DrumPPA_Attachment_2_Outgrant_Agreement_(Sample).pdf

Department of the Army Lease Form (EXAMPLE)

LEASE

BETWEEN

THE DEPARTMENT OF THE ARMY

AND

LESSEE NAME

FOR THE PREMISES LOCATED ON

Fort Drum, New York (Called the “Installation” in this Lease.)

TABLE OF CONTENTS

RECITALS

SECTION 1: BASIC LEASE PROVISIONS

Paragraph 1.01: Date and Parties Paragraph 1.02: Premises Paragraph 1.03: Use and Access Paragraph 1.04: Term and Renewal Option Paragraph 1.05: Lessee’s Compliance with Applicable Laws Paragraph 1.06: Condition of the Premises

SECTION 2: RENT AND TAXES

Paragraph 2.01: Rent Paragraph 2.02: Additional Rent Paragraph 2.03: Renewal Rent Paragraph 2.04: Rent Escalation Paragraph 2.05: Reimbursements Paragraph 2.06: Rent Payments Paragraph 2.07: Receipt of “In-Kind” Consideration Paragraph 2.08: Penalty Charges Paragraph 2.09: Taxes

SECTION 3: REPRESENTATIONS, WARRANTIES, AND COVENANTS

Paragraph 3.01: Lessee’s Representations, Warranties, and Covenants Paragraph 3.02: Government’s Representations Warranties, and Covenants

SECTION 4: ENVIRONMENTAL MATTERS

Paragraph 4.01: Lessee’s Compliance with Environmental Laws Paragraph 4.02: Required Government Approval Paragraph 4.03: Definitions Paragraph 4.04: Lessee’s Indemnification Paragraph 4.05: Required Notices and Government’s Right of Inspection Paragraph 4.06: No Liability for Government’s Environmental Impacts Paragraph 4.07: Hazardous Waste Storage Facilities Paragraph 4.08: Availability of Lessee Records Paragraph 4.09: Government’s Access for Environmental Testing and Remediation Paragraph 4.10: Specific Lease Restrictions Paragraph 4.11: Hazardous Substance Notice

SECTION 5: LIABILITY AND INSURANCE

Paragraph 5.01: Government’s Limitation of Liability Paragraph 5.02: General Indemnification of Lessee Paragraph 5.03: Insurance

SECTION 6: ALTERATIONS, REPAIRS, MAINTENANCE, AND SURRENDER

Paragraph 6.01: Utilities and Services Paragraph 6.02: Alterations and Improvements Paragraph 6.03: Operation, Maintenance, and Surrender

SECTION 7: DEFAULT

Paragraph 7.01: Lessee’s Default Paragraph 7.02: Government’s Remedies Paragraph 7.03: Exception to Cure Period Paragraph 7.04: Lessee’s Grant of Security Interest

SECTION 8: ENCUMBRANCES OF THE LESSEE’S ESTATE

Paragraph 8.01: Encumbrance of Lessee’s Estate Paragraph 8.02: Permitted Mortgages Paragraph 8.03: Lessee Required Notices Paragraph 8.04: Acquisition of Lessee’s Interest by Approved Mortgagee or Affiliate Paragraph 8.05: Approved Mortgagee Protections Paragraph 8.06: Termination Notice and Right to Postpone Paragraph 8.07: No Obligation to Deliver Premises or Improvements Paragraph 8.08: Rights of Multiple Approved Mortgagees Paragraph 8.09: New Lease Paragraph 8.10: Government Protections

SECTION 9: LOSS OF PREMISES

Paragraph 9.01: Damage Paragraph 9.02: Lessee’s Obligation to Restore Paragraph 9.03: Extensive Damage or Destruction of Improvements Paragraph 9.04: Insurance Proceeds Paragraph 9.05: Waivers Paragraph 9.06: Lessee’s Right to Purchase the Premises

SECTION 10: ASSIGNMENT AND SUBLEASES

Paragraph 10.01: Assignment and Sublease Paragraph 10.02: Reasonableness Paragraph 10.03: Procedure Paragraph 10.04: Conditions – Subleases and Assignments

SECTION 11: PERMITTED ENTRIES

Paragraph 11.01: Permitted Entries Paragraph 11.02: Entry Conditions

SECTION 12: DISPUTES

Paragraph 12.01: Disputes Paragraph 12.02: Judicial Review Paragraph 12.03: Opportunity to be Heard and to Offer Evidence

SECTION 13: MISCELLANEOUS

Paragraph 13.01: Covenant Against Contingent Fees Paragraph 13.02: Officials Not to Benefit Paragraph 13.03: Non-Discrimination Paragraph 13.04: Gratuities Paragraph 13.05: No Joint Venture Paragraph 13.06: Notices Paragraph 13.07: Records and Books of Account Paragraph 13.08: Partial Invalidity Paragraph 13.09: Headings, Titles, and Personal Pronouns Paragraph 13.10: Waiver Paragraph 13.11: Time is of the Essence Paragraph 13.12: Construction Paragraph 13.13: Good Faith and Fair Dealing Paragraph 13.14: Government Representatives and Successors Paragraph 13.15: Binding on Successors Paragraph 13.16: Governing Law Paragraph 13.17: Lease Not an Offer Paragraph 13.18: Counterparts Paragraph 13.19: Recording Paragraph 13.20: Survival of Remedies Paragraph 13.21: Authority of Parties Paragraph 13.22: Business Days Paragraph 13.23: Entire Agreement Paragraph 13.24: Applicable Laws Paragraph 13.25: Anti-Deficiency Act Paragraph 13.26: Definition of Lease Paragraph 13.27: Lease Not Subject to 10 USC § 2662

