HMC Eviction

Re : End of the commercial lease - Le Hameau du Glacier

We are addressing you this letter in order to draw your attention, considering the legal provisions currently in force, to the various options available to you when the lease that you have granted to the company SAS HMC Les Arcs 1950 will come to an end.

1 - Date at which the lease becomes operative - End of the lease

When you made the acquisition of apartment 519 in building Le Hameau du Glacier - ARC 1950 in the city of BOURG SAINT-MAURICE, you signed a commercial lease contract with the company SAS HMC Les Arcs 1950 for a period of eleven years from the date at which the lease became operative.

According to the said lease, the date at which the lease would become operative has been set down as "the day following the date of delivery to the lessor by the vendor of the premises, at 00h00, or on the date of the signature of the lease if the said signature occurs subsequently to the date of delivery of the property". It has been specified that "the lease will be terminated on the 3dh of April following the eleventh anniversary of the date at which the lease has become operative." The lease has become operative on 11 December 2003, therefore, it will be ended on 30 April 2015, subject to the prior respect of the legal provisions which entitles you to obtain the release of the premises by the tenant (such as more fully developed below, under paragraph 3).

2 - Your options during the year preceding the end of the lease

During the yeaf preceding the end of the lease and at least 6 months before the said end, you will have

three options, you may:

(i) Either offer the renewal of the lease to the tenant, the renewal intervening for a period of 9 years (the tenant would then benefit from an opportunity to terminate the contract every three years), and the rent being fixed following the statutory rules;

(ii) Or take the necessary steps (explained hereinafter) in order to put an end to the lease and take possession of the rented premises back;

(iii) Or do nothing and let the lease go on beyond its contractual end for an undetermined period which can be terminated at any time by both parties by serving a writ with a six-month notice.

3 - Non-renewal of the current lease

The subject matter of this letter is to give you precise information on the steps to take if you were willing, at the end of the lease, not to renew the current lease and to take possession of the rented premises back.

We would also like to remind you the fiscal provisions currently in force and applicable to the case where the lessee's exploitation would be ended less than 19 years after the date of acquisition of the premises.

3. 1 - A few general principles of French law - Renunciation to the right of renewal of the lease and to the payment of a compensation for eviction by SAS HMC LES Arcs 1950

The French law of commercial lease currently in force creates under certain circumstances (usually combined by the tenant) a legal right which entitles the tenant to obtain the renewal of its lease at the end of the said lease. For lack of such an offer of renewal, the lessor has to indemnify the tenant for the loss due to the non-renewal of the lease with a compensation of eviction.

However, the tenant may legitimately renounce to his right to the renewal of the lease or to any compensation for eviction.

According to a letter signed by Monsieur Philippe BURGUE, legal representative of the company which is renting the premises, notarized in PARIS (75008), 77 boulevard Malesherbes, and a copy of which is appended to the present letter, the company SAS HMC Les Arcs 1950 has unilaterally renounced to its right to ask from you the renewal of its lease when the latter will come to its end and to ask for a compensation of eviction should the lease not be renewed.

However, we would like to draw you attention to the fact that this unilateral renunciation does not imply that the premises will actually be released by the tenant at the end of the lease.

The French law currently in force provides indeed that, in order to actually put an end to the lease, the lessor ought to serve a writ to the tenant, at the latest six months before the term of the lease, that is to say 30 October 2014 at the latest.

During the year preceding the end of the lease, possible evolutions of the legal provisions - such as the time limit before serving the tenant with the notice - will have to be checked

Should there be no notice, the lease would continue as of right for an unspecified period which can be ended at any time by both parties. If the lease should continue beyond its term, the current case law does not assure you that you would be entitled to the unilateral renunciation of the lessee about which it has been talked above.

3.2 Reminder of the fiscal provisions applicable in case of non renewal of the lease

When you will make your decision, the fiscal consequences of the choice of recovering the rented premises should be taken into account, considering the fiscal regulations applicable at this date.

We are wishing to remind you the fiscal regulations currently in force, which already are in the deed of purchase.

We have thus joined an extract of the deed of purchase:

PARTICULAR RULES OF THE FISCAL REGIME IN THE EVENT OF SALE OF THE PREMISES DURING THE PERIOD OF THE CURRENT LEASE

In the event of a sale before the commencement of the nineteenth year following the year of acquisition or completion of the property complex of which the properties the subject-matter hereof form part, the Purchaser shall be obliged to make a payment of VAT under the conditions provided by Article 210 of Schedule /I to the General Taxation Code, the contents of which are as follows:

Article 210 - Article 1 - When buildings are sold or transferred before the commencement of the nineteenth year following the year of their acquisition or completion and the sale or transfer is not subject to the tax on the total price or total value of the building, the taxpayer shall be liable to pay a fraction of the tax previously deducted. This fraction shall be equal to the amount of the deduction less one-twentieth per year or fraction of a year expired since the date on which the building was acquired or completed. The sale of the business or the termination of the operations giving rise to the right .to the deduction, as well as transfers between different sectors of businesses of a taxpayer as provided in Article 213, shall be treated as a sale or transfer. When the right to deduction did not arise until after the date of acquisition or completion of the building, the date on which the right of deduction arose shall be substituted for that date. When a building purchased or constructed with a view to sale is used directly by the taxpayer, the date of first use shall be substituted for that of the acquisition or completion.