished in accordance with the
provisions of Section 3.5.  In the event of an acceptance or deemed acceptance
of a Rejectable Offer, on the applicable Lease Termination Date, the applicable
Project shall be conveyed to Tenant or its designee in exchange for payment by
Tenant to Landlord of the applicable Stipulated Loss Value, together with all
Basic Rent, Additional Rent and other sums accrued or due and payable under this
Lease with respect to the applicable Project as of the applicable Lease
Termination Date and on the applicable Lease Termination Date, the Net Proceeds,
if any, payable in connection with the Major Casualty or Major Condemnation
triggering the right to make such Rejectable Offer (or the right to receive the
same when made if payment therefor has not yet been made) shall, notwithstanding
anything to the contrary contained in this Section 3.3., be assigned and/or
turned over to the Tenant on the closing of the title for the applicable
Project, provided that all amounts payable to Landlord in connection with such
acceptance or deemed acceptance of a Rejectable Offer, including the purchase
price of the applicable Project, have been paid.  In the event of an acceptance
or deemed acceptance of a Rejectable Substitution Offer, on the applicable Lease
Termination Date, the Replaced Project shall (upon satisfaction of the
conditions set forth in Section 3.4) be conveyed to Tenant or its designee in
exchange for delivery of the Substitute Project, and upon payment by Tenant to
Landlord of all Basic Rent, Additional Rent and other sums accrued or due and
payable under this Lease with respect to the applicable Project as of the Lease
Termination Date and on the applicable Lease Termination Date, the Net Proceeds,
if any, payable in connection with the Major Casualty or Major Condemnation
triggering the right to make such Rejectable Substitution Offer (or the right to
receive the same when made if payment therefor has not yet been made) shall,
notwithstanding anything to the contrary contained in this Section 3.3., be
assigned and/or turned over to the Tenant on the closing of the title for the
Replaced Project, provided that all amounts payable to Landlord in connection
with such acceptance or deemed acceptance of a Rejectable Substitution Offer
have been paid. For purposes of this Section 3.3, an appraisal, report, survey,
environmental report, operating statement, engineering report, or any other
document permitted to be delivered pursuant to this Section 3.3, shall
be  “current” if it is dated within one hundred twenty (120) days prior to the
proposed Lease Termination date.  Acceptable Appraisal shall mean an appraisal
of a proposed Substitute Project that is (i) dated not more than 120 days prior
to the applicable Lease Termination Date, (ii) signed by a qualified,
independent MAI appraiser with no interest, direct or indirect, in the Loan or
any Project, and whose compensation is not affected by the value of the Project
reflected in such appraisal, (iii) addressed to Landlord and Lender and its
successors and assigns, (iv) made in compliance with the requirements of the
Federal National Mortgage Association Company or Federal Home Loan Mortgage
Corporation, or any successor thereto, and Title XI of the Federal Institutions
Reform, Recovery, and Enforcement Act of 1989 and the regulations promulgated
thereunder and (v) otherwise reasonably satisfactory to the Landlord and the
Lender in all respects.
 
(b) In the event that a Project becomes Economically Obsolete, Tenant shall be
allowed, provided that the Lockup Period has expired, to deliver to Landlord (i)
(x) so long as no Event of Default has occurred and is continuing and (y) the
substitution complies with all REMIC (as hereinafter defined) or other
securitization regulations applicable to the Loan, a Rejectable Substitution
Offer to substitute a Substitute Project for the affected Project on the Lease
Termination Date in accordance with Section 3.4, and (ii) a certificate from a
Responsible Officer of Tenant which (A) describes the event(s) giving rise to
the Project becoming Economically Obsolete, (B) states that Tenant has
determined that the Project is Economically Obsolete, and (C) states that Tenant
shall not use such Project in Tenant’s business for five (5) years after the
closing of the transfer of the Project and (iii) the Substitution
Documents.  Within ninety (90) days of the date Landlord receives the items
referenced in (i), (ii) and (iii) of this Section 3.3(b), Landlord shall deliver
written notice of its election to either accept or reject Tenant’s Rejectable
Substitution Offer (with a failure to respond constituting an acceptance of such
Rejectable Substitution Offer), provided that the Substitution satisfies the
conditions of Section 3.4 (it being specifically understood that an acceptance
of the Rejectable Substitution Offer shall not constitute satisfaction of any of
the conditions set forth in Section 3.4).  In the event of an acceptance or
deemed acceptance of a Rejectable Substitution Offer, on the applicable Lease
Termination Date, the applicable Project shall (upon satisfaction of the
conditions set forth in Section 3.4) be conveyed to Tenant or its designee in
exchange for delivery of the Substitute Project, and upon payment by Tenant to
Landlord of all Basic Rent, Additional Rent and other sums accrued or due and
payable under this Lease with respect to the applicable Project as of the Lease
Termination Date.  “Economically Obsolete” shall mean (i) a Project occupied by
Tenant which, for a period of the immediately preceding eight quarters, as of
the end of any fiscal quarter, has a Rent Coverage Ratio of less than 1.25 to 1,
as certified by a Responsible Officer of Tenant in writing to Landlord, having
exercised reasonable business judgment in making its determination or (ii) a
Project occupied by a sublessee permitted by this Lease pursuant to a sublease
under which such sublessee is paying rent equal to less than 125% of the portion
of Basic Rent allocable to such Project.
 
(c) In addition to the Substitution rights set forth in Sections 3.3(a) and (b),
during the Term of this Lease, Tenant shall be allowed, provided that the Lockup
Period has expired, and provided that (x) no Event of Default shall have
occurred and be continuing and (y) the substitution complies with all REMIC (as
hereinafter defined) or other securitization regulations applicable to the Loan,
to make a Substitution pursuant to a Rejectable Substitution Offer with respect
to a maximum of two (2) Projects, provided that Tenant complies with the
provisions of this Section and the other provisions of this Lease.  Landlord
agrees that Tenant may request Landlord's consent to the right to make one
additional Substitution pursuant to this Section 3.3(c), the granting or
rejection of such request to be Landlord's sole and absolute discretion and
subject to Lender's prior written consent.  In the event that Tenant shall
desire to utilize such right, Tenant shall deliver to Landlord (i) an
irrevocable Rejectable Substitution Offer to substitute a Substitute Project for
the affected Project on the Lease Termination Date in accordance with Section
3.4, and (ii) the Substitution Documents.  Within ninety (90) days of the date
Landlord receives the items referenced in (i) and (ii) of this Section 3.3(c),
Landlord shall deliver written notice of its election to either accept or reject
Tenant’s Rejectable Substitution Offer (with a failure to respond within such
ninety (90) day period constituting an acceptance of such Rejectable
Substitution Offer), provided that the Substitution satisfies the conditions of
Section 3.4 (it being specifically understood that an acceptance of the
Rejectable Substitution Offer shall not constitute satisfaction of any of the
conditions set forth in Section 3.4).  In the event of an acceptance or deemed
acceptance of a Rejectable Substitution Offer, on the applicable Lease
Termination Date, the Replaced Project shall (upon satisfaction of the
conditions set forth in Section 3.4) be conveyed to Tenant or its designee in
exchange for delivery of the Substitute Project, and Tenant shall pay all costs
and expenses associated therewith, as outlined herein with respect to any other
Substitution.  If Landlord rejected a Rejectable Substitution Offer that
satisfies the conditions for Substitution set forth herein under this Section
3.3(c), then this Lease shall terminate on the Lease Termination Date with
respect to such Project in accordance with the provisions of Section 3.5.
 
(d) In the event that Landlord receives a Rejectable Substitution Offer,
Landlord shall, within forty-five (45) days after receipt of the Substitution
Documents, deliver to Tenant its written approval or disapproval of the matters
contained in the Substitution Documents, which approval shall not be
unreasonably withheld (with a failure to deliver notice within such forty-five
(45) day period constituting disapproval).  An approval of the Substitution
Documents shall not constitute an acceptance of the Rejectable Substitution
Offer, and a disapproval of the Substitution Documents shall not constitute a
rejection of the Rejectable Substitution Offer.  An acceptance or rejection of
the Rejectable Substitution Offer shall be accomplished only in accordance with
Sections 3.3(a) and 3.3(b) above.  If Landlord approves of the Substitution
Documents (it being understood that such approval shall not constitute
satisfaction of the conditions set forth in Section 3.4, but such approval shall
estop Landlord from later objecting to items previously specifically approved in
writing, but not those items arising subsequent to such approval), the parties
shall proceed to Substitution, provided that Landlord ultimately accepts the
Rejectable Substitution Offer and provided that Tenant ultimately satisfies the
conditions of Section 3.4 for Substitution.  If Landlord disapproves of the
Substitution Documents (or any portion thereof), Tenant shall have up to thirty
(30) days to cure any matter to which Landlord has objected.  If Landlord has
not approved of such matter in writing within five (5) days of Tenant’s cure
thereof, Tenant shall not be allowed to make the Substitution.
 
(e) Tenant agrees that so long as any portion of the note secured by the
Indenture is outstanding, Tenant shall deliver to Lender, concurrently with the
delivery thereof to Landlord, a copy of any notice of termination of this Lease
(in whole or in part) and of any Rejectable Offer or Rejectable Substitution
Offer, together with all items required to be delivered in connection therewith
and together with copies of all items required to be delivered pursuant to
Sections 3.3 and 3.4.
 
3.4  
Substitution.

 
(a) In the event that Tenant has made (and Landlord has accepted or is deemed to
have accepted) a Rejectable Substitution Offer, as outlined in Section 3.3,
Tenant shall replace, on the Lease Termination Date (a “Substitution”), the
affected Project (the “Replaced Project”) with a Substitute Project upon
satisfaction of the conditions set forth in this Section 3.4, and upon delivery
to Landlord, if applicable, (with a copy to any assignee of this Lease,
including Lender) of a certificate from a Responsible Officer of Tenant setting
forth the determination of Tenant as outlined in Section 3.3.  “Substitute
Project” means a property which (i) has a Fair Market Value (as hereinafter
defined) at least equal to the greater of that of the Replaced Project as of the
date of the Substitution or as of the date of this Lease, (ii) the Improvements
constituting a part of such Substitute Project have a remaining useful life and
residual value substantially equivalent to, or better than, that of the
Improvements constituting a part of the Replaced Project, (iii) is located in
(A) the same state as the Replaced Project or (B) in another state acceptable to
Landlord in Landlord’s reasonable discretion (it being understood that Landlord
shall not unreasonably withhold its consent to any state in which another
Project is located, provided that Tenant shall pay any increased costs by reason
of a Substitution in another jurisdiction) and (iv) is located in a market with
similar characteristics and demographics as the Replaced Project.  In the case
of a Substitution as a result of a Major Casualty or Major Condemnation, the
Fair Market Value of the Replaced Project and the remaining useful life and
residual value of the Improvements constituting a part thereof shall be
determined as of the date which is immediately prior to such Major Condemnation
or Major Casualty (including, if construction is anticipated or being
accomplished at such time with respect to such Replaced Project, the appraised
value of the completed Project assuming that Completion of the Project has
occurred).  In the case of a Substitution as a result of a Project becoming
Economically Obsolete, the Fair Market Value of the Replaced Project shall be
equal to the appraised value as of the date hereof (including, if construction
(including, without limitation, any renovation required under Section 9.1) is
anticipated or being accomplished at such time with respect to such Replaced
Project, the appraised value of the completed Project assuming that Completion
of the Project has occurred).  In the case of a Substitution pursuant to Section
3.3(c), the Fair Market Value of the Replaced Project shall be determined as of
the date of Substitution (including, if construction (including, without
limitation, any renovation required under Section 9.1) is anticipated or being
accomplished at such time with respect to such Replaced Project, the appraised
value of the completed Project assuming that Completion of the Project has
occurred).  Fee simple title to the Substitute Project must be conveyed to
Landlord and Landlord will not accept a ground lease.  At the time of
substitution, a Substitute Project must be an operating Project which Tenant
intends to continue to operate pursuant to and in accordance with Section 1.2
hereof.
 
(b) Notwithstanding any contrary provision hereof, in the event that Tenant has
made (and Landlord has previously approved the Substitution Documents and has
accepted or is deemed to have accepted) a Rejectable Substitution Offer with
respect to a Project arising as a result of a Major Condemnation or Major
Casualty, but Tenant fails to meet the conditions of Substitution set forth in
Section 3.4(d) on or before the applicable Lease Termination Date, Tenant shall
not be allowed to make such Substitution.  In such event, this Lease shall
continue in full force and effect, Tenant shall be deemed to have made a
Rejectable Offer on the initially-scheduled Lease Termination Date, and Landlord
shall either accept or reject such deemed Rejectable Offer no later than sixty
(60) days after the initially-scheduled Lease Termination Date.  A failure by
Landlord to either accept or reject such deemed Rejectable Offer shall be deemed
acceptance.  The Lease Termination Date in such event shall be the first Payment
Date occurring not less than thirty (30) days after acceptance or rejection of
such deemed Rejectable Offer.  In the event that Tenant has made (and Landlord
has previously approved the Substitution Documents) any other Rejectable
Substitution Offer pursuant to the provisions of this Lease, but Tenant fails to
meet the conditions of Substitution set forth in Section 3.4(d) on or before the
applicable Lease Termination Date, Tenant shall not be allowed to make such
Substitution.  In such event, this Lease shall continue in full force and effect
with respect to the applicable Project.
 
(c) The term “Fair Market Value” shall mean the value of a fee simple interest
in the applicable Replaced Project or Substitute Project, unencumbered by this
Lease and any Indenture (and in at least the condition required to be maintained
pursuant to this Lease) and determined at the time in question.  If Landlord is
in agreement with the appraisals delivered by Tenant as a part of the
Substitution Documents (which appraisals shall be by appraisers approved in
advance by Landlord and Lender and, at the request of Landlord, shall provide
that the party or parties engaging such appraiser shall be the Landlord or the
Lender or both), such appraisals shall be utilized to determine Fair Market
Value.  If Landlord gives Tenant written notice of its disapproval of an
appraisal delivered by Tenant (to be delivered by Landlord within the thirty
(30) day period referred to in the second line of Section 3.3(d) above), Fair
Market Value shall be determined using Landlord's and Lender's respective
standard valuation methods.  Any such determination shall be prepared by a
qualified, independent MAI appraiser who is both a member of the American
Institute of Appraisers and actively engaged in the appraisal of real property
in the area where such property is located.  Any appraisal delivered by Tenant
in connection with this Article 3 shall be dated no more than 120 days prior to
the proposed initial Lease Termination Date and shall expressly provide that
each of Landlord and Lender shall be entitled to rely thereon.  For the purposes
of this Lease, "Approved Appraiser" shall mean an appraiser meeting the criteria
set forth above in this Section 3.4(c)(i) who (A) holds no interest, direct or
indirect,  in the Loan or the Project being appraised and (B) whose compensation
is not affected by the value of the Project reflected in such appraisal.  An
appraiser shall not, in making its appraisal of the Replaced Project and the
Substitute Project, attribute any value to any of Tenant’s Personal Property.
 
(d) In the event that Tenant shall make a Rejectable Substitution Offer in
compliance with the provisions of Sections 3.3 and 3.4, and Landlord shall have
accepted (or be deemed to have accepted) such Rejectable Substitution Offer,
Tenant shall be allowed to make such Substitution, provided that all of the
following conditions precedent are satisfied in the reasonable judgment of
Landlord and, as required by the Indenture, Lender:
 
(i)  
there shall be no Event of Default at the time of the Rejectable Substitution
Offer or on the applicable Lease Termination Date;

 
(ii)  
so long as any portion of the loan secured by the Indenture (the “Loan”) is
outstanding, Landlord shall request promptly and as soon thereafter as is
reasonably practicably obtain and deliver to Lender (at Tenant’s expense) a
written confirmation from each of Standard & Poor’s Rating Group, Fitch Ratings,
Inc. and Moody’s Investors Service Inc. or any successor thereto, or any other
nationally recognized credit rating agency(ies) which is rating securities
issued in connection with any securitization which includes the Loan (the
“Rating Agencies”) that such Substitution will not result in a withdrawal,
downgrade or qualification of the then current rating of any such securities
which are in effect immediately prior to the Substitution;

 
(iii)  
so long as any portion of the Loan is outstanding, Lender and the Rating
Agencies shall have received an opinion of counsel which, as required by the
Indenture, is acceptable to the Rating Agencies, stating that any securitization
vehicle formed in connection with a securitization which includes the Loan which
has elected to be treated as a “real estate mortgage investment conduit” within
the meaning of Section 860D of the Internal Revenue Code, as amended, (“REMIC”)
will not fail to maintain such REMIC status as a result of such Substitution and
that the Substitution does not constitute a “significant modification” of the
Loan under Section 1001 of the Internal Revenue Code, as amended, or otherwise
cause a tax to be imposed on a “prohibited transaction” by any securitization
vehicle electing to be treated as a REMIC;

 
(iv)  
so long as any portion of the Loan is outstanding, Landlord and Lender shall
have received an opinion of counsel delivered by Tenant stating that the
certificates, opinions and other instruments which have been or are therewith
delivered to and deposited with Landlord and Lender or either thereof by Tenant
and by any Guarantor conform to the requirements of this Lease;

 
(v)  
Tenant shall have delivered to Landlord and Lender an appraisal of the
Substitute Project dated no more than one hundred twenty (120) days prior to the
Substitution by an appraiser which, as required by the Indenture, is acceptable
to the Rating Agencies, indicating a Fair Market Value of the Substitute Project
that is equal to or greater than the Fair Market Value of the Replaced Project
determined in accordance with Section 3.4(a) of this Lease and using
substantially the same methodology as used in the appraisal delivered to Lender
in connection with the origination of the Loan;

 
(vi)  
Tenant shall have delivered to Landlord and Lender a current as-built survey for
the Substitute Project satisfying the requirements set forth in Schedule H
certified to the title insurance company, to Landlord, and to Lender and its
successors and assigns, prepared by a professional land surveyor licensed in the
state in which the Substitute Project is located which, as required by the
Indenture, is acceptable to the Rating Agencies and which, as required by the
Indenture, would be reasonably satisfactory to a prudent lending institution
making a loan similar to the Loan.  Such survey shall reflect the same legal
description which is included in the title insurance policy relating to such
Substitute Project and shall include, among other things, a metes and bounds
description of the real property comprising part of such Substitute
Project.  The surveyor’s seal shall be affixed to such survey, such survey shall
show no encroachments or violations of any setback requirements and shall
certify that the surveyed property is not located in a “one-hundred-year flood
hazard area” (or, if the surveyed property is located in a “one-hundred-year
flood hazard area”, flood insurance in an amount equal to the full Replacement
Cost of the Substitute Project or the maximum amount available through National
Flood Program or any successor program, whichever is less, shall be provided if
flood insurance is available under the National Flood Insurance Act;

 
(vii)  
Tenant shall have delivered to Landlord and Lender a Phase I environmental
report addressed to Landlord and Lender and, if as a result of such report,
facts are revealed that would reasonably necessitate a Phase II environmental
report, a Phase II environmental report addressed to Landlord and Lender, each
in form and substance reasonably satisfactory to Landlord and Lender (x) stating
that the Substitute Project is in compliance with Environmental Laws and that no
Hazardous Substances are present or have been Released or are threatened to be
Released at, on, under, within or emanating to or from the Substitute Project,
and (y) indicating that the Substitute Project is in compliance with this Lease,
and, as required by the Indenture, is acceptable to the Rating Agencies and
would be reasonably satisfactory to a prudent lending institution making a loan
similar to the Loan;

 
(viii)  
Tenant shall have delivered a policy of owner’s title insurance from a title
insurer reasonably satisfactory to Landlord containing coverages which shall be
equivalent to those contained in the policy for the Replaced Project (except
that to the extent certain coverage was obtained for other Projects but was
unavailable or prohibitively expensive in the state where the Replaced Project
was located, the coverage for the Substitute Project shall include such
coverage) and title exceptions of equivalent nature to those contained in the
policy for the Replaced Project (it being specifically understood that the title
exceptions may only include easements which do not interfere with any buildings,
and in no event shall the title exceptions include any use or other restrictions
unless the same have been approved by Landlord and, as required by the
Indenture, Lender, in their sole discretion), and a policy of lender’s title
insurance satisfying the requirements of the Lender as set forth in the
Indenture;

 
(ix)  
Tenant shall have delivered to Landlord and Lender valid certificates of
insurance and copies of related insurance policies indicating that the insurance
requirements set forth in this Lease have been satisfied with respect to the
Substitute Project and evidencing the payment of all premiums payable with
respect thereto for the existing policy period;

 
(x)  
Tenant shall have caused to be delivered to Landlord and Lender annual operating
and occupancy statements for the Substitute Project for the three (3) most
recently completed fiscal years and a current operating statement for the
Substitute Project, each certified by Tenant to Landlord, to Lender and their
respective successors and assigns as being true and correct and a certificate
from Tenant certifying that there has been no material adverse change in the
financial condition of the Substitute Project since the date of such operating
statements;

 
(xi)  
Tenant shall have delivered to Landlord and Lender a physical conditions
inspection report with respect to the Substitute Project which is reasonably
acceptable to Landlord and, as required by the Indenture, which is acceptable to
the Rating Agencies and which would be reasonably satisfactory to a prudent
lending institution making a loan similar to the Loan, and stating that the
Substitute Project and its use comply in all material respects with all
applicable Legal Requirements (including, without limitation, zoning,
subdivision and building laws) and that the Substitute Project is in good
condition and repair and free of damage and waste.  If compliance with any Legal
Requirements is not addressed by such report, compliance shall be confirmed by
delivery to Landlord and Lender of a certificate of an architect licensed in the
state in which the Substitute Project is located, a letter from the municipality
in which such Substitute Project is located, a certificate of a surveyor that is
licensed in the state in which the Substitute Project is located (with respect
to zoning and subdivision laws), an ALTA 3.1 zoning endorsement to the title
insurance policies delivered pursuant to clause (viii) above (with respect to
zoning laws) or a subdivision endorsement to the title policies delivered
pursuant to clause (viii) above (with respect to subdivision laws).  If such
physical condition report indicates that there are any items of deferred
maintenance, Tenant shall have deposited into escrow with Lender, as required by
the Indenture as long as any portion of the Loan is outstanding and otherwise
with Landlord, an amount equal to 125% of the estimated cost of the deferred
maintenance, together with an agreement to complete such deferred maintenance
within six months thereafter, subject to Force Majeure (as hereinafter defined).

 
(xii)  
Landlord shall have received, and Lender shall have received a copy of, a deed
conveying a fee estate in and to the Substitute Project to Landlord, and a
letter from Landlord countersigned by a title insurance company acknowledging
receipt of such deed (or deeds, as applicable), and agreeing to record the same
in the real estate records for the county in which the Substitute Project is
located, such deed (or deeds) containing the same types of warranty as in the
deed (or deeds) Landlord received for the Replaced Project taking into account
differing nomenclature in different states;

 
(xiii)  
Tenant shall have delivered to Landlord and Lender an amendment to this Lease
(as of the date of the Substitution) subjecting the Substitute Project to this
Lease and removing the Replaced Project from this Lease, together with a
recordable amendment to the memorandum of this Lease in form reasonably
acceptable to Landlord, and a consent of Tenant acknowledging that this Lease,
as so amended, has been assigned to Lender in the same form as the consent of
Tenant to the assignment to Landlord of the Lease with respect to the Replaced
Project;

 
(xiv)  
Tenant shall have delivered to Landlord and Lender an amendment or supplement
(as of the date of Substitution) to any Guarantor’s guaranty of this Lease,
executed by the appropriate Guarantor, and confirming that such guaranty, as
amended or supplemented, remains in full force and effect;

 
(xv)  
Tenant shall have delivered to Landlord, Lender and the Rating Agencies a
certification by Tenant relating to the Substitute Project containing
representations and warranties as similar as possible to those made by Seller to
Landlord in that certain Contract of Sale (the "Contract of Sale") dated of even
date herewith, by and between Landlord, as purchaser, and Seller, as seller,
relating to the Replaced Project and containing representations and warranties
with respect to documents delivered by Tenant in connection with the
Substitution which are as similar as possible to those made by Tenant to
Landlord and Lender in Tenant’s Certificate, as defined in and delivered
pursuant to that certain Loan Agreement of even date herewith, between Landlord
and Lender (the “Loan Agreement”);

 
(xvi)  
Tenant shall have delivered, and shall have caused each Guarantor, if any, to
deliver, to Landlord, Lender and the Rating Agencies, a certificate which (1)
confirms that no Event of Default exists at the time of the Rejectable
Substitution Offer or on the applicable Lease Termination Date, (2) states that
all conditions precedent relating to such Substitution set forth in this Lease
and, as required by the Indenture, set forth in the Indenture, have been
complied with, (3) states that the representations and warranties contained in
the closing certificate delivered by it pursuant to the Loan Agreement and in
any Operative Documents (as defined in the Indenture and as amended in
connection to the Substitution) to which it is a party are true and correct in
all material respects on and as of the Lease Termination Date on which the
Substitution is concluded, with respect to itself, the Operative Documents to
which it is a party (including any amendment or supplement thereto in connection
with such Substitution) and the Substitute Project, and (4) contains such other
representations and warranties as Landlord or, as required by the Indenture,
Lender or the Rating Agencies, may require, provided that such other
representations and warranties are generally consistent with the representations
and warranties given in connection with the execution and delivery of the
Lease.  If any such certificate cannot be given because it would be inaccurate,
such certificate shall disclose the inaccuracy of such representation and
warranty and such certificate shall be acceptable if the disclosure therein
would be reasonably satisfactory to a prudent lending institution making a loan
similar to the Loan.  As required by the Indenture, any such certificate shall
be in form and substance satisfactory to the Rating Agencies;

 
(xvii)  
Tenant shall have delivered to Landlord and Lender (1) updates certified by
Tenant of all organization documentation related to such entity and/or the
formation, structure, existence, good standing and/or qualification to do
business of such entity similar to that delivered to Lender in connection with
the origination of the Loan; (2) good standing certificates, or certificates of
qualification to do business in the jurisdiction in which the Substitute Project
is located (if required in such jurisdiction) and (3) evidence of the authority
of such entity to undertake the Substitution and any actions taken in connection
with such substitution;

 
(xviii)  
Tenant shall have delivered, and shall have caused each Guarantor, if any, to
deliver, to Landlord, Lender and the Rating Agencies (1) an opinion or opinions
of counsel admitted to practice under the laws of the state in which the
Substitute Project is located, which counsel and which forms of opinion are
acceptable to Landlord and, as required by the Indenture, to the Rating Agencies
and, as required by the Indenture, which would be reasonably satisfactory to a
prudent lending institution making a loan similar to the Loan, stating that
(A) the Operative Documents entered into by Tenant or by such Guarantor
delivered pursuant to this Lease and the Indenture with respect to the
Substitute Project are legal, valid, binding and enforceable in accordance with
their terms, subject to the laws applicable to creditors’ rights and equitable
principles, and (B) that Tenant and each Guarantor is qualified to do business
in good standing under the laws of the jurisdiction where the Substitute Project
is located or that such entity is not required by applicable law to qualify to
do business in such jurisdiction, (2) an opinion of the respective counsel for
Tenant and each Guarantor acceptable to Landlord and, as required by the
Indenture, to the Rating Agencies and, as required by the Indenture, which would
be reasonably satisfactory to a prudent lending institution making a loan
similar to the Loan stating that the Operative Documents entered into by Tenant
or by such Guarantor with respect to the Substitute Project were duly
authorized, executed and delivered by such entity and that the execution and
delivery of such Operative Documents and the performance by such entity of its
respective obligations thereunder will not cause a breach of, or a default
under, any agreement document or instrument to which it is a party or to which
it or its properties are bound; and (3) as required by the Indenture, an opinion
or counsel acceptable to the Rating Agencies stating that the Substitution and
the related transactions do not constitute a fraudulent conveyance under
applicable bankruptcy and insolvency laws;

 
(xix)  
Tenant shall have delivered to Landlord and Lender such additional documents,
similar to those required in connection with the execution and delivery of this
Lease and the Indenture, as Landlord or, as required by the Indenture, Lender
may reasonably request or, as required by the Indenture, in such form as
required by the Rating Agencies and to Lender, to enable them to determine
compliance with the terms of this Lease and the Indenture;

 
(xx)  
As required by the Indenture, Tenant shall have caused Lender to receive such
other and further approvals, opinions, documents and information in connection
with the Substitution as the Rating Agencies may have requested; and

 
(xxi)  
All out-of-pocket expenses of Lender and, on an after-tax basis, all reasonable
out-of-pocket expenses of Landlord shall be paid in connection with the
Substitution, including, without limitation, title charges, transfer tax
charges, recording charges, filing fees, taxes, mortgage and intangible taxes,
documentary stamp taxes and other related expenses, reasonable legal fees and
expenses, appraisal fees, survey costs, income taxes, if any, as a result of the
Substitution, costs for Phase I (and, if necessary, Phase II) environmental
reports, and all other costs necessary to provide documentation to Landlord and
Lender meeting the requirements of Sections 3.3 and 3.4 of this Lease with
respect to Substitution and at least equivalent to the documentation received by
Landlord and Lender upon acquisition of the original Premises and the financing
thereof and as the Rating Agencies may require.  Tenant shall have paid all
costs, expenses and fees, if any, of the Rating Agencies incurred in connection
with the Substitution.