SECTION 14: DEFINITIONS

Paragraph 14.01: Definitions

EXHIBITS

Exhibit A: Description of Premises Exhibit B: Map of Premises Exhibit C: Existing Encumbrances Exhibit D: Operating Agreement Exhibit E: Physical Condition Report Exhibit F: Environmental Condition of Property Report Exhibit G: Site Work Agreement Exhibit H: Notice of Hazardous Substances Exhibit I: Government Approved Alterations

RECITALS

A. The Secretary of the Army, under the authority contained in 10 U.S.C. § 2667, has determined:

(i) that the Premises, as defined in this Lease, is not excess property as defined by the Federal

Property and Administration Services Act of 1949, as amended (40 U.S.C. § 472(e)), and is not at this time needed for other public use;

(ii) that a lease of such Premises is advantageous to the United States; and

(iii) that a lease of such Premises on the terms set forth in this Lease is in the public interest.

B. NOW, THEREFORE, the Secretary of the Army, by virtue of the authority conferred by law, for the consideration set forth below, hereby leases to the Lessee the Premises (as defined in this Lease) subject to the terms, conditions, covenants and agreements set forth in this Lease as follows:

SECTION 1—BASIC LEASE PROVISIONS

1.01. Date and Parties. This lease (“Lease”) is made as of this _______________________, 20___, between the Secretary of the Army (“Government”) and LESSEE NAME, organized under the laws of

STATE, with principal offices at LESSEE ADDRESS (“Lessee”). The Government and the Lessee may be referred to jointly as the “Parties” and each separately as a “Party.”

1.02. Premises. The Government leases to the Lessee the land described in Exhibit A and shown on

Exhibit B, together with the right to gain access to the Premises through a route or routes designated from time to time by the Government, and to use the streets, driveways, sidewalks, and walkways on the

Installation for the purposes of pedestrian and vehicular ingress and egress to and from the Premises. The

Government reserves the right to change, modify, or eliminate, or temporarily to close, any portion or portions of streets, driveways, sidewalks, and walkways in a manner that will not unreasonably interfere with the Lessee’s use of the Premises under this Lease. Notwithstanding the foregoing, the Government reserves its right of general access to the Premises for such purposes as maintaining, repairing, or replacing utility systems located within the Premises, and to the extent they are needed by the Government for the operation, security, or safety of the Installation, or its assigned personnel, or for any other lawful purpose.

1.02(a). Fee Title. Fee title to the land shall continue to vest at all times with the Government.

1.02(b). Easements and Rights-of-Way. The Premises may be subject to certain reservations, easements, restrictions and rights. A list of such known reservations, easements, restrictions and rights, upon current information and belief is included in the list of Existing Encumbrances at Exhibit C. The Government shall have the further right to create and grant additional easements and rights-of-way over, across and through the Premises, including, without limitation, the right to modify and relocate any of the Existing

Encumbrances (hereafter “Additional Encumbrances”). The Lessee shall accept and occupy the Premises subject to and in compliance with the Existing Encumbrances and Additional Encumbrances (collectively, the “Encumbrances”); provided, however, the Government agrees that it will not create any Additional

Encumbrances or relocate Existing Encumbrances in a manner that is inconsistent with or materially impairs the rights and benefits of the Lessee under this Lease with respect to the development, construction, ownership, leasing, use and operation of the Premises by the Lessee.

1.02(c). Additional Easements and Rights-of-Way. The Government agrees, at the request of the Lessee, to grant and create such additional easements and rights-of-way as shall be reasonably required to enable the Lessee to develop, construct, own, lease, use and operate the Premises, which easements and rights-of-way over Government owned or controlled land shall be set forth in documentation prepared by the

Government, provided that such easements shall not be located or relocated in a manner that would unreasonably interfere with the overall operation or impair the security of the Installation, of which the

Premises are a part. Obtaining any easements and rights-of-way over property not owned or controlled by the Government shall be the responsibility of the Lessee to obtain or procure, at the Lessee’s sole cost and expense.

1.03. Use and Access.

1.03(a). Primary Uses. The Lessee shall use the Premises for DESCRIBE PERMITTED USES only, unless the Government gives its advance written consent to another use, which consent the Government may unreasonably withhold or delay. The Lessee shall comply, at its own expense, with (1) all present and future laws, ordinances, rules, requirements, regulations and orders of the United States of America, the state where the Premises are located and any other public or quasi-public federal, state or local authority and/or any department or agency thereof, having jurisdiction over the Premises and relating to the Premises or imposing any duty upon the Lessee with respect to the use, occupation or alteration of the Premises, and

(2) any reasonable requests of any insurance company providing coverage with respect to the Premises.

The Lessee shall not create a nuisance or use the Premises for any immoral or illegal purposes. Unless a waiver is granted by the Government, in no event shall the Premises be used by the Lessee for any of the following:

(i) Activities involving the storage, treatment, transportation, disposal, or manufacture of hazardous materials, hazardous substances, or hazardous wastes, except as specifically authorized by Paragraph

4.02.

(ii) Activities that adversely affect the health, safety, morals, welfare, morale, and discipline of the

Armed Forces, such as the sale or use of drug abuse paraphernalia, illicit gambling, and prostitution.

