EXHIBIT 10.9
MASTER LEASE
THIS MASTER LEASE (this "Lease") is made as of October 1, 2002 (the
"Effective Date"), by and between SCS FINANCE I, L.P., a Delaware limited
partnership ("Lessor"), and SOUTHWEST CONVENIENCE STORES, LP, a Texas limited
partnership ("Lessee").
WITNESSETH:
THAT, in consideration of the mutual covenants and agreements herein
contained, Lessor and Lessee hereby covenant and agree as follows:
1. CERTAIN DEFINED TERMS. The following terms shall have the following
meanings for all purposes of this Lease:
"ADA" means the Americans with Disabilities Act of 1990, as such act may
be amended from time to time.
"Additional Rental" has the meaning set forth in Section 5.B.
"Affiliate" means any Person which directly or indirectly controls, is
under common control with, or is controlled by any other Person. For purposes of
this definition, "controls", "under common control with" and "controlled by"
means 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 or otherwise.
"Affiliated Borrower" means SCS Finance II, L.P., a Delaware limited
partnership.
"Applicable Regulations" means all applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, orders and approvals of each
Governmental Authority having jurisdiction over any of the Properties or the
Equipment, including, without limitation, all health, building, fire, safety and
other codes, ordinances and requirements, all applicable standards of the
National Board of Fire Underwriters and the ADA and all policies or rules of
common law, in each case, and any judicial or administrative interpretation
thereof, including any judicial order, consent, decree or judgment applicable to
any of the Lessee Parties, each as in effect on the date of determination.
"Applicable Rent Reduction Percentage" means, with respect to any
Property, a fraction, the numerator of which shall be the original principal
balance of the Note relating to such Property and Fee Equipment located thereon,
and the denominator of which shall be the sum of all of the original principal
balances of the Notes relating to all of the Properties and Fee Equipment then
subject to this Lease, including such Property and Fee Equipment.
"Base Annual Rental" means the amount of $2,309,941.08, which Base Annual
Rental may be subject to adjustment from time to time as set forth in Section
21.
"Base Monthly Rental" means an amount equal to 1/12 of the Base Annual
Rental.
"Business Day" means any day on which Lender is open for business other
than a Saturday, Sunday or a legal holiday, ending at 5:00 P.M. Phoenix, Arizona
time.
"Change of Control" means a change in control of any of the Lessee Parties
occurring as a result of: (i) any merger or consolidation by any of the Lessee
Parties, as applicable, with or into any other entity other than another entity
controlled by Alon Israel Oil Company Ltd. or any successor in interest thereto;
or (ii) if any "Person" as defined in Section 3(a)(9) of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and as used in Section
13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) of the
Exchange Act, who, subsequent to the Closing, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), of securities of any of the
Lessee Parties, as applicable, representing 50% or more of the combined voting
power of that Lessee Party's then outstanding securities (other than indirectly
as a result of the redemption by any of the Lessee
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Parties, as applicable, of its securities) including, without limitation, a
change in control resulting from direct or indirect transfers of voting stock or
partnership, membership or other ownership interests, whether in one or a series
of transactions; provided, however, that if no Event of Default, or events or
circumstances which with the giving of notice or passage of time will result in
an Event of Default, then exists (except for an environmental default being
cured in accordance with Section 24.A.(vii)), then no Change in Control of any
of the Lessee Parties shall be deemed to have occurred if immediately following
the event that would otherwise cause that Change in Control: (i) Lessee has an
aggregate amount of partners' capital equal to or greater than the aggregate
amount of the partners' capital of Lessee, as determined in accordance with GAAP
immediately prior to that event and the Corporate Fixed Charged Coverage Ratio
of Lessee determined for the last twelve full months occurring prior to that
event is at least 1.5:1; or (ii) the rating agency then rating the debt of
Guarantor has confirmed that the credit rating of Guarantor is no lower than its
credit rating immediately prior to that event; and provided, further, no event
that would otherwise be deemed to be a Change in Control hereunder as a result
of any merger or consolidation of, or the transfer of the voting stock or other
voting ownership interests in, Alon Israel Oil Company Ltd. shall be deemed to
be a Change in Control under this Agreement or any other Loan Document. For
purposes of this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of any of the Lessee Parties, as applicable.
"Code" means Title 11 of the United States Code, 11 U.S.C. Sec. 101 et
seq., as amended.
"Corporate Fixed Charge Coverage Ratio" means with respect to Guarantor or
Lessee, the "Corporate Fixed Charge Coverage Ratio" as defined in Section
24.A(xii) or Section 59, respectively.
"Default Rate" means the lesser of the highest rate for which the
undersigned may legally contract or the rate of 14% per annum.
"Distributor" means Alon USA, LP, or any other distributor of petroleum
products to the Properties, in accordance with a Permitted Concept.
"Distributor Agreement" means the agreement or agreements with the
Distributor (including any successor Distributor) with respect to the supply of
petroleum products to the Properties, together with all amendments,
modifications, supplements, or replacements thereto.
"Effective Date" has the meaning set forth in the Preamble.
"Environmental Compliance Activities" means any action to comply with any
Environmental Laws or with any permits issued pursuant thereto, any inspection,
investigation, study, monitoring, assessment, audit, sampling and testing,
laboratory or other analysis or any evaluation relating to Hazardous Materials.
"Environmental Condition" means any condition with respect to soil,
surface waters, groundwaters, land, stream sediments, surface or subsurface
strata, ambient air and any environmental medium comprising or surrounding any
of the Properties, which would reasonably be expected to or does result in any
damage, loss, cost, expense, claim, demand, order or liability to or against any
of the Lessee Parties, Lessor or Lender by any third party (including, without
limitation, any Governmental Authority), including, without limitation, any
condition resulting from the operation of business at any of the Properties
and/or the operation of the business of any other property owner or operator in
the vicinity of the Properties and/or any activity or operation formerly
conducted by any person or entity on or off any of the Properties.
"Environmental Insurer" means American International Specialty Lines
Insurance Company, or such other environmental insurance company as Lessor may
select, and its successors and assigns.
"Environmental Laws" means any applicable federal, state and local laws,
statutes, ordinances, rules, regulations, orders, injunctions and decrees of
Governmental Authorities and common law, relating to Hazardous Materials or USTs
and/or the protection of human health or the environment by reason of a Release
or a Threatened Release of Hazardous Materials or USTs or relating to liability
for or costs of Remediation, Environmental Compliance Activities or prevention
of Releases. "Environmental Laws" includes, but is not limited to, the
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following statutes, as amended, any successor thereto, and any regulations,
rulings, orders or decrees promulgated pursuant thereto, and any state or local
statutes, ordinances, rules, regulations, orders, injunctions and decrees of
Governmental Authorities: the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Sections 9601 et seq.; the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. Section 5101 et seq.; the Resource
Conservation and Recovery Act (including but not limited to Subtitle I relating
to USTs), 42 U.S.C. Sections 6901 et seq.; the Clean Water Act, 33 U.S.C.
Sections 1251 et seq.; the Clean Air Act, 42 U.S.C. Sections 7401 et seq.; the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Sections 7401 et seq.; the Occupational Safety and Health
Act, 29 U.S.C. Section 651 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Sections 136 et seq.; the Endangered Species Act, 16
U.S.C. Sections 1531 et seq. and the National Environmental Policy Act, 42
U.S.C. Section 4321 et seq. "Environmental Laws" also includes, but is not
limited to, any applicable federal, state and local laws, statutes, ordinances,
rules, regulations, orders, injunctions and decrees of Governmental Authorities
and common law: conditioning transfer of property upon a negative declaration or
other approval of a Governmental Authority of the environmental condition of the
property; requiring notification or disclosure of Releases or other
environmental condition of any of the Properties to any Governmental Authority
or other person or entity, whether or not in connection with transfer of title
to or interest in property; imposing conditions or requirements relating to
Hazardous Materials or USTs in connection with permits or other authorizations
required by Governmental Authorities; relating to the handling and disposal of
Hazardous Materials; relating to nuisance, trespass or other causes of action
related to Hazardous Materials; and relating to wrongful death, personal injury,
or property or other damage in connection with the physical condition or use of
any of the Properties by reason of the presence of Hazardous Materials or USTs
in, on, under or above any of the Properties.
"Environmental Liens" has the meaning set forth in Section 6.L(9).
"Environmental Policies" means the environmental insurance policies issued
by Environmental Insurer to Lender with respect to the Properties, which
Environmental Policies shall be in form and substance satisfactory to Lender in
its sole discretion.
"Equipment" means the Fee Equipment and the Leasehold Equipment.
"Equipment Loan Agreement" means the Equipment Loan and Security
Agreement, dated as of the Effective Date, in effect between Lessor and Lender,
as such agreement may be amended, modified or supplemented from time to time and
any replacements or substitutions thereof.
"Equipment Loan Documents" means, collectively, the Equipment Loan
Agreement, the Equipment Notes, and all other documents, instruments and
agreements executed in connection therewith or contemplated thereby, all as
amended, modified or supplemented from time to time, and any and all
replacements or substitutions thereof.
"Equipment Notes" means, collectively, the equipment promissory notes
dated as of the Effective Date executed by Lessor and payable to Lender and
secured by the Leasehold Equipment, as such notes may be amended, modified,
restated and/or substituted from time to time.
"Equipment Premises" means collectively or individually, as the context
may require a parcel or all of the parcels of real property described by address
and unit number in Exhibit B attached hereto, and legally described on Exhibit
B-2 attached hereto, which are leased to Lessee pursuant to the Premises Leases
and all rights, privileges and appurtenances associated therewith, including all
buildings, fixtures and other improvements.
"Equipment Premises Landlord" means the owner of the fee-simple interest
in one or more Equipment Premises, which party leases such Equipment Premises to
Lessee pursuant to a Premises Lease.
"Event of Default" has the meaning set forth in Section 24.
"Fee Equipment" means the furniture, machinery, equipment, trade fixtures,
appliances, gas pumps and canopies, and all other tangible personal property now
or hereafter located at the Properties owned by Lessor and leased to Lessee
pursuant to this Lease.
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"GAAP" means generally accepted accounting principles consistently applied
and in effect in the United States of America from time to time.
"Governmental Authority" means any governmental authority, agency,
department, commission, bureau, board, instrumentality, court or
quasi-governmental authority having jurisdiction or supervisory or regulatory
authority over any of the Properties, Equipment or any of the Lessee Parties.
"Guaranty" means the unconditional guaranty of payment and performance
dated as of the date of this Agreement executed by Guarantor, for the benefit of
Lessor with respect to this Lease.
"Guarantor" means Alon USA, Inc., a Delaware corporation, and its
successors.
"Hazardous Materials" means (a) any toxic substance or hazardous waste,
substance, solid waste or related material, or any pollutant or contaminant; (b)
radon gas, asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment containing
dielectric fluid having levels of polychlorinated biphenyls in excess of
applicable standards established by any Governmental Authority, or any petroleum
product or additive; (c) any substance, gas, material or chemical which is now
or hereafter defined as or included in the definition of "hazardous substances,"
"toxic substances," "hazardous materials," "hazardous wastes," "regulated
substances" or words of similar import under any Environmental Laws, including,
without limitation, "petroleum" and "petroleum-based substances" or any similar
terms described or defined in any Environmental Laws and any applicable federal,
state, county or local laws applicable to or regulating USTs; and (d) any other
chemical, material, gas or substance the exposure to or release of which is
prohibited, limited or regulated by any Governmental Authority that asserts or
may assert jurisdiction over any of the Properties or the operations or activity
at any of the Properties, or any chemical, material, gas or substance that does
or is reasonably likely to pose a hazard to the health and/or safety of the
occupants of any of the Properties or the owners and/or occupants of property
adjacent to or surrounding the any of Properties.
"Indemnified Parties" means Lessor, Environmental Insurer, Lender, their
respective directors, officers, shareholders, trustees, beneficial owners,
partners and members, any directors, officers, shareholders, trustees,
beneficial owners, partners, members of any shareholders, beneficial owners,
partners or members of Lessor, Environmental Insurer or Lender, and all
employees, agents, servants, representatives, contractors, subcontractors,
affiliates, subsidiaries, participants, successors and assigns of any of the
foregoing, including, but not limited to, any successors by merger,
consolidation or acquisition of all or a substantial portion of the assets and
business of Lessor, Environmental Insurer or Lender, as applicable.
"Lease Term" shall have the meaning described in Section 4.
"Leasehold Equipment" means the furniture, machinery, equipment, trade
fixtures, appliances, gas pumps and canopies, and all other tangible personal
property now or hereafter located at the Equipment Premises owned by Lessor and
leased to Lessee pursuant to this Lease.
"Lender" means GE Capital Franchise Finance Corporation, a Delaware
corporation, its successors and assigns, any successor lender in connection with
any loan secured by Lessor's interest in any of the Properties and/or Equipment,
and any servicer of any loan secured by Lessor's interest in any of the
Properties and/or the Equipment.
"Lessee Parties" means, collectively, Lessee and any guarantors of this
Lease (including, in each case, any predecessors-in-interest).
"Lessor Entities" means, collectively, Lessor (including any
predecessor-in-interest to Lessor) and any Affiliate of Lessor (including any
Affiliate of any predecessor-in-interest to Lessor).
"Loan Agreement" means the Loan Agreement dated as of the Effective Date
in effect between Lessor and Lender, as such agreement may be amended, modified
or supplemented from time to time and any and all replacements or substitutions
thereof.
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"Loan Documents" means, collectively, the Loan Agreement, the Notes, the
Mortgages and all other documents, instruments and agreements executed in
connection therewith or contemplated thereby, all as amended, modified and
supplemented and any and all replacements or substitutions thereof.
"Loan Pool" means:
(i) in the context of a Securitization, any pool or group of loans
that are a part of such Securitization;
(ii) in the context of a Transfer, all loans which are sold,
transferred or assigned to the same transferee; and
(iii) in the context of a Participation, all loans as to which
participating interests are granted to the same participant.
"Losses" means any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts,
damages, losses, costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in settlement and
damages of whatever kind or nature (including, without limitation, attorneys'
fees, court costs and other costs of defense).
"Material Adverse Effect" means a material adverse effect on (i) any of
the Properties and/or Equipment, including, without limitation, the operation of
any of the Properties and/or Equipment as a Permitted Concept, or (ii) Lessee's
ability to perform its obligations under this Lease or any Premises Lease.
"Memorandum" means the memorandum of master lease dated as of the
Effective Date between Lessor and Lessee with respect to the Properties. A
duplicate original Memorandum will be executed and recorded in the applicable
real property records for each Property. Each Memorandum will contain exhibits
with the addresses and store identification numbers for all of the Properties
and the legal description for the applicable Property.
"Mortgage" or "Mortgages" means, as the context may require, the mortgage
or deed of trust dated as of the date of this Agreement executed by Lessor for
the benefit of Lender with respect to a Property or the mortgages, deeds of
trust or deeds to secure debt, assignments of rents and leases, security
agreements and fixture filings dated as of the Effective Date executed by Lessor
for the benefit of Lender with respect to all of the Properties, as the same may
be amended, modified, restated and/or supplemented from time to time and any and
all replacements or substitutions thereof. A Mortgage has been executed for each
Property.
"Notes" means, collectively, the promissory notes dated as of the
Effective Date executed by Lessor and payable to Lender with respect to the
Properties, as such notes may be amended, modified, restated and/or substituted
from time to time.
"Other Agreements" means, collectively, all agreements and instruments now
or hereafter entered into between, among or by (1) any of the Lessee Parties
and/or any Affiliate of any of the Lessee Parties (including any Affiliate of
any predecessor-in-interest to any of the Lessee Parties), and, or for the
benefit of, (2) any of the Lessor Entities; provided, however, the term Other
Agreements shall not include this Lease or any Related Lease.
"Participation" means one or more grants by Lender or any Affiliate of
Lender to a third party of a participating interest in notes evidencing
obligations to repay secured or unsecured loans owned by Lender or any Affiliate
of Lender or any or all servicing rights with respect thereto.
"Permitted Amounts" means, with respect to any given level of Hazardous
Materials, that level or quantity of Hazardous Materials in any form or
combination of forms the presence, use, storage, release or handling of which
does not constitute a violation of any Environmental Laws and is customarily
employed in the ordinary course of, or associated with, similar businesses
located in the states in which the Properties are located.
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"Permitted Concept" means the operation of each Property or Equipment
Premises as a recognized, regionally or nationally branded convenience store or
convenience store brand used by Lessee for substantially all of its stores, with
facilities for the sale of gasoline, which sells gasoline under the brand name
"Fina" (or any variant thereof or successor brand thereto) or under any other
national or brand name for gasoline having a similar or greater name recognition
in the market area in which the Property or Equipment Premises are located or
any other brand to which Lessor consents, in Lessor's reasonable discretion.
"Permitted Liens" means (i) those recorded easements, restrictions, liens
and encumbrances set forth as exceptions in the title insurance policies issued
by Title Company to Lender with respect to the Properties, (ii) liens or
encumbrances created by, through or under the Lender or any Person claiming by
or through Lender, (iii) liens or encumbrances for taxes, assessments or other
governmental charges either not yet due or being contested by Lessee in
accordance with this Lease or the Loan Documents, (iv) inchoate materialman's,
mechanic's, workmen's, repairmen's or other like liens arising in the ordinary
course of business and for amounts the payment of which either is not yet due or
is being contested by Lessee as may be permitted by this Lease, provided the
nonpayment of such amount does not involve any material danger of sale, for
forfeiture or loss of any part of the Properties or Equipment, title thereto or
any interest therein.
"Person" means any individual, corporation, partnership, limited liability
company, trust, unincorporated organization, Governmental Authority or any other
form of entity.
"Personal Property" means all machinery, appliances, furniture, equipment,
trade fixtures, gas pumps and canopies and other tangible personal property (but
excluding inventory, general intangibles, payment intangibles, cash, instruments
(including promissory notes), documents, accounts, chattel paper (whether
tangible or electronic), deposit accounts, letter of credit rights, securities
and all other investment property, any other contract rights or rights to the
payment of money, and all other intangible property), owned by Lessee now or
hereafter located on or at any of the Properties or used solely in connection
with any of the Properties.
"Premises Lease" or "Premises Leases" means, as the context may require,
one or all of the leases for an Equipment Premises, each between Lessee, as
lessee, and an Equipment Premises Landlord, as lessor, as the same may be
amended or supplemented from time to time.
"Properties" means, collectively, the parcels of real estate owned by
Lessor, which are described by address, Lessor Number and Unit Number in Exhibit
A attached hereto and legally described in Exhibit A-1 attached hereto, all
rights, privileges and appurtenances associated therewith, and all buildings,
fixtures and other improvements now or hereafter located on such real estate
(whether or not affixed to such real estate).
"Property" means any one of the Properties.
"Questionnaires" means the environmental questionnaires completed on
behalf of Lessor with respect to the Properties and submitted to Environmental
Insurer in connection with the issuance of the Environmental Policies.
