EXHIBIT 10.21
(Form of Cross Continent Lease)
LEASE AGREEMENT
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BETWEEN
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CAPITAL AUTOMOTIVE L.P., LANDLORD
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AND
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[ ], TENANT
________________________________________________________________________
DATED: ____________, 1997
ARTICLE I
LEASE AGREEMENT, LEASED PROPERTY AND TERM......................1
1.01 Lease Agreement..........................................1
1.02 Contingent Upon Acquisition of the Leased Property.......2
1.03 Term.....................................................2
1.04 Holding Over.............................................3
1.05 Surrender................................................4
ARTICLE II
RENT...........................................................4
2.01 Base Rent................................................4
2.02 Payment..................................................4
2.03 Security Deposit.........................................4
2.04 Base Annual Rent Adjustment..............................5
2.05 Additional Rent..........................................5
2.06 Place(s) of Payment of Rent; Direct Payment of
Additional Rent.........................................5
2.07 Net Lease................................................5
2.08 No Termination, Abatement, Etc...........................5
ARTICLE III
IMPOSITIONS AND UTILITIES......................................6
3.01 Payment of Impositions...................................6
3.02 Definition of Impositions................................7
3.03 Utilities................................................8
3.04 Escrow of Impositions....................................8
3.05 Discontinuance of Utilities..............................9
3.06 Liens....................................................9
ARTICLE IV
INSURANCE......................................................9
4.01 Insurance................................................9
4.02 Insurance Limits........................................11
4.03 Insurance Requirements..................................11
4.04 Replacement Cost........................................12
4.05 Blanket Policy..........................................12
4.06 No Separate Insurance...................................12
4.07 Waiver of Subrogation...................................13
4.08 Mortgages...............................................13
4.09 Other Insurance Requirements............................13
ARTICLE V
INDEMNITY; SUBSTANCES OF CONCERN..............................13
5.01 Tenant's Indemnification................................13
5.02 Substances of Concern...................................14
5.03 Audits..................................................16
5.04 Landlord's Option Re: Compliance........................17
5.05 Environmental Indemnification...........................17
5.06 Tenant's Cleanup Obligation.............................18
5.07 Existing Environmental Conditions.......................18
5.08 Survival of Tenant's Obligations........................18
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES................................18
6.01 Use of Leased Properties................................18
6.02 Acceptance of Leased Properties.........................19
6.03 Conditions of Use and Occupancy.........................19
6.04 Financial Statements and Other Information..............19
ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS...........20
7.01 Maintenance.............................................20
7.02 Compliance with Laws....................................20
7.03 Required Alterations....................................21
7.04 Mechanics' Liens........................................21
7.05 Replacements of Fixtures................................21
7.06 Encroachments; Restrictions.............................22
ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTIES....................22
8.01 Tenant's Right to Construct.............................22
8.02 Scope of Right..........................................23
8.03 Cooperation of Landlord.................................23
8.04 Commencement of Construction............................24
8.05 Rights in Tenant Improvements ..........................24
8.06 Personal Property.......................................25
8.07 Requirements for the Tenant's Personal Property.........25
8.08 Financings of Capital Additions to a Leased Property....26
ARTICLE IX DEFAULTS AND REMEDIES.........................................27
9.01 Events of Default.......................................27
9.02 Remedies................................................29
9.03 Right of Set-Off........................................32
9.04 Performance of Tenant's Covenants.......................32
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9.05 Late Charge......................................... 32
9.06 Litigation; Attorneys' Fees......................... 32
9.07 Remedies Cumulative................................. 33
9.08 Escrows and Application of Payments................. 33
9.09 Power of Attorney................................... 33
ARTICLE X
DAMAGE AND DESTRUCTION..................................... 34
10.01 General............................................. 34
10.02 Landlord's Inspection............................... 35
10.03 Landlord's Costs.................................... 35
10.04 Rent Abatement...................................... 35
10.05 Substantial Damage During Lease Term................ 35
10.06 Damage Near End of Term............................. 36
10.07 Risk of Loss........................................ 36
ARTICLE XI
CONDEMNATION............................................... 37
11.01 Total Taking........................................ 37
11.02 Partial Taking...................................... 37
11.03 Restoration......................................... 37
