EXHIBIT 10.18
XXXXXXXXX LEASE (Lease for each Property in Substantially the Same Form)
LEASE AGREEMENT
BETWEEN
CAPITAL AUTOMOTIVE L.P., LANDLORD
AND
MARYLAND IMPORTED CARS, INC. d/b/a GAITHERSBURG MAZDA, TENANT
DATED: NOVEMBER 21, 1997
ARTICLE I
LEASE AGREEMENT, LEASED PROPERTY AND TERM.................................1
1.01 Lease Agreement..................................................1
1.02 Contingent Upon Acquisition of the Leased Property...............2
1.03 Term.............................................................2
1.04 Holding Over.....................................................3
1.05 Surrender........................................................4
ARTICLE II
RENT......................................................................4
2.01 Base Rent........................................................4
2.02 Payment..........................................................4
2.03 Security Deposit.................................................4
2.04 Base Annual Rent Adjustment......................................5
2.05 Additional Rent..................................................5
2.06 Place(s) of Payment of Rent; Direct Payment of Additional Rent...5
2.07 Net Lease........................................................5
2.08 No Termination, Abatement, Etc...................................5
ARTICLE III
IMPOSITIONS AND UTILITIES.................................................6
3.01 Payment of Impositions...........................................6
3.02 Definition of Impositions........................................7
3.03 Utilities........................................................8
3.04 Escrow of Impositions............................................8
3.05 Discontinuance of Utilities......................................9
3.06 Liens............................................................9
ARTICLE IV
INSURANCE.................................................................9
4.01 Insurance........................................................9
4.02 Insurance Limits................................................11
4.03 Insurance Requirements..........................................11
4.04 Replacement Cost................................................12
4.05 Blanket Policy..................................................12
4.06 No Separate Insurance. .........................................12
4.07 Waiver of Subrogation...........................................13
4.08 Mortgages.......................................................13
4.09 Other Insurance Requirements....................................13
ARTICLE V
INDEMNITY; SUBSTANCES OF CONCERN.........................................14
5.01 Tenant's Indemnification........................................14
5.02 Substances of Concern...........................................14
5.03 Audits..........................................................17
5.04 Landlord's Option Re: Compliance................................17
5.05 Environmental Indemnification...................................17
5.06 Tenant's Cleanup Obligation.....................................18
5.07 Existing Environmental Conditions...............................18
5.08 Survival of Tenant's Obligations................................19
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES...........................................19
6.01 Use of Leased Properties........................................19
6.02 Acceptance of Leased Properties.................................19
6.03 Conditions of Use and Occupancy.................................20
6.04 Financial Statements and Other Information......................20
ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS......................20
7.01 Maintenance.....................................................20
7.02 Compliance with Laws............................................21
7.03 Required Alterations............................................21
7.04 Mechanics' Liens................................................21
7.05 Replacements of Fixtures........................................22
7.06 Encroachments; Restrictions.....................................22
ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTIES...............................23
8.01 Tenant's Right to Construct.....................................23
8.02 Scope of Right..................................................23
8.03 Cooperation of Landlord.........................................24
8.04 Commencement of Construction....................................24
8.05 Rights in Tenant Improvements...................................25
8.06 Personal Property...............................................25
8.07 Requirements for the Tenant's Personal Property.................25
8.08 Financings of Capital Additions to a Leased Property............27
ARTICLE IX
DEFAULTS AND REMEDIES....................................................27
9.01 Events of Default...............................................27
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9.02 Remedies........................................................30
9.03 Right of Set-Off................................................32
9.04 Performance of Tenant's Covenants...............................33
9.05 Late Charge.....................................................33
9.06 Litigation; Attorneys' Fees.....................................33
9.07 Remedies Cumulative.............................................34
9.08 Escrows and Application of Payments.............................34
9.09 Power of Attorney...............................................34
ARTICLE X
DAMAGE AND DESTRUCTION...................................................35
10.01 General.........................................................35
10.02 Landlord's Inspection...........................................35
10.03 Landlord's Costs................................................36
10.04 Rent Abatement..................................................36
10.05 Substantial Damage During Lease Term............................36
10.06 Damage Near End of Term.........................................37
10.07 Risk of Loss....................................................37
ARTICLE XI
CONDEMNATION.............................................................38
11.01 Total Taking....................................................38
11.02 Partial Taking..................................................38
11.03 Restoration.....................................................38
11.04 Landlord's Inspection...........................................39
11.05 Award Distribution..............................................39
11.06 Temporary Taking................................................39
ARTICLE XII
ADDITIONAL REPRESENTATIONS, WARRANTIES AND FINANCIAL COVENANTS...........40
12.01 Organization and Qualification..................................40
12.02 Material Agreements.............................................41
12.03 Changes in Condition............................................41
12.04 Franchises, Licenses, etc.......................................41
12.05 Litigation......................................................42
12.06 Authorization and Enforceability................................42
12.07 No Legal Obstacle to Lease......................................42
12.08 Certain Business Representations................................43
12.09 Certain Financial Covenants.....................................44
12.10 Cash Flow Coverage Ratio Covenant...............................45
12.11 Disclosure......................................................45
12.12 Covenant Not to Acquire.........................................45
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ARTICLE XIII
ASSIGNMENT AND SUBLETTING; ATTORNMENT ...................................46
13.01 Prohibition Against Subletting and Assignment...................46
13.02 Changes of Control..............................................46
13.03 Operating/Service Agreements....................................47
13.04 Assignment......................................................48
13.05 REIT Limitations................................................48
13.06 Attornment......................................................49
13.07 Severance and Spin-Off..........................................49
ARTICLE XIV
ARBITRATION..............................................................50
14.01 Controversies...................................................50
14.02 Appointment of Arbitrators......................................50
14.03 Arbitration Procedure...........................................50
14.04 Expenses........................................................50
14.05 Enforcement of the Arbitration Award............................51
ARTICLE XV
QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT, ESTOPPEL CERTIFICATES........................................51
15.01 Quiet Enjoyment.................................................51
15.02 Landlord Mortgages; Subordination...............................51
15.03 Attornment......................................................51
15.04 Estoppel Certificates...........................................52
15.05 Waiver of Landlord's Lien.......................................52
ARTICLE XVI
RIGHT OF FIRST OFFER.....................................................53
16.01 Right of First Offer During Lease Term or Extension Term........53
16.02 Right to Purchase at End of an Extension Term...................54
ARTICLE XVII
MISCELLANEOUS............................................................55
17.01 Notices..........................................................55
17.02 Advertisement of a Leased Property..............................56
17.03 Landlord's Access...............................................56
17.04 Entire Agreement................................................56
17.05 Severability....................................................57
17.06 Captions and Headings...........................................57
17.07 Governing Law...................................................57
iv
17.08 Memorandum of Lease or Certain Rights Under the Lease...........57
17.09 Waiver..........................................................57
17.10 Assignment; Binding Effect......................................57
17.11 Consents and Approvals..........................................57
17.12 Single Property.................................................58
17.13 Modification....................................................58
17.14 Incorporation by Reference......................................58
17.15 No Merger.......................................................58
17.16 Force Majeure...................................................58
17.17 Laches..........................................................58
17.18 Waiver of Jury Trial............................................58
17.19 Permitted Contests..............................................59
17.20 Construction of Lease...........................................59
17.21 Counterparts....................................................60
17.22 Relationship of Landlord and Tenant.............................60
SCHEDULES
A Leased Properties
B Permitted Liens
C Base Annual Rent Schedule
EXHIBITS
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
12.02 Material Agreements
12.03 Changes in Condition
15.02 Form of Subordination and Non-Disturbance Agreement
v
NO. 11
LEASE AGREEMENT
This Lease Agreement ("Lease") dated as of the 21st day of November,
1997 by and between CAPITAL AUTOMOTIVE L.P., a Delaware limited partnership
("Landlord"), having its principal office at 0000 Xxxxx Xxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxx 00000 and Maryland Imported Cars, Inc. d/b/a Gaithersburg
Mazda, a Maryland corporation, having its principal office at 0000 Xxxxx Xxxxx
Xxxx, Xxxxxxxxx, Xxxxxxxx 00000 ("Tenant").
RECITALS
WHEREAS, Tenant or an Affiliate (as hereafter defined) has conveyed or
will convey to Landlord certain parcels of real estate and improvements thereon
upon which Tenant engages in motor vehicle retail and/or motor vehicle related
businesses (the "Business"), which parcels of real estate and improvements
thereon are described on Schedule A attached hereto and incorporated herein by
reference (each hereinafter a "Leased Property" or collectively, the "Leased
Properties"), and Landlord and Tenant desire to provide for the lease by
Landlord to Tenant of the Leased Properties; and
WHEREAS, Landlord and Tenant desire that each of the Leased Properties
shall be the subject of this Lease and be used by Tenant in its operation of the
Business; and
WHEREAS, this Lease provides that additional real estate and
improvements thereon may be made subject to the operation and effect of this
Lease, upon execution by Landlord and Tenant of a Lease Supplement designating
each such additional property as a Leased Property hereunder.
NOW, THEREFORE, in consideration of the foregoing premises and of
their respective agreements and undertakings herein, and of other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant agree as follows:
ARTICLE I
LEASE AGREEMENT, LEASED PROPERTY AND TERM
1.01 Lease Agreement. Landlord does hereby let and lease unto
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Tenant, and Tenant does hereby take and hire from Landlord, the Leased
Properties, which shall respectively consist of:
(a) The parcels of land described and located at the addresses
listed in Schedule A hereto, as more particularly described
therein, together with any additional parcels of real estate and
improvements thereon subsequently designated as a Leased
Property by the parties pursuant to a Lease Supplement as
provided for herein, together with all rights, titles,
appurtenant interests, covenants, licenses, privileges and
benefits thereto belonging, and any easements, rights-of-way,
rights of ingress or egress or other interests in, on, or to any
land, highway, street, road or avenue, open or proposed, in, on,
across, in front of, abutting or adjoining such real property
including, without limitation, any strips and gores adjacent to
or lying between such real estate and any adjacent real estate
(the "Land");
(b) All buildings, improvements, structures and Fixtures (as
hereinafter defined) now located or to be located or to be
constructed on the Land, including, without limitation,
sidewalks, landscaping, parking lots and structures, roads,
drainage and all above ground and underground utility structures
and conduits (on-site or off-site), equipment systems and other
so-called "infrastructure" improvements (the "Improvements");
(c) All equipment, machinery, fixtures, and other items of real
and/or personal property, including all components thereof,
located in, on or used in connection with, and permanently
affixed to or incorporated into, the Improvements, including,
without limitation, all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control,
waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection
equipment, and similar systems, all of which, to the greatest
extent permitted by law, are hereby deemed to constitute real
estate, together with all replacements, modifications,
alterations and additions thereto (collectively the "Fixtures");
and
(d) All easements, rights and appurtenances relating to the Land and
the Improvements.
SUBJECT, HOWEVER, to the liens, encumbrances, restrictions,
agreements, and other title matters listed or specifically referred to in
Schedule B ("Permitted Exceptions").
The Leased Properties shall however exclude all furniture, equipment,
inventory and items of moveable personal property attached to the Land or
Improvements that relate to the business being conducted on the Leased Property
which items may readily be removed without material damage to the Land and
Improvements whether or not such items might legally be considered to be
"fixtures" (all of which are owned by Tenant and shall hereinafter be defined as
the "Excluded Personal Property").
1.02 Contingent Upon Acquisition of the Leased Property. In the
--------------------------------------------------
event this Lease is executed prior to the conveyance by Tenant or an Affiliate
of the Leased Property to Landlord, the parties acknowledge that the
effectiveness of this Lease in respect of such Leased Property is contingent
upon the closing of such conveyance (the "Commencement Date").
2
1.03 Term. The initial term of this Lease (the "Term") shall be for
----
a fixed term of One Hundred and Twenty (120) months commencing on the
Commencement Date. The initial term for any Leased Property designated in a
Lease Supplement shall begin on the date of such Lease Supplement and expire at
the end of the Term or then current Extension Term (as hereafter defined), as
the case may be. Tenant shall have the right to extend this Lease for the Leased
Properties as a group, at Tenant's option, for one One Hundred and Twenty (120)
month renewal term from the expiration of the Term (the "First Extension Term"),
provided that no Event of Default (as defined in Section 9.01 hereof) shall
exist and be continuing. In addition, Tenant shall have the right to extend this
Lease for the Leased Properties as a group at Tenant's option, for a second One
Hundred and Twenty (120) month renewal term from the expiration of the First
Extension Term (the "Second Extension Term", each an "Extension Term", and
collectively with the First Extension Term, the "Extension Terms") provided that
no Event of Default (as defined in Section 9.01 hereof) shall exist and be
continuing. Tenant shall exercise the First Extension Term by written notice to
Landlord no later than twelve months prior to the end of the Term. Tenant shall
exercise the Second Extension Term by written notice to Landlord no later than
twelve (12) months prior to the end of the First Extension Term. Notwithstanding
anything else to the contrary in this Agreement, the Rent during the Second
Extension Term shall be the Fair Market Rent (as hereafter defined) for the
Leased Property. Fair Market Rent shall be determined as soon as possible after
receipt by Landlord of Tenant's notice of option exercise, on the basis of
appraisals of independent appraisers selected in accordance with the provisions
of Section 16.02(b). Tenant shall have the right, in its sole discretion, to
rescind the exercise of Tenant's option to extend the Lease for the Second
Extension Term during a period of five (5) business days after the determination
of the Fair Market Rent. If Tenant shall fail to exercise the right to rescind
within such five (5) day period, the election to extend shall be irrevocable and
the Fair Market Rent so determined shall be the Base Annual Rent during the
Second Extension Term notwithstanding any changes in the market rental rates,
whether upward or downward, which may occur after such determination. However,
notwithstanding anything else in this Agreement, Fair Market Rent shall become
the Base Annual Rent (as defined hereafter) and shall be subject to Base Annual
Rent Adjustments as set forth in Section 2.04.
1.04 Holding Over. Should Tenant, without the express consent of
------------
Landlord, continue to hold and occupy any Leased Property after the expiration
or earlier termination of the Term or any Extension Term, as the case may be,
such holding over beyond the Term and the acceptance or collection of Rent (as
defined hereinafter) by Landlord shall operate and be construed as creating a
tenancy from month-to-month and not for any other term whatsoever. During any
such holdover period Tenant shall pay to Landlord for each month (or portion
thereof) Tenant remains in such Leased Property, in lieu of the Base Annual Rent
(as defined hereafter) for such Leased Property, an amount equal to the sum of
one-twelfth (1/12) of (i) one hundred seven percent (107%) of such Base Annual
Rent (the "Holdover Rate"), and (ii) as applicable, one hundred percent (100%)
of the Additional Rent (as defined hereinafter) for such Leased Property and
Other Additional Rent (as defined hereinafter) for such Leased Property, each as
in effect on the expiration date. Said month-to-month tenancy may be terminated
by
3
Landlord by giving Tenant thirty (30) days written notice, and at any time
thereafter Landlord may re-enter and take possession of such Leased Property.
1.05 Surrender. Except as a result of (a) Tenant Improvements and
---------
Capital Additions (as defined hereinafter); (b) normal and reasonable wear and
tear (subject to the obligation of Tenant to maintain each Leased Property in
good order and repair during the Term); and (c) casualty, taking or other damage
and destruction not required to be repaired by Tenant, Tenant shall surrender
and deliver up each Leased Property at the expiration or termination of the Term
or the Extension Term therefor, as the case may be, broom clean, in good order
and repair, free of the Excluded Personal Property and any additional items of
Tenant's personal property (together with the Excluded Personal Property, the
"Tenant's Personal Property"), all of which Tenant shall remove prior to such
surrender and delivery, and in as good order and condition as of the
Commencement Date.
ARTICLE II
RENT
2.01 Base Rent. Tenant shall pay Landlord annual base rent (the
---------
"Base Annual Rent") as to the Leased Property for each year during the Term or
the Extension Term (each such year a "Lease Year"), which Base Annual Rent shall
be subject to upward adjustment pursuant to Section 2.04. In the first Lease
Year, Base Annual Rent shall be in the amount set forth on Schedule A (the
"Initial Base Annual Rent"), paid to Landlord in twelve equal monthly
installments.
2.02 Payment. Tenant shall pay Landlord the Base Annual Rent as to
-------
the Leased Property for each Lease Year, without notice, demand, set-off or
counterclaim in advance, in lawful money of the United States of America and
payable in consecutive monthly installments commencing on the Commencement Date
and thereafter on the first day of each month during the Term. Tenant will, to
the extent that such method of payment is compatible with its business
practices, make such payments by direct deposit of immediately available funds
to the account set forth in Exhibit 2.02 (which Exhibit 2.02 may be modified by
Landlord from time to time upon Notice (as hereafter defined) to Tenant).
2.03 Security Deposit. Prior to the Commencement Date, Tenant shall
----------------
deliver to Landlord an amount equal to one-twelfth (1/12th) of the Base Annual
Rent, which amount shall be held by Landlord as security (the "Security
Deposit") for the performance of Tenant's payment and other obligations under
this Lease. Upon an Event of Default and the continuance thereof, Landlord shall
have the right, but not the obligation, to apply the Security Deposit as set
forth in Section 9.08. Landlord shall return the Security Deposit, without
interest, after expiration of this Lease, if Tenant has fully and faithfully
carried out all of the terms, covenants and conditions hereof. In the event that
Landlord eliminates its standard business policy of
4
requiring security deposits from tenants, then Landlord shall refund the
Security Deposit to Tenant within thirty (30) days of such policy change.
2.04 Base Annual Rent Adjustment.
---------------------------
(a) The Base Annual Rent shall be adjusted during the Lease
Term or the Extension Terms under the procedures set forth
in Exhibit 2.04 (the "Base Annual Rent Adjustment").
(b) As used in Exhibit 2.04, the "Index" shall mean the CPI-U
published by the United States Department of Labor, Bureau
of Labor Statistics Consumer Price Index for All Urban
Consumers, U.S. City Average. If at any time during the
Term or the Extension Term, as the case may be, the Index
shall be discontinued, Landlord shall select a substitute
index, being an existing official index published by the
Bureau of Labor Statistics or its successor or another,
similar governmental agency, which index is most nearly
equivalent to the Index.
2.05 Additional Rent. As to each Leased Property, in addition to the
---------------
Base Annual Rent, Tenant shall pay all other amounts, liabilities, obligations
and Impositions (as hereinafter defined) which Tenant assumes or agrees to pay
under this Lease and any fine, penalty, interest, charge and cost which may be
added for nonpayment or late payment of such items (collectively, the
"Additional Rent").
2.06 Place(s) of Payment of Rent; Direct Payment of Additional Rent.
--------------------------------------------------------------
The Base Annual Rent and Additional Rent are hereinafter referred to as "Rent."
Landlord shall have all legal, equitable and contractual rights, powers and
remedies provided in this Lease or by statute or otherwise in the case of
nonpayment of the Rent for each Leased Property. Tenant shall make all payments
of Rent at Landlord's address set forth in Section 17.01 or as Landlord may
otherwise from time to time direct in writing, or, if Landlord shall direct
Tenant, directly to a bank account specified by Landlord to Tenant in writing.
At the direction of the Landlord, Tenant shall make payments of Additional Rent
directly to the person or persons to whom such amount is owing at the time and
times when such payments are due, and Tenant shall give to Landlord such
evidence of such direct payments as Landlord shall reasonably request.
2.07 Net Lease. This Lease shall be deemed and construed to be an
---------
"absolute net lease" or "triple net lease," (i.e. that Tenant shall pay all
costs and expenses related to the ownership and operations of each Leased
Property, thereby leaving all Rent as an absolutely net return to Landlord) and
as to each Leased Property, Tenant shall pay all Rent, Impositions, and other
charges and expenses in connection with such Leased Property throughout the Term
and any Extension Term, without abatement, deduction or set-off.
5
2.08 No Termination, Abatement, Etc. Except as otherwise specifically
-------------------------------
provided herein, Tenant shall remain bound by this Lease in accordance with its
terms. Except as otherwise specifically provided herein, Tenant shall not,
without the prior written consent of Landlord, modify, surrender or terminate
this Lease as to any Leased Property, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent as to any
Leased Property for any reason whatsoever. Except as specifically provided
herein, the obligations of Landlord and Tenant shall not be affected by reason
of: (a) the lawful or unlawful prohibition of, or restriction upon, Tenant's use
of any Leased Property, or any part thereof, the interference with such use by
any person, corporation, partnership or other entity, or by reason of eviction
by paramount title; (b) any claim which Tenant has or might have against
Landlord or by reason of any default or breach of any warranty by Landlord under
this Lease or any other agreement between Landlord and Tenant, or to which
Landlord and Tenant are parties; (c) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceeding affecting Landlord or any assignee or transferee of Landlord; (d) any
damage to, or destruction of, any Leased Property or any portion thereof for
whatever cause, or any taking of the Leased Property or any portion thereof; or
(e) any other cause, whether similar or dissimilar to any of the foregoing,
other than a discharge of Tenant from any such obligations as a matter of law.