"Related Lease" means the master lease, dated as of the date of this
Lease, between Lessee, as lessee, and the Affiliated Borrower, as lessor, as
amended or supplemented from time to time.
"Release" means any presence, release, deposit, discharge, emission,
leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying,
escaping, dumping, disposing or other movement of Hazardous Materials in
violation of Environmental Laws or which may result in a Material Adverse
Effect.
"Remediation" means any response, remedial, removal, or corrective action,
any activity to clean up, detoxify, decontaminate, contain or otherwise
remediate any Hazardous Materials or USTs required by any Environmental Law or
any Governmental Authority, any actions to cure or mitigate any Release, any
action to comply with any Environmental Laws or with any permits issued pursuant
thereto, and any inspection, investigation, study, monitoring, assessment,
audit, sampling and testing, laboratory or other analysis, or any evaluation
relating to any Release of Hazardous Materials or Release from any USTs.
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"Securitization" means one or more sales, dispositions, transfers or
assignments by Lender or any Affiliate of Lender to a special purpose
corporation, trust or other entity identified by Lender or any Affiliate of
Lender of notes evidencing obligations to repay secured or unsecured loans owned
by Lender or any Affiliate of Lender (and, to the extent applicable, the
subsequent sale, transfer or assignment of such notes to another special purpose
corporation, trust or other entity identified by Lender or any Affiliate of
Lender), and the issuance of bonds, certificates, notes or other instruments
evidencing interests in pools of such loans, whether in connection with a
permanent asset securitization or a sale of loans in anticipation of a permanent
asset securitization. Each Securitization shall be undertaken in accordance with
all requirements which may be imposed by the investors or the rating agencies
involved in each such sale, disposition, transfer or assignment or which may be
imposed by applicable securities, tax or other laws or regulations.
"Terrorism Laws" means Executive Order 13224 issued by the President of
the United States of America, the Terrorism Sanctions Regulations (Title 31 Part
595 of the U.S. Code of Federal Regulations), the Terrorism List Governments
Sanctions Regulations (Title 31 Part 596 of the U.S. Code of Federal
Regulations), and the Foreign Terrorist Organizations Sanctions Regulations
(Title 31 Part 597 of the U.S. Code of Federal Regulations), and all other
present and future federal, state and local laws, ordinances, regulations,
policies and any other requirements of any Governmental Authority (including,
without limitation, the United States Department of the Treasury Office of
Foreign Assets Control) addressing, relating to, or attempting to eliminate,
terrorist acts and acts of war, each as hereafter supplemented, amended or
modified from time to time, and the present and future rules, regulations and
guidance documents promulgated under any of the foregoing, or under similar
laws, ordinances, regulations, policies or requirements of other states or
localities.
"Threatened Release" means a substantial likelihood of a Release which
requires action to prevent or mitigate damage to the soil, surface waters,
groundwaters, land, stream sediments, surface or subsurface strata, ambient air
or any other environmental medium comprising or surrounding any of the
Properties which may result from such Release.
"Title Company" means Lawyers Title Insurance Corporation.
"Transfer" means one or more sales, transfers or assignments by Lender or
any Affiliate of Lender to a third party of notes evidencing obligations to
repay secured or unsecured loans owned by Lender or any Affiliate of Lender or
any or all servicing rights with respect thereto.
"UCC" shall have the meaning described in Section 31.
"USTs" means any one or combination of below or above ground tanks and
associated piping systems used in connection with the storage, dispensing and
general use of petroleum and petroleum-based substances.
2. DEMISE OF PROPERTIES. In consideration of the rentals and other sums to
be paid by Lessee and of the other terms, covenants and conditions on Lessee's
part to be kept and performed, Lessor hereby leases to Lessee, and Lessee hereby
takes and hires, all of the Properties and Equipment. The Properties and
Equipment are leased to Lessee "AS IS" and "WHERE IS" without representation or
warranty by Lessor and subject to the rights of parties in possession, to the
existing state of title, any state of facts which an accurate survey or physical
inspection might reveal, and all Applicable Regulations now or hereafter in
effect. Lessee has examined each of the Properties and the Equipment and title
to each of the Properties and the Equipment and has found all of the same
satisfactory for all of Lessee's purposes.
3. MASTER LEASE CHARACTERIZATION. A. Lessor and Lessee intend that:
(i) this Lease constitutes a single master lease of all, but not
less than all, of the Properties and Equipment and that Lessor and Lessee
have executed and delivered this Lease with the understanding that this
Lease constitutes a unitary, unseverable instrument pertaining to all, but
not less than all, of the Properties, and that neither this Lease nor the
duties, obligations or rights of Lessee may be allocated or otherwise
divided among the Properties and Equipment by Lessee;
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(ii) this Lease is a "true lease" and not a financing lease,
mortgage, equitable mortgage, deed of trust, trust agreement, security
agreement or other financing or trust arrangement, and the economic
realities of this Lease are those of a true lease; and
(iii) the business relationship created by this Lease and any
related documents is solely that of a long-term commercial lease between
landlord and tenant and has been entered into by both parties in reliance
upon the economic and legal bargains contained herein.
X. Xxxxxx and Lessee acknowledge and agree that the Lease Term, including
any term extensions provided for in this Lease, is less than the remaining
economic life of each of the Properties and of the Equipment.
C. Lessee waives any claim or defense based upon the characterization of
this Lease as anything other than a true lease and irrevocably waives any claim
or defense which asserts that this Lease is anything other than a true lease.
Lessee covenants and agrees that it will not assert that this Lease is anything
but a true lease. Lessee stipulates and agrees not to challenge the validity,
enforceability or characterization of the lease of the Properties and Equipment
as a true lease and further stipulates and agrees that nothing contained in this
Lease creates or is intended to create a joint venture, partnership (either de
jure or de facto), equitable mortgage, trust, financing device or arrangement,
security interest or the like. Lessee shall support the intent of the parties
that the lease of the Properties and Equipment pursuant to this Lease is a true
lease and does not create a joint venture, partnership (either de jure or de
facto), equitable mortgage, trust, financing device or arrangement, security
interest or the like, if, and to the extent that, any challenge occurs.
D. Lessee waives any claim or defense based upon the characterization of
this Lease as anything other than a master lease of all of the Properties and
Equipment and irrevocably waives any claim or defense which asserts that this
Lease is anything other than a master lease. Lessee covenants and agrees that it
will not assert that this Lease is anything but a unitary, unseverable
instrument pertaining to the lease of all, but not less than all, of the
Properties and Equipment. Lessee stipulates and agrees not to challenge the
validity, enforceability or characterization of the lease of the Properties and
Equipment as a unitary, unseverable instrument pertaining to the lease of all,
but not less than all, of the Properties and Equipment. Lessee shall support the
intent of the parties that this Lease is a unitary, unseverable instrument
pertaining to the lease of all, but not less than all, of the Properties and
Equipment, if, and to the extent that, any challenge occurs.
E. Lessee represents and warrants to Lessor that (i) the Base Annual
Rental is the fair market value for the use of the Properties and Equipment and
was agreed to by Lessor and Lessee on that basis, and (ii) the execution,
delivery and performance by Lessee of this Lease does not constitute a transfer
of all or any part of the Properties and Equipment.
F. The expressions of intent, the waivers, the representations and
warranties, the covenants, the agreements and the stipulations set forth in this
Section are a material inducement to Lessor entering into this Lease.
4. LEASE TERM. The Lease Term for all of the Properties and Equipment
shall commence as of the Effective Date and shall expire on March 31, 2023,
unless terminated sooner as provided in this Lease. The time period during which
this Lease shall actually be in effect is referred to herein as the "Lease
Term."
5. RENTAL AND OTHER PAYMENTS. A. If the Effective Date is a date other
than the first day of the month, Lessee shall pay Lessor on the Effective Date
the Base Monthly Rental prorated on the basis of the ratio that the number of
days from the Effective Date through the last day in the month containing the
Effective Date bears to the number of days in such month. Thereafter, on or
before the first day of each succeeding calendar month, Lessee shall pay Lessor
in advance the Base Monthly Rental. The payments of the Base Monthly Rental
shall be made to such account or accounts as Lessor shall designate to Lessee
from time to time.
B. All sums of money required to be paid by Lessee under this Lease which
are not specifically referred to as rent ("Additional Rental") shall be
considered rent although not specifically designated as such. Lessor shall have
the same remedies for nonpayment of Additional Rental as those provided herein
for the nonpayment of Base Annual Rental.
SCS Finance I, L.P.
8
6. REPRESENTATIONS AND WARRANTIES OF LESSEE. The representations and
warranties of Lessee contained in this Section are being made to induce Lessor
to enter into this Lease and Lessor has relied, and will continue to rely, upon
such representations and warranties. Lessee represents and warrants to Lessor as
of the Effective Date as follows:
A. Organization, Authority and Status. (i) Each of the Lessee Parties
(other than individuals), as applicable, is duly organized or formed, validly
existing and in good standing under the laws of its state of incorporation or
formation. Lessee is qualified as a foreign corporation, partnership or limited
liability company, as applicable, to do business in each state where the
Properties are located, and each of the Lessee Parties is qualified as a foreign
corporation, partnership or limited liability company, as applicable, to do
business in any other jurisdiction where the failure to be qualified would
reasonably be expected to result in a Material Adverse Effect. All necessary
action has been taken to authorize the execution, delivery and performance by
Lessee of this Lease and of the other documents, instruments and agreements
provided for herein. Lessee is not a "foreign corporation", "foreign
partnership", "foreign trust", "foreign limited liability company" or "foreign
estate", as those terms are defined in the Internal Revenue Code and the
regulations promulgated thereunder. Lessee's U.S. Federal Tax Identification
number, Organization Identification number and principal place of business are
correctly set forth on the signature page of this Lease. The person(s) who have
executed this Lease on behalf of Lessee are duly authorized to do so. None of
the Lessee Parties, and no individual or entity owing directly or indirectly any
interest in any of the Lessee Parties, is an individual or entity whose property
or interests are subject to being "blocked" under any of the Terrorism Laws or
who is otherwise in violation of any of the Terrorism Laws.
B. Enforceability. Upon execution by Lessee, this Lease shall constitute
the legal, valid and binding obligation of Lessee, enforceable against Lessee in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, liquidation, fraudulent conveyance,
fraudulent transfer, reorganization and other laws affecting the rights of
creditors generally and general principles of equity.
C. Litigation. Except as set forth in Schedule I hereof, there are no
suits, actions, proceedings or investigations pending, or, to its actual
knowledge, threatened against or involving the Lessee Parties or any of the
Properties or Equipment before any arbitrator or Governmental Authority, except
for such suits, actions, proceedings or investigations which, individually or in
the aggregate, have not had, and would not reasonably be expected to result in,
a Material Adverse Effect.
D. Absence of Breaches or Defaults. The Lessee Parties are not, and the
authorization, execution, delivery and performance of this Lease and the
documents, instruments and agreements provided for herein will not result in,
any breach or default under any Premises Lease or any other document, instrument
or agreement to which any of the Lessee Parties is a party or by which any of
the Lessee Parties, any of the Properties or any of the property of any of the
Lessee Parties is subject or bound, except for such breaches or defaults which,
individually or in the aggregate, have not had, and could not reasonably be
expected to result in, a Material Adverse Effect. The authorization, execution,
delivery and performance of this Lease and the documents, instruments and
agreements provided for herein will not violate any applicable law, statute,
regulation, rule, ordinance, code or order. None of the Properties are subject
to any right of first refusal, right of first offer or option to purchase or
lease granted to a third party. Lessee has not assigned, transferred, mortgaged,
hypothecated or otherwise encumbered this Lease or any rights hereunder or
interest herein.
E. Liabilities of Lessor. Lessee is not liable for any indebtedness for
money borrowed by Lessor and has not guaranteed any of the debts or obligations
of Lessor.
F. Licenses and Permits; Access. All required licenses and permits, both
governmental and private, to use and operate each of the Properties and the
Equipment Premises as a Permitted Concept are in full force and effect, except
for such licenses and permits the failure of which to obtain has not had, and
could not reasonably be expected to result in, a Material Adverse Effect.
Adequate rights of access to public roads and ways are available to each of the
Properties for unrestricted ingress and egress and otherwise to permit
utilization of each of the Properties for their intended purposes, and all such
public roads and ways have been completed and dedicated to public use.
SCS Finance I, L.P.
9
G. Condition of Properties. Each of the Properties and Equipment, is in
good condition and repair and well maintained, ordinary wear and tear excepted.
The Properties are fully equipped and operational, free from known structural
defects, safe and properly lighted.
H. Utilities. Adequate public utilities are available at each of the
Properties to permit utilization of each of the Properties as a Permitted
Concept and all utility connection fees and use charges will have been paid in
full, prior to delinquency.
I. Area Development; Wetlands. No condemnation or eminent domain
proceedings affecting any of the Properties have been commenced or, to Lessee's
actual knowledge, are contemplated. None of the Properties and, to Lessee's
actual knowledge, none of the real property bordering any of the Properties are
designated by any Governmental Authority as a wetlands.
J. Financial Information. Lessee has delivered to Lessor and Lender
certain financial statements and other information concerning the Lessee Parties
in connection with this Lease (collectively, the "Financial Information"). The
Financial Information is true, correct and complete in all material respects;
there have been no amendments to the Financial Information since the date such
Financial Information was prepared or delivered to Lessor. Lessee understands
that Lessor is relying upon the Financial Information and Lessee represents that
such reliance is reasonable. All financial statements included in the Financial
Information were prepared in accordance with GAAP and fairly present as of the
date of such financial statements the financial condition of each individual or
entity to which they pertain. No change has occurred with respect to the
financial condition of any of the Lessee Parties and/or the Properties as
reflected in the Financial Information which has not been disclosed in writing
to Lessor that has had, or could reasonably be expected to result in, a Material
Adverse Effect.
K. Zoning; Compliance With Laws. Each of the Properties is in compliance
with all applicable zoning requirements, and the use of each of the Properties
as a Permitted Concept does not constitute a nonconforming use under applicable
zoning requirements, except where such noncompliance would not have a Material
Adverse Effect. The Lessee Parties, the Properties, the Equipment Premises and
Equipment are in compliance with all Applicable Regulations except for such
noncompliance which has not had, and would not reasonably be expected to result
in, a Material Adverse Effect.
L. Environmental. Except as disclosed in the Questionnaires as amended and
supplemented through the date of Closing:
(1) None of the Properties nor any of the Lessee Parties are in violation
of, or subject to, any pending or, to Lessee's actual knowledge, threatened
investigation or inquiry by any Governmental Authority or to any remedial
obligations under any Environmental Laws which violation, investigation or
inquiry would have a Material Adverse Effect, and this representation and
warranty would continue to be true and correct following disclosure to the
applicable Governmental Authorities of all relevant facts, conditions and
circumstances, if any, pertaining to any of the Properties;
(2) All permits, licenses or similar authorizations required to construct,
occupy, operate or use any buildings, improvements, fixtures and Equipment
forming a part of or located at any of the Properties by reason of any
Environmental Laws have been obtained, or are pending, and Borrower has no
reason to believe that such permits, licenses or similar authorizations that are
pending will not be issued in due course, except where such failure to obtain
any permit, license or authorization would not have a Material Adverse Effect;
(3) Since the initial acquisition by and during the ownership and/or
occupancy of the Properties by Lessee, and to Lessee's knowledge prior to such
acquisition and ownership, no Hazardous Materials have been used, handled,
manufactured, generated, produced, stored, treated, processed, transferred,
disposed of or otherwise Released in, on, under, from or about any of the
Properties, except in Permitted Amounts;
(4) None of the Properties contain Hazardous Materials, except in
Permitted Amounts, and all USTs located on or about the Properties or which
constitute any portion of the Equipment, if any, are in full compliance with all
Environmental Laws, except where such noncompliance would not have a Material
Adverse Effect;
SCS Finance I, L.P.
10
(5) To Borrower's knowledge, there is no threat of any Release migrating
to any of the Properties in excess of Permitted Amounts;
(6) Since the initial acquisition by and during the ownership and/or
occupancy of the Properties by Lessor, Lessee, and to Lessee's knowledge prior
to such acquisition and ownership there is no past or present non-compliance
with Environmental Laws, or with permits issued pursuant thereto, in connection
with any of the Properties, except where such noncompliance would not have a
Material Adverse Effect;
(7) None of the Lessee Parties has received any written notice or other
communication from any person or entity (including but not limited to a
Governmental Authority) relating to any Release of Hazardous Materials in excess
of Permitted Amounts, or USTs or Remediation thereof, possible liability of any
person or entity pursuant to any Environmental Law, other Environmental
Conditions in connection with any of the Properties or Equipment, or any actual
or potential administrative or judicial proceedings in connection with any of
the foregoing;
(8) All information known to any of the Lessee Parties or contained in the
files of any of the Lessee Parties relating to any existing Environmental
Condition or Releases of Hazardous Materials in, on, under or from any of the
Properties, other than in Permitted Amounts, has been provided to Lessor,
including, without limitation, information relating to all prior Remediation;
(9) All of the Properties are free and clear of all liens and other
encumbrances imposed pursuant to any Environmental Law (the "Environmental
Liens"); and none of the Lessee Parties has allowed any tenant or other user of
any of the Properties or Equipment to do any act on the Properties or Equipment
Premises that materially increased the dangers to human health or the
environment, posed an unreasonable risk of harm to any person or entity (whether
that person or entity on or off any of the Properties), impaired the value of
any of the Properties or Equipment in any material respect, is contrary to any
requirement of any insurer, constituted a public or private nuisance, or
violated any covenant, condition, agreement or easement applicable to any of the
Properties, except where such violation did not have a Material Adverse Effect
on the Premises; and
(10) The information and disclosures in the Questionnaires, as amended or
supplemented through the date of Closing, are true, correct and complete in all
material respects, and the person or persons executing the Questionnaires and
any amendments or supplements thereto were duly authorized to do so; and
(11) Each of the Lessee Parties is in compliance with the requirements of
40 C.F.R. Section 280 Subpart H - Financial Responsibility (or equivalent state
law or regulation) with respect to all petroleum underground storage tanks or
storage tank systems (as those terms are defined under 40 C.F.R. Section 280.12
or equivalent state law or regulation) owned or operated by any of the Lessee
Parties or located on any of the Properties, except where such noncompliance
would not have a Material Adverse Effect.
M. No Mechanics' Liens. There are no delinquent accounts payable or
mechanics' liens in favor of any materialman, laborer, or any other person or
entity in connection with labor or materials furnished to or performed on any
portion of the Properties; and no work has been performed or is in progress nor
have materials been supplied to the Properties or agreements entered into for
work to be performed or materials to be supplied to the Properties prior to the
Effective Date, which will be delinquent on the Effective Date.