11.04 Landlord's Inspection............................... 38
11.05 Award Distribution.................................. 38
11.06 Temporary Taking.................................... 38
ARTICLE XII
ADDITIONAL REPRESENTATIONS, WARRANTIES AND FINANCIAL
COVENANTS
12.01 Organization and Qualification...................... 39
12.02 Material Agreements................................. 40
12.03 Changes in Condition................................ 40
12.04 Franchises, Licenses, etc........................... 40
12.05 Litigation.......................................... 41
12.06 Authorization and Enforceability.................... 41
12.07 No Legal Obstacle to Lease.......................... 41
12.08 Certain Business Representations.................... 42
12.09 Certain Financial Covenants......................... 43
12.10 Cash Flow Coverage Ratio Covenant................... 43
12.11 Disclosure.......................................... 43
12.12 Covenant Not to Acquire............................. 44
ARTICLE XIII
ASSIGNMENT AND SUBLETTING; ATTORNMENT...................... 44
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13.01 Prohibition Against Subletting and Assignment....... 44
13.02 Changes of Control.................................. 44
13.03 Operating/Service Agreements........................ 45
13.04 Assignment.......................................... 46
13.05 REIT Limitations.................................... 46
13.06 Attornment.......................................... 47
13.07 Severance and Spin-Off.............................. 47
ARTICLE XIV ARBITRATION................................................ 48
14.01 Controversies....................................... 48
14.02 Appointment of Arbitrators.......................... 48
14.03 Arbitration Procedure............................... 48
14.04 Expenses............................................ 48
14.05 Enforcement of the Arbitration Award................ 49
ARTICLE XV QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT, ESTOPPEL CERTIFICATES.......................... 49
15.01 Quiet Enjoyment..................................... 49
15.02 Landlord Mortgages; Subordination................... 49
15.03 Attornment.......................................... 49
15.04 Estoppel Certificates............................... 50
15.05 Waiver of Landlord's Lien........................... 50
ARTICLE XVI RIGHT OF FIRST OFFER....................................... 51
16.01 Right of First Offer During Lease Term or
Extension Term...................................... 51
16.02 Right to Purchase at End of an Extension Term....... 52
ARTICLE XVII MISCELLANEOUS.............................................. 53
17.01 Notices............................................. 53
17.02 Advertisement of a Leased Property.................. 54
17.03 Landlord's Access................................... 54
17.04 Entire Agreement.................................... 54
17.05 Severability........................................ 55
17.06 Captions and Headings............................... 55
17.07 Governing Law....................................... 55
17.08 Memorandum of Lease or Certain Rights Under
the Lease........................................... 55
17.09 Waiver.............................................. 55
17.10 Assignment; Binding Effect.......................... 55
17.11 Consents and Approvals.............................. 55
17.12 Single Property..................................... 56
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17.13 Modification........................................ 56
17.14 Incorporation by Reference.......................... 56
17.15 No Merger........................................... 56
17.16 Force Majeure....................................... 56
17.17 Laches.............................................. 56
17.18 Waiver of Jury Trial................................ 56
17.19 Permitted Contests.................................. 57
17.20 Construction of Lease............................... 57
17.21 Counterparts........................................ 58
17.22 Relationship of Landlord and Tenant................. 58
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SCHEDULES
A Leased Properties and Initial Base Rent
B Permitted Exceptions
12.02 Material Agreements
12.03 Changes in Condition
EXHIBITS
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
15.02 Form of Subordination and Non-Disturbance Agreement
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LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") dated as of the ______ day of ________,
1997 by and between CAPITAL AUTOMOTIVE L.P., a Delaware limited partnership
("Landlord"), having its principal office at 0000 Xxxxx Xxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxx 00000, and [ ], a ___________ [corporation],
having its principal office at [________________] ("Tenant").
RECITALS
WHEREAS, Tenant or an Affiliate (as hereafter defined) has conveyed or
will convey to Landlord certain parcels of real estate and improvements thereon
upon which Tenant engages in motor vehicle retail and/or motor vehicle related
businesses (the "Business"), which parcels of real estate and improvements
thereon are described on Schedule A attached hereto and incorporated herein by
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reference (each hereinafter a "Leased Property" or collectively, the "Leased
Properties"), and Landlord and Tenant desire to provide for the lease by
Landlord to Tenant of the Leased Properties; and
WHEREAS, Landlord and Tenant desire that each of the Leased Properties
shall be the subject of this Lease and be used by Tenant in its operation of the
Business; and
WHEREAS, this Lease provides that additional real estate and
improvements thereon may be made subject to the operation and effect of this
Lease, upon execution by Landlord and Tenant of a Lease Supplement designating
each such additional property as a Leased Property hereunder.