Except as otherwise specifically provided herein, and to the maximum extent
permitted by law, Tenant hereby specifically waives all rights, including but
not limited to any rights under any statute relating to rights of tenants in the
jurisdictions where the Leased Properties are located, which may now be
conferred upon it by law, relating to: (a) the modification, surrender or
termination of this Lease, or the quitting or surrender of any Leased Property
or any portion thereof; (b) any abatement, reduction, suspension or deferment of
the Rent or other sums payable by Tenant hereunder; or (c) any rights of
redemption. As to each Leased Property, the obligations of Landlord and Tenant
hereunder shall be separate and the Rent and all other sums shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or by termination of this Lease
other than by reason of an Event of Default.
ARTICLE III
IMPOSITIONS AND UTILITIES
3.01 Payment of Impositions. Subject to the adjustments set forth
----------------------
herein, Tenant shall pay, in the manner set forth in Section 3.04, as Additional
Rent, to the Landlord an amount equal to the amount necessary to pay all
Impositions (as hereinafter defined) that may be levied or become a lien on any
Leased Property or any part thereof at any time (whether prior to or during the
Term), without regard to prior ownership of said Leased Property, before the
same becomes delinquent. Tenant's obligation to pay such Impositions shall be
deemed absolutely fixed upon the date such Impositions become a lien upon any
Leased Property or any part thereof. Tenant, at its expense, shall prepare and
file all tax returns and reports in respect of any Imposition as may be required
by governmental authorities, provided, however, that Tenant shall provide to
Landlord copies of all filings of such tax returns or reports in respect of any
real or
6
personal property owned by Landlord. Tenant shall be entitled to any refund due
in respect of such Impositions from any taxing authority if no Event of Default
shall have occurred hereunder and be continuing. Any refunds in respect of such
Impositions retained by Landlord due to an Event of Default shall be applied as
provided in Section 9.08. Landlord and Tenant shall, upon request of the other,
provide such data as is maintained by the party to whom the request is made with
respect to a Leased Property as may be necessary to prepare any required tax
returns and reports. In the event governmental authorities classify any property
covered by this Lease as personal property, Landlord and Tenant shall file all
personal property tax returns in such jurisdictions where it may legally so file
with respect to their respective owned personal property. Landlord, to the
extent it possesses the same, and Tenant, to the extent it possesses the same,
will provide the other party, upon request, with cost and depreciation records
necessary for filing such returns or reports for any property so classified as
personal property. To the extent that Landlord is legally required to file
personal property tax returns, Tenant will be provided with copies of assessment
notices indicating a value in excess of the reported value in sufficient time
for Tenant to file a protest. Tenant may, upon notice to Landlord, at Tenant's
option and at Tenant's sole cost and expense, protest, appeal, or institute such
other proceedings as Tenant may deem appropriate to effect a reduction of real
estate or personal property assessments and Landlord, at Tenant's expense as
aforesaid, shall fully cooperate with Tenant in such protest, appeal, or other
action. Tenant shall provide Landlord copies of all materials filed or presented
in connection with any such proceeding. Tenant shall promptly reimburse Landlord
for all taxes paid by Landlord, which were not paid with deposits received from
Tenant, upon receipt of xxxxxxxx accompanied by copies of a xxxx therefor and
payments thereof which identify the property with respect to which such payments
are made. Impositions imposed with respect to the tax-fiscal period during which
the Term commences and terminates as to each Leased Property shall be adjusted
and prorated between Landlord and Tenant on a per diem basis, with Tenant being
obligated to pay its pro rata share from and including the Commencement Date to
and including the expiration or termination date of the Term or Extension Term,
as the case may be, whether or not such Imposition is imposed before or after
such commencement or termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination. Tenant shall also pay to Landlord
a sum equal to the amount which Landlord may be caused to pay of any privilege
tax, sales tax, gross receipts tax, rent tax, occupancy tax or like tax
(excluding any tax based on net income), hereinafter levied, assessed, or
imposed by any federal, state, city, county or municipal or other local
governmental authority, or any subdivision thereof, upon or measured by rent or
other consideration required to be paid by Tenant under this Lease.
3.02 Definition of Impositions. "Impositions" means, collectively:
-------------------------
(a) taxes (including without limitation, all real estate and personal property
ad valorem (whether assessed as part of the real estate or separately assessed
as unsecured personal property), sales and use, business or occupation, single
business, gross receipts, transaction, privilege, rent or similar taxes, but not
including income or franchise or excise taxes payable with respect to Landlord's
receipt of Rent); (b) assessments, whether in the nature of a special assessment
or otherwise (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not to be completed within
7
the Term or any Extension Term, as the case may be); (c) ground rents, water,
sewer or other rents and charges, excises, tax levies, and fees (including,
without limitation, license, permit, inspection, authorization and similar
fees); (d) to the extent they may become a lien on a Leased Property, all taxes
imposed on Tenant's operations of such Leased Property including without
limitation, employee withholding taxes, income taxes and intangible taxes; and
(e) all other governmental charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforseen, of every character in
respect of each Leased Property or any part thereof, the Business conducted by
Tenant thereon, and/or the Rent (including all interest and penalties thereon
due to any failure in payment by Tenant), which at any time prior to, during or
in respect of the Term or any Extension Term, as the case may be, hereof may be
assessed or imposed on or in respect of or be a lien upon (i) Landlord or
Landlord's interest in any Leased Property or any part thereof; (ii) any Leased
Property or any part thereof or any rent therefrom or any estate, right, title
or interest therein; or (iii) any occupancy, operation, use or possession of, or
sales from, or activity conducted on, or in connection with any Leased Property
or the leasing or use of any Leased Property or any part thereof. Tenant shall
not, however, be required to pay: (x) any tax based on net income (whether
denominated as a franchise or capital stock or other tax) imposed on Landlord or
(y) except as provided in Section 13.01, any tax imposed with respect to the
sale, exchange or other disposition by Landlord of a Leased Property or the
proceeds thereof; provided, however, that if any tax, assessment, tax levy or
charge which Tenant is obligated to pay pursuant to the first sentence of this
definition and which is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (x) or (y) immediately above is levied, assessed or imposed expressly in
lieu thereof Tenant shall then pay such tax, levy, or charge set forth in said
clause (x) or (y).
3.03 Utilities. Tenant shall contract for, in its own name, and will
---------
pay, as Additional Rent all taxes, assessments, charges/deposits, and bills for
utilities, including without limitation charges for water, gas, oil, sanitary
and storm sewer, electricity, telephone service, trash collection, and all other
utilities which may be charged against the occupant of the Improvements during
the Term. Tenant shall at all times maintain that amount of heat necessary to
ensure against the freezing of water lines. Tenant hereby agrees to indemnify
and hold Landlord harmless from and against any liability or damages to the
utility systems of each Leased Property that may result from Tenant's failure to
maintain sufficient heat in the Improvements therefor.
3.04 Escrow of Impositions. Unless waived by written notice from
---------------------
Landlord to Tenant, Tenant shall thereafter deposit with Landlord on the first
day of each month during the Term hereof and any Extension Term, as the case may
be, a sum equal to one-twelfth (1/12th) of the Impositions assessed against such
Leased Property which sums shall be used by Landlord toward payment of such
Impositions. If, at the end of any applicable tax year, any such funds held by
Landlord are insufficient to make full payment of taxes or other Impositions for
which such funds are held, Tenant, on demand, shall pay to Landlord any
additional funds necessary to pay and discharge in full the obligations of
Tenant pursuant to the provisions of this Section. If, however, at the end of
any applicable tax year, such funds held by Landlord are in excess of the
8
total payment required to satisfy taxes or other Impositions for which such
funds are held, Landlord shall apply such excess amounts to a tax and Imposition
escrow fund for the next tax year. With respect to each Leased Property, if any
such excess exists following the expiration or earlier termination of this
Lease, and subject to Section 8.08 below, Landlord shall promptly refund such
excess amounts to Tenant. The receipt by Landlord of the payment of such
Impositions by and from Tenant shall only be as an accommodation to Tenant and
the taxing authorities, and shall not be construed as rent or income to
Landlord, Landlord serving, if at all, only as a conduit for delivery purposes.
3.05 Discontinuance of Utilities. Landlord will not be liable for
---------------------------
damages to person or property or for injury to, or interruption of, business for
any discontinuance of utilities at any Leased Property nor will such
discontinuance in any way be construed as an eviction of Tenant from such Leased
Property or cause an abatement of Rent as to such Leased Property or operate to
release Tenant from any of Tenant's obligations as to such Leased Property under
this Lease. Notwithstanding the forgoing, however, Landlord shall be liable for
damages to person or property or for injury to, or interruption of business, for
any discontinuance of utilities at any Leased Property, in the event and to the
extent, such damages or injury are caused by the wilful misconduct of the
Landlord.
3.06 Liens. Subject to Section 17.19 relating to contests, Tenant
-----
shall not directly or indirectly create or allow to remain, and will promptly
discharge at its expense, any lien, encumbrance, attachment, title retention
agreement or claim upon any Leased Property or any attachment, levy, claim or
encumbrance in respect of any Rent provided under this Lease, not including,
however: (a) this Lease; (b) utility easements and road rights-of-way in the
customary form (i) provided the same do not adversely affect the intended use of
the Leased Properties (including the Improvements) and do not create a Material
Adverse Effect on the value of the Leased Properties or (ii) which result solely
from the action or inaction of Landlord; (c) zoning and building laws or
ordinances, provided they do not prohibit the use of the Leased Properties for
the Business and so long as the Leased Properties are in compliance with same;
(d) such encumbrances as are subsequently consented to in writing by Landlord,
but excluding liens in respect of Impositions required to be paid under Section
3.01; (e) liens for Impositions so long as (i) the same are not yet payable or
are payable without the addition of any fine or penalty or (ii) such liens are
being contested as permitted under Section 16.18; and (f) other encumbrances,
easements, rights of way or liens (i) provided the same do not adversely affect
the intended use of the Leased Properties (including the Improvements) and do
not create a Material Adverse Effect on the value of the Leased properties, or
(ii) which result solely from the action or inaction of Landlord.
ARTICLE IV
INSURANCE
9
4.01 Insurance. Tenant shall, at Tenant's expense, keep the
---------
Improvements, Fixtures, and other components of each Leased Property insured
against the following risks:
(a) Loss or damage by fire with extended coverage (including
windstorm and subsidence), vandalism and malicious
mischief, sprinkler leakage and all other physical loss
perils commonly covered by "All Risk" insurance in an
amount not less than one hundred percent (100%) of the then
full replacement cost thereof (as hereinafter defined).
Such policy shall include an agreed amount endorsement if
available at a reasonable cost. Such policy shall also
include endorsements for contingent liability for operation
of building laws, demolition costs, and increased cost of
construction.
(b) Loss or damage by explosion of steam boilers, pressure
vessels, or similar apparatus, now or hereafter installed
on any Leased Property, in commercially reasonable amounts
acceptable to Landlord.
(c) Loss of rent under a rental value or Business interruption
insurance policy covering risk of loss during the first
twelve (12) months of reconstruction necessitated by the
occurrence of any hazards described in Sections 4.01(a) or
4.01(b), above, and which causes an abatement of Rent as
provided in Article X hereof, in an amount sufficient to
prevent Landlord or Tenant from becoming a co-insurer,
containing endorsements for extended period of indemnity
and premium adjustment, and written with an agreed amount
clause, if the insurance provided for in this clause (c) is
available.
(d) If the Land or any portion thereof related to a Leased
Property is located in whole or in part within a designated
flood plain area, loss or damage caused by flood in
commercially reasonable amounts acceptable to Landlord.
(e) Loss or damage commonly covered by blanket crime insurance
including employee dishonesty, loss of money orders or
paper currency, depositor's forgery, and loss of property
accepted by Tenant for safekeeping, in commercially
reasonable amounts acceptable to Landlord.
(f) Workers' compensation insurance as required by statute in
respect of any work or other operations on or about each
Leased Property.
10
(g) Comprehensive liability insurance as to each Leased
Property in amounts equal to the greater of (i) One Million
Dollars ($1,000,000) for each occurrence and Two Million
Dollars ($2,000,000) in the aggregate, or (ii) the limits
of liability generally required under the franchise
agreements or other agreements pursuant to which Tenant
operates the Businesses conducted on or about each Leased
Property.
(h) Commercial comprehensive catastrophic liability insurance
with limits of liability of not less than the greater of
(i) Five Million ($5,000,000) and (ii) the limits of
liability generally required under the franchise agreements
or other agreements pursuant to which Tenant operates the
Businesses conducted on or about each Leased Property.
(i) upon Landlord's request, earthquake insurance in an amount
not less than the full insurable value of each Leased
Property.
(j) During the period when any addition, alteration,
construction, installation or demolition is being made or
performed to any part of the Leased Property, contingent
liability, public liability, completed value, builder's
risk (non-reporting form) workers' compensation and other
insurance as is deemed prudent by Landlord.
4.02 Insurance Limits. Deductible provisions for the insurance
----------------
required under Section 4.01(a) shall not exceed Twenty-Five Thousand Dollars
($25,000) per location per occurrence and One Hundred Thousand Dollars
($100,000) aggregate per occurrence; under clause(d), Twenty-Five Thousand
Dollars ($25,000) per occurrence, except that if federal flood insurance is
available then such deductible shall not be greater than the lowest deductible
available with respect to such federal flood insurance; under clause (g),
Twenty-Five Thousand Dollars ($25,000) per occurrence; under clause (h), Twenty-
Five Thousand Dollars ($25,000) per occurrence; and under clause (j), Twenty-
Five Thousand Dollars ($25,000) per occurrence.
4.03 Insurance Requirements. The following provisions shall apply to
-----------------------
all insurance coverages required hereunder:
(a) The carriers of all policies shall have a Best's Rating of
"A-" or better and a Best's Financial Category of XII or
larger and shall be authorized to do insurance business in
the jurisdiction in which the Leased Property is located.
11
(b) Tenant shall be the "named insured" and Landlord and any
mortgagee of Landlord shall be an "additional named
insured" on each policy.
(c) Tenant shall deliver to Landlord certificates or policies
showing the required coverages and endorsements. Each
policy or certificate of insurance shall provide that such
policy or certificate (i) may not be canceled, (ii) may not
lapse for failure to renew, and (iii) no material change or
reduction in coverage may be made, without at least thirty
(30) days' prior written notice to Landlord.
(d) The policies shall contain a severability of interest
and/or cross-liability endorsement, provide that the acts
or omissions of Tenant will not invalidate Landlord's
coverage, and provide that Landlord shall not be
responsible for payment of premiums.
(e) All loss adjustment shall require the written consent of
Landlord and Tenant, as their interests may appear.
(f) At least (30) thirty days prior to the expiration of each
policy, Tenant shall deliver to Landlord a certificate
showing renewal of such policy and payment of the annual
premium therefor.
Landlord shall have the right to review the insurance coverages
required hereunder with Tenant from time to time, to obtain the input of third
party professional insurance advisors (at Landlord's expense) with respect to
such insurance coverages, and to consult with Tenant in Tenant's annual review
and renewal of such insurance coverages. All insurance coverages hereunder shall
be in such form, substance and amounts as are customary or standard in Tenant's
industry, but at a minimum shall comply with the requirements set forth herein.
4.04 Replacement Cost. The term "full replacement cost" means the
----------------
actual replacement cost of the Improvements from time to time including
increased cost of construction, with no reductions or deductions. Tenant shall,
not later than thirty (30) days after the anniversary of each policy of
insurance, increase the amount of the replacement cost endorsement for the
Improvements to the extent necessary to reflect increased costs of construction.
If Tenant makes any Permitted Alterations (as hereinafter defined) to any Leased
Property, Landlord may have such full replacement cost redetermined at any time
after such Permitted Alterations are made, regardless of when the full
replacement cost was last determined.
4.05 Blanket Policy. Tenant may carry the insurance required by this
--------------
Article under a blanket policy of insurance, provided that the coverage afforded
Tenant will not be reduced or diminished or otherwise be different from that
which would exist under a separate
12
policy meeting all of the requirements of this Lease and the Landlord approves
the form of the policy.
4.06 No Separate Insurance. Tenant shall not take out separate
----------------------
insurance concurrent in form or contributing in the event of loss with that
required in this Article, or increase the amounts of any then existing insurance
by securing an additional policy or additional policies, unless all parties
having an insurable interest in the subject matter of the insurance, including
Landlord and any mortgagees, are included therein as additional named insureds
or loss payees, the loss is payable under said insurance in the same manner as
losses are payable under this Lease, and such additional insurance is not
prohibited by the existing policies of insurance required pursuant to this
Article. Tenant shall immediately notify Landlord of the taking out of such
separate insurance or the increasing of any of the amounts of the existing
insurance by securing an additional policy or additional policies. The term
"mortgages" as used in this Lease includes, but is not limited to, Deeds of
Trust and the term "mortgagees" includes, but is not limited to, trustees and
beneficiaries under a Deed of Trust.
4.07 Waiver of Subrogation. Each party hereto hereby waives any and
---------------------
every claim which arises or may arise in its favor and against the other party
hereto during the Term or any Extension Term or renewal thereof, for any and all
loss of, or damage to, any of its property located within or upon, or
constituting a part of, any Leased Property, which loss or damage is covered by
valid and collectible insurance policies, to the extent that such loss or damage
is recoverable in full under such policies. Said mutual waiver shall be in
addition to, and not in limitation or derogation of, any other waiver or release
contained in this Lease with respect to any loss or damage to property of the
parties hereto. Inasmuch as the said waivers will preclude the assignment of any
aforesaid claim by way of subrogation (or otherwise) to an insurance company (or
any other person), each party hereto agrees immediately to give each insurance
company which has issued to it policies of insurance, written notice of the
terms of said mutual waivers, and to have such insurance policies properly
endorsed, if necessary, to prevent the invalidation of said insurance coverage
by reason of said waivers, so long as such endorsement is available at a
reasonable cost.
4.08 Mortgages. The following provisions shall apply if Landlord now
---------
or hereafter places a mortgage on any Leased Property or any part thereof: (a)
Tenant shall obtain a standard form of mortgage clause insuring the interest of
the mortgagee; (b) Tenant shall deliver evidence of insurance to such mortgagee;
(c) loss adjustment shall require the consent of the mortgagee but such consent
shall not be unreasonably withheld and may not include any requirement that the
funds be paid to mortgagee in lieu of reconstruction; and (d) Tenant shall
obtain such other coverages and provide such other information and documents as
may be reasonably required by the mortgagee.
4.09 Other Insurance Requirements. Notwithstanding anything in this
----------------------------
Lease to the contrary and not by way of limitation, in addition to the types and
amounts of insurance required to be carried by Tenant herein, Tenant covenants
to insure and continue in effect such
13
types and amounts of insurance as the Tenant shall be required to carry pursuant
to any contract, agreement, instrument, statute, law, rule or regulation
relating to the use of the Leased Property and the operations of any Business or
other activities thereon, including noncancellable written notice to mortgagee.
ARTICLE V
INDEMNITY; SUBSTANCES OF CONCERN
5.01 Tenant's Indemnification. Subject to Section 4.07, Tenant hereby
------------------------
agrees to indemnify and hold harmless Landlord, its agents, and employees from
and against any and all demands, claims, causes of action, fines, penalties,
damages (including punitive and consequential damages), losses, liabilities
(including strict liability), judgments, costs and expenses (including, without
limitation, attorneys' fees, court costs, and the costs set forth in Section
9.06) (the "Claims") incurred in connection with or arising from: (a) the use,
condition, operation or occupancy of the Leased Properties; (b) any activity,
work, or thing done, or permitted or suffered by Tenant in, on or about the
Leased Properties; (c) any acts, omissions, or negligence of Tenant or any
person claiming under Tenant, or the contractors, agents, employees, invitees,
or visitors of Tenant or any such person; (d) any breach, violation, or
nonperformance by Tenant or any person claiming under Tenant or the employees,
agents, contractors, invitees, or visitors of Tenant or of any such person, of
any term, representation, warranty, covenant, or provision of this Lease or any
law, ordinance, or governmental requirement of any kind; (e) any injury or
damage to the person, property or Business of Tenant, its employees, agents,
contractors, invitees, visitors, or any other person entering upon any Leased
Property; (f) any accident, injury to or death of persons or loss or damage to
any item of property occurring on or about any Leased Property; (g) any
Environmental Law or any pollution or other threat to human health or the
environment at, arising out of or relating to any Leased Property as set forth
in Section 5.05, and (h) any brokers' or agents' fees and commissions. If any
action or proceeding is brought against Landlord, its employees, or agents by
reason of any such demand, claim, or cause of action, Tenant, upon notice from
Landlord, will defend the same at Tenant's expense with counsel reasonably
satisfactory to Landlord. In the event Landlord reasonably determines that its
interests and the interests of Tenant in any such action or proceeding are not
substantially the same and that Tenant's counsel cannot adequately represent the
interests of Landlord therein, Landlord shall have the right to hire separate
counsel in any such action or proceeding and the reasonable costs thereof shall
be paid for by Tenant. Tenant's indemnification obligations with respect to a
Claim shall survive the expiration or earlier termination of this Lease until
the later of (i) two (2) years from the date hereof, or (ii) the expiration of
the period ninety (90) days after the date on which Landlord has actual
knowledge of the existence of such Claim, provided, however, that Tenant's
indemnification obligations shall survive the expiration or earlier termination
of this Lease until ninety (90) days after the expiration of the applicable
statute of limitations for Claims incurred in connection with, arising out of,
or related to (i) Section 5.01(g) or (ii) the failure to pay, as provided for in
this Agreement, any Imposition.