N. Title to Personal Property. Lessee is the owner of all Personal
Property, free and clear of all liens, encumbrances, charges and security
interests of any nature whatsoever, except the liens created by the Lease, and
no Affiliate of Lessee owns any of the Personal Property. Upon the execution and
delivery of this Lease, Lessor shall have a first priority lien upon and
security interest in all Personal Property, which lien and security interest
shall secure the payment by Lessee of the Rents that become due and payable to
Lessor pursuant to this Lease and the performance by Lessee of its other
agreements, covenants and obligations arising under this Lease.
O. Distributor Provisions. Lessee has delivered to Lessor a true, correct
and complete copy of the Distributor Agreement. The Distributor Agreement is the
only agreement in effect with Distributor with respect to the Properties. The
Distributor Agreement is in full force and effect and constitutes the legal,
valid and binding obligations of the parties to the Distributor Agreement,
enforceable in accordance with its terms, except as such
SCS Finance I, L.P.
11
enforceability may be limited by applicable bankruptcy, insolvency, liquidation,
reorganization and other laws affecting the rights of creditors generally and
general principles of equity. None of the Lessee Parties has assigned,
transferred, mortgaged, hypothecated or otherwise encumbered the Distributor
Agreement or any rights thereunder or any interest therein, and none of the
Lessee Parties has received any notice that the Distributor has made any
assignment, pledge or hypothecation of all or any part of its rights or interest
in the Distributor Agreement. No notice of default from Distributor has been
received under the Distributor Agreement which has not been cured and no notice
of default to Distributor has been given under the Distributor Agreement which
has not been cured. No event has occurred and no condition exists which, with
the giving of notice or the lapse of time or both, would constitute a default
under the Distributor Agreement. At the request of Lessor, Lessee shall deliver
to Lessor a certificate from Distributor in a form and substance acceptable to
Lessor, which provided that the Distributor Agreement is valid, binding and in
full force and effect and no events have occurred which could constitute a
default thereunder.
P. Premises Leases. The Premises Leases are in full force and effect and
represent the legal, valid and binding obligations of the parties thereto, in
accordance with the respective terms of each Premises Lease. No default exists
under any of the Premises Leases. Lessee's use of the Equipment Premises and
Leasehold Equipment thereon is in compliance with the Premises Leases.
Q. Guaranty. Lessee has delivered to Lessor the executed Guaranty. The
Guaranty is in full force and effect and constitutes the legal, valid and
binding obligation of Guarantor with respect to this Lease, except as such may
be limited by applicable bankruptcy, insolvency, liquidation, fraudulent
conveyance, fraudulent transfer, reorganization and other laws affecting the
right of creditors generally or general principles of equity.
7. NONCONSOLIDATION; TRANSFER, PARTICIPATION AND SECURITIZATION; PREMISES
LEASES; COMPLIANCE CERTIFICATES. Lessee covenants to Lessor for so long as this
Lease is in effect as follows:
A. Nonconsolidation Covenants. (i) The annual financial statements of
Lessee, including consolidated financial statements, if any, shall contain notes
stating that (a) all of Lessor's assets are owned by Lessor and (b) Lessor is a
separate entity with its own separate creditors which will be entitled to be
satisfied out of Lessor's assets.
(ii) Lessee will not assume liability for any indebtedness for money
borrowed by Lessor and does not, and will not, guarantee any of the debts or
obligations of Lessor. Lessee will not hold itself out as being liable for any
obligations or indebtedness of Lessor.
(iii) Lessee shall not and shall use its best efforts to cause its
Affiliates not to hold Lessor out to the public or to any individual creditors
as being a unified entity with assets and liabilities in common with Lessee
except that Lessor may be included in Lessee's or its Affiliates' reports under
the Securities Exchange Act of 1934, as amended, and its and their consolidated
financial statements, as appropriate, provided such statements adequately
disclose the separate legal existence of Lessor, the separate ownership by
Lessor of the Properties and Equipment and the separate liabilities of Lessor.
(iv) Lessee shall conduct its business so as not to mislead others as to
the separate identity of Lessor, and particularly will avoid the appearance of
conducting business on behalf of Lessor. Without limiting the generality of the
foregoing, no oral and written communications of Lessee, including, without
limitation, letters, invoices, purchase orders, contracts, statements and loan
applications, will be made in the name of Lessor which to the extent that to do
otherwise would materially bear upon the maintenance of Lessor's separate
identity.
(v) Lessee will not act in Lessor's name.
(vi) Where necessary and appropriate, Lessee shall disclose the
independent business status of Lessor to creditors of Lessee, if any.
(vii) The resolutions, agreements and other instruments of Lessee, if any,
underlying the transactions described in this Lease will be maintained by
Lessee.
SCS Finance I, L.P.
12
(viii) All transactions between Lessee and Lessor will be no less fair to
each party than they could obtain on an arm's-length basis.
(ix) The books, records and accounts of Lessee shall at all times be
maintained in a manner permitting the assets and liabilities of Lessor to be
easily separated and readily ascertained from those of Lessee.
(x) Lessee will not direct, or otherwise control, the ongoing business
decisions of Lessor.
(xi) Lessee will not file or cause to be filed a voluntary or involuntary
petition in bankruptcy on behalf of or against Lessor, nor seek substantive
consolidation of the assets and liabilities of Lessor and Lessee in any
bankruptcy or insolvency proceeding during the Lease Term and for a period of 91
days after the Lease Term.
B. Transfer, Participation and/or Securitization Covenants. (i) Lessee
agrees to cooperate in good faith with Lessor and Lender in connection with any
Transfer, Participation and/or Securitization of any of the Notes, Equipment
Notes, Mortgages, Equipment Loan Documents and/or any of the Loan Documents, or
any or all servicing rights with respect thereto, including, without limitation,
(X) providing such documents, financial and other data, and other information
and materials (the "Disclosures") which would typically be required with respect
to the Lessee Parties by a purchaser, transferee, assignee, servicer,
participant, investor or rating agency involved with respect to such Transfer,
Participation and/or Securitization, as applicable; provided, however, the
Lessee Parties shall not be required to make Disclosures of any confidential
information or any information which has not previously been made public unless
required by applicable federal or state securities laws; and (Y) amending the
terms of this Lease to the extent necessary so as to satisfy the requirements of
purchasers, transferees, assignees, servicers, participants, investors or
selected rating agencies involved in any such Transfer, Participation or
Securitization, so long as such amendments would not have a material adverse
effect upon either of the Lessee Parties or the transactions contemplated by
this Lease and no amendment would result in any additional obligation of Lessee
or increase in the amount of any payment that Lessee is required to make
pursuant to this Lease. Lessor shall be responsible for causing Lender to
prepare at Lender's expense any documents evidencing the amendments referred to
in the preceding subitem (Y).
(ii) Lessee consents to Lessor and Lender providing the Disclosures, as
well as any other information which Lessor and Lender may now have or hereafter
acquire with respect to the Properties or Equipment or the financial condition
of the Lessee Parties to each purchaser, transferee, assignee, servicer,
participant, investor or rating agency involved with respect to such Transfer,
Participation and/or Securitization, as applicable. Lessee shall pay its own
attorney fees and other out-of-pocket expenses incurred in connection with the
performance of its obligations under this Section 7.B but shall not be required
to incur in any event any such fees and expenses that with related fees and
expenses of Lessor would in the aggregate exceed $10,000 in connection with any
and all such Transfers, Participations and/or Securitizations unless Lender
shall agree to reimburse Lessee and Lessor for any amounts expended by them in
excess of $10,000 in the aggregate.
C. Covenants Regarding Premises Leases. Lessee covenants and agrees to
perform each and every covenant, obligation and duty of Lessee arising under and
in connection with the Premises Leases during the term of this Master Lease. No
Premises Lease shall be amended, modified, terminated or otherwise altered
during the term of this Master Lease.
D. Compliance Certificate. Within 60 days after the end of each fiscal
year of Lessee, Lessee shall deliver a compliance certificate to Lessor, in a
form to be provided by Lessor, in order to establish that Lessee is in
compliance in all material respects with all of its obligations, duties and
covenants under this Lease.
8. RENTALS TO BE NET TO LESSOR. The Base Annual Rental payable hereunder
shall be net to Lessor, so that this Lease shall yield to Lessor the rentals
specified during the Lease Term, and that, except as may be otherwise expressly
provided herein, all costs, expenses and obligations of every kind and nature
whatsoever relating to the Properties and/or Equipment shall be performed and
paid by Lessee.
9. TAXES AND ASSESSMENTS. Lessee shall pay, prior to the earlier of
delinquency or the accrual of interest on the unpaid balance, all taxes and
assessments of every type or nature assessed against, imposed upon or
SCS Finance I, L.P.
13
arising with respect to any of the Properties and Equipment, this Lease, the
rental or other payments due under this Lease or Lessee during the Lease Term
which affect in any manner the net return realized by Lessor under this Lease,
including, without limitation, the following:
A. All taxes and assessments upon any of the Properties and Equipment or
any part thereof and upon any Personal Property, whether belonging to Lessor or
Lessee, or any tax or charge levied in lieu of such taxes and assessments;
B. All taxes, charges, license fees and or similar fees imposed by reason
of the use of any of the Properties or Equipment by Lessee; and
C. All excise, transaction, privilege, license, sales, use and other taxes
upon the rental or other payments due under this Lease, the leasehold estate of
either party or the activities of either party pursuant to this Lease.
Notwithstanding the foregoing, but without limiting the preceding
obligation of Lessee to pay all taxes which are imposed on the rental or other
payments due under this Lease, in no event will Lessee be required to pay any
income taxes (i.e., taxes which are based on the income of Lessor or determined
taking into account deductions for depreciation, interest, taxes and ordinary
and necessary business expenses) or franchise taxes (unless imposed in lieu of
other taxes that would otherwise be the obligation of Lessee under this Lease)
including, without limitation, any "gross receipts tax" or any similar tax based
upon gross income or receipts of Lessor which does not take into account
deductions from depreciation, interest, taxes and/or ordinary or necessary
business expenses, any transfer taxes of Lessor, or any tax imposed with respect
to the sale, exchange or other disposition by Lessor, in whole or in part, of
any of the Properties or Equipment or Lessor's interest in this Lease (other
than transfer or recordation taxes imposed in connection with the transfer of
any of the Properties or Equipment to Lessee or the termination of this Lease
pursuant to the provisions of this Lease).
All taxing authorities shall be instructed to send all tax and assessment
invoices relating to the Properties, the Personal Property and the Equipment to
Lessee and, upon Lessor's or Lender's request, Lessee shall promptly provide
Lessor and Lender with copies of all tax and assessment invoices received by
Lessee. Upon request, Lessee shall also provide Lessor and Lender with evidence
that such invoices were paid in a timely fashion. Lessee may, at its own
expense, contest or cause to be contested, 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 item specified in this Section or lien
therefor, provided that (i) Lessee shall provide written notice to Lessor of any
contest involving more than $10,000.00, (ii) such proceeding shall suspend the
collection thereof from the applicable Properties or Equipment or any interest
therein, (iii) neither such Properties or Equipment nor any interest therein
would be in any danger of being sold, forfeited or lost by reason of such
proceedings, (iv) no Event of Default has occurred and is continuing, and (v)
Lessee shall have deposited with Lessor adequate reserves for the payment of the
taxes, together with all interest and penalties thereon, unless paid in full
under protest, or Lessee shall have furnished the security as may be required in
the proceeding or as may be required by Lessor to insure payment of any
contested taxes.
10. UTILITIES. Lessee shall contract, in its own name, for and pay when
due all charges for the connection and use of water, gas, electricity,
telephone, garbage collection, sewer use and other utility services supplied to
the Properties during the Lease Term. Under no circumstances shall Lessor be
responsible for any interruption of any utility service.
11. INSURANCE. Throughout the Lease Term, Lessee shall maintain with
respect to each of the Properties and Equipment related thereto, at its sole
expense, the following types and amounts of insurance (which may be included
under a blanket insurance policy if all the other terms hereof are satisfied):
A. Insurance against loss, damage or destruction by fire and other
casualty, including theft, vandalism and malicious mischief, flood (for each of
the Properties which is in a location designated by the Federal Emergency
Management Administration as a Special Flood Hazard Area), earthquake (for each
of the Properties which is in an area that has been subject to destructive
earthquakes during the period in which records relating to the occurrence of
earthquakes have been kept for the areas in which the Properties are located),
boiler explosion (for each of the
SCS Finance I, L.P.
14
Properties with a boiler), plate glass breakage, sprinkler damage (for each of
the Properties which has a sprinkler system), all matters covered by a standard
extended coverage endorsement, special coverage endorsement commonly known as an
"all-risk" endorsement and such other risks as Lessor may reasonably require,
insuring each of the Properties and Equipment for not less than 100% of their
full insurable replacement cost.
B. Commercial general liability and property damage insurance, including a
products liability clause, covering Lessor and Lessee against bodily injury
liability, property damage liability and automobile bodily injury and property
damage liability, including without limitation any liability arising out of the
ownership, maintenance, repair, condition or operation of the Properties or
Equipment or adjoining ways, streets or sidewalks and, if applicable, insurance
covering Lessor and Lessee against liability arising from the sale of liquor,
beer or wine on the Properties. Such insurance policy or policies shall contain
a broad form contractual liability endorsement under which the insurer agrees to
insure Lessee's obligations under Section 19 hereof to the extent insurable, and
a "severability of interest" clause or endorsement which precludes the insurer
from denying the claim of Lessee or Lessor because of the negligence or other
acts of the other, shall be in amounts of not less than $1,000,000.00 per injury
and occurrence with respect to any insured liability, whether for personal
injury or property damage, or such higher limits as Lessor may reasonably
require from time to time consistent with insurance limits required by Lender
for properties and borrowers similar to the Premises and Lessor, at the time the
requirement is imposed, and shall be of form and substance satisfactory to
Lessor.
C. Reserved.
D. State Worker's Compensation insurance in the statutorily mandated
limits, employer's liability insurance with limits not less than those limits as
may be necessary to comply with applicable laws.
E. Such other insurance as may from time to time be reasonably required by
Lessor or Lender in order to protect their respective interests with respect to
the Properties and Equipment consistent with insurance coverages required by
Lender for properties and borrowers similar to the Premises and Lessor at the
time the insurance is required.
All insurance policies shall:
(i) Provide for a waiver of subrogation by the insurer as to claims
against Lessor, Lender and their respective employees and agents and provide
that such insurance cannot be unreasonably cancelled, invalidated or suspended
on account of the conduct of Lessee, its officers, directors, employees or
agents;
(ii) Provide that any "no other insurance" clause in the insurance policy
shall exclude any policies of insurance separately maintained by Lessor or
Lender and that the insurance policy obtained by Lessee pursuant to this Section
11 shall not be brought into contribution with insurance maintained by Lessor or
Lender;
(iii) Contain a standard without contribution mortgagee clause endorsement
in favor of Lender and its successors and assigns as their interests may appear
and any other party designated by Lessor;
(iv) Provide that the policy of insurance shall not be terminated,
cancelled or substantially modified without at least thirty (30) days' prior
written notice to Lessor, Lender and to any other party covered by any standard
mortgage clause endorsement;
(v) Provide that the insurer shall not have the option to restore the
applicable Properties and Equipment if Lessor or Lessee elects to terminate this
Lease in accordance with the terms hereof;
(vi) Be issued by the Xxxxxx Group of insurance companies or insurance
companies licensed to do business in the states in which the Properties are
located and which are rated A:VI or better by Best's Insurance Guide or are
otherwise approved by Lessor; and
(vii) Provide that the insurer shall not deny a claim because of the
negligence of Lessee, anyone acting for Lessee or any tenant or other occupant
of any of the Properties.
SCS Finance I, L.P.
15
It is expressly understood and agreed that the foregoing minimum limits of
insurance coverage shall not limit the liability of Lessee for its acts or
omissions as provided in this Lease. All liability insurance policies (with the
exception of worker's compensation insurance to the extent not available under
statutory law), shall designate Lessor and Lender and their respective
successors and assigns as additional insureds as their interests may appear and
shall be payable as set forth in Section 21 hereof. All such policies shall be
written as primary policies, with deductibles not to exceed 10% of the amount of
coverage. Any other policies, including any policy now or hereafter carried by
Lessor or Lender, shall serve as excess coverage. Lessee shall procure policies
for all insurance for periods of not less than one year and shall provide to
Lessor and Lender certificates of insurance or, upon the request of Lessor or
Lender, duplicate originals of insurance policies evidencing that insurance
satisfying the requirements of this Lease is in effect at all times. In the
event of any transfer by Lessor of Lessor's interest in any of the Properties or
Equipment or any financing or refinancing of Lessor's interest in any of the
Properties or Equipment, Lessee shall, upon not less than ten (10) days' prior
written notice, deliver to Lessor or any Lender providing such financing or
refinancing, as the case may be, certificates of all insurance required to be
maintained by Lessee hereunder naming such transferee or such Lender, as the
case may be, as an additional named insured to the extent required herein
effective as of the date of such transfer, financing or refinancing.
As an alternative to maintaining all of the insurance required under this
Section 11 with third party insurers, Lessee may elect to self-insure for a
portion of the required coverages pursuant to a self-insurance program, provided
that (i) the total amount of self-insurance provided by Lessee with respect to
each policy of insurance required to be maintained by Lessee hereunder shall not
exceed the lesser of (A) 10% of Lessee's Net Worth (as defined hereafter) or (B)
$1,000,000.00, and (ii) Lessee maintains a Net Worth (as defined hereafter)
equal to at least $10,000,000.00; provided, that Lessee shall at all times
provide the remaining portion of the coverages set forth in this Section 11 with
third party insurers complying with the provisions of this Section 11. The
amount of all deductibles with respect to such third party policies shall not,
however, exceed in the aggregate, when added to the amount of self-insurance,
the per policy limitation on self-insurance provided in the preceding sentence.
For purposes hereof, the term "Net Worth" means the total equity in Lessee,
determined in accordance with GAAP as of the month end occurring immediately
prior to the date of determination.
12. TAX AND INSURANCE IMPOUND. Upon the occurrence of an Event of Default,
Lessor may require Lessee to pay to Lessor sums which will provide an impound
account (which shall not be deemed a trust fund) for paying up to the next one
year of taxes, assessments and/or insurance premiums for each of the Properties
and Equipment. Upon such requirement, Lessor will estimate the amounts needed
for such purposes and will notify Lessee to pay the same to Lessor in equal
monthly installments, as nearly as practicable, in addition to all other sums
due under this Lease. Should additional funds be required at any time, Lessee
shall pay the same to Lessor on demand. Lessee shall advise Lessor of all taxes
and insurance bills which are due and shall cooperate fully with Lessor in
assuring that the same are paid. Lessor may deposit all impounded funds in
accounts insured by any federal or state agency and may commingle such funds
with other funds and accounts of Lessor. Interest or other gains from such
funds, if any, shall be the sole property of Lessee. Upon receipt from Lessee of
evidence of the amount of taxes, assessments and/or insurance premiums owing
from time to time, Lessor shall apply the amounts so held to the payment of such
taxes, assessments and/or insurance premiums for which such amounts are held in
such impound account. If an Event of Default shall occur subsequent to Lessor
requiring the establishment of an impound account pursuant to this Section,
Lessor may apply all impounded funds against any sums due from Lessee to Lessor.