(iii) Partisan political activities.

(iv) Activities by entities advocating the overthrow of the United States.

1.03(b). Additional Permitted Use. In addition to the Primary Uses, and subject to subparagraph 1.03(c) below, the Premises may be used for Permitted Retail Uses which are incidental to the Primary Uses. The term “Permitted Retail Uses” shall mean restaurants and drive-through restaurants; newspaper and gift shops; retail uses that are either located on the first floor of an office building in the Project Site or are in or related to any hotel within the Project Site; in-line retail centers; banks; convenience stores; and freestanding retail stores located on “pad sites”.

1.03(c). Conditions on Permitted Retail Uses. Government and Lessee agree that, except for the

Permitted Retail Uses described in subparagraph 1.03(b) above, other retail uses and housing and residential uses shall be deemed not compatible with the Installation Master Plan. The term “sub lessee” as used herein shall also include a “subtenant” or other such party to a sublease of all or any portion of the

Premises. The Installation Master Plan shall mean that current master plan for the area comprising the

Installation as may be amended from time to time by Government. Prior to Lessee subleasing any portion of the Premises for any Permitted Retail Use, Lessee shall notify Government of such proposed use and

Government shall determine whether such proposed use would provide merchandise or services in direct competition with the Army Air Force Exchange Service (“AAFES”) or the program for Morale, Welfare and Recreation (which is overseen by the Department of Defense, Military Community and Family Policy

(“MWR”)). If such retail use is determined by Government to provide merchandise or services in direct competition with AAFES or MWR, then prior to entering into a sublease for such retail use, Government shall provide notice thereof to AAFES and MWR who shall have ninety (90) days to exercise the right to establish and operate a community support facility or provide community support services in lieu of the propose retail use, or seek equitable compensation in lieu of the operation of such a facility or the provision of such services (the “AAFES and MWR Rights”); provided, however, if the Government waives this provision as to such retail use pursuant to its authority under 10 U.S.C. § 2667(d), AAFES and MWR shall have not such AAFES and MWR Rights in connection with such retail use.

1.03(d). Installation Rules. The Lessee’s use and occupation of the Premises shall be subject to the general supervision and approval of the Installation Commander and to such rules and regulations regarding access to the Installation, and the preservation of health, safety, security and the maintenance of good order and discipline on the Installation as the Installation Commander may prescribe from time to time. The Lessee acknowledges receipt of the Installation’s rules and regulations as of the effective date of this Lease. The Installation Commander shall provide the Lessee with any subsequent amendments or modifications to such rules and regulations.

1.03(e). Conflict with Lease. If a rule or regulation issued under subparagraph 1.03(d) conflicts with or is inconsistent with any Lease provision, the Lease provision controls.

1.03(f). Operating Agreement. The Operating Agreement at Exhibit D is hereby incorporated into and made a part of this Lease. The Operating Agreement sets forth certain procedures and requirements to be followed by the Lessee in operating and maintaining the Premises. In the event of any amendment of the

Operating Agreement, the amended Operating Agreement will be deemed to be substituted in lieu of the existing one. In the event of any inconsistency between any provisions of the Operating Agreement, as it presently exists or may be amended in the future, and any provisions of this Lease, the provisions of this

Lease will control.

1.03(g). Installation Access. The Lessee acknowledges that it understands that the Installation is an operating military installation, that can be closed to the general public, and, as a result, agrees that the

Lessee’s operations may be restricted to accommodate the needs of national defense. Access on the

Installation may also be restricted due to inclement weather and natural disasters. The Lessee further acknowledges that the Government strictly enforces Federal laws and Army regulations concerning controlled substances (drugs) and personnel, vehicles, supplies and equipment entering the Installation are subject to search and seizure, under 18 U.S.C. § 1382. The Government will reasonably permit the Lessee access to the Premises at all times, subject to the provisions of this paragraph. Notwithstanding the foregoing, the Lessee agrees the Government will not be responsible for lost time or costs incurred due to delays in entry, temporary loss of access, barring of individual employees from the installation under

Federal laws authorizing such actions, limitation or withdrawal of an employee’s installation driving privileges, or any other security action that may cause employees to be late to or unavailable at their work stations, or delay arrival of parts and supplies. The Lessee, its sub lessees, employees, and invitees shall abide with all Installation access restrictions imposed by the Government.

1.04. Term and Renewal Option.

[LEASES SHALL BE FOR A TERM OF NO MORE THAN 35 YEARS INCLUDING EXTENSIONS.

ANY LONGER PERIOD MUST BE JUSTIFIED IN WRITING AND APPROVED BY THE DIRECTOR

OF REAL ESTATE.]

1.04(a). Term. This Lease shall be for a term beginning at 12:01 a.m., ______________, 20__, (“Beginning Date”) and will be for a duration of twenty five (25) years ending at 12:00 p.m., _______________, 20__ (“Ending Date”), unless sooner terminated in accordance with the terms contained in this Lease. The period from the Beginning Date through the Ending Date shall be referred to as the

“Term.” In the event, subject however to an Excusable Delay as defined in subparagraph 7.01(b), the

Lessee shall fail to commence its development activities within ___ days/months/years [SELECT

APPROPRIATE PERIOD BASED ON PROJECT CONSIDERATIONS] from the Beginning Date, or having commenced such development activities shall fail to proceed, with reasonable diligence to complete all of its development activities within ___ days/months/years [SELECT APPROPRIATE PERIOD

BASED ON PROJECT CONSIDERATIONS] from the Beginning Date, and such failure shall continue after the expiration of the cure period set forth in subparagraph 7.01(a), the Government, in its sole discretion, may terminate the Lease. If pursuant to the foregoing, the Government terminates this Lease, Lessee shall vacate and surrender the Premises as provided in subparagraph 6.03(c).