 
(xxii)  
Any report, document, instrument or opinion required to be delivered pursuant to
this Section 3.4(d) if not acceptable to each of Landlord and Lender in their
reasonable judgement, shall be deemed not to have been delivered hereunder.

 
(xxiii)  
If the Substitution is being made as a result of a Major Casualty or Major
Condemnation, the Rent Coverage Ratio of the Substitute Project shall be equal
to or greater than the lesser of (i) the Rent Coverage Ratio of the Replaced
Project and (ii) the greater of (A) the Rent Coverage Ratio for the portfolio as
set forth on Schedule J and (B) the Rent Coverage Ratio of all the Projects as
of the end of the most recent fiscal quarter ending not less than 30 days prior
to giving effect to the Substitution.

 
(xxiv)  
If the Substitution is being made other than in connection with a Major Casualty
or Major Condemnation, the Rent Coverage Ratio of the Substitute Project shall
be equal to or greater than the Rent Coverage Ratio of the Replaced Project.

 
(xxv)  
(A) If the Substitution is being made pursuant to Section 3.3(b) or (c), the
gross sales at the Substitute Project shall not have decreased for the previous
twelve quarters (or such lesser period of at least four quarters as such
Substitute Project shall have been open for business) by a percentage greater
than the lesser of (i) the percentage decrease, if any, in the gross sales of
the Replaced Project and (ii) the percentage decrease, if any, in the gross
sales at the Projects in the aggregate, in each case during the same period, or
(B) if the Substitution is being made pursuant to Section 3.3(a), the gross
sales at the Substitute Project shall not have decreased for the previous twelve
quarters (or such lesser period of at least four quarters as such Substitute
Project shall have been open for business) by a percentage greater than the
percentage decrease, if any, in the gross sales of the Replaced Project during
the same period.

 
(xxvi)  
Tenant shall have satisfied such other conditions reasonably required by the
Lender.

 
(e) Landlord shall have received an indemnity against adverse tax consequences
from the exchange in form and substance reasonably satisfactory to Landlord.
 
(f) Upon satisfaction of the conditions for Substitution set forth above,
Landlord shall, on the applicable Lease Termination Date, convey title to the
Replaced Project to Tenant subject only to the Permitted Exceptions (which shall
not include any mortgage created by Landlord) and any other liens, charges,
restrictions or encumbrances created by Tenant or any of its creditors,
employees, contractors, agents or created by Landlord pursuant to the express
terms hereof or with Tenant’s consent, in exchange for the Substitute Project,
which shall be transferred to Landlord subject only to the encumbrances listed
in the title insurance policy referred to in Section 3.4(d) above.
 
(g) If a Substitute Project is substituted for a Replaced Project, the following
modifications shall be made to the Schedules:  (i) the legal description for the
Substitute Project shall be substituted for the legal description of the
Replaced Project on Schedule A; (ii) the Permitted Exceptions for the Substitute
Project shall be substituted for the Permitted Exceptions of the Replaced
Project on Schedule B; (iii) Schedule C shall not be revised; (iv) Schedule D
shall not be revised; and (E) the Substitute Project shall be substituted for
the Replaced Project in Schedule F, but the numbers in Schedule F shall not be
revised.
 
(h) Upon a Substitution, the lien of any Indenture shall be released from the
Replaced Project and recorded as a lien against the Substitute Project.  In the
event of such a Substitution, on the applicable Lease Termination Date, the Net
Proceeds, if any, payable in connection with the Major Casualty or Major
Condemnation (or the right to receive the same when made if payment therefor has
not yet been made) shall, notwithstanding anything to the contrary contained in
Section 3.2, be assigned and/or turned over to the Tenant on the closing of the
title for the Substitute Project, provided that all amounts payable to Landlord
in connection with such a Substitution have been paid.
 
3.5  
Rejection of Rejectable Offer or Rejectable Substitution Offer.

 
(a) If the Landlord rejects a Rejectable Offer with respect to a particular
Project by a written notice given to the Tenant within the time period set forth
in Section 3.3, then this Lease shall terminate on the Lease Termination Date
with respect to that Project (and the Basic Rent shall be reduced as set forth
in Section 3.1(c)) and any Net Proceeds (other than those specifically relating
to the Tenant’s Personal Property), if any, payable in connection with a Major
Casualty or Major Condemnation (or the right to receive the same when made if
payment therefor has not yet been made) shall be assigned or paid and belong to
the Landlord, and, in addition, the Tenant shall pay to the Landlord an amount
equal to any deductible or self insurance amount in effect under the policy or
policies insuring the risk relating to such Major Casualty or Major
Condemnation, if any, all Basic Rent accrued as of such Lease Termination Date
and all other amounts then accrued or due and payable by the Tenant under this
Lease with respect to the applicable Project; provided that Tenant shall not be
liable to Landlord or Lender for any Make Whole Premium.  During such time as an
Indenture encumbers a particular Project, no rejection of a Rejectable Offer
with respect to that Project shall be effective unless countersigned by the
Lender.
 
(b) If the Landlord rejects a Rejectable Substitution Offer with respect to a
particular Project by a written notice given to the Tenant within the time
period set forth in Section 3.3(a), (b) or (c) then this Lease shall terminate
on the Lease Termination Date with respect to that Project (and the Basic Rent
shall be reduced as set forth in Section 3.1(c)) and any Net Proceeds (other
than those specifically relating to the Tenant’s Personal Property), if any,
payable in connection with a Major Casualty or Major Condemnation (or the right
to receive the same when made if payment therefor has not yet been made) shall
be assigned or paid and belong to the Landlord, and, in addition, the Tenant
shall pay to the Landlord all Basic Rent accrued as of such Lease Termination
Date and all other amounts then accrued or due and payable by the Tenant under
this Lease with respect to the applicable Project; provided that Tenant shall
not be liable to Landlord or Lender for any Make Whole Premium. During such time
as an Indenture encumbers a particular Project, no rejection of a Rejectable
Substitution Offer with respect to that Project shall be effective unless
countersigned by the Lender.  It is specifically understood that a failure to
meet the conditions for Substitution set forth in Section 3.4 is not a rejection
of a Rejectable Substitution Offer, but such failure shall be handled in
accordance with the provisions of Section 3.4(b).
 
3.6  
Less than Major Condemnation or Casualty.

 
(a) If, after a Condemnation or Casualty, Tenant is not permitted to give or, if
permitted, does not give notice of its intention to terminate this Lease with
respect to a particular Project as provided in Section 3.2 (and is not required
to give such notice pursuant to Section 3.2), then this Lease shall continue in
full force and effect and Tenant shall, at its expense, promptly rebuild,
replace or repair the Premises in conformity with the requirements of Sections
2.5 and 3.8 so as to restore the applicable Project (in the case of
Condemnation, as nearly as practicable) to the condition and fair market value
thereof immediately prior to such occurrence (or if the Project was under
renovation at such time, to the condition and fair market value thereof at the
time of completion of renovation).  Prior to any such rebuilding, replacement or
repair, Tenant shall deliver its reasonable estimate of the cost thereof, which
shall be subject to the approval of Landlord, which approval shall not be
unreasonably withheld (the cost approved by Landlord is referred to as the
“Restoration Cost”).
 
(b) If the repair constitutes a Material Alteration, the Restoration Cost must
be confirmed by an architect reasonably acceptable to Landlord (an “Architect”),
and if the Restoration Cost is more than the amount of Net Proceeds, the Tenant
shall deliver or cause to be delivered to Landlord or, if required by the
Indenture, Lender (i) cash collateral in an amount equal to such excess, or (ii)
if acceptable to Lender, an unconditional, irrevocable, clean sight draft letter
of credit, in form and substance, and issued by a bank, acceptable to Landlord
and Lender, in their respective reasonable discretion, in the amount of such
excess, or (iii) evidence acceptable to Landlord and, if required by the
Indenture, Lender, that the excess has been expended in performing the
restoration work prior to any funds being drawn from the Net Proceeds.
 
(c) The Restoration Cost shall be paid first out of Tenant’s own funds to the
extent that the Restoration Cost exceeds the Net Proceeds payable in connection
with such occurrence, after which expenditure Tenant shall be entitled to
receive the Net Proceeds, which shall be disbursed from time to time upon
Landlord, and if required by the Indenture, Lender being furnished with
(i) evidence satisfactory to Landlord of the estimated Restoration Cost, (ii) a
fixed price or guaranteed maximum cost construction contract for restoration
satisfactory to Landlord, (iii) prior to the commencement of restoration, all
immediately available funds in addition to the Net Proceeds that in Landlord’s
judgment are required to complete the proposed restoration, (iv) such
architect’s certificates, waivers of lien, contractor’s sworn statements, title
insurance endorsements, bonds, plats of survey, permits, approvals, licenses and
such other documents and items as Landlord may reasonably require and approve in
Landlord's discretion, and (iv) all plans and specifications for such
restoration, such plans and specifications to be approved by Landlord prior to
commencement of any work.  Landlord may, at Tenant's expense, retain or, if
required by the Indenture, permit Lender to retain, a consultant to review and
approve all requests for disbursements, which approval shall also be a condition
precedent to any disbursement.  No payment made prior to the final completion of
the restoration shall exceed 90% of the value of the work performed from time to
time; funds other than the Net Proceeds shall be disbursed prior to disbursement
of such Net Proceeds; and at all times, the undisbursed balance of such Net
Proceeds remaining in the hands of Landlord, or if required by the Indenture,
Lender, together with funds deposited for that purpose or irrevocably committed
to the satisfaction of Landlord by or on behalf of Tenant for that purpose,
shall be at least sufficient in the reasonable judgment of Landlord to pay for
the cost of completion of the restoration, free and clear of all liens or claims
for lien.
 
(d) Without limiting the generality of Section 2.1, the Basic Rent and the
Additional Rent payable under the provisions of this Lease shall not be
affected, altered or reduced by any Casualty or Condemnation (except as
specifically set forth in Section 3.1 with respect to a termination of the Lease
upon payment of the amounts required therein), and Tenant’s obligation to
continue to pay Basic Rent and Additional Rent shall continue notwithstanding
any such Condemnation or Casualty.
 
(e) [Intentionally deleted.]
 
(f) Notwithstanding any other provision of this Section, if either Tenant or a
Guarantor is then currently maintaining an Acceptable Credit Rating and in
Tenant’s reasonable judgment the cost of the Work (as hereinafter defined) is
less than $100,000 with respect to any one casualty or partial condemnation (and
the cost of all outstanding Work for all Projects is less than $250,000), such
Work can be completed in less than one hundred twenty (120) days (subject to
Force Majeure) and no Event of Default has occurred and is continuing and if
allowed pursuant to the provisions of the Indenture, then Landlord, upon request
by Tenant, shall permit Tenant to apply for and receive the Net Proceeds
directly from the insurer or payor thereof (and Landlord shall advise such
insurer or payor and Lender to pay over such Net Proceeds directly to Tenant),
provided that Tenant shall promptly and diligently commence and complete such
Work in a good and workmanlike manner.
 
(g) If an Event of Default shall have occurred and be continuing or if Tenant
(i) shall fail to submit to Landlord for approval plans and specifications (if
required pursuant to Section 3.6(b) hereof) for the Work (approved by the
Architect and by all governmental authorities whose approval is required), (ii)
after any such plans and specifications are approved by all such governmental
authorities, the Architect, Landlord and Lender, shall fail to commence promptly
such Work, (iii) after Lender or Landlord has released the Net Proceeds to the
extent provided for under this Lease, shall fail to diligently prosecute such
Work to completion, or (iv) materially fail in any other respect to comply with
the Work obligations under this Section 3.6, then in addition to all other
rights available under this Lease, at law or in equity, Landlord or Lender, or
any receiver of the applicable Project or any portion thereof, upon fifteen (15)
days' prior written notice to Tenant (except in the event of emergency in which
case no notice shall be required), may (but shall have no obligation to) perform
or cause to be performed such Work, and may take such other steps as either
Landlord or Lender deems advisable (but such performance shall not cure the
default of Tenant).   In addition, Tenant acknowledges that if an Event of
Default shall have occurred and be continuing, Lender may apply any Net Proceeds
towards payment of the Indenture, which payment shall not relieve Tenant of any
of its obligations under this Lease.  Tenant hereby waives, for Tenant and all
others holding under or through Tenant, any claim, other than for gross
negligence or willful misconduct (subject to the provisions of Section
10.17(b)), against Landlord and Lender and any receiver arising out of any act
or omission of Landlord or Lender or such receiver pursuant hereto, and Landlord
or Lender may apply all or any portion of the Net Proceeds (without the need to
fulfill any other requirements forth in this Section 3.6) to reimburse Landlord
or Lender or such receiver, for all amounts incurred in connection with the
Work, and any costs not reimbursed to such parties shall be paid by Tenant to
Landlord (or such other party) on demand, together with interest thereon at the
Rate from the date such amounts are advanced until the same are paid by Tenant.
 
3.7  
Insurance.

 
(a) Tenant shall maintain insurance on each of the Projects of the following
character:
 
(i)  
(A) all-risk property insurance covering each and every component of the
Projects against physical loss or damage, including, but not limited to fire and
extended coverage, collapse, windstorm, flood and earth movement in an amount at
least equal to the greater of (1) the then replacement value of each Project
without deduction for physical depreciation and (2) 100% of the allocated amount
of the Loan with respect to each Project.  Such insurance policy shall contain
an agreed amount endorsement waiving any coinsurance penalty; (B) rent loss
coverage or business interruption insurance in an amount sufficient to provide
proceeds which will cover the actual amount of Basic Rent for a period of at
least twelve (12) months.

 
(ii)  
"boiler and machinery" insurance with respect to damage (not insured against
pursuant to Section 3.7(a)(i) hereof) to the boilers, pressure vessels or
similar apparatus located on the Projects for risks normally insured against
under boiler and machinery policies.

 
(iii)  
commercial general liability insurance with respect to the Projects written on
an occurrence basis (not claims made basis) with a limit of not less than
$2,000,000 per occurrence and at least $4,000,000 in the aggregate.  Such
coverage shall include, but shall not be limited to, premises/operations,
explosion, collapse, underground hazards, hostile fire and limited sudden and
accidental pollution, contractual liability, independent contractors, property
damage, bodily injury, advertising injury and personal injury liability.  Such
insurance shall not contain an exclusion for punitive or exemplary damages when
insurable by law.

 
(iv)  
(A) workers' compensation insurance in accordance with statutory provisions or
qualified self-insurance covering accidental injury, illness or death of an
employee of Tenant while at work or in the scope of his employment with Tenant
and (B) employer's liability in an amount not less than $1,000,000 or such
greater amount as may be required by law.  Such coverage shall not contain any
occupational disease exclusion.

 
(v)  
excess or umbrella liability insurance in an amount not less than $10,000,000
written on an occurrence basis (i.e., not claims made basis) providing coverage
limits in excess of the insurance limits in 3.7(a)(iii) and (iv) above for all
operations of the Tenant.  Such insurance shall follow the form of the primary
insurance and drop down in case of exhaustion of underlying limits.  Such
insurance shall not contain an exclusion for punitive or exemplary damages where
insurable under law.

 
(vi)  
if such Project or any part thereof is situated in an area now or subsequently
designated  as a “Zone 1 or Zone 2 Earthquake Zone” by the U.S. Geological
Survey, earthquake insurance in an amount of at least $5,000,000 in the
aggregate.

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

 
(viii)  
business automobile coverage in an amount not less than $1,000,000 Combined
Single Limit - Bodily Injury and Property Damage.

 
(ix)  
such other insurance, including without limitation terrorism insurance (subject
to the provisions of the letter agreement of even date herewith between Tenant
and Landlord), as may from time to time be reasonably required by Landlord, or,
as required by the Indenture, by Lender in order to protect their respective
interests, provided that such insurance is then customarily maintained by
prudent owners of comparable properties.

 
(x)  
during any period when construction is conducted on a Project, worker’s
compensation, employers’ liability, commercial auto liability, and commercial
general liability insurance (including contractual liability and completed
operations coverage) for each general contractor written on a 1986 or 1993
standard “ISO” occurrence basis form or equivalent and excess umbrella coverage,
carried during the course of construction, with coverage for blanket
contractual, personal injury, bodily injury and property damage of not less than
the amounts set forth below for single limit coverage, or such greater limits as
may be required from time to time by Landlord, or, as required by the Indenture,
Lender consistent with insurance coverage on properties similarly constructed,
occupied and maintained: if the value of the work to be performed is less than
$10,000, $1,000,000; if the value of the work to be performed is at least
$10,000 but less than $50,000, $2,000,000; if the value of the work to be
performed is at least $50,000 but less than $500,000, $5,000,000; and if the
value of the work to be performed is $500,000 or more, $10,000,000.

 
(b) (i)           All such insurance shall be issued by companies authorized to
transact business in the state in which the applicable Project is located and
having an Alfred M. Best Company rating of “A” or better and financial size
category of not less than IX, and a Standard & Poor’s rating of "BBB" or better
as to claims paying ability; provided, however, that if the company providing
the primary coverage is so rated, the company providing a layer of excess
coverage may have an Alfred M. Best Company rating of "A-" or better.  No
liability insurance policy maintained by Tenant shall provide for a deductible
or self-insured retention in excess of $100,000, except to the extent applicable
law shall require that the insurance carrier shall be responsible for payment
with respect to all claims covered (including amounts payable under
the  deductible), such policy shall reflect such obligation and the full amount
of any deductible shall be collateralized by a letter of credit, the beneficiary
of which is such insurance carrier.  No casualty or other insurance policy
maintained by Tenant (other than liability policies) shall provide for a
deductible or self-insured retention in excess of (A) the greater of $250,000 or
5% of replacement value per location for windstorm damage at coastal Properties
or (B) $100,000 per occurrence for all other covered perils, other than for
flood.
 
(ii)           Notwithstanding the preceding provisions of this Section 3.7(b),
at any time that the Tenant shall maintain a Credit Rating of BBB from Standard
and Poors' Rating Group and Baa2 from Moody's Investors Service Inc., or higher,
Tenant shall be entitled to have deductibles or self-insured retentions
described in the last sentence of Section 3.7(b)(i) so long as such risks
retained do not exceed with respect to clause (A) of such Section 10% of
replacement value per location and with respect to clause (B) of such Section
$500,000.  In addition, if Tenant shall have one or more blanket insurance
policies with respect to the matters described in Section 3.7(a), such policies
may have higher deductibles or self-insured retention than permitted by Section
3.7(b), but not in excess of $500,000, if the Tenant shall have posted for the
benefit of the Landlord and Lender a Letter of Credit in the amount of the
difference between (x) the deductible or self-insured retention provided in such
policy and (y) the deductible or self-insured retention permitted by Section
3.7(b).  Such Letter of Credit, notwithstanding anything to the contrary, may be
issued by Bank of America, Citibank, JPMorgan Chase or Wachovia so long as the
long term unsecured debt obligations of such bank are rated at least "A" by
Standard & Poor's Rating Group.

(c) Every such policy (other than any general public liability, auto liability
or worker’s compensation policy) shall bear a mortgagee’s loss payable clause or
a mortgagee endorsement in favor of the mortgagee or beneficiary (whether one or
more, and together with its or their successors and assigns, the “Lender”) under
each mortgage, deed of trust or similar security instrument creating a lien on
the interests of Landlord in the Premises (whether one or more, the
“Indenture”), and any loss under any such policy shall be payable to the Lender
which has a first lien on such interests (if there is more than one first
Lender, then to the trustee for such Lenders) to be held and applied pursuant to
this Article 3.
 
(d) All such insurance (other than any worker’s compensation policy) shall be
endorsed to provide that:
 
(i)  
such insurance will not be canceled or amended except after thirty (30) days’
written notice to Landlord and Lender and that it shall not be invalidated by
any act or negligence of Landlord, Tenant or any person or entity having an
interest in the Premises, nor by occupancy or use of the applicable Projects for
purposes more hazardous than permitted by such policy, nor by any foreclosure or
other proceedings relating to a Project, nor by change in title to or ownership
of a Project;

 
(ii)  
Landlord and Lender are each an additional insured with the understanding that
any obligation imposed upon the insured (including, without limitation, the
liability to pay premiums, but excluding any obligation of the insured to
cooperate with any insurer or any insurer’s representative in the investigation,
defense or settlement of any claim covered under such insurance) shall be the
sole obligation of Tenant and not that of any other insured;

 
(iii)  
all insurance proceeds payable under any policy of property, sprinkler or flood
insurance with respect to the Premises shall be paid to Lender (or if no Lender
exists, to Landlord);

 
(iv)  
the interests of the Lender shall not be invalidated by any action or inaction
of the Landlord, Tenant or any other person, and such insurance shall insure the
Lender regardless of any breach or violation by the Tenant, the Landlord or any
other person of any warranties, declarations or conditions contained in the
policies relating to such insurance or application therefor;

 
(v)  
the interests of Landlord shall not be invalidated by any action or inaction of
the Tenant or any other person, and such insurance shall insure the Landlord
regardless of any breach or violation by the Tenant or any other person of any
warranties, declarations or conditions contained in the policies relating to
such insurance or application therefor;

 
(vi)  
the insurer thereunder waives all rights of subrogation against the Lender  and
Landlord and waives any right of set-off and counterclaim and any other right of
deduction, whether by attachment or otherwise;

 
(vii)  
such insurance shall be primary to Tenant without right of contribution from any
other insurance carried by or on behalf of Tenant with respect to Tenant’s
operation only or Landlord or the Lender or any other person with respect to its
interest in a Project;

 
(viii)  
all terms, conditions, insuring agreements and endorsements, with the exception
of limits of liability, shall operate in the same manner as if there were a
separate policy covering each insured.

 
(e) Tenant shall deliver to Landlord and Lender originals of the applicable
insurance policies (without any necessity for request) or binding certificates
evidencing renewal and original or duplicate certificates of insurance (without
any necessity for request), satisfactory to and permitting reliance thereon by
Landlord and Lender, evidencing the existence of all insurance which is required
to be maintained by Tenant under this Lease, such delivery to be made (i) upon
the execution and delivery hereof and (ii) at least thirty (30) days prior to
the expiration of any such insurance.  In the event of any transfer by Landlord
of its interest in the Premises or any financing or refinancing of Landlord’s
interest in any Project, Tenant shall, upon not less than ten (10) days’ prior
written notice, deliver to Landlord or any Lender providing such financing or
refinancing, as the case may be, certificates of all insurance required to be
maintained by Tenant under this Lease naming such transferee or such Lender, as
the case may be, as an additional named insured to the extent required herein
effective as of the date of such transfer, financing or refinancing.  Tenant
shall not obtain or carry separate insurance concurrent in form or contributing
in the event of loss with that required by this Section 3.7 unless Landlord is
additionally named insured therein and unless there is a Lender endorsement in
favor of Lender with loss payable as provided herein.  Tenant shall immediately
notify Landlord whenever any such separate insurance is obtained and shall
deliver to Landlord and Lender the policies or certificates evidencing the
same.  Any insurance required under this Lease may be provided under blanket
policies provided that the Premises and the applicable coverage applicable
thereto are specified therein.
 
(f) Any loss under any property damage insurance required to be maintained by
Tenant shall be adjusted by Landlord and Tenant pursuant to the provisions of
Section 3.2(a), provided, that if an Event of Default shall have occurred and be
continuing, Landlord shall have the sole right to make such adjustment and
collection, but Tenant shall be entitled to any proceeds relating to Tenant’s
Personal Property (subject to Landlord’s right to offset any amounts owed to
Landlord under this Lease).
 
(g) If Tenant fails to maintain and deliver to Landlord the original policies
and certificates of insurance required by this Lease, Landlord may, at its
option, procure such insurance, and Tenant shall reimburse Landlord in the
amount of all such premiums thereon promptly, upon demand by Landlord, with
interest thereon at the Rate from the date paid by Landlord to the date of
repayment; provided, however, that this sentence shall not prevent any default
under this Section 3.7 from becoming an Event of Default.
 