14
5.02 Substances of Concern.
---------------------
(a) For purposes of this Section 5:
(i) "Substances of Concern" means, without limitation,
chemicals, pollutants, contaminants, wastes, toxic
substances, radioactive materials or genetically
modified organisms, which are, have been or become
regulated by any federal, state or local government
authority including, without limitation, (1)
petroleum or any fraction thereof, (2) asbestos, (3)
any substance or material defined as a "hazardous
substance" pursuant to (S) 101 of the Comprehensive
Environmental Response Compensation and Liability Act
(42 U.S.C. (S) 9601), or (4) any substance or
material defined as a "hazardous chemical" pursuant
to the federal Hazard Communication Standard (29
C.F.R. (S) 1910.1200).
(ii) "Environmental Laws" means all federal, state, local,
and foreign laws and regulations relating to
pollution or protection of human health or the
environment (including, without limitation, ambient
air, surface water, ground water, wetlands, land
surface, subsurface strata, and indoor and outdoor
workplace), including, without limitation, (1) laws
and regulations relating to emissions, discharges,
releases, or threatened releases of Substances of
Concern, and (2) common law principles of tort
liability.
(b) Tenant shall not, either with or without negligence,
injure, overload, deface, damage or otherwise harm any
Leased Property or any part or component thereof; commit
any nuisance; permit the emission of any Substances of
Concern; allow the release or other escape of any
biologically or chemically active substances or materials
or other Substances of Concern so as to impregnate, impair
or in any manner affect, even temporarily, any element or
part of any Leased Property or neighboring property, or
allow the storage or use of such substances or materials in
any manner not sanctioned by law and by reasonable
standards prevailing in the automobile retail and related
industries for the storage and use of such substances or
materials; nor shall Tenant permit the occurrence of
objectionable noise or odors; or make, allow or suffer any
waste whatsoever to any Leased Property. Landlord
15
may inspect each Leased Property from time to time, and
Tenant will cooperate with such inspections.
(c) Notwithstanding the foregoing, Tenant anticipates using,
storing and disposing of certain Substances of Concern in
connection with operation of its Business. Such Substances
of Concern include, but are not limited to, the following:
motor oil, waste motor oil and filters, transmission fluid,
antifreeze, refrigerants, waste paint and lacquer thinner,
batteries, solvents, lubricants, degreasing agents,
gasoline and diesel fuels. Tenant shall ascertain and
comply fully with all applicable Environmental Laws and
environmental standards and requirements set by federal,
state or local laws, rules, regulations or governmental
directives related to the Leased Properties or Tenant's use
or occupancy of the Leased Property ("Environmental
Standards"), including but not limited to any laws or
standards (a) regulating the use, storage, generation or
disposal of Substances of Concern, (b) regulating the
monitoring or use of any underground or aboveground storage
tanks at the Leased Properties, or (c) establishing any
permitting, notification or reporting requirements. As
promptly as practicable after the Commencement Date (but in
no event later than 120 days thereafter), Tenant shall
establish and implement a program of compliance with all
applicable Environmental Laws and Environmental Standards
("Environmental Compliance Program"). Tenant shall update
such Environmental Compliance Program every three (3) years
during the Term. Tenant shall submit its Environmental
Compliance Program and each update thereto to Landlord;
provided, however, such submittal shall not relieve Tenant
of its obligations pursuant to this Section 5. Tenant's
Environmental Compliance Program shall include a program
for monitoring Tenant's compliance with Environmental Laws
and Environmental Standards and a plan for correcting
immediately any incident of noncompliance. Tenant shall
comply with its Environmental Compliance Program.
(d) In the event of any noncompliance with any Environmental
Laws or Environmental Standards or any spill, release or
discharge of Substances of Concern in a reportable quantity
under federal, state or local law, Tenant shall:
(i) give Landlord immediate notice of the incident by
telephone or facsimile, providing as much detail as
possible. Such notice shall be provided to Landlord's
16
National Dealership Real Estate Manager or to such
other person as Landlord shall designate in
accordance with Section 16.01 below;
(ii) as soon as possible, but no later than seventy-two
(72) hours, after discovery of an incident of
noncompliance, submit a written report to Landlord,
identifying the source or case of the noncompliance
or spill, release or discharge (including the names
and quantities of any Substances of Concern involved)
and the method or action required to correct the
problem; and
(iii) cooperate with Landlord or its designated agents or
contractors with respect to the investigation and
correction of such problem.
Tenant shall also be solely responsible for providing any notice
to any federal, state or local governmental authority required by applicable
laws and regulations as a result of such incident.
5.03 Audits. Landlord shall have the right to conduct, at its
------
expense, periodic audits of Tenant's compliance with the Environmental
Compliance Program and management of Substances of Concern at the Leased
Properties and/or periodic tests of air, soil, surface water or groundwater at
or near the Leased Properties. Landlord shall not be obligated to provide Tenant
with the results of any audit or tests unless such results are the basis for a
claim by Landlord that Tenant has breached its obligations under this Lease or a
demand by Landlord that Tenant modify its Environmental Compliance Program or
operations or remediate or remove a spill, release or discharge of Substances of
Concern in accordance with Section 5.06 below. Tenant agrees promptly to modify
its Environmental Compliance Program or the conduct of its operations in
accordance with Landlord's reasonable recommendations directed at improvement of
Tenant's handling, use and disposal of Substances of Concern in, on or from any
Leased Property. If, as a result of an environmental audit performed by Landlord
with respect to any Leased Property, Landlord reasonably determines in its
judgment that alterations or improvements of equipment or buildings located on
the Leased Property are necessary, Tenant shall perform such alterations or
improvements as are reasonable under the circumstances and pay all costs and
expenses relating thereto. If Tenant shall fail to pay any such costs or
expenses, Tenant shall deposit with Landlord the full amount necessary to pay
such costs in full within ten (10) days of Landlord's demand. Nothing contained
herein shall be construed to obligate or require Landlord to perform any audits,
tests, inquiry or investigation. Should Landlord elect or be required to
disclose to Tenant the results of any audit or tests, Landlord shall not be
liable in any way for the truth or accuracy of such information.
17
5.04 Landlord's Option Re: Compliance. If Tenant, after notice from
--------------------------------
Landlord, fails to comply with or perform any of its obligations pursuant to
this Section 5, including, but not limited to, obligations to clean up spills,
releases or discharges, Landlord may, but shall not be obligated to, perform
such obligations and Tenant shall pay Landlord within ten (10) days of demand
Landlord's costs therefor, including any overhead and administrative costs.
5.05 Environmental Indemnification. Tenant shall indemnify and hold
-----------------------------
harmless Landlord from and against all demands, claims, causes of action, fines,
penalties, damages (including punitive and consequential damages), losses,
liabilities (including strict liability), judgments, and expenses (including,
without limitation, attorneys' fees, court costs, and the costs set forth in
Section 9.06) imposed upon or asserted against Tenant, Landlord or any Leased
Property on account of any Environmental Law (irrespective of whether there has
occurred any violation of any Environmental Law) relating to any Leased
Property, including (a) response costs and costs of removal and remedial action
incurred by the United States Government or any state or local governmental unit
to any other person or entity, or damages from injury to or destruction or loss
of natural resources, including the reasonable costs of assessing such injury,
destruction or loss, incurred pursuant to any Environmental Law, (b) costs and
expenses of abatement, investigation, removal, remediation, correction or
cleanup, fines, damages, response costs or penalties which arise from the
provisions of any Environmental Law, (c) liability for personal injury or
property damage arising under any statutory or common-law tort theory, including
damages assessed for the maintenance of a public or private nuisance or for
carrying on of a dangerous activity, (d) liability by reason of a breach of an
environmental representation or warranty by Tenant, and (e) failure of Tenant to
complete in a timely manner alterations or improvements of equipment or
buildings located on the Leased Property deemed necessary or advisable by
Landlord pursuant to Section 5.03 in a manner acceptable to Landlord.
5.06 Tenant's Cleanup Obligation. If any spill, release or discharge
---------------------------
of Substances of Concern occurs on, at or from the Leased Properties during the
Term, Tenant shall promptly take all actions, at its sole expense, as are
necessary to remove or remediate such spill, release or discharge and to return
the Leased Property to the condition existing prior to the introduction of any
such Substances of Concern to the Leased Property, provided that Landlord's
approval of such action shall first be obtained, which approval shall not be
unreasonably withheld so long as such actions would not potentially have any
material adverse effect on the Leased Property.
5.07 Existing Environmental Conditions. Tenant acknowledges that it
---------------------------------
has had the opportunity to review the Environmental Reports attached hereto as
Exhibit 5.07. Tenant hereby represents that it has reviewed and is aware of the
matters disclosed in the Environmental Reports.
As a material consideration for Landlord's willingness to enter
into this Lease, Tenant, for itself and its Affiliates, and each of their
shareholders, directors, officers, employees, agents, contractors,
representatives, insurers, successors and assigns hereby waives
18
and releases Landlord and its Affiliates and each of their shareholders,
directors, officers, employees, representatives, agents, contractors,
representatives, insurers, successors and assigns from any and all claims,
demands, liabilities, costs, expenses, causes of action and rights of action
whatsoever, past, present or future, known or unknown, suspected or unsuspected,
which arise out of or relate in any way to the violation of Environmental Laws
or the use, storage, treatment, disposal, presence, spill, release, or discharge
of Substances of Concern at, on or from the Leased Properties before the
Commencement Date (collectively, the "Released Claims").
In the event that Landlord is ordered by a governmental agency,
or determines that it is in its best interest, to remedy any violation of
Environmental Laws or to remove or remediate any Substances of Concern present
on, under or about the Leased Properties on the Commencement Date, or spilled,
released or discharged on, at or from the Leased Properties before the
Commencement Date, Tenant shall immediately upon notice from Landlord take all
actions, at Tenant's sole expense, to promptly complete such removal or
remediation.
5.08 Survival of Tenant's Obligations. Tenant's obligations under
--------------------------------
this Section 5 shall survive the expiration or earlier termination of this
Lease. During any period of time employed by Tenant after the termination of
this Lease to complete the removal from the Leased Property of any Substances of
Concern, if the premises are not rentable for uses contemplated under this
Lease, Tenant shall continue to pay the full amount of Rent due under this
Lease, which Rent shall be prorated daily for the final month of such period of
time.
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES
6.01 Use of Leased Properties. For so long as this Lease is in
------------------------
effect (including following any sublease or assignment thereof), Tenant shall
use and occupy each Leased Property exclusively for the purpose of conducting
the Business or for any other legal purpose for which such Leased Property is
being used as of the Commencement Date, and for no other purpose without the
prior written consent of Landlord. Tenant shall obtain and maintain all
approvals, licenses, and consents needed to use and operate the Leased
Properties for such purposes. Tenant shall promptly deliver to Landlord complete
copies of surveys, examinations, certification and licensure inspections,
compliance certificates, and other similar reports issued to Tenant by any
governmental agency.
6.02 Acceptance of Leased Properties. Except as otherwise
-------------------------------
specifically provided in this Lease, Tenant acknowledges (i) Tenant and its
agents have had an opportunity to inspect each Leased Property; (ii) Tenant has
found each Leased Property fit for Tenant's use; (iii) delivery of each Leased
Property to Tenant is in an "as-is" condition; (iv) Landlord is not obligated to
make any improvements or repairs to any Leased Property; and (v) the roof,
walls, foundation, heating, ventilating, air conditioning, telephone, sewer,
electrical, mechanical, utility, plumbing, and other portions of each Leased
Property are in good working order. Tenant waives
19
any claim or action against Landlord with respect to the condition of any Leased
Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTIES OR ANY PART THEREOF, EITHER AS TO ITS FITNESS
FOR USE, DESIGN OR CONDITION OR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS
TO QUALITY OR THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
6.03 Conditions of Use and Occupancy. Tenant agrees that during the
-------------------------------
Term it shall use and keep each Leased Property in a careful, safe and proper
manner; not commit or suffer waste thereon; not use or occupy any Leased
Property for any unlawful purposes; not use or occupy any Leased Property or
permit the same to be used or occupied, for any purpose or business deemed extra
hazardous on account of fire or otherwise; keep each Leased Property in such
repair and condition as may be required by the local board of health, or other
city, state or federal authorities, free of all cost to Landlord; not permit any
acts to be done which will cause the cancellation, invalidation, or suspension
of any insurance policy; and permit Landlord and its agents to enter upon each
Leased Property at all reasonable times after notice to Tenant to examine the
condition thereof. In addition, at any time and from time to time upon not less
than fifteen (15) days prior written notice, Tenant shall permit Landlord and
any mortgagee or lender and their authorized representatives, to inspect the
Leased Properties during normal Business hours, provided that such inspections
shall not unreasonably interfere with Business of Tenant.
6.04 Financial Statements and Other Information. Tenant shall
------------------------------------------
provide Landlord and any mortgagee or lender regularly (or more often as may be
reasonably requested by Landlord in writing), the following financial
information: (a) as to each Leased Property within thirty (30) days after each
fiscal quarter during the Term or any Extension Term, as the case may be,
(except the fourth quarter), Tenant-prepared financial statements prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied; and (b) as to each Leased Property and itself, Tenant shall use its
best efforts to provide Landlord within ninety (90) days after the end of each
fiscal year of Tenant during the Term or any Extension Term, as the case may be,
and in no event later than one hundred and twenty (120) days after the end of
each fiscal year of Tenant during the Term or any Extension Term, as the case
may be, financial statements, audited, reviewed or compiled by a certified
public accountant (the "Annual Financial Statements"). Tenant shall also deliver
to Landlord such additional financial information as Landlord may reasonably
request, provided the same is of a type normally maintained by Tenant or can be
obtained without undue cost or burden on Tenant's personnel and does not
constitute information which Tenant reasonably determines to be proprietary or
confidential. Additionally, upon Landlord's request, Tenant shall provide
Landlord with copies of Tenant's annual capital expenditure budgets for each
Leased Property and any reports generated by Tenant regarding maintenance and
repairs of each Leased Property.
20
ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS
7.01 Maintenance. Tenant shall maintain each Leased Property in
-----------
good order, repair and appearance, and repair each Leased Property, including
without limitation, all interior and exterior, structural and nonstructural
repairs and replacements to the roof, foundations, exterior walls, building
systems, HVAC systems, parking areas, sidewalks, water, sewer and gas
connections, pipes, and mains. Tenant shall pay as Additional Rent the full cost
of such maintenance, repairs, and replacements. Tenant shall maintain all
drives, sidewalks, parking areas, and lawns on or about each Leased Property in
a clean and orderly condition, free of accumulations of dirt, rubbish, snow and
ice. Tenant shall permit Landlord to inspect each Leased Property at all
reasonable times, and shall implement all reasonable suggestions of Landlord as
to the maintenance and repair of each Leased Property.
7.02 Compliance with Laws. Tenant shall comply with all laws,
--------------------
ordinances, orders, rules, regulations, and other governmental requirements
relating to the use, condition, or occupancy of each Leased Property, whether
now or hereafter enacted and in force including without limitation: (a)
licensure requirements for operation of the Business; (b) requirements of any
board of casualty insurance underwriters or insurance service office for any
other similar body having jurisdiction over any Leased Property; (c) all zoning
and building codes; and (d) Environmental Laws. At Landlord's request, from time
to time, Tenant shall deliver to Landlord copies of certificates or permits
evidencing compliance with such laws, including without limitation, copies of
any applicable licenses, certificates of occupancy and building permits. Tenant
shall provide Landlord with copies of any notice from any governmental authority
alleging any non-compliance by Tenant or any Leased Property with any of the
foregoing requirements and such evidence as Landlord may reasonably require of
Tenant's remediation thereof. Tenant hereby agrees to defend, indemnify and hold
Landlord, its agents, and employees from and against any and all demands,
claims, causes of action, fines, penalties, damages (including punitive and
consequential damages), losses, liabilities (including strict liability),
judgments, costs and expenses (including, without limitation, attorneys' fees,
court costs, and the costs set forth in Section 9.06) resulting from any failure
by Tenant to comply with any laws, ordinances, rules, regulations, and other
governmental requirements.
7.03 Required Alterations. Tenant shall, at Tenant's sole cost
--------------------
and expense, make any additions, changes, improvements or alterations to each
Leased Property, including structural alterations, which may be required by any
governmental authorities, including those required to continue to satisfy any
licensure requirements related to the operation of the Business, whether such
changes are required by Tenant's use, changes in the law, ordinances, or
governmental regulations, defects existing as of the date of this Lease, or any
other cause whatsoever. Tenant shall provide thirty (30) days prior written
notice to Landlord of any changes to a Leased Property pursuant to this Section
7.03 which involve changes to the structural integrity thereof or materially
affect the operational capabilities thereof. All such additions, changes,
improvements or alterations shall be deemed to be a Tenant Improvement
21
and shall comply with all laws relating to such alterations and with the
provisions of Section 8.01.
7.04 Mechanics' Liens. Tenant shall have no authority to permit
----------------
or create a lien against Landlord's interest in any Leased Property, and Tenant
shall post notices or file such documents as may be required to protect
Landlord's interest in each Leased Property against liens. Tenant hereby agrees
to defend, indemnify, and hold Landlord harmless from and against any mechanics'
liens against any Leased Property by reason of work, labor services or materials
supplied or claimed to have been supplied on or to such Leased Property. Tenant
shall immediately remove, bond-off, or otherwise obtain the release of any
mechanics' lien filed against any Leased Property. Tenant shall pay all expenses
in connection therewith, including without limitation, damages, interest, court
costs and reasonable attorneys' fees.
7.05 Replacements of Fixtures. Tenant shall not remove Fixtures
-------------------------
from any Leased Property except to replace such Fixtures with other items used
for similar or analogous purposes, which replacement items are of equal or
greater quality and value. Items being replaced by Tenant may be removed and
shall become the property of Tenant and items replacing the same shall be and
remain the property of Landlord. Tenant shall execute, upon written request from
Landlord, any and all documents necessary to evidence Landlord's ownership of
the Fixtures and replacements therefor. Tenant may not finance replacements by
security agreement or equipment lease unless: (a) Landlord has consented to the
terms and conditions of the equipment lease or security agreement; (b) the
equipment lessor or lender has entered into a non-disturbance agreement with
Landlord upon terms and conditions acceptable to Landlord, including without
limitation (i) Landlord shall have the right (but not the obligation) to assume
such security agreement or equipment lease upon the occurrence of an Event of
Default by Tenant hereunder; (ii) the equipment lessor or lender shall promptly
notify Landlord of any default by Tenant under the equipment lease or security
agreement and give Landlord a reasonable opportunity to cure such default; and
(iii) Landlord shall have the right to assign its rights under the equipment
lease, security agreement, or non-disturbance agreement; (c) the equipment
lessor or lender shall subordinate its security interest to the security
interest of any of Landlord's lessors, mortgagors or lenders, whether now
created or hereafter existing, and (d) Tenant shall, within ten (10) days after
receipt of an invoice from Landlord, reimburse Landlord for all costs and
expenses incurred in reviewing and approving the equipment lease, security
agreement, and non-disturbance agreement, including without limitation,
reasonable attorneys' fees and costs.
7.06 Encroachments; Restrictions. If any of the Improvements
---------------------------
shall, at any time, encroach upon any property, street or right-of-way adjacent
to a Leased Property, or shall violate the agreements or conditions contained in
any restrictive covenant or other agreement affecting a Leased Property, other
than one which is created or consented to by Landlord without Tenant's consent,
or shall impair the rights of others under an easement or right-of-way to which
a Leased Property is subject, other than one which is created or consented to by
Landlord without Tenant's consent, then promptly upon the request of Landlord or
at the request of any person
22
affected by any such encroachment, violation or impairment, Tenant shall, at its
expense, subject to its right to contest the existence of any encroachment,
violation or impairment and in such case, in the event of an adverse final
determination, either (a) obtain valid and effective waivers or settlements of
all claims, liabilities and damages resulting from each such encroachment,
violation or impairment, whether the same shall affect Landlord or Tenant or (b)
make such changes in the Improvements and take such other actions as shall be
necessary to remove such encroachment and to end such violation or impairment,
including, if necessary, the alteration of improvements. Any such alteration
shall be made in conformity with the requirements of Article VIII.
ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTIES
8.01 Tenant's Right to Construct. As to each Leased Property,
---------------------------
during the Term of this Lease or any Extension Term, as the case may be, so long
as no Event of Default shall have occurred and be continuing as to such Leased
Property, Tenant may make Capital Additions (as defined herein), or other
alterations, additions, changes and/or improvements to such Leased Property as
deemed necessary or useful to operate such Leased Property for Tenant's Business
(individually, a "Tenant Improvement," or collectively, the "Tenant
Improvements"). "Capital Additions" shall mean the construction of one or more
new buildings or one or more additional structures annexed to any portion of any
of the Improvements on a Leased Property, which are constructed on any parcel or
portion of the Land comprising a Leased Property, including the construction of
a new floor, or the repair, replacement, restoration, remodeling or rebuilding
of the Improvements or any portion thereof on a Leased Property which are not
normal, ordinary or recurring to maintain such Leased Property. Except as
otherwise agreed to by Landlord herein or otherwise in writing, any such Tenant
Improvement or Capital Addition shall be made at Tenant's sole expense and shall
become the property of Landlord upon termination of this Lease. Unless made on
an emergency basis to prevent injury to person or property, as to each Leased
Property, Tenant must obtain Landlord's prior written approval, such approval
not to be unreasonably withheld or delayed, for any Capital Addition or for any
Tenant Improvement which is not a Capital Addition and which has a cost of more
than One Hundred Thousand Dollars ($100,000) or a cost which, when aggregated
with the costs of all such Tenant Improvements on such Leased Property in a
given Lease Year, would cause the total costs of all such Tenant Improvements on
such Leased Property to exceed Two Hundred Fifty Thousand Dollars ($250,000).
Additionally, in connection with any Tenant Improvement, including any Capital
Addition, Tenant shall provide Landlord with copies of any plans and
specification therefor, Tenant's budget relating thereto, any required
governmental permits or approvals, any construction contracts or agreements
relating thereto, and any other information relating to such Tenant Improvement
as Landlord shall reasonably request.
23
8.02 Scope of Right. Subject to Section 8.01 herein and Section
--------------
7.03 concerning required alterations, at Tenant's cost and expense, Tenant shall
have the right to:
(a) seek any governmental approvals, including building
permits, licenses, conditional use permits and any
certificates of need that Tenant requires to construct
any Tenant Improvement;
(b) erect upon each Leased Property such Tenant
Improvements as Tenant deems desirable;
(c) make additions, alterations, changes and improvements
in any Tenant Improvement so erected; and
(d) engage in any other lawful activities that Tenant
determines are necessary or desirable for the
development of each Leased Property in accordance with
the Tenant's Business;
provided, however, Tenant shall not make any Tenant Improvement which would, in
Landlord's reasonable judgment, impair the value of the Leased Property or the
Tenant's Business without Landlord's prior written consent and provided, further
that Tenant shall not be permitted to create a mortgage, lien or any other
encumbrance on any Leased Property without Landlord's prior written consent.
8.03 Cooperation of Landlord. Landlord shall cooperate with
-----------------------
Tenant and take such actions, including the execution and delivery to Tenant of
any applications or other documents, reasonably requested by Tenant in order to
obtain any governmental permits, licenses or approvals sought by Tenant to
construct any Tenant Improvement within fifteen (15) business days following the
later of: (a) the date Landlord receives Tenant's request or (b) the date of
delivery of any such application or document to Landlord; provided, the taking
of such action by Landlord, including the execution of said applications or
documents, shall be without cost to Landlord (or if there is a cost to Landlord,
such cost shall be reimbursed by Tenant), shall not cause Landlord to be in
violation of any law, ordinance or regulation, and shall not be deemed a waiver
by Landlord of any of its rights or of any of Tenant's obligations, including
but not limited to indemnification.
8.04 Commencement of Construction. Tenant agrees that:
----------------------------
(a) Tenant shall diligently seek all governmental approvals
relating to the construction of any Tenant Improvement;
(b) Once Tenant begins the construction of any Tenant
Improvement, Tenant shall diligently oversee any such
construction to completion in accordance with
applicable insurance requirements
24
and the laws, rules and regulations of all governmental
bodies or agencies having jurisdiction over the subject
Leased Property;
(c) Landlord shall have the right at any time and from time
to time to post and maintain upon each Leased Property
such notices as may be necessary to protect Landlord's
interest from mechanics' liens, materialmen's liens or
liens of a similar nature;
(d) Tenant shall not suffer or permit any mechanics' liens
or any other claims or demands arising from the work of
construction of any Tenant Improvement to be enforced
against any Leased Property or any part thereof, and
Tenant agrees to hold Landlord, its agents and
employees and said Leased Property free and harmless
from all demands, claims, causes of action, fines,
penalties, damages (including punitive and
consequential damages), losses, liabilities (including
strict liability), judgments, costs and expenses
(including, without limitation, attorneys' fees, court
costs, and the costs set forth in Section 9.06)
incurred in connection with or arising therefrom;
(e) All work shall be performed in a satisfactory and
workmanlike manner consistent with standards in the
industry; and
(f) Subject to Section 8.08 in the case of Capital
Additions, Tenant shall not secure any construction or
other financing for the Tenant Improvements which is
secured by a portion of any Leased Property without
Landlord's prior written consent, and any such
financing (i) shall not exceed the cost of the Tenant
Improvements, (ii) shall be subordinate to any mortgage
or encumbrance now existing or hereinafter created with
respect to such Leased Property, and (iii) shall be
limited solely to Tenant's interest in the subject
Leased Property.
8.05 Rights in Tenant Improvements. Notwithstanding anything to
------------------------------
the contrary in this Lease, all Tenant Improvements existing on the Leased
Property or constructed upon each Leased Property pursuant to Section 8.01, any
and all subsequent additions thereto and alterations and replacements thereof
shall be the sole and absolute property of Tenant during the Term and any
Extension Term, as the case may be, of this Lease (in respect of such Leased
Property). Upon the expiration or early termination of this Lease in respect of
a Leased Property, all such Tenant Improvements located thereon shall become the
property of Landlord. Without limiting the generality of the foregoing, prior to
the expiration or early termination of this Lease in respect of a Leased
Property, Tenant shall be entitled to all federal and state income tax benefits
associated with all Tenant Improvements located on such Leased Property.
25
8.06 Personal Property. Tenant shall install, place, and use on
-----------------
each Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Fixtures as may be required or as Tenant
may, from time to time, deem necessary or useful to operate such Leased Property
in the operation of the Business.
8.07 Requirements for the Tenant's Personal Property. Tenant
-----------------------------------------------
shall comply with all of the following requirements in connection with the
Tenant's Personal Property:
(a) RESERVED.
(b) The Tenant's Personal Property shall be installed in a
good and workmanlike manner, in compliance with all
governmental laws, ordinances, rules, and regulations
and all insurance requirements, and be installed free
and clear of any mechanics' liens.
(c) Tenant shall, at Tenant's sole cost and expense,
maintain, repair, and replace the Tenant's Personal
Property.
(d) Tenant shall, at Tenant's sole cost and expense, keep
the Tenant's Personal Property insured against loss or
damage by fire, vandalism and malicious mischief,
sprinkler leakage, and other physical loss perils
commonly covered by fire and extended coverage, boiler
and machinery, and difference in conditions insurance
(which insurance shall meet the requirements of Section
4.03 hereof) in an amount not less than the full
replacement cost thereof or such other amount as
appears on a schedule submitted by Tenant to Landlord,
which schedule shall be subject to Landlord's approval,
and Tenant shall use the proceeds from any such policy
for the repair and replacement of such items of
Tenant's Personal Property; provided, however, that if
Landlord fails to object to the schedule so submitted
by Tenant within five (5) business days of Landlord's
receipt of such schedule, Landlord's approval of such
schedule shall be deemed given.
(e) Tenant shall pay all Impositions and other taxes
applicable to Tenant's Personal Property.
(f) If Tenant's Personal Property is damaged or destroyed
by fire or otherwise, Tenant shall promptly repair or
replace Tenant's Personal Property unless Tenant is
entitled to and elects to terminate the Lease pursuant
to Section 10.05.
26
(g) As to each Leased Property, unless an Event of Default
(or any event which, with the giving of notice or lapse
of time, or both, would constitute an Event of Default)
has occurred and remains uncured beyond any applicable
grace period, Tenant may remove Tenant's Personal
Property from such Leased Property from time to time
provided that: (i) the items removed are not required
or necessary to operate the Business on such Leased
Property (unless such items are being replaced by
Tenant) and (ii) Tenant promptly repairs any damage to
such Leased Property resulting from the removal of
Tenant's Personal Property.
(h) As to each Leased Property, Tenant shall remove all of
Tenant's Personal Property upon the termination or
expiration of the Lease and shall promptly repair any
damage to such Leased Property resulting from the
removal thereof to the reasonable satisfaction of
Landlord; provided, however, if Tenant fails to remove
Tenant's Personal Property from such Leased Property
within thirty (30) days after the termination or
expiration of this Lease with respect thereto, then
Tenant shall be deemed to have abandoned such items of
Tenant's Personal Property, all of which shall become
the property of Landlord, and Landlord may remove,
store and dispose of such property and Tenant shall
have no claim or right against Landlord for such
property or the value thereof regardless of the
disposition thereof by Landlord. Tenant shall pay
Landlord, upon demand, all expenses incurred by
Landlord in removing, storing, and disposing of such
items of Tenant's Personal Property and repairing any
damage caused by such removal. Tenant's obligations
hereunder shall survive the termination or expiration
of this Lease as to such Leased Property.
(i) Tenant shall perform its obligations under any
equipment lease or security agreement for Tenant's
Personal Property.
8.08 Financings of Capital Additions to a Leased Property.
-----------------------------------------------------
Landlord may, but shall be under no obligation to, provide or arrange
construction, permanent or other financing for any Capital Addition proposed to
be made to a Leased Property by Tenant. Any financing so provided by Landlord
shall be made in accordance with, and subject to, a written Addendum to this
Lease.
ARTICLE IX
DEFAULTS AND REMEDIES
27
9.01 Events of Default. The occurrence of any one or more of the
-----------------
following shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of Rent, or
any other monetary obligation payable by Tenant to
Landlord hereunder, within ten (10) days after the due
date thereof and after written notice thereof and an
opportunity to cure within a ten (10) day period after
such notice is given to Tenant by Landlord. In the
event of Tenant's failure to make timely payment of
such obligations two (2) times during any twelve (12)
month period, each subsequent such failure within the
twelve (12) months immediately following such second
failure shall immediately constitute an Event of
Default, and Landlord shall not be required to provide
notice thereof, nor shall Tenant have any further
opportunity to cure such failure;
(b) Tenant fails to observe and perform any covenant (other
than the covenant in respect of insurance set forth in
Article IV), condition or agreement hereunder to be
performed by Tenant (except those described in Section
9.01(a) of this Lease) and such failure continues for a
period of twenty (20) days after written notice thereof
is given to Tenant by Landlord; or if, by reason of the
nature of such default, the same cannot with due
diligence be remedied within said twenty (20) days,
such failure will not be deemed to continue if Tenant
proceeds promptly and with due diligence to remedy the
failure and diligently completes the remedy thereof;
provided, however, said cure period will not extend
beyond forty (40) days if the facts or circumstances
giving rise to the default are creating a further harm
to Landlord or the subject Leased Property and Landlord
makes a good faith determination that Tenant is not
undertaking remedial steps that Landlord would cause to
be taken if this Lease were then to terminate;
(c) If Tenant: (i) admits in writing its inability to pay
its debts generally as they become due; (ii) files a
petition in bankruptcy or a petition to take advantage
of any insolvency act; (iii) makes an assignment for
the benefit of its creditors; (iv) is unable to pay its
debts as they mature; (v) consents to the appointment
of a receiver of itself or of the whole or any
substantial part of its property; or (vi) files a
petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any
other
28
applicable law or statute of the United States of
America or any state thereof;
(d) If Tenant, on insolvency proceedings or on a petition
in bankruptcy filed against it, is adjudicated as
bankrupt or a court of competent jurisdiction enters an
order or decree appointing, without the consent of
Tenant, a receiver of Tenant of the whole or
substantially all of its property, or approving a
petition filed against it seeking reorganization or
arrangement of Tenant under the federal bankruptcy laws
or any other applicable law or statute of the United
States of America or any state thereof, and such
judgment, order or decree is not vacated, dismissed or
set aside within sixty (60) days from the date of the
entry thereof;
(e) If the estate or interest of Tenant in a Leased
Property or any part thereof is levied upon or attached
in any proceeding and the same is not vacated or
discharged within fifteen (15) days after commencement
thereof (unless Tenant is contesting such lien or
attachment in accordance with this Lease) or if such
estate or interest of Tenant is assigned, conveyed or
involuntarily transferred in violation of this Lease;
(f) Any representation, warranty or covenant made by Tenant
on behalf of itself or an Affiliate in this Lease or in
any certificate, demand or request made pursuant hereto
proves to be incorrect, in any material respect, as of
the date of issuance or making thereof;
(g) Conviction of Tenant or an Affiliate of a crime or
offense constituting a felony in the jurisdiction in
which committed or under federal law which conviction
results in the termination of the franchise.
(h) Termination or relinquishment of the franchise or
license pursuant to which Tenant or an Affiliate
conducts business on or from any Leased Property,
provided that such event shall not constitute an Event
of Default if (i) no other Event of Default enumerated
in this Section 9.01 shall occur and be continuing, and
(ii) at a date no later than twenty-four (24) months
following such date of termination or relinquishment,
Tenant or an Affiliate has entered into written new or
amended franchises or licenses for operation of motor
vehicle retail or motor vehicle related businesses at
such Leased Property satisfactory to Landlord in its
discretion applying commercially reasonable standards;
29
(i) Default under any franchise or license pursuant to
which Tenant or an Affiliate conducts business at a
Leased Property, if in the Landlord's judgment such
default in light of commercially reasonable standards
and industry practice would have a Material Adverse
Effect (as hereafter defined) on the Leased Property;
(j) A final, non-appealable judgment or judgments for the
payment of money not fully covered (excluding
deductibles) by insurance is rendered against Tenant
and the same remains undischarged, unvacated, unbonded,
unappealed or unstayed for a period of thirty (30)
consecutive days;
(k) Tenant shall fail to observe the covenant in respect to
insurance under Article IV provided Landlord shall have
provided notice of such failure to Tenant and Tenant
shall have failed to cure such failure within three (3)
business days of such notice; or
(l) Except after the effective date of a permitted
assignment meeting the requirements of Article XIII, if
Tenant is liquidated or dissolved, or begins
proceedings toward liquidation or dissolution, or in
any manner permits the sale or divestiture of
substantially all of its assets.
9.02 Remedies. To the extent an Event of Default is applicable
--------
only to a specific Leased Property or specific Leased Properties (in accordance
with Section 9.01 above), the remedies set forth herein shall be exercisable
solely with respect to such Leased Property or Leased Properties, and shall not
be exercisable with respect to any other Leased Property. To the extent an Event
of Default constitutes an Event of Default as to all of the Leased Properties
(in accordance with Section 9.01 above), the remedies set forth herein shall be
exercisable with respect to all of the Leased Properties. Subject to the
foregoing provisions, Landlord may exercise any one or more of the following
remedies upon the occurrence of an Event of Default:
(a) Landlord may terminate this Lease, exclude Tenant from
possession of the subject Leased Property and use
reasonable efforts to lease the subject Leased Property
to others. If this Lease is terminated pursuant to the
provisions of this subparagraph (a) with respect to one
or more, but less than all, of the Leased Properties
identified on Schedule A hereto, Tenant will remain
liable to Landlord for the Rent for all of the Leased
Properties identified on Schedule A and other sums then
due and for the balance of the Term as if the Lease had
not been terminated with respect to the subject Leased
Property, less the net proceeds, if any, of any re-
letting of the subject Leased Property by Landlord
30
subsequent to such termination, after deducting all
Landlord's expenses in connection with such re-letting,
including without limitation, the expenses set forth in
Section 9.02(b)(ii) below. Notwithstanding the
termination of this Lease with respect to a subject
Leased Property, Tenant shall pay to Landlord all
amounts due as Rent, and such other amounts then due,
under this Lease on the days that such Rent and such
other amounts become due and payable as required by
this Lease.
(b) Without demand or notice, Landlord may re-enter and
take possession of the subject Leased Property or any
part thereof; and repossess such Leased Property as of
Landlord's former estate; and expel Tenant and those
claiming through or under Tenant from such Leased
Property; and, remove the effects of both or either,
without being deemed guilty of any manner of trespass
and without prejudice to any remedies for arrears of
Rent or preceding breach of covenants or conditions. If
Landlord elects to re-enter, as provided in this
paragraph (b) or if Landlord takes possession of such
Leased Property pursuant to legal proceedings or
pursuant to any notice provided by law, Landlord may,
from time to time, without terminating any portion of
this Lease, re-let such Leased Property or any part of
such Leased Property, either alone or in conjunction
with other portions of the Improvements of which such
Leased Property are a part, in Landlord's name but for
the account of Tenant, for such term or terms (which
may be greater or less than the period which would
otherwise have constituted the balance of the Term of
this Lease) and on such terms and conditions (which may
include concessions of free rent, and the alteration
and repair of such Leased Property) as Landlord, in its
uncontrolled discretion, may determine. Landlord may
collect and receive the Rents for such Leased Property.
Landlord will not be responsible or liable for any
failure to re-let such Leased Property, or any part of
such Leased Property, or for any failure to collect any
Rent due upon such re-letting. No such re-entry or
taking possession of such Leased Property by Landlord
will be construed as an election on Landlord's part to
terminate this Lease unless a written notice of such
intention is given to Tenant. No notice from Landlord
under this Lease or under a forcible entry and detainer
statute or similar law will constitute an election by
Landlord to terminate this Lease unless such notice
specifically says so. Landlord reserves the right
following any such re-entry or re-letting, or both, to
exercise its right to terminate this Lease by
31
giving Tenant such written notice, and, in that event
such Lease will terminate as specified in such notice.
(c) If Landlord elects to take possession of a Leased
Property according to subparagraph (b) of this Section
9.02 without terminating this Lease, Tenant will pay
Landlord (A) the Rent and other sums which would be
payable under this Lease with respect to such Leased
Property if such repossession had not occurred, less
(B) the net proceeds, if any, of any re-letting of such
Leased Property after deducting all of Landlord's
expenses incurred in connection with such re-letting,
including without limitation, all repossession costs,
brokerage commissions, legal expense, attorneys' fees,
expense of employees, alteration, remodeling, repair
costs, and expense of preparation for such re-letting.
If, in connection with any re-letting, any resulting
lease term for the subject Leased Property extends
beyond the existing Term or Extension Term, as the case
may be, or such Leased Property covered by such re-
letting includes areas which are not part of such
Leased Property, a fair apportionment of the Rent
received from such re-letting and the expenses incurred
in connection with such re-letting will be made in
determining the net proceeds received from such re-
letting. In addition, in determining the net proceeds
from such re-letting, any rent concessions will be
apportioned over the term of the new lease. Tenant will
pay such amounts to Landlord monthly on the days on
which the Rent and all other amounts owing under this
Lease would have been payable if possession had not
been retaken, and Landlord will be entitled to receive
the rent and other amounts from Tenant on each such
day. Notwithstanding anything herein to the contrary,
Landlord, at its option, may collect and apply any Rent
received from such re-letting in accordance herewith
and in such case shall remit any balance thereof to
Tenant. Landlord shall incur no liability or obligation
to Tenant arising out of the collection or application
of Rent by Landlord hereunder.
(d) Landlord may re-enter the applicable Leased Property
and have, repossess and enjoy such Leased Property as
if this Lease had not been made, and in such event,
Tenant and its successors and assigns shall remain
liable for any contingent or unliquidated obligations
or sums owing at the time of such repossession.
(e) Landlord may take whatever action at law or in equity
as may appear necessary or desirable to collect the
Rent and other amounts
32
payable hereunder with respect to the subject Leased
Property then due and thereafter to become due, or to
enforce performance and observance of any obligations,
agreements or covenants of Tenant under this Lease.