1.04(b). Renewal Option. The Lessee shall have one (1) option (“Renewal Option”) to extend the Term for an additional period of ten (10) consecutive years (“Extension Period”) provided that:

(i) Lessee gives written notice (“Exercise Notice”) to Government of its election request to exercise the Renewal Option no later than two (2) years prior the expiration of the Term;

(ii) Lessee is considered by Government to have performed satisfactorily under this lease;

(iii) Lessee is willing to pay the then fair market rental value of the Premises; and

(iv) as of the date that the Exercise Notice is delivered to the Government, no default (beyond the notice and cure period set forth in this Lease) has occurred and then remains uncured.

All terms and conditions of this Lease shall remain in full force and effect during the Extension Period, except that Base Rent payable during the Extension Period shall be determined as set forth in Paragraph

2.03 below.

1.05. Lessee’s Compliance with Applicable Laws.

1.05(a). Lessee’s Compliance. The Lessee shall at all times during the existence of this Lease promptly observe and comply, at its sole cost and expense, with the provisions of all applicable federal, state, and local laws, regulations, and standards, and in particular those provisions concerning the protection of the environment and pollution control and abatement and occupational safety and health. Further, with respect to any facilities on the Premises which are jointly used by the Lessee and the Government, the Lessee shall comply with all Army safety, health, and fire regulations, standards, technical orders, and procedures in common use work and operating areas.

1.05(b). Special Compliance. The Lessee shall comply with all applicable state and local laws, ordinances, and regulations with regard to construction, sanitation, licenses, or permits to do business, and all other matters. The Lessee shall be responsible for determining whether it is subject to local building codes or building permit requirements, and for compliance with them to the extent they are applicable.

1.05(c). Permitted Signs. The Lessee shall comply with Government regulations with respect to the placement of signage in, on or about the Premises. Other than the signs and listings permitted under the aforementioned regulations, the Lessee shall not place or have placed any other signs, listings, advertisements, or any other notices anywhere else in, on or about the Premises.

1.05(d). Federal Supremacy and Sovereign Immunity. Nothing in this Lease shall be construed to constitute a waiver of federal supremacy or federal sovereign immunity.

1.05(e). Lessee’s Responsibility. Responsibility for compliance as specified in this Paragraph 1.05 rests exclusively with the Lessee. The Government assumes no enforcement or supervisory responsibility except with respect to matters committed to its jurisdiction and authority. The Lessee shall be liable for all costs associated with compliance, defense of enforcement actions or suits, payment of fines, penalties, or other sanctions and remedial costs related to the Lessee’s use of the Premises.

1.05(f). Lessee’s Right to Contest. The Lessee shall have the right to contest by appropriate proceedings diligently conducted in good faith, without cost or expense to the Government, the validity or application of any law, ordinance, order, rule, regulation, or requirement of the nature referred to in this Paragraph 1.05.

The Government shall not be required to join in or assist the Lessee in any such proceedings.

1.06. Condition of the Premises. The Lessee agrees that it has inspected, knows, and accepts the condition and state of repair of the Premises. It is understood and agreed that the Premises are leased in an “as is, where is” condition without any representation or warranty by the Government concerning their condition, and without obligation on the part of the Government to make any alterations, repairs, or additions. The

Government shall not be liable for any latent or patent defects in the Premises. The Lessee acknowledges that the Government has made no representation or warranty concerning the condition and state of repair of the Premises nor any agreement or promise to alter, improve, adapt, or repair them that has not been fully set forth in this Lease. The Lessee represents, warrants, and acknowledges that it has entered into this

Lease on the basis of its own full investigation of all facts and conditions underlying or relating to the

Premises and the development and use of the Premises, including without limitation, environmental conditions, and that it has solely relied upon its own investigation. Given the Lessee’s deemed knowledge of the facts and conditions affecting the Premises, the Lessee shall exercise the appropriate level of care when conducting any ground disturbing activities to ensure that such activities do not result in the release of any hazardous substances, materials or waste of any kind. The Lessee shall also be responsible for exercising the appropriate level of care as described in this Paragraph 1.06 with respect to any underground pipes and related infrastructure that may exist within the Premises. The Lessee waives any claim or cause of action the Lessee may have against the Government under any federal, state, or local law, ordinance, rule or regulation now existing or hereafter enacted or promulgated, relating to environmental matters or conditions, in, on, under, about or migrating from or onto the Premises, or by virtue of any common law right related to environmental conditions or matters in, on, under, about or migrating from or onto the

Premises except for:

(i) Pre-existing environmental conditions requiring response under applicable law that are attributable to the Government and which are not exacerbated by the Lessee; and

(ii) Hazardous Substance releases caused by the Government that migrate onto the Premises and which are not exacerbated by the Lessee.

The provisions of this Paragraph 1.06 shall survive the expiration of this Lease.

1.06(a). Physical Condition Report. A physical condition report (“PCR”) signed by representatives of the

Government and the Lessee is attached to this Lease as Exhibit E. The PCR sets forth the agreed physical appearance and condition of the Premises on the Beginning Date as determined from a joint inspection by the Parties.