Lessor shall give to Lessee an annual accounting showing all credits and debits
to and from such impounded funds received from Lessee.
13. PAYMENT OF RENTAL AND OTHER SUMS. All rental and other sums which
Lessee is required to pay hereunder shall be the unconditional obligation of
Lessee and shall be payable in full when due without any setoff, abatement,
deferment, deduction or counterclaim whatsoever. Upon execution of this Lease,
Lessee shall authorize Lessor to establish arrangements whereby payments of the
Base Monthly Rental and impound payments, if any, are transferred by Automated
Clearing House Debit initiated by Lessor or its designee directly from Lessee's
bank account to such account as Lessor may designate or as Lessor may otherwise
designate; provided, however, upon notice from Lender to Lessee and Lessor
delivered in the manner set forth in Section 29, Lessee shall deliver all
payments of Base Monthly Rental as specified in such notice from Lender. Any
delinquent payment (that is, any payment not made within five calendar days
after the date when due) shall, in addition to any other remedy of Lessor, incur
a late charge of 5% (which late charge is intended to compensate Lessor for the
cost of handling and
SCS Finance I, L.P.
16
processing such delinquent payment and should not be considered interest) and
bear interest at the Default Rate, such interest to be computed from and
including the date such payment was due through and including the date of the
payment; provided, however, in no event shall Lessee be obligated to pay a sum
of late charge and interest higher than the maximum legal rate then in effect.
14. USE. A. Except as set forth below, each of the Properties, the
Equipment Premises and Equipment shall be used solely for the operation of a
Permitted Concept, and for no other purpose. Lessor and Lessee agree that the
operation of the Properties and the Equipment Premises as Permitted Concepts
shall permit Lessee to operate or cease to operate, or shall permit Lessee to
grant to third parties the right to operate or cease to operate, in the
convenience stores located on one or more of the Properties and the Equipment
Premises, kiosks, stands, counters, or other facilities relating to the sale of
food, drinks, confections and other goods and services, not including the sale
of gasoline ("Additional Concepts") so long as the Additional Concepts are
operated in a manner consistent with the requirements of this Lease and the
rights of third parties to operate within the Properties or Equipment Premises
are subordinate to this Lease. Lessee may locate, use and operate and allow
third parties to locate, use and operate equipment, machinery, furniture and
signage on one or more of the Properties and Equipment Premises in connection
with the operation of the Additional Concepts, in a manner consistent with the
requirements of this Lease.
B. Lessee shall occupy the Properties and Equipment Premises and use the
Equipment related thereto commencing on the Effective Date and, except as set
forth below and except during periods when any of the Properties or Equipment
Premises is untenantable by reason of fire or other casualty or condemnation
(provided, however, during all such periods while any of the Properties is
untenantable, Lessee shall strictly comply with the terms and conditions of
Section 21 of this Lease), Lessee shall at all times during the Lease Term
occupy each of the Properties and Equipment Premises and diligently operate its
business on each of the Properties. Lessee may cease diligent operation of
business at any of the Properties and Equipment Premises for a period not to
exceed 90 days and may do so only once with respect to each Property or
Equipment Premises within any five-year period during the Lease Term. If Lessee
does discontinue operation as permitted by this Section, Lessee shall (i) give
written notice to Lessor within 10 days after Lessee elects to cease operation,
(ii) provide adequate protection and maintenance of any such Properties or
Equipment Premises during any period of vacancy, (iii) comply with all
Applicable Regulations and otherwise comply with the terms and conditions of
this Lease other than the continuous use covenant set forth in this Section, and
(iv) pay all costs necessary to restore such Properties or Equipment Premises to
their condition on the day operation of the business ceased at such time as such
Properties are reopened for Lessee's business operations or other substituted
use approved by Lessor as contemplated below. Notwithstanding anything herein to
the contrary, Lessee shall pay the Base Monthly Rental on the first day of each
month during any period in which Lessee discontinues operation.
C. Except as set forth below, Lessee shall not, by itself or through any
assignment, sublease or other type of transfer, convert any of the Properties or
Equipment to an alternative use during the Lease Term without Lessor's consent,
which consent shall not be unreasonably withheld, conditioned or delayed. Lessor
may consider any or all of the following in determining whether to grant its
consent, without being deemed to be unreasonable: (i) whether the rental paid to
Lessor would be equal to or greater than the anticipated rental assuming
continued existing use, (ii) whether the proposed rental to be paid to Lessor is
reasonable considering the converted use of the Properties, Equipment Premises
and/or Equipment and the customary rental prevailing in the community for such
use, (iii) whether the converted use will be consistent with the highest and
best use of the Properties, Equipment Premises and/or Equipment, and (iv)
whether the converted use will increase Lessor's risks or decrease the value of
the Properties, Equipment Premises and/or Equipment. Notwithstanding the
foregoing, Lessee may sublease or license to a third party the right to use
space at any of the Properties or Equipment Premises not in excess of 10% of the
usable square footage in the building constituting the store at any such
Property or Equipment Premises without the consent of Lessor or Lender if (i)
the sole purpose of such sublease or license is to permit the operation of an
Additional Concept in such subleased or licensed space, (ii) such sublease or
license is expressly subordinate to this Lease and to the lien of the applicable
Mortgage, (iii) the term of such sublease or license shall not extend beyond the
Lease Term, and (iv) Lessee provides Lessor with a copy of any sublease or
license at a Property or Equipment Premises.
SCS Finance I, L.P.
17
15. COMPLIANCE WITH LAWS GENERALLY. A. Lessee's use and occupation of each
of the Properties and Equipment, and the condition thereof, shall, at Lessee's
sole cost and expense, comply with all Applicable Regulations now or hereafter
in effect and all restrictions, covenants and encumbrances of record with
respect to each of the Properties and Equipment. In addition, the Lessee Parties
shall comply with all Applicable Regulations now or hereafter in effect. Without
limiting the generality of the other provisions of this Section, Lessee shall
comply with the ADA, and all regulations promulgated thereunder, as it affects
each of the Properties and Equipment.
B. Lessee will not permit any act or condition to exist on or about any of
the Properties or Equipment Premises which will increase any insurance rate on
the Properties or Equipment except when such acts are required in the normal
course of its business and Lessee shall pay for such increase.
16. COMPLIANCE WITH ENVIRONMENTAL LAWS. Lessee covenants to Lessor and
Environmental Insurer for so long as this Lease is in effect that:
(1) The Properties, Equipment, the Lessee Parties and any other operator
or user of any of the Properties and/or Equipment shall not be in violation of
any Environmental Laws, except where such violation will not have a Material
Adverse Effect.
(2) All uses and operations on or of each of the Properties and the
Equipment, whether by Lessee or any other person or entity, shall be in
compliance with all Environmental Laws and permits issued pursuant thereto,
except where such noncompliance will not have a Material Adverse Effect.
(3) There shall be no Releases or Hazardous Materials in, on, under or
from any of the Properties, except in Permitted Amounts or where Release or
Hazardous Materials will not result in a Material Adverse Effect and Borrower
shall promptly commence and complete any required Remediation in accordance with
this Agreement.
(4) Lessee shall keep each of the Properties and Equipment, or cause each
of the Properties and Equipment to be kept, free and clear of all Environmental
Liens.
(5) Lessee shall not do or allow any tenant or other user of any of the
Properties and Equipment to do any act that (a) materially increases the dangers
to human health or the environment, (b) poses an unreasonable risk of harm to
any person or entity (whether on or off any of the Properties), (c) may have a
Material Adverse Effect, (d) is contrary to any requirement of any insurer
(other than those of the Environmental Insurer except to the extent Lessee is
notified of those requirements) necessary to permit insurance required to be
maintained on the Properties to be maintained in full, (e) constitutes a public
or private nuisance, or (f) violates any covenant, condition, agreement or
easement applicable to any of the Properties if such violation would have a
Material Adverse Effect.
(6) Lessee shall promptly notify Lessor in writing upon Lessee obtaining
actual knowledge of:
(a) any Releases or Threatened Releases in, on, under, from or
migrating towards any of the Properties, in excess of Permitted Amounts,
including, without limitation, the presence on or under any of the
Properties, or the escape, seepage, leakage, spillage, discharge, emission
or release from any USTs on, above or under any of the Properties, of any
Hazardous Materials, apparent or real, in excess of Permitted Amounts;
(b) any non-compliance with any Environmental Laws related in any
way to any of the Properties or Equipment;
(c) any Environmental Lien or any act or omission which could
reasonably be expected to result in the imposition of an Environmental
Lien;
(d) any required or proposed Environmental Compliance Activities or
Remediation of environmental conditions relating to any of the Properties,
including, without limitation, any and all
SCS Finance I, L.P.
18
enforcement, clean-up, remedial, removal or other governmental or
regulatory actions threatened, instituted or completed pursuant to any of
the Environmental Laws affecting any of the Properties;
(e) any written notice or other communication of which any of the
Lessee Parties becomes aware from any credible source whatsoever
(including but not limited to a Governmental Authority) relating in any
way to the presence of Hazardous Materials at the Properties in excess of
Permitted Amounts, the Release of Hazardous Material from or adjacent to
the Properties, including from USTs located thereon, or Remediation
thereof, noncompliance with any Environmental Law or possible liability of
any Person pursuant to any Environmental Law with respect to the
Properties, other Environmental Conditions, in each case in connection
with any of the Properties, or any actual or threatened administrative or
judicial proceedings in connection with the Properties or Lessee; or
(f) any investigation or inquiry initiated by any Governmental
Authority relating to the Environmental Condition of any of the
Properties.
(7) Lessee shall:
(a) perform any environmental site assessment or other investigation
of environmental conditions in connection with any of the Properties as
may be reasonably requested by Lessor (including but not limited to
sampling, testing and analysis of soil, water, air, building materials and
other materials and substances whether solid, liquid or gas), and share
with Lessor and Environmental Insurer the reports and other results
thereof, and Lessor, Environmental Insurer and other Indemnified Parties
shall be entitled to rely on such reports and other results thereof; and
(b) have the Properties inspected as may be required by any
Environmental Laws for seepage, spillage and other environmental concerns.
If any USTs are located at any of the Properties, Lessee shall maintain
and monitor such USTs in accordance with all Environmental Laws. Lessee
shall provide Lessor with written certified results of all inspections
performed on any of the Properties. Subject to Section 16(9) below, all
costs and expenses associated with the inspection, preparation and
certification of results, as well as those associated with any corrective
action, shall be paid by Lessee. All inspections and tests performed on
any of the Properties pursuant to the requirements of Environmental Laws
or relating in any manner to a possible Release of Hazardous Materials
shall be conducted in compliance with all Environmental Laws.
(8) Lessee shall, at its sole cost and expense, and without limiting the
rights of Lessor under any other provision of this Lease, including, without
limitation, subsection (12), comply with all reasonable written requests of
Lessor to:
(a) reasonably effectuate Remediation of any Environmental Condition
(including but not limited to a Release) in, on, under or from any of the
Properties;
(b) comply with any Environmental Law; and
(c) comply with any directive from any Governmental Authority except
to the extent Lessee is contesting any such directive in accordance with
Applicable Regulations and in circumstances that do not result in any risk
of the sale or forfeiture of the Properties subject to the directive or
would not result in a Material Adverse Effect.
(9) Lessor, Lender, Environmental Insurer and any other person or entity
designated by Lessor, including but not limited to any receiver, any
representative of a Governmental Authority, and any environmental consultant,
shall have the right, but not the obligation, to enter upon any of the
Properties during normal business hours after two Business Days' prior notice or
at any time in the event of an emergency or if an Event or Default has occurred
and is continuing (including without limitation in connection with any
Securitization, Participation or Transfer or in connection with a proposed sale
or conveyance of any of the Properties or a proposed financing or refinancing
secured by any of the Properties or in connection with the exercise of any
remedies set forth in this
SCS Finance I, L.P.
19
Lease, the Mortgages, or Equipment Loan Documents or other Loan Documents, as
applicable) to assess any and all aspects of the environmental condition of any
of the Properties and its use, including but not limited to conducting any
environmental assessment or audit (the scope of which shall be determined in the
sole and absolute discretion of the party conducting the assessment) and taking
samples of soil, groundwater or other water, air, or building materials, and
conducting other invasive testing so long as such assessment or other action
does not unreasonably interfere with the operation of the Properties. Lessee
shall cooperate with and provide access to Lessor, Lender, Environmental Insurer
and any other person or entity designated by Lessor. Any assessment and
investigation made pursuant to Section 16(7) or (9) shall be at Lessee's sole
cost and expense if, at the time such assessment or investigation is undertaken,
the party conducting the assessment or investigation, has a reasonable basis for
believing that a Release in excess of Permitted Amounts has occurred at the
Properties at which such inspection or assessment takes place, or if Lessee is
in breach of the covenant set forth in Section 59, but Lessor has not declared
an Event of Default, or if an Event of Default has occurred and is continuing.
Otherwise, any such assessment and investigation shall be at the sole cost and
expense of the party conducting such assessment and investigation.
(10) All Environmental Laws regarding USTs shall be complied with,
including, without limitation, any of such regulations or requirements which
impose (a) technical standards, including, without limitation, performance, leak
prevention, leak detection, notification reporting and record keeping, (b)
corrective action with respect to confirmed and suspected Releases, and (c)
financial responsibility for the payment of costs of corrective action and
compensation to third parties for injury and damage resulting from Releases.
(11) Lessee shall satisfy the requirements for financial responsibility
set forth in 40 C.F.R. Section 280.93 Subpart H (or equivalent state law or
regulation). Lessee shall specifically designate Lessor (or at the direction of
Lessor, Lender) as the beneficiary of such insurance, guarantee, bond, letter of
credit or trust fund as is used to satisfy the obligations of 40 C.F.R. Section
280.93 (or equivalent state law or regulation) and to provide Lessor or its
designee with proof of that designation. In the event Lessee changes its method
of establishing financial responsibility under 40 C.F.R. Section 280.93 (or
equivalent state law or regulation), Lessee shall re-designate Lessor (or at the
direction of Lessor, Lender) as beneficiary under the new mechanism used to
establish compliance with 40 C.F.R. Section 280.93 (or equivalent state law or
regulation) and provide documentation of that fact to Lessor within 10 days of
that re-designation. In the event that any state that has not delegated UST
authority to the U.S. Environmental Protection Agency, has a law or regulation
that imposes less stringent requirements or financial assurance standards than
40 C.F.R. Section 280.93, Lessee shall nevertheless satisfy the requirements and
financial assurance standards of 40 C.F.R. Section 280.93. Lessee shall notify
Lessor and any provider of financial assurance issued pursuant to 40 C.F.R.
Section 280.93 Subpart H of any matter required to be reported by 40 C.F.R.
Section 280.93.
(12) Upon any Release, escape, seepage, leakage, spillage, discharge,
emission or release from any USTs on, above or under any of the Properties of
any Hazardous Materials, Lessee shall promptly remedy such situation in
accordance with all Environmental Laws and any request of Lessor. Should Lessee
fail to remedy or cause the remedy of such situation in accordance with all
Environmental Laws, Lessor shall be permitted to take such actions in its sole
discretion to remedy such situation and any reasonable costs and expenses
incurred in connection therewith will be paid by Lessee.
The obligations of Lessee and the rights and remedies of Lessor under this
Section shall survive the termination, expiration and/or release of this Lease.
17. CONDITION OF PROPERTIES; MAINTENANCE. Lessee shall (i) maintain each
of the Properties and Equipment in good condition and repair, subject to
reasonable and ordinary wear and tear, free from actual or constructive waste,
(ii) operate, remodel, update and modernize each of the Properties and Equipment
in accordance with those standards of Lessee for similarly situated stores in
Lessee's system, with such remodeling and modernizing being undertaken
substantially in accordance with Lessee's system-wide timing schedules for such
activities, and (iii) pay all operating costs of the Properties and Equipment in
the ordinary course of business. Lessee shall at all times keep and maintain the
Equipment in good working order, repair and condition, ordinary wear and tear
excepted, and will promptly replace any part thereof that from time to time may
become obsolete, badly worn or in a state of disrepair. Lessee agrees that all
such replacement Equipment shall be the property of Lessor, and Lessee shall
execute and deliver all instruments or documents as necessary to insure that
title is held in Lessor's name free and clear of all liens and encumbrances.
Lessee waives any right to (i) require Lessor to
SCS Finance I, L.P.
20
maintain, repair or rebuild all or any part of any of the Properties or
Equipment or (ii) make repairs at the expense of Lessor, pursuant to any
Applicable Regulations at any time in effect.
18. ALTERATIONS AND IMPROVEMENTS. Lessee shall not alter the exterior,
structural, plumbing or electrical elements of the Properties in any manner
without the consent of Lessor, which consent shall not be unreasonably withheld,
conditioned or delayed; provided, however, Lessee may, without Lessor's consent
(i) undertake nonstructural alterations to a Property costing less than
$100,000, (ii) make alterations to the exterior, structural, plumbing or
electrical elements of a Property in order to comply with Applicable
Regulations, to remedy conditions Lessee deems unsafe, to replace worn out
equipment or materials or to repair damages and (iii) make any alterations or
repairs or take any other actions necessary or advisable in connection with any
Environmental Compliance Activities or Remediation. For purposes of this Lease,
alterations to the exterior, structural, plumbing or electrical elements of any
of the Properties shall mean:
(i) alterations which affect the foundation or "footprint" of the
improvements at the Properties;
(ii) alterations which involve the structural elements of the improvements
at the Properties, such as a load-bearing wall, structural beams, columns,
supports or roof; or
(iii) alterations which materially affect any of the building systems,
including, without limitation, the electrical systems, plumbing, HVAC and fire
and safety systems.
If Lessor's consent is required hereunder and Lessor consents to the making of
any such alterations, the same shall be made by Lessee at Lessee's sole expense
by a licensed contractor and according to plans and specifications reasonably
approved by Lessor and subject to such other conditions as Lessor shall require.
Any work at any time commenced by Lessee on any of the Properties shall be
prosecuted diligently to completion, shall be of good workmanship and materials
and shall comply fully with all the terms of this Lease. Upon completion of any
alterations, Lessee shall promptly provide Lessor with (i) evidence of full
payment to all laborers and materialmen contributing to the alterations, (ii) an
architect's certificate certifying the alterations to have been completed in
conformity with the plans and specifications, (iii) a certificate of occupancy
(if the alterations are of such a nature as would require the issuance of a
certificate of occupancy), and (iv) any other documents or information
reasonably requested by Lessor. Any addition to or alteration of any of the
Properties shall automatically be deemed a part of the Properties and belong to
Lessor, and Lessee shall execute and deliver to Lessor such instruments as
Lessor may require to evidence the ownership by Lessor of such addition or
alteration. Lessee shall execute and file or record, as appropriate, a "Notice
of Non-Responsibility," or any equivalent notice permitted under applicable law
in the states where the applicable Properties are located.
