MEMORANDUM OF LEASE
THIS LEASE made this 15th day of April, 2010, by and between OCEAN PINES ASSOCIATION, INC., a Maryland corporation, hereinafter called "Lessor", and O.C. SEACRETS, INC., a Maryland Corporation, hereinafter called "Lessee" and LEIGHTON W.MOORE, JR., hereinafter called "Guarantor":
WHEREAS, The parties hereto have previously entered into lease agreements whereby certain property owned by Lessor was leased to Lessee (the obligations of which leases were guaranteed by Guarantor), and which said Lease provisions were the subject of memoranda dated November 1, 1999, and, thereafter, for subsequent terms of four years;
and WHEREAS, the last Lease is dated November 1, 2008 and is in effect but the parties have agreed to terminate the conditions in the November 1, 2008 agreement arid replace the provisions thereof with the terms and conditions set forth herein, in part due to construction of certain improvements by Lessee in the leased area.
NOW THEREFORE, the parties do agree as follows:
1. LEASE OF PREMISES - TERM.
A. Lessor does lease to Lessee and Lessee rents from Lessor all that certain property in the Town of Ocean City, Tenth Tax District of Worcester County, Maryland described as all the tract or parcel of land more particularly as set forth in Exhibit "A".
B. The term of the Lease shall be for a period of five (5) summer season years, commencing on the date set forth hereinabove and terminating on October 31, 2014 for the use of the property including the use of the parking area of Exhibit "A" during daily hours from 5:00 p.m. to 3:00 a.m. The parties further agree that during the time of the year when the Ocean Pines Beach Club is not open (in the off season), the Lessee may use the parking area hereby leased during the hours that the establishment known as "Seacrets" is open. Lessor shall notify Lessee on or before April 15 of each lease year as to the operating schedule of the Ocean Pines Beach Club.
C. Provided that the Lessee is in good standing under this Lease, the Lessee shall have a right of first refusal to purchase the real property described on Exhibit "A" attached hereto ("Property") on the same terms and conditions of any bona fide offer received by the Lessor. The Lessor shall give written notice of Lessee's right of first refusal to any prospective purchaser of the Property, and shall give written notice to Lessee within three (3) business days of the terms and conditions of any offer received. Any such offer must be accepted or rejected by the Lessee or the Guarantor within ten (10) days of receipt. A Right Of First Refusal
Agreement in the form attached hereto as Exhibit "B" shall be executed by the Lessor and Lessee and recorded among the Land Records of Worcester County, Maryland.
2. RENTAL. The rental for the term set forth above shall be as follows:
(a) Forty Thousand Dollars ($40,000.00) for the first year of the Lease which said term begins on the date hereof and ends October 31, 2010;
(b) Forty Two Thousand Dollars ($42,000.00) for the second year of the Lease;
(c) Forty Four Thousand One Hundred Dollars ($44,100.00) for the third year of the Lease;
(d) Forty Six Thousand Three Hundred Five Dollars ($46,305.00) for the fourth year of the Lease;
(e) Forty Eight Thousand Six Hundred Twenty Dollars ($48,620.00) for the fifth year of the Lease .
(f) The Lease payment due and payable for the first year of the Lease shall be paid on or before the 1st day of August 2010; and all subsequent Lease payments shall be due and payable on August 1 of each subsequent Lease year.
3. PROPERTY DESCRIPTION.
(a) The property described in Exhibit "A" hereof includes all of the parcel as shown on the Plat attached to and recorded with the Deed and as set forth in Schedule "A".