NOW, THEREFORE, in consideration of the foregoing premises and of
their respective agreements and undertakings herein, and of other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant agree as follows:
ARTICLE I
LEASE AGREEMENT, LEASED PROPERTY AND TERM
1.01 Lease Agreement. Landlord does hereby let and lease unto
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Tenant, and Tenant does hereby take and hire from Landlord, the Leased
Properties, which shall respectively consist of:
(a) The parcels of land described and located at the addresses
listed in Schedule A hereto, as more particularly described
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therein, together with any additional parcels of real estate
and improvements thereon subsequently designated as a Leased
Property by the parties pursuant to a Lease Supplement as
provided for herein, together with all rights, titles,
appurtenant interests, covenants, licenses, privileges and
benefits thereto belonging, and any easements, rights-of-way,
rights of ingress or egress or
other interests in, on, or to any land, highway, street, road
or avenue, open or proposed, in, on, across, in front of,
abutting or adjoining such real property including, without
limitation, any strips and gores adjacent to or lying between
such real estate and any adjacent real estate (the "Land");
(b) All buildings, improvements, structures and Fixtures (as
hereinafter defined) now located or to be located or to be
constructed on the Land, including, without limitation,
sidewalks, landscaping, parking lots and structures, roads,
drainage and all above ground and underground utility
structures and conduits (on-site or off-site), equipment
systems and other so-called "infrastructure" improvements (the
"Improvements");
(c) All equipment, machinery, fixtures, and other items of real
and/or personal property, including all components thereof,
located in, on or used in connection with, and permanently
affixed to or incorporated into, the Improvements, including,
without limitation, all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control,
waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection
equipment, and similar systems, all of which, to the greatest
extent permitted by law, are hereby deemed to constitute real
estate, together with all replacements, modifications,
alterations and additions thereto (collectively the
"Fixtures"); and
(d) All easements, rights and appurtenances relating to the Land
and the Improvements.
SUBJECT, HOWEVER, to the liens, encumbrances, restrictions,
agreements, and other title matters listed or specifically referred to in
Schedule B ("Permitted Exceptions").
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The Leased Properties shall however exclude all furniture, equipment,
inventory and items of moveable personal property attached to the Land or
Improvements that relate to the business being conducted on the Leased Property
which items may readily be removed without material damage to the Land and
Improvements whether or not such items might legally be considered to be
"fixtures" (all of which are owned by Tenant and shall hereinafter be defined as
the "Excluded Personal Property").
1.02 Contingent Upon Acquisition of the Leased Property. In the
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event this Lease is executed prior to the conveyance by Tenant or an Affiliate
of the Leased Property to Landlord, the parties acknowledge that the
effectiveness of this Lease in respect of such Leased Property is contingent
upon the closing of such conveyance (the "Commencement Date").
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1.03 Term. The initial term of this Lease (the "Term") shall be
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for a fixed term of One Hundred and Twenty (120) months commencing on the
Commencement Date. The initial term for any Leased Property designated in a
Lease Supplement shall begin on the date of such Lease Supplement and expire at
the end of the Term or then current Extension Term (as hereafter defined), as
the case may be. Tenant shall have the right to extend this Lease for the
Leased Properties as a group, at Tenant's option, for one One Hundred and Twenty
(120) month renewal term from the expiration of the Term (the "First Extension
Term"), provided that no Event of Default (as defined in Section 9.01 hereof)
shall exist and be continuing. In addition, Tenant shall have the right to
extend this Lease for the Leased Properties as a group at Tenant's option, for a
second One Hundred and Twenty (120) month renewal term from the expiration of
the First Extension Term (the "Second Extension Term", each an "Extension Term",
and collectively with the First Extension Term, the "Extension Terms") provided
that no Event of Default (as defined in Section 9.01 hereof) shall exist and be
continuing. Tenant shall exercise the First Extension Term by written notice to
Landlord no later than twelve (12) months prior to the end of the Term. Tenant
shall exercise the Second Extension Term by written notice to Landlord no later
than twelve (12) months prior to the end of the First Extension Term.
Notwithstanding anything else to the contrary in this Agreement, the Rent during
the Second Extension Term shall be the Fair Market Rent (as hereafter defined)
for the Leased Property. Fair Market Rent shall be determined as soon as
possible after receipt by Landlord of Tenant's notice of option exercise, on the
basis of appraisals of independent appraisers selected in accordance with the
provisions of Section 16.02(b). Tenant shall have the right, in its sole
discretion, to rescind the exercise of Tenant's option to extend the Lease for
the Second Extension Term during a period of fifteen (15) business days after
the determination of the Fair Market Rent. If Tenant shall fail to exercise the
right to rescind within such fifteen (15) day period, the election to extend
shall be irrevocable and the Fair Market Rent so determined shall be the Base
Annual Rent during the Second Extension Term notwithstanding any changes in the
market rental rates, whether upward or downward, which may occur after such
determination. However, notwithstanding anything else in this Agreement, Fair
Market Rent shall become the Base Annual Rent (as defined hereafter) and shall
be subject to Base Annual Rent Adjustments as set forth in Section 2.04.