(h) (1)  If required by Landlord, Tenant agrees that it shall deposit with
Landlord, or, if directed by Landlord, to Lender (or its designee) (Landlord
hereby irrevocably directs Tenant to make such deposits with Lender as long as
the Indenture shall remain outstanding, and Tenant hereby grants a security
interest in such account to Landlord and consents to the pledge of and the
granting of a security interest in such account by Landlord to Lender) on each
Payment Date, as Additional Rent, one twelfth (1/12) of the estimated insurance
premiums necessary to pay for renewal of all insurance required to be maintained
by Tenant hereunder (collectively, the "Estimated Premiums") at least thirty
(30) days prior to expiration of any policy as reasonably estimated by
Landlord.  To the extent permitted by applicable law, neither Landlord nor
Lender or its designee, as Depository, shall be required to maintain the
Estimated Premiums in an account separate from other funds of such party or to
deposit any such amounts in an interest-bearing account.  Tenant shall deposit
with Depository, prior to the date which is thirty (30) days prior to the due
date of insurance premiums, such additional amount as may be necessary to
provide Depository with sufficient funds in such deposit account to pay each
such insurance premium at least thirty (30) days in advance of the due date
thereof.  Depository shall apply the aforesaid deposits and interest, if any,
thereon for such purpose not later than the last day on which any such insurance
premiums are due or disburse or cause Depository to disburse them to Tenant upon
presentation of evidence of payment and a certificate of an officer of Tenant in
form and substance satisfactory to Landlord.  If, at any time, the amount of any
insurance premiums are increased or Landlord or Lender receives information that
such insurance premiums will be increased, or if Landlord shall determine in its
reasonable judgement that the amounts of such deposit will be insufficient for
the payments due, and if the monthly deposits then being made by Tenant for this
purpose (if continued) would not make up a fund sufficient to pay such insurance
premiums thirty (30) days prior to the due date, said monthly deposits thereupon
shall be increased and Tenant immediately shall deposit with the Depository, on
demand, sufficient moneys so that the moneys then on hand for the payment of
said insurance premiums, plus the increased payments and such additional sums
demanded, shall be sufficient so that the Depository shall have received from
Tenant adequate amounts to pay such insurance premiums at least thirty (30) days
before such insurance premiums become due and payable.  In the event the amount
of the funds deposited by Tenant exceeds the amount necessary to fully fund the
Estimated Premiums, then Landlord shall decrease the amount required for
subsequent deposits under this Section 3.7(h).  For purposes of determining
whether the Depository has on hand sufficient moneys to pay any particular
insurance premium at least thirty (30) days prior to the due date therefor,
deposits for each category of insurance premium shall be treated separately, it
being the intention that the Depository shall not be obligated to use moneys
deposited for the payment of an item not yet due and payable to the payment of
an item that is due and payable.  Notwithstanding the foregoing, it is
understood and agreed that (i) to the extent permitted by applicable law,
deposits provided for hereunder may be held by the Depository in a single bank
account and commingled with other funds of the Depository, and (ii) the
Depository may, if Tenant fails to make any deposit required hereunder, apply
deposits made for any one insurance premium for the payment of the same, any
other insurance premium or any outstanding Basic Rent or Additional
Rent.  If  an Event of Default shall have occurred and be continuing under this
Lease, all deposits then held by the Depository shall be applied on account of
any and all sums due under this Lease and Tenant shall forthwith pay the
resulting deficiency in accordance with the terms hereof.  If Landlord ceases to
have any interest in any Project, Landlord shall direct the Depository to
transfer to the person or entity who owns or acquires such interest in such
Project and is the transferee of the Landlord's interest in this Lease, the
deposits made pursuant to the provisions hereof.  In addition, in the event that
Lender (or a servicing agent on Lender's behalf) is the Depository, Lender shall
have the right to transfer the deposits (or to cause its servicing agent to
transfer such deposits) to any transferee of the Indenture or to the holder of
any substitute Indenture.  Upon any such transfer of the deposits, after
acknowledgement of such transfer by the transferee and notice thereof to Tenant,
the transferor shall be deemed to be released from all liability with respect
thereto and Tenant agrees to look to the transferee solely with respect thereto,
and the provisions hereof shall apply to each successive transfer of the said
deposits.  Tenant shall be deemed the owner of such deposits and shall pay any
taxes associated therewith.
 
(2)  Tenant shall not be required to make the deposits required by Section
3.7(h) so long as (i) Tenant shall pay all insurance premiums as the same become
due and payable before delinquency, (ii) Tenant shall, upon request, furnish to
Landlord receipts for payment of all insurance premiums or other evidence of
such payment reasonably satisfactory to Landlord, (iii) no Event of Default
shall have occurred and be continuing, (iv) Tenant has a Net Worth in excess of
$100,000,000 and (v) Tenant is maintaining a Rent Coverage Ratio with respect to
all Projects of at least 1.25:1.  Tenant's obligation to make the deposits
required by Section 3.7(h) shall immediately resume and shall continue (x) in
the event of the failure of any condition set forth in clauses (i), (ii) or
(iii) above, until the termination or earlier expiration of this Lease, (y) in
the event of the failure of the condition set forth in clause (iv) above, until
such time as Tenant's Net Worth shall be equal to or greater than $150,000,000
and (z) in the event of the failure of the condition set forth in clause (v)
above, until such time as Tenant's Rent Coverage Ratio with respect to all
Projects is equal to or greater than 1.5:1.
 
(i) Notwithstanding anything in Section 3.7(h) to the contrary, Landlord shall
waive the requirements of Section 3.7(h) so long as (i) no Event of Default
shall have occurred and be continuing and (ii) Tenant shall have paid all
premiums or Estimated Premiums at least thirty (30) days prior to the expiration
date of any applicable policy and shall have supplied Landlord and Lender, in
accordance with Section 3.7(e), evidence of such payment.
 
(j) The requirements of this Section 3.7 shall not be construed to negate or
modify Tenant’s obligations under Section 2.4.
 
3.8  
Alterations.

 
(a) Tenant may, at its expense, make additions to and alterations of the
Improvements, and construct additional Improvements (collectively,
“Alterations”), provided that (1) the fair market value, residual value, utility
and useful life of the applicable Project shall not be reduced or lessened other
than to a de minimis extent thereby or cause the Project to be characterized as
"limited-use property," as defined in Rev. Proc. 2001-28, (2) such Alterations
shall be expeditiously completed in a good and workmanlike manner, free and
clear of liens and encumbrances, and in compliance with all applicable Legal
Requirements and the requirements of all insurance policies required to be
maintained by Tenant under this Lease, (3) Tenant shall not make any Alterations
in violation of the terms of any restriction, easement, condition, covenant or
other matter affecting title to or use of a Project and (4) no Material
Alterations (as hereinafter defined), shall be made unless Landlord’s prior
written consent shall have been obtained, which consent shall not be
unreasonably withheld, delayed or conditioned, unless an Event of Default shall
have occurred and be continuing in which case such consent may be withheld by
Landlord in its sole discretion.  “Material Alteration” is defined as either (A)
Structural Work (as hereinafter defined), or (B) a demolition of any material
portion of the Improvements, or (C) Alterations which would materially and
adversely affect the building systems or equipment, or (D) Work which involves
the construction of a shared common or party wall on a property line which
separates a Project from adjacent land, or (E) Work for which the Estimated Cost
is in excess of $150,000 at any one time for any particular Project or which
would cause Work then being conducted for all Projects to exceed $500,000 at any
one time, excluding, for purposes of this clause (E) only, such other Work
effected pursuant to standard renovation plans that have previously been
approved by Landlord, and as required by the Indenture, Lender (it being
understood that any request for such approval shall not be considered unless
each of Landlord and Lender has received detailed plans and specifications, and
other information with respect to the proposed renovations as may be reasonably
requested).  “Structural Work” is defined as Work which involves in any material
respect any roof, load-bearing wall, structural beams, columns, supports,
foundation or any other structural element of the Premises.  “Estimated Cost” is
defined as the estimated cost of materials, construction and labor (including
architects, engineers or other professionals), as estimated by a licensed
Architect (or if not required to be estimated by an Architect, as reasonably
estimated by Tenant), which estimate together with a complete description of the
Work and all related work shall be delivered to, and such estimate and
description reasonably approved by, Landlord and, as required by the Indenture,
Lender, before the commencement of any Work.  In addition to the limitations set
forth in (1) through (4) above, Tenant agrees that all Alterations, Material
Alterations, Structural Work, restoration, repair and any other work which
Tenant shall be required or permitted to do under the provisions of this Lease
(hereinafter collectively called the “Work”) shall be performed in each case
subject to the following:
 
(i)  
Tenant shall not perform any Work which shall have a material adverse effect on
the use or operation of any Project, as operated by Tenant as of the date hereof
(except such adverse effect as shall occur during the period of time needed to
complete the Work).  Any Work when completed shall be of such a character as not
to materially reduce the value or could reasonably be anticipated to materially
reduce net operating income of the affected Project below its value immediately
prior to the commencement of such Work or damage to such Project necessitating
such Work or change.

 
(ii)  
Except with respect to adverse effects occurring during the period of time
needed to complete the applicable Work, no Work shall be performed by Tenant if
the same would materially reduce the usable square footage of the applicable
Project, or would materially weaken, temporarily or permanently, the structure
of the applicable Project or any part thereof, or reduce the permitted uses
thereof under applicable zoning laws or impair other amenities of such Project.

 
(iii)  
No Material Alterations shall be commenced until plans and specifications
(including layout, architectural, mechanical and structural drawings, where
appropriate), prepared by an Architect shall have been submitted to and approved
by Landlord (such approval not to be unreasonably withheld and such approval to
be deemed denied if Landlord has not responded within 30 days of submission),
and no such Work shall be undertaken except under the supervision of the
Architect.

 
(iv)  
The reasonable cost and expense paid to third parties (including Landlord’s
asset manager or, as required by the Indenture, any servicer retained by Lender)
of Landlord’s and Lender’s respective (A) review of any plans and specifications
required to be furnished pursuant to this Lease and (B) reasonable
review/supervision of any such Work shall be paid by Tenant to Landlord within
ten (10) days after demand.

 
(v)  
All Work shall be commenced only after all required municipal and other
governmental permits, authorizations and approvals shall have been obtained by
Tenant, at its own cost and expense, and copies thereof delivered to
Landlord.  Landlord will, on Tenant’s written request, promptly execute any
documents necessary to be signed by Landlord to obtain any such permits,
authorizations and approvals, provided that Tenant shall bear any expense or
liability of Landlord in connection therewith; provided, however, that none of
the foregoing shall, in any manner, result in a change in zoning or otherwise
have a material adverse affect on the ability to use such Project as currently
operated by Tenant.

 
(vi)  
If the Work shall constitute a Material Alteration, it shall not be commenced
until Tenant shall have obtained and delivered to Landlord, and as required by
the Indenture, Lender, either (A) a performance bond and a labor and materials
payment bond (issued by a corporate surety licensed to do business in the state
in which such Project is located and satisfactory to Landlord and, as required
by the Indenture, Lender), each in an amount equal to the Estimated Cost of such
Work and in form otherwise satisfactory to Landlord, and as required by the
Indenture, Lender, or (B) such other security as shall be reasonably
satisfactory to Landlord, and as required by the Indenture, Lender; provided,
that if at the time the Work is commenced (w) either Tenant or a Guarantor then
maintains and continues to maintain until such Work is completed an Acceptable
Credit Rating, (x) no Event of Default shall have occurred and be continuing,
(y) the Estimated Cost of the Work with respect to a particular Project does not
exceed $250,000 and (z) the aggregate Estimated Cost of all Work then being
undertaken by Tenant with respect to all of the Projects does not exceed
$500,000, then Tenant shall not be required to comply with this subsection (vi).

 
(vii)  
All Work shall be performed in a good and workmanlike manner, and in accordance
with all Legal Requirements, as well as any plans and specifications therefor
which shall have been approved by Landlord.  All Work shall be commenced and
completed in a commercially reasonable manner.

 
(viii)  
Subject to the terms of Section 2.6 hereof, the cost of all Work shall be paid
promptly, in cash, so that the Premises and Tenant’s leasehold estate therein
shall at all times be free from (A) liens for labor or materials supplied or
claimed to have been supplied to any Project or Tenant, and (B) chattel
mortgages, conditional sales contracts, title retention agreements, security
interest and agreements, and financing agreements and statements.

 
(ix)  
Upon completion of any Work, Tenant, at Tenant’s expense, shall obtain
certificates of final approval of such Work required by any governmental or
quasi-governmental authority and shall furnish Landlord with copies thereof,
and, if the Work constituted Material Alterations, together with “as-built”
plans and specifications for such Work.

 
(x)  
Any Work shall be subject to inspection at any time and from time to time by any
of Landlord or, as required by the Indenture,  Lender, their respective
architect(s), or their duly authorized construction representatives, and if any
such party upon any such inspection shall be of the opinion that the Work is not
being performed in accordance with the provisions of this Section 3.8 or the
plans and specifications, or that any of the materials or workmanship are
unsound or improper, Tenant shall correct any such failure and shall replace any
unsound or improper materials or workmanship.  Anything contained herein to the
contrary notwithstanding, any different procedure for the performance of Work
which may be required under any Indenture shall take precedence over and be in
addition to the procedures provided for in this Lease.

 
(xi)  
Except as may be expressly provided to the contrary under this Lease with
respect to Severable Alterations or with respect to Tenant’s Personal Property,
all Alterations installed in or upon any Project at any time during the Term
shall become the property of Landlord (and shall not constitute Tenant’s
Personal Property) and shall remain upon and be surrendered with the Premises
unless Landlord, by notice to Tenant no later than ninety (90) days prior to the
date the lease Term expires as set forth on Schedule C hereto (such date, the
“Expiration Date”), elects to have the same removed or demolished by Tenant, in
which event, the same shall be removed from the Project by Tenant prior to the
termination of this Lease, at Tenant’s expense.  Tenant may expressly request in
Tenant’s written request for consent that Landlord determine its election prior
to installation (which written request shall include the estimated cost of
removal and restoration).  Tenant shall immediately repair any damage to any
Project caused by its removal of any of the Severable Alterations or Tenant’s
Personal Property or Alterations which remain the property of Tenant pursuant to
the terms of this Section.  All property permitted or required to be removed by
Tenant at the end of the Term remaining in any Project after Tenant’s removal
shall be deemed abandoned and may, at the election of Landlord, either be
retained as Landlord’s property or may be removed from such Project by Landlord
at Tenant’s expense.  The provisions of this Section shall survive the
expiration or earlier termination of the Term.

 
(b) Tenant may, at its cost and expense, install, or place upon or reinstall, or
replace and remove from any Project any Tenant’s Personal Property.  Subject to
and conditioned upon compliance with the provisions of Section 3.8(a) above,
Tenant may make Alterations or undertake construction which requires sharing the
use of existing facilities and utilities, provided that reciprocal easement
agreements and joint use agreements allocate ownership, use and expenses to the
reasonable satisfaction of Landlord, and provided that the same comply with the
provisions of Section 3.10.  No such construction shall impair the structural
and functional integrity of any Project as an independent commercial property,
in compliance with Legal Requirements, at the time the Alterations are made or
at the end of the Term of this Lease.
 
3.9  
Severable Alterations

 
.  Alterations that (1) are readily removable without causing damage to a
Project by more than a minimal extent, (2) will not reduce the value, useful
life or utility of the applicable Project other than to a de minimis extent if
removed, and (3) are not required for the lawful occupancy of the applicable
Project are sometimes referred to herein as “Severable Alterations”.  Title to
Severable Alterations will remain in Tenant and shall be treated for purposes of
this Lease as Tenant’s Personal Property unless the cost thereof shall have been
paid or financed by Landlord.  If Tenant does not purchase the applicable
Project upon termination of this Lease with respect to such Project, Landlord
shall have the right to purchase any or all such Severable Alterations for fair
market value at the termination of this Lease, such fair market value to be
determined by following the appraisal procedure set forth in Section
3.4(c)(i).  It is specifically understood that the F&E shall not, in any event,
be considered to be Severable Alterations.
 
3.10  
Easements.

 
(a) Landlord agrees from time to time during the Term of this Lease, at the
request of Tenant, without additional consideration (1) to sell, assign, convey,
or otherwise transfer an interest in any Project of a nature described in this
Section 3.10 to any Person legally empowered to take such interest under the
power of eminent domain which Person has indicated that it intends to so do, (2)
to grant easements, licenses, rights of way and other rights and privileges in
the nature of easements, of such nature, extent and duration as Tenant may
reasonably request, provided that such easements, licenses, rights of way and
other rights and privileges are customarily granted by prudent  operators,
managers or owners of properties similar to the Projects; (3) to release or
relocate existing easements and appurtenances which are for the benefit of any
Project; (4) to dedicate or transfer unimproved portions of a Project for road,
highway or other public purposes; (5) to execute petitions to have a Project
annexed to any municipal corporation or utility district; (6) to execute
amendments to any covenants and restrictions affecting a Project; and (7) to
execute and deliver any instrument necessary or appropriate to confirm or effect
such grants, releases, dedication, transfer, petition or amendment to any person
in each of the foregoing instances, the same to be without consideration, but
only if, in each of the foregoing instances (i) such grant, release, dedication,
transfer, petition or amendment is not detrimental to the proper conduct of
business of Tenant on the applicable Project, (ii) such grant, release,
dedication, transfer, petition or amendment does not materially impair the
effective use of the Project for its intended purposes or materially and
adversely affect its value, useful life or utility, (iii) Tenant reasonably
considers the consideration, if any, being paid for such grant, release,
dedication, transfer, petition or amendment to be fair and adequate, (iv) for so
long as this Lease is in effect, Tenant will perform all obligations, if any, of
Landlord under the applicable instrument, and (v) Landlord and Lender shall have
received (W) a certificate from the appropriate officer of Tenant certifying as
to the satisfaction of the conditions described in clauses (i) through (iv)
above, (X) a duly authorized undertaking of Tenant and each Guarantor, in form
and substance reasonably satisfactory to Landlord, to the effect that Tenant
will remain obligated under this Lease, and Guarantor will remain obligated
under its guaranty of Tenant’s obligations under this Lease, to the same extent
as if such grant, release, dedication, transfer, petition amendment had not been
made, and (Y) such instruments, certificates (including evidence of authority),
surveys, title insurance policy endorsements, and opinions of counsel reasonably
acceptable to Landlord, as Landlord may reasonably request.  Any easement that
imposes any obligation or liability on Landlord shall expressly provide that it
is without recourse to Landlord (except to the extent of Landlord’s interest in
the Project), and that any lien arising by virtue of the nonperformance of
obligations under such easement shall be subordinate to the lien of any
Indenture.  As required by the Indenture, the grant of any such easement and the
taking of any other action pursuant to this Section 3.10, shall be subject to
Lender’s consent, which consent shall not be unreasonably withheld or
delayed.  Tenant shall be responsible for the payment of all costs and expenses
paid to third parties (including the reasonable costs and expenses of Landlord
and Lender) incurred in connection with this Section 3.10.  Subject to the
provisions of Sections 3.2 and 3.6, any consideration received for the grants,
releases, dedications, transfers, petitions or amendments outlined in this
Section shall be the property of Landlord.
 
(b) Without limiting the generality of any other provision of this Lease
requiring payments of Additional Rent, if any Project is presently, or should at
sometime in the future be, affected by an easement agreement, Tenant agrees
during the Term of this Lease (i) to perform all of the duties and obligations
of Landlord under such easement agreement (including, without limitation, paying
any and all costs, charges and assessments imposed thereunder), (ii) to comply
with all of the terms, conditions, covenants, provisions, restrictions and
agreements set forth in such easement agreement, (iii) that any obligation or
liability arising under any such easement agreement shall be nonrecourse to
Landlord (except to the extent of Landlord’s interest in the Project and this
Lease), (iv) that any lien against the Project arising by virtue of the
nonperformance of obligations under such easement agreement shall be subordinate
to the lien of any Indenture; and (v) to indemnify, defend and hold the
Indemnified Parties harmless from and against every, any and all demands, claims
and assertions of liability, or action relating to Tenant’s failure to comply
with the obligations set forth in this Section 3.10(b).  Landlord agrees that it
shall not (except as may be required by any governmental agency or in connection
with any condemnation proceeding) enter into any easement without the prior
written consent of Tenant, which consent shall not be unreasonably withheld or
delayed.
 
3.11  
Fixtures and Equipment

 
.  Tenant acknowledges that the F&E is the property of Landlord and that
Landlord has granted, and may hereafter grant, a security interest therein to
Lender.  Tenant hereby represents and warrants to Landlord that the F&E is free
and clear of any and all liens, security interests or other encumbrances as of
the date hereof, other than the lien and security interest of the
Indenture.  Tenant hereby agrees to maintain the F&E in good condition and
repair, reasonable wear and tear excepted.  In no event shall any of the
Landlord’s F&E be discarded or removed from a Project unless such F&E is
replaced by similar F&E with a value and utility, not less than, by more than a
de minimis amount, the value and utility of the replaced F&E.
 
3.12  
Right of First Offer.

 
(a) If Landlord desires to sell or offer for sale all of the Premises to any
unaffiliated third party, Landlord shall first provide Tenant in writing all of
the material economic terms and conditions of the proposed sale, including,
without limitation, the price (the "Offered Terms") and the requirements for
compliance with or satisfaction of any transfer, assignment and assumption
obligations under any loan then outstanding, and shall offer Tenant the
opportunity to purchase such interest for the same purchase price and otherwise
on substantially the same terms and conditions as such Offered Terms (other than
representations and warranties that may be offered as an inducement to certain
third parties).  Tenant shall have the right to accept the Offered Terms by
written notice to the Landlord given within thirty (30) Days after Tenant's
receipt of the Offered Terms; provided, however, that the Tenant shall have
satisfied any transfer, assignment and assumption obligations and any other
requirements of Landlord in connection therewith under any loan then outstanding
prior to Tenant’s consummation of such purchase.  If Tenant does not accept the
Offered Terms within thirty (30) Days after receipt of the Offered Terms from
the Landlord (with silence being deemed a rejection of such offer), Tenant shall
be deemed to have rejected the Offered Terms and the Landlord may enter into a
contract to sell such interest during the twelve (12) month period beginning on
the date of the expiration of the applicable period, provided, that a sale
resulting from such offer shall be consummated on substantially the same terms
as the Offered Terms (other than representations and warranties that may be
offered as an inducement to certain third parties) (it being agreed that any
sale at a price that is equal to or greater than 95% of the purchase price
contained in the Offered Terms shall be considered to be substantially the same
terms as to price).  If such sale is not consummated within such twelve (12)
month period, the provisions of this Section 3.12 shall again apply in respect
of any proposed offer of any such interest in such Project to an unaffiliated
third party whether made during such twelve (12) month period or thereafter.
 
(b) Notwithstanding anything contained to the contrary in this Section 3.12,
Tenant shall not have the right of first offer under Section 3.12(a) (i) while
an Event of Default has occurred and is continuing; (ii) following a retention
of a Project by the Landlord in connection with a rejection of a Rejectable
Offer or a Rejectable Substitution Offer; (iii) at any time after the expiration
or earlier termination of this Lease; (iv) in connection with a foreclosure or
deed in lieu thereof delivered in connection with the exercise of remedies under
the Indenture; or (v) in connection with a conveyance by Lender or its designee
subsequent to a foreclosure or deed in lieu thereof.
 
ARTICLE 4.                                
 
4.1  
Assignment and Subletting.

 
(a) Tenant shall not be permitted to transfer or assign this Lease (whether
directly or indirectly, including without limitation by any indirect transfer
effected through a Subject Transfer (as hereinafter defined); provided, however,
that so long as no Event of Default has occurred and is continuing, Tenant may
assign its interest in this Lease with the prior written consent of Landlord and
Lender (such consent not to be unreasonably withheld) or pursuant to Section
4.1(d).  No assignment permitted hereunder shall (a) relieve Tenant of any of
its obligations, liabilities or duties hereunder, which shall be and remain
those of a principal and not a guarantor, (b) cause any portion of the Premises
to be tax-exempt use property within the meaning of Section 168(h) of the
Internal Revenue Code of 1986, as amended, or (c) be to an assignee that is
bankrupt or insolvent as of the effective date of such assignment.
 
(b) The Tenant may sublease all or any part of the Premises at any time on such
terms and conditions as Tenant may desire in its sole discretion, without the
consent of Landlord; provided, however, that (i) any such sublease shall be
expressly subject and subordinate to this Lease and the Indenture and shall not
release Tenant from any of its obligations or liabilities under this Lease; (ii)
no such sublease may be entered into if an Event of Default has occurred and is
continuing; (iii) any sublessee shall not be bankrupt or insolvent at the
inception of the sublease and shall be permitted to use the Premises only as
permitted by Section 1.2; (iv) any such sublease shall be for a term that does
not extend beyond the Primary Term or any Extended Term, Wintergreen Extended
Term or FMV Extended Term that has been irrevocably elected; (v) the subtenant
is not a tax-exempt entity within the meaning of Section 168(h) of the Internal
Revenue Code of 1986, as amended.  Tenant shall supply copies of any sublease to
Landlord upon request.
 
(c) Landlord and Lender shall not unreasonably withhold execution and delivery
of a subordination, non-disturbance and attornment agreement in the form
attached to this Lease as Exhibit I (a "Non-Disturbance Agreement"), in
connection with a sublease by Lessee complying with Section 4.1(b), provided (i)
such sublease is for an entire Project and for a term of not less than five (5)
years, (ii) the rent payable under such sublease is equal to the greater of (A)
the fair market rental value of such Project or (B) the Basic Rent allocable to
such Project (such amount to be determined by multiplying the annual Basic Rent
by a fraction, the numerator of which is the amount allocated to such Project in
Schedule G, and the denominator of which is the aggregate amount allocated in
Schedule G to all Projects then subject to this Lease), (iii) the terms of such
sublease shall not be contrary to the terms of this Lease, (iv) either (A) the
subtenant has an Acceptable Credit Rating, or (B) Tenant has an Acceptable
Credit Rating and the subtenant (1) is a national or regional retailer that
operates a portfolio of not less than ten (10) stores, (2) has a net worth of
not less than $50,000,000 and (3) has a debt to cash flow ratio of not more than
3.5 to 1 for each of the three (3) preceding fiscal years of subtenant, (v) the
subtenant is obligated to provide financial reporting similar to the reporting
requirements applicable to Tenant or a Guarantor hereunder and (vi) the
subtenant shall have acknowledged that neither Landlord nor Lender shall be
liable to subtenant for any act or omission of Tenant.  Lessor and Lender shall
execute and deliver the Non-Disturbance Agreement with respect to such sublease
within twenty (20) Business Days after request by Tenant so long as (x) Tenant
pays all reasonable costs and expenses (including reasonable attorneys' fees and
expenses) in connection therewith, (y) no Event of Default has then occurred and
is continuing and (z) the Tenant shall have delivered a certificate to the
Lessor and the Lender confirming compliance with this Section 4.1.
 
(d)   Any Subject Transfer (as hereinafter defined) shall require the prior
written consent of each of Landlord and Lender; provided, however, that such
consent shall not be required if immediately after giving effect to the Subject
Transfer, (a) Tenant shall have a credit rating at least equal to its credit
rating on the day preceding the Subject Transfer, (b) Tenant or any surviving or
successor entity shall assume in writing the obligations under this Lease, (c)
no Event of Default shall have occurred and be continuing, and (d) Tenant shall
have delivered a certification that all conditions set forth above in this
subparagraph (d) have been satisfied.  For the purposes of this Section 4.1(d)
"Subject Transfer" shall mean the sale, assignment or other transfer, in a
single transaction or a series of related transactions, of 50.1% or more of the
outstanding common stock of Tenant (without regard to any sale, assignment, gift
or other transfer to any spouse or direct descendant of any holder of such
common stock as of the date hereof) to any "person" or "group" within the
meaning of Section 13(d)(3) of the Securities and Exchange Act of 1934, as
amended.
 