1.06(b). Environmental Condition Report. An Environmental Condition of Property Report (“ECP”) of the Premises, signed by the Parties, is attached hereto as Exhibit F. The ECP sets forth those environmental conditions and matters on and affecting the Premises on the Beginning Date, as determined from the records and analyses reflected in the ECP. The ECP is not, and shall not constitute, a representation or warranty on the part of the Government regarding the environmental or physical condition of the Premises and the Government shall have no liability in connection with the accuracy or completeness thereof. In this regard the Lessee acknowledges and agrees that the Lessee has relied, and shall rely, entirely on its own investigation of the Premises in determining to enter into this Lease. A separate ECP (“Final ECP”) for the

Premises will be prepared and signed by the Parties, after the expiration or earlier termination of this Lease.

The Lessee, at the Lessee’s sole cost, using an environmental professional acceptable to the Government, shall prepare the Final ECP in the format specified in Army Regulation 200-1, as amended, revised or replaced. The Final ECP will document the environmental conditions and matters on and affecting the

Premises on the Ending Date of the Lease as determined from the records and analyses reflected therein.

The final ECP will be used by the Government in determining whether the Lessee has fulfilled its obligations to maintain and restore the Premises under this Lease including without limitation, Section 4 and Section 6.

SECTION 2—RENT, ADDITIONAL RENT, REIMBURSEMENTS, AND TAXES

2.01. Rent.

[INSERT APPROPRIATE BASE RENT AND PAYMENT REQUIREMENT. AS A GENERAL RULE,

CASH WILL BE THE PREFERRED METHOD OF CONSIDERATION.]

2.01(a). Base Rent. The Lessee shall pay to the Government Base Rent of _________________________

($_____,_____.___) for each month/quarter/year of the Term.

2.01(b). Proration of Base Rent. If the Term does not begin on the first day or end on the last day of a month, the Rent for that partial month shall be prorated by multiplying the monthly Rent by a fraction, the numerator of which is the number of days of the partial month included in the Term and the denominator of which is the total number of days in the full calendar month.

2.02. Additional Rent.

2.02(a). Calculation of Additional Rent. In addition to Base Rent, the Lessee shall pay to the

Government, Additional Rent for each Lease Year during the Term or any Extension Period, or fractional part thereof, equal to [INSERT AMOUNT OF PERCENTAGE]% of all Gross Receipts derived with respect to the Premises during each Lease Year. As used in this Lease, the term “Lease Year” shall mean the twelve (12) full calendar months between the period January 1 through and including December 31;

provided, however, that if the Beginning Date or the commencement of the Extension Period of this Lease is other than January 1, the first Lease Year shall be the period immediately following the Beginning Date or the commencement of the Extension Period of this Lease up to and including the December 31st next succeeding. The Government reserves the right, at its sole election, to change the Lease Year to any other fiscal or twelve (12) month period selected by the Government. Each Lease Year shall be considered as an independent accounting period for the purpose of computing the amount of Percentage Rent due, if any.

The amount of Gross Receipts for any Lease Year shall not be carried over into any other Lease Year.

2.02(b). Payment of Additional Rent. Additional Rent shall be paid on a monthly/quarterly/yearly basis fifteen (15) days after the last day of the month in which the percentage of Gross Receipts are first due for the applicable Lease Year and thereafter shall be paid monthly/quarterly/yearly on the fifteenth (15th) day after the end of each succeeding period until all Additional Rent due for such Lease Year has been paid.

Each such payment of Additional Rent shall be in an amount equal to the amount of Additional Rent accruing during the immediately preceding period. If the commencement date is other than the first (1st) day of the calendar month, the Gross Receipts during the period of the first fractional month shall be added to the Gross Receipts during the next succeeding calendar month.

2.02(c). Definition of “Gross Receipts”. As used in this Lease, the term “Gross Receipts” shall mean all revenues received by the Lessee relating to the Premises. Each charge or sale upon installment or credit shall be treated as a sale for the full price in the month during which such charge or sale is made. No deduction shall be allowed for uncollectible credit accounts. Each lease or rental of merchandise shall be treated as a sale for a price equal to the total rent payable in the month during which such lease or rental is made.

2.02(d). Lessee’s Statements and Records. The Lessee shall submit to the Government on or before the fifteenth (15th) day following the end of each Additional Rent payment period during the Lease Term:

(i) a written statement signed and certified by the Lessee, showing the amount of Gross Receipts derived from the business conducted in or from the Premises during the preceding Additional Rent payment period; and

(ii) the remittance of the Percentage Rent due, if any. The Lessee shall further submit to the

Government on or before the thirtieth (30th) day following the end of each Lease Year a written statement, signed and certified by the Lessee and an independent certified public accountant to be true and correct, showing the amount of such Gross Receipts during the preceding Lease Year.

The statements referred to herein shall be in such form and style and contain such details and breakdown as the Government may reasonably require.

2.02(e). Lessee’s Retention of Records. The Lessee shall prepare and maintain for a period of three (3) years following the end of each Lease Year, accurate books of account and records of all relevant information from which the Gross Receipts upon the Premises can be determined.