1.04 Holding Over. Should Tenant, without the express consent of
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Landlord, continue to hold and occupy any Leased Property after the expiration
or earlier termination of the Term or any Extension Term, as the case may be,
such holding over beyond the Term and the acceptance or collection of Rent (as
defined hereinafter) by Landlord shall operate and be construed as creating a
tenancy from month-to-month and not for any other term whatsoever. During any
such holdover period Tenant shall pay to Landlord for each month (or portion
thereof) Tenant remains in such Leased Property, in lieu of the Base Annual Rent
(as defined hereafter) for such Leased Property, an amount equal to the sum of
one-twelfth (1/12) of (i) one hundred seven percent (107%) of such Base Annual
Rent (the "Holdover Rate"), and (ii) as applicable, one hundred percent (100%)
of the Additional Rent (as defined hereinafter) for such Leased Property and
Other Additional Rent (as defined hereinafter) for such Leased Property, each as
in effect on the expiration date. Said month-to-month tenancy may be terminated
by
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Landlord by giving Tenant thirty (30) days written notice, and at any time
thereafter Landlord may re-enter and take possession of such Leased Property.
1.05 Surrender. Except as a result of (a) Tenant Improvements
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and Capital Additions (as defined hereinafter); (b) normal and reasonable wear
and tear (subject to the obligation of Tenant to maintain each Leased Property
in good order and repair during the Term); and (c) casualty, taking or other
damage and destruction not required to be repaired by Tenant, Tenant shall
surrender and deliver up each Leased Property at the expiration or termination
of the Term or the Extension Term therefor, as the case may be, broom clean, in
good order and repair, free of the Excluded Personal Property and any additional
items of Tenant's personal property (together with the Excluded Personal
Property, the "Tenant's Personal Property"), all of which Tenant shall remove
prior to such surrender and delivery, and in as good order and condition as of
the Commencement Date.
ARTICLE II
RENT
2.01 Base Rent. Tenant shall pay Landlord annual base rent (the
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"Base Annual Rent") as to the Leased Property for each year during the Term or
the Extension Term (each such year a "Lease Year"), which Base Annual Rent shall
be subject to upward adjustment pursuant to Section 2.04. In the first Lease
Year, Base Annual Rent shall be in the amount set forth on Schedule A (the
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"Initial Base Annual Rent"), paid to Landlord in twelve equal monthly
installments.
2.02 Payment. Tenant shall pay Landlord the Base Annual Rent as
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to the Leased Property for each Lease Year, without notice, demand, set-off or
counterclaim in advance, in lawful money of the United States of America and
payable in consecutive monthly installments commencing on the Commencement Date
and thereafter on the first day of each month during the Term. Tenant will, to
the extent that such method of payment is compatible with its business
practices, make such payments by direct deposit of immediately available funds
to the account set forth in Exhibit 2.02 (which Exhibit 2.02 may be modified by
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Landlord from time to time upon Notice (as hereafter defined) to Tenant).
2.03 Security Deposit. Prior to the Commencement Date, Tenant
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shall deliver to Landlord an amount equal to one-twelfth (1/12th) of the Initial
Base Annual Rent, which amount shall be held by Landlord as security (the
"Security Deposit") for the performance of Tenant's payment and other
obligations under this Lease. Upon an Event of Default and the continuance
thereof, Landlord shall have the right, but not the obligation, to apply the
Security Deposit as set forth in Section 9.08. If Tenant has fully and
faithfully carried out all of the terms, covenants and conditions hereof,
Landlord shall return the Security Deposit, without interest, after expiration
of this Lease, or upon early termination of this Lease in accordance with
Article X, Article XI, or otherwise less any amounts that Landlord may deduct
from such Security
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Deposit for unpaid amounts due and owing under this Lease at the time of
termination. In the event that Landlord eliminates its standard business policy
of requiring security deposits from tenants, then Landlord shall refund the
Security Deposit to Tenant within thirty (30) days of such policy change.
2.04 Base Annual Rent Adjustment.
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(a) The Base Annual Rent shall be adjusted during the Lease
Term or the Extension Terms under the procedures set forth in Exhibit
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2.04 (the "Base Annual Rent Adjustment").