The property contains 1.33 acres of land of which, a portion of 0.63 acre is an approximate wetland area, and the remainder of the area westerly thereof within the boundary line of the property is in the waters of Isle of Wight Bay. The majority of the property landward of the waters of Isle of Wight Bay is utilized for parking purposes and, Lessee shall utilize the property for parking only with the exception of certain improvements heretofor made within the leased property including a sound wall extending onto the parking area, installation of dining booths used for food and beverage service, and construction of storage/restroom facilities, all for "Seacrets" nightclub which extend onto Lessors property, which said improvements have been constructed by Lessee and which said improvements are hereby acknowledged by Lessor. The parties agree that no further construction or extension thereof shall encroach onto Lessors property, without prior written consent of the Board of Directors and any additional unapproved construction may be removed by Lessor at Lessee's sole expense. If any such additional encroachment is to remain, Lessee shall pay additional rent for same, as determined by Lessor.
(b) Lessee agrees (and Guarantor acknowledges and agrees) that all such construction extensions noted in Paragraph 3(a) above shall be removed, at the termination of the Lease or any extensions hereof, and that all work to remove all such construction shall be done in a good and workmanlike manner and the Property shall be left completely clean and free from any and all debris and trash regarding or relating thereto.
4. USE OF PREMISES. With the exception of the constructed improvements denoted in Paragraph 3 above, the leased property shall be used for Lessee's guests, customers and employee parking only, and Lessee shall utilize the property for no other purpose, without the prior written consent of Lessor.
5. MAINTENANCE OF PROPERTY.
(a) Lessee will maintain the property in good, presentable condition in accordance with the requirements of the Town of Ocean City, and shall maintain, utilize and obtain, if required, all permits necessary from the Town of Ocean City and any other governmental authority, for the use of the property as set forth herein.
(b) Lessee shall be responsible for the removal of all trash from the parking lot on a daily basis. Such removal shall include the parking area itself, any drainage areas, and any landscaping areas adjacent to said lot including the areas to the west thereof which are not presently intended to be improved for parking.
6. SIGNAGE. Lessee shall, subject to the prior approval of Lessor, be entitled to erect a sign denoting the leased area as parking for "Seacrets" and for the Ocean Pines Association members; and further, shall provide such notice on site as is required by the Code of Ocean City so as to advise users thereof and the public in general that any motor vehicles left on the premises after 3:00 a.m. shall be towed or removed and Lessee shall be responsible for the removal of all such automobiles on a daily basis remaining after the hour of 3:00 a.m. (said motor vehicles to be removed from the premises prior to 8:00 a.m.). This requirement shall be in effect during the season when the Ocean Pines Beach Club is open for use by its members.
Lessee shall not allow long term parking on the leased property during any time of the year.
Lessee shall be accorded access between the properties located south and north of the property, across the Lessor's property in order to facilitate parking for Lessee's use. Said access will not interfere with Lessor's use of property for members or guest parking, in the manner and at the times set forth herein.
7. SECURITY. Lessee shall be responsible to provide adequate security for the premises so as to effectively avoid vandalism, malicious mischief, and other obnoxious activities on the premises during the hours of use by Lessee.
8. INSURANCE; INDEMNITY BY LESSEE. Lessee shall carry Commercial General Liability Insurance or its equivalent in an amount not less than One Million Dollars ($1,000,000.00) per occurrence, and shall name the Lessor as additional insured, and shall provide proper certificates of insurance to the Lessor. Lessee will hold Lessor harmless for any damages which may occur to customers vehicles while parked on the lot during the specified times contained in Paragraph 1.
In addition, Lessee shall indemnify and save Lessor harmless from any claims or occurrences which occur on the premises related to Lessee's use of the premises or of its guests, customers or employees and will fully defend Lessor from any and all such claims.
9. ADDITIONAL PAYMENT BY LESSEE. Lessee shall, in addition to the payments under this Lease, be solely responsible for the payment of all State and County real estate taxes, which have been assessed as a result of the imposition of this Lease. Lessee shall pay same promptly upon receipt of any tax bill, either directly from the taxing authority, or through the Lessor's notification to Lessee. Lessee shall have the right to appeal all assessments levied by the State, County or City during the term of the Lease to the appropriate taxing authorities at Lessee's sole expense.