(e) Neither this Lease nor the Term hereby demised shall be mortgaged or pledged
by Tenant, nor shall Tenant mortgage or pledge its interest in any sublease of
any portion of the Premises or the rentals payable thereunder.  Any such
mortgage or pledge, any sublease made other than as expressly permitted by this
Section 4.1, and any assignment of Tenant’s interest under this Lease made other
than as expressly permitted by this Section 4.1, shall be void.
 
(f) Without implying any authority of Tenant to assign this Lease or sublet any
Projects (other than as set forth herein), if this Lease is assigned pursuant to
the provisions hereof, or if any Project or any part thereof is sublet or
occupied by any person or entity other than Tenant, Landlord may, after an Event
of Default has occurred and is continuing, collect rent from the assignee,
subtenant or occupant, and apply the net amount collected to the Basic Rent and
Additional Rent herein reserved, but no such assignment, subletting, occupancy
or collection shall be deemed a waiver of this covenant, or the acceptance of
the assignee, subtenant or occupant as Tenant, or a release of Tenant from the
further performance by Tenant of the terms, covenants, and conditions on the
part of Tenant to be observed or performed under this Lease, and, subsequent to
any assignment or subletting, Tenant’s liability under this Lease shall continue
notwithstanding any subsequent modification or amendment hereof or the release
of any subsequent tenant under this Lease from any liability, to all of which
Tenant hereby consents in advance.
 
ARTICLE 5.                                
 
5.1  
Conditional Limitations; Default Provisions.

 
(a) Any of the following occurrences or acts shall constitute an “Event of
Default” under this Lease:
 
(i)  
if Tenant shall (1) fail to pay any Basic Rent, Additional Rent or other sum as
and when required to be paid by Tenant under this Lease, and such failure shall
continue for two (2) Business Days (with respect to Basic Rent or 5 Business
Days (with respect to Additional Rent or any other sum) after delivery of
written notice from Landlord (or Lender) to Tenant that such payment was not
received when due, or (2) fail to observe or perform any other provision of this
Lease (other than those referred to in clauses (vii) and (ix) of this
Section 5.1(a)) and such failure shall continue for thirty (30) days after
written notice to Tenant of such failure (provided, that in the case of any such
failure which is capable of being cured but cannot be cured by the payment of
money and cannot with diligence be cured within such 30-day period, if Tenant
shall commence promptly to cure the same and thereafter prosecute the curing
thereof with diligence, the time within which such failure may be cured shall be
extended for such period as is necessary to complete the curing thereof with
diligence, but in no event to exceed one hundred eighty (180) days from the date
of such failure; or;

 
(ii)  
if any representation or warranty of Tenant, Seller or Guarantor set forth
herein, in the Contract of Sale or in any notice, certificate, demand, request
or other document or instrument delivered to Landlord in connection with this
Lease shall prove to be incorrect in any material respect as of the time when
the same shall have been made; or

 
(iii)  
if Tenant or any guarantor of Tenant’s obligations under this Lease (a
“Guarantor”) shall file a petition in bankruptcy or for reorganization or for an
arrangement, administration, liquidation or receivership pursuant to any federal
or state law (or any other law governing a Guarantor), or shall be adjudicated a
bankrupt or become insolvent or shall make an assignment for the benefit of
creditors or shall admit in writing its inability to pay its debts generally as
they become due, or if a petition or answer proposing the adjudication of Tenant
or a Guarantor as a bankrupt or its reorganization pursuant to any federal or
state bankruptcy, liquidation, voluntary administration, administration,
receivership, moratorium or trust law or any similar federal or state law shall
be filed in any court and Tenant or such Guarantor shall consent to or acquiesce
in the filing thereof or such petition or answer shall not be discharged or
denied within ninety (90) days after the filing thereof; or

 
(iv)  
if a receiver, trustee, administrator or liquidator of Tenant or any Guarantor
or of all or substantially all of the assets of Tenant or such Guarantor or of
any Project or Tenant’s estate therein shall be appointed in any proceeding
brought by Tenant or a Guarantor, or if any such receiver, trustee or liquidator
shall be appointed in any proceeding brought against Tenant or a Guarantor and
shall not be discharged within ninety (90) days after such appointment, or if
Tenant or a Guarantor shall consent to or acquiesce in such appointment; or

 
(v)  
if any Project shall have been left unoccupied and unattended for a period of
thirty (30) days (other than as permitted by Section 1.2(b)); or

 
(vi)  
if Tenant or a Guarantor shall dissolve or otherwise fail to maintain its legal
existence; or

 
(vii)  
if Tenant shall default under Section 4.1(a), 4.1(b) or 4.1(d) or Schedule K of
this Lease; or

 
(viii)  
if any Guarantor shall default under the provisions of its guaranty; or

 
(ix)  
if Tenant shall fail to maintain any insurance required to be maintained by
Tenant in accordance with the terms and conditions of Section 3.7 of this Lease
or the letter of even date herewith from Tenant to Landlord relating to
insurance; or

 
(x)  
if Tenant shall default under Sections 7.2 and/or  7.3 of this Lease.

 
(xi)  
Any event that but for the giving of notice or the passage of time would be an
Event of Default shall be a “Default.”

 
(b) If an Event of Default shall have occurred and be continuing Landlord shall
be entitled to all remedies available at law or in equity.  Without limiting the
foregoing, Landlord shall have the right to give Tenant notice of Landlord’s
termination of the Term of this Lease.  Upon the giving of such notice, the Term
of this Lease and the estate hereby granted shall expire and terminate on such
date as fully and completely and with the same effect as if such date were the
date herein fixed for the expiration of the Term of this Lease, and all rights
of Tenant under this Lease shall expire and terminate, but Tenant shall remain
liable as hereinafter provided.
 
(c) If an Event of Default shall have happened and be continuing, Landlord shall
have the immediate right, whether or not the Term of this Lease shall have been
terminated pursuant to Section 5.1(b), to re-enter and repossess the Premises
and the right to remove all persons and property therefrom by summary
proceedings, ejectment, any other legal action or in any lawful manner Landlord
determines to be necessary or desirable, so long as Landlord is proceeding in
accordance with applicable law and, if required under applicable law, under
authority of a court of proper jurisdiction.  Landlord shall be under no
liability by reason of any such re-entry, repossession or removal.  No such
re-entry, repossession or removal shall be construed as an election by Landlord
to terminate this Lease unless a notice of such termination is given to Tenant
pursuant to Section 5.1(b).
 
(d) At any time or from time to time after a re-entry, repossession or removal
pursuant to Section 5.1(c), whether or not the Term of this Lease shall have
been terminated pursuant to Section 5.1(b), Landlord may (but shall be under no
obligation to) relet any or all of the Projects for the account of Tenant, in
the name of Tenant or Landlord or otherwise, without notice to Tenant, for such
term or terms and on such conditions and for such uses as Landlord, in its
absolute discretion, may determine.  Landlord may collect any rents payable by
reason of such reletting.  Landlord shall not be liable for any failure to relet
any of the Projects or for any failure to collect any rent due upon any such
reletting.
 
(e) No expiration or earlier termination of the Term of this Lease pursuant to
Section 5.1(b), by operation of law or otherwise, and no re-entry, repossession
or removal pursuant to Section 5.1(c) or otherwise, and no reletting of the
Premises pursuant to Section 5.1(d) or otherwise, shall relieve Tenant of its
liabilities and obligations under this Lease, all of which shall survive such
expiration, termination, re-entry, repossession, removal or reletting.
 
(f) In the event of the expiration or earlier termination of the Term of this
Lease or re-entry or repossession of the Premises or removal of persons or
property therefrom by reason of the occurrence of an Event of Default, Tenant
shall pay to Landlord all Basic Rent, Additional Rent and other sums required to
be paid by Tenant, in each case together with interest thereon at the Rate from
the due date thereof to and including the date of such expiration, termination,
re-entry, repossession or removal; and thereafter, Tenant shall, until the end
of what would have been the Term of this Lease in the absence of such
expiration, termination, re-entry, repossession or removal and whether or not
any Projects shall have been relet, be liable to Landlord for, and shall pay to
Landlord, as liquidated and agreed current damages:  (i) all Basic Rent,
Additional Rent and other sums which would be payable under this Lease by Tenant
in the absence of any such expiration, termination, re-entry, repossession or
removal, less (ii) the net proceeds, if any, of any reletting effected for the
account of Tenant pursuant to Section 5.1(d), after deducting from such proceeds
all expenses of Landlord in connection with such reletting (including, without
limitation, all repossession costs, brokerage commissions, reasonable attorneys’
fees and expenses (including fees and expenses of appellate proceedings),
employees’ expenses, alteration costs and expenses of preparation for such
reletting).  Tenant shall pay such liquidated and agreed current damages on the
dates on which Basic Rent would be payable under this Lease in the absence of
such expiration, termination, re-entry, repossession or removal, and Landlord
shall be entitled to recover the same from Tenant on each such date.
 
(g) At any time after any such expiration or earlier termination of the Term of
this Lease or re-entry or repossession of the Premises or removal of persons or
property thereon by reason of the occurrence of an Event of Default, whether or
not Landlord shall have previously collected any liquidated and agreed current
damages pursuant to Section 5.1(f), Landlord shall be entitled to recover from
Tenant, and Tenant shall pay to Landlord on demand, as and for liquidated and
agreed final damages for Tenant’s default and in lieu of all liquidated and
agreed current damages beyond the date of such demand as outlined in Section
5.1(f) above (it being agreed that it would be impracticable or extremely
difficult to fix the actual damages, and the liquidated and agreed final damages
reasonably approximate to the actual damages Landlord would sustain on account
of a Tenant Default or Event of Default, and the same are not intended to be a
penalty), an amount equal to the excess, if any, of (a) the aggregate of all
Basic Rent, Additional Rent and other sums which would be payable under this
Lease, in each case from the date of such demand (or, if it be earlier, the date
to which Tenant shall have satisfied in full its obligations under Section
5.1(f) to pay liquidated and agreed current damages) for what would be the
then-unexpired Term of this Lease in the absence of such expiration,
termination, re-entry, repossession or removal, discounted at a rate equal to
the then yield on U.S. Treasury obligations of comparable maturity to the Term
(the “Treasury Rate”) over (b) the then fair rental value of the Premises for
what would be such then unexpired Term of this Lease, discounted at the Treasury
Rate for the same period (such excess being hereinafter referred to as
“Liquidated Damages”).   For purposes of determining value pursuant to this
Section 5.1(g), the following shall apply:  (a) determinations of fair rental
value shall be made by an MAI appraiser (engaged by Landlord) who is a member of
the American Institute of Appraisers, with copies of such determinations and
supporting analysis to be provided to Tenant; and (b) all determinations of
Liquidated Damages shall be binding on Tenant in the absence of manifest
error.  If any law shall limit the amount of liquidated final damages to less
than the amount above agreed upon, Landlord shall be entitled to the maximum
amount allowable under such law.
 
5.2  
Bankruptcy or Insolvency.

 
(a) In the event that Tenant shall become a debtor in a case filed by or against
debtor under Chapter 7 of the Bankruptcy Code and Tenant’s trustee or Tenant
shall elect to assume this Lease for the purpose of assigning the same or
otherwise, such election to assume may be made only if the provisions of
Sections 5.2(b) and 5.2(d) are satisfied as if the election to assume were made
in a case filed under Chapter 11 of the Bankruptcy Code.  If Tenant or Tenant’s
trustee shall fail to elect to assume this Lease within 60 days after the entry
of the order for relief in the debtor’s case or such additional time as provided
by the court within such 60-day period, this Lease shall be deemed to have been
rejected.  Immediately thereupon Landlord shall be entitled to possession of the
Premises without further obligation to Tenant or Tenant’s trustee and this Lease
upon the election of Landlord shall terminate, but Landlord’s right to be
compensated for damages (including, without limitation, liquidated damages
pursuant to any provision hereof) or the exercise of any other remedies in any
such bankruptcy proceeding shall survive, whether or not this Lease shall be
terminated.
 
(b)   
 
(i)    In the event that Tenant shall become a debtor in a case under Chapter 11
of the Bankruptcy Code, or in a case filed under Chapter 7 of the Bankruptcy
Code which is converted to Chapter 11, Tenant’s trustee or Tenant, as
debtor-in-possession, as the case may be, must elect to assume this Lease within
one hundred twenty (120) days from the date of the entry of the order for relief
in the debtor’s case or Tenant’s trustee or Tenant, as debtor-in-possession, as
the case may be, shall be deemed to have rejected this Lease.  In the event that
Tenant’s trustee or Tenant as the debtor-in-possession, as the case may be, has
failed to perform any of Tenant’s obligations under this Lease within the time
periods (excluding grace periods) required for such performance, no election by
Tenant’s trustee or the debtor-in-possession to assume this Lease, whether under
Chapter 7 or Chapter 11, shall be permitted or effective unless each of the
following conditions has been satisfied:
 
(1)  Tenant’s trustee or Tenant as the debtor-in-possession, as the case may be,
has cured all Events of Default under this Lease, or has provided Landlord with
Assurance (as hereinafter defined) that it will cure all Events of Default
susceptible of being cured by the payment of money within ten (10) days from the
date of such assumption and that it will cure all other Events of Default under
this Lease which are susceptible of being cured by the performance of any act
promptly after the date of such assumption.
 
(2)  Tenant’s trustee or Tenant as the debtor-in-possession, as the case may be,
has compensated Landlord, or has provided Landlord with Assurance that within
ten (10) days from the date of such assumption it will compensate Landlord, for
any actual pecuniary loss incurred by Landlord arising from any Event of Default
as indicated in any statement of actual pecuniary loss sent by Landlord to
Tenant’s trustee or Tenant as the debtor-in-possession, as the case may be.
 
(3)  Tenant’s trustee or Tenant as the debtor-in-possession, as the case may be,
has provided Landlord with Assurance of future performance of each of the
obligations under this Lease, and shall also (i) deposit with Landlord, as
security for the timely payment of rent under this Lease, an amount equal to one
(1) advance installment (in addition to the installment then due as a result of
Basic Rent being payable in advance pursuant to subitem (ii) below) of Basic
Rent (at the rate then payable) which shall be applied to installments of Basic
Rent in the inverse order in which such installments shall become due provided
all the terms and provisions of this Lease shall have been complied with, (ii)
agree that from and after such date all Basic Rent shall be due and payable in
advance (rather than in arrears) on each Payment Date, and (iii) pay in advance
to Landlord on the date each installment of Basic Rent is payable a pro rata
share of Tenant’s annual obligations for Additional Rent and other sums pursuant
to this Lease, such that Landlord shall hold funds sufficient to satisfy all
such obligations as they become due.  The obligations imposed upon Tenant’s
trustee or Tenant as the debtor-in-possession, as the case may be, by this
Section shall continue with respect to Tenant or any assignee of this Lease
after the conclusion of the debtor’s bankruptcy case.
 
(4)  The assumption of this Lease will not breach or cause a default under any
provision of any other lease, mortgage, financing arrangement or other agreement
by which Landlord is bound.
 
(ii)  For purposes of this Section 5.2, Landlord and Tenant acknowledge that
“Assurance” shall mean no less than:  Tenant’s trustee or Tenant as the
debtor-in-possession, as the case may be, has and will continue to have
sufficient unencumbered assets after the payment of all secured obligations and
administrative expenses to assure Landlord that sufficient funds will be
available to fulfill the obligations of Tenant under this Lease, and (x) there
shall have been deposited with Landlord, or the Bankruptcy Court shall have
entered an order segregating, sufficient cash payable to Landlord to fulfill the
obligations of Tenant under this Lease, and/or (y) Tenant’s trustee or Tenant as
the debtor-in-possession, as the case may be, shall have granted a valid and
perfected first lien and security interest and/or mortgage in property of
Tenant’s trustee or Tenant as the debtor-in-possession, as the case may be,
acceptable as to value and kind to Landlord, to secure to Landlord the
obligation of Tenant’s trustee or Tenant as the debtor-in-possession, as the
case may be, to cure the Events of Default under this Lease, monetary and/or
non-monetary, within the time periods set forth above.
 
(c) In the event that this Lease is assumed in accordance with Section 5.2(b)
and thereafter Tenant is liquidated or files or has filed against it a
subsequent petition under Chapter 7 or Chapter 11 of the Bankruptcy Code,
Landlord may, at its option, terminate this Lease and all rights of Tenant under
this Lease by giving Tenant notice of its election to so terminate within thirty
(30) days after the occurrence of any such event.
 
(d) If Tenant’s trustee or Tenant as the debtor-in-possession, as the case may
be, has assumed this Lease pursuant to the terms and provisions of Sections
5.2(a) or 5.2(b) for the purpose of assigning (or elects to assign) this Lease,
this Lease may be so assigned only if the proposed assignee (the “Assignee”) has
provided adequate assurance of future performance (as hereinafter defined) of
all of the terms, covenants and conditions of this Lease to be performed by
Tenant.  Landlord shall be entitled to receive all cash proceeds of such
assignment.  As used herein “adequate assurance of future performance” shall
mean no less than that each of the following conditions has been satisfied:
 
(i)  The Assignee has furnished Landlord with either (1) (x) a copy of a credit
rating of Assignee which Landlord reasonably determines to be sufficient to
assure the future performance by Assignee of Tenant’s obligations under this
Lease and (y) a current financial statement of Assignee audited by a certified
public accountant indicating a net worth and working capital in amounts which
Landlord reasonably determines to be sufficient to assure the future performance
by Assignee of Tenant’s obligations under this Lease, or (2) a guarantee or
guarantees, in form and substance satisfactory to Landlord, from one or more
persons with a credit rating and net worth equal to or exceeding the credit
rating and net worth of Tenant as of the date hereof.
 
(ii)  The Assignee has obtained all consents or waivers from others required
under any lease, mortgage, financing arrangement or other agreement by which
Landlord is bound to permit Landlord to consent to such assignment.
 
(iii)  The proposed assignment will not release or impair any guaranty of the
obligations of Tenant (including the Assignee) under this Lease.
 
(e) When, pursuant to the Bankruptcy Code, Tenant’s trustee or Tenant as the
debtor-in-possession, as the case may be, shall be obligated to pay reasonable
use and occupancy charges for the use of the Premises, such charges shall not be
less than the Basic Rent, Additional Rent and other sums payable under this
Lease.
 
(f) Neither the whole nor any portion of Tenant’s interest in this Lease or its
estate in the Premises shall pass to any trustee, receiver, assignee for the
benefit of creditors, or any other person or entity, by operation of law or
otherwise under the laws of any state having jurisdiction of the person or
property of Tenant unless Landlord shall have consented to such transfer.  No
acceptance by Landlord of rent or any other payments from any such trustee,
receiver, assignee, person or other entity shall be deemed to constitute such
consent by Landlord nor shall it be deemed a waiver of Landlord’s right to
terminate this Lease as a result of any transfer of Tenant’s interest under this
Lease without such consent.
 
(g) In the event of an assignment of Tenant’s interests pursuant to this Section
5.2, the right of Assignee to extend the Term of this Lease for an Extended
Term, Wintergreen Extended Term or FMV Extended Term beyond the then Term of
this Lease shall be extinguished.
 
5.3  
Additional Rights of Landlord.

 
(a) No right or remedy under this Lease shall be exclusive of any other right or
remedy, but shall be cumulative and in addition to any other right or remedy
under this Lease or now or hereafter existing.  Failure to insist upon the
strict performance of any provision hereof or to exercise any option, right,
power or remedy contained herein shall not constitute a waiver or relinquishment
thereof for the future.  Receipt by Landlord of any Basic Rent, Additional Rent
or other sums payable under this Lease with knowledge of the breach of any
provision hereof shall not constitute waiver of such breach, and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless made
in writing duly executed by Landlord.  Landlord shall be entitled to injunctive
relief in case of the violation, or attempted or threatened violation, of any of
the provisions hereof, or to a decree compelling performance of any of the
provisions hereof, or to any other remedy allowed to Landlord by law or equity.
 
(b) Tenant hereby waives and surrenders for itself and all those claiming under
it, including creditors of all kinds, (i) any right and privilege which it or
any of them may have to redeem any portion of the Premises or to have a
continuance of this Lease after termination of Tenant’s right of occupancy by
order or judgment of any court or by any legal process or writ, or under the
terms of this Lease, or after the termination of the Term of this Lease as
herein provided, and (ii) the benefits of any law which exempts property from
liability for debt or for distress for rent.
 
(c) If Tenant shall be in default in the observance or performance of any term
or covenant on Tenant's part to be observed or performed under any of the
provisions of this Lease, then, without thereby waiving such default, Landlord
may, but shall be under no obligation to, take all action, including, without
limitation, entry upon any or all of the Projects to perform the obligation of
Tenant under this Lease immediately and without notice in the case of an
emergency and upon 30 days written notice to Tenant in other cases (unless,
within such 30 days Tenant shall have provided evidence to Landlord that Tenant
has commenced and is diligently pursuing a cure of such default).  All expenses
incurred by Landlord in connection therewith, including attorneys’ fees and
expenses (including those incurred in connection with any appellate
proceedings), together with interest thereon at the Rate from the date any such
expenses were incurred by Landlord until the date of payment by Tenant, shall
constitute Additional Rent and shall be paid by Tenant to Landlord upon demand.
 
(d) If Tenant shall be in default in the performance of any of its obligations
under this Lease, Tenant shall pay to Landlord or Lender, as appropriate, on
demand, all expenses incurred by Landlord or Lender as a result thereof,
including reasonable attorneys’ fees and expenses (including those incurred in
connection with any appellate proceedings).  If Landlord or Lender shall be made
a party to any litigation commenced against Tenant and Tenant shall fail to
provide Landlord or Lender with counsel reasonably approved by Landlord or
Lender, as appropriate, and pay the expenses thereof, Tenant shall pay all costs
and reasonable attorneys’ fees and expenses in connection with such litigation
(including fees and expenses incurred in connection with any appellate
proceedings).
 
5.4  
Waivers

 
.  If an Event of Default has occurred and is continuing, Tenant waives, to the
extent permitted by law, the service of notice of Landlord’s intention to
re-enter as provided for in any statute, or to institute legal proceedings to
that end.  To the extent permitted by law, Tenant waives any and all right of
redemption in case Tenant shall be dispossessed by a judgment or by warrant of
any court or judge.  The terms “enter”, “re-enter”, “entry” or “re-entry” as
used in this Lease are not restricted to their technical legal meanings.
 
ARTICLE 6.                                
 
6.1  
Notices and Other Instruments

 
.  All notices, consents, approvals and requests required or permitted under
this Lease shall be given in writing and shall be effective for all purposes if
hand delivered or sent by (i) certified or registered United States mail,
postage prepaid, return receipt requested, or (ii) expedited prepaid delivery
service, either overnight delivery service of a nationally recognized courier,
commercial or United States Postal Service, with proof of attempted delivery,
addressed as follows:
 
(i)  
With respect to the Landlord:

 
Havertacq 11 LLC
 
c/o GE Capital Asset Management
Attention:  Robert Nowicki Haverty Sale/ Leaseback Asset Manager
GE Capital Real Estate
1528 Walnut Street
Philadelphia, PA  19102
Fax:  (215) 772-0361
 
with a copy to:
 
U.S. Realty Advisors, LLC
Attention:  David M. Ledy
1370 Avenue of the Americas, 29th Floor
New York, NY  10019
Fax:  (212) 581-4050
 
with a copy to:
GE Capital Real Estate
292 Long Ridge Road
Stamford, CT  06927
Attention:  General Counsel/Haverty Portfolio
Fax:  203-357-6768
 
with a copy to:
 
Paul D. Walker, Esq.
Dewey Ballantine LLP
333 South Grand Street
Suite 2600
Los Angeles, CA  90071-1530
 
with a copy to:
 
Havertacq 11 LLC
c/o GE Capital Asset Management
Attention:  Haverty Sale/Leaseback Asset Manager
GE Capital Real Estate
1528 Walnut Street
Philadelphia, PA 19102
 
(ii)  
With respect to the Tenant:

 
Haverty Furniture Companies, Inc.
780 Johnson Ferry Road
Suite 800
Atlanta, GA 30342
Attention:  Chief Financial Officer and Real Estate Manager
with a copy to:
Robert H. West, Esq.
Smith, Gambrell & Russell, LLP
Promenade II, Suite 3100
1230 Peachtree Street, NE
Atlanta, Georgia  30309
 
Such address may be changed by any party in a written notice to the other
parties hereto in the manner provided for in this Section.  A notice shall be
deemed to have been delivered:  in the case of hand delivery, at the time of
delivery; in the case of registered or certified mail, when delivered or the
first attempted delivery on a Business Day; or in the case of expedited prepaid
delivery, upon the first attempted delivery on a Business Day.  A party
receiving a notice which does not comply with the technical requirements for
notice under this Section may elect to waive any deficiencies and treat the
notice as having been properly given.
 
6.2  
Estoppel Certificates, Financial Information.

 
(a) Tenant shall at any time and from time to time during the Term of this Lease
(but in no circumstances more often than two (2) times per calendar year unless
in connection with a sale or refinancing of all or any of the Projects) upon not
less than ten (10) days prior written request by Landlord, promptly execute,
acknowledge and deliver to Landlord or to any prospective purchaser, assignee or
mortgagee or third party designated by Landlord, a certificate stating:  (i)
that this Lease is unmodified and is a valid, legal and binding obligation of
Tenant in force and effect (or if there have been modifications, that this Lease
is in force and effect as modified, and identifying the modification
agreements); (ii) the date to which Basic Rent and Additional Rent has been
paid; (iii) whether there is any existing default by the Tenant in the payment
of Basic Rent, whether there is an existing default by the Tenant in the payment
of any Additional Rent beyond any applicable grace period, and whether there is
any other existing default or Event of Default by either party hereto, and, if
there is any such default, specifying the nature and extent thereof and the
action taken to cure such default; (iv) whether there are any actions or
proceedings pending against the Premises before any governmental authority to
condemn any Project or any portion thereof or any interest therein and whether,
to the knowledge of Tenant, any such actions or proceedings have been
threatened; (v) whether there exists any material unrepaired damage to any
Project from fire or other casualty; (vi) whether, to the knowledge of Tenant,
there is any existing default by Landlord under this Lease; (vii) any offsets or
defenses to the payment of Basic Rent or Additional Rent; (viii) that no
actions, whether voluntary or involuntary or otherwise, are pending against
Tenant under the bankruptcy laws of the United States or any state; and (ix)
other items that may be reasonably requested.  Any such certificate may be
relied upon by any actual or prospective mortgagee or purchaser of a Project.
 
