1. LEASE ACQUISITIONS – WARTS N’ ALL
Presented By:
Susan Parker Myers, Esq Hour Fitness USA, Inc.
Gregg Ankenman, Esq. Wendel, Rosen, Black & Dean LLP

2. Introduction

3. Overview of what we will discuss:
Alternative deal structures Administrative and legal process for acquiring and integrating an existing lease or group of leases Particular lease clauses that impact transferability and integration of leases

4. We Will Discuss Issues in Three Broad Categories:
Threshold issues Key operational and legal issues General consistency with existing lease portfolio

5. Fundamental Requirements for Deal to Work
Threshold Issues
Fundamental Requirements for Deal to Work

6. Deal Structure Alternatives
Lease Assignment Sublease Acquisition of Stock/Ownership Interest Acquisition in Bankruptcy

7. Assignment/Sublease Rights and Requirements
Landlord consent required?
Standards: Reasonability vs. Sole Discretion
Requirements
New worth and other financial
Management and operating experience
Critical mass
Timing

8. Will Transaction Trigger Negative Consequences?
Rent increase? CAM or other NNN charge reset? Recapture/termination rights

9. Transferability of Key Tenant Rights
Renewal Options
Exclusive Use
Co-Tenancy
Kick Out Rights

10. Permitted Uses/Trade Name
Is use restricted? Reasonableness standard for landlord consent to use change? Is landlord consent required to change trade name? Will any existing exclusive or prohibited uses prevent anticipated use?

11. Key Operational Issues
Can You Operate Your Business Under the Lease?

12. Radius Restrictions
Will this location trigger a radius violation in an existing lease? Will an existing location trigger a violation in the to be acquired lease?

13. Operating Covenant/Penalties
Is there an operating covenant? Negotiated right to go dark? Will location be closed during transition? Will closing trigger a default, penalties or termination right?

14. Required Hours of Operation
Are required days and hours of operation workable?
What are the penalties?

15. Alterations/Signage Initial remodel/signage Seasonal signs/displays
Be sure you can convert premises into your store
Seasonal signs/displays
Are your standard marketing practices allowed?

16. Percentage Rent
Do percentage rent rate and structure fit anticipated new operation? Adequate gross sales definition and exclusions?

17. Parking Rights and Protections
Is parking adequate in number and proximity of spaces? Are there exclusive or prohibited parking areas? Protected area? After hours lighting and access?

18. Exclusive Use Rights
Are there exclusive use rights? Do rights protect anticipated use after transfer? Do protected uses allow for use as it may evolve over time?

19. Relocation Does landlord have right to relocate the premises?
Are parameters for relocated premises adequate?
Are triggering events acceptable?

20. General Lease Consistency With Portfolio

21. General Lease Consistency With Portfolio
Consider other lease clauses important to your business or leasing practices Evaluate risks and practical concerns from inconsistencies with lease portfolio

22. General Lease Consistency With Portfolio
Compliance with laws Maintenance and repair Obligation to remove improvements on surrender NNN protections and cap Rights to do future corporate transactions and assignments/subleases

23. General Lease Consistency With Portfolio
Defaults and remedies
Adequate notice and cure periods
Rent acceleration
Obligation to repay tenant improvement allowance
Get estoppel

24. General Lease Consistency With Portfolio
Timing of payments and reports Non-disturbance Effect of default by original tenant

25. Remember – Look Before You Leap.

26. Wendel, Rosen, Black & Dean LLP
Thank You
Presented By:
Susan Parker Myers, Esq.
24 Hour Fitness USA, Inc.
Gregg Ankenman, Esq.
Wendel, Rosen, Black & Dean LLP