19. INDEMNIFICATION. A. Lessee shall, at its sole cost and expense,
protect, defend, indemnify, release and hold harmless each of the Indemnified
Parties for, from and against any and all Losses (excluding Losses suffered by
an Indemnified Party arising out of the gross negligence or willful misconduct
of such Indemnified Party; provided, however, that the term "gross negligence"
shall not include gross negligence imputed as a matter of law to any of the
Indemnified Parties solely by reason of the Lessor's interest in any of the
Properties or Lessor's failure to act in respect of matters which are or were
the obligation of Lessee under this Lease) caused by, incurred or resulting from
Lessee's operations of or relating in any manner to any of the Properties or
Equipment, whether relating to their original design or construction, latent
defects, alteration, maintenance, use by Lessee or any person thereon,
supervision or otherwise, or from any breach of, default under, or failure to
perform, any term or provision of this Lease by Lessee, its officers, employees,
agents or other persons, or to which any Indemnified Party is subject because of
Lessor's interest in any of the Properties or Equipment including, without
limitation, Losses arising from (1) any accident, injury to or death of any
person or loss of or damage to property occurring in, on or about any of the
Properties or Equipment or portion thereof or on the adjoining sidewalks, curbs,
parking areas, streets or ways, (2) any use, non-use or condition in, on or
about, or possession, alteration, repair, operation, maintenance or management
of, any of the Properties or Equipment or any portion thereof or on the
adjoining sidewalks, curbs, parking areas, streets or ways, (3) any
representation or warranty made herein by Lessee, in any certificate delivered
in connection herewith or in any other agreement to which Lessee is a party or
pursuant thereto being false or misleading in any material respect as of the
date of such representation or warranty was made, (4) performance of any labor
or services or the furnishing of any materials or other property in respect to
any of the
SCS Finance I, L.P.
21
Properties or Equipment or any portion thereof, (5) any taxes, assessments or
other charges which Lessee is required to pay under Section 9, (6) any lien,
encumbrance or claim arising on or against any of the Properties or Equipment or
any portion thereof under any Applicable Regulation or otherwise which Lessee is
obligated hereunder to remove and discharge, or the failure to comply with any
Applicable Regulation, (7) the claims of any invitees, patrons, licensees or
subtenants of all or any portion of any of the Properties or any Person acting
through or under Lessee or otherwise acting under or as a consequence of this
Lease or any sublease, (8) any act or omission of Lessee or its agents,
contractors, licensees, subtenants or invitees, (9) any contest referred to in
Section 9, and (10) the sale of liquor, beer or wine on any of the Properties.
B. Lessee shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless each of the Indemnified Parties for, from and against
any and all Losses (excluding Losses suffered by an Indemnified Party directly
arising out of such Indemnified Party's gross negligence or willful misconduct;
provided, however, that the term "gross negligence" shall not include gross
negligence imputed as a matter of law to any of the Indemnified Parties solely
by reason of the Lessor's interest in any of the Properties or Equipment or
Lessor's failure to act in respect of matters which are or were the obligation
of Lessee under this Lease) and costs of Environmental Compliance Activities or
Remediation (whether or not performed voluntarily), engineers' fees,
environmental consultants' fees, and costs of investigation (including but not
limited to sampling, testing, and analysis of soil, water, air, building
materials and other materials and substances whether solid, liquid or gas)
imposed upon or incurred by or asserted against any Indemnified Parties, and
directly or indirectly arising out of or in any way relating to any one or more
of the following:
(1) any presence of any Hazardous Materials or USTs in, on, above, or
under any of the Properties;
(2) any past, present or Threatened Release in, on, above, under or from
any of the Properties;
(3) any activity by Lessee, any person or entity affiliated with Lessee or
any tenant or other user of any of the Properties in connection with any actual,
proposed or threatened use, treatment, storage, holding, existence, disposition
or other Release, generation, production, manufacturing, processing, refining,
control, management, abatement, removal, handling, transfer or transportation to
or from any of the Properties of any Hazardous Materials or USTs at any time
located in, under, on or above any of the Properties;
(4) any activity by Lessee, any person or entity affiliated with Lessee or
any tenant or other user of any of the Properties in connection with any actual
or proposed Remediation of any Hazardous Materials or USTs at any time located
in, under, on or above any of the Properties, whether or not such Remediation is
voluntary or pursuant to court or administrative order, including but not
limited to any removal, remedial or corrective action;
(5) any past, present or threatened non-compliance or violations of any
Environmental Laws (or permits issued pursuant to any Environmental Law) in
connection with any of the Properties or operations thereon, including but not
limited to any failure by Lessee, any person or entity affiliated with Lessee or
any tenant or other user of any of the Properties to comply with any order of
any Governmental Authority in connection with any Environmental Laws;
(6) the imposition, recording or filing or the threatened imposition,
recording or filing of any Environmental Lien encumbering any of the Properties;
(7) any administrative processes or proceedings or judicial proceedings in
any way connected with any matter addressed in this Lease;
(8) any past, present or threatened injury to, destruction of or loss of
natural resources in any way connected with any of the Properties, including but
not limited to costs to investigate and assess such injury, destruction or loss;
(9) any acts of Lessee, any person or entity affiliated with Lessee or any
tenant or other user of any of the Properties in arranging for disposal or
treatment, or arranging with a transporter for transport for disposal or
treatment, of Hazardous Materials or USTs owned or possessed by Lessee, any
person or entity affiliated with
SCS Finance I, L.P.
22
Lessee or any tenant or other user, at any facility or incineration vessel owned
or operated by another person or entity and containing such or similar Hazardous
Materials or USTs;
(10) any acts of Lessee, any person or entity affiliated with Lessee or
any tenant or other user of any of the Properties, in accepting any Hazardous
Materials or USTs for transport to disposal or treatment facilities,
incineration vessels or sites selected by Lessee, any person or entity
affiliated with Lessee or any tenant or other user of any of the Properties,
from which there is a Release, or a Threatened Release of any Hazardous
Materials which causes the incurrence of costs for Environmental Compliance
Activities or Remediation;
(11) any personal injury, wrongful death, or property damage arising under
any statutory or common law or tort law theory, including but not limited to
damages assessed for the maintenance of a private or public nuisance or for the
conducting of an abnormally dangerous activity on or near any of the Properties;
or
(12) any misrepresentation or inaccuracy in any representation or warranty
or material breach or failure to perform any covenants or other obligations
pursuant to this Lease.
C. If an Indemnified Party desires to be indemnified by Lessee with
respect to any Loss pursuant to this Section 19, that Indemnified Party shall
notify Lessee promptly upon receiving notice of or otherwise learning of the
Loss for which indemnification will be sought. The failure or delay of an
Indemnified Party to provide notice required by the foregoing sentence shall not
release Lessee from its obligations under this Section 19; provided, however,
that if an Indemnified Party fails to provide or delays providing such notice to
Lessee and such failure or delay shall prejudice in a material adverse manner
the ability of Lessee to defend against the claim, cause of action or other
proceeding that may result in the Losses for which the Indemnified Party is
seeking indemnity, Lessee shall not have any obligation to indemnify the
Indemnified Party for such Losses to the extent the delay causes Lessee to be
unable to effectively provide a defense of such claims relating to the Losses.
If an Indemnified Party notifies Lessee of any claim of proceeding included in,
or any investigation or allegation concerning Losses for which Lessee is
responsible pursuant to this Section 19, Lessee shall assume on behalf of the
Indemnified Party and conduct with due diligence and in good faith the
investigation and defense thereof and the response thereto with counsel selected
by Lessee and approved by the Indemnified Party, in its sole discretion.
However, if any such claim, proceeding investigation or allegation involves both
Lessee and the Indemnified Party and the Indemnified Party shall have reasonably
concluded that there are legal defenses available to it which are inconsistent
with those available to Lessee and that as a result the counsel selected to
prosecute such defense would have an ethical conflict of interest in its
representation of the Indemnified Party, then the Indemnified Party shall have
the right to select separate counsel to participate in the investigation and
defense of and response to such claim, proceeding, investigation or allegation
on its own behalf, and Lessee shall pay or reimburse the Indemnified Party for
all attorney's fees incurred by the Indemnified Party because of the selection
of such separate counsel. If Lessee fails to assume the defense of the
Indemnified Party promptly following notification from the Indemnified Party
(and in any event fifteen days after Lessee is notified of the applicable claim,
proceeding, investigation or allegation), or at any time an Indemnified Party
determines in its reasonable discretion that immediate action is necessary to
preserve the rights of the Indemnified Party, then the Indemnified Party may
take actions as reasonably necessary to contest or defend the claim, proceeding,
investigation or allegation at Lessee's expense using counsel selected by the
Indemnified Party; provided, that if the Indemnified Party takes such immediate
action, Lessee may thereafter assume control of any remaining aspects of the
defense of such claim, cause of action or proceeding, investigation or
allegation as otherwise provided herein. Moreover, if such failure by Lessee
continues for thirty days or more after Lessee is notified of any such claim,
proceeding, investigation or allegation then the Indemnified Party may elect not
to contest or continue contesting such claim, proceeding, investigation or
allegation and instead, in accordance with the advice of counsel, settle (or pay
in full) any or all claims against the Indemnified Party related thereto without
Borrower's consent and without releasing Lessee from any obligations to the
Indemnified Party under this Section 19. Except as expressly set forth in the
preceding sentence, no Indemnified Party or Lessee shall settle, compromise,
permit a default judgment to be entered or agree to the entry of a judgment in
or in connection with any claim, cause of action, proceeding, investigation or
allegation which could result in Losses without the prior written consent of
Lessee and Indemnified Party.
D. It is expressly understood and agreed that Lessee's obligations under
this Section shall survive the expiration or earlier termination of this Lease
for any reason.
SCS Finance I, L.P.
23
20. QUIET ENJOYMENT. So long as Lessee shall pay the rental and other sums
herein provided and shall keep and perform all of the terms, covenants and
conditions on its part herein contained, Lessee shall have, subject and
subordinate to Lessor's rights herein, the right to the peaceful and quiet
occupancy of the Properties and use of the Equipment. Notwithstanding the
foregoing, however, in no event shall Lessee be entitled to bring any action
against Lessor to enforce its rights hereunder if an Event of Default shall have
occurred and be continuing.
21. CONDEMNATION OR DESTRUCTION. A. In the event of a taking of all or any
part of any of the Properties or Equipment for any public or quasi-public
purpose by any lawful power or authority by exercise of the right of
condemnation or eminent domain or by agreement between Lessor, Lessee and those
authorized to exercise such right ("Taking") or the commencement of any
proceedings or negotiations which might result in a Taking or any material
damage to or destruction of any of the Properties or Equipment or any part
thereof ("Casualty"), Lessee will promptly give written notice thereof to
Lessor, generally describing the nature and extent of such Taking, proceedings,
negotiations or Casualty and including copies of any documents or notices
received in connection therewith. Thereafter, Lessee shall promptly send Lessor
copies of all correspondence and pleadings relating to any such Taking,
proceedings, negotiations or Casualty. During all periods of time following a
Casualty, Lessee shall ensure that the subject Property and Equipment is secure
and does not pose any risk of harm to adjoining property owners or occupants or
third-parties.
B. In the event of a Taking of the whole of any of the Properties and
Equipment related thereto, other than for temporary use ("Total Taking"), the
obligations of Lessee with respect to such Property and Equipment related
thereto only shall terminate as of the date of the Total Taking, but this Lease
shall otherwise continue in full force and effect with respect to the remaining
Properties and Equipment. From and after the date of a Total Taking, the Base
Annual Rental shall be reduced by an amount equal to the product of (i) the
Applicable Rent Reduction Percentage for the Property subject to the Total
Taking, and (ii) the Base Annual Rental in effect as of the date of such Total
Taking (the "Adjustment"). If the date of such Total Taking is other than the
first day of a month, the Base Annual Rental payable for the month in which such
Total Taking occurs shall be apportioned based on such Adjustment as of the date
of the Total Taking. Lessee's obligations to Lessor under Section 19 of this
Lease with respect to such Property and Equipment related thereto and Lessee's
obligation to pay all other sums of money under this Lease (whether payable to
Lessor or to a third-party) which accrue prior to the date of such Total Taking
shall survive the partial termination of this Lease with respect to such
Property and Equipment related thereto. A Total Taking shall include a Taking,
other than for a temporary use, of such a substantial part of any Property and
Equipment related thereto as shall result in the portion of such Property and
Equipment related thereto remaining after such Taking being unsuitable for use
as a Permitted Concept. Lessor shall be entitled to receive the entire award or
payment in connection with a Total Taking without deduction for any estate
vested in Lessee by this Lease. Lessee hereby expressly assigns to Lessor all of
its right, title and interest in and to every such award or payment and agrees
that Lessee shall not be entitled to any award or payment for the value of
Lessee's leasehold interest in this Lease. Lessee shall be entitled to claim and
receive any award or payment from the condemning authority expressly granted for
the taking of Personal Property, the interruption of its business and moving
expenses, but only if such claim or award does not adversely affect or interfere
with the prosecution of Lessor's claim for the Total Taking or otherwise reduce
the amount recoverable by Lessor for the Total Taking.
C. In the event of a Taking of all or any part of any of the Properties or
Equipment for a temporary use ("Temporary Taking"), this Lease shall remain in
full force and effect without any reduction of Base Annual Rental, Additional
Rental or any other sum payable hereunder. Except as provided below and subject
to the terms and provisions of the Mortgages, Lessee shall be entitled to the
entire award for a Temporary Taking, whether paid by damages, rent or otherwise,
unless the period of occupation and use by the condemning authorities shall
extend beyond the date of expiration of this Lease, in which case the award made
for such Taking shall be apportioned between Lessor and Lessee as of the date of
such expiration. At the termination of any such Temporary Taking, Lessee will,
at its own cost and expense and pursuant to the terms of Section 18 above,
promptly commence and complete the restoration of the Property affected by such
Temporary Taking.
D. In the event of a Taking which is not a Total Taking or a Temporary
Taking ("Partial Taking") or of a Casualty, all awards, compensation or damages
shall be paid to Lessor, and Lessor shall have the option to (i) terminate this
Lease with respect to the Property and Equipment related thereto that is
affected, provided that Lessor shall have obtained Lender's prior written
consent, by notifying Lessee within 60 days after Lessee gives Lessor
SCS Finance I, L.P.
24
notice of such Casualty or that title has vested in the taking authority or (ii)
continue this Lease in effect, which election may be evidenced by either a
notice from Lessor to Lessee or Lessor's failure to notify Lessee that Lessor
has elected to terminate this Lease with respect to such Property within such
60-day period. Lessee shall have a period of 60 days after Lessor's notice that
it has elected to terminate this Lease with respect to such Property and
Equipment related thereto during which to elect to continue this Lease with
respect to such Property and Equipment related thereto on the terms herein
provided and Lessor shall continue the Lease as to such Property and Equipment
upon Lessee's election. If Lessor elects to terminate this Lease with respect to
such Property and Equipment related thereto and Lessee does not elect to
continue this Lease with respect to such Property and Equipment related thereto
or shall fail during such 60-day period to notify Lessor of Lessee's intent to
continue this Lease with respect to such Property and Equipment related thereto,
then this Lease shall terminate with respect to such Property and Equipment
related thereto as of the last day of the month during which such period
expired. Lessee shall then immediately vacate and surrender such Property and
Equipment related thereto, all obligations of either party hereunder with
respect to such Property and Equipment related thereto shall cease as of the
date of termination (provided, however, Lessee's obligations to Lessor under any
indemnification provisions of this Lease with respect to such Property
(including, without limitation, Section 19) and Lessee's obligations to pay Base
Annual Rental, Additional Rental and all other sums (whether payable to Lessor
or a third party) accruing under this Lease with respect to such Property and
Equipment related thereto prior to the date of termination shall survive such
termination), the Base Annual Rental shall be reduced by an amount equal to the
product of (i) the Applicable Rent Reduction Percentage for such Property and
Equipment related thereto and (ii) the Base Annual Rental in effect as of the
date of such Partial Taking or Casualty, and Lessor may retain all such awards,
compensation or damages. This Lease shall continue in full force and effect with
respect to all other Properties and Equipment. If Lessor elects not to terminate
this Lease with respect to such Property, or if Lessor elects to terminate this
Lease with respect to such Property and Equipment related thereto but Lessee
elects to continue this Lease with respect to such Property and Equipment
related thereto, then this Lease shall continue in full force and effect on the
following terms: (i) all Base Annual Rental, Additional Rental and other sums
and obligations due under this Lease shall continue unabated, and (ii) Lessee
shall promptly commence and diligently prosecute restoration of such Property
and Equipment related thereto to the same condition, as nearly as practicable,
as prior to such Partial Taking or Casualty as approved by Lessor. Subject to
the terms and provisions of the Mortgages, Lessor shall promptly make available
in installments as restoration progresses an amount up to but not exceeding the
amount of any award, insurance proceeds, compensation or damages received by
Lessor after deducting all costs, fees and expenses incident to the collection
thereof, including all costs and expenses incurred by Lessor and Lender in
connection therewith (the "Net Restoration Amount"), upon request of Lessee
accompanied by evidence reasonably satisfactory to Lessor that such amount has
been paid or is due and payable and is properly a part of such costs and that
Lessee has complied with the terms of Section 18 above in connection with the
restoration. Prior to the disbursement of any portion of the Net Restoration
Amount with respect to a Casualty, Lessee shall provide evidence reasonably
satisfactory to Lessor of the payment of restoration expenses by Lessee up to
the amount of any applicable insurance deductible applicable to such Casualty.
Lessor shall be entitled to keep any portion of the Net Restoration Amount which
may be in excess of the cost of restoration, and Lessee shall bear all
additional costs, fees and expenses of such restoration in excess of the Net
Restoration Amount. If this Lease is terminated with respect to any Property and
Equipment related thereto as a result of a Casualty, simultaneously with such
termination Lessee shall pay Lessor an amount equal to any applicable insurance
deductible applicable to such Casualty.
E. Any loss under any property damage insurance required to be maintained
by Lessee shall be adjusted by Lessor and Lessee. Subject to the terms and
provisions of the Mortgages, any award relating to a Total Taking or a Partial
Taking shall be adjusted by Lessor or, at Lessor's election, Lessee.
