**Exhibit10.38**

 

LEASE/RIGHT OF FIRST OFFER

 

This Lease/Right of First Offer Agreement is enteredinto this 12th day of October, 2003, by and between JOHN BLAKE of Standish, Maine**(hereinafter called“Landlord”), and LBO HOLDING, INC., a Maine corporation with a principal placeof business in Bartlett, New Hampshire (hereinafter called “Tenant”) and isintended to amend and replace a prior Lease and Option Agreement between theparties dated July 19, 2003 affecting the Premises.

 

1.             DESCRIPTIONOFPREMISES. The**Landlordhereby agrees to lease to the Tenant, and the Tenant hereby**agrees to accept, subject to the termsand conditions hereinafter set forth, the premises in Bartlett, New Hampshiredescribed in the attached Exhibit A (hereinafter called the “Premises”).

 

2.             TERM.The term of this lease shall commence on January 1, 2004 and shallcontinue until December 31, 2014.

 

3.             RENT.The rent shall be paid monthly on the first day of each month in arrears,beginning January 1, 2004. The rent shall be $3,500.00 per month for therest of the months in 2004. Rent shall increase annually beginningJanuary 1, 2005 (applicable to the month of January, 2005) and eachJanuary 1st thereafter during the term of this Lease, to reflect theincrease, if any, in the cost of living as determined by reference to theConsumer Price Index for the Northeast – Size Class B/C, All Urban Consumers(“CPI”) for November immediately preceding the January for which rentwill be adjusted, using the November CPI index from the immediately prioryear as a base month. The rent will be increased by the percent increase (ifany) of the CPI from the prior November to the November immediatelypreceding the adjustment date.   Anydelay in adjusting the rent shall not waive Landlord’s right to retroactivelymake the adjustment.

 

4.             REALESTATE TAXES. The Tenant shall pay when due all real estate taxes assessedagainst the Premises.

 

5.             UTILITIES:SPECIAL ASSESSMENTS. The Tenant shall pay for any special assessments madeagainst the Premises or any utility charges or expenses incurred for thePremises.

 

6.             USE.The Premises shall be used by Tenant as a parking lot and for other activitiesnot inconsistent with its use as a parking lot.

 

7.             CONDITIONOF THE PREMISES. Landlord shall not be responsible for making anyimprovements or repairs to the Premises. Tenant may make improvements to thePremises at its expense with Landlord’s Consent, which shall not beunreasonably withheld.

 

8.             RISKOF LOSS*.** ***All property ofevery kind and the Premises shall be at thesole risk****of the Tenant. Landlordshall not be liable to the Tenant or any otherperson for any injury*,*lose, damage, or inconvenienceoccasioned by any cause whatsoever**tosaid****property.

 

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9.             INDEMNITY.The Tenant agrees to indemnify, defend and hold harmless. the Landlord againstall loss, damage, liability,****orexpense, (including without limitation, attorneys fees and Court costs) arising out of injury to****thirdparties or their property on or about****the****Premises****(unless each loss etc. isdue to the intentional****actsor negligence of Landlord),**or in**connection with anythingowned or controlled by the Tenant on or about the Premises, or****resultingfrom any act, failure****to act, or negligence of the Tenant or itsservants or agents on or about the Premises, or from any nuisance made orsuffered on or about**thePremises.

 

Further, Tenant covenants and agrees that, with respect to any hazardous, toxicor special wastes, materials or substances including asbestos, waste oil andpetroleum products (the “Hazardous Materials”) which Tenant, its agents,employees or visitors, may use, handle, store or generate in the conduct of itsbusiness at or adjacent to the Premises Tenant will: (i) comply with allapplicable laws, ordinances and regulations which relate to the treatment,storage, transportation and handling of the Hazardous Materials (ii) thatTenant will in no event permit or cause any disposal of Hazardous Materials in,on or about the Premises in violation of applicable environmental laws; (iii)that upon termination of this Lease, Tenant will at its expense, remove allHazardous Materials from the Premises which came to exist on, in or under thePremises during the term of this Lease or any extensions thereof and complywith applicable state, local and federal laws as the same may be amended fromtime to time.  The terms used in thisparagraph shall include, without limitation, all substances, materials, etc.,designated by such terms under any laws, ordinances or regulations, whetherfederal state or local.  Tenant shallindemnify and hold Landlord harmless from any and all claims, losses, damages,fines, penalties, demands, causes of action, judgments, costs and expenses,including without limitation attorneys’ fees, incurred by Landlord arising fromor in connection with Tenant’s breach of this paragraph.  The foregoing indemnity shall survive theexpiration or earlier termination of this Lease.