2.02(f). Default and Audit Provisions. Upon five (5) days’ prior written notice to the Lessee, the

Government shall have the right to cause a complete audit to be made of all business affairs conducted on the Premises by the Lessee and of all books and records pertaining thereto, and the Lessee shall be required to make all such books and records available for such examination at the office where such records are regularly maintained. If the results of such audit shall show that the Lessee’s statement of Gross Receipts for any period has been misstated by three percent (3%) or more, then the Lessee shall pay to the

Government the cost of such audit and, in addition, any deficiency payment required as shown by such audit. If the Lessee omits to prepare and deliver promptly any quarterly, annual or other statement required by the foregoing Additional Rent provisions, the Government may elect to treat the Lessee’s omission as a substantive breach of this Lease entitling the Government to terminate this Lease and the Lessee’s right to possession of the premises, or to make an audit of all books and records of the Lessee, including its bank accounts, which in any way pertain to or show Gross Receipts, and to prepare the statement or statements which the Lessee failed to prepare and deliver. Such audit shall be made and such statement or statements shall be prepared by an auditor to be selected by the Government. The statement or statements, so prepared, shall be conclusive on the Lessee, and the Lessee shall pay all expenses of the audit and other services.

203. Renewal Rent. Base Rent during the Extension Period (“Renewal Rent”) shall be calculated at the then current market rental rate for unimproved land located in or about the Installation and being put to the same use as the Premises at the time of the commencement of the Extension Period (“Market Rate”).

Notwithstanding the foregoing, in no event shall the Renewal Rent be less than the Base Rent payable during the last year of the Term of this Lease. Government and Lessee shall reasonably negotiate the amount of Renewal Rent for the Extension Period within thirty (30) days after Government's receipt of

Lessee's Renewal Notice based on the requirements of this Paragraph 2.03. The Parties agree to execute an amendment modifying this Lease to set forth the Renewal Rent for the Premises during the Extension

Term.

2.04. Rent Escalation. On each five-year anniversary of the Beginning Date, Base Rent, Renewal Rent, and Additional Rent (collectively “Rent”) shall increase from the Rent from the previous period by the greater of either 110% or a percentage equal to the percentage increase in the CPI from the first month of the previous period to such anniversary date. The term “CPI” as used herein shall mean Consumer Price

Index for All Urban Consumers (CPI-U), All Items, INSERT APPLICABLE CPI-U, issued by the Bureau of Labor Statistics of the United States Department of Labor. If the CPI-U is discontinued, the Government may substitute the CPI-U with another comparable index published by an agency or department of the

United States. Similarly, the Government may make reasonable adjustments in calculating the CPI increase based on changes to the CPI-U, such as the base year or month in which the CPI-U is published.

2.05. Reimbursements. All sums other than Base Rent and Additional Rent payable by the Lessee to the

Government under this Lease, including but not limited to all items of reimbursement, such as reimbursement for police and fire protection services and water provided by the Government, shall be collectively deemed reimbursements (“Reimbursements”). Any request by the Government to the Lessee for Reimbursements under this Lease shall identify the expenses included in such reimbursement request and the account into which such Reimbursements must be paid. The Lessee shall pay all Reimbursements when due without deduction or offset, unless specifically provided under this Lease.

2.06. Rent Payments. For the purposes of this Lease, Base Rent and Additional Rent shall sometimes be collectively referred to as “Rent.” All Rent and Reimbursements shall be paid:

(i) without advance notice, demand, offset, or deduction;

(ii) by the first day of each month/quarter/year during the Term; and

(iii) to the Government at [FOR BASE AND ADDITIONAL RENT, SPECIFY TYPE OF RENT

AND WHERE IT IS TO BE RECEIVED], or as otherwise provided in this Lease or as the

Government may specify in writing to the Lessee.

2.07. Receipt of “In-Kind” Consideration.

2.07(a). Identified “In-Kind” Consideration. The Government and the Lessee have identified specific in-kind consideration to be provided under this Lease as set forth in the Site Work Agreement attached hereto as Exhibit G, and made a part hereof. The work order specifies the value of the in-kind services to be received under this Lease. If the value of such services is below the cash consideration identified in

Paragraph 2.01, the Lessee shall pay the difference between the Rent and the value of the in-kind services in cash, as more specifically set forth in Paragraph 2.06, above. The Lessee acknowledges that the

Government reserves, in its sole discretion, the right to terminate any such Site Work Agreement (as provided therein) and to receive cash consideration for this Lease.

2.07(b). Future “In-Kind” Consideration. In lieu of the receipt of cash payments as described in subparagraphs 2.01 and 2.02, above, the Government, via the Army Garrison at [INSERT

INSTALLATION NAME] (“Garrison”) at any time may elect to receive “in-kind” consideration as authorized under 10 U.S.C. § 2667(c). In the event the Garrison elects to receive in-kind consideration, it will notify Lessee of such election. The Garrison’s notice will contain a list of projects to be agreed upon by the Garrison and Lessee. Within a reasonable time the Garrison and Lessee will agree upon a specific project (or a specific list of projects), the project costs, and timelines for completion. Lessee shall continue to make cash payments as set forth in subparagraphs 2.01 and 2.02, above, until a final agreement to provide in-kind consideration is executed. The final agreement with respect to any in-kind consideration to be provided by Lessee will be more specifically set forth in one or more Site Work Agreements. Upon execution of a Site Work Agreement, Lessee’s obligations to make cash payments under subparagraphs

2.01 and 2.02, above, shall be adjusted to the extent of the in-kind consideration being received under the

Site Work Agreement. The provision by Lessee of in-kind consideration under a Site Work Agreement shall fulfill Lessee’s obligation to pay Rent to the extent of the value of the provided in-kind consideration, as set out in a Site Work Agreement. Failure of the parties to agree upon the terms of a Site Work

Agreement shall not constitute a default by the Lessee under this Lease. Notwithstanding the foregoing, Lessee’s failure to provide in-kind consideration as set forth in an executed Site Work Agreement shall constitute a default under this Lease.