Notwithstanding the foregoing or any other provisions of this Section to the
contrary but subject to the terms and provisions of the Mortgages, if at the
time of any Taking or any Casualty or at any time thereafter an Event of Default
shall have occurred and be continuing under this Lease, Lessor is hereby
authorized and empowered but shall not be obligated, in the name and on behalf
of Lessee and otherwise, to file and prosecute Lessee's claim, if any, for an
award on account of such Taking or for insurance proceeds on account of such
Casualty and to collect such award or proceeds and apply the same, after
deducting all costs, fees and expenses incident to the collection thereof, to
the curing of such default and any other then existing default under this Lease
and/or to the payment of any amounts owed by Lessee to Lessor under this Lease,
in such order, priority and proportions as Lessor in its discretion shall deem
proper.
SCS Finance I, L.P.
25
F. Notwithstanding the foregoing, nothing in this Section 21 shall be
construed as limiting or otherwise adversely affecting the representations,
warranties, covenants and characterizations set forth in Lease, including,
without limitation, those provisions set forth in Section 3 of this Lease.
22. INSPECTION. Lessor and its authorized representatives shall have the
right during normal business hours upon two Business Days' prior telephonic
notice (or at any time in the event of an emergency or after and during the
continuance of an Event of Default) to enter any of the Properties or any part
thereof at reasonable times in order to inspect the same (including, without
limitation, the Equipment) and make photographic or other evidence concerning
Lessee's compliance with the terms of this Lease or in order to show the
Properties and Equipment to prospective purchasers and lenders; provided that
any such Person shall conduct such activities in a manner that does not
unreasonably interfere with the operation of any of the Properties or Equipment.
Lessee shall also make the Leasehold Equipment available for inspection at the
Equipment Premises during normal business hours upon, so long as no Event of
Default has occurred and is continuing, 24-hours' prior telephonic notice (or at
any time in the event of an emergency). Lessee hereby waives any claim for
damages for any injury or inconvenience to or interference with Lessee's
business, any loss of occupancy or quiet enjoyment of any of the Properties and
any other loss occasioned by such entry so long as Lessor shall have used
reasonable efforts not to unreasonably interrupt Lessee's normal business
operations. Lessee shall keep and maintain at the Properties or Lessee's
corporate headquarters full, complete and appropriate books of account and
records of Lessee's business relating to the Properties and the Equipment in
accordance with GAAP. Lessee's books and records relating to the Properties and
Equipment, during Lessee's normal business hours, be open for inspection by
Lessor, Lender and their respective auditors or other authorized representatives
upon, so long as no Event of Default has occurred and is continuing, two
Business Days' prior telephonic notice and shall show such information as is
reasonably necessary to determine compliance with Lessor's obligations under the
Loan Documents and/or Equipment Loan Documents.
23. DISTRIBUTOR AGREEMENT. Lessee shall maintain the Distributor Agreement
in full force and effect and perform its obligations thereunder in all material
respects. Lessee shall give prompt notice to Lessor of any claim of default by
or to Lessee under the Distributor Agreement and shall provide Lessor with a
copy of any default notice given or received by Lessee under the Distributor
Agreement and any information submitted or referenced in support of such claim
of default. Lessee shall also give prompt notice to Lessor of any extensions,
renewals or replacements of the Distributor Agreement and the expiration or
termination of the Distributor Agreement.
24. DEFAULT, REMEDIES AND MEASURE OF DAMAGES. A. Each of the following
shall be an event of default under this Lease (each, an "Event of Default"):
(i) If any representation or warranty of Lessee set forth in this Lease is
false in any material respect, or if Lessee renders any statement or account
which is false in any material respect;
(ii) If any rent or other monetary sum due under this Lease is not paid
within five days after the date when due; provided, however, notwithstanding the
occurrence of such an Event of Default, Lessor shall not be entitled to exercise
its remedies set forth below unless and until Lessor shall have given Lessee
notice thereof and a period of five days from the delivery of such notice shall
have elapsed without such Event of Default being cured;
(iii) Subject to the provisions of Section 9, if Lessee fails to pay,
prior to delinquency, any taxes, assessments or other charges the failure of
which to pay will result in the imposition of a lien against any of the
Properties or Equipment pursuant to Applicable Regulations and such taxes,
assessments or other charges are not being contested in accordance with the
terms of this Lease;
(iv) If any of the Lessee Parties becomes insolvent within the meaning of
the Code, files or notifies Lessor that it intends to file a petition under the
Code, initiates a proceeding under any similar law or statute relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts
(collectively, an "Action"), becomes the subject of either a petition under the
Code or an Action (and, if such petition or Action is involuntary, such petition
or Action is not dismissed within 60 days), or is not generally paying its debts
as the same become due;
(v) If Lessee vacates or abandons any of the Properties or the Equipment
other than in accordance with the provisions of Section 14 of this Lease;
SCS Finance I, L.P.
26
(vi) If Lessee shall fail to maintain insurance in accordance with the
requirements of Section 11 of this Lease;
(vii) If Lessee fails to observe or perform any of the other covenants
(except with respect to a breach of the Corporate Fixed Charge Coverage Ratio,
which breach is addressed in Subitem (xii) below), conditions, or obligations of
this Lease; provided, however, if any such failure does not involve the payment
of any monetary sum, is not willful or intentional, does not place any rights or
property of Lessor in immediate jeopardy, and is within the reasonable power of
Lessee to cure within the period provided below after receipt of notice thereof,
all as determined by Lessor in its reasonable discretion, then such failure
shall not constitute an Event of Default hereunder, unless otherwise expressly
provided herein, unless and until Lessor shall have given Lessee notice thereof
and a period of 30 days shall have elapsed, during which period Lessee may
correct or cure such failure, upon failure of which an Event of Default shall be
deemed to have occurred hereunder without further notice or demand of any kind
being required. If such failure cannot reasonably be cured within such 30-day
period, as determined by Lessor in its reasonable discretion, and Lessee is
diligently pursuing a cure of such failure, then Lessee shall have a reasonable
period to cure such failure beyond such 30-day period, which shall in no event
exceed 90 days after receiving notice of such failure from Lessor. If Lessee
shall fail to correct or cure such failure within such 90-day period, an Event
of Default shall be deemed to have occurred hereunder without further notice or
demand of any kind being required. Notwithstanding anything in this subitem
(vii) to the contrary, if a breach of one or more of the covenants in Section
6.F. shall have occurred as a result of any occurrence or event or series of
occurrences or events and that occurrence or event or series of occurrences or
events may be, or shall be required to be, Remediated under applicable
Environmental Laws or directive of any Governmental Authority having
jurisdiction over such matter, the cure period for such breach of that covenant
or those covenants shall be deemed extended if Lessee promptly commences the
process of effecting the Remediation of such occurrence or event or series of
occurrences or events within the cure period set forth in this subitem (vii) and
Lessee continuously and diligently pursues and completes such Remediation in
accordance with applicable Environmental Laws and directives of any Governmental
Authority having jurisdiction over such matter until either: (i) Lessee ceases
the Remediation in accordance with this subitem (vii); or (ii) completes the
Remediation;
(viii) If there is an "Event of Default" or a breach or default, after the
passage of all applicable notice and cure or grace periods, under any of the
Other Agreements;
(ix) If a final, nonappealable judgment is rendered by a court against any
of the Lessee Parties which (i) has a Material Adverse Effect on the operation
of any of the Properties or the Equipment, or (ii) is in an amount greater than
$350,000.00 with respect to Lessee, or $700,000.00 with respect to Guarantor,
and not covered by insurance, and, in either case, is not discharged or
provision made for such discharge within 60 days from the date of entry of such
judgment;
(x) If there is an "Event of Default" that has occurred and is continuing
under the Related Lease, or breach or default by Lessee, after the passage of
all applicable notice and cure or grace periods under any of the Premises
Leases, or if any of the Premises Leases is terminated prior to the expiration
or earlier termination of this Lease and not replaced promptly by a similar
Lease with respect to the affected Equipment Premises;
(xi) If there is a breach or default by Lessee, after the passage of all
applicable notice and cure or grace periods, the Distributor Agreement
terminates or expires prior to the end of the Lease Term and a substitute
agreement for the terminated or expired agreement is not entered into to allow
Lessee to operate the Properties and Equipment Premises as a Permitted Concept
prior to such expiration or termination, which substitute agreement shall be in
form and substance reasonably satisfactory to Lessor; or
(xii) If there is a breach of the Corporate Fixed Charge Coverage Ratio
requirement contained in Section 59, Lessor shall have given notice thereof and
Lessee shall have failed within a period of 10 days from delivery of such notice
to provide Lessor with evidence that the Guarantor maintained a Corporate Fixed
Charge Coverage Ratio of at least 1.25:1, determined for Guarantor's last
complete fiscal year during the Lease Term. For purposes of this Subitem (xii),
when determining whether Guarantor has maintained a Corporate Fixed Charge
Coverage Ratio (but not with respect to the Corporate Fixed Charge Coverage
Ratio of Lessee), the term "Corporate Fixed Charge Coverage Ratio" shall mean
with respect to each such fiscal year, the ratio calculated for such fiscal
SCS Finance I, L.P.
27
year, each as determined in accordance with GAAP, of (a) the sum of Net Income,
Depreciation and Amortization, Interest Expense and Operating Lease Expense,
minus income taxes or charges equivalent to income taxes allocable to the period
of determination, to (b) the sum of, without duplication, Operating Lease
Expense, scheduled principal payments of long term Debt, scheduled maturities of
all Capital Leases and Interest Expense (excluding non-cash interest expense and
amortization of non-cash financing expenses) for such fiscal year.
For purposes of this Subitem (xii), the following terms shall be defined
as set forth below:
"Capital Lease" shall mean all leases of any property, whether real,
personal or mixed, by Guarantor, which lease would, in conformity with
GAAP, be required to be accounted for as a capital lease on the balance
sheet of Guarantor. The term "Capital Lease" shall not include any
operating lease.
"Debt" shall mean with respect to Guarantor, and for the period of
determination (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, indentures, notes or similar instruments, (iii)
obligations to pay the deferred purchase price of property or services,
(iv) obligations under leases which should be, in accordance with GAAP,
recorded as Capital Leases, and (v) obligations under direct or indirect
guarantees in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against
loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (i) through (iv) above.
"Depreciation and Amortization" shall mean the depreciation and
amortization accruing during any period of determination with respect to
Guarantor, as determined in accordance with GAAP.
"Interest Expense" shall mean for any period of determination, the
sum of all interest accrued or which should be accrued in respect of all
Debt of Guarantor, as determined in accordance with GAAP.
"Net Income" shall mean with respect to the period of determination,
the net income or net loss of Guarantor. In determining the amount of Net
Income, (i) adjustments shall be made for nonrecurring gains and losses or
non-cash items allocable to the period of determination, (ii) deductions
shall be made for, among other things, Depreciation and Amortization,
Interest Expense, Operating Lease Expense and actual corporate and
district overhead expense allocable to the period of determination, and
(iii) no deductions shall be made for income taxes or charges equivalent
to income taxes allocable to the period of determination, as determined in
accordance with GAAP.
"Operating Lease Expense" shall mean the sum of all payments and
expenses incurred by Guarantor under any operating leases during the
period of determination, as determined in accordance with GAAP.
B. Upon the occurrence of an Event of Default, with or without notice or
demand, except the notice prior to default required under certain circumstances
by subsection A. above or such other notice as may be required by statute and
cannot be waived by Lessee (all other notices being hereby waived), Lessor shall
be entitled to exercise, at its option, concurrently, successively, or in any
combination, all remedies available at law or in equity, including without
limitation, any one or more of the following as well as the applicable remedies
set forth on the attached Schedule II:
(i) To terminate this Lease, whereupon Lessee's right to possession of the
Properties and Equipment shall cease and this Lease, except as to Lessee's
liability, shall be terminated.
(ii) To reenter and take possession of any or all of the Properties and
Equipment, any or all Personal Property located on or at any or all of the
Properties in which Lessor shall have a landlord's lien and/or security
interest, and, to the extent permissible, all franchises, licenses, area
development agreements, permits and other rights or privileges of Lessee
pertaining to the use and operation of any or all of the Properties and
Equipment and to expel Lessee and those claiming under or through Lessee,
without being deemed guilty in any manner of trespass or becoming liable for any
loss or damage resulting therefrom, without resort to legal or judicial process,
procedure or action. No notice from Lessor hereunder or under a forcible entry
and detainer statute or similar law shall constitute
SCS Finance I, L.P.
28
an election by Lessor to terminate this Lease unless such notice specifically so
states. If Lessee shall, after default, voluntarily give up possession of any of
the Properties or Equipment to Lessor, deliver to Lessor or its agents the keys
to any of the Properties, or both, such actions shall be deemed to be in
compliance with Lessor's rights and the acceptance thereof by Lessor or its
agents shall not be deemed to constitute a termination of this Lease. Lessor
reserves the right following any reentry and/or reletting to exercise its right
to terminate this Lease by giving Lessee written notice thereof, in which event
this Lease will terminate as specified in said notice.
(iii) To seize all Personal Property located on or at any or all of the
Properties, in which Lessor shall have a landlord's lien and/or security
interest, and to dispose thereof in accordance with the laws prevailing at the
time and place of such seizure or to remove all or any portion of such property
and cause the same to be stored in a public warehouse or elsewhere at Lessee's
sole expense, without becoming liable for any loss or damage resulting therefrom
and without resorting to legal or judicial process, procedure or action.
(iv) To bring an action against Lessee for any damages sustained by Lessor
or any equitable relief available to Lessor.
(v) To relet any or all of the Properties and Equipment or any part
thereof for such term or terms (including a term which extends beyond the
original Lease Term), at such rentals and upon such other terms as Lessor, in
its sole discretion, may determine, with all proceeds received from such
reletting being applied to the rental and other sums due from Lessee in such
order as Lessor may, in it sole discretion, determine, which other sums include,
without limitation, all repossession costs, brokerage commissions, attorneys'
fees and expenses, employee expenses, alteration, remodeling and repair costs
and expenses of preparing for such reletting. Except to the extent required by
applicable law, Lessor shall have no obligation to relet any of the Properties
or Equipment or any part thereof and shall in no event be liable for refusal or
failure to relet any of the Properties or Equipment or any part thereof, or, in
the event of any such reletting, for refusal or failure to collect any rent due
upon such reletting, and no such refusal or failure shall operate to relieve
Lessee of any liability under this Lease or otherwise to affect any such
liability. Lessor reserves the right following any reentry and/or reletting to
exercise its right to terminate this Lease by giving Lessee written notice
thereof, in which event this Lease will terminate as specified in said notice.
(vi) (x) To recover from Lessee all rent and other monetary sums then due
and owing under this Lease and (y) to accelerate and recover from Lessee all
rent and other monetary sums scheduled to become due and owing under this Lease
after the date of such breach for the entire original scheduled Lease Term.
(vii) To recover from Lessee all costs and expenses, including reasonable
attorneys' fees, court costs, expert witness fees, costs of tests and analyses,
travel and accommodation expenses, deposition and trial transcripts, copies and
other similar costs and fees, paid or incurred by Lessor as a result of such
breach, regardless of whether or not legal proceedings are actually commenced.
(viii) To immediately or at any time thereafter, and with or without
notice, at Lessor's sole option but without any obligation to do so, correct
such breach or default and charge Lessee all costs and expenses incurred by
Lessor therein. Any sum or sums so paid by Lessor, together with interest at the
Default Rate, shall be deemed to be Additional Rental hereunder and shall be
immediately due from Lessee to Lessor. Any such acts by Lessor in correcting
Lessee's breaches or defaults hereunder shall not be deemed to cure said
breaches or defaults or constitute any waiver of Lessor's right to exercise any
or all remedies set forth herein.
(ix) To immediately or at any time thereafter, and with or without notice,
except as required herein, set off any money of Lessee held by Lessor under this
Lease against any sum owing by Lessee hereunder.
(x) To seek any equitable relief available to Lessor, including, without
limitation, the right of specific performance.
All powers and remedies given by this Section to Lessor, subject to
applicable law, shall be cumulative and not exclusive of one another or of any
other right or remedy or of any other powers and remedies available to Lessor
under this Lease, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants
SCS Finance I, L.P.
29
and agreements of Lessee contained in this Lease, and no delay or omission of
Lessor to exercise any right or power accruing upon the occurrence of any Event
of Default shall impair any other or subsequent Event of Default or impair any
rights or remedies consequent thereto. Every power and remedy given by this
Section or by law to Lessor may be exercised from time to time, and as often as
may be deemed expedient, by Lessor, subject at all times to Lessor's right in
its sole judgment to discontinue any work commenced by Lessor or change any
course of action undertaken by Lessor.
If Lessee shall fail to observe or perform any of its obligations under
this Lease or in the event of an emergency, then, without waiving any Event of
Default which may result from such failure or emergency, Lessor may, but without
any obligation to do so, take all actions, including, without limitation, entry
upon any or all of the Properties to perform Lessee's obligations, immediately
and without notice in the case of an emergency and upon five days written notice
to Lessee in all other cases. All expenses incurred by Lessor in connection with
performing such obligations, including, without limitation, reasonable
attorneys' fees and expenses, together with interest at the Default Rate from
the date any such expenses were incurred by Lessor until the date of payment by
Lessee, shall constitute Additional Rental and shall be paid by Lessee to Lessor
upon demand.
25. LIENS; MORTGAGES, SUBORDINATION AND ATTORNMENT. Lessor's interest in
this Lease and/or any of the Properties and Equipment shall not be subordinate
to any liens or encumbrances placed upon any of the Properties and Equipment by
or resulting from any act of Lessee, and nothing herein contained shall be
construed to require such subordination by Lessor. Lessee shall keep the
Properties and Equipment free from any liens for work performed, materials
furnished or obligations incurred by Lessee except Permitted Liens. NOTICE IS
HEREBY GIVEN THAT, UNLESS LESSOR'S PRIOR WRITTEN CONSENT IS OBTAINED, LESSEE IS
NOT AUTHORIZED TO PLACE OR ALLOW TO BE PLACED ANY LIEN, MORTGAGE, DEED OF TRUST,
DEED TO SECURE DEBT, SECURITY INTEREST OR ENCUMBRANCE OF ANY KIND UPON ALL OR
ANY PART OF ANY OF THE PROPERTIES, EQUIPMENT, THE PERSONAL PROPERTY OR LESSEE'S
LEASEHOLD INTEREST IN THE PROPERTIES AND EQUIPMENT EXCEPT PERMITTED LIENS, AND
ANY SUCH PURPORTED TRANSACTION SHALL BE VOID. FURTHERMORE, ANY SUCH PURPORTED
TRANSACTION SHALL BE DEEMED A TORTIOUS INTERFERENCE WITH LESSOR'S RELATIONSHIP
WITH LESSEE AND LESSOR'S OWNERSHIP OF THE PROPERTIES.