9.03 Right of Set-Off. Landlord may, and is hereby authorized by
-----------------
Tenant, at any time and from time to time, after advance notice to Tenant, to
set-off and apply any and all sums held by Landlord in respect of a Leased
Property, including all sums held in any escrow for Impositions, any
indebtedness of Landlord to Tenant, and any claims by Tenant against Landlord,
against any obligations of Tenant under this Lease in respect of such Leased
Property and against any claims by Landlord against Tenant, whether or not
Landlord has exercised any other remedies hereunder. Landlord shall set-off and
apply such sums first, to delinquent real estate taxes, unless such taxes are
being protested in good faith and no lien has attached to any Leased Property
with respect thereto, second, to currently due and owing real estate taxes, and
next, to other Tenant's obligations in the order which Landlord may determine.
The rights of Landlord under this Section are in addition to any other rights
and remedies Landlord may have against Tenant.
9.04 Performance of Tenant's Covenants. Landlord may, without
---------------------------------
waiving or releasing any obligation of Tenant, and without waiving or releasing
any obligation or default, perform any obligation of Tenant which Tenant has
failed to perform within five (5) business days after Landlord has sent a
written notice to Tenant informing it of its specific failure (provided no such
notice shall be required if Landlord has previously notified Tenant of such
failure under the provisions of Section 9.01). In the event Landlord deems, in
its discretion, that Tenant's failure to perform such obligation has given rise
to an emergency situation, Landlord may perform such obligation without waiving
or releasing any obligation of Tenant, and without waiving or releasing any
obligation or default; provided, however, that Landlord shall notify Tenant of
such performance as soon as it is reasonably practicable to do so. Tenant shall
reimburse Landlord on demand, as Additional Rent, for any expenditures thus
incurred by Landlord and shall pay interest thereon at the New York Prime Rate.
9.05 Late Charge. Any payment not made by Tenant for more than
-----------
five (5) business days after the due date shall be subject to a late charge
payable by Tenant as Rent of four percent (4%) of the amount of such overdue
payment. Notwithstanding the foregoing, in the event that Tenant's payment is
not made more than five (5) business days after the due date more than two (2)
times during any twelve (12) month period, any such subsequent overdue payments
within the twelve (12) months immediately following such second failure shall be
subject to a late charge payable by Tenant as Rent of seven percent (7%) of the
amount of such overdue payment.
9.06 Litigation; Attorneys' Fees. Within ten (10) days after
----------------------------
Tenant has knowledge of any litigation or other proceeding related to or arising
out of this Agreement or the Leased Property in which claims are asserted in an
amount in excess of $50,000, that (1) may be
33
instituted against Tenant, (2) may be instituted against any Leased Property to
secure or recover possession thereof, or (3) may affect the title to or the
interest of Landlord in any Leased Property, Tenant shall give written notice
thereof to Landlord. In the event that Landlord determines that Tenant has
failed to give adequate cooperation or information with respect to any such
litigation, investigation, receivership, administrative, bankruptcy, insolvency
or other similar proceeding, Landlord may, after notice to Tenant, undertake
such investigation or proceeding and Tenant shall pay all reasonable costs and
expenses (the "Costs") related thereto that are incurred by Landlord, whether or
not Landlord has received notice from Tenant of such investigation or
proceeding, and whether or not an Event of Default has actually occurred or has
been declared and thereafter cured, which Costs shall include, without
limitation: (a) the fees, expenses, and costs of any litigation, investigation,
receivership, administrative, bankruptcy, insolvency or other similar
proceeding; (b) reasonable attorney, paralegal, consulting and witness fees and
disbursements; and (c) the expenses, including, without limitation, lodging,
meals, and transportation, of Landlord and its employees, agents, attorneys, and
witnesses in investigating or preparing for litigation, administrative,
bankruptcy, insolvency or other similar proceedings and attendance at hearings,
depositions, and trials in connection therewith. Within ten (10) days of
Landlord's presentation of an invoice of Costs incurred by Landlord pursuant to
the preceeding sentence or otherwise incurred by Landlord in enforcing or
preserving Landlord's rights under this Lease, whether or not an Event of
Default has actually occurred or has been declared and thereafter cured, Tenant
shall pay all such Costs. All such Costs as incurred shall be deemed to be
Additional Rent under this Lease.
9.07 Remedies Cumulative. The remedies of Landlord herein are
-------------------
cumulative to and not in lieu of any other remedies available to Landlord at law
or in equity. The use of, or failure to use, any one remedy shall not be taken
to exclude or waive the right to use any other remedy.
9.08 Escrows and Application of Payments. As security for the
-----------------------------------
performance of its obligations hereunder, Tenant hereby assigns to Landlord all
its right, title and interest in and to all monies escrowed with Landlord under
this Lease and all deposits with utility companies, taxing authorities, and
insurance companies; provided, however, that Landlord shall not exercise its
rights hereunder with respect to any Leased Property until an Event of Default
has occurred in respect of such Leased Property. Any payments received by
Landlord under any provisions of this Lease during the existence, or continuance
of an Event of Default shall be applied to Tenant's obligations, first, to
delinquent real estate taxes, unless such taxes are being protested in good
faith and no lien has attached to any Leased Property with respect thereto,
second, to currently due and owing real estate taxes, and next, to other
Tenant's obligations in the order which Landlord may determine.
9.09 Power of Attorney. Tenant hereby irrevocably and
-----------------
unconditionally appoints Landlord, or Landlord's authorized officer, agent,
employee or designee, as Tenant's true and lawful attorney-in-fact, to act,
after an Event of Default, for Tenant in Tenant's name, place, and stead, and
for Tenant's and Landlord's use and benefit, to execute, deliver and file all
34
applications and any and all other necessary documents or things, to effect a
transfer, reinstatement, renewal and/or extension of any and all licenses and
other governmental authorizations issued to Tenant in connection with Tenant's
operation of the Leased Properties, and to do any and all other acts incidental
to any of the foregoing. Tenant irrevocably and unconditionally grants to
Landlord as its attorney-in-fact full power and authority to do and perform,
after an Event of Default, every act necessary and proper to be done in the
exercise of any of the foregoing powers as fully as Tenant might or could do if
personally present or acting, with full power of substitution, hereby ratifying
and confirming all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and is
irrevocable prior to the full performance of Tenant's obligations hereunder.
ARTICLE X
DAMAGE AND DESTRUCTION
10.01 General. Tenant shall notify Landlord if any Leased
-------
Property is damaged or destroyed by reason of fire or any other cause. Tenant
shall promptly repair, rebuild, or restore such Leased Property, at Tenant's
expense, so as to make such Leased Property at least equal in value to such
Leased Property existing immediately prior to such occurrence and as nearly
similar to it in character as is practicable and reasonable. Before beginning
such repairs or rebuilding, or executing any contracts in connection with such
repairs or rebuilding, Tenant will submit for Landlord's approval, which
approval Landlord will not unreasonably withhold or delay, complete and detailed
plans and specifications for such repairs or rebuilding. Promptly after
receiving Landlord's approval of the plans and specifications, Tenant will begin
such repairs or rebuilding and will oversee the repairs and rebuilding to
completion with diligence, subject, however, to strikes, lockouts, acts of God,
embargoes, governmental restrictions, and other causes beyond Tenant's
reasonable control. Landlord will make available to Tenant the net proceeds of
any fire or other casualty insurance paid to Landlord for such repair or
rebuilding as the same progresses, after deduction of any costs of collection,
including attorneys' fees. Payment will be made against properly certified
vouchers of a competent architect in charge of the work and approved by
Landlord. Prior to commencing the repairing or rebuilding, Tenant shall deliver
to Landlord for Landlord's approval a schedule setting forth the estimated
monthly draws for such work. Landlord will contribute to such payments out of
the insurance proceeds an amount equal to the proportion that the total net
amount received by Landlord from insurers bears to the total estimated cost of
the rebuilding or repairing, multiplied by the payment by Tenant on account of
such work. Landlord may, however, withhold ten percent (10%) from each such
payment and shall disburse such amount after: (a) the work of repairing or
rebuilding is completed and proof has been furnished to Landlord that no lien or
liability has attached or will attach to such Leased Property or to Landlord in
connection with such repairing or rebuilding and (b) Tenant has obtained a
certificate of use and occupancy (or its functional equivalent) for the portion
of such Leased Property being repaired or rebuilt. Upon the completion of
rebuilding or repairing and the furnishing of such proof, the balance of the net
proceeds of such insurance payable to Tenant on account of such repairs or
rebuilding will be paid to Tenant. Tenant will
35
obtain and deliver to Landlord a temporary or final certificate of occupancy
before such Leased Property is reoccupied for any purpose. Tenant shall
complete such repairs or rebuilding free and clear of mechanic's or other liens,
and in accordance with the building codes and all applicable laws, ordinances,
regulations, or orders of any state, municipal, or other public authority
affecting the repairs or rebuilding, and also in accordance with all
requirements of the insurance rating organization, or similar body. Any
remaining proceeds of insurance after such restoration will be Tenant's
property.
10.02 Landlord's Inspection. During the progress of such repairs
----------------------
or rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the subject Leased Property and will be furnished, if required by them,
with copies of all plans, shop drawings, and specifications relating to such
repairs or rebuilding. Tenant will keep all plans, shop drawings, and
specifications available, and Landlord and its architects and engineers may
examine them at all reasonable times. If, during such repairs or rebuilding,
Landlord and its architects and engineers determine that the repairs or
rebuilding are not being done in accordance with the approved plans and
specifications, Landlord will give prompt notice in writing to Tenant,
specifying in detail the particular deficiency, omission, or other respect in
which Landlord claims such repairs or rebuilding do not accord with the approved
plans and specifications. Upon the receipt of any such notice, Tenant will
cause corrections to be made to any deficiencies, omissions, or such other
respect. Tenant's obligations to supply insurance, according to Article IV,
will be applicable to any repairs or rebuilding under this Section 10.02.
10.03 Landlord's Costs. Tenant shall, within fifteen (15) days
----------------
after receipt of an invoice from Landlord, pay the reasonable costs, expenses,
and fees of any architect or engineer employed by Landlord to review any plans
and specifications and to supervise and approve any construction, or for any
services rendered by such architect or engineer to Landlord as contemplated by
any of the provisions of this Lease, or for any services performed by Landlord's
attorneys in connection therewith; provided, however, that Landlord will consult
with Tenant and notify Tenant of the estimated amount of such expenses.
10.04 Rent Abatement. In the event that the provisions of Section
--------------
10.01 above shall become applicable as to any Leased Property, and subject to
the last sentence of this Section 10.04, the applicable Base Annual Rent shall
be abated or reduced proportionately during any period in which, by reason of
such damage or destruction, there is substantial interference with the operation
of the Business of Tenant in such Leased Property, having regard to the extent
to which Tenant may be required to discontinue any Business on such Leased
Property, and such abatement or reduction shall continue for the period
commencing with such destruction or damage and ending with the substantial
completion by Tenant of such work or repair and/or reconstruction. In the event
that only a portion of any Leased Property is rendered untenantable or incapable
of such use, the Base Annual Rent payable hereunder in respect thereof shall be
reduced proportionately considering the extent to which the Tenant is unable to
practicably use the Leased Property for Business. Tenant shall use reasonably
diligent efforts to make the Leased Property tenantable and capable of such use.
Notwithstanding any other
36
provision hereof, such rental abatement shall be limited to the amount of any
rental or Business interruption insurance proceeds actually received by Landlord
under Article IV.
10.05 Substantial Damage During Lease Term. Provided Tenant has
------------------------------------
fully complied with Section 4.01 hereof (including actually maintaining in
effect rental value insurance or Business interruption insurance provided for in
clause (c) thereof) and has satisfied the conditions of the last sentence of
this Section 10.05, if, at any time during the Term or any Extension Term, as
the case may be, of this Lease, any Leased Property is so damaged by fire or
otherwise that it is Completely Destroyed or Partially Destroyed (as such terms
are hereafter defined), Tenant may, within one hundred and eighty (180) days
after such damage, give notice of its election to terminate this Lease with
respect to such Leased Property and, subject to the further provisions of this
Section, this Lease will cease with respect to such Leased Property on the
thirtieth (30th) day after the delivery of such notice. If the Lease is so
terminated, Tenant will have no obligation to repair, rebuild or replace such
Leased Property, and the entire insurance proceeds will belong to Landlord. If
the Lease is not so terminated, Tenant shall rebuild such Leased Property in
accordance with Section 10.01. If Tenant elects to terminate this Lease pursuant
to this Section 10.05, Tenant will pay (or cause to be paid) to Landlord, an
amount equal to the excess amount, if any, of the book value of the damaged
property as shown in Landlord's financial statements as of the date of such
termination, over the amount of all insurance proceeds received by Landlord. A
Leased Property shall be deemed to be "Completely Destroyed" if there is
sufficient damage to such Leased Property that Landlord and Tenant agree to its
classification as such. A Leased Property shall be deemed to be "Partially
Destroyed" if, as a result of damages to it, a substantial part of the Business
(as determined by a reasonable dealer in the trade, in light of standard trade
practices) cannot be conducted on it within one hundred and eighty (180) days of
the occurrence of such damages. In the event that Landlord and Tenant are unable
to agree to a determination of whether any Leased Property is Completely
Destroyed, Partially Destroyed or otherwise, such determination shall be made
pursuant to the Arbitration provisions set forth in Article XIV.
10.06 Damage Near End of Term. Notwithstanding any provisions of
-----------------------
Sections 10.01 or 10.05 to the contrary, if damage to or destruction of any
Leased Property occurs during the last twenty-four (24) months of the Term, and
if such damage or destruction renders the Leased Property Completely Destroyed
or Partially Destroyed, either party shall have the right to terminate this
Lease as to such Leased Property by giving notice to the other within ten (10)
days after the date of damage or destruction, in which event Landlord shall be
entitled to retain the insurance proceeds and Tenant shall pay to Landlord on
demand the amount of any deductible or uninsured loss arising in connection
therewith; provided, however, that any such notice given by Landlord shall be
void and of no force and effect if Tenant exercises an available option for an
Extension Term with respect to such Leased Property pursuant to provisions of
this Lease within ten (10) business days following receipt of such termination
notice.
10.07 Risk of Loss. Notwithstanding anything herein to the
------------
contrary, during the Term or any Extension Term, as the case may be, the risk of
loss of or decrease in the enjoyment
37
and beneficial use of the Leased Properties in consequence of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by Tenant, and Landlord shall in no event be answerable or
accountable therefor except in the case of gross negligence, willful misconduct
or breach of this Lease by Landlord resulting in such damage or destruction. In
addition, all risk of loss or decrease in enjoyment and beneficial use in
consequence of foreclosures, attachments, levies or executions is assumed by
Tenant except for foreclosure due to Landlord's indebtedness.
ARTICLE XI
CONDEMNATION
11.01 Total Taking. If at any time during the Term or any
------------
Extension Term, as the case may be, any Leased Property is totally and
permanently taken by right of eminent domain or by conveyance made in response
to the threat of the exercise of such right ("Condemnation"), this Lease shall
terminate as to such Leased Property on the Date of Taking (which shall mean the
date the condemning authority has the right to possession of the property being
condemned), and Tenant shall promptly pay all outstanding applicable Rent and
other charges through the date of termination, provided, however, this Lease
shall not so terminate if the Condemnation occurred due to the failure of Tenant
to maintain such Leased Property as required by Article VII hereof or other
applicable provisions hereof, whether or not such failure on the part of Tenant
constituted an Event of Default hereunder at the time of the Condemnation.
11.02 Partial Taking. If a portion of a Leased Property is taken
--------------
by Condemnation, this Lease shall remain in effect as to such Leased Property if
such Leased Property is not thereby rendered Unsuitable for the continuation of
Tenant's Business on that Leased Property (which shall mean that such Leased
Property is in such a state or condition such that in the good faith judgment of
Tenant, reasonably exercised, it cannot be used on a commercially practicable
basis in the operation of the Business), but if such Leased Property is thereby
rendered Unsuitable for the continuation of Tenant's Business on that Leased
Property, this Lease shall terminate as to such Leased Property on the Date of
Taking, provided such Condemnation was not as a result of Tenant's failure to
maintain such Leased Property as provided for in Section 11.01.
11.03 Restoration. If there is a partial taking of any Leased
-----------
Property and this Lease remains in full force and effect pursuant to Section
11.02, Landlord shall retain the amount of any Landlord Award (as hereafter
defined) received by Landlord, Landlord shall apply such Landlord Award to
accomplish all necessary restoration to the Leased Property, and any excess
after such application shall be retained by Landlord. If there is a partial
taking of any Leased Property and this Lease remains in full force and effect
pursuant to Section 11.02, Tenant shall retain the amount of any Tenant Award
(as hereafter defined) received by Tenant, Tenant shall apply such Tenant Award
to accomplish all necessary restoration of Tenant's property, and any excess
after such application shall be retained by Tenant. Notwithstanding anything in
this
38
Section to the contrary, in the event that there is a partial taking of any
Leased Property and this Lease remains in full force and effect pursuant to
Section 11.02, and there is a single Award with respect to such partial taking,
then the Landlord and Tenant shall use their good faith efforts to determine the
proper apportionment of such Award (as hereafter defined) to restoration of
Landlord's and Tenant's respective properties. In the event that the parties
are unable to agree on such apportionment within thirty (30) days, the parties
shall submit to arbitration of an apportionment subject to the arbitration
provisions set forth in Article XIV.
11.04 Landlord's Inspection. During the progress of such
---------------------
restoration, Landlord and its architects and engineers may, from time to time,
inspect the subject Leased Property and will be furnished, if required by them,
with copies of all plans, shop drawings, and specifications relating to such
restoration. Tenant will keep all plans, shop drawings, and specifications
available, and Landlord and its architects and engineers may examine them at all
reasonable times. If, during such restoration, Landlord and its architects and
engineers determine that the restoration is not being done in accordance with
the approved plans and specifications, Landlord will give prompt notice in
writing to Tenant, specifying in detail the particular deficiency, omission, or
other respect in which Landlord claims such restoration does not accord with the
approved plans and specifications. Upon the receipt of any such notice, Tenant
will cause corrections to be made to any deficiencies, omissions, or such other
respect. Tenant's obligations to supply insurance, according to Article IV, will
be applicable to any restoration under this Section.
11.05 Award Distribution. The entire compensation, sums or
------------------
anything of value awarded, paid or received on a total or partial Condemnation
of a Leased Property that is awarded to Landlord shall belong to Landlord (the
"Landlord Award"). The entire compensation, sums or anything of value awarded,
paid or received on a total or partial Condemnation of a Leased Property that is
awarded to Tenant shall belong to Tenant (the "Tenant Award", collectively with
the Landlord Award, the "Awards", and each, individually, an "Award").
Notwithstanding anything in this Section to the contrary, in the event that
there is a total or partial Condemnation of a Leased Property and there is a
single Award with respect to such Condemnation, then the Landlord and Tenant
shall use their good faith efforts to determine the proper apportionment of such
Award to Landlord's and Tenant's respective properties. In the event that the
parties are unable to agree on such apportionment within thirty (30) days, the
parties shall submit to arbitration of an apportionment subject to the
arbitration provisions set forth in Article XIV.
11.06 Temporary Taking. The taking of any Leased Property, or any
----------------
part thereof, by military or other public authority shall constitute a taking by
Condemnation only when the use and occupancy by the taking authority has
continued for longer than twenty four (24) months. During any such twenty-four
(24) month period, which shall be a temporary taking, all the provisions of this
Lease shall remain in full force and effect as to such Leased Property with no
abatement of rent payable by Tenant hereunder. In the event of any such
temporary
39
taking, the entire amount of any such Award made for such temporary taking
allocable to the Term hereof, whether paid by way of damages, Rent or otherwise,
shall be paid to Tenant.
ARTICLE XII
ADDITIONAL REPRESENTATIONS, WARRANTIES AND FINANCIAL COVENANTS
Tenant hereby represents, warrants and covenants to Landlord as
follows:
12.01 Organization and Qualification.
------------------------------
(a) Tenant is a Maryland corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation or organization, with all power and authority,
corporate or otherwise, necessary to: (i) enter into and
perform this Lease and (ii) own and lease its assets and
properties, and conduct its Business, as it is now being
conducted or proposed to be conducted. Tenant is duly qualified
as a foreign corporation or other entity, as the case may be,
to conduct its Business and own and lease its assets and
properties, and is in good standing, in each jurisdiction where
the character of its assets and properties owned or held under
lease or the nature of its Business makes such qualification
necessary or advisable, and is duly qualified and licensed
under all laws, regulations, ordinances or orders of public or
governmental authorities, or otherwise to carry on its Business
and own or lease its assets and properties in the places and in
the manner in which they are owned, leased or conducted or
proposed to be owned, leased or conducted, except where the
failure to be so organized, qualified and in good standing or
to have such authority, qualification or licensing could not
result in a Material Adverse Change. Complete and correct
copies of Tenant's Charter, as in effect on the date hereof,
and Tenant's by-laws, also as in effect on the date hereof,
have been delivered to Landlord.