(b) Tenant shall deliver to Landlord and to any Lender (A) within 90 days after
the end of each calendar quarter and within 120 days after each calendar year a
statement of Tenant's EBITDAR with respect to each Project for the previous
calendar year, certified by the chief financial officer, treasurer or chief
accounting offices of Tenant and (B) copies of all financial statements,
reports, notices and proxy statements sent by Tenant to its stockholders or to
the Securities and Exchange Commission; provided, however, that if such
statements and reports do not include the following information, Tenant shall
deliver to Landlord and to Lender the following:
 
(i)  Within one hundred twenty (120) days after the end of each fiscal year of
Tenant, a balance sheet of Tenant and its consolidated subsidiaries as at the
end of such year and a statement of profits and losses of Tenant and its
consolidated subsidiaries for such year setting forth in each case, in
comparative form, the corresponding figures for the preceding fiscal year in
reasonable detail and scope and audited by independent certified public
accountants of recognized national standing selected by Tenant; and within
ninety (90) days after the end of each fiscal quarter of Tenant (except for the
fourth fiscal quarter) a balance sheet of Tenant and its consolidated
subsidiaries as at the end of such quarter and statements of profits and losses
of Tenant and its consolidated subsidiaries for such quarter setting forth in
each case, in comparative form, the corresponding figures for the similar
quarter of the preceding year, in reasonable detail and scope, and certified by
the chief financial officer of Tenant, the foregoing financial statements all
being prepared in accordance with generally accepted accounting principles,
consistently applied;
 
(ii)  Within ninety (90) days after the end of each fiscal year of Tenant,
Project-level statements of profits and losses as at the end of such year,
setting forth, in comparative form, the corresponding figures for the preceding
year, in reasonable detail and scope, certified by the chief financial officer
or treasurer of Tenant, and prepared in accordance with generally accepted
accounting principles.
 
(iii)  With reasonable promptness, such additional information (including copies
of public reports filed by Tenant) regarding the business affairs and financial
condition of Tenant as Landlord may reasonably request.
 
(c) Upon request of Landlord, and upon concurrent compliance with the provisions
of Section 6.2(d) below, Tenant shall enter into an agreement with any Lender
pursuant to which Tenant shall agree:
 
(i)  that in the event that any such Lender, or any purchaser at a foreclosure
sale, shall acquire title to a Project, Tenant shall attorn to such Lender or
such purchaser, as the case may be, as its new Landlord and this Lease shall
continue as a direct lease between Tenant and such Lender or purchaser, as the
case may be, with respect to the Premises upon the terms and conditions set
forth herein except that such Lender or purchaser, as the case may be, shall not
be liable to Tenant for any actions or omissions of Landlord prior to the date
such Lender or purchaser, as the case may be, acquired title to the applicable
Project;
 
(ii)  Tenant shall not enter into any agreement with Landlord for the
termination of this Lease unless Tenant receives the written consent of the
Lender to such termination;
 
(iii)  no rejection by Landlord of any Rejectable Offer pursuant to this Lease
shall be effective unless Tenant receives the written consent of the Lender to
such rejection, which consent Lender shall be required to provide if the Loan is
paid in accordance with the terms thereof;
 
(iv)  no rejection or acceptance by Landlord of any Rejectable Substitution
Offer pursuant to this Lease shall be effective unless Tenant receives the
written consent of the Lender to such rejection or acceptance, which consent
Lender shall be required to provide if the Loan is paid in accordance with the
terms thereof;
 
(v)  no consent to the release of Tenant from liability under this Lease upon
assignment of this Lease or sublease of any Project shall be effective unless
Tenant shall receive the written consent of such Lender; and
 
(vi)  no subordination, amendment or modification of this Lease shall be
effective unless Tenant receives the written consent of the Lender thereto and
written evidence in writing from the Rating Agencies that any such action shall
not result in a withdrawal, qualification or downgrade of the current ratings
for any securities issued in connection with any securitization or other
secondary market transaction in which the indebtedness secured by the Indenture
is included.
 
(d) Upon receipt of a request from Landlord for the agreement described in
Section 6.2(c) above, Tenant’s obligations under Section 6.2(c) above shall be
conditioned upon such Lender entering into a non-disturbance and attornment
agreement which shall provide that unless an Event of Default then exists under
this Lease, Lender shall not join Tenant as a defendant in any action to
foreclose upon the interest of Landlord in the Premises and, upon the Lender’s
foreclosure of Landlord’s interest in the Premises by judicial proceedings or
otherwise, such Lender shall not be entitled to, nor shall it seek to terminate
this Lease or Tenant’s interest in the Premises, provided, that, Tenant, from
and after the date of such succession, attorns to such Lender, pays to such
Lender all items of Basic Rent, Additional Rent and other items accruing from
and after such date and otherwise remains in compliance with all other terms and
provisions of this Lease.  Tenant hereby acknowledges that the Subordination,
Non-disturbance and Attornment Agreement of even date herewith, among Tenant,
Landlord and Lender constitutes such an agreement.  In the event that Tenant
shall execute a separate document for the benefit of a Lender relating to
subordination, attornment or non-disturbance, such document shall control to the
extent that it conflicts with the provisions of this Section 6.2(d).
 
ARTICLE 7.                                
 
7.1  
Environmental Warranty

 
.  Tenant represents and warrants to Landlord and, as hereby required by
Landlord, Lender:
 
(a) Tenant  complies and at all times has been in full compliance with, and each
of the Projects complies and has at all times been in full compliance with, in
all material respects, all Environmental Laws;
 
(b) Tenant and each of the Projects has obtained and is in compliance with, all
permits, licenses, authorizations, registrations and other governmental consents
(“Environmental Permits”) required by applicable Environmental Laws, and has
made all appropriate filings for the issuance or renewal of such Environmental
Permits;
 
(c) no written notices, complaints or claims of violation or non-compliance with
Environmental Laws or potential liability under Environmental Laws or relating
to environmental matters have been received by Tenant and, no federal, state or
local environmental investigation or proceeding is pending or, to Tenant's
knowledge, threatened with regard to any Project or any use thereof or any
alleged violation of Environmental Laws with regard to any Project;
 
(d) none of the Projects, or any portion thereof, has been used by Tenant or by
any prior owner for the generation, manufacture, storage, handling, use,
transfer, treatment, recycling, transportation, processing, production,
refinement or disposal of any Hazardous Substance other than in connection with
the customary operation and maintenance of a Project and in commercially
reasonable quantities as a consumer thereof, subject to, in any event,
compliance with Environmental Laws;
 
(e) no underground storage tanks or surface impoundments have been installed in
any Project by Tenant or by any other person or entity, and, except as otherwise
set forth in any Phase I environmental report delivered to Landlord in
connection with its acquisition of the Projects, there exists no Hazardous
Substance contamination at, on, under, or within any Project, whether
originating on or off the applicable Project;
 
(f) except as otherwise specifically set forth in the Phase I environmental
reports delivered to Landlord in connection with its acquisition of the
Projects, no Hazardous Substances (including, without limitation, asbestos) are
present or have been Released or are threatened to be Released at, on, under,
within or emanating to or from any of the Projects or any portion thereof; and
 
(g)  “Environmental Laws” shall mean and include the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. §§ 6901-6987, as amended by the Hazardous and
Solid Waste Amendments of 1984 (“RCRA”), the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601-9657, (“CERCLA”),
the Hazardous Materials Transportation Act of 1975, 49 U.S.C. §§ 1801-1812, the
Toxic Substances Control Act, 15 U.S.C. §§ 2601-2671, the Clean Air Act, 42
U.S.C. §§ 7401 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq., and
all other present and future federal, state, local and other governmental
statutes, laws (including without limitation principles of common and decisional
law), ordinances, rules, orders, statutes, decrees, judgments, injunctions,
codes, regulations, permits, licenses, registrations, approvals and
requirements, and authorizations of any Governmental Authority, relating to the
environment, pollution, waste management, human health and safety as it relates
to Hazardous Substances, natural resources or the regulation or control of or
imposing liability or standards of conduct concerning Hazardous Substances
(including without limitation manufacture, distribution in commerce, use and
Release), as any of the foregoing may have been from time to time amended,
supplemented or supplanted.  “Hazardous Substance” shall mean collectively, (a)
any petroleum (including crude oil or any fraction thereof), flammable
explosive, radioactive material, radon gas, friable asbestos, urea formaldehyde
foam insulation and polychlorinated biphenyls, (b) any hazardous waste,
hazardous material, hazardous substance, toxic substance, contaminant or
pollutant, including, without limitation, those defined or regulated as such
under any Environmental Law, and (c) any other chemical or other material
(including products), substance or waste which is now or hereafter prohibited,
limited or regulated under any Environmental Law.  “Release” shall mean the
release, deposit, disposal, migration or leak of any Hazardous Substance into or
upon or under any land or water or air, or otherwise into the environment,
including, without limitation, by means of burial, disposal, discharge,
emission, injection, spillage, leakage, seepage, leaching, dumping, pumping,
pouring, escaping, emptying, placement and the like.
 
7.2  
Environmental Covenants

 
.  Tenant covenants and agrees that:
 
(a) During the Term of this Lease it (i) shall comply, and cause each of the
Projects to comply, with all Environmental Laws applicable to the Projects, (ii)
shall not use and shall prohibit the use of each of the Projects for regulated
activities (other than in connection with the customary operation and
maintenance of a Project and in commercially reasonable quantities as a consumer
thereof, subject to, in any event, compliance with Environmental Laws), (iii)
shall not install or knowingly permit the installation on any of the Projects of
any underground storage tanks or surface impoundments, (iv) shall not knowingly
permit the presence, or Release or threatened Release under, within or emanating
to or from any Project or any portion thereof or any Hazardous Substance (it
being understood that Tenant shall not be obligated to remove existing
non-friable asbestos unless hereafter required pursuant to any Legal Requirement
or unless such non-friable asbestos is hereafter disturbed by renovation,
casualty or other event, in which event the non-friable asbestos shall be
removed and provided further, that any existing non-friable asbestos shall be
maintained in accordance with prudent industry standards, including an
appropriate operations and maintenance program), and (v) shall cause any
alterations of any of the Projects to be done in a way so as to not expose the
persons working on or visiting the applicable Project to Hazardous Substances
and in connection with any such alterations shall remove any Hazardous
Substances present upon any Project which are not in compliance with
Environmental Laws or which present a danger to persons working on or visiting
the applicable Project.
 
(b) If any investigation, site monitoring, containment, cleanup, removal,
restoration or other remedial work of any kind or nature (collectively, the
“Remedial Work”) is required at the Projects pursuant to an order or directive
of any Governmental Authority (as hereinafter defined) or under any applicable
Environmental Law, or in Landlord’s opinion, after notice to Tenant, is
reasonably necessary to prevent future liability under any applicable
Environmental Law, because of or in connection with the current or future
presence or Release, or threatened Release on, at, under, within or emanating to
or from any Project or any portion thereof of any Hazardous Substance, Tenant
shall (at Tenant’s sole cost and expense), or shall cause such responsible third
parties to, promptly commence and diligently prosecute to completion all such
Remedial Work.  In all events, such Remedial Work shall be commenced within
thirty (30) days (or such shorter period as may be required under any applicable
Environmental Law) after the earlier to occur of Tenant’s knowledge that
Remedial Work is required under applicable Environmental Laws or any written
demand reasonably made therefor by Landlord; however, Tenant shall not be
required to commence such Remedial Work within the above-specified time periods
if (x) prevented from doing so by any Governmental Authority, (y) commencing
such Remedial Work within such time periods would result in Tenant or such
Remedial Work violating any Environmental Law or (z) Tenant is contesting in
good faith and by appropriate proceedings the applicability of the relevant
Environmental Laws in accordance with Section 2.6 of this Lease; provided, that
such contest shall not (I) create or materially increase the risk of any civil
or criminal liability of any kind whatsoever on the part of Landlord or
(II) permit or materially increase the risk of the spread, Release or threatened
Release of any Hazardous Substance into the air, soil, ground water, surface
water, or soil vapor on, at, under, within or emanating from any Project or any
portion thereof during the pendency of such contest.  “Governmental Authority”
shall mean any federal, state, regional or local government or political
subdivision thereof and any Person exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
 
(c) All Remedial Work shall be performed by contractors, and under the
supervision of an environmental consultant, each approved in advance by
Landlord.  All costs and expenses reasonably incurred in connection with such
Remedial Work and Landlord’s or Lender’s reasonable monitoring or review of such
Remedial Work which Lender or Landlord may, but are not obligated to, do
(including reasonable attorneys’ fees and disbursements and administrative and
similar costs of Lender and Landlord, but excluding internal overhead) shall be
paid by Tenant.  If Tenant does not timely commence and diligently prosecute to
completion the Remedial Work, then Landlord or, as required by the Indenture,
Lender, may (but shall not be obligated to) cause such Remedial Work to be
performed.  Tenant agrees to bear and shall pay or reimburse Landlord or Lender,
as the case may be, on demand for all advances and expenses (including
reasonable attorneys’ fees and disbursements and administrative and similar
costs of Landlord or Lender, but excluding internal overhead) reasonably
relating to or incurred by Landlord or Lender in connection with such Remedial
Work (including, without limitation, the monitoring, reviewing or performing any
such Remedial Work).  Tenant shall provide Landlord with copies of all reports,
including laboratory data, prepared in connection with any Remedial Work.
 
(d) Except with the prior written consent of Landlord and, as required by the
Indenture, Lender, which consent shall not be unreasonably withheld or delayed,
Tenant shall not commence any Remedial Work or enter into any settlement
agreement, consent decree or other compromise relating to any Hazardous
Substances or Environmental Laws.  Landlord’s and Lender’s prior written consent
with respect to the commencement of Remedial Work shall not be required,
however, if the presence, Release or threatened Release of Hazardous Substances
on, at, under, within, or about, or emanating to or from a Project poses an
immediate threat to the health, safety or welfare of any person or is of such a
nature that an immediate remedial response is necessary, or if Lender or
Landlord, as applicable, fails to respond to any notification by Tenant under
this Section 7.2 within sixty (60) Business Days from the date of such
notification.  In such event, Tenant shall notify Lender and Landlord as soon as
practicable of any action taken.
 
(e) Upon reasonable prior notice, Landlord and, as required by the Indenture,
Lender and their agents, representatives and employees shall have the right at
all reasonable times and during normal business hours, except to the extent such
access is limited by applicable law, to enter upon and inspect, at Landlord’s
and/or Lender’s sole cost and expense except as set forth below, all or any
portion of a Project; provided, however, that such inspections shall not
unreasonably interfere with the operation thereof.  Either of Landlord or
Lender, at its sole expense, except as provided in Section 7.2(f) hereof, may
retain an environmental consultant to conduct and prepare reports of such
inspections.  The inspection rights granted to Landlord and Lender in this
Section shall be in addition to, and not in limitation of, any other inspection
rights granted to Landlord or Lender in this Lease, and shall expressly include
the right to conduct soil borings and other customary environmental tests,
assessments and audits in compliance with applicable Legal Requirements or other
causes set forth in Section 7.2(b); provided that the environmental consultant
performing such tests, assessments and audits shall maintain adequate insurance
to cover any damage caused thereby (failing which Landlord or Lender, as
applicable shall cause to be repaired any such damage).
 
(f) Tenant agrees to bear and shall pay or reimburse Landlord or, as required by
the Indenture, Lender, on demand for all expenses (including reasonable
attorneys' fees and disbursements and administrative and similar costs of Lender
or Landlord, but excluding internal overhead) reasonably relating to or incurred
by Lender or Landlord in connection with the inspections, tests and reports
described in this Section 7.2(e) in the following situations:
 
(i)  If Lender or Landlord, as applicable, has reasonable grounds to believe at
the time any such inspection is ordered, that there exists an Environmental
Violation (as hereinafter defined) or that a Hazardous Substance is present on,
at, under, within or emanating to or from any Project, or is migrating to or
from adjoining property, except under conditions permitted by applicable
Environmental Laws and not prohibited by this Lease;
 
(ii)  If any such inspection reveals an Environmental Violation or that a
Hazardous Substance is present on, to, under, within or emanating to or from a
Project or is migrating to or from adjoining property, except under conditions
permitted by applicable Environmental Laws and not prohibited by this Lease; or
 
(iii)  If an Event of Default exists at the time any such inspection is ordered.
 
(g) To the extent that Tenant has knowledge thereof, Tenant shall promptly, but
not more than five (5) days after acquiring such knowledge, provide notice to
Landlord and Lender of:
 
(i)  any proceeding or investigation commenced or threatened by any Governmental
Authority with respect to the presence, Release or threatened Release of any
Hazardous Substance on, at, under, within or emanating to or from any Project;
 
(ii)  any proceeding or investigation commenced or threatened by any
Governmental Authority, against Tenant (or its subtenants or assignees) or
Landlord, with respect to the presence, Release or threatened Release of
Hazardous Substances from any property not owned by Landlord, including, but not
limited to, proceedings under CERCLA;
 
(iii)  all claims made or any lawsuit or other legal action or proceeding
brought by any Person against (A) Tenant (or its subtenants or assignees) or
Landlord or any Project or any portion thereof, or (B) any other party occupying
such Project or any portion thereof, in any such case relating to any loss or
injury allegedly resulting from any Hazardous Substance or relating to any
violation or alleged violation of or liability arising under Environmental Law;
 
(iv)  the discovery of any occurrence or condition on a Project or on any real
property adjoining or in the vicinity of such Project, which reasonably could be
expected to lead to such Project or any portion thereof being in violation of
any Environmental Law or subject to any restriction on ownership, occupancy,
transferability or use under any Environmental Law (collectively, an
“Environmental Violation”) or which might subject Landlord, Lender or Tenant (or
its subtenants or assignees) to an Environmental Claim.  “Environmental Claim”
shall mean any notice, claim, administrative, regulatory or judicial action,
suit, lien, order, consent decree or judgment, demand alleging or asserting
liability or responsibility for investigatory costs, legal or other fees, costs
of legal proceedings, cleanup costs, remediation costs, mitigative action,
corrective action, removal costs, response costs, damages to natural resources,
personal injuries, contribution, indemnification, cost recovery, compensation,
injunctive relief, losses, fines, or penalties (whether civil or criminal)
arising out of, based on or resulting from (i) the presence or Release or
threatened Release of any Hazardous Substance at the Projects or (ii) any
Environmental Law or (iii) any alleged injury or threat of injury to health,
safety or the environment from Hazardous Substances; and
 
(v)  the commencement and completion of any Remedial Work.
 
(h) Tenant will promptly transmit to Landlord and Lender copies of any
citations, orders, notices or other communications received by Tenant from any
Person with respect to the notices described in Section 7.2(g) hereof.
 
(i) Landlord and, as required by the Indenture, Lender may, but are not required
to, join and participate in, as a party if they so determine, any legal or
administrative proceeding or action concerning any Project or any portion
thereof under any Environmental Law, if, in Landlord’s or Lender’s reasonable
judgment, the interests of Landlord or Lender, as applicable, will not be
adequately protected by Tenant.  Tenant agrees to bear and shall pay or
reimburse Landlord and Lender, on demand for all reasonable expenses (including
reasonable attorneys’ fees and disbursements and administrative and similar
costs of Lender and Landlord, but excluding internal overhead) relating to or
incurred by Landlord or Lender in connection with any such action or proceeding.
 
7.3  
Environmental Indemnity

 
.  Tenant agrees to indemnify, reimburse, defend, and hold harmless the
Indemnified Parties for, from, and against all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties, punitive and consequential
damages, costs of any Remedial Work, reasonable attorneys’ fees, disbursements
and expenses, and reasonable consultants’ fees, disbursements and expenses and
administrative and similar costs of the Indemnified Parties, but excluding
internal overhead), asserted against, resulting to, imposed on, or incurred by
the Indemnified Parties, directly or indirectly, in connection with any of the
following:
 
(a) events, circumstances, or conditions which are alleged to, or do, (1) relate
to the presence or Release or threatened Release on, at, under, within or
emanating to or from any of the Projects or portion thereof of any Hazardous
Substance, (2) form the basis of any violation or alleged violation, of, or
liability or alleged liability under, any Environmental Law by Tenant (or any
subtenants or assignees), Landlord or Lender or with respect to any such
Projects, or (3) constitute Environmental Violations;
 
(b) any pollution, loss or damage to property or natural resources or threat to
human health or safety or the health or safety of other living organisms, or the
environment that is related in any way to Tenant’s (or any subtenants’ or
assignees’) or any previous owner's or operator's management, use, control,
ownership or operation of any Project, including, without limitation, all onsite
and offsite activities involving Hazardous Substances, and whether occurring,
existing or arising prior to or from and after the date hereof;
 
(c) any Environmental Claim against any person or entity whose liability for
such Environmental Claim Tenant, Seller or Landlord has or may have assumed or
retained either contractually or by operation of law;
 
(d) any Remedial Work required to be performed pursuant to any Environmental Law
or the terms hereof; or
 
(e) the breach of any environmental representation, warranty or covenant set
forth in this Lease, (collectively, “Indemnified Environmental Losses”),
INCLUDING IN EACH CASE, WITHOUT LIMITATION, WITH RESPECT TO EACH OF THE
INDEMNIFIED PARTIES, AS THE CASE MAY BE, TO THE EXTENT SUCH INDEMNIFIED
ENVIRONMENTAL LOSSES RESULT FROM THE STRICT OR ABSOLUTE LIABILITY OF SUCH
INDEMNIFIED PARTY OR ITS NEGLIGENCE, EXCEPT IN EACH CASE, TO THE EXTENT THAT
THEY RESULT SOLELY FROM THE INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT (SUBJECT TO THE PROVISIONS OF SECTION 10.17(b)).
 
7.4  
Waiver of Surety Defenses.

 
TENANT HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL DEFENSES
AVAILABLE TO A GUARANTOR OR SURETY, WHETHER THE WAIVER IS SPECIFICALLY HEREIN
ENUMERATED OR NOT.  TENANT WAIVES ANY AND ALL RIGHTS WHICH TENANT HAS OR MIGHT
HAVE UNDER SECTION 49-25 AND 49-26 OF THE VIRGINIA CODE ANNOTATED (1989), AS
AMENDED.
 
7.5  
Survival

 
.  The indemnity obligations of the Tenant and the rights and remedies of the
Landlord under this Article 7 shall survive the termination of this Lease for an
indefinite period of time.
 
ARTICLE 8.                                
 
8.1  
Holdover

 
.  If the Tenant shall continue to occupy a Project after the Expiration Date or
earlier termination of this Lease, then Tenant shall be in default under the
Lease and deemed to be a holdover tenant, the tenancy of which shall be from
month to month upon the same provisions and conditions set forth in this Lease,
except that the monthly Basic Rent for the holdover period shall be an amount
equal to the Applicable Percentage of the monthly Basic Rent that is, or would
be, payable during the Extended Term or Wintergreen Extended Term pursuant to
Schedule D, whether or not the Primary Term shall have been extended pursuant to
the terms of this Lease.  “Applicable Percentage” means (a) one hundred
twenty-five percent (125%) for the first ninety (90) days for such holdover
tenancy and (b) one hundred fifty percent (150%) thereafter.  This Article 8
does not amount to a waiver of the Landlord’s right of reentry or any other
right granted under Article 5 and shall not constitute a consent to any holdover
by Tenant.
 
ARTICLE 9.                                
 
9.1  
Deferred Maintenance

 
  The parties acknowledge that certain of the Projects require deferred
maintenance as described on Schedule L hereto (the “Deferred
Maintenance”).  Tenant shall complete all Deferred Maintenance no later than
October 5, 2002.  If Tenant has not completed all such Deferred Maintenance to
the reasonable satisfaction of Landlord prior to such date, on October 5, 2002
Tenant shall deposit into a Required Repairs Account, for the benefit of
Landlord, which account may be pledged to Lender (and Tenant hereby consents to
such pledge), an amount equal to 125% of the cost of such Deferred Maintenance,
which amount Tenant agrees shall be $46,912.50.  Tenant shall provide evidence
to Landlord and, as required by the Indenture, Lender of its performance
pursuant to this Section 9.1, at which time, so long as no Event of Default
shall have occurred and be continuing, any amount deposited into the Required
Repairs Account shall be released to the Tenant.
 
9.2  
Deferred Maintenance Work

 
.  Tenant agrees the Deferred Maintenance work which Tenant shall be required or
permitted to do under the provisions of this Lease shall be performed in each
case subject to the following:
 
(a) All Deferred Maintenance shall be commenced only after all required
municipal and other governmental permits, authorizations and approvals shall
have been obtained by Tenant, at its own cost and expense.  Landlord will, on
Tenant’s written request, promptly execute any documents necessary to be signed
by Landlord to obtain any such permits, authorizations and approvals, provided
that Tenant shall bear any liability or reasonable expense of Landlord in
connection therewith.
 
(b) All Deferred Maintenance shall be performed in a good and workmanlike
manner, and in accordance with all Legal Requirements.  All Deferred Maintenance
shall be commenced and completed promptly.
 
(c) Subject to the terms of Section 2.6 hereof with respect to contests, the
cost of all Deferred Maintenance shall be paid promptly, in cash, so that the
Project and Tenant’s leasehold estate therein shall at all times be free from
(i) liens for labor or materials supplied or claimed to have been supplied to
any Project or Tenant, and (ii) chattel mortgages, conditional sales contracts,
title retention agreements, security interest and agreements, and financing
agreements and statements.
 
(d) Upon completion of any Deferred Maintenance, Tenant, at Tenant’s expense,
shall obtain certificates of final approval of such Deferred Maintenance
required by any governmental or quasi-governmental authority and shall furnish
Landlord and Lender with copies thereof, and together with “as-built” plans and
specifications for such Deferred Maintenance.
 
(e) Any Deferred Maintenance shall be subject to inspection at any reasonable
time and from time to time by any of Landlord or, as required by the Indenture,
Lender, their respective architect(s), or their duly authorized construction
representatives, and if any such party upon any such inspection shall be of the
reasonable opinion that the Deferred Maintenance is not being performed in
accordance with the provisions of this Article 9 or the plans and
specifications, or that any of the materials or workmanship are unsound or
improper, Tenant shall correct any such failure and shall replace any unsound or
improper materials or workmanship.
 
(f) Except as may be expressly provided to the contrary under this Lease with
respect to Tenant’s Personal Property, all Deferred Maintenance installed in or
upon any Project at any time during the Term shall become the property of
Landlord and shall remain upon and be surrendered with the Project.
 
ARTICLE 10.                                
 
10.1  
No Merger

 
.  There shall be no merger of this Lease or of the leasehold estate hereby
created with the fee estate in any Project by reason of the fact that the same
person acquires or holds, directly or indirectly, this Lease or the leasehold
estate hereby created or any interest herein or in such leasehold estate as well
as the fee estate in the applicable Project or any interest in such fee estate.
 