This Lease at all times shall automatically be subordinate to the
Mortgages and Equipment Loan Documents and to the lien and security interest of
any and all ground leases, mortgages, deeds to secure debt, security agreements
and trust deeds now or hereafter placed upon any of the Properties or Equipment
by Lessor, and Lessee covenants and agrees to execute and deliver, upon demand,
such further instruments subordinating this Lease to the lien and security
interest of the Mortgages and Equipment Loan Documents and any or all such
ground leases, mortgages, deeds to secure debt, security agreements or trust
deeds as shall be desired by Lessor, or any present or proposed mortgagees,
secured parties or lenders under deeds to secure debt, security agreements or
trust deeds.
If any landlord, mortgagee, receiver, Lender or other secured party
validly exercises its right to elect to have this Lease and the interest of
Lessee hereunder be superior to any of the Mortgages, Equipment Loan Documents
or any such ground lease, mortgage, deed to secure debt, security agreement or
trust deed and evidences such election by written notice given to Lessee, then
this Lease and the interest of Lessee hereunder shall be deemed superior to any
such Mortgage, Equipment Loan Document, ground lease, mortgage, deed to secure
debt, security agreement or trust deed, whether this Lease was executed before
or after such Mortgage, Equipment Loan Document, ground lease, mortgage, deed to
secure debt, security agreement or trust deed and in that event such landlord,
mortgagee, receiver, Lender or other secured party shall have the same rights
with respect to this Lease as if it had been executed and delivered prior to the
execution and delivery of such Mortgage, Equipment Loan Document, ground lease,
mortgage, deed to secure debt, security agreement or trust deed and had been
assigned to such landlord, mortgagee, receiver, Lender or other secured party.
Although the foregoing provisions shall be self-operative and no future
instrument of subordination shall be required, upon request by Lessor, Lessee
shall execute and deliver whatever instruments may be required for such
purposes, and in the event Lessee fails so to do within 10 days after demand,
Lessee does hereby make, constitute and irrevocably appoint Lessor as its agent
and attorney-in-fact and in its name, place and stead so to do, which
appointment shall be deemed coupled with an interest.
SCS Finance I, L.P.
30
In the event any purchaser or assignee of Lender at a foreclosure sale
acquires title to any of the Properties or Equipment, or in the event Lender or
any assignee otherwise succeeds to the rights of Lessor as landlord under this
Lease, Lessee shall attorn to Lender or such purchaser or assignee, as the case
may be (a "Successor Lessor"), and recognize the Successor Lessor as lessor
under this Lease, and, if the Successor Lessor in its sole discretion elects to
recognize Lessee's tenancy under this Lease, this Lease shall continue in full
force and effect as a direct lease between the Successor Lessor and Lessee,
provided that the Successor Lessor shall only be liable for any obligations of
the lessor under this Lease which accrue after the date that such Successor
Lessor acquires title. The foregoing provision shall be self operative and
effective without the execution of any further instruments.
Lessee shall give written notice to any lender of Lessor having a recorded
lien or perfected security interest upon any of the Properties and Equipment or
any part thereof of which Lessee has been notified of any breach or default by
Lessor of any of its obligations under this Lease simultaneously with the giving
of such notice to Lessor, and Lessee shall give such lender at least 60 days
beyond any notice period to which Lessor might be entitled to cure such default
before Lessee may exercise any remedy with respect thereto. Upon request by
Lessor, Lessee shall also provide Lessee's most recent audited financial
statements to Lessor or any such lender and certify the continuing accuracy of
such financial statements in such manner as Lessor or such lender may request.
26. ESTOPPEL CERTIFICATE. A. At any time, and from time to time, Lessee
shall, promptly and in no event later than fifteen (15) days after a request
from Lessor or Lender, execute, acknowledge and deliver to Lessor or Lender a
certificate in the form supplied by Lessor, Lender or any present or proposed
mortgagee or purchaser designated by Lessor, certifying: (i) that Lessee has
accepted the Properties and Equipment (or, if Lessee has not done so, that
Lessee has not accepted the Properties, and specifying the reasons therefor);
(ii) that this Lease is in full force and effect and has not been modified (or
if modified, setting forth all modifications), or, if this Lease is not in full
force and effect, the certificate shall so specify the reasons therefor; (iii)
the commencement and expiration dates of the Lease Term, including the terms of
any extension options of Lessee; (iv) the date to which the rentals have been
paid under this Lease and the amount thereof then payable; (v) whether there are
then any existing defaults by Lessor in the performance of its obligations under
this Lease, and, if there are any such defaults, specifying the nature and
extent thereof; (vi) that no notice has been received by Lessee of any default
under this Lease which has not been cured, except as to defaults specified in
the certificate; (vii) the capacity of the person executing such certificate,
and that such person is duly authorized to execute the same on behalf of Lessee;
(viii) that neither Lessor nor Lender has actual involvement in the management
or control of decision making related to the operational aspects or the
day-to-day operations of the Properties, including the USTs or the handling or
disposal of Hazardous Materials; and (ix) any other information reasonably
requested by Lessor, Lender or such present or proposed mortgagee or purchaser.
B. If Lessee shall fail or refuse to sign a certificate in accordance with
the provisions of this Section within fifteen (15) days following a request by
Lessor, Lessee irrevocably constitutes and appoints Lessor as its
attorney-in-fact to execute and deliver the certificate to any third party
requesting such certificate, it being stipulated that such power of attorney is
coupled with an interest and is irrevocable and binding; provided, however, that
Lessor's execution and delivery of such certificate on behalf of Lessee shall
not cure any default arising by reason of Lessee's failure to execute and
deliver such certificate.
27. ASSIGNMENT. A. If Lender shall succeed to the rights of Lessor as
landlord under this Lease, whether through foreclosure of the liens or security
interests of the Mortgages or Equipment Loan Documents, deeds-in-lieu of
foreclosure or otherwise, Lender, as lessor, shall have the right to sell or
convey all, but not less than all, of the Properties and Equipment or to assign
its right, title and interest as Lessor under this Lease in whole, but not in
part. In the event of any such sale or assignment other than a security
assignment, Lessee shall attorn to such purchaser or assignee and Lessor shall
be relieved, from and after the date of such transfer or conveyance, of
liability for the performance of any obligation of Lessor contained herein,
except for obligations or liabilities accrued prior to such assignment or sale
(provided, however, nothing in this Section 27 shall impose liability on Lender
or such purchaser or assignee, as lessor, for the obligations of Lessor accruing
under this Lease prior to the time Lender or such purchaser or assignee, as the
case may be, succeeds to Lessor's rights as lessor under this Lease). Otherwise,
and except as permitted pursuant to the Loan Documents or Equipment Loan
Documents, Lessor shall not have the right to sell or convey the Properties or
Equipment or to assign its right, title and interest as lessor under this Lease
in whole or in part.
SCS Finance I, L.P.
31
B. Lessee acknowledges that Lessor has relied both on the business
experience and creditworthiness of Lessee and upon the particular purposes for
which Lessee intends to use the Properties and Equipment in entering into this
Lease. Without the prior written consent of Lessor: (i) Lessee shall not assign,
transfer, convey, pledge or mortgage this Lease or any interest therein, whether
by operation of law or otherwise; (ii) no Change of Control shall occur; and
(iii) Lessee shall not sublet all or any part of any of the Properties or
Equipment except as expressly provided herein (each of items (i) through (iv)
are hereinafter referred to as a "Prohibited Transaction"). In addition, no
interest in any of the Lessee Parties, or in any individual or person owning
directly or indirectly any interest in any of the Lessee Parties, shall be
knowingly transferred, assigned or conveyed to any individual or person whose
property or interests are subject to being blocked under any of the Terrorism
Laws and/or who is in violation of any of the Terrorism Laws.
Lessor's consent to a Prohibited Transaction shall be subject to the
satisfaction of such conditions as Lessor shall determine in its sole
discretion, including, without limitation, (i) Lessor having obtained the
consent of Lender to the Prohibited Transaction, (ii) Lessee having executed and
delivered such modifications to the terms of this Lease as Lessor shall
reasonably request, (iii) the Prohibited Transaction having been approved by
each of the rating agencies which have issued ratings in connection with any
Securitization as well as any other rating agency selected by Lender, (iv) the
proposed transferee, as applicable, having assumed this Lease (as modified
pursuant to clause (ii) above), (v) payment to Lessor of any rentals owing under
a sublease which are in excess of any rentals owing under this Lease, and (vi)
the proposed transferee having satisfactory creditworthiness and satisfactory
experience operating a Permitted Concept. In addition, any such consent shall be
conditioned upon the payment by Lessee to Lessor of (x) a fee equal to one
percent (1%) of the then outstanding principal balance of the Notes and
Equipment Notes and (y) all out-of-pocket costs and expenses incurred by Lessor
in connection with such consent, including, without limitation, reasonable
attorneys' fees. The provisions of this Section shall apply to every Prohibited
Transaction regardless of whether voluntary or not, or whether or not Lessor has
consented to any previous Prohibited Transaction. No assignment of this Lease or
subletting of any of the Properties shall relieve Lessee of its obligations
under this Lease or any guarantor of this Lease of any of its obligations under
its guaranty. Any Prohibited Transaction in violation of this Section shall be
voidable at the sole option of Lessor.
29. NOTICES. All notices, consents, approvals or other instruments
required or permitted to be given by either party pursuant to this Lease shall
be in writing and given by (i) hand delivery, (ii) facsimile, (iii) express
overnight delivery service or (iv) certified or registered mail, return receipt
requested, and shall be deemed to have been delivered upon (a) receipt, if hand
delivered, (b) transmission, if delivered by facsimile, (c) the next Business
Day, if delivered by express overnight delivery service, or (d) the third
Business Day following the day of deposit of such notice with the United States
Postal Service, if sent by certified or registered mail, return receipt
requested. Notices shall be provided to the parties and addresses (or facsimile
numbers, as applicable) specified below:
If to Lessee: Southwest Convenience Stores, L.P.
c/o Alon Interests USA, LLC
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Attn: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with copies to:
Alon Interests USA, LLC
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
SCS Finance I, L.P.
32
If to Lessor: SCS Finance I, L.P.
c/o SCS Finance, Inc.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Attn: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with copies to:
SCS Finance, Inc.
c/o Alon USA LP
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Attn: Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above. No such notices, consents, approvals or other communications
shall be valid unless Lender receives a duplicate original thereof at the
following address:
GE Capital Franchise Finance Corporation
00000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or to such other address or such other person as Lender may from time to time
specify to Lessor and Lessee in a notice delivered in the manner provided above.
30. HOLDING OVER. If Lessee remains in possession of any of the Properties
or the Equipment after the expiration of the Lease Term, Lessee, at Lessor's
option and within Lessor's sole discretion, may be deemed a tenant on a
month-to-month basis and shall continue to pay rentals and other sums in the
amounts herein provided, except that the Base Monthly Rental shall be
automatically doubled, and comply with all the terms of this Lease; provided
that nothing herein nor the acceptance of rent by Lessor shall be deemed a
consent to such holding over. Lessee shall defend, indemnify, protect and hold
the Indemnified Parties harmless from and against any and all Losses resulting
from Lessee's failure to surrender possession upon the expiration of the Lease
Term, including, without limitation, any claims made by any succeeding lessee.
31. LANDLORD'S LIEN/SECURITY INTEREST. Lessee agrees that Lessor shall
have a landlord's lien, and additionally hereby separately grants to Lessor a
first and prior security interest, in, on and against all Personal Property,
which lien and security interest shall secure the payment of all rental and
other charges payable by Lessee to Lessor under the terms hereof and all other
obligations of Lessee to Lessor under this Lease. Lessee authorizes Lessor to
file financing statements with respect to the Personal Property, continuation
statements with respect thereto, and any amendments to such financing statements
which may be necessitated by reason of any of the changes described in the last
sentence of this Section. Furthermore, at any time, and from time to time,
Lessee shall, promptly and in no event later than fifteen (15) days after a
request from Lessor, execute, acknowledge and deliver to Lessor such financing
statements and other documents as Lessor may then deem appropriate or necessary
to perfect and maintain said lien and security interest. Lessee expressly
acknowledges and agrees that, in addition to any and all other rights and
remedies of Lessor whether hereunder or at law or in equity, in the event of any
default of Lessee hereunder, Lessor shall have any and all rights and remedies
granted a secured party under the Uniform Commercial Code then in effect in the
state of Arizona (the "UCC"). Lessee represents that its exact legal name and
state of incorporation is as set forth in the first paragraph of this Lease.
Lessee shall preserve its current form of organization and shall not change its
legal name, its state of formation, nor, in one transaction or a series of
related
SCS Finance I, L.P.
33
transactions, merge with or into, or consolidate with, any other entity without
providing, in each case, Lessor with thirty (30) days' prior written notice and
obtaining Lessor's prior written consent (to the extent such consent is required
under Section 27 of this Lease). Lessee agrees that, notwithstanding any
provision in the UCC to the contrary, Lessee shall not file a termination
statement of any financing statement filed by Lessor in connection with any
security interest granted under this Lease if Lessor reasonably objects to the
filing of such termination statement.
32. REMOVAL OF PERSONAL PROPERTY. At the expiration of the Lease Term, and
so long as no Event of Default has occurred and is continuing or no event, which
with the passage of time, the giving of notice or both, would result in the
occurrence of an Event of Default, has occurred and is continuing, Lessee may
remove all Personal Property from the Properties. Lessee shall repair any damage
caused by such removal and shall leave the Properties broom clean and in good
and working condition and repair inside and out. Any property of Lessee left on
the Properties on the tenth day following the expiration of the Lease Term
shall, at Lessor's option, automatically and immediately become the property of
Lessor.
33. FINANCIAL STATEMENTS. Within 45 days after the end of each of the
first three fiscal quarters and within 120 days after the end of each fiscal
year of Lessee, Lessee shall deliver to Lessor and Lender (i) complete financial
statements of the Lessee Parties including a balance sheet, profit and loss
statement, statement of cash flows and all other related schedules for the
fiscal period then ended; and (ii) income statements for the business at each of
the Properties. All such financial statements shall be prepared in accordance
with GAAP from period to period, and shall be certified by Lessee (or the
Treasurer or other appropriate officer of Lessee) to fairly present the
financial condition of the Lessee Party whose financial statements they are.
Lessee understands that Lessor and Lender will rely upon such financial
statements and Lessee represents that such reliance is reasonable. In the event
the property and business at the Properties is ordinarily consolidated with
other business for financial statement purposes, such financial statements shall
be prepared on a consolidated basis showing separately the sales, profits and
losses, assets and liabilities pertaining to each of the Properties with the
basis for allocation of overhead of other charges being clearly set forth. The
financial statements delivered to Lessor and Lender need not be audited, but
Lessee shall deliver to Lessor and Lender copies of any audited financial
statements of Lessee which may be prepared, as soon as they are available.
34. FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, acts of God, enemy or hostile governmental action, civil commotion,
fire or other casualty beyond the control of the party obligated to perform
shall excuse the performance by such party for a period equal to any such
prevention, delay or stoppage, except the obligations imposed with regard to
rental and other monies to be paid by Lessee pursuant to this Lease and any
indemnification obligations imposed upon Lessee under this Lease.
35. TIME IS OF THE ESSENCE. Time is of the essence with respect to each
and every provision of this Lease in which time is a factor.
36. LESSOR'S LIABILITY. Notwithstanding anything to the contrary provided
in this Lease, it is specifically understood and agreed, such agreement being a
primary consideration for the execution of this Lease by Lessor, that (i) there
shall be absolutely no personal liability on the part of Lessor, its successors
or assigns and the trustees, members, partners, shareholders, officers,
directors, employees and agents of Lessor and its successors or assigns, to
Lessee with respect to any of the terms, covenants and conditions of this Lease,
(ii) Lessee waives all claims, demands and causes of action against the
trustees, members, partners, shareholders, officers, directors, employees and
agents of Lessor and its successors or assigns in the event of any breach by
Lessor of any of the terms, covenants and conditions of this Lease to be
performed by Lessor, and (iii) Lessee shall look solely to the Properties and
Equipment for the satisfaction of each and every remedy of Lessee in the event
of any breach by Lessor of any of the terms, covenants and conditions of this
Lease to be performed by Lessor, or any other matter in connection with this
Lease, the Properties or the Equipment, such exculpation of liability to be
absolute and without any exception whatsoever.
37. CONSENT OF LESSOR. (a) Unless specified otherwise herein, Lessor's
consent to any request of Lessee may be conditioned or withheld in Lessor's sole
discretion. Lessor shall have no liability for damages
SCS Finance I, L.P.
34
resulting from Lessor's failure to give any consent, approval or instruction
reserved to Lessor, Lessee's sole remedy in any such event being an action for
injunctive relief.
(b) It is understood and agreed that to the extent Lessor is required to
obtain the consent, approval, agreement or waiver of Lender with respect to a
matter for which Lessor's approval has been requested under this Lease, Lessor
shall in no event be deemed to have unreasonably withheld Lessor's consent,
approval, agreement or waiver thereof if Lender shall not have given its
approval if required.
38. WAIVER AND AMENDMENT. No provision of this Lease shall be deemed
waived or amended except by a written instrument unambiguously setting forth the
matter waived or amended and signed by the party against which enforcement of
such waiver or amendment is sought. Waiver of any matter shall not be deemed a
waiver of the same or any other matter on any future occasion. No acceptance by
Lessor of an amount less than the monthly rent and other payments stipulated to
be due under this Lease shall be deemed to be other than a payment on account of
the earliest such rent or other payments then due or in arrears nor shall any
endorsement or statement on any check or letter accompanying any such payment be
deemed a waiver of Lessor's right to collect any unpaid amounts or an accord and
satisfaction.
39. SUCCESSORS BOUND. Except as otherwise specifically provided herein,
the terms, covenants and conditions contained in this Lease shall bind and inure
to the benefit of the respective heirs, successors, executors, administrators
and assigns of each of the parties hereto.
40. NO MERGER. The voluntary or other surrender of this Lease by Lessee,
or a mutual cancellation thereof, shall not result in a merger of Lessor's and
Lessee's estates, and shall, at the option of Lessor, either terminate any or
all existing subleases or subtenancies, or operate as an assignment to Lessor of
any or all of such subleases or subtenancies.
41. CAPTIONS. Captions are used throughout this Lease for convenience of
reference only and shall not be considered in any manner in the construction or
interpretation hereof.
42. SEVERABILITY. The provisions of this Lease shall be deemed severable.
If any part of this Lease shall be held unenforceable by any court of competent
jurisdiction, the remainder shall remain in full force and effect, and such
unenforceable provision shall be reformed by such court so as to give maximum
legal effect to the intention of the parties as expressed therein.
43. CHARACTERIZATION. A. It is the intent of the parties hereto that the
business relationship created by this Lease and any related documents is solely
that of a long-term commercial lease between landlord and tenant and has been
entered into by both parties in reliance upon the economic and legal bargains
contained herein. None of the agreements contained herein, is intended, nor
shall the same be deemed or construed, to create a partnership between Lessor
and Lessee, to make them joint venturers, to make Lessee an agent, legal
representative, partner, subsidiary or employee of Lessor, nor to make Lessor in
any way responsible for the debts, obligations or losses of Lessee.