(b) Each Affiliate that conducts operations or business on or from
any Leased Property, whether now or at any time in the future,
is duly organized, validly existing and in good standing under
the laws of its organization, with all power and authority,
corporate or otherwise, necessary to own and lease its assets
and properties, and conduct its business, as it is now being
conducted or proposed to be conducted. Each Affiliate is duly
qualified as a foreign corporation or other entity, as the case
may be, to do business and own and lease its assets and
properties, and is in good standing, in each jurisdiction where
the character of its assets and properties owned or held under
lease or the nature of its activities or business makes such
qualification necessary or advisable, and is duly qualified and
licensed
40
under all laws, regulations, ordinances or orders or public or
governmental authorities or otherwise to carry on its business
and own or lease its assets and properties in the places and in
the manner in which they are owned, leased or is conducted or
proposed to be owned, leased or conducted, except where the
failure to be so organized, qualified and in good standing or
to have such authority, qualification or licensing could not
result in a Material Adverse Change.
"Material Adverse Change" since a particular specified date, or a date
which may be specified from the circumstances existing immediately prior to the
happening of a specified event or occurrence, or, if no date or event is
specified, with reference to the most recent Annual Financial Statements
delivered pursuant to this Lease, means a material adverse change in the
Business, assets, properties, franchises, financial condition or income of
Tenant or the operations, business, assets, properties, franchises, financial
condition, income or prospects of any Affiliate, whether or not such event or
occurrence is an Event of Default. Nothing that would otherwise be a breach of
any representation, warranty, covenant or obligation herein by any Affiliate
shall be a breach of this Agreement, unless such breach constitutes or causes a
material adverse effect on the Business.
"Affiliate" means with respect to any Person, (i) any Person that
holds direct or indirect beneficial ownership (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) of voting securities or other
voting interests representing at least five percent (5%) of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least five percent (5%) of the outstanding equity securities or
interests in a Person, or (ii) any Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with such Person.
A "Person" shall mean and include natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts, Indian tribes or other organizations, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
12.02 Material Agreements. Tenant has previously furnished to
-------------------
Landlord correct and complete copies of (including all exhibits, schedules and
amendments thereto) each agreement listed in Exhibit 12.02, each as in effect on
the date hereof (the "Material Agreements").
12.03 Changes in Condition. Since the date of the latest Annual
---------------------
Financial Statements, no Material Adverse Change has occurred between such date
and the date hereof, and neither Tenant nor any Affiliate has entered into any
material transaction outside the ordinary course of its or their operations or
business, including the Business, except as set forth in Exhibit 12.03 and the
matters contemplated by this Lease.
41
12.04 Franchises, Licenses, etc. Tenant and its subsidiaries own,
--------------------------
or have sufficient interests in, all franchises, trademarks, trademark rights,
trade names, trade name rights, copyrights, licenses, permits, authorizations
and other rights as are necessary for the conduct of Tenant's Business and its
subsidiaries' businesses as now conducted or proposed to be conducted by Tenant
or any Affiliate, as well as rights under any agreement under which Tenant or
its subsidiaries has access to confidential information used by Tenant or its
subsidiaries in Tenants' Business or the businesses of its subsidiaries, as the
case may be (collectively, the "Intellectual Property"). All Intellectual
Property is in full force and effect in all material respects, and Tenant and
its subsidiaries are in substantial compliance with the foregoing without any
conflict with the valid rights of others, which has resulted, or could be
reasonably likely to result in any Material Adverse Change. Neither Tenant nor
any Affiliate has violated, or received any communication that by conducting its
Business or any Affiliate's businesses, it or any Affiliate would violate any
franchises, licenses, patents, trademarks, service marks, trade names,
copyrights, trade secrets, proprietary rights or processes of any other Person
(as hereafter defined) nor is Tenant or any Affiliate aware of any such
violations. No event has occurred which permits, or after notice or lapse of
time or both would permit, the revocation or termination of any such license,
franchise or other right or affect the rights of Tenant or any Affiliate so as
to result in or reasonably be likely to result in any Material Adverse Change.
There is no litigation or other proceeding or dispute or, to the knowledge of
Tenant or any Affiliate, threat thereof with respect to the validity or, where
applicable, the extension or renewal, of any of the foregoing which has
resulted, or could result, in any Material Adverse Change.
12.05 Litigation. No litigation, at law or in equity, or any
-----------
proceeding before any court, board or other governmental or administrative
agency or any arbitrator or other forum of alternative dispute resolution is
pending or, to the knowledge of Tenant or any Affiliate, threatened which
involves any risk of any final judgment, order or liability which, after giving
effect to any applicable insurance, has resulted, or could result, in any
Material Adverse Change or which seeks to enjoin the execution and consummation
of this Lease and the performance of Tenant's obligations hereunder. No
judgment, decree or order of any court, board or other governmental or
administrative agency or any arbitrator has been issued against or binds Tenant
or any Affiliate, which has resulted, or could result, in any Material Adverse
Change.
12.06 Authorization and Enforceability. Tenant has taken all
---------------------------------
corporate or other action required to execute, deliver and perform this Lease.
This Lease constitutes the legal, valid and binding obligation of Tenant and is
enforceable against Tenant in accordance with its terms.
12.07 No Legal Obstacle to Lease. Neither the execution and
---------------------------
delivery of this Lease nor the performance of any obligation hereunder has
constituted or resulted in or will constitute or result in:
(a) any breach, violation of, conflict with, default under
or termination of any agreement, contract, mortgage,
instrument, deed or lease to
42
which Tenant or any Affiliate is a party or by which it
or they are bound;
(b) the violation of or conflict with any law, statute,
ordinance, judgment, decree, order, rule or regulation
applicable to Tenant, any Affiliate, any Improvements
or any Leased Property; or
(c) any violation of or conflict with Tenant's or any
Affiliate's Charter or By-Laws or other organizational
documents, as the case may be.
No approval, authorization or other action by, or declaration to or
filing with, any governmental or administrative authority or any other Person is
required to be obtained or made by Tenant in connection with the execution,
delivery and performance of this Lease.
12.08 Certain Business Representations:
--------------------------------
(a) Labor Relations. No dispute or controversy between
---------------
Tenant or any Affiliate and its or their employees has
resulted in, or is reasonably likely to result in, any
Material Adverse Change, and neither Tenant nor any
Affiliate anticipates that its relationships with its
unions or employees will result, or are reasonably
likely to result, in any Material Adverse Change.
Tenant and each Affiliate is in compliance in all
material respects with all federal and state laws
relating to employees and labor relations, including,
but not limited to, laws relating to health and safety
in the workplace, non-discrimination in employment and
the payment of wages.
(b) Antitrust. Tenant and each Affiliate is in compliance
----------
in all material respects with all federal and state
antitrust laws relating to Tenant's Business and the
subsidiaries' businesses and the geographic
concentration thereof.
(c) Consumer Protection. Neither Tenant nor any
--------------------
Affiliate is in violation of any rule, regulation,
order, or interpretation of any rule, regulation or
order of the Federal Trade Commission (including truth-
in-lending) or other federal, state or local public or
governmental authority or agency, with which the
failure to comply, in the aggregate, has resulted in,
could result in, a Material Adverse Change.
(d) Future Expenditures. Neither Tenant nor any Affiliate,
-------------------
anticipates that further expenditures, if any, by
Tenant or any Affiliate needed to meet the provisions
of any federal, state or foreign governmental
43
statutes, orders, rules or regulation could result in
any Material Adverse Change.
(e) Benefit Liabilities. Neither Tenant nor any ERISA
-------------------
Affiliate (as hereafter defined) maintains, contributes
to, or is obligated to contribute to, nor has Tenant or
any ERISA Affiliate maintained, contributed to, been
obligated to contribute to, or had any direct,
indirect, or contingent liability with respect to, any
Title IV Plan (as hereafter defined). Tenant and each
ERISA Affiliate have timely made all contributions
required to be made with respect to each of their
Tenant Benefit Plans (as hereafter defined). Each
Tenant Benefit Plan has been maintained in compliance
with its terms and with applicable laws (including
specifically the Code and the Employee Retirement
Income Security Act of 1974 ("ERISA"). Neither Tenant
nor any ERISA Affiliate has incurred any obligation in
connection with the termination or withdrawal from any
Tenant Benefit Plan. Contributions made by Tenant or
its ERISA Affiliates, as the case may be, to any Tenant
Benefit Plan have been accounted for, and the
liabilities associated therewith are disclosed, in
Tenant's or its ERISA Affiliates', as the case may be,
financial statements for the fiscal year ending before
the date as of which this representation is given. The
present value of the accrued benefit liabilities
(whether or not vested) under each Tenant Benefit Plan,
determined as of the end of Tenant's or its ERISA
Affiliates', as the case may be, most recently ended
fiscal year on the basis of actuarial assumptions, each
of which is reasonable, did not exceed the current
value of the assets of such Tenant Benefit Plan
allocable to such benefit liabilities. "Tenant Benefit
Plan" means any plan, fund, or other similar program
described in Section 3(2) of ERISA and established or
maintained or with respect to which Tenant and/or any
ERISA Affiliate has an obligation to contribute for the
benefit of its employees (or for which Tenant could be
directly or contingently liable). "Title IV Plan" means
an "employee benefit plan" (as defined in Section 3(3)
of ERISA) that is subject to Title IV of ERISA and is
or has been established or maintained, by Tenant or any
ERISA Affiliate, or to which contributions are, have
been, or should have been made. "ERISA Affiliate" means
any trade or business, whether or not incorporated,
that, together with Tenant, is or has been under common
control, within the meaning of Section 414(b), (c),
(m), or (o) of the Code or Section 4001 of ERISA.
44
12.09 Certain Financial Covenants. Tenant or an Affiliate, as
----------------------------
applicable, is in compliance in all material respects with all financial
covenants required to be maintained pursuant to any franchise or other agreement
pursuant to which Tenant or such Affiliate operates its business, except in such
respects as shall not result in any franchisor under any franchise or operating
agreement to which Tenant is a party taking any action that could result in a
Material Adverse Change.
12.10 Cash Flow Coverage Ratio Covenant. On the date of this
---------------------------------
Lease and measured at a date that is twenty-four (24) months following such date
(each a "Cash Flow Measurement Date"), and on each anniversary date that is
twenty-four (24) months following a prior Cash Flow Measurement Date, Tenant
shall have maintained a Cash Flow Coverage Ratio of not less than 1.5 to 1.0
based on the Annual Financial Statements to be delivered to Landlord in
accordance with Section 6.04 hereof. "Cash Flow Coverage Ratio" means the
aggregate of net income before taxes plus mortgage interest, rent expense,
depreciation, compensation of principals of the Business, management fees plus
the annual LIFO adjustment and other non-cash expenses, less recurring capital
expenditures and gain (loss) on sale of real estate, dividends and/or profits
taken out of Tenant divided by the aggregate of the Tenant's obligations under
this Lease. Notwithstanding anything herein to the contrary, in the event that
Tenant shall not be in compliance with this covenant at a Cash Flow Measurement
Date or Tenant shall have knowledge of such non-compliance prior to any Cash
Flow Measurement Date, the Tenant shall have the right to cure such breach
through any reasonable commercial means, including, but not limited to,
providing guarantees acceptable to Landlord, increasing capital, or cross
collateralizing with any other property of Tenant or an Affiliate, provided that
such breach is cured within one hundred and eighty (180) days after Notice by
Landlord to Tenant of the existence of such breach.
12.11 Disclosure. This Lease does not contain any untrue
----------
statement of a material fact or omit to state a material fact necessary in order
to make any statement contained herein not misleading in light of the
circumstances under which it was made. To Tenant's knowledge, there is no event,
fact or occurrence that has resulted, or in the future (so far as Tenant can
reasonably foresee) could result, in any Material Adverse Change, except to the
extent that present or future general and sector-specific economic conditions
may result in a Material Adverse Change.
12.12 Covenant Not to Acquire. Tenant covenants and agrees that
-----------------------
during the Term and any Extension Term, as the case may be, Tenant and its
controlling shareholders or its or their Affiliates will not acquire, directly
or indirectly, more that 9.90% of the outstanding common shares of beneficial
interest of Capital Automotive REIT. Tenant covenants and agrees that it will
divest itself of such shares of Capital Automotive REIT as may be necessary to
satisfy the limitations of this Section 12.12.
45
ARTICLE XIII
ASSIGNMENT AND SUBLETTING; ATTORNMENT
13.01 Prohibition Against Subletting and Assignment. Subject to
---------------------------------------------
Section 13.03, Tenant shall not, without the prior written consent of Landlord,
or upon compliance with any conditions established by Landlord, in its sole
discretion, assign, mortgage, pledge, hypothecate, encumber or otherwise
transfer (except to an Affiliate) this Lease or any interest herein, or all or
any part of any Leased Property, or suffer or permit this Lease or the leasehold
estate created hereby or any other rights arising hereunder to be assigned,
transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in
part, whether voluntarily, involuntarily or by operation of law. For purposes of
this Section 13.01, an assignment of this Lease shall be deemed to include any
Change of Control of Tenant, as if such Change of Control were an assignment of
the Lease. In the event that (i) Landlord shall withhold any consent to any
assignment or transfer of this Lease or any interest herein, and (ii) such
assignee or transferee is approved by the relevant manufacturer for continuation
as a franchisee, there shall be a presumption that such assignment or transfer
was reasonable and Landlord shall have the burden of rebutting such presumption
and of proving that such consent was in fact reasonably withheld (or that such
conditions were reasonable).
13.02 Changes of Control. A Change of Control requiring the consent
------------------
of Landlord shall mean:
(a) the issuance and/or sale by Tenant or the sale by any
shareholder or equity holder of Tenant of a Controlling
(which shall mean, as applied to any Person, the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person,
whether through the ownership of voting securities, by
contract or otherwise) interest in Tenant to a Person other
than an Affiliate of Tenant, other than in either case a
distribution to the public pursuant to an effective
registration statement under the Securities Act of 1933, as
amended (a "Registered Offering");
(b) the sale, conveyance or other transfer of all or
substantially all of the assets of Tenant (whether by
operation of law or otherwise) provided, however, that no
Change of Control shall be deemed to have occurred in the
event of the transfer of assets as a result of the death of
a person involved in the Business, so long as the transferee
is approved by the manufacturer for the continuation of the
Business; or
46
(c) any transaction pursuant to which Tenant is merged with or
consolidated into another entity (other than an entity owned
and Controlled by an Affiliate), and Tenant is not the
surviving entity.
13.03 Operating/Service Agreements.
----------------------------
(a) Permitted Agreements. Tenant shall, without Landlord's prior
--------------------
approval, be permitted to enter into such operating/service
agreements for portions of each Leased Property to various
licensees in connection with Tenant's Business as are
customarily associated with or incidental to the operation
of such Leased Property, which agreements may be in the
nature of a sublease agreement.
(b) Terms of Agreements. Each operating/service agreement
-------------------
concerning a Leased Property shall be subject and
subordinate to the provisions hereof. No agreement made as
permitted by Section 13.03(a) shall affect or reduce any of
the obligations of Tenant hereunder, and all such
obligations shall continue in full force and effect as if no
agreement had been made. No agreement shall impose any
additional obligations on Landlord hereunder.
(c) Copies. Tenant shall, within ten (10) days after the
------
execution and delivery of any operating/service agreement
permitted by Section 13.03(a), deliver a duplicate original
thereof to Landlord.
(d) Assignment of Rights in Agreements. As security for
----------------------------------
performance of its obligations hereunder, Tenant hereby
grants, conveys and assigns to Landlord all right, title and
interest of Tenant in and to all operating/service
agreements now in existence or hereinafter entered into for
each Leased Property, and all extensions, modifications and
renewals thereof and all rents, issues and profits
therefrom, to the extent the same are assignable by Tenant.
Landlord hereby grants to Tenant a license to collect and
enjoy all rents and other sums of money payable under any
such agreement; provided, however, that Landlord shall have
the absolute right at any time after the occurrence and
continuance of an Event of Default upon notice to Tenant and
any vendors or licensees to revoke said license and to
collect such rents and sums of money and to retain the same.
Tenant shall not (i) after the occurrence and continuance of
an Event of Default, consent to, cause, or allow, any
material modification or alteration of any of the terms,
conditions or covenants of any of the agreements or the
47
termination thereof, without the prior written approval of
Landlord nor (ii) accept any rents (other than customary
security deposits) more than thirty (30) days in advance of
the accrual thereof nor permit anything to be done, the
doing of which, nor omit or refrain from doing anything, the
omission of which, will or could be a breach of or default
in the terms of any of the agreements.
(e) Licenses, Etc. For purposes of Section 13.03, the
-------------
operating/service agreements shall mean any licenses,
concession arrangements, or other arrangements relating to
the possession or use of all or any part of any Leased
Property.
13.04 Assignment. If Landlord shall withhold its consent to any
----------
assignment or if Landlord shall have established conditions to approval of any
assignment but such conditions shall not have been complied with, to the
satisfaction of Landlord, such assignment shall not in any way impair the
continuing primary liability of Tenant hereunder. No consent to any assignment
in a particular instance shall be deemed to be a general waiver of the
prohibition set forth in Article XIII. Any assignment shall be solely of
Tenant's entire interest in this Lease with respect to the subject Leased
Property or Leased Properties. Any assignment or other transfer of all or any
portion of Tenant's interest in this Lease in contravention of Article XIII
shall be voidable at Landlord's option.
13.05 REIT Limitations.
----------------
(a) Anything contained herein to the contrary notwithstanding,
Tenant shall not: (a) sublet or assign a Leased Property or
this Lease on any basis such that the rental or other
amounts to be paid by the sublessee or assignee thereunder
would be based, in whole or in part, on the income or
profits derived by the business activities of the sublessee
or assignee; (b) sublet or assign a Leased Property or this
Lease to any Person that, under Section 856(d)(2)(B) of the
Internal Revenue Code of 1986, as amended (the "Code"),
Landlord or its general partner owns, directly or indirectly
(by applying constructive ownership rules set forth in
Section 856(d) (5) of the Code, a ten percent (10%) or
greater interest; or (c) sublet or assign a Leased Property
or this Lease in any other manner or otherwise derive any
income which could cause any portion of the amounts received
by Landlord pursuant hereto or any sublease to fail to
qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, or which could cause any other
income received by Landlord to fail to qualify as income
described in Section 856(c) (2) of the Code. The
requirements of
48
this Section 13.05 shall likewise apply to any further
subleasing by any subtenant.
(b) Tenant acknowledges that Capital Automotive REIT, a Maryland
real estate investment trust and the general partner of
Landlord (the "Company"), intends to elect to be taxed as a
real estate investment trust (a "REIT") under the Code.
Tenant shall not do anything which would adversely affect
the Company's status as a REIT. Tenant hereby agrees to
modifications of this Lease which do not materially
adversely affect Tenant's rights and liabilities if such
modifications are required to retain or clarify the
Company's status as a REIT.
13.06 Attornment. Tenant shall insert in each sublease permitted
----------
under Section 13.03(a) provisions to the effect that: (a) such sublease is
subject and subordinate to all of the terms and provisions of this Lease and to
the rights of Landlord hereunder; (b) in the event this Lease shall terminate
before the expiration of such sublease, the sublessee thereunder will, at
Landlords' option, attorn to Landlord and waive any right the sublessee may have
to terminate the sublease or to surrender possession thereunder, as a result of
the termination hereof; and (c) in the event the sublessee receives a written
notice from Landlord or Landlord's assignees, if any, stating that Tenant is in
default under this Lease, the sublessee shall thereafter be obligated to pay all
rentals accruing under said sublease directly to the party giving such notice,
or as such party may direct. All rentals received from the sublessee by Landlord
or Landlord's assignees in respect of a Leased Property, if any, as the case may
be, shall be credit against the amounts owing by Tenant hereunder with respect
to such Leased Property.
13.07 Severance and Spin-Off. If at any time while this Lease is in
----------------------
effect any Leased Property shall be utilized by Tenant in the operation of more
than one automobile franchise, then provided that there is no existing Event of
Default and there exists no condition which, with the passage of time, could
become an Event of Default, Tenant shall have the right (the "Spin-Off Right")
to sever and spin-off one or more parcels (each referred to as a "Spin-Off
Parcel") of the Leased Property from this Lease, subject to compliance with the
requirements of Section 13.08.
13.08 Assignment. If the Leased Property is not a separate subdivided
----------
lot, Landlord may condition its approval of an assignment upon Tenant showing
that there are appropriate provisions (such as a condominium regime,
subdivision, and/or reciprocal easements, lender and/or franchisor consents if
necessary, and separate tax lots) which allow the Leased Property to be
separately owned and operated without interference from or dependence upon,
another person as to items such as access, real estate taxes, or utilities.