10.2  
Surrender.

 
(a) Upon the expiration or earlier termination of this Lease, Tenant shall
surrender the Premises to Landlord in the condition in which the Premises were
originally received from Landlord, except as repaired, rebuilt, restored,
altered or added to as permitted or required hereby and except for ordinary wear
and tear.  Tenant shall remove from the Premises on or prior to such expiration
or termination all Severable Alterations and all Tenant’s Personal Property and
shall repair any damage caused by such removal.  Property not so removed shall
become the property of Landlord, and Landlord may cause such property to be
removed from the Premises and disposed of, but the cost of any such removal and
disposition and of repairing any damage caused by such removal shall be borne by
Tenant.  Landlord shall credit the net proceeds of a disposition of such
property actually realized by Landlord against such costs to be borne by Tenant,
provided that the Lease termination giving rise to such disposition was not
caused by an Event of Default.  If Tenant abandons Tenant’s Personal Property,
it shall become the property of Landlord as outlined above.  The fair market
value of the Tenant’s Personal Property shall be determined by the mutual
agreement of Landlord and Tenant, and if the parties cannot agree, by appraisal
by an unrelated third-party appraiser.  The provisions of this Section shall
survive the termination or expiration of this Lease.  Simultaneously with such
surrender, Tenant shall deliver to Landlord:
 
(i)  to the extent maintained by Lessee in the ordinary course of its business,
originals of all transferable operating licenses, other licenses, certificates
of occupancy, other certificates, permits, authorizations and approvals relating
to the use and occupancy of the each Project;
 
(ii)  to the extent in the possession or control of Tenant (x) plans and
specifications for all mechanical, electrical and HVAC systems pertaining to
each Project and (y) as-built drawings, blueprints, operating and repair
manuals, engineering logs and preventative maintenance records relating to each
Project or any Alteration;
 
(iii)  maintenance contracts, warranties or claims related to each Project;
 
(iv)  keys to each Project and all locks located therein in the possession or
control of Tenant;
 
(v)  such other papers and documents in the possession or control of Tenant as
may be necessary for the ownership or the proper operation of each Project; and
 
(vi)  if and when required by Landlord, an instrument signed by Tenant which
shall be sufficient to transfer to Landlord all right, title and interest of
Tenant in and to all of the items described in subparagraphs (i) through (v)
above, and which shall be satisfactory to Landlord in all other respects.
 
10.3  
Separability; Binding Effect.

 
(a) Each provision hereof shall be separate and independent and the breach of
any provision by Landlord shall not discharge or relieve Tenant from any of its
obligations under this Lease.  Each provision hereof shall be valid and shall be
enforceable to the extent not prohibited by law.  If any provision hereof or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, the remaining provisions hereof, or the application of such
provision to persons or circumstances other than those as to which it is invalid
or unenforceable, shall not be affected thereby.  All provisions contained in
this Lease shall be binding upon, inure to the benefit of, and be enforceable
by, the successors and assigns of Landlord to the same extent as if each such
successor and assign were named as a party hereto.  All provisions contained in
this Lease shall be binding upon the successors and assigns of Tenant and shall
inure to the benefit of and be enforceable by the permitted successors and
assigns of Tenant in each case to the same extent as if each such successor and
assign were named as a party hereto.
 
(b) If any right or option provided in this Lease would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule of law relating to
the vesting of an interest in or the suspension of the power of alienation of
property, then such right or option shall be exercisable only during the period
which shall end 21 years after the date of death of the last survivor of the
descendants of Franklin D. Roosevelt, the former President of the United States,
Henry Ford, the deceased automobile manufacturer, and John D. Rockefeller, the
founder of the Standard Oil Company (but excluding Michael Rockefeller (the son
of Nelson A. Rockefeller) and any descendant of said Michael Rockefeller), alive
on the date of the execution, acknowledgment and delivery of this Lease.
 
10.4  
Table of Contents and Headings

 
.  The table of contents and the headings of the various Sections and Schedules
of this Lease have been inserted for reference only and shall not to any extent
have the effect of modifying the express terms and provisions of this Lease.
 
10.5  
Counterparts

 
.  This Lease may be executed in two or more counterparts and shall be deemed to
have become effective when and only when one or more of such counterparts shall
have been signed by or on behalf of each of the parties hereto (although it
shall not be necessary that any single counterpart be signed by or on behalf of
each of the parties hereto, and all such counterparts shall be deemed to
constitute but one and the same instrument), and shall have been delivered by
each of the parties to each other.
 
10.6  
Recording of Lease

 
.  Tenant will execute, acknowledge, deliver and cause to be recorded or filed
in the manner and place required by any present or future law a memorandum of
this Lease and all other instruments, including, without limitation, financing
statements, continuation statements, releases and instruments of similar
character, which shall be reasonably requested by the Landlord.  Tenant shall be
responsible for all costs and expenses in connection with the recording of this
Lease or a memorandum hereof.  Upon the termination of this Lease, Tenant shall
execute, acknowledge, deliver and cause to be recorded or filed in the
appropriate manner and place any and all instruments evidencing the termination
of this Lease and sufficient to discharge of record any memorandum of this
Lease.
 
10.7  
Rating of the Transaction

 
.  During the Term of the Lease, Tenant will, at Landlord’s request, and as
required by the Indenture, reasonably cooperate in good faith with Landlord and
Lender (at Lender’s expense for any third party out-of-pocket costs) in (i)
effecting any secondary market transaction relating to the Loan (including
satisfying the market standards for publicly issued securities rated by each of
the Rating Agencies which involve credit lease loans) and (ii) implementing all
requirements imposed by the Rating Agencies involved in any such secondary
market transaction including, without limitation,
 
(a) to provide, or use its reasonable efforts to cause to be provided by
Guarantor, as applicable, such financial and other information with respect to
the Premises, Tenant and Guarantor, together with appropriate verification of
such information through letters of auditors, if customary; provided, however,
that such information with respect to Guarantor shall not include any
confidential non-public information it being understood, however, that in the
event Guarantor ceases to be a public company, Guarantor shall provide its
audited financial statements, on a confidential basis, to Lender and any
applicable Rating Agencies and proposed purchasers or participants;
 
(b) to permit such site inspections and other similar due diligence
investigation of the Premises by Landlord, or, as required by the Indenture, by
Lender or the Rating Agencies, as may  be reasonably requested by Landlord or
Lender, or as may be requested by any of the Rating Agencies;
 
(c) to provide additional or updated appraisals, market studies, environmental
reviews and reports, and engineering reports which are customary in secondary
market transactions and which shall be reasonably acceptable to Landlord and, as
required by the Indenture, Lender, and, as required by the Indenture, shall be
acceptable to the Rating Agencies, provided that the foregoing shall only be
required to the extent that any such third party due diligence reports which
were delivered in connection with the origination of the Loan referenced therein
additional information recommended or required to be obtained or provided in
connection therewith which has not been so obtained or provided to Landlord or
Lender;
 
(d) to cause counsel to render opinions with respect to the Premises, Tenant or
Guarantor, and to make, and use its reasonable efforts to cause to be made by
Guarantor, as applicable, such representations and warranties, as are
customarily provided in secondary market transactions, which shall be reasonably
acceptable to Landlord and, as required by the Indenture, Lender, and, as
required by the Indenture, shall be acceptable to the Rating Agencies, to the
extent that such matters were not included in the opinions and representations
and warranties contained in certificates or Operative Documents delivered by
Tenant or Guarantor in connection with the origination of the Loan and, with
respect to such representations and warranties, consistent with the facts
covered thereby as they exist on the date thereof; and
 
(e) to execute modifications, and use reasonable efforts to cause Guarantor to
execute modifications, to any Operative Documents to which Tenant or Guarantor
is a party, acceptable to the Rating Agencies; provided, however, that (i) any
such modification shall be subject to Landlord’s prior approval, and (ii)
neither Tenant nor Guarantor shall be required to modify any such Operative
Documents in any way which would change the economic terms of such Operative
Documents (such as the amount and timing of payment of Basic Rent, Stipulated
Loss Values and purchase prices under this Lease or of any purchase options
under this Lease), or which would impose additional financial covenants on
Tenant, Subtenant or Guarantor or which, in the reasonable judgment exercised in
good faith by Tenant, Subtenant or Guarantor, as applicable, would materially
impair the rights of or materially increase the obligations of Tenant, Subtenant
or Guarantor under such Operative Documents.
 
10.8  
No Brokers

 
.  Each of the Landlord and the Tenant represents and warrants to the other that
it has not dealt with any broker in connection with the purchase and leasing of
the Premises other than as provided in the Contract of Sale, and indemnifies the
other against the claims of brokers claiming through it.
 
10.9  
Governing Law

 
.  This Lease has been executed, delivered and accepted in the State of New York
and the terms and provisions of this Lease shall be governed by the laws of the
State of New York (without giving effect to the conflict of laws rules and
principles of such state), and the United States of America, except the rights
and remedies with respect to a particular Project shall be governed by the laws
of the state in which the Project is located.  To the fullest extent permitted
by law, Tenant hereby unconditionally and irrevocably waives any claim to assert
that the law of any jurisdiction other than New York or the law of the State in
which the applicable Project is located, as applicable, governs this
Lease.  Tenant hereby consents and will submit to the jurisdiction and venue of
New York Courts and the United States Southern District of New York in
connection with any action or proceeding arising out of or relating to this
Lease, other than with respect to a particular Property.
 
10.10  
Waiver of Jury Trial

 
.  LANDLORD AND TENANT HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THIS LEASE OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY
IS GIVEN KNOWINGLY AND VOLUNTARILY BY TENANT AND LANDLORD AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
TRIAL BY JURY WOULD OTHERWISE ACCRUE.  LANDLORD AND TENANT ARE HEREBY AUTHORIZED
TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF
THIS WAIVER.
 
10.11  
Conveyance by Landlord

 
.  The word “Landlord” as used in this Lease means only the owner for the time
being of the Premises, so that, if there is a transfer of an owner’s interest,
the transferor shall be and hereby is entirely freed and relieved of all
covenants and obligations of the Landlord under this Lease, except any
obligations which accrued prior to the date of transfer, and it shall be deemed
and construed, without further agreement between the parties or between the
parties and the transferee of the Premises, that the transferee has assumed and
has agreed to carry out any and all of the Landlord’s covenants and obligation
under this Lease from and after the date of transfer.
 
10.12  
Intent; Relationship of the Parties

 
.  This agreement is intended to be a lease for all purposes.  Nothing contained
in this Lease shall be construed in any manner to create any relationship
between the Landlord and the Tenant other than the relationship of landlord and
tenant.  Without limitation, the Landlord and the Tenant shall not be considered
partners or co-venturers or lender or borrower for any purpose on account of
this Lease.
 
10.13  
Representation by Counsel

 
.  Tenant and Landlord each acknowledge that it was represented by counsel in
connection with the negotiation and execution of this Lease, and any presumption
to the effect that ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Lease.
 
10.14  
Access to Premises

 
.  The Tenant will permit the Landlord, any Lender or prospective Lender or
purchaser, and their duly authorized representatives to enter upon the Premises
and to inspect the same at any and all reasonable times, upon five (5) Business
days' advance written notice, and at any time in the case of an emergency
without the giving of notice, and for any purpose reasonably related to the
rights of the Landlord and any Lender under this Lease.  Landlord and Lender
shall, in exercising such rights of access, cause no unreasonable interference
with Tenant’s business or Tenant’s guests.  Notwithstanding the foregoing,
Landlord agrees that it will not exercise the foregoing right of access for any
particular Project more than once in any calendar year except (a) during such
time as an Event of Default has occurred and is continuing, or (b) in the event
of a sale, financing, refinancing or securitization of any Indenture relating to
the Project or the Premises, or (c) if Landlord has reasonable grounds to
believe that a Project is in violation of Legal Requirements (including
Environmental Laws) or that a Project is not being maintained in accordance with
the requirements of this Lease or (d) as otherwise expressly provided in this
Lease.
 
10.15  
Showing

 
.  During the fifteen (15) month period preceding the date on which the Term
shall be scheduled to terminate or fully expire, Landlord, if accompanied by a
representative of Tenant and subject to the rights of any subtenant not
affiliated with Tenant, may show the Premises to prospective tenants or
purchasers at such reasonable times during normal business hours as Landlord may
select upon reasonable prior notice to Tenant, provided that Landlord does not
materially interfere with Tenant’s normal business operations.
 
10.16  
True Lease

 
.  This Lease is intended as, and shall constitute, an agreement of lease, and
nothing herein shall be construed as conveying to the Tenant any right, title or
interest in or to the Premises nor to any remainder or reversionary estates in
the Premises held by any Person, except, in each instance, as a Tenant.  Under
no circumstances shall this Lease be regarded as an assignment of all of
Landlord’s interests in and to the Premises; instead Landlord and Tenant shall
have the relationship between them of landlord and tenant, pursuant to the
provisions of this Lease.  In no event shall Tenant or any affiliate of Tenant
claim depreciation, amortization or interest deductions as owner of any Project
or as borrower on the Loan for United States federal, state or local income tax
purposes (except as to Alterations not financed by Landlord).  Landlord and
Tenant agree that this Lease is a true lease and as such the Landlord shall be
treated as the owner and lessor of the Projects and the Tenant as the lessee
thereof and that this Lease does not represent a financing arrangement.  Each
party shall reflect the transaction represented hereby in all applicable books,
records and reports (including tax filings) in a manner consistent with "true
lease" treatment rather than "financing" treatment.
 
10.17  
Landlord’s Consent and Standards.

 
(a) Whenever Landlord is allowed or required to give its consent or approval of
any matter under this Lease or to deliver any estoppel or other instrument,
Tenant’s sole remedy for Landlord’s failure to give such consent or approval or
deliver such instrument in accordance with the applicable provision of this
Lease shall be to compel such approval or delivery.  In no event and under no
circumstance shall Tenant be entitled to any monetary damages for such failure
or to terminate or otherwise modify this Lease.  However, if Tenant shall bring
such an action to compel consent, approval or delivery, the prevailing party in
such action shall be entitled to reimbursement for its reasonable attorneys’
fees; provided, however, that with respect to any attorneys’ fees to be
reimbursed by Landlord, such fees and Tenant’s right to recover the same shall
be junior and subordinate to the Indenture, and in no event shall Tenant be
entitled to offset any amounts due under this Lease to recover such fees.
 
(b) Under no circumstance shall Landlord or any Indemnified Party be deemed to
have acted negligently, grossly negligently or willfully merely by Landlord’s or
such Indemnified Party’s ownership of the Premises, and in no event shall any
occurrence relating to any Project, whether negligent, grossly negligent or
willful, be imputed to Landlord or any Indemnified Party by reason of Landlord’s
or such Indemnified Party’s interest in such Project, it being understood that
all obligations with respect to the Premises are the responsibility of Tenant
under this Lease.  In order to have acted negligently, grossly negligently or
willfully, Landlord or any Indemnified Party must have committed an affirmative
act.
 
10.18  
Quiet Enjoyment

 
.  Landlord covenants that, so long as Tenant shall faithfully perform the
agreements, terms, and covenants and conditions hereof, Tenant shall and may
peaceably and quietly have, hold and enjoy the Premises for the Term hereby
granted without molestation or disturbance by or from Landlord.
 
10.19  
Force Majeure

 
.  The term “Force Majeure”, as used in this Lease, shall mean delays caused by
acts of God, strikes and other similar events beyond the control of
Tenant.  However, the duration of any delay excused by Force Majeure shall be
limited to the actual amount of time caused by the event giving rise to the
Force Majeure.  In addition, no performance by Tenant under this Lease shall be
excused by Force Majeure unless the requirement for performance set forth in
this Lease specifically states that it is subject to Force Majeure.
 
10.20  
[Intentionally Omitted]

 
10.21  
Tenant's Acknowledgement of Indemnities

 
  TENANT ACKNOWLEDGES THAT THIS LEASE PROVIDES FOR INDEMNIFICATION OF LANDLORD
BY TENANT PURSUANT TO SECTIONS 2.4, 3.10 AND 7.3.
 
10.22  
Limitation on Landlord’s Liability

 
.  IT IS EXPRESSLY UNDERSTOOD AND AGREED BY AND AMONG THE PARTIES HERETO, FOR
THEMSELVES AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, THAT NOTHING HEREIN
CONTAINED SHALL BE CONSTRUED AS CREATING ANY LIABILITY OF LANDLORD OR ANY
BENEFICIARY OF LANDLORD OR ANY OF THEIR RESPECTIVE AFFILIATES OR ANY OF THEIR
RESPECTIVE MEMBERS, OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS, VENTURERS,
TRUSTEES, BENEFICIARIES, EMPLOYEES OR AGENTS (COLLECTIVELY, THE “LANDLORD
PARTIES”), INDIVIDUALLY OR PERSONALLY, FOR BREACH OF ANY REPRESENTATION OR
WARRANTY OR TO OBSERVE OR PERFORM ANY AGREEMENT OR COVENANT, EITHER EXPRESS OR
IMPLIED, CONTAINED HEREIN, ALL SUCH LIABILITY, IF ANY, BEING EXPRESSLY WAIVED BY
TENANT AND BY EACH AND EVERY PERSON NOW OR HEREAFTER CLAIMING BY, THROUGH OR
UNDER TENANT, AND THAT, SO FAR AS ANY LANDLORD PARTY, INDIVIDUALLY OR
PERSONALLY, IS CONCERNED, TENANT AND ANY PERSON CLAIMING BY, THROUGH OR UNDER
TENANT HERETO SHALL LOOK SOLELY TO THE RIGHT, TITLE AND INTEREST OF LANDLORD IN
THE PREMISES FOR THE PERFORMANCE OF ANY OBLIGATION UNDER THIS LEASE AND THE
SATISFACTION OF ANY LIABILITY ARISING THEREFROM.
 

 
[END OF TEXT]
 

 NY-#661676.14
 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed as
of the date first above written.  The parties intend that this document
satisfies all requirements under Virginia law relating to leasehold deeds.
 

LANDLORD:

HAVERTACQ 11 LLC

By:           General Electric Capital Corporation,
  its Manager

By:       /s/ Stephen Benko    
Name:  Stephen Benko
Title:  Authorized Signatory

TENANT:

HAVERTY FURNITURE COMPANIES, INC.
 
                    By:  /s/ Dennis Fink 
Dennis Fink, Chief Financial Officer

 
 

--------------------------------------------------------------------------------

 

 
STATE OF ___________                )
)ss.
COUNTY OF _________               )

Subscribed and sworn to before me this ____ day of ______________, 2001, by
________________, as _____________, of _____.

__________________________________________
Notary Public

My Commission Expires:_____________

STATE OF ___________                )
)ss.
COUNTY OF _________                )

Subscribed and sworn to before me this ____ day of ______________, 2001, by
________________, as _____________, of _________________________.

__________________________________________
Notary Public

My Commission Expires:_____________

 
 

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SCHEDULE “A”
Page 1 of 10

Parcel 1:  Property located in Gwinnett County, Georgia
TRACT 1:
All that tract or parcel of land lying and being in Land Lot 232 of the Sixth
Land District, Gwinnett County, Georgia, and being more particularly described
as follows:
 
To find the True Point of Beginning, begin at the mitered intersection of the
Southerly margin of the 100 ft. Right-of-Way for Satellite Blvd. with the
Easterly margin of the 88 ft. Right-of-Way for Old Norcross Road; thence in an
Easterly direction and along the Southerly margin of the 100 ft. R/W for
Satellite Blvd. 374.97 feet along an arc of a curve to the right, said curve
having a radius of 991.74 ft. and subtended by a chord bearing of South 89
degrees, 12 minutes, 04 seconds East, and a chord distance of 372.74 ft. to a ½”
rebar found, said ½” rebar being THE TRUE POINT OF BEGINNING; thence along a
curve to the right having a radius of 991.74 feet and an arc length of 28.59
feet, being subtended by a chord of South 77 degrees 32 minutes 37 seconds East
for a distance of 28.59 feet to a ½” rebar set; thence South 00 degrees 45
minutes 45 seconds West for a distance of 285.38 feet to a ½” rebar set along
the property line common with Gwinnett Place Mall; thence along a curve to the
left having a radius of 382.07 feet and an arc length of 162.78 feet, being
subtended by a chord of South 68 degrees 21 minutes 32 seconds West for a
distance of 161.55 feet to a ½” rebar found; thence South 56 degrees 09 minutes
13 seconds West for a distance of 66.01 feet to a ½” rebar found; thence North
69 degrees 50 minutes 50 seconds West for a distance of 52.79 feet to a ½” rebar
found on the Easterly margin of the 88 ft. R/W for Old Norcross Road; thence
along a curve to the right having a radius of 1388.36 feet and an arc length of
97.32 feet, being subtended by a chord of North 33 degrees 12 minutes 59 seconds
West for a distance of 97.30 feet to a ½” rebar found; thence North 56 degrees
09 minutes 13 seconds East for a distance of 95.97 feet to a ½” rebar found;
thence along a curve to the right having a radius of 522.07 feet and an arc
length of 219.16 feet, being subtended by a chord of North 68 degrees 10 minutes
47 seconds East for a distance of 217.55 feet to a ½” rebar found; thence North
00 degrees 45 minutes 45 seconds East for a distance of 153.98 feet to a ½”
rebar found on the Southerly margin of the 100 ft. R/W for Satellite Blvd., said
½” rebar also being THE TRUE POINT OF BEGINNING.
 
TRACT 2:
 
ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lot 232 of the 6th
District, Gwinnett County, Georgia, and being more particularly described as
follows:
 

 CORP/896840.1
 
 

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SCHEDULE “A”
Page 2 of 10

 
To find the TRUE POINT OF BEGINNING, begin at the point of intersection of the
southerly right-of-way line of Satellite Boulevard (100 foot right-of-way) with
the easterly right-
 
of-way line of Old Norcross Road (88 foot right-of-way) if said right-of-way
lines were extended to form a point (said point of intersection being located
north 23 degrees 54 minutes 01 seconds west a distance of 50.00 feet from an
iron pin found on the easterly right-of-way line of Old Norcross Road); run
thence along the arc of a curve (said arc having a radius of 991.74 feet, and
said arc being subtended by a chord bearing north 78 degrees 31 minutes 23
seconds east a distance of 49.99 feet) an arc distance of 50.00 feet to a
one-half inch rebar found along the southerly right of way line of Satellite
Boulevard and the TRUE POINT OF BEGINNING; from said TRUE POINT OF BEGINNING
continue along said southerly right-of-way line of Satellite Boulevard along the
arc of a curve (said arc having a radius of 991.74 feet, and said arc being
subtended by a chord being south 89 degrees 12 minutes 04 seconds east a
distance of 372.74 feet) an arc distance of 374.97 feet to an iron pin set;
thence leaving said southerly right-of-way of Satellite Boulevard and running
south 00 degrees 45 minutes 45 seconds west a distance of 153.98 feet to an iron
pin set; run thence along the arc of a curve (said arc having a radius of 522.07
feet, and said arc being subtended by a chord bearing south 68 degrees 10
minutes 47 seconds west a distance of 217.55 feet) an arc distance of 219.16
feet to an iron pin set; thence south 56 degrees 09 minutes 13 seconds west a
distance of 95.97 feet to an iron pin set along the easterly right-of-way line
of Old Norcross Road; thence continuing along said easterly right-of-way line of
Old Norcross Road along the arc of a curve (said arc having a radius of 1388.36
feet, and said arc being subtended by a chord bearing north 27 degrees 33
minutes 15 seconds west a distance of 176.96 feet) an arc distance of 177.08
feet to a one-half inch rebar found; thence continuing along said easterly right
of way line of Old Norcross Road north 23 degrees 54 minutes 01 seconds west a
distance of 88.52 feet to a one-half inch rebar found; run thence north 27
degrees 18 minutes 26 seconds east a distance of 62.64 feet along the mitered
right-of-way line of Old Norcross Road to a one-half inch rebar found on the
southerly right-of-way line of Satellite Boulevard, said one-half inch rebar
being the TRUE POINT OF BEGINNING; all according to a Boundary Survey for
Haverty Furniture Company, Inc. by Hayes, James & Associates, Billy Ray Cheek
Georgia Registered Land Surveyor No. 1615, dated December 4, 1986, last revised
January 6, 1987 containing 1.930 acres and being designated as Lot 1, Block “H”,
Unit No. 10, Gwinnett Place Commercial Center according to said survey and as
shown on plat recorded in Plat Book 38, page 279, Gwinnett County, Georgia
records.
 
Parcel 2:  Property located in Fayette County, Georgia

ALL that tract or parcel of land lying and being in Land Lot 67 of the 5th
District of Fayette County Georgia, in the City of Fayetteville and more
particularly described as follows:
 

 CORP/896840.1
 
 

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SCHEDULE “A”
Page 3 of 10

Beginning at a right-of-way monument on the northwesterly right-of-way of
Georgia Highway No. 85 (170’ r/w) at the intersection of the northeasterly
right-of-way of New Hope Road (80’ r/w);
 
THENCE, along a curve to the left having a radius of 3,612.90 feet and an arc
length of 478.02 feet, being subtended by a chord of North 62 degrees 28 minutes
27 seconds West for a distance of 477.68 feet along the northeasterly
right-of-way of New Hope Road to an iron pin found on the southeasterly
right-of-way of New Hope Place (40’ r/w);
 
THENCE, North 26 degrees 10 minutes 11 seconds East for a distance of 586.46
feet along the southeasterly right-of-way of New Hope Place to an iron pin
found;
 
THENCE, departing said r/w South 60 degrees 27 minutes 55 seconds East for a
distance of 361.13 feet to an iron pin found;
 
THENCE, South 00 degrees 56 minutes 33 seconds West for a distance of 127.63
feet to an iron pin found;
 
THENCE, South 45 degrees 31 minutes 12 seconds East for a distance of 177.71
feet to an iron pin found on the Land Lot line common to Land Lots 167 and 168;
 
THENCE, South 01 degrees 25 minutes 40 seconds West for a distance of 35.11 feet
along said Land Lot line to an iron pin found on the northwesterly right-of-way
of Georgia Highway No. 85;
 
THENCE, South 44 degrees 05 minutes 31 seconds West for a distance of 392.45
feet along said right-of-way to a right-of-way monument and the POINT OF
BEGINNING.
 
SAID PROPERTY CONTAINS 6.679 ACRES.

 CORP/896840.1
 
 

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SCHEDULE “A”
Page 4 of 10

Parcel 3:  Property located in Sedgwick County, Kansas

Tract #1:

Lot 1, Block 1, C.C.R., 3rd Addition to Wichita, Sedgwick County, Kansas.

Tract #2:

A non-exclusive easement for parking for the benefit of Tract #1 as created by
the Reciprocal Parking Easement Agreement filed on Film 1525, Page 1602 over
those certain designated parking spaces shown on Exhibit “C” thereto located on
Lot 2, Block 1, C.C.R. 3rd Addition to Wichita, Sedgwick County, Kansas.

 CORP/896840.1
 
 

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SCHEDULE “A”
Page 5 of 10

Parcel 4:  Property located in Fayette County, Kentucky

Being all of Lot 1, as shown on the Amended Final Record Plant of Hamburg Place
Mall, Unit 1, Parcel 1, of record in the Fayette County Clerk’s Office in Plat
Cabinet K, Slide 739.
 
Being the same property conveyed to Haverty Furniture Companies, Inc., a
Maryland corporation, by Deed dated December 10, 1998 and of record in Deed Book
2022, page 578 in the office aforesaid.
 