2.07(c). Lease Conformance to Facilitate Receipt of “In-Kind” Consideration. In order to facilitate the

Government’s receipt of “in kind” services as authorized under 10 U.S.C. § 2667(c), the Parties hereby agree to cooperate in amending this Lease, as appropriate, to identify the in-kind consideration to be provided.

2.08. Penalty Charges.

2.08(a). Assessment of Penalty Charges. If the Lessee fails to fully pay any Rent or Reimbursement within ten (10) business days after it is due, the Lessee shall also pay:

(i) interest, consistent with the Debt Collection Act of 1982 (31 U.S.C. § 3717), as amended, from the due date at the rate prescribed by the Secretary of the Treasury for amounts past due to the

Federal government until paid in full;

(ii) an administrative charge to be determined by the Government to cover the costs of processing and handling delinquent debts; and

(iii) an assessment of an additional penalty charge equal to 18 percent per annum or the maximum then allowed by applicable law, whichever is less, on any portion of a debt that is more than 90 days past due on the remaining unpaid balance, retroactive to the date originally due until paid.

2.08(b). Payment of penalty Charges. All payments received will be applied first to any accumulated interest, administrative and penalty charges and then to any unpaid Rent or other payment balance. Interest will not accrue on any administrative or late payment penalty charges. No interest or administrative charges shall be imposed by the Government on any late payment if the Lessee pays the amount due within

30 days after receiving written notice from the Government that such amount is past due and the amount thereof. This 30-day period may be extended at Government’s sole discretion. No penalty shall be imposed by the Government on any late payment if the Lessee pays the amount due within 90 days after receiving written notice from the Government that such amount is past due and the amount thereof.

Notwithstanding the foregoing, the Government shall not impose any interest, administrative charge or penalty upon the Lessee while the Lessee, in good faith, is disputing the amount of the payment, so long as the Lessee pays to the Government any undisputed amount thereof.

2.09. Taxes.

(i) Before delinquency the Lessee shall be responsible for paying all taxes, assessments and similar charges on the Premises applicable to the Term of this Lease. The term "taxes" as used in this Lease shall include all real property taxes on the improvements, the Premises on which the improvements are situated, and the various estates in the building and the land. The term "taxes" shall also include all personal property taxes levied on the property used in the operation of the improvements; taxes of every kind and nature levied and assessed in lieu of, in substitution for, or in addition to, existing or additional real or personal property taxes on the improvements, Premises, or personal property, whether or not now customary or within the contemplation of the parties to this Lease.

(ii) If and to the extent the leased property comprising the Premises is later made taxable by State or local governments under an Act of Congress, this Lease shall be renegotiated.

SECTION 3—REPRESENTATIONS, WARRANTIES, AND COVENANTS

3.01. Lessee’s Representations, Warranties, and Covenants.

3.01(a). Lessees Representations, Warranties, and Covenants. The Lessee hereby makes the following representations, warranties and covenants, solely for the benefit of the Government and its respective successors and assigns, as of the Beginning Date:

(i) During the Term of this Lease, the Lessee shall use the Premises solely for the uses of the

Premises set forth in this Lease.

(ii) The Lessee is a duly organized, validly existing INSERT TYPE OF ENTITY and in good standing under the laws of the State of STATE NAME.

(iii) The persons executing this Lease on behalf of the Lessee have the full right, power and authority to execute and deliver this Lease as the Lessee’s act and deed and to bind the Lessee hereto. The Lessee has the full right, power and authority to obtain, and has obtained all necessary authorizations and consents, to enter into and perform its obligations under this Lease.

(iv) This Lease is a legal, valid and binding obligation of the Lessee, enforceable against the Lessee in accordance with its terms.

(v) The execution and delivery of this Lease by the Lessee will not result in a breach of the terms or provisions of, or constitute a default (or a condition that, upon notice or lapse of time, or both, would constitute a default) under its organizational documents or any indenture, agreement or obligation by which the Lessee is bound, and will not constitute a violation of any applicable laws.

(vi) The Lessee has not incurred, directly or indirectly, any obligation to pay any real estate commission, brokerage commission or finder’s fee to any agent, broker, salesperson or finder in connection with this transaction.

3.01(b). Opinion of Counsel. At closing the Lessee shall provide a written opinion of counsel as to the enforceability of this Lease agreement.

3.02. Government’s Representations, Warranties, and Covenants. The Government hereby makes the following representations, warranties and covenants, solely for the benefit of the Lessee, the Approved

Mortgagee and their respective successors and assigns hereunder, as of the Beginning Date:

(i) The Government has full right, power and lawful authority to enter into this Lease on behalf of the United States of America in accordance with the terms hereof and to grant the estate demised hereby, and the person executing this Lease on behalf of the Government has the full right, power and authority to execute and deliver this Lease and to bind the Government hereto.

(ii) This Lease is a legal, valid and binding obligation of the Government, enforceable against the

Government in accordance with its terms.