49
ARTICLE XIV
ARBITRATION
14.01 Controversies. Except with respect to the payment of Rent
-------------
hereunder, which shall be subject to the provisions of Section 9.02, in the
event a controversy arises between the parties as to any of the requirements of
this Lease or the performance hereunder, which the parties are unable to
resolve, the parties agree to waive the remedy of litigation (except for
extraordinary relief in an emergency situation) and agree that such controversy
or controversies shall be determined by arbitration as hereafter provided in
this Article.
14.02 Appointment of Arbitrators. The party or parties requesting
--------------------------
arbitration shall serve upon the other a demand therefor, in writing, specifying
in detail the controversy and matter(s) to be submitted to arbitration before
the American Arbitration Association. The selection of arbitrators shall be
conducted pursuant to the rules for resolution of commercial disputes
promulgated by the American Arbitration Association. The party or parties giving
notice shall request a listing of available arbitrators from the American
Arbitration Association, and each party shall respond in the selection process
within fifteen (15) days after each receipt of such listings until a panel of
three (3) arbitrators has been designated. If either party fails to respond
within fifteen (15) days, it is agreed that the American Arbitration Association
may make such selections as are necessary to complete the panel of three (3)
arbitrators.
14.03 Arbitration Procedure. Within five (5) business days after the
---------------------
selection of the arbitration panel, the arbitrators shall give written notice to
each party as to the time and the place of each meeting, which shall be held in
Washington, D.C., at which the parties may appear and be heard, which shall be
no later than fifteen (15) days after certification of the arbitration panel.
The parties specifically waive discovery, and further waive the applicability of
rules of evidence or rules of procedure in the proceedings. The applicable rules
shall be those in effect at the time for the resolution of commercial disputes
promulgated by the American Arbitration Association. Notwithstanding the
foregoing, the substantive law governing the arbitration shall be the laws of
the State of Delaware (without application of choice of law provisions). The
arbitrators shall take such testimony and make such examination and
investigations as the arbitrators reasonably deem necessary. The decision of the
arbitrators shall be in writing signed by a majority of the panel which decision
shall be final and binding upon the parties to the controversy. Provided,
however, in rendering their decisions and making awards, the arbitrators shall
not add to, subtract from or otherwise modify the provisions of this Lease.
14.04 Expenses. The expenses of the arbitration shall be assessed by
--------
the arbitrators and specified in the written decision. In the absence of a
determination or assessment of expenses of the arbitration procedure in the
award, all of the expenses of such arbitration shall be divided equally between
Landlord and Tenant. Each party in interest shall be responsible for and pay the
fees, costs and expenses of its own counsel, unless the arbitration award
provides for an assessment of reasonable attorneys' fees and costs.
50
14.05 Enforcement of the Arbitration Award. There shall be no appeal
------------------------------------
from the decision of the arbitrators, and upon the rendering of an award, any
party thereto may file the arbitrators' decision in the United States District
Court for the Eastern District of Virginia for enforcement as provided by
applicable law.
ARTICLE XV
QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT, ESTOPPEL CERTIFICATES
15.01 Quiet Enjoyment. So long as Tenant performs all of its
---------------
obligations under this Lease, Tenant's possession of the Leased Properties will
not be disturbed by or through Landlord.
15.02 Landlord Mortgages; Subordination. Subject to Section 15.03,
---------------------------------
without the consent of Tenant, Landlord may, from time to time, directly or
indirectly, create or otherwise cause to exist any liens, encumbrances, security
interests or title retention agreements on any Leased Property, or any portion
thereof or any interest therein, whether to secure any borrowing or other means
of financing or refinancing. Tenant shall execute, acknowledge and deliver to
Landlord, at any time and from time to time upon demand by Landlord or any
mortgagee or any holder of any mortgage or other instrument described in this
Section, without cost to Landlord, a Subordination and Non-Disturbance Agreement
in the form attached hereto as Exhibit 15.02, which provides that (i) Tenant's
rights hereunder are subordinate to any ground lease or underlying lease, first
mortgage, first deed of trust, or other first lien against any Leased Property,
together with any renewal, consolidation, extension, modification, or
replacement thereof, which now or at any subsequent time affects any Leased
Property or any interest of Landlord in any Leased Property, except to the
extent that any such instrument expressly provides that this Lease is superior;
and (ii) in the event such party succeeds to Landlord's interest under the Lease
and provided that no Event of Default by Tenant exists, such party will not
disturb Tenant's possession, use or occupancy of the subject Leased Property. If
Tenant fails or refuses to execute, acknowledge, and deliver such Subordination
and Non-Disclosure Agreement within ten (10) business days after written demand,
then Landlord shall send to Tenant a second written demand. If Tenant fails or
refuses to execute, acknowledge and deliver such Subordination and Non-
Disclosure Agreement within ten (10) days after such second written demand, then
Landlord or such successor in interest may execute, acknowledge and deliver such
Subordination and Non-Disclosure Agreement on behalf of Tenant as Tenant's
attorney-in-fact. Tenant hereby constitutes and irrevocably appoints Landlord,
its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant the Subordination and Non-
Disclosure Agreement. This power of attorney is coupled with an interest and is
irrevocable.
15.03 Attornment. If any holder of any mortgage, indenture, deed of
----------
trust, or other similar instrument described in Section 15.02 succeeds to
Landlord's interest in any Leased
51
Property, Tenant will pay to such holder all Rent subsequently payable hereunder
as to such Leased Property. Tenant shall, upon request of anyone succeeding to
the interest of Landlord, automatically become the tenant of, and attorn to,
such successor in interest without changing this Lease. The successor in
interest will not be bound by: (a) any payment of Rent for more than one (1)
month in advance; (b) any amendment or modification hereof made without its
written consent; (c) any claim against Landlord arising prior to the date on
which the successor succeeded to Landlord's interest; or (d) any claim or offset
of Rent against Landlord.
15.04 Estoppel Certificates. At the request of Landlord or any
---------------------
mortgagee or purchaser of a Leased Property, Tenant shall execute, acknowledge,
and deliver an estoppel certificate, in recordable form, in favor of Landlord or
any mortgagee or purchaser of any Leased Property certifying the following as to
such Leased Property: (a) that this Lease is unmodified and in full force and
effect, or if there have been modifications that the same is in full force and
effect as modified and stating the modifications; (b) the date to which Rent and
other charges have been paid; (c) that neither Tenant nor Landlord is in default
nor is there any fact or condition which, with notice or lapse of time, or both,
would constitute a default, if that be the case, or specifying any existing
default; (d) that Tenant has accepted and occupies such Leased Property; (e)
that Tenant has no defenses, set-offs, deductions, credits, or counterclaims
against Landlord, if that be the case, or specifying such that exist; (f) that
Landlord has no outstanding construction or repair obligations; and (g) such
other information as may reasonably be requested by Landlord or any mortgagee or
purchaser. Any purchaser or mortgagee may rely on this estoppel certificate. If
Tenant fails to deliver the estoppel certificates to Landlord within ten (10)
business days after the request of Landlord, then Landlord shall request such
delivery a second time. If Tenant fails to deliver the estoppel certificates to
Landlord within ten (10) days after such second request by Landlord, then Tenant
shall be deemed to have certified that: (a) this Lease is in full force and
effect and has not been modified, or that this Lease has been modified as set
forth in the certificate delivered to Tenant; (b) Tenant has not prepaid any
Rent or other charges except for the current month; (c) Tenant has accepted and
occupies such Leased Property; (d) neither Tenant nor Landlord is in default nor
is there any fact or condition which, with notice or lapse of time, or both,
would constitute a default; (e) Landlord has no outstanding construction or
repair obligation; and (f) Tenant has no defenses, set-offs, deductions,
credits, or counterclaims against Landlord. Tenant hereby irrevocably appoints
Landlord as Tenant's attorney-in-fact to execute, acknowledge and deliver on
Tenant's behalf any estoppel certificate which Tenant does not object to within
twenty (20) days after Landlord sends the certificate to Tenant. This power of
attorney is coupled with an interest and is irrevocable.
15.05 Waiver of Landlord's Lien. Landlord agrees to and does hereby
-------------------------
Waiver its Landlord's lien and any other rights that it may have with respect to
property or assets representing the security or collateral under Tenant's
"floor-plan" or similar financing arrangements, during the Term or any Extension
Term. Landlord shall, upon request by any such lender, execute an acknowledgment
of such waiver.
52
ARTICLE XVI
RIGHT OF FIRST OFFER
16.01 Right of First Offer During Lease Term or Extension Term.
--------------------------------------------------------
(a) If and when during the Term or Extension Term, as the case
may be, Landlord shall decide to sell the Leased Properties
to a Person who is not an Affiliate of Landlord (the
"Decision to Sell"), provided that no Event of Default has
occurred and is continuing under the Lease, Landlord shall
notify Tenant in writing within ten (10) business days after
Landlord makes a Decision to Sell. Tenant shall have ten
(10) business days thereafter in which to notify Landlord in
writing of its desire to purchase the Leased Properties. If
Tenant shall give such notice, Tenant shall have a period of
thirty (30) days within which to make a written offer to
purchase the property (the "First Offer"). The First Offer
must set forth the purchase price, deposit amounts and
closing date and any and all other terms and conditions
being proposed by Tenant.
(b) Within thirty (30) days of receipt of the First Offer,
Landlord shall give Tenant written notice of its acceptance
or rejection thereof. If accepted, Tenant shall, within five
(5) days after receipt of the acceptance notice, make the
deposit called for in the First Offer and the parties shall
proceed to contract and closing upon the terms thereof. If
the First Offer is rejected, then, subject to the provisions
of subsections (c) and (d) of this Section 16.01, Tenant
shall have no further rights with respect to the purchase of
the Leased Properties during the Term or Extension Term, as
the case may be.
(c) If Landlord shall reject the First Offer, for a one year
period thereafter it may proceed to sell the Leased
Properties, subject to the Lease and the remaining Term or
Extension Term thereof, as the case may be, to any third
party, provided (i) the purchase price of such sale shall
exceed that specified in the First Offer, or (ii) if the
purchase price of such sale does not exceed that specified
in the First Offer, the terms of such sale, taken together,
are more favorable to Landlord, in Landlord's reasonable
judgement, than those of the First Offer. There shall be a
presumption that Landlord's judgment was reasonable and
Tenant shall have the burden of rebutting such presumption
and of proving that such judgment was in fact unreasonable.
53
(d) If no sale is effected by Landlord within the period
specified in subsection (c) above, then if Landlord
thereafter desires to sell the Leased Properties, the
procedure set forth in subsections (a), (b) and (c) shall be
followed.
(e) This option shall terminate in any event twenty (20) years
after the death of the last descendant of the father of Xxxx
X. Xxxxxxx living at the time of execution of this Lease.
16.02 Right to Purchase at End of an Extension Term.
----------------------------------------------
(a) Landlord hereby grants the Tenant the right and option to
purchase the Leased Properties (the "Option to Purchase") at
an amount equal to the Property Consideration (as hereafter
defined) upon termination of an Extension Term of this
Lease. The Option to Purchase shall not be granted if Tenant
does not extend the Term of this Lease pursuant to Section
1.03 or if on the Option Exercise Date (as hereafter
defined) an Event of Default with respect to any Leased
Property exists and has not been cured. The Tenant shall
notify Landlord in writing of its intent to exercise this
Option to Purchase, thirty (30) days prior to the end of an
Extension Term of this Lease (the "Option Exercise Date").
(b) The consideration to be paid for the Leased Properties upon
exercise of the Option to Purchase (the "Property
Consideration") shall be the Appraised Value (as hereafter
defined) determined by (1) an independent appraiser, who is
a member of the Appraisal Institute, and will be selected by
Landlord, (the "Landlord MAI Appraiser"), (2) a second
appraiser, who is a member of the Appraisal Institute, and
will be selected by the Tenant (the "Tenant MAI Appraiser"),
and (3) a third MAI Appraiser selected by agreement of the
Landlord MAI Appraiser and the Tenant MAI Appraiser (the
"Third MAI Appraiser") (each an "Appraiser" and,
collectively, the "Appraisers"). Landlord and Tenant shall,
as promptly as possible, but in no event later than ten (10)
days following the Option Exercise Date, select its
respective Appraiser. The Third MAI Appraiser shall be
selected no later than five (5) days after the selection of
the other Appraisers. The costs of the Appraisers'
appraisals shall be shared equally by the parties. As
promptly as possible but in no event later than fifteen (15)
days after selection of the Third Appraiser, each Appraiser
shall deliver his or her written report of the Appraisers'
determination of the fair market value of the Leased
Property,
54
which determination shall be based, for each Leased
Property, upon the highest and best use of such Leased
Property, taking into consideration the location of such
Leased Property and other properties comparable thereto. The
"Appraised Value" of the Real Property shall be equal to the
arithmetic mean of the two (2) fair market value
determinations of the Appraisers that are closest in value.
In the event that the values of (i) the difference between
the highest appraisal value and the next lower appraisal
value, and (ii) the difference between the lowest appraisal
value and the next higher appraisal value, are equal, then
the "Appraised Value" shall be equal to the arithmetic mean
of the fair market value determinations of all Appraisers.
(c) Upon determination of the Property Consideration, Landlord
and Tenant agree to cooperate to close the sale and purchase
of the Leased Property entirely for cash on an " as is,
where as basis" and with no warranties by Landlord other
than in a special warranty deed, within forty-five (45) days
after the date of determination of the Property
Consideration (the "Option Closing Period"). If the sale and
purchase of the Leased Property does not close within the
Option Closing Period due to Tenant's default, Landlord
shall have no further obligations to Tenant pursuant to this
Section 16.02 (a).
ARTICLE XVII
MISCELLANEOUS
17.01 Notices. Landlord and Tenant hereby agree that all notices,
-------
demands, requests, and consents (hereinafter "Notices") required to be given
pursuant to the terms of this Lease shall be in writing and shall be addressed
as follows:
If to Tenant:
Geneva Enterprises, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxx
With a copy to:
Charapp, Deese & Weisse, LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
55
If to Landlord:
Capital Automotive L.P.
0000 Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President and Chief Executive Officer
With a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
and shall be served by: (a) personal delivery; (b) certified mail, return
receipt requested, postage prepaid; or (c) nationally recognized overnight
courier. All notices shall be deemed to be given upon the earlier of actual
receipt or three (3) days after mailing, or one (1) business day after deposit
with the overnight courier. Any Notices meeting the requirements of this
Section shall be effective, regardless of whether or not actually received.
Landlord or Tenant may change its notice address at any time by giving the other
party Notice of such change. Any such Notice of change of address shall be
effective five (5) days after delivery.
17.02 Advertisement of a Leased Property. In the event the parties
----------------------------------
hereto have not executed a renewal lease, or agreed to the Extension Term, as to
the Leased Property within twelve (12) months prior to the expiration of the
Term or an Extension Term, as the case may be, then Landlord or its agent shall
have the right to enter such Leased Property at all reasonable times for the
purpose of exhibiting such Leased Property to others and to place upon such
Leased Property for and during the period commencing two-hundred seventy (270)
days prior to the expiration of the Term or an Extension Term, as the case may
be, "for sale" or "for rent" notices or signs.
17.03 Landlord's Access. Landlord, or its designated agents or
-----------------
contractors, shall have the right to enter upon each Leased Property, upon
reasonable prior notice to Tenant, for purposes of inspecting the same and
assuring Tenant's compliance with this Lease provided, any such entry by
Landlord shall be subject to all rules, guidelines and procedures prescribed by
Tenant in connection therewith. Landlord shall not be allowed entry to a Leased
Property unless accompanied by such of Tenant's personnel as Tenant shall
require and which Tenant shall promptly provide.
17.04 Entire Agreement. This Lease contains the entire agreement
----------------
between Landlord and Tenant with respect to the subject matter hereof. No
representations, warranties, and agreements have been made by Landlord or Tenant
except as set forth in this Lease.
56
17.05 Severability. If any term or provision of this Lease is held by
------------
Landlord to be invalid or unenforceable as to a Leased Property, such holding
shall not affect the remainder of this Lease as to such Leased Property, or the
validity or enforceability of this Lease as to any other Leased Property, and
the same shall remain in full force and effect, unless such holding
substantially deprives Tenant of the use of such Leased Property or Landlord of
the Rents therefor, in which case this Lease shall forthwith terminate as to
such Leased Property as if by expiration of the Term or an Extension Term, as
the case may be, but shall remain in full force and effect with respect to each
other Leased Property.
17.06 Captions and Headings. The captions and headings are inserted
---------------------
only as a matter of convenience and for reference and in no way define, limit or
describe the scope of this Lease or the intent of any provision hereof.
17.07 Governing Law. This Lease shall be construed under the laws of
-------------
the State of Virginia (without application of choice of law provisions).
17.08 Memorandum of Lease or Certain Rights Under the Lease. Landlord
-----------------------------------------------------
and Tenant agree that a record of this Lease or of certain rights under this
Lease may be recorded by either party in a memorandum of lease approved by
Landlord and Tenant with respect to each Leased Property. The party recording
such memorandum must bear all costs of such recording.
17.09 Waiver. No waiver by Landlord of any condition or covenant
------
herein contained, or of any breach of any such condition or covenant, shall be
held or taken to be a waiver of any subsequent breach of such covenant or
condition, or to permit or excuse its continuance or any future breach thereof
or of any condition or covenant, nor shall the acceptance of Rent by Landlord at
any time when Tenant is in default in the performance or observance of any
condition or covenant herein be construed as a waiver of such default, or of
Landlord's right to terminate this Lease or exercise any other remedy granted
herein on account of such default.
17.10 Assignment; Binding Effect. Except as otherwise set forth
--------------------------
herein, this Lease shall not be assignable by Tenant, without the prior written
consent of Landlord. This Lease will be binding upon and inure to the benefit of
the heirs, successors, personal representatives, and permitted assigns of
Landlord and Tenant.
17.11 Consents and Approvals. In each instance in this Lease where
----------------------
the Landlord is required or permitted to give a consent or approval, or to make
a determination, the Landlord's decision and any conditions thereon must be
reasonable under the circumstances. Except as provided in Sections 8.07(d) and
13.01, there shall be a presumption that each such decision and any conditions
thereon by Landlord was in fact reasonable, and Tenant shall have the burden of
proof in any attempt to rebut that presumption. With respect to Sections 8.07(d)
and 13.01, there shall be a presumption that each such decision and any
conditions thereon by
57
Landlord was in fact unreasonable, and Landlord shall have the burden of proof
in any attempt to rebut that presumption.
17.12 Single Property. Throughout the form of this Lease there are
---------------
references to "Leased Properties". If, in fact, there is only one Leased
Property being leased hereunder, all such references shall, without further
action, be deemed amended to refer solely to such Leased Property and all
provisions relating to Leased Properties, including remedies applicable to only
one Leased Property, shall likewise be amended to the extent necessary, but only
to the extent necessary, to give effect to the fact that there is only one
Leased Property.
17.13 Modification. This Lease may only be modified by a writing
------------
signed by both Landlord and Tenant.
17.14 Incorporation by Reference. All schedules and exhibits referred
--------------------------
to in this Lease are incorporated herein by reference.
17.15 No Merger. As to each Leased Property, the surrender of this
---------
Lease by Tenant or the cancellation of this Lease by agreement of Tenant and
Landlord or the termination of this Lease on account of Tenant's default will
not work a merger, and will, at Landlord's option, terminate any subleases or
operate as an assignment to Landlord of any subleases. Landlord's option under
this paragraph will be exercised by notice to Tenant and all known subtenants of
such Leased Property.
17.16 Force Majeure. Landlord, its agents and employees, will not be
-------------
liable for any loss, injury, death, or damage (including consequential damages)
to persons, property, or Tenant's Business occasioned by theft, act of God,
public enemy, injunction, riot, strike, insurrection, war, court order,
requisition, order of governmental body or authority, fire, explosion, falling
objects, steam, water, rain or snow, leak or flow of water (including water from
the elevator system), rain or snow from any Leased Property or into any Leased
Property or from the roof, street, subsurface or from any other place, or by
dampness or from the breakage, leakage, obstruction, or other defects of the
pipes, sprinklers, wires, appliances, plumbing, air conditioning, or lighting
fixtures of any Leased Property, or from construction, repair, or alteration of
any Leased Property or from any acts or omissions of any other occupant or
visitor of any Leased Property, or from the release, emission, discharge,
presence or disposal of any hazardous substance or material on or from any
Leased Property, or from any other cause beyond Landlord's control.
17.17 Laches. No delay or omission by either party hereto to exercise
------
any right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
17.18 Waiver of Jury Trial. To the extent that there is any claim by
--------------------
one party against the other that is not to be settled by arbitration as provided
in Article XIV hereof,
58
Landlord and Tenant waive trial by jury in any action, proceeding or
counterclaim brought by either of them against the other on all matters arising
out of this Lease or the use and occupancy of any Leased Property (except claims
for personal injury or property damage). If Landlord commences any summary
proceeding for nonpayment of Rent, Tenant will not interpose, and waives the
right to interpose, any counterclaim in any such proceeding.