Parcel 5:  Property located in Beaufort County, South Carolina

TRACT I:
ALL THAT  certain piece, parcel or lot of land situate, lying and being in
Bluffton Township, Beaufort County, and being shown as “Lot 2B/ 58,175 Sq. Ft./
1.34 Acres”, on that certain plat entitled “A Subdivision Plat of/ Lot 2, 4.01
Acres/ A Portion of District 600, Map 41, Parcel 48, Buckingham Plantation Road”
prepared by Matthew M. Crawford, S.C.R.L.S. No. 9756 of Conner and Associates,
Inc., dated July 21, 1993, and recorded in the Office of the RMC for Beaufort
County, South Carolina, in Plat Book 47 at Page 89 (the “Plat”);
 
TRACT II:
 
ALL that certain piece, parcel or lot of land situate, lying and being in
Bluffton Township, Beaufort County, and being shown as “Lot 2C / 58,173 Square
Feet / 1.33 Acre,” on that certain Plat entitled “A Subdivision Plat of Lot 2,
4.01 Acres / A Portion of District 600, Map 41, Parcel 48 / Buckingham
Plantation Road,” prepared by Matthew M. Crawford, S.C.R.L.S. No. 9756 of Conner
and Associates, Inc., dated July 21, 1993, and recorded in the Office of the
Register of Mesne Conveyances for Beaufort County, South Carolina in Plat Book
47 at Page 89 (the “Plat”);
 
TOGETHER WITH those easement rights arising under that certain Agreement
Regarding Easement by and between The Blount Co. Inc., of Hilton Head, A.A.
Ulmer, Jr., C.A. Ulmer, Hugh M. Ulmer, Salt Marsh, Inc., May River Golf Club
Associates, Gloria H. Conrad and George Hamilton Herring, Jr., dated June 1,
1993, filed for record September 21, 1993 at 9:49 a.m., recorded in Book 653,
Page 78 in the Register of Deeds for Beaufort County, South Carolina.
 
ALSO TOGETHER WITH those easement rights arising under that certain Roadway
Easement by and between Gloria H. Conrad, George Hamilton Herring, Jr. and Cecil
Curtis Hart, Jr., dated September 30, 1992, filed for record October 2, 1992 at
10:51 a.m., recorded in Book 608, Page 1902, aforesaid Records.
 
ALSO TOGETHER WITH those easement rights as reserved in that certain Limited
 
 
 
 

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SCHEDULE “A”
Page 6 of 10

 
Warranty Deed from Gloria H. Conrad and George Hamilton Herring, Jr. to The
Blount Co., Inc. of Hilton Head, dated April 11, 1986, filed for record May 9,
1986 at 9:17 a.m., recorded in Book 448, Page 84, aforesaid Records.
 

 
Tract I being the same property conveyed to Grantor by Gloria H. Conrad and
George Hamilton Herring, Jr., by Deed dated November 8, 1994, and recorded in
the Office of the RMC for Beaufort County, South Carolina, in Deed Book 742,
Page 1764.
 

 
Tract II being the same property conveyed to Grantor by Gloria H. Conrad and
George Hamilton Herring, Jr., by Deed dated September 16, 1993, and recorded in
the Office of the RMC for Beaufort County, South Carolina, in Deed Book 653,
Page 202, and Corrective Deed dated November 8, 1994, recorded in Deed Book 749,
Page 2033, aforesaid records.
 
Tract I – TMS No. 600-041-000-0181.
 
Tract II – TMS No. 600-041-000-0182.
 

 
Parcel 6:  Property located in Amarillo, Randall County, Texas

Being Lot 19, in Block 27, of Puckett West Unit #10, an Addition to THE CITY OF
AMARILLO, RANDALL COUNTY, TEXAS, according to the Map thereof recorded in Volume
722, Page 463 of the Deed Records of Randall County, Texas.

Parcel 7:  Property located in Austin, Williamson County, Texas

Being Lot 6, Block A, RESUBDIVISION OF LOT 1 LAKELINE MALL SUBDIVISION, a
subdivision in Williamson County, Texas, according to the map or plat thereof,
recorded in Cabinet M, Slide(s) 397-400 and Cabinet N, Slide(s) 1-4 of the Plat
Records of Williamson County, Texas.

Parcel 8:  Property located in Tyler, Smith County, Texas

All that certain lot, tract or parcel of land situated in Smith County, Texas,
being 3/8738 acres of land, part of the Robert Fletcher Survey, A-359, and being
Lot 4-B, N.C.B. 1292, HAVERTY ADDITION, City of Tyler, according to corrected
final plat thereof recorded in Cabinet C, Slide 118-B, of the Plat Records of
Smith County, Texas.
 
 
 
 

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SCHEDULE “A”
Page 7 of 10

 
TOGETHER WITH easement and right-of-way contained in that certain Easement
Agreement from Kevin P. Eltife, to Haverty Furniture Companies, Inc., dated
September 9, 1994, recorded in Volume 3617, Page 794, Land Records of Smith
County, Texas, over and  across the following described lands
 
All that certain lot, tract, or parcel of land, located in the Robert Fletcher
Survey, Abstract No. 359, Smith County, Texas, part of New City Block 1292 of
the City of Tyler, part of that certain called 4.8596 acre tract conveyed to
Resolution Trust Corporation by Vesta Investments, Inc. on August 6, 1991 by a
deed recorded in Volume 3144, Page 757, of the Deed Records of Smith County,
Texas, and being a 25.00 foot Access Easement more completely described as
follows:
 
BEGINNING at a point for corner in the east line of the above mentioned 4.8596
acre tract and in the west line of the Old Bullard Road, from which point a ½”
iron rod found at the southeast corner of said tract bears:  S 03 degrees 26
minutes 55 seconds W – 76.03 feet.
 
THENCE S 89 degrees 27 minutes 14 seconds W, a distance of 427.49 feet to a
point for corner.
 
THENCE N 00 degrees 32 minutes 46 seconds W, a distance of 25.00 feet to a ½”
iron rod set for corner.
 
THENCE N 89 degrees 27 minutes 14 seconds E, a distance of 429.24 feet to an ‘X’
marked in concrete pavement for corner in the east line of said 4.8596 acre
tract and the west line of Old Bullard Road.
 
THENCE S 03 degrees 26 minutes 55 seconds W, with the east line of said 4.8596
acre tract and the west line of Old Bullard Road, a distance of 25.06 feet to
the place of beginning, containing 0.2458 of an acre of land, more or less.
 

Parcel 9:  Property located in Midlothian, Chesterfield County, Virginia

TRACT ONE:
All that certain lot or parcel of land, with all improvements thereon and
appurtenances thereto belonging, lying and being in Midlothian District,
Chesterfield County, Virginia, more particularly described as follows:
 
BEGINNING at a rod situated on the southern line of Midlothian Turnpike (U.S.
Route 60) at the westerly terminus of the curve located at the intersection of
said line of Midlothian Turnpike and the western line of Branchway Road (Route
645) as shown on the below mentioned plat; thence running toward Branchway Road
and following the arc of the said curve, having a radius of 20 feet, a distance
of 28.43 feet to a rod marking the southerly terminus of the
 
 
 
 

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SCHEDULE “A”
Page 8 of 10

said curve on the westerly line of Branchway Road; thence along the said line of
Branchway Road S 9°33’45” E 274.09 feet to a rod; thence S 80°14’15” W 305.00
feet to a rod; thence N 2°05’45” W 332.01 feet to a rod on the aforesaid
southerly line of Midlothian Turnpike; and thence running along the said line of
Midlothian Turnpike as it curves to the left following the arc of a circle
having a radius of 11,575.0 feet, a distance of 144.70 feet to a rod; and thence
continuing along the line of the said Turnpike N 88°56’45” E 102.53 feet to the
rod at the point of beginning, the said property containing 2.027± acres and
being more particularly shown on a plat thereof made by J.K. Timmons &
Associates, Inc., Consulting Engineers, dated January 31, 1979, revised April 3,
1979, a copy of which is recorded in Plat Book 33, pages 62 and 63.
LESS AND EXCEPT 0.006 acre, more or less, land conveyed to Commonwealth
Transportation Commissioner of Virginia, by Certificate of Deposit recorded
January 29, 1987, in Deed Book 1831, page 1984.
 
IT BEING the same property conveyed to Haverty Furniture Companies, Inc., a
Maryland corporation by deed of American Real Estate Holdings Limited
Partnership, a Delaware limited partnership, dated February 26, 1999 and
recorded in the Clerk’s Office of the Circuit Court of Chesterfield County,
Virginia in Deed Book 3544 at page 791.
 
TRACT TWO:
 
All that certain lot, piece or parcel of land containing 0.142 acre, designated
as Parcel C on plat of survey made by Timmons, dated February 23, 2000, revised
March 6, 2000 and May 3, 2000, entitled “PLS SHOWING: THREE PARCELS OF LAND
TOTALING 4.176 ACRES SITUATED AT THE SOUTHWEST QUADRANT OF THE INTERSECTION OF
MIDLOTHIAN TURNPIKE AND BRANCHWAY ROAD, MIDLOTHIAN DISTRICT, CHESTERFIELD
COUNTY, VIRGINIA”, a copy of which is recorded in the Clerk’s Office of the
Circuit Court of Chesterfield County, Virginia in Plat Book 111 at page 20.
 
IT BEING the same property conveyed to Haverty Furniture Companies, Inc., a
Maryland corporation by deed of MSO, Inc., a Virginia corporation, dated May 15,
2000 and recorded in the aforesaid Clerk’s Office in Deed Book 3832 at page 334;
as corrected in Deed Book 3979 at page 72.
 
Parcel 10:  Property located in Newport News, Virginia

ALL THAT certain lot, piece or parcel of land, with the buildings and
improvements thereon, lying, situate and being in the City of Newport News,
Virginia, and being known, numbered and designated as Lot 2B-1 on that certain
plat entitled “RESUBDIVISION OF PARCEL 2B UNICO SUBDIVISION, PART OF PARCEL B,
UNION INVESTMENT COMPANY, NEWPORT NEWS, VIRGINIA”, which said plat is duly
recorded in the Clerk’s Office of the Circuit Court of the City of Newport News,
Virginia on March 24, 1995, in Deed Book 1394 at page 1768, made by John W.
Lawson, Certified Land Surveyor (hereinafter referred to as the “Lawson Plat”),
and which said parcel of land is more particularly described as follows:
 

 
 

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SCHEDULE “A”
Page 9 of 10

 
BEGINNING at a point on the westerly right-of-way line of Jefferson Avenue at
the southeastern property corner of Ryan’s Family Steak House, Inc. (said
property of Ryan’s Family Steak House, Inc. is more particularly described in
that certain Deed dated July 15, 1987, recorded at Deed Book 1153 at page 619,
aforesaid records, and is hereinafter referred to as the “Ryan’s Property”;
thence South 26°16’ East along the westerly right-of-way line of Jefferson
Avenue a distance of 243.00 feet to a point; thence South 63°44’ West a distance
of 500.00 feet to a point; thence North 26°16’ West a distance of 243.00 feet to
a point; thence North 63°44’ East along the southerly boundary of said Ryan’s
Property a distance of 500.00 feet to the Point of Beginning; containing 121,500
square feet or 2.789 acres, as shown on the Lawson Plat.
 
TOGETHER WITH an easement for access over part of said Ryan’s Property, as
described in that certain Deed of Easement dated February 22, 1995, from Ryan’s
Family Steak House, Inc. to Union Investment Company recorded in Deed Book 1395
at page 68.
 
Together with and subject to the easements which benefit and burden the
Premises, as shown on the Lawson Plat, including, without limitation, the
following:
 
 
a)
A drainage easement, the center line of which is the northerly boundary line of
the above-described Premises (this being an existing easement shown on the plat
recorded in Deed Book 1150, page 1471);

 
 
b)
An additional drainage and utility easement, 15.0 feet in width, the northerly
boundary line of which is the northerly boundary line of the above-described
premises;

 
 
c)
A sanitary sewer easement 15.0 feet in width, the center line of which funs
parallel to the westerly boundary line of the above-described Premises and is
located 100.0 feet east of said westerly boundary line, which easement extends
in a southerly and then easterly direction from the above-described premises;

 
 
d)
An access easement 25.0 feet in width running along and west of the westerly

 
 
boundary line of the above-described Premises and extending in a southerly
direction to the point of connection with the future extension of Middleground
Boulevard;

 
 
e)
An easement for ingress, egress and utilities, 24.0 feet in width, the center
line of which is the southerly boundary line of the above-described premises;

 
f)           An ingress and egress easement 50.0 feet in width, running along,
contiguous with, and west of the westerly right-of-way line of Jefferson Avenue
and extending in a southerly direction to the point of connection with the
future extension of Middleground Boulevard.

 
 

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SCHEDULE A
Page 10 of 10

 
It being the same property conveyed to HAVERTY FURNITURE COMPANIES, INC., a
Maryland Corporation by deed form Union Investment Company of Newport News,
Virginia, dated March 27, 1995 and recorded March 28, 1995 in Deed Book 1395 at
page 71.
 

Parcel 11:  Property located in Virginia Beach, Virginia

All that certain lot, piece or parcel of land situate, lying and being in the
City of Virginia Beach, Virginia, containing 3.152 acres and described as
follows:

BEGINNING at the southwest corner of the intersection of Virginia Beach
Boulevard and Witchduck Road formerly Bay Shore Road where the western limits of
Witchduck Road extended northward intersect the southern limits of Virginia
Beach Boulevard extended eastward; thence northwesterly along the southern
limits of Virginia Beach Boulevard extended 870.96 feet to an iron pin and the
TRUE POINT OF BEGINNING; thence S 32°00’29” W a distance of 303.01 feet to
a  drill hole in curb; thence N 69°22’46” W a distance of 407.93 feet to an iron
pin; thence N 32°00’00” E a distance of 383.50 feet to an iron pin; thence along
the southern limits of Virginia Beach Boulevard S 58°00’00” E a distance of
399.97 feet to the Point of Beginning.

TOGETHER WITH rights to use reciprocal easement for parking as set out in Deed
Book 4200, Page 1730, in the Clerk’s Office of the Circuit Court of the City of
Virginia Beach.

 
 

--------------------------------------------------------------------------------

 
SCHEDULE B
Permitted  Exceptions
 
(See Attached)
 

 
 
 

--------------------------------------------------------------------------------

 
 

EXHIBIT “B”
Permitted Title Exceptions
 

 
As to Parcel 1:   Property located in Gwinnett County, Georgia
 

1.  
All taxes for the year 2002, which are liens not yet due or payable, and
subsequent years.

 
2.  
Declaration and Agreement of Covenants by and between Partridge Greene, Inc., a
Georgia corporation wholly owned by D. Scott Hudgens, Jr. and CF-H Gwinnett
Associates, a Georgia limited partnership, dated December 23, 1982, filed for
record December 29, 1982 at 11:46 a.m., recorded in Deed Book 2485, Page 1,
Records of Gwinnett County, Georgia.

 
3.  
Grant of Easement from Partridge Green, Inc. to CF-H Gwinnett Associates, dated
March 31, 1982, filed for record March 31, 1982 at 3:43 p.m., recorded in Deed
Book 2357, Page 251, aforesaid Records; as corrected and restated by that
certain Corrected and Restated Grant of Easement from Partridge Greene, Inc. to
CF-H Gwinnett Associates, dated March 31, 1982, filed for record December 14,
1982 at 11:42 a.m., recorded in Deed Book 2478, Page 422, aforesaid Records; as
amended by that certain First Amendment to Corrected and Restated Grant of
Easement, dated March 31, 1982, filed for record December 29, 1982 at 11:47
a.m., recorded in Deed Book 2485, Page 332, aforesaid Records.

 
4.  
Restrictions as contained in that certain Warranty Deed from Gwinnett Prado,
L.P., a Georgia limited partnership to Haverty Furniture Companies, Inc., a
Maryland corporation, dated July 19, 1994, filed for record July 20, 1994 at
9:24 a.m., recorded in Deed Book 10516, Page 130, aforesaid Records.

 
5.  
Right-of-Way Easement from Haverty Furniture Companies, Inc. to Jackson Electric
Membership Corporation, a corporation, dated June 10, 1987, filed for record
June 13, 1987 at 9:00 a.m., recorded in Deed Book 4384, Page 163, aforesaid
Records.

 
6.  
Right-of-Way Easement Underground Service from Haverty Furniture Companies, Inc.
to Jackson Electric Membership Corporation, a Georgia corporation, dated June
10, 1987, filed for record June 23, 1987 at 9:00 a.m., recorded in Deed Book
4384, Page 164, aforesaid Records.

 
7.  
Those matters as disclosed by that certain survey entitled “ALTA/ACSM Land Title
Survey for Greenwich Capital Financial Products, Inc., Havacq 11, LLC [sic],
Fidelity National Title Insurance Company of New York, Chicago Title Insurance
Company, Haverty Furniture Companies, Inc.”, prepared by Development Consultants
Group, bearing the seal and certification of Donald G. Holland, Georgia
Registered Land Surveyor No. 2637, dated May 8, 2002, last revised June 12,
2002, as follows:

 
 
(1)  
Ten (10’) foot drainage easement located in the easterly portion and crossing
the easterly and southeasterly boundary lines of subject property;

 
(2)  
Eight (8”) inch sanitary sewer line crossing the easterly, southeasterly and
southerly boundary lines of subject property;

 
(3)  
Fifty (50’) foot building lines along the Rights-of-Way of Satellite Boulevard
and Old Norcross Road;

 
(4)  
Fifteen (15’) foot building line along the easterly boundary line of subject
property; and

 
(5)  
Ten (10’) foot building line along the southeasterly boundary line of subject
property.

 

 
 
As to Parcel 2:  Property located in Fayette County, Georgia

 
1.  
All taxes for the year 2002 and subsequent years.

 
2.  
Drainage rights as contained in that certain Right-of-Way Deed from B.B. Gilbert
to the State Highway Department of Georgia, dated August 18, 1955, recorded
October 4, 1955, recorded in Deed Book 38, Page 309, Records of Fayette County,
Georgia.  (Georgia Highway No. 85)

 
3.  
Drainage rights as contained in that certain Right-of-Way Deed from Mrs. Cecila
R. Sparks and B.B. Gilbert to Fayette County, a political subdivision of the
State of Georgia, dated October 14, 1957, recorded October 17, 1957, recorded in
Deed Book 41, Page 176, aforesaid Records.  (New Hope Road)

 
4.  
Sewer Easement from Fayetteville Presbyterian Church to the City of
Fayetteville, a legal corporation of the State of Georgia, dated January 27,
1995, filed for record August 9, 1995 at 3:58 p.m., recorded in Deed Book 1001,
Page 458, aforesaid Records.

 
5.  
Water Pipeline Easement from Fayetteville Presbyterian Church to David R. Black,
dated February 12, 1995, filed for record February 13, 1995 at 10:04 a.m.,
recorded in Deed Book 967, Page 541, aforesaid Records.

 
6.  
Easement from Roberds, Inc. to Georgia Power Company, dated September 27, 1995,
filed for record October 26, 1995 at 11:58 a.m., recorded in Deed Book 1019,
Page 751, aforesaid Records.

 
7.  
Those matters as disclosed by that certain survey entitled “ALTA/ACSM Land Title
Survey for; Haverty Furniture Companies, Inc. and Chicago Title Insurance
Company”, prepared by M.V. Ingram Enterprises, Inc., bearing the seal and
certification of Matthew V. Ingram, Georgia Registered Land Surveyor No. 2288,
dated September 25, 1995, last revised July 8, 2002, as follows:

 
 
(6)  
Power lines crossing the northerly and easterly most boundary lines of subject
property;

 
(7)  
Sixty (60’) foot building line along the Right of Way of Georgia Highway 85;

 
(8)  
Forty (40’) foot building line along the Right of Way of New Hope Road;

 
(9)  
Sixty-two (62’) foot building line and fifty (50’) foot buffer along the Right
of Way of New Hope Place; and

 
(10)  
Fifteen (15’) foot building line and fifty (50’) foot buffer along the northerly
and northeasterly boundary lines of subject property.

As to Parcel 3:  Property located in Sedgwick county, Kansas

1.  
Taxes and assessments subsequent to the year 2002, not yet due and payable.

 
2.  
Building setback lines, easement, and access controls established by and shown
on the recorded plat of C.C.R. 3rd Addition.

 
3.  
Building setback lines established on the recorded plat of C.C.R. 3rd Addition
by the unrecorded Community Unit Plan.  DP-215 Amendment Number One, on file at
the Wichita-Sedgwick County Metropolitan Area Planning Department.

 
4.  
Terms and provisions of the Easement Encroachment Agreement filed on Film 787,
Page 1198, regarding drainage system which contains provisions for assessments.

 
5.  
Terms and provisions of the Easement Agreement filed on Film 761, Page 1539; and
Amendment Easement Agreement filed on Film 1515, Page 870; Partial Release of
Easement Agreement filed on Film 1525, Page 1590.

 
6.  
Terms and provisions of the Easement Agreement filed on Film 1515, Page 880 and
the Amended and Restated Easement Agreement filed on Film 1525, Page 1612 which
contain provisions for assessments.

 
7.  
Terms and provisions of the Reciprocal Parking Easement Agreement filed on Film
1525, Page 1602.

 
8.  
Avigational easement for navigable airspace as established by instrument filed
on Film 669, Page 208; Film 783, Page 880; Film 1496, Page 1919; and Film 1524,
Page 1935.

 
9.  
Covenants and restrictions contained on Film 669, Page 236; Film 783, Page 881;
Film 1496, Page 1918; Film 1515, Page 867; and Film 1524, Page 1933.

 
10.  
Rights, if any, claimed by the owner of the premises adjoining the land on the
south to that part of the land lying south of the fence line located near the
south line of the land as shown by the survey of Baughman Company, P.A., dated
May 10, 2002, last revised June 19, 2002.

 
11.  
The following matters disclosed by the survey of Baughman Company, P.A., dated
May 10, 2002, last revised June 25, 2002:

 
(A)  
Fence is located north of the most southerly line of the premises in question.

(B)  
Building is located over a 40 foot Drainage pursuant to the Agreement filed on
Film 787, Page 1198.

 
As to Parcel 4:  Property located in Fayette County, Kentucky

1.  
2002 county taxes, and subsequent years, a lien not yet due and payable.

 
2.  
Reciprocal Construction, Operation and Easement Agreement dated June 29, 1995
and of record in Deed Book 1794, Page 1 in the Office of the Fayette County
Court Clerk.

 
3.  
Agreement Regarding Easements and Restrictions dated December 10, 1998 and of
record in Deed Book 2022, Page 588 in the office aforesaid.

 
4.  
Certificate of Assumed Name of Haverty Furniture Companies, Inc. of record in
Book 219, Page 353 in the office aforesaid.

 
5.  
Conditions, easements, and restrictions on Plats of Record in Plat Cabinet J,
Slide 677 and Plat Cabinet K, Slide 334, and Amended Final Record Plat of
Hamburg Place Mall Unit 1, Parcel 1 of record in Plat Cabinet K, Slide 739 in
the office aforesaid.

 
6.  
Land Use Restrictions of record in the Land Use Restrictions Book 4, Page 686,
and Land Use Restriction Book 8, Page 128, in the office aforesaid.

 
7.  
Subject to 25’ building line along property boundary parallel with Sir Barton
Way, per plat of record in Plat Cabinet K, Slide 334.

 
8.  
Those matters as set forth on the survey of Sam Bailey, P.L.S., #2434, dated
June 13, 2002, as follows:

 
(A)  
Curbing of the parking area encroaches into the 5 foot Landscaping Easement.

(B)  
The Concrete sidewalk along this line encroaches onto subject property.

(C)  
Apparent utility easement for 12” water line between the sidewalk and curb and a
6” gas line within the right of way of Sir Barton Way.

 
As to Parcel 5:  Property located in Beaufort County, South Carolina

 

1.  
All general or special taxes and assessments, including Public Service District
assessments, if any, for Beaufort County, South Carolina for the year 2002 and
subsequent years.

 
2.  
Easement from Haverty’s Furniture Store to Palmetto Electric Cooperative, Inc.,
dated August 8, 1994, filed for record November 10, 1994 at 12:41 p.m., recorded
in Book 742, Page 822 in the Register of Deeds for Beaufort County, South
Carolina.

 
3.  
Easement from Haverty’s Furniture Store to Palmetto Electric Cooperative, Inc.,
dated March 25, 1994, filed for record April 19, 1995 at 12:39 p.m., recorded in
Book 772, Page 2165, aforesaid Records.

 
4.  
Telephone and CATV Utility Easement by and between Haverty Furniture Companies,
Inc., a Maryland corporation, Hargray CATV Company, Inc., a South Carolina
corporation and Bluffton Telephone Company, Inc., a South Carolina corporation,
dated July 1, 1994, filed for record August 30, 1994 at 8:50 a.m., recorded in
Book 727, Page 1341, aforesaid Records.

 
5.  
Telephone and CATV Utility Easement by and between Gloria H. Conrad, George H.
Herring, Jr., Hargray CATV Company, Inc., a South Carolina corporation and
Bluffton Telephone Company, Inc., a South Carolina corporation, dated May 5,
1994, filed for record July 27, 1994 at 8:52 a.m., recorded in Book 720, Page
2364, aforesaid Records.

 
6.  
Easement Regarding Turn Lane Rights by and between Gloria H. Conrad, George H.
Herring, Jr., A.A. Ulmer, Jr., C.A. Ulmer, Hugh M. Ulmer, The Blount Co., Inc.
of Hilton Head, Salt Marsh, Inc. and May River Golf Club Associates, a South
Carolina general partnership, dated September 16, 1993, filed for record
September 21, 1993 at 9:49 a.m., recorded in Book 653, Page 97, aforesaid
Records.

 
7.  
Roadway Easement by and between Gloria H. Conrad, George Hamilton Herring, Jr.
and Barry W. Connor, dated May 20, 1993, filed for record September 21, 1993 at
9:49 a.m., recorded in Book 653, Page 90, aforesaid Records.

 
8.  
Agreement Regarding Easement by and between The Blount Co. Inc., of Hilton Head,
A.A. Ulmer, Jr., C.A. Ulmer, Hugh M. Ulmer, Salt Marsh, Inc., May River Golf
Club Associates, Gloria H. Conrad and George Hamilton Herring, Jr., dated June
1, 1993, filed for record September 21, 1993 at 9:49 a.m., recorded in Book 653,
Page 78, aforesaid Records.

 
9.  
Agreement Concerning Utility and Drainage Easement Area by and between Gloria H.
Conrad, George Hamilton Herring, Jr. and Cecil Curtis Hart, Jr., dated September
30, 1992, filed for record October 2, 1992 at 10:51 a.m., recorded in Book 608,
Page 1909, aforesaid Records.

 
10.  
Roadway Easement by and between Gloria H. Conrad, George Hamilton Herring, Jr.
and Cecil Curtis Hart, Jr., dated September 30, 1992, filed for record October
2, 1992 at 10:51 a.m., recorded in Book 608, Page 1902, aforesaid Records.

 
11.  
Agreement Regarding Easements and Restrictions by and between A.A. Ulmer, Jr.,
C.A. Ulmer, Hugh M. Ulmer, Salt Marsh Farm, Inc., a South Carolina corporation
and May River Golf Club Associates, a South Carolina general partnership, dated
January 30, 1991, filed for record February 14, 1991 at 9:43 a.m., recorded in
Book 570, Page 1016, aforesaid Records.

 
12.  
Easement from Gloria H. Conrad and George H. Herring, Jr. to Palmetto Electric
Cooperative, Inc., dated December 31, 1986, filed for record February 5, 1987 at
9:25 a.m., recorded in Book 470, Page 733, aforesaid Records.