SECTION 4—ENVIRONMENTAL MATTERS

4.01. Lessee’s Compliance with Environmental Laws. The Lessee shall comply, at its sole cost and expense, with all Environmental Laws that are or may become applicable to the Premises or the Lessee’s activities on the Premises, including but not limited to all applicable federal, state, and local laws, regulations, and other requirements relating to occupational safety and health, the handling and storage of hazardous materials, and the proper generation, handling, accumulation, treatment, storage, disposal, and transportation of hazardous wastes. The Lessee shall at its own expense maintain in effect any permits, license or other governmental approvals relating to Hazardous Substances, if any, required for the Lessee’s use, and cause each sub lessee to maintain in effect any such permits, license or other governmental approvals, if any, required for such sub lessee’s use, of the Premises. The Lessee shall make all disclosures required of the Lessee by any such Environmental Laws, and shall comply with all orders, with respect to the Lessee’s and its sub lessees’, employees’, agents’, contractors’ and invitees’ use of the Premises, issued by any governmental authority having jurisdiction over the Premises and take all action required by such governmental authorities to bring the Lessee’s and its sub lessees’, employees’, agents’, contractors’ and invitees’ activities on the Premises into compliance with all Environmental Laws affecting the Premises.

4.02. Required Government Approval. The Lessee must obtain written Government approval as required by 10 U.S.C. § 2692, prior to storing, treating, or disposing of any toxic or hazardous material on the

Premises. Toxic or hazardous material includes any material that is a “hazardous substance” under section

101(14) of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42

U.S.C. § 9601(14), or designated a “hazardous substance” by the U.S. Environmental Protection Agency under section 102 of CERCLA, 42 U.S.C. § 9602. Toxic or hazardous material also includes any material that is explosive, flammable, or pyrotechnic. The Lessee shall ensure any sub lessees, licenses, rights of entry, or other use agreements the Lessee issues for the Premises contain a similar requirement for obtaining prior Government written approval for the storage, treatment, or disposal of toxic or hazardous material on the Premises. The Lessee shall be responsible for any violations of these requirements by its agents, sub lessees, licensees, contractors or invitees, and any successor or successors in interest in or to any of the Premises. The Lessee shall be responsible for the cost of proper disposal of any hazardous waste generated by its agents, sub lessees, licensees, contractors or invitees, and any successor or successors in interest in or to any of the Premises in the event of failure by them to dispose such wastes properly.

4.03. Definitions.

4.03(a). Hazardous Substance. Notwithstanding Paragraph 4.02, the term “Hazardous Substance’’ means any substance that is at any pertinent time defined or listed in, or otherwise classified, designated, or regulated pursuant to, any Environmental Law as a hazardous substance, hazardous material, extremely hazardous substance, hazardous waste, hazardous chemical, infectious waste, toxic substance, toxic pollutant or solid waste, or any other legislative or regulatory formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, including, without limitation, friable asbestos and polychlorinated biphenyls and also including oil and petroleum, petroleum products, by-products and wastes, and by-products associated with the extraction, refining, or use of petroleum or petroleum products, whether or not so defined, listed, classified, designated or regulated in “Environmental Laws.’’

4.03(b). Environmental Law. The term “Environmental Law’’ means any statute, law, act, ordinance, rule, regulation, order, decree, or ruling of any Federal, State and/or local governmental, quasi-governmental, administrative or judicial body, agency, board, commission or other authority relating to the protection of health and/or the environment or otherwise regulating and/or restricting the use, storage, disposal, treatment, handling, release, and/or transportation of Hazardous Substances, including, without limitation, CERCLA, the Resource Conservation and Recovery Act, the Federal Water Pollution Control

Act, the Clean Air Act, the Hazardous Materials Transportation Act, the Toxic Substances Control Act, the

Emergency Planning and Community Right To Know Act, and the environmental control laws of the State of STATE NAME, each as now or hereafter amended, and all regulations and interpretive guidelines respectively promulgated thereunder.

4.04. Lessee’s Indemnification. The Lessee shall indemnify and hold harmless the Government, from any and all claims for damages, costs, expenses, liabilities, fines, or penalties, including the Government’s cost of defending against such claims, arising from or caused in whole or in part, directly or indirectly, by:

(i) the presence in, on, under, or about the Premises or any discharge or release in or from the

Premises of any Hazardous Substance, to the extent that any such presence, discharge, or release is caused by the Lessee’s activities, or the activities of any of the Lessee’s sub lessees, employees, agents, contractors or invitees, or

(ii) The Lessee’s failure to comply with its covenants under this Section 4.

The indemnity obligations created by this Paragraph 4.04 shall include, without limitation, whether foreseeable or unforeseeable, any and all costs incurred in connection with any site investigation, and any and all costs for repair, cleanup, detoxification or decontamination, or other remedial action of the

Premises. This obligation shall survive the expiration or termination of this Lease, and the Lessee’s obligations hereunder shall apply whenever the Government incurs costs or liabilities for the Lessee’s actions of the types described in this Section 4.

4.05. Required Notices and Government Right of Inspection.

4.05(a). Required Notices. If at any time either Party shall become aware, or have reasonable cause to believe, that any Hazardous Substances have been released or have otherwise come to be located on or beneath the Premises, in amounts greater than either the Hazardous Substances’ reportable quantities or a level requiring response action(s) under an Environmental Law, such Party shall immediately upon discovering the release or the presence or suspected presence of the Hazardous Substance, give written notice of that condition to the other Party. In addition, the Party first learning of the release or presence of a Hazardous Substance on or beneath the Premises, shall immediately notify the other Party in writing of:

(i) any enforcement, cleanup, removal, or other governmental or regulatory action…