17.19 Permitted Contests. Tenant, on its own or on Landlord's behalf
------------------
(or in Landlord's name), but at Tenant's expense, may contest, by appropriate
legal proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or any legal
requirement or insurance requirement or any lien, attachment, levy, encumbrance,
charge or claim provided that: (a) in the case of an unpaid Imposition, lien,
attachment, levy, encumbrance, charge or claim, the commencement and
continuation of such proceedings shall suspend the collection thereof from
Landlord and from the subject Leased Property; (b) neither the subject Leased
Property nor any Rent therefrom nor any part thereof or interest therein would
be in any immediate danger of being sold, forfeited, attached or lost; (c) in
the case of a legal requirement, Landlord would not be in any immediate danger
of civil or criminal liability for failure to comply therewith pending the
outcome of such proceedings; (d) in the event that any such contest shall
involve a sum of money or potential loss in excess of Twenty Five Thousand
Dollars ($25,000), Tenant shall deliver to Landlord and its counsel an opinion
of Tenant's counsel to the effect set forth in clauses (a), (b) and (c), to the
extent applicable; (e) in the case of a legal requirement and/or an Imposition,
lien, encumbrance, or charge, Tenant shall give such reasonable security as may
be demanded by Landlord to insure ultimate payment of the same and to prevent
any sale or forfeiture of a subject Leased Property or the Rent in respect
thereof by reason of such nonpayment or noncompliance; provided, however, the
provisions of this Section shall not be construed to permit Tenant to contest
the payment of Rent (except as to contests concerning the method of computation
or the basis of levy of any Imposition or the basis for the assertion of any
other claim) or any other sums payable by Tenant to Landlord hereunder; (f) in
the case of an insurance requirement, the coverage required by Article IV shall
be maintained; and (g) if such contest be finally resolved against Landlord or
Tenant, Tenant shall, as Additional Rent due hereunder, promptly pay the amount
required to be paid, together with all interest and penalties accrued thereon,
or comply with the applicable legal requirement or insurance requirement.
Landlord, at Tenant's expense, shall execute and deliver to Tenant such
authorizations and other documents as may be reasonably required in any such
contest, and, if reasonably requested by Tenant or if Landlord so desires,
Landlord shall join as a party therein. Tenant hereby agrees to indemnify and
hold harmless Landlord, its officers, trustees, employees, shareholders,
affiliates and agents from and against any and all demands, claims, causes of
action, fines, penalties, damages (including punitive and consequential
damages), losses, liabilities (including strict liability), judgments, costs and
expenses (including, without limitation, attorneys' fees, court costs, and the
costs set forth in Section 9.06) that may be incurred in connection with or
arise from any such contest.
17.20 Construction of Lease. This Lease has been reviewed by Landlord
---------------------
and Tenant and their respective professional advisors. Landlord and Tenant
believe that this Lease is
59
the product of all their efforts, that they express their agreement, and agree
that they shall not be interpreted in favor of either Landlord or Tenant or
against either Landlord or Tenant merely because of any party's efforts in
preparing such documents.
17.21 Counterparts. This Lease may be executed in duplicate
------------
counterparts, each of which shall be deemed an original hereof or thereof.
17.22 Relationship of Landlord and Tenant. The relationship of
-----------------------------------
Landlord and Tenant is the relationship of lessor and lessee. Landlord and
Tenant are not partners, joint venturers, or associates.
{Remainder of this page left intentionally blank}
60
IN WITNESS WHEREOF, the parties hereto have executed this Lease or
caused the same to be executed by their respective duly authorized officers as
of the date first set forth above.
CAPITAL AUTOMOTIVE L.P.
By: Capital Automotive REIT,
Its General Partner
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
MARYLAND IMPORTED CARS, INC. d/b/a
XXXXXXXXX GAITHERSBURG MAZDA
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx *
Title: Chairman
*By Xxxxxx Xxxxxx as Attorney-in-Fact
61
XXXXXXXXX LEASE AGREEMENT EXHIBITS AND SCHEDULES
EXHIBITS
A Leased Properties
B Permitted Liens
C Base Annual Rent Schedule
SCHEDULES
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
12.02 Material Agreements
12.03 Changes in Condition
15.02 Form of Subordination and Non-Disturbance Agreement
EXHIBIT A
LEASED PROPERTIES
------------------------------------------------------------------------------------------------
Lease Lessees and Lessees Total Annual Initial Base Rent for Properties Covered by
Leased Properties Lease
------------------------------------------------------------------------------------------------
11 Maryland Imported Cars, Inc. d/b/a Gaithersburg Mazda 000 Xxxxx Xxxxxxxxx
Xxx.
$253,944 + $___________* (Tax Id. No. 09-201-
02571575)
*Amount attributable to closing costs, as set forth in
Section 7.5.1 of the Contribution Agreement, dated as
of November 21, 1997, relating to this Property.
------------------------------------------------------------------------------------------------
EXHIBIT B
---------
PERMITTED LIENS
To be provided by Tenant in form and substance acceptable to Landlord prior to
the Commencement Date of the Lease.
EXHIBIT C
INITIAL BASE ANNUAL RENT SCHEDULE
See Exhibit A for Initial Base Annual Rent payments due on Leased Property.
SCHEDULE 2.02
-------------
PAYMENT ACCOUNT INFORMATION
Wiring instructions for the Landlord's operating account are as follows:
FIRST UNION NATIONAL BANK OF VIRGINIA
CHARLOTTE, NC
ABA# 000000000
For Credit to: CAPITAL AUTOMOTIVE REIT, Operating Account
Account # 2050000478240
SCHEDULE 2.04
-------------
BASE ANNUAL RENT ADJUSTMENT
The Base Annual Rent shall be increased, effective as of the commencement
of the third Lease Year and as of each subsequent odd-numbered Lease Year by an
amount equal to fifty percent (50%) of the change in the Index during the
immediately preceding one (1) year period; provided, however that,
(a) in the event that the above-calculated adjustment is less than one
percent (1%), such adjustment shall be equal to one percent (1%), and
(b) in the event that the above-calculated adjustment is greater than two
percent (2%), such adjustment shall be equal to two percent (2%).
SCHEDULE 5.07
(LEASE 11)
ENVIRONMENTAL REPORTS
See attached Phase I Environmental Site Assessment for XXXXXXXXX
GAITHERSBURG AUTO PARK, 000-000 XXXXX XXXXXXXXX XXXXXX, XXXXXXXXXXXX, XXXXXXXX
(Prepared by Environmental Consultants and Contractors, Inc., ECC Project No.
97-3085, Oct. 22, 1997).
SCHEDULE 12.02
--------------
MATERIAL AGREEMENTS
To be provided by Tenant in form and substance acceptable to Landlord prior
to the Commencement Date of the Lease.
SCHEDULE 12.03
--------------
CHANGES IN CONDITION
To be provided by Tenant in form and substance acceptable to Landlord prior
to the Commencement Date of the Lease.
SCHEDULE 15.02
--------------
See attached Form of Subordination and Non-Disturbance Agreement.
Form
----
SUBORDINATION AND NON-DISTURBANCE AGREEMENT
-------------------------------------------
THIS AGREEMENT is made as of this ___ day of __________, 1997, among
_____________, a ___________ organized under the laws of the State of
_____________ ("Lender"), __________________ ("Tenant"), and CAPITAL AUTOMOTIVE
L.P., a Delaware limited partnership ("Landlord").
WITNESSETH:
-----------
WHEREAS, Landlord and Tenant have entered into a certain Lease, dated
____________________ , which lease and all amendments, modifications,
assignments, subleases and other agreements related thereto are attached hereto
as Exhibit A and incorporated herein by this reference (collectively, the
---------
"Lease"), which Lease relates to the premises described therein (the
"Premises"), and
WHEREAS, Lender has made or has committed to make a first mortgage loan to
Landlord in the principal amount not to exceed $_________ (the "Loan"), the Loan
being secured by a mortgage, deed of trust or security deed (collectively, the
"Mortgage") and an assignment(s) of leases and rents from Landlord to Lender
covering the Premises; and
WHEREAS, Tenant has agreed that the Lease shall be subject and subordinate
to the Mortgage held by Lender, provided Tenant is assured of continued
occupancy of the Premises under the terms of the Lease;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the sum of Ten Dollars ($10.00) and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
and notwithstanding anything in the Lease to the contrary, it is hereby agreed
as follows:
1. SUBORDINATION OF LEASE. Lender, Tenant and Landlord do hereby
----------------------
covenant and agree that the Lease with all rights, options, liens and charges
created thereby, is and shall continue to be subject and subordinate in all
respects to the Mortgage and to any renewals, modifications, consolidations,
replacements and extensions thereof and to all advancements made thereunder.
2. NONDISTURBANCE OF TENANT. Lender does hereby agree with Tenant that,
------------------------
in the event Lender becomes the owner of the Premises by foreclosure, conveyance
in lieu of foreclosure or otherwise, so long as Tenant complies with and
performs its obligations under the Lease, (a) Lender will take no action which
will interfere with or disturb Tenant's possession or use of the Premises or
other rights under the Lease, and (b) the Premises shall be subject to the Lease
and Lender shall recognize Tenant as the tenant of the Premises for the
remainder of the terms of the Lease in accordance with the provisions thereof,
provided, however, that Lender shall not be subject to any offsets or defenses
which Tenant might have against any prior landlord except those which arose
under the provisions of the Lease out of such landlord's default and accrued
after Tenant had notified Lender and given Lender the opportunity to cure same
as hereinbelow provided, nor shall Lender be liable for any act or omission of
any prior landlord, nor shall Lender be bound by any rent or additional rent
which Tenant might have paid for more than the current month to any prior
landlord nor shall it be bound by any amendment or modification of the Lease
made without its consent.
3. ATTORNMENT BY TENANT. Tenant does hereby agree with Lender that, in
--------------------
the event Lender becomes the owner of the Premises by foreclosure, conveyance in
lieu of foreclosure or otherwise, then Tenant shall attorn to and recognize
Lender as the landlord under the Lease for the remainder of the term thereof,
and Tenant shall perform and observe its obligations thereunder, subject only to
the terms and conditions of the Lease. In such event, Lender shall not be
liable for any act or omission of any prior landlord, liable for return of the
security deposit unless same was actually delivered to Lender, bound by any
amendment to or assignment of the Lease made without its consent, bound by any
rent paid more than thirty (30) days in advance, or be subject to any set-off or
defense Tenant might have had against any prior landlord. Tenant further
covenants and agrees to execute and deliver upon request of Lender or its
assigns, an appropriate Agreement of Attornment to Lender and any subsequent
titleholder of the Premises.
4. ACKNOWLEDGMENT OF ACQUISITION RIGHTS. Lender acknowledges that Tenant
------------------------------------
has certain purchase rights under the lease. So long as Tenant complies with
the provisions of the Lease, Lender acknowledges that Tenant may exercise such
rights and Lender will honor such rights so long as Tenant pays the acquisition
price to Lender or otherwise obtains a release from Lender.
5. CURATIVE RIGHTS, MODIFICATION OF LEASE, AND ADVANCE PAYMENT OF RENT.
-------------------------------------------------------------------
So long as the Mortgage remains outstanding and unsatisfied:
(a) Tenant will mail or deliver to Lender, at the address and in the
manner hereinbelow provided, a copy of all notices permitted or required to be
given to the Landlord by Tenant under and pursuant to the terms and provisions
of the Lease. At any time before the rights of the Landlord shall have been
forfeited or adversely affected because of any default of the Landlord, or
within the time permitted the Landlord for curing any default under the Lease as
therein provided, Lender may, but shall have no obligation to, pay any taxes and
assessments, make any repairs and improvements, make any deposits or do any
other act or thing required of the Landlord by the terms of the Lease; and all
payments so made and all things so done and performed by Lender shall be as
effective to prevent the rights of the Landlord from being forfeited or
adversely affected because of any default under the Lease as the same would have
been if done and performed by the Landlord.
(b) Tenant will not consent to the modification of the Lease, nor to
the termination thereof, without the prior written consent of Lender, such
consent not to be unreasonably withheld or delayed, nor will Tenant pay any rent
under the Lease more than thirty (30) days in advance.
2
6. CONSENT TO ASSIGNMENT. Tenant acknowledges that Landlord will execute
---------------------
and deliver to Lender an assignment of the Lease as security for the Loan, and
Tenant hereby expressly consents to such assignment.
7. LIMITATION OF LIABILITY. Lender shall have no liability whatsoever
-----------------------
hereunder prior to becoming the owner of the Premises; and Tenant agrees that if
Lender becomes the owner of the Premises, Tenant shall look solely to the estate
or interest of Lender in the Premises for satisfaction of any obligation which
may be or become owing by Lender to Tenant hereunder or under the Lease.
8. LANDLORD AND TENANT CERTIFICATIONS. Landlord and Tenant hereby
----------------------------------
certify to Lender that the Lease has been duly executed by Landlord and Tenant
and is in full force and effect, that the Lease and any modifications and
amendments specified herein are a complete statement of the agreement between
Landlord and Tenant with respect to the leasing of the Premises, and the Lease
has not been modified or amended except as specified herein; that to the
knowledge of Landlord and Tenant, no party to the Lease is in default
thereunder; that no rent under the Lease has been paid more than thirty (30)
days in advance of its due date; and that Tenant, as of this date, has no
charge, lien or claim of offset under the Lease, or otherwise, against the rents
or other charges due or to become due thereunder.
a. 9. TENANT ESTOPPEL CERTIFICATIONS. With the knowledge that Lender,
------------------------------
as beneficiary of the mortgage encumbering the premises, will place substantial
reliance thereon in connection with the closing and funding of the Loan, Tenant
hereby makes the following certifications:
(a) The term of the Lease commenced on ________, 19__, and will
terminate on ______________.
(b) The Lease, as described above, has not been modified, amended,
assigned or subleased except as set forth in Exhibit A attached hereto, and is
---------
in good standing and in full force and effect.
(c) The Lease provides for rental payments over the term of the
Lease, all as specifically provided in the Lease. No rent under the Lease has
been paid more than thirty (30) days in advance of the due date of same. For the
year ____, monthly payments, which are due on the first (1st) day of each month,
are as follows:
Basic Rent - $________
Payment of the above amount was timely made for the months of ______,
___and _____, ____, and the next payment of the above amount will be due on
________, ____. In addition to the above
3
amount, certain additional sums are due to Landlord from Tenant under the Lease,
all as specifically set forth in the Lease.
(d) Tenant has paid a security deposit under the Lease.
(e) To Tenant's knowledge there are no defaults by Landlord under the
Lease and there are no existing circumstances which, with the passage of time,
or notice, or both, would give rise to a default under the Lease.
(f) Tenant has accepted and is occupying the Premises, and Landlord
has no unperformed obligation under the Lease to construct any improvements for
the Tenant related to the Premises.
(g) Tenant has no charge, lien, claim of set-off or defense against
rents or other charges due or to become due under the Lease or otherwise under
any of the terms, conditions, or
covenants contained therein.
(h) Tenant has received no notice from any insurance company of any
defects or inadequacies in the Premises or in any part thereof which would
adversely affect the insurability of the Premises.
(i) Except as provided in the Lease, Tenant does not have any right
or option to purchase the Premises.
(j) Except as provided in the Lease, Tenant does not have any rights
or options to renew the Lease or to lease additional space in any building owned
by the Landlord.
10. TENANT COVENANTS.
----------------
(a) From and after the date hereof, Tenant will not pay any rent
under the Lease more than thirty (30) days in advance of its due date.
(b) From and after the date hereof, so long as there shall be any
assignment of Landlord's interest in the Lease to Lender, or any successor
thereto, Tenant will not: consent to the modification of the Lease nor to the
termination thereof without the prior written consent of the Lender or any
successor holder of the Loan or the Mortgage which consent shall not be
unreasonably withheld or delayed (either of them being called "Mortgagee"), nor
seek to terminate the Lease by reason of any act or omission of Landlord until
Tenant shall have given written notice of such act or omission to such
Mortgagee's last address furnished Tenant) and until a reasonable period of time
shall have elapsed following the giving of such notice, during which period the
Mortgagee shall have the right, but not the obligation, to remedy such act or
omission.
4
(c) Upon written notice of the default by Landlord under any of the
loan documents held by Mortgagee and assignment of the Landlord's interest under
the Lease by Landlord to Mortgagee, Tenant, if Mortgagee so requests, will
recognize such Mortgagee as the Landlord under the Lease and will thereafter pay
rent and other sums to Mortgagee (or to the party designated by the Mortgagee in
writing) in accordance with the terms of the Lease, and, in such event, such
Mortgagee will not be liable for any act or omission of any prior lessor, liable
for return of the security deposit unless same was actually delivered to
Mortgagee, bound by any amendment to or assignment of the Lease made without its
consent, bound by any rent paid more than thirty (30) days in advance, or be
subject to any set-off or defense Tenant might have had against any prior
lessor.
11. NOTICES. Unless and except as otherwise specifically provided
-------
herein, any and all notices, elections, approvals, consents, demands, requests
and responses thereto ("Communications") permitted or required to be given under
this Agreement shall be in writing, signed by or on behalf of the party giving
the same, and shall be deemed to have been properly given and shall be effective
upon the earlier of receipt thereof or three (3) days after deposit thereof in
the United States mail, postage prepaid, certified with return receipt
requested, to the other party at the address of such other party set forth
hereinbelow or at such other address within the continental United States as
such other party may designate by notice specifically designated as a notice of
change of address and given in accordance herewith; provided, however, that the
time period in which a response to any Communication must be given shall
commence on the date of receipt thereof, and provided further that no notice of
change of address shall be effective with respect to Communications sent prior
to the time of receipt of such change. Receipt of Communications hereunder shall
occur upon actual delivery (whether by mail, facsimile transmission, messenger,
courier service, or otherwise) to an individual party or to an officer, member,
or general or limited partner of a party or to any agent or employee of such
party at the address of such party set forth hereinbelow, subject to change as
provided hereinabove. An attempted delivery in accordance with the foregoing,
acceptance of which is refused or rejected, shall be deemed to be and shall
constitute receipt; and an attempted delivery in accordance with the foregoing
by mail, messenger, or courier service (whichever is chosen by the sender) which
is not completed because of changed address of which no notice was received by
the sender in accordance with this provision prior to the sending of the
Communication shall also be deemed to be and constitute receipt. Any
Communication, if given to Lender, must be addressed as follows, subject to
change as provided hereinabove:
__________________________________
__________________________________
and, if given to Tenant, must be addressed as follows, subject to change as
provided hereinabove:
__________________________________
__________________________________
__________________________________
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and, if given to Landlord, must be addressed as follows, subject to change as
provided hereinabove:
Capital Automotive, L.P.
__________________________________
__________________________________
12. MISCELLANEOUS. This Agreement shall be binding upon and inure to
-------------
the benefit of the parties hereto and their respective heirs, legal
representatives, successors, successors-in-title and assigns. When used herein,
the term "Landlord" or "landlord" refers to Landlord and to any successor to the
interest of Landlord under the Lease.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above written.
LENDER:
Signed, sealed and delivered
in the presence of: By:
Title:
__________________________________ _________________________
Witness
(CORPORATE SEAL)
TENANT:
Signed, sealed and delivered
in the presence of: By:
Title:
__________________________________ _________________________
Witness (CORPORATE SEAL)
LANDLORD:
Signed, sealed and delivered
in the presence of: By:
Title:
__________________________________ _________________________
Witness (PARTNERSHIP SEAL)
7
EXHIBIT A
Lease Dated __________ from ________________ to _______________ with Exhibit A
attached, all in the form attached hereto as Attachment to Exhibit A.
------------------------
8
County of ___________________________:
SS:
State of _____________________________:
This is to certify that on this ____ day of ________, 1997, personally
appeared before me, a notary public of the County (City) aforesaid, known to me
(or satisfactorily identified to me) to be the individual signing on behalf of
Lender in the capacity stated by his signature, and that he acknowledged the
within document to be the act and deed of the Lender.
_______________________________
Notary Public
My commission expires:
10
County of ____________________________:
SS:
State of _____________________________:
This is to certify that on this ____ day of _________, 1997, personally
appeared before me, a notary public of the County (City) aforesaid, known to me
(or satisfactorily identified to me) to be the individual signing on behalf of
Tenant in the capacity stated by his signature, and that he acknowledged the
within document to be the act and deed of the Tenant.
______________________________
Notary Public
My commission expires:
County of ____________________________
SS:
State of _____________________________
This is to certify that on this ____ day of _______, 1997, personally
appeared before me, a notary public of the County (City) aforesaid, known to me
(or satisfactorily identified to me) to be the individual signing on behalf of
Landlord in the capacity stated by his signature, and that he acknowledged the
within document to be the act and deed of the Landlord.
______________________________
Notary Public
My commission expires:
11
