The Boathouse Benevolent Society Inc

TO BENEFIT THE UNIVERSITY OF TENNESSEE, SPECIFICALLY WOMEN'S ATHLETICS

THE BOATHOUSE BENEVOLENT SOCIETY, INC. (THE "SOCIETY") WAS CREATED TO BENEFIT THE UNIVERSITY OF TENNESSEE SYSTEM, WITH SPECIAL EMPHASIS ON THE WOMEN'S ATHLETIC DEPARTMENT. MORE SPECIFICALLY, THE SOCIETY WILL CONSTRUCT A THREE-STORY BOATHOUSE ON PROPERTY LEASED TO IT BY THE UNIVERSITY OF TENNESSEE (THE "UNIVERSITY") FOR THE PURPOSE OF HOUSING THE UNIVERSITY WOMEN'S CREW TEAM ON THE FIRST TWO FLOORS OF THE FACILITY. AFTER AN UP-FRONT LEASE PAYMENT, THE SOCIETY WILL LEASE THESE TWO FLOORS TO THE UNIVERSITY ATHLETIC DEPARTMENT FOR A NOMINAL LEASE PAYMENT. THE THIRD FLOOR OF THE BUILDING WILL BE LEASED TO AN UNRELATED PARTY TO OPERATE A RESTAURANT UNDER A NET LEASE ARRANGEMENT. SUBSTANTIALLY ALL OF THE NET PROCEEDS FROM THE LEASE WILL BE CONTRIBUTED TO THE UNIVERSITY SYSTEM TO ENHANCE, PROMOTE AND STIMULATE EDUCATION AND ATHLETIC DEVELOPMENT WITHIN THE SYSTEM. THE UNIVERSITY ATHLETIC DEPARTMENT HAS COMMITTED TO PAY $1.5 MILLION TO THE SOCIETY AS AN UP-FRONT PAYMENT FOR A 25-YEAR LEASE FOR THE FIRST TWO FLOORS OF THE FACILITY.IN ADDITION, THE SOCIETY WILL OPERATE AN UNINCORPORATED ASSOCIATION KNOWN AS THE "THE RIVERCLUB AT THE BOATHOUSE" (THE "RIVERCLUB"). UP TO 56 MEMBERS OF THE RIVERCLUB WILL MAKE AN INITIAL CONTRIBUTION OF $20,000 FOR A LIFETIME MEMBERSHIP. THE BENEFIT OF SUCH MEMBERSHIP IS A GUARANTEED TABLE FOR FOUR AT THE RESTAURANT AT ANY TIME DURING THE YEAR WITH AN ADVANCE NOTICE REQUIREMENT.THE THIRD SOURCE OF REVENUE WILL BE FROM THE LEASE OF THE THIRD FLOOR OF THE FACILITY TO THE UNRELATED ENTITY TO OPERATE A RESTAURANT. THIS LEASE WILL BE A TRIPLE NET LEASE WITH ESTIMATED RENTAL PAYMENTS TO THE SOCIETY OF $80,000 ANNUALLY.THIS ORGANIZATION'S PURPOSE IS TO BENEFIT THE UNIVERSITY OF TENNESSEE, WITH SPECIAL EMPHASIS ON THE WOMEN'S' ATHLETIC DEPARTMENT. THIS PURPOSE WAS ACCOMPLISHED THROUGH THE COMPLETION OF THE CONSTRUCTION OF THE BOATHOUSE. THE FIRST TWO FLOORS OF THE BUILDING ARE UTILIZED SOLELY BY THE UNIVERSITY OF TENNESSEE'S WOMEN'S CREW TEAM. THE THIRD FLOOR OF THIS BUILDING IS LEASED TO AN OPERATING RESTAURANT. CURRENTLY THE RENTAL PROCEEDS ARE BEING USED TO SERVICE DEBT.