 
13.  
Grant of Easement from Alan A. Ulmer, Jr., C.A. Ulmer, Hugh M. Ulmer and H.D.
Ulmer to Salt Marsh Farms, Inc., a South Carolina corporation, dated October 20,
1986, filed for record November 6, 1986 at 1:27 p.m., recorded in Book 462, Page
2019, aforesaid Records.

 
14.  
Grant of Easement from The Blount Co., Inc. of Hilton Head to Alan A. Ulmer,
Jr., C.A. Ulmer, Hugh M. Ulmer and H.D. Ulmer, dated October 20, 1986, filed for
record November 6, 1986 at 1:27 p.m., recorded in Book 462, Page 2016, aforesaid
Records.

 
15.  
Easement from C.E. Ulmer, Jr. to Hugh D. Ulmer, Alan A. Ulmer, Jr., Charles A.
Ulmer and Hugh M. Ulmer, dated December 21, 1974, filed for record December 31,
1974 at 1:20 p.m., recorded in Book 225, Page 1822, aforesaid Records; as
affected by that certain Quit Claim Deed from The Blount Co., Inc. of Hilton
Head to Gloria H. Conrad and George Hamilton Herring, Jr., dated May 5, 1986,
filed for record May 9, 1986 at 9:17 a.m., recorded in Book 448, Page 80,
aforesaid Records; as further affected by that certain Quit Claim Deed from Hugh
D. Ulmer a/k/a H.D. Ulmer to The Blount Co., Inc. of Hilton Head, dated April 4,
1985, filed for record May 9, 1986 at 9:17 a.m., recorded in Book 448, Page 72,
aforesaid Records; as further affected by that certain Quit Claim Deed from Alan
A. Ulmer, Jr. to The Blount Co., Inc. of Hilton Head, dated April 4, 1986, filed
for record May 9, 1986 at 9:17 a.m., recorded in Book 448, Page 68, aforesaid
Records; as further affected by that certain Quit Claim Deed from Charles A.
Ulmer to The Blount Co., Inc. of Hilton Head, dated April 4, 1986, filed for
record May 9, 1986 at 9:17 a.m., recorded in Book 448, Page 64, aforesaid
Records; as further affected by that certain Quit Claim Deed from Hugh M. Ulmer
to The Blount Co., Inc. of Hilton Head, dated April 4, 1986, filed for record
May 9, 1986 at 9:17 a.m., recorded in Book 448, Page 60, aforesaid Records.

 
16.  
Easement from H.D. Ulmer and Estate of Alan A. Ulmer to South Carolina Electric
& Gas Company, a South Carolina corporation, dated December 2, 1969, filed for
record January 2, 1970 at 9:00 a.m., recorded in Book 169, Page 237, aforesaid
Records.

 
17.  
Easement from Charles A. Ulmer to South Carolina Electric & Gas Company, a South
Carolina corporation, dated December 2, 1969, filed for record January 2, 1970
at 9:00 a.m., recorded in Book 169, Page 236, aforesaid Records.

 
18.  
Easement from C.E. Ulmer, Jr., H.D. Ulmer, Vera Ulmer, Alan A. Ulmer, Jr., C.A.
Ulmer, Hugh M. Ulmer and Elizabeth Wyatt to Central Electric Power Cooperative,
Inc., dated August 15, 1969, filed for record August 26, 1969 at 9:00 a.m.,
recorded in Book 166, Page 249, aforesaid Records.

 
19.  
Easement from C.E. Ulmer, Jr., H.D. Ulmer and A.A. Ulmer to Palmetto Electric
Cooperative, Ind., dated December 9, 1960, filed for record December 13, 1960 at
12:30 p.m., recorded in Book 104, Page 203, aforesaid Records.

 
20.  
Easement from C.E. Ulmer to South Carolina Power Company, a corporation, dated
July 21, 1937, recorded August 19, 1937, recorded in Book 54, Page 72, aforesaid
Records.

 
21.  
Those matters as disclosed by that certain survey entitled “A ALTA/ACSM Land
Title Survey of Lots 2B and 2C, U.S. Highway 278,” prepared by Connor and
Associates, Inc., stamped by Donald R. Cook, Jr., SCPLS No. 19010, dated May 13,
2002, as follows:

 
(A)  
Non-Exclusive access easement located in the easterly corner of subject
property;

 
(B)  
Fifteen (15’) foot utility easement and sanitary sewer line crossing the
southwesterly boundary line of subject property;

 
(C)  
Fifty (50’) foot access easement and sanitary sewer line crossing the westerly
boundary line of subject property; and

 
(D)  
Fifty (50’) foot building setback lines along the Rights-of-Way of Highway 278
and Buckingham Plantation Road.

 
As to Parcel 6:  Property located in Amarillo, Randall County, Texas

1.  
Standby fees, taxes and assessments by any taxing authority for the year 2002,
and subsequent years; and subsequent taxes and assessments by any taxing
authority for prior years due to change in land use or ownership.

 
2.  
Restrictive covenants described in instrument recorded in Volume 1486, Page 283,
Deed Records of Randall County, Texas.

 
3.  
A 30’ ingress-egress easement over the North property line of subject property,
as shown on plat recorded in Volume 722, Page 463 of the Deed Records of Randall
County, Texas.

 
4.  
A 5’ utility easement over the East property line of subject property, as shown
on plat recorded in Volume 722, Page 463 of the Deed Records of Randall County,
Texas.

 
5.  
Easement granted to Southwestern Public Service Company by instrument recorded
in Volume 724, Page 517 of the Deed Records of Randall County, Texas.

 
6.  
Utility easement granted by Haverty Furniture Companies, Inc. to Southwestern
Public Service Company by instrument dated June 19, 1995, filed for record on
December 12, 1995 and recorded in Volume 1667, Page 58 of the Deed Records of
Randall County, Texas.

 
7.  
Title to all oil, gas and minerals and other elements not constituting part of
the surface estate in the above described property, together with all rights,
privileges and immunities relating thereto.

 

 
 
Parcel 7:  Property located in Austin, Williamson County, Texas

 
1.  
Standby fees, taxes and assessments by any taxing authority for the year 2002
and subsequent years; and subsequent taxes and assessments by any taxing
authority for prior years due to change in land usage or ownership.

 
2.  
Restrictive covenants described in instrument recorded in Cabinet J, Slide
283-285, PLAT Records of WILLIAMSON County, Texas.

 
3.  
Restrictive covenants described in instrument recorded in Cabinet M, Slide
397-400, PLAT Records of WILLIAMSON County, Texas.

 
4.  
Restrictive covenants described in instrument recorded in Cabinet N Slide 1-4,
PLAT Records of WILLIAMSON County, Texas.

 
5.  
Restrictive covenants described in instrument recorded in Volume 1367, Page 456,
OFFICIAL Records of WILLIAMSON County, Texas.

 
6.  
Restrictive covenants described in instrument recorded in Volume 1852, Page 818,
OFFICIAL Records of WILLIAMSON County, Texas.

 
7.  
Restrictive covenants described in instrument cc# 9746336, OFFICIAL Records of
WILLIAMSON County, Texas.  As further affected by Agreement Regarding Zoning
Restrictions recorded in Volume 1371, Page 77, OFFICIAL Records of WILLIAMSON
County, Texas.

 
8.  
Restrictive covenants described in instrument cc# 9623409, OFFICIAL Records of
WILLIAMSON County, Texas.  As amended by Document No. 9646432, OFFICIAL Records
of WILLIAMSON County, Texas.

 
9.  
Restrictive covenants described in instrument cc# 9816808, OFFICIAL Records of
WILLIAMSON County, Texas.

 
10.  
Restrictive covenants described in instrument cc# 2000035521, OFFICIAL Records
of WILLIAMSON County, Texas.

 
11.  
Utility easement granted to the City of Austin and Williamson County by
instrument dated April 27, 1987, recorded in Volume 1558, Page 621 of the
Official Records of Williamson County, Texas, and as shown on the Plats recorded
in Cabinet J, Slide(s) 283-285 and Cabinet M, Slide(s) 397-400 and Cabinet N,
Slide(s) 1-4 of the Plat of Records of Williamson County, Texas.

 
12.  
Drainage easement granted to Williamson County by instrument dated October 1,
1987, recorded in Volume 1590, Page 152 of the Official Records of Williamson
County, Texas and as shown on the Plat(s) recorded in Cabinet J, Slide(s)
283-285 and Cabinet M, Slide(s) 397-400 and Cabinet N, Slide(s) 1-4 of the Plat
Records of Williamson County, Texas.

 
13.  
Building setback line 25 feet in width along the Pecan Park Boulevard frontage
property line(s) as shown on the Plats recorded in Cabinet J, Slide(s) 283-285
and Cabinet M, Slide(s) 397-400 and Cabinet N, Slide(s) 1-4 of the Plat Records
of Williamson County, Texas.

 
14.  
Electric easement granted to Pedernales Electric Cooperative, Inc. by instrument
dated May 8, 1995, recorded in Volume 2723, Page 896 of the Official Records of
Williamson County, Texas and as shown on the Plat(s) recorded in Cabinet M,
Slide(s) 397-400 and Cabinet N, Slide(s) 1-4 of the Plat Records of Williamson
County, Texas.  Said easement partially released by instrument recorded in
Document No. 2000018372 of the Official Public Records of Williamson County,
Texas.

 
15.  
Terms, provisions and conditions set out in that certain Assignment of Utility
Improvements Agreement dated June 6, 1986, recorded in Volume 1371, Page 176 of
the Official Records of Williamson County, Texas.

 
16.  
Terms, provisions and conditions set out in that certain Amended and Restated
Development and Roadway Construction Agreement for Phasing of the Lakeline
Development Project dated June 3, 1987, recorded inn Volume 1578, Page 633, as
amended by Substitution Agreement recorded under Document No. 9545257, as
rerecorded under Document No. 9547139 of the Official Records, and as further
affected by Amended and Restated Agreement Regarding Phasing Agreement recorded
in Volume 1605, Page 716 of the Official Records of Williamson County, Texas.

 
17.  
The terms, conditions and stipulations set out in that certain Agreement to
Dedicate F.M. 620 Frontage and Utility Easements and to Cooperate in Connection
with Development Matters dated June 6, 1986, recorded in Volume 1371, Page(s) 46
of the Official Records of Williamson County, Texas.,

 
18.  
Terms, provisions and conditions set out in that certain Agreement Regarding
Construction of Utilities dated June 6, 1986, recorded in Volume 1371, Page 142
of the Official Records of Williamson County, Texas.

 
19.  
Terms, provisions and conditions set out in that certain Agreement Regarding
Construction of Utilities dated June 6, 1986, recorded in Volume 1371, Page 129
of the Official Records of Williamson County, Texas.

 
20.  
Terms, provisions and conditions set out in that certain Affidavit of Pollution
Abatement Plant dated July 17, 1998, recorded under Document No. 9840880 of the
Official Records of Williamson County, Texas.

 
21.  
Assessments payable to Lakeline Business and Commercial Owners
Association, Inc., as set forth and secured by a Vendor’s Lien retained in
instrument(s) recorded under Document No. 9816808 of the Official Records of
Williamson County, Texas.

 
22.  
Subject property lines within the boundaries of Brushy Creek Water Control and
Improvement District No. 1.

 
23.  
A 328-square foot landscape and sign easement together with rights of access and
to provide utilities thereto, as reserved in Special Warranty Deed dated
March 23, 2000, recorded under Document No. 2000035520 of the Official Public
Records of Williamson County, Texas.

 
24.  
The terms, conditions and stipulations set out in that certain Covenants,
Conditions and Restrictions Agreement-Reserve Tract 1-Lakeline Mall dated
March 15, 2000, recorded under Document No. 2000035521 of the Official Public
Records of Williamson County, Texas.

 
25.  
One-fourth (1/4th) non-participating royalty interest in all oil, gas and other
minerals reserved by Mitchel Wolf in instrument recorded in Volume 832, Page 838
of the Deed Records of Williamson County, Texas.

 
26.  
Consequences, if any, arising due to 1) Concrete Detention Pond encroaching 5.7
feet onto subject property at east side of asphalt parking; 2) Water manhole,
telephone box and transformer pad located outside of easement along west side of
subject property; 3) transformer pads located outside of easement at south side
of subject property; and 4) sewer manhole located outside of easement at east
side of subject property, as shown on survey prepared by Thomas P. Dixon, RPLS
No. 4324, dated June 17, 2002.

 

 
 
As to Parcel 8:  Property located in Tyler, Smith County, Texas

 
1.  
Standby fees, taxes and assessments by any taxing authority for the year 2002
and subsequent years; and subsequent taxes and assessments by any taxing
authority for prior years due to change in land usage or ownership.

 
2.  
Right of Way to Texas Power & Light Co. recorded in Volume 344, Page 519, Deed
Records of Smith County, Texas.

 
3.  
Right of Way to Gus W. Arnold recorded in Volume 1226, Page 239, Deed Records of
Smith County, Texas.

 
4.  
Easements as shown on plat of subdivision recorded in Cabinet C, Slide 118-B,
Plat Records of Smith County, Texas.

 
5.  
Easement to City of Tyler recorded in Volume 3747, Page 600, Land Records of
Smith County, Texas.

 
6.  
Terms, conditions and stipulations of Easement Agreement by and between Kevin P.
Eltife and Haverty Furniture Companies, Inc., recorded in Volume 3617, Page 794,
Land Records of Smith County, Texas.

 
7.  
Easements set out in that certain Easement Agreement by and between Haverty
Furniture Companies, Inc. and Kevin P. Eltife, recorded in Volume 3617, Page
802, Land Records of Smith County, Texas.

 

 
 
As to Parcel 9, Property located in Midlothian, Chesterfield County, Virginia

 

 
EXCEPTIONS AS TO TRACT ONE:
1.  
Real Estate taxes accruing from the beginning of the second half of the fiscal
year 2001-2002 and subsequent semi-annual payments not yet due and payable.

 
2.  
Easement to Virginia Electric and Power Company as recorded in the Clerk’s
Office of the Circuit Court of Chesterfield County, Virginia in Deed Book 253 at
page 528.

 
3.  
Easement to Virginia Electric and Power Company as recorded in the Clerk’s
Office of the Circuit Court of Chesterfield County, Virginia in Deed Book 215 at
page 269.

 
4.  
Easement to Chesapeake and Potomac Telephone Company as recorded in the Clerk’s
Office of the Circuit Court of Chesterfield County, Virginia in Deed Book 977 at
page 349.

 
5.  
Easement to Chesapeake and Potomac Telephone Company as recorded in the Clerk’s
Office of the Circuit Court of Chesterfield County, Virginia in Deed Book 521 at
page 174.

 
6.  
Easement to Chesapeake and Potomac Telephone Company as recorded in the Clerk’s
Office of the Circuit Court of Chesterfield County, Virginia in Deed Book 977 at
page 300.

 
7.  
Conditions and restrictions as contained in instrument recorded in the Clerk’s
Office of the Circuit Court of Chesterfield County, Virginia in Deed Book 629 at
page 180.

 
8.  
Easement to Chesapeake and Potomac Telephone Company as recorded in the Clerk’s
Office of the Circuit Court of Chesterfield County, Virginia in Deed Book 207 at
page 52.

 
9.  
Easement to Virginia Electric and Power Company as recorded in the Clerk’s
Office of the Circuit Court of Chesterfield County, Virginia in Deed Book 520 at
page 229.

 
10.  
Easement to Virginia Electric and Power Company as recorded in the Clerk’s
Office of the Circuit Court of Chesterfield County, Virginia in Deed Book 1831
at page 1984.

 
11.  
Declaration and Easement Agreement by and between American Property
Investors VIII, Frank L. Hereford and Beverly M. Hereford, Haverty Furniture
Companies, Inc., John J. Dickinson and Kenneth L. Gray, Trustees, and Bank of
Virginia recorded in Deed Book 1862 at page 634.  Amendment to Declaration and
Easement Agreement recorded in Deed Book 2147 at page 509.

 
12.  
Easement to Chesapeake and Potomac Telephone Company as recorded in the Clerk’s
Office of the Circuit Court of Chesterfield County, Virginia in Deed Book 1866
at page 608.

 
13.  
Water Easement Agreement recorded in Deed Book 3780 at page 357.

 
14.  
Deed of Cross-Easement recorded in Deed Book 3832 at page 337.

 
15.  
Water and Sewer Contract recorded in Deed Book 3849 at page 651.

 
16.  
Physical survey dated May 1, 2002 prepared by Timmons discloses the following:

 
(A)  
Encroachments of AC Unit and 2’ x 8’ frame shed from property adjoining on the
west

 
17.                      Subdivision plat recorded in Plat Book 33 at pages 62
and 63 shows:
 
(A) 13’x16’ C&P Telephone Company right of way

 
EXCEPTIONS AS TO TRACT TWO:
1.  
Real Estate taxes accruing from the beginning of the second half of the fiscal,
year 2001-2002 and subsequent semi-annual payments not yet due and payable.

 
2.  
Easement to Chesapeake and Potomac Telephone Company as recorded in the Clerk’s
Office of the Circuit Court of Chesterfield County, Virginia in Deed Book 207 at
page 52.

 
3.  
Conditions and restrictions as contained in instrument recorded in the Clerk’s
Office of the Circuit Court of Chesterfield County, Virginia in Deed Book 551 at
page 336, in Deed Book 557 at page 148, and in Deed Book 524 at page 459.

 
4.  
Cross-Easement Agreement recorded in Deed Book 3832 at page 337.

 
5.  
Easement to Virginia Electric and Power Company as recorded in the Clerk’s
Office of the Circuit Court of Chesterfield County, Virginia in Deed Book 3832
at page 348.

 
6.  
Sewer Easement Agreement with the County of Chesterfield recorded in Deed Book
3861 at page 533.

 
7.  
Water and Sewer Contract recorded in Deed Book 3849 at page 651.

 

 
 
As to Parcel 10:  Property located in Newport News, Virginia

 

 
1.  
Real Estate taxes accruing from the beginning of the second half of the fiscal
year 2001-2002 and subsequent semi-annual payments not yet due and payable.

 
2.  
Storm water taxes.

 
3.  
Easement to Virginia Electric and Power Company as recorded in the Clerk’s
Office of the Circuit Court of the City of Newport News, Virginia in Deed Book
1182, at page 1729.

 
4.  
Easement to Virginia Electric and Power Company as recorded in the Clerk’s
Office of the Circuit Court of the City of Newport News, Virginia in Deed Book
1162, at page 1522.

 
5.  
Easement to the Commonwealth of Virginia recorded in Deed Book 1177 at page 869,
and shown in State Highway Plat Book 9 at pages 257 through 260.

 
6.  
Variable with private drainage easement located along northern boundary line as
shown on plat recorded in Deed Book 1150 at page 1471.

 
7.  
Fifteen (15) foot VEPCO easement as shown on the subdivision plat recorded in
Deed Book 1150 at page 1471

 
8.  
Rights of others entitled thereto in and to the access easement recorded in Deed
Book 1395 at page 68.

 
9.  
Easement to Virginia Electric and Power Company as recorded in the Clerk’s
Office of the Circuit Court of the City of Newport News, Virginia in Deed Book
1410 at page 2214.

 
10.  
Easement for Water Pipeline recorded in Deed Book 1412 at page 2129.

 
11.  
Exception is taken to the following matters affecting Parcel 2B-1 as shown on
the Lawson Plat recorded in Deed Book 1394 at page 1768:

 
A.  
Fifteen-foot sanitary sewer easement

B.  
Portion of twenty-four foot easement for ingress, egress and utilities

C.  
Portion of fifty-foot ingress and egress easement

D.  
Fifty (50) foot Minimum building setback line

E.  
Fifteen (15) foot drainage easement, the center line of which is the northerly
boundary line of the property

 
F.  
Additional drainage easement along the northern property line

G.  
Ten (10) foot drainage easement along the northern lot line, centerline is
property line

 
H.  
Newport News (23’ x 25’ waterworks easement)

I.  
Fifteen (15) foot Virginia Power Easement

THE FOLLOWING AFFECT EASEMENTS AND ACCESS EASEMENT WITHIN “FRONTAGE DRIVE” ONLY
DESCRIBED AS APPURTENANT IN EXHIBIT A HEREOF:
 
12.  
Reservation of storm drainage easement and fifteen-foot sewer easement in Deed
Book 1153 at page 619.

 
13.  
Easement to Virginia Electric and Power Company as recorded in the Clerk’s
Office of the Circuit Court of the City of Newport News, Virginia in Deed Book
1182, at page 1726.

 
14.  
Easement of variable width along the south side property line for drainage, as
shown on the subdivision plat recorded in Deed Book 1150 at page 1471.

 
15.  
Building setback lines as shown on the recorded plat of the subdivision are as
follows:  thirty (30) foot.

 
16.  
Easement ten feet in width along and two feet from the north side property line
for sanitary sewer, as shown on the recorded plat of subdivision.

 
17.  
Rights of others entitled thereto in and to the use of the non-exclusive
appurtenant easements described in Exhibit “A.”

 
As to Parcel 11:  Property located in Virginia Beach, Virgnia
 
1.  
Real Estate taxes accruing from the beginning of the first half of the fiscal
year 2002-2003 and subsequent semi-annual payments not yet due and payable.

 
2.  
Storm water taxes.

 
3.  
Easement to Virginia Electric and Power Company as recorded in the Clerk’s
Office of the Circuit Court of the City of Virginia Beach, Virginia in Deed Book
1115, at page 613.

 
4.  
Right of Way Agreements with the Commonwealth of Virginia recorded in Deed Book
648 at page 206 and in Deed Book 2789 at page 1264.

 
5.  
Permanent Drainage Easement along Virginia Beach Boulevard as shown on the
recorded plat of Subdivision and in State Highway Plat Book 7 at page 180.

 
6.  
Easement to Virginia Electric and Power Company as recorded in the Clerk’s
Office of the Circuit Court of the City of Virginia Beach, Virginia in Deed Book
3530, at page 1250.

 
7.  
Three (3) foot by eight (8) foot drainage easement affecting northeastern corner
of property as shown in Map Book 179 at page 53.

 
8.  
Rights of others entitled thereto in and to the easements as set out in Deed
Book 4200 at page 1730.

 
9.  
Easement to Virginia Electric and Power Company as recorded in the Clerk’s
Office of the Circuit Court of the City of Virginia Beach, Virginia in Deed Book
2791, Page 414, and shown in State Highway Plat Book 7 at page 180.

 

 
 

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SCHEDULE C
Lease Term
 
 
Term
Commencement Date
Expiration Date
     
Primary Term
August 6, 2002
August 14, 2002
     
First Extended Term
August 15, 2022
August 14, 2027
     
Second Extended Term
August 15, 2027
August 14, 2032
     
First Wintergreen Extended Term
(or FMV Extended Term)
August 15, 2032
August 14, 2037
     
Second Wintergreen Extended Term
(or FMV Extended Term)
August 15, 2037
August 14, 2042
     
Third Wintergreen Extended Term
(or FMV Extended Term)
August 15, 2042
August 14, 2047

 
 

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SCHEDULE D
Basic Rent
 

Primary and Extended Terms.  The annual Basic Rent payable for the Premises
during the Primary Term, the Extended Terms, if any, and the Wintergreen
Extended Terms, if any, of this Lease shall be payable in equal monthly
installments in advance and inthe amounts and on the dates set forth below:
 
 
1.  
Primary Term.

   
Monthly Payment
     
8/15/02 – 7/15/07
 
$  338,845.64
8/15/07 – 7/15/12
 
$  359,176.37
8/15/12 – 7/15/17
 
$  380,726.96
8/15/17 – 7/15/22
 
$  403,570.57

2.  Extended Terms.

   
Monthly Payment
     
8/15/22 – 7/15/27
 
$  423,749.10
8/15/27 – 7/15/32
 
$  444,936.55

3.  Wintergreen Extended Terms.

   
Monthly Payment
     
8/15/32 – 7/15/37
 
$  467,183.39
8/15/37 – 7/15/47
 
$  515,069.68

 
 

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SCHEDULE E
Determination of Basic Rent Upon Release of Project or Payment of Net Proceeds
to Tenant
 
 
 
In the event that a Project is released from this Lease pursuant to Section 3.1
(c) or otherwise, the Basic Rent due on any Payment Date thereafter shall be
reduced by an amount equal to the Basic Rent set forth on Schedule D, multiplied
by a fraction, the numerator of which is the allocated adjustment amount
allocated to such Project as set forth on Schedule G, and the denominator of
which is the aggregate amount allocated to all Projects as set forth on Schedule
G (including the released Project and any other Projects previously released).

 
 

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SCHEDULE F
Stipulated Loss Values
 
The Stipulated Loss Value for a particular Project as of a particular date shall
be determined by multiplying the applicable percentage set forth on the Schedule
attached hereto by the amount allocated to such Project, as set forth on
Schedule G.

 
 

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SCHEUDLE G
Amounts allocated to Projects

Property Location (City, State)
Allocated Amount
   
Tyler, Texas
 
Amarillo, Texas
 
Austin, Texas
 
Duluth, Georgia
 
Fayetteville, Georgia
 
Wichita, Kansas
 
Lexington, Kentucky
 
Bluffton, South Carolina
 
Richmond, Virginia
 
Newport News, Virginia
 
Virginia Beach, Virginia
 

 
 

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SCHEDULE H
Survey Requirements
 
 

 
 
 

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SCHEDULE I
Form of Subordination,
Non-Disturbance and Attornment Agreement
 

 
 
 

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SCHEDULE J
Rent Coverage Ratio
 

 
 
 
Store
 
Purchase
Price
2001
Pre-Tax
Income
 
2001 Rent
Addback
2001
Depreciation
Addback
 
2001 Interest
Addback
 
 
EBITDAR
 
 
Basic Rent
2001 Rent Coverage Ratio
                 
Gwinnett Place
               
Wichita
               
Lexington
               
Hilton Head
               
Amarillo
               
Tyler
               
Virginia
Beach
               
Newport
News
               
Midlothian
               
Austin
Lakeline
               
Fayetteville
               

 
 

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SCHEDULE K
Certificate of Occupancy Covenant
 

Notwithstanding anything in the Lease that may be construed to the contrary,
Tenant agrees that it shall:  (1) cause that portion of the Premises located at
11501 Midlothian Turnpike, Richmond, Virginia (the “Midlothian Premises”), to
comply with all Legal Requirements imposed, enacted or promulgated by the County
of Chesterfield, Virginia and related Governmental entities, and (ii) no later
than the date which is 180 days after the date of this Lease, cause the issuance
of a permanent Certificate of Occupancy with respect to the Midlothian Premises
which evidences such compliance, including with respect to the screening of
existing air conditioning units installed on the rooftop of the building located
thereon.  Tenant shall provide Landlord with a copy of such Certificate of
Occupancy promptly after Tenant’s receipt thereof.  Any failure by Tenant to
perform under the provisions of this paragraph shall constitute an Event of
Default under this Lease without further notice or act.

 
 

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SCHEDULE  L
Deferred Maintenance