B. This Lease shall be interpreted and construed in a fair and impartial
manner without regard to such factors as the party which prepared the
instrument, the relative bargaining powers of the parties or the domicile of any
party. Whenever in this Lease any words of obligation or duty are used, such
words or expressions shall have the same force and effect as though made in the
form of a covenant.
44. EASEMENTS. During the Lease Term Lessor shall have the right to grant
utility easements on, over, under and above any of the Properties without the
prior consent of Lessee, provided that such easements will not materially
interfere with Lessee's long-term use of such Properties.
45. BANKRUPTCY. A. As a material inducement to Lessor executing this
Lease, Lessee acknowledges and agrees that Lessor is relying upon (i) the
financial condition and specific operating experience of Lessee and Lessee's
obligation to use each of the Properties specifically in accordance with
system-wide requirements imposed from time to time on Permitted Concepts, (ii)
Lessee's timely performance of all of its obligations under this Lease
SCS Finance I, L.P.
35
as to all Properties and Equipment notwithstanding the entry of an order for
relief under the Code for Lessee and (iii) all defaults under this Lease as to
all Properties and Equipment being cured promptly and this Lease being assumed
within 60 days of any order for relief entered under the Code for Lessee, or
this Lease being rejected within such 60 day period and the Properties
surrendered to Lessor.
Accordingly, in consideration of the mutual covenants contained in this
Lease and for other good and valuable consideration, Lessee hereby agrees that:
(i) All obligations that accrue or become due under this Lease (including
the obligation to pay rent), from and after the date that an Action is commenced
shall be timely performed as provided in this Lease and any failure to so
perform shall be harmful and prejudicial to Lessor;
(ii) Any and all obligations under this Lease that accrue or become due
from and after the date that an Action is commenced and that are not paid as
required by this Lease shall, in the amount of such rents, constitute
administrative expense claims allowable under the Code with priority of payment
at least equal to that of any other actual and necessary expenses incurred after
the commencement of the Action;
(iii) Any extension of the time period within which Lessee may assume or
reject this Lease without an obligation to cause all obligations accruing or
coming due under this Lease from and after the date that an Action is commenced
to be performed as and when required under this Lease shall be harmful and
prejudicial to Lessor;
(iv) Any time period designated as the period within which Lessee must
cure all defaults and compensate Lessor for all pecuniary losses which extends
beyond the date of assumption of this Lease shall be harmful and prejudicial to
Lessor;
(v) Any assignment of this Lease must result in all terms and conditions
of this Lease being assumed by the assignee without alteration or amendment, and
any assignment which results in an amendment or alteration of the terms and
conditions of this Lease without the express written consent of Lessor shall be
harmful and prejudicial to Lessor;
(vi) Any proposed assignment of this Lease to an assignee: (a) that will
not use the Properties or Equipment specifically as a Permitted Concept in
accordance with the Distributor Agreement and any applicable franchise, license
and/or area development agreements then in effect with respect to the Properties
or Equipment Premises, or (b) that does not possess financial condition,
operating performance and experience characteristics equal to or better than the
financial condition, operating performance and experience of the Lessee Parties
as of the Effective Date, shall be harmful and prejudicial to Lessor;
(vii) The rejection (or deemed rejection) of this Lease for any reason
whatsoever shall constitute cause for immediate relief from the automatic stay
provisions of the Code, and Lessee stipulates that such automatic stay shall be
lifted immediately and possession of the Properties and Equipment will be
delivered to Lessor immediately without the necessity of any further action by
Lessor; and
(viii) This Lease shall at all times be treated as consistent with the
specific characterizations set forth in Section 3 of this Lease, and assumption
or rejection of this Lease shall be (a) in its entirety, (b) for all of the
Properties, and (c) in strict accordance with the specific terms and conditions
of this Lease.
B. No provision of this Lease shall be deemed a waiver of Lessor's rights
or remedies under the Code or applicable law to oppose any assumption and/or
assignment of this Lease, to require timely performance of Lessee's obligations
under this Lease, or to regain possession of the Properties and Equipment as a
result of the failure of Lessee to comply with the terms and conditions of this
Lease or the Code.
C. Notwithstanding anything in this Lease to the contrary, all amounts
payable by Lessee to or on behalf of Lessor under this Lease, whether or not
expressly denominated as such, shall constitute "rent" for the purposes of the
Code.
SCS Finance I, L.P.
36
D. For purposes of this Section addressing the rights and obligations of
Lessor and Lessee in the event that an Action is commenced, the term "Lessee"
shall include Lessee's successor in bankruptcy, whether a trustee, Lessee as
debtor in possession or other responsible person.
46. NO OFFER. No contractual or other rights shall exist between Lessor
and Lessee with respect to the Properties and Equipment until both have executed
and delivered this Lease, notwithstanding that deposits may have been received
by Lessor and notwithstanding that Lessor may have delivered to Lessee an
unexecuted copy of this Lease. The submission of this Lease to Lessee shall be
for examination purposes only, and does not and shall not constitute a
reservation of or an option for Lessee to lease or otherwise create any interest
on the part of Lessee in the Properties and Equipment.
47. OTHER DOCUMENTS. Each of the parties agrees to do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all such further acts, documents and assurances as may be reasonably
required or deemed advisable to carry into effect the purposes of this Lease, to
perfect any lien or security interest granted in this Lease and for the better
assuring and confirming of all of Lessor's rights, powers and remedies under
this Lease.
48. ATTORNEYS' FEES. In the event of any judicial or other adversarial
proceeding between the parties concerning this Lease, to the extent permitted by
law, the prevailing party shall be entitled to recover all of its reasonable
attorneys' fees and other costs in addition to any other relief to which it may
be entitled. In addition, Lessor shall, upon demand, be entitled to all
reasonable attorneys' fees and all other costs incurred in the preparation and
service of any notice or demand hereunder, whether or not a legal action is
subsequently commenced.
49. ENTIRE AGREEMENT. This Lease and any other instruments or agreements
referred to herein constitute the entire agreement between the parties with
respect to the subject matter hereof, and there are no other representations,
warranties or agreements except as herein provided. Without limiting the
foregoing, Lessee specifically acknowledges that neither Lessor nor any agent,
officer, employee or representative of Lessor has made any representation or
warranty regarding the projected profitability of the business to be conducted
on the Properties. Furthermore, Lessee acknowledges that Lessor did not prepare
or assist in the preparation of any of the projected figures used by Lessee in
analyzing the economic viability and feasibility of the business to be conducted
by Lessee at the Properties.
50. FORUM SELECTION; JURISDICTION; VENUE; CHOICE OF LAW. Lessee
acknowledges that this Lease was substantially negotiated in the State of
Arizona, this Lease was executed and delivered in the State of Arizona, all
payments under this Lease will be delivered in the State of Arizona (unless
otherwise directed by Lessor or its successors) and there are substantial
contacts between the parties and the transactions contemplated herein and the
State of Arizona. For purposes of any action or proceeding arising out of this
Lease, the parties hereto expressly submit to the jurisdiction of all federal
and state courts located in the State of Arizona. Lessee and Lessor consent that
they may be served with any process or paper by registered mail or by personal
service within or without the State of Arizona in accordance with applicable
law. Furthermore, Lessee and Lessor waive and agree not to assert in any such
action, suit or proceeding that they are not personally subject to the
jurisdiction of such courts, that the action, suit or proceeding is brought in
an inconvenient forum or that venue of the action, suit or proceeding is
improper. The creation of this Lease and the rights and remedies of Lessor with
respect to the Properties, as provided herein and by the laws of the states in
which the Properties are located, as applicable, shall be governed by and
construed in accordance with the internal laws of the states in which the
Properties are located, as applicable, without regard to principles of conflicts
of law. With respect to other provisions of this Lease, this Lease shall be
governed by the internal laws of the State of Arizona, without regard to its
principles of conflicts of law. Nothing contained in this Section shall limit or
restrict the right of Lessor or Lessee to commence any proceeding in the federal
or state courts located in the states in which the Properties are located to the
extent Lessor or Lessee deems such proceeding necessary or advisable to exercise
remedies available under this Lease.
51. COUNTERPARTS. This Lease may be executed in one or more counterparts,
each of which shall be deemed an original.
SCS Finance I, L.P.
37
52. MEMORANDUM OF MASTER LEASE. Concurrently with the execution of this
Lease, Lessor and Lessee are executing the Memorandum to be recorded in the
applicable real property records with respect to each of the Properties.
Further, upon Lessor's request, Lessee agrees to execute and acknowledge a
termination of lease and/or quit claim deed in recordable form with respect to
each of the Properties to be held by Lessor and the Equipment Premises (with
respect to the Equipment to be held by Lessor) until the expiration or sooner
termination of the Lease Term.
53. NO BROKERAGE. Lessor and Lessee represent and warrant to each other
that they have had no conversation or negotiations with any broker concerning
the leasing of the Properties. Each of Lessor and Lessee agrees to protect,
indemnify, save and keep harmless the other, against and from all liabilities,
claims, losses, costs, damages and expenses, including attorneys' fees, arising
out of, resulting from or in connection with their breach of the foregoing
warranty and representation.
54. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT
DAMAGES. LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES
PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF
THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY
MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF
LESSOR AND LESSEE, LESSEE'S USE OR OCCUPANCY OF ANY OF THE PROPERTIES, AND/OR
ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS
WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS
BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, LESSEE
AND LESSOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT
EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES
FROM THE OTHER AND ANY OF THE OTHER'S AFFILIATES, OFFICERS, DIRECTORS OR
EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES
PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER
PARTY AGAINST THE OTHER OR ANY OF THE OTHER'S AFFILIATES, OFFICERS, DIRECTORS OR
EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF
OR IN CONNECTION WITH THIS LEASE OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED
HERETO. THE WAIVER BY LESSEE AND LESSOR OF ANY RIGHT THEY MAY HAVE TO SEEK
PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE
PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
55. RELIANCE BY ENVIRONMENTAL INSURER. Lessee acknowledges and agrees that
Environmental Insurer may rely on the representations, warranties and covenants
set forth in Sections 6.L, 16 and 19.B of this Lease, that Environmental Insurer
is an intended third-party beneficiary of such representations, warranties and
covenants and that Environmental Insurer shall have all rights and remedies
available at law or in equity as a result of a breach of such representations,
warranties and covenants, including to the extent applicable, the right of
subrogation.
56. LENDER'S RIGHTS. A. Lessee acknowledges and agrees that (i) Lessor has
collaterally assigned all of its right, title and interest under this Lease to
Lender pursuant to the Loan Documents and (ii) upon the exercise of Lender's
remedies set forth in such Loan Documents, all of the rights, powers and
privileges of Lessor shall be deemed the rights, powers and privileges of Lender
and Lender shall be entitled to exercise all of the rights and remedies of
"Lessor" under this Lease. Lessee hereby consents to, and no further consent by
Lessee shall be required for, any further assignment of rights of Lessor
hereunder or in connection with any transfer by Lender. All notices,
certificates, reports or other information required to be delivered to Lessor
under this Lease shall be delivered simultaneously to Lender in accordance with
the provisions of Section 29. Notwithstanding any provision herein to the
contrary, the collateral assignment of this Lease to Lender shall not be deemed
to create any obligation of or liability for Lender.
B. Lessee acknowledges and agrees that Lender may rely on all of the
representations, warranties and covenants set forth in this Lease, that Lender
is an intended third-party beneficiary of such representations,
SCS Finance I, L.P.
38
warranties and covenants and that Lender shall have all rights and remedies
available at law or in equity as a result of a breach of such representations,
warranties and covenants, including to the extent applicable, the right of
subrogation.
C. Lessee agrees that any consent, approval, agreement or waiver provided
by Lessor pursuant to this Lease shall not be valid unless consented to in
writing by Lender.
57. DOCUMENT REVIEW. In the event Lessee makes any request upon Lessor
requiring Lessor or the attorneys of Lessor to review and/or prepare (or cause
to be reviewed and/or prepared) any documents, plans, specifications or other
submissions in connection with or arising out of this Lease, then Lessee shall
reimburse Lessor upon demand therefor for all out-of-pocket costs and expenses
incurred by Lessor in connection with such review and/or preparation, including,
without limitation, reasonable attorneys' fees.
58. STATE SPECIFIC PROVISIONS. The provisions and/or remedies which are
set forth on Schedule II shall be deemed a part of and included within the terms
and conditions of this Lease.
59. CORPORATE FIXED CHARGE COVERAGE RATIO. Lessee shall maintain a
Corporate Fixed Charge Coverage Ratio of at least 1.25:1 for each of its fiscal
years during the Lease Term. For purposes of this Section, the term "Corporate
Fixed Charge Coverage Ratio" shall mean with respect to that fiscal year, the
ratio calculated for such fiscal year, each as determined in accordance with
GAAP, of (a) the sum of Net Income, Depreciation and Amortization, Interest
Expense and Operating Lease Expense, minus income taxes or charges equivalent to
income taxes allocable to that fiscal year, to (b) the sum of, without
duplication, Operating Lease Expense, scheduled principal payments of long term
Debt, scheduled maturities of all Capital Leases and Interest Expense (excluding
non-cash interest expense and amortization of non-cash financing expenses).
For purposes of this Section, the following terms shall be defined as set
forth below:
"Capital Lease" shall mean all leases of any property, whether real,
personal or mixed, by Lessee or any of the other Lessee Parties, as
applicable, which lease would, in conformity with GAAP, be required to be
accounted for as a capital lease on the balance sheet of Lessee. The term
"Capital Lease" shall not include any operating lease.
"Debt" shall mean with respect to Lessee, and for the period of
determination (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, indentures, notes or similar instruments, (iii)
obligations to pay the deferred purchase price of property or services,
(iv) obligations under leases which should be, in accordance with GAAP,
recorded as Capital Leases, and (v) obligations under direct or indirect
guarantees in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against
loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (i) through (iv) above.
"Depreciation and Amortization" shall mean the depreciation and
amortization accruing during any period of determination with respect to
Lessee and the other Lessee Parties, collectively, as determined in
accordance with GAAP.
"Interest Expense" shall mean for any period of determination, the
sum of all interest accrued or which should be accrued in respect of all
Debt of Lessee and the other Lessee Parties, collectively, as determined
in accordance with GAAP.
"Net Income" shall mean with respect to the period of determination,
the net income or net loss of Lessee and the other Lessee Parties,
collectively. In determining the amount of Net Income, (i) adjustments
shall be made for nonrecurring gains and losses or non-cash items
allocable to the period of determination, (ii) deductions shall be made
for, among other things, Depreciation and Amortization, Interest Expense,
Operating Lease Expense and actual corporate and district overhead expense
allocable to the period of determination, and (iii) no deductions shall be
made for income taxes or charges equivalent to income taxes allocable to
the period of determination, as determined in accordance with GAAP.
SCS Finance I, L.P.
39
"Operating Lease Expense" shall mean the sum of all payments and
expenses incurred by Lessee and the other Lessee Parties, collectively,
under any operating leases during the period of determination, as
determined in accordance with GAAP.
60. PARTNERS' CAPITAL. Lessee shall at all times maintain partners'
capital of at least $10,000,000.00 as determined in accordance with GAAP.
61. EXCESS LAND. If, at any time following the Closing, the any portion of
that parcel of land included in the Property referred to as Store No. 647
located at 000 X. Xxxxxx Xxxxx, Xx Xxxx, Xxxxx ("647 Premises") is released from
the lien of the Mortgage in favor of Lender, as permitted by the Loan Documents,
then this Lease shall automatically terminate as to the portion of the 647
Premises released from such Mortgage, but not as to the remaining portion of the
647 Premises, without any reduction in the Base Annual Rental, Base Monthly
Rental, any Additional Rental or any other amount owing by Lessee under this
Lease or any other obligation of Lessee under this Lease.
62. PARTIAL TERMINATION OF LEASE. If Lessor has performed and satisfied
all of its obligations, liabilities and duties under the Equipment Loan
Documents, including, without limitation, payment of all principal and interest
outstanding on the Equipment Notes, then Lessor and Lessee, at any time after
the 10th anniversary of the Effective Date, may terminate this Lease as to the
Leasehold Equipment only, in accordance with a termination agreement acceptable
to Lender.
SIGNATURE PAGE FOLLOWS
SCS Finance I, L.P.
40
IN WITNESS WHEREOF, Lessor and Lessee have entered into this Lease as of
the Effective Date.
LESSOR:
SCS FINANCE I, L.P., a Delaware
limited partnership
By: SCS Finance GP LLC, a Delaware limited
liability company, its general partner
By: SCS Finance, Inc., a Delaware corporation,
its managing member
By /s/ XXXXXXX X. XXXXXX
---------------------------------------
Xxxxxxx X. Xxxxxx, President
LESSEE:
SOUTHWEST CONVENIENCE STORES, LP, a Texas
limited partnership
By: Alon USA Interests, LLC, a Texas limited
liability company, its general partner
By /s/ XXXXXXX X. XXXXXX
--------------------------------------------
Xxxxxxx X. Xxxxxx
Chairman of the Board of Managers
U.S. Federal Tax Identification Number:
17526797331
----------------------------------------------------
Organization Identification Number:
800127686
----------------------------------------------------
POWER OF ATTORNEY
Lessor may act as attorney-in-fact or otherwise on behalf of Lessee
pursuant to Sections 25 and 26 of this Lease. This power of attorney is coupled
with an interest, is durable and is not affected by subsequent disability or
incapacity of the principal or lapse of time.
/s/ J.R. /s/ J.D.M.
----------- ----------
Witness Lessee
WITNESS
In accordance with the requirements of Arizona Revised Statutes Section
14-5506 and other applicable law, the undersigned has executed this Lease for
the purpose of witnessing the grant of the powers of attorney by Lessee to
Lessor.
/s/ Xxx Xxxxxx
-------------------------------------
SCS Finance I, L.P.
42
STATE OF ARIZONA )
) SS.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me on September 27, 2002
by Xxxxxxx X. Xxxxxx, President of SCS Finance, Inc., a Delaware corporation,
Managing Member of SCS Finance GP LLC, a Delaware limited liability company, the
General Partner of SCS Finance I, L.P., a Delaware limited partnership, on
behalf of the partnership.
/s/ Xxxxxx X. Xxxxx
--------------------------------
Notary Public
[seal]
My Commission Expires:
5-5-06
--------------------------------------
STATE OF ARIZONA )
) SS.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me on September 27, 2002
by Xxxxxxx X. Xxxxxx, Chairman of the Board of Managers of Alon USA Interests,
LLC, a Texas limited liability company, general partner of Southwest Convenience
Stores, LP, a Texas limited partnership, on behalf of the partnership.
/s/ Xxxxxx X. Xxxxx
--------------------------------
Notary Public
[seal]
My Commission Expires
5-5-06
--------------------------------------
SCS Finance I, L.P.
43