 

l0.            CONDEMNATION.If the Premises are partially or wholly taken for any public use, the Landlordor theTenant may terminate this lease by giving written notice tothe other party within thirty (30) days after the taking becomes final.

 

11.           INSURANCE.****Tenant shall, at its sole cost and expense, obtain andmaintain at all time during the initial and extension terms of this Lease, forthe protection of Landlord and Tenant, commercial general liability coverage(including contractual liability insurance) in amounts not less than TwoMillion Dollars ($2,000,000.00) combined single limit with deductibles of notmore than Five Thousand Dollars ($5,000.00) per occurrence, insuring againstall liability of Tenant and its representatives arising out of or in connectionwith Tenant’s use and occupancy of the Premises.  Tenant shall name Landlord as additional insured in suchpolicy.  Such insurance shall be issuedby an insurance company licensed to do business in New Hampshire and rated inthe most recent edition of A. M. Best Company’s ratings of at least A, Class X,written on an “occurrence” basis, and with a per location endorsement if suchinsurance is part of a blanket policy covering multiple locations.  Tenant shall deposit with Landlord bindingcertificates for such insurance (such as the ACORD 27 Form Certificate) showingsatisfaction of all of the conditions of this paragraph at or prior to thecommencement of the term, and thereafter within thirty (30) days prior to theexpiration of any such policies.  Allsuch insurance certificates shall provide that such policies shall not becanceled without at least thirty

 

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(30) days priorwritten notice to each insured named therein.

 

12.           INSURANCERIGHTS. Tenant will not assign, transfer, or set over to its insurer anyright of subrogation against the Landlord because of any payment required to bemade under any policy of insurance on the Premises or the contents thereof.Tenant agrees that a waiver of such subrogation rights will be procured andwritten into any such insurance policies issued to it.

 

13.           WAIVER.The Tenant covenants with the Landlord that the failure of the Landlord toinsist in any one or more instances upon the strict and. literal performance ofany of the covenants, terms or condition of this lease, or to exercise anyoption of the Landlord herein contained, shall not be construed as a waiver ora relinquishment for the future, of such covenant, term, condition or option,but the same shall continue and remain in full force and effect. The receipt bythe Landlord of rent, with knowledge of the breach of any covenant, term orcondition hereof, shall not be deemed to be a waiver of such breach; and nowaiver by the Landlord of any covenant, term, condition or provision of thislease, or of the breach thereof, shall be deemed to have been made by theLandlord, unless expressly acknowledged in writing by the Landlord over itssignature.

 

14.           ASSIGNMENT.Landlord hereby consents to any collateral assignment of this lease by Tenantto any lender of Tenant. Landlord agrees to execute any documents reasonablynecessary to evidence  Landlord’sconsent as aforesaid.

 

15.           MISCELLANEOUS.This lease is to be construed as a New Hampshire lease; is to take effect as asealed instrument; sets forth the entire agreement between the parties; isbinding upon and inures to the benefit of the parties hereto and theirrespective heirs, devisees, personal representatives, executors,administrators, conservators, successors and assigns; and may be canceled,modified, or amended only by written instrument signed by the Landlord and theTenant.