10. UTILITIES. Lessee shall maintain all electric utilities placed upon the premises in its sole name so as to cause the supplier of electricity to bill it directly for the cost of all electrical service provided to the property.
11. RIGHT OF ENTRY AND REPOSSESSION. The parties hereto recognize and agree that this Lease is a commercial lease and not a residential lease as defined by Maryland law.
If the said rent or any portion thereof shall be in arrears or unpaid for a period of fifteen (15) days after written notice to Lessee as provided for in Paragraph 14 hereof, or in the event that any covenant of this lease be breached and remain breached for a period of thirty (30) days after written notice to Lessee as provided for in Paragraph 14 hereof, this Lease shall become null and void if the Lessor shall so elect, and the Lessor, its successors, may re-renter upon the premises and hold the same as if this lease had not been made, without Lessor being deemed guilty or becoming liable for any loss or damage thereby. Lessor shall also have all rights afforded by the Laws of the State of Maryland and the parties hereby expressly waive right to a jury trial with regard thereto for any matters related to this commercial lease.
12. SUBLEASES AND ASSIGNMENT. Lessee shall have no right to sublet said premises or assign this lease or any rights hereto to any Assignee, other than one owned or controlled by Leighton W. Moore, Jr., without the written consent of the Lessor first having been obtained, with the understanding, however, Lessor shall not be required to allow any sublease or assignments. In the event Lessee requests such approval any approval shall be in Lessor's sole discretion.
13. PARTIAL INVALIDITY. If any provision of this Lease or application thereof to any person or circumstances shall to any extent be invalid, the remainder of this Lease or the application of such provisions to persons or circumstances other than those as to which it is held invalid shall not be affected thereby and each provision of this Lease shall be valid and enforceable to the fullest extent permitted by law.
14. NOTICES. It is understood and agreed between the parties hereto that written notice addressed to Lessee Attn: Leighton W. Moore, Jr., Gary Figgs or Mary Handy and mailed certified or registered mail, whether receipt is acknowledged or not, or personally delivered to Leighton W. Moore, Jr., Gary Figgs or Mary Handy or, if none of them are available, to the executive offices located on the Third Floor of O.C. Seacrets at 117 W. 49th Street, Ocean City, Maryland shall constitute sufficient notice to the Lessee hereunder and written notice addressed to Lessor and delivered to Lessor at 239 Ocean Parkway, Ocean Pines, MD 21811 shall constitute sufficient notice to the Lessor hereunder.
15. SURRENDER. Lessee agrees, upon the termination hereof, to quietly surrender the premises unto Lessor in good condition in which the premises were at the commencement hereof, normal wear and tear excepted and in clean condition, as set forth in Paragraph 3(b) hereof.
16. WRITTEN AGREEMENT. This Lease contains the entire agreement between the parties hereto and all previous negotiations leading thereto and it may be modified only by an agreement in writing signed and sealed by Lessor and Lessee. No surrender of the demised premises or of the remainder of the term of this Lease shall be valid unless accepted by Lessor and Lessee.
17. QUIET ENJOYMENT. So long as Lessee is not in default of any terms hereunder, it shall have Quiet Enjoyment of the leased premises.
18. HEADINGS AND TERMS. The headings and the various paragraphs of this Lease have been inserted for convenient reference only and shall not in any manner be construed as modifying, amending or affecting in any way the express terms and provisions hereof. The term "Lessee" when used in this Lease, shall mean any individual, corporation, partnership, firm, trust, joint venture, business association, syndicate, combination organization or any other person or entity and shall be deemed to include heirs, personal representatives, successors and assigns. Words of any gender used in this Lease shall be held to include any other gender, and words in the singular number shall be held to include the plural, when the sense requires.
AS WITNESS the hands and seals of the parties hereto, all as of the day and year first
ATTEST: OCEAN PINES ASSOCIATION, INC.
BY: (SEAL) William
hton W. M
P. Q. Om