 

16.           RIGHTOF FIRST OFFER. If Landlord should, at any time during the term of thisLease, elect to sell the Premises, Landlord shall send written notice to Tenantnotifying Tenant of Landlord’s intention to sell (“Notice”). Upon receipt ofNotice, Tenant shall have the right, for a period of ninety (90) days, to electto purchase the Premises, together with the property described on Exhibit Battached hereto, for a purchase price in an amount equal to the sum of (i)$356,000.00 plus (ii) $12,000.00 for each Dec. 31st that has passedprior to the closing of the sale of the Premises, commencing withDecember 31, 2003, plus (iii) any rent that is unpaid at the time ofclosing, with rent to be prorated to the closing date, by delivering a writtenacceptance of the Notice to Tenant (“Acceptance”).  Upon delivering Acceptance to Landlord within the ninety (90)period as aforesaid, Tenant shall have up to twelve (12) months after the dateof the Notice to close on the purchase of the Premises.   This Right of First Offer shall be void anddeemed waived by Tenant if Tenant is in default of this Lease beyond anyapplicable cure period, and shall terminate upon the termination of thisLease.  Further, Tenant’s right topurchase the Premises and the property described on Exhibit B pursuant to thisRight of First Offer shall expire three (3) months after delivery of Notice ifTenant does not deliver Acceptance within the three (3) month time perioddescribed above. If Tenant exercises this right of first offer, Landlord willconvey good and merchantable title to the Premises by Quitclaim Deed and theparties agree 

 

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to close on a datespecified by Tenant that is within twelve (12) months of the date of theNotice.

 

17.           ASSIGNMENT.This Lease and Right of First Offer shall continue to burden the Premises ifLandlord conveys any interest in the Premises. Tenant or its successors assignsor the purchaser of substantially all of its assets will be entitled to thebenefits of this Lease and Right of First Offer as tenant.

 

18.           GOVERNMENTALREGULATIONS. Tenant shall faithfully observe all municipal and countyordinances and state and federal statutes, rules and regulations now orhereafter in force in the use of the Premises.

 

19.           PRIORLEASE, AGREEMENT MERGED. Both Landlord and Tenant agree that theJuly 19, 1994 Lease/Option Agreement between Landlord and Tenant isterminated and superseded by this Lease and Right of First Offer, whichconstitutes the entire agreement between the parties.

 

20.           Default.If Tenant defaults in the performance of its obligations pursuant to this Leaseand such default is not cured within 30 days of a Tenant receiving writtennotice from Landlord of the nature of the default (unless such default is not apayment default and can not be cured within 30 days, in which case Tenant shalldiligently pursue a cure of the default), the Landlord may exercise thefollowing rights:

 

a. Landlord maycommence an equitable action in a court of competent jurisdiction seekingenforcement of the terms of this Lease.

 

b. Landlord maycommence an action at law in a Court of competent jurisdiction to recover anyamounts due Landlord pursuant to this Lease.

 

c. Landlord maysend a written notice of lease termination to Tenant. If Tenant does not curethe default or exercise the option to purchase in paragraph 16 within 30 daysof receipt of the written termination notice, then Landlord may begin legalproceedings to recover possession of the Premises. Landlord shall takereasonable steps after regaining possession to sell or lease the Premises to athird party to mitigate Landlord’s damages.

 

d. Landlord maycollect his reasonable costs of enforcing this Lease, including, but notlimited to, reasonable attorneys fees.

 

21.           RECORDINGMEMORANDUM. Both Landlord and Tenant have executed a separate memorandumcontaining the description of the Premises, the term and the Right of FirstOffer rights contained in this Lease. Tenant is authorized to record thememorandum in the Carroll County Registry of Deeds.

 

22.           TWOEASEMENTS. Landlord hereby confirms that Mt. Attitash Lift Corp. may usethe premises described ‘in Exhibit B for parking by virtue of its easementsreserved in a November 12, 1982 deed recorded in Book 870, Page 361, andmay use all utility easements described in the Declaration of Easements andRestriction dated November 30, 1993 and recorded 

 

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in Book 1555, Page 97.

 

23.           NOTICE:Any notice or other communication required or permitted under this Agreementwill be adequately given when it is personally delivered; when it is sent byfax, with confirmation of receipt; or one day after it is sent by overnightcourier paid by the sender, and addressed

 
| To Landlord at: |
|-----------------|
|            |
|            | 35 Watchic Road 1 |
|            | Standish, Maine 04084 |
|            | Fax: (207) 642-4041 |
|            |   |
| With a copy to: |
|            |   |
|            | John L. Carpenter, Esq. |
|            | Bernstein, Shur, Sawyer & Nelson, P.A. |
|            | 100 Middle Street |
|            | P.O. Box 9729 |
|            | Portland, Maine   04104-5029 |
|            | Fax No.: (207) 774-1127 |
|            |   |
| To Tenant:      |
|            |   |
|            | LBO Holding, Inc. |
|            | P.O. Box 308 |
|            | Bartlett, NH 03912 |
|            | Attn: Tom Chasse, President and Managing Director |
|            | Fax no.:   (603) 374 1960 |
|            |   |
| With a copy to: |
|            |   |
|            | Foster Stewart, Esq. |
|            | American Skiing Company |
|            | One Monument Way |
|            | Portland, ME 04101 |
|            | Fax no.:   (207) 791-2607 |

 

Any party may change the address or fax number towhich notices or other communications are to be given by furnishing the otherparties with written notice of the change.

 

24.           Tenantagrees to look solely to Landlord’s interest in the Premises for recovery ofany judgment against Landlord it being agreed that Landlord shall never bepersonally liable for any such judgment. The provisions contained in the foregoing sentence shall not limit anyright that Tenant might otherwise have to obtain an injunctive relief againstLandlord, or any other action not involving the personal liability of 

 

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Landlord. Under no circumstances shall Landlord everbe liable for punitive, indirect or consequential damages.

 

IN WITNESS WHEREOF, the Landlord has signed and sealedthis instrument, and the Tenant has caused this instrument to be signed andsealed by its duly authorized officer, on the day and first year written.

 

 
| In the presence of: | LANDLORD:                     |
|---------------------|-------------------------------|
|                |                          |
|                |                          |
|                |                          | /s/ John  Blake |   |
| Name                | John Blake                    |
|                |                          |
|                | TENANT:****LBO  HOLDING; INC. |
|                |                          |
|                |                          | /s/ Tom Chasse |   |
| Name:               | Name: Tom Chasse              |
|                | Title: President              |
|                     |                               |  |  |  |

 

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EXHIBIT A

 

TRACT 1:Beginning on the Northerly edge of Route 302, the same being 10 feet West of aformer building; thence running Easterly along said highway a distance of 113feet to a point; thence turning and running Northerly and perpendicular to thesaid highway to land of Maine Central Railroad; thence turning and runningwesterly along land of said Railroad to a point; thence turning and runningSoutherly and parallel to the second mentioned course, to point of beginning.

 

TRACT 2:Beginning at a point on the Northerly side of Route 302, the same being ten(10) feet westerly of a former building and being the Northwesterly corner ofland now or formerly of Russo; thence Northerly along land now or formerly ofRusso to land of Maine Central Railroad; thence Westerly along land of saidMaine Central Railroad to land of Garland; thence Southerly along land of saidGarland to Route 302; thence about 257 feet along said highway, Route 302, tothe point of beginning.

 

### EXHIBIT B

 

A certain lot or parcel of land shown as Lot 2 on a plan entitled“Proposed Boundary Line Adjustment, Property of Attitash Associates, Route 302,Bartlett, New Hampshire,” dated May 3, 1993 by Thaddeus Thorne - Surveys,Inc. and approved by the Bartlett Planning Board on May 25, 1993 and recorded in the Carroll County Registryof Deeds at Book 144, Page 69, subject to a parking easement reserved in thedeed of Mt. Attitash Lift Corporation to Seller dated November 12, 1982and recorded in Carroll County Registry of Deeds at Book 870, Page 361 andsubject to a sewer easement and utility easements benefitting the adjacent Lot 1**as shown on the plan and asgranted by Attitash Associates in a deed to Attitash Mountain Service Company,Inc. dated November 30, 1993 and recorded in the Carroll County Registryof Deeds; subject to the water**anddrainage easements for the benefit of Mt. Attitash Lift Corporation as grantedin the Declaration of Easements and Restrictive Covenants by AttitashAssociates and Mt. Attitash Lift Corporation dated November 30, 1993 andrecorded in the Carroll County Registry of Deeds in Book 1555, Page 97.

 

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