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(b) As used in Exhibit 2.04, the "Index" shall mean the CPI-U
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published by the United States Department of Labor, Bureau of Labor
Statistics Consumer Price Index for All Urban Consumers, U.S. City
Average. If at any time during the Term or the Extension Term, as the
case may be, the Index shall be discontinued, Landlord shall select a
substitute index, being an existing official index published by the
Bureau of Labor Statistics or its successor or another, similar
governmental agency, which index is most nearly equivalent to the
Index.
2.05 Additional Rent. As to each Leased Property, in addition to
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the Base Annual Rent, Tenant shall pay all other amounts, liabilities,
obligations and Impositions (as hereinafter defined) which Tenant assumes or
agrees to pay under this Lease and any fine, penalty, interest, charge and cost
which may be added for nonpayment or late payment of such items (collectively,
the "Additional Rent").
2.06 Place(s) of Payment of Rent; Direct Payment of Additional
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Rent. The Base Annual Rent and Additional Rent are hereinafter referred to as
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"Rent." Landlord shall have all legal, equitable and contractual rights, powers
and remedies provided in this Lease or by statute or otherwise in the case of
nonpayment of the Rent for each Leased Property. Tenant shall make all payments
of Rent at Landlord's address set forth in Section 17.01 or as Landlord may
otherwise from time to time direct in writing, or, if Landlord shall direct
Tenant, directly to a bank account specified by Landlord to Tenant in writing.
At the direction of the Landlord, Tenant shall make payments of Additional Rent
directly to the person or persons to whom such amount is owing at the time and
times when such payments are due, and Tenant shall give to Landlord such
evidence of such direct payments as Landlord shall reasonably request.
2.07 Net Lease. This Lease shall be deemed and construed to be
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an "absolute net lease" or "triple net lease," (i.e. that Tenant shall pay all
costs and expenses related to the ownership and operations of each Leased
Property, thereby leaving all Rent as an absolutely net return to Landlord) and
as to each Leased Property, Tenant shall pay all Rent, Impositions, and
5
other charges and expenses in connection with such Leased Property throughout
the Term and any Extension Term, without abatement, deduction or set-off.
2.08 No Termination, Abatement, Etc. Except as otherwise
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specifically provided herein, Tenant shall remain bound by this Lease in
accordance with its terms. Except as otherwise specifically provided herein,
Tenant shall not, without the prior written consent of Landlord, modify,
surrender or terminate this Lease as to any Leased Property, nor seek nor be
entitled to any abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent as to any Leased Property for any reason whatsoever. Except as
specifically provided herein, the obligations of Landlord and Tenant shall not
be affected by reason of: (a) the lawful or unlawful prohibition of, or
restriction upon, Tenant's use of any Leased Property, or any part thereof, the
interference with such use by any person, corporation, partnership or other
entity, or by reason of eviction by paramount title; (b) any claim which Tenant
has or might have against Landlord or by reason of any default or breach of any
warranty by Landlord under this Lease or any other agreement between Landlord
and Tenant, or to which Landlord and Tenant are parties; (c) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceeding affecting Landlord or any assignee or transferee
of Landlord; (d) any damage to, or destruction of, any Leased Property or any
portion thereof for whatever cause, or any taking of the Leased Property or any
portion thereof; or (e) any other cause, whether similar or dissimilar to any of
the foregoing, other than a discharge of Tenant from any such obligations as a
matter of law. Except as otherwise specifically provided herein, and to the
maximum extent permitted by law, Tenant hereby specifically waives all rights,
including but not limited to any rights under any statute relating to rights of
tenants in the jurisdictions where the Leased Properties are located, which may
now be conferred upon it by law, relating to: (a) the modification, surrender
or termination of this Lease, or the quitting or surrender of any Leased
Property or any portion thereof; (b) any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Tenant hereunder; or (c) any
rights of redemption. As to each Leased Property, the obligations of Landlord
and Tenant hereunder shall be separate and the Rent and all other sums shall
continue to be payable in all events unless the obligations to pay the same
shall be terminated pursuant to the express provisions of this Lease or by
termination of this Lease other than by reason of an Event of Default.
ARTICLE III
IMPOSITIONS AND UTILITIES
3.01 Payment of Impositions. Subject to the adjustments set forth
----------------------
herein, Tenant shall pay, in the manner set forth in Section 3.04, as
Additional Rent, to the Landlord an amount equal to the amount necessary to pay
all Impositions (as hereinafter defined) that may be levied or become a lien on
any Leased Property or any part thereof at any time (whether prior to or during
the Term), without regard to prior ownership of said Leased Property, before the
same becomes delinquent. Tenant's obligation to pay such Impositions shall be
deemed absolutely fixed upon the date such Impositions become a lien upon any
Leased Property or any part
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thereof. Tenant, at its expense, shall prepare and file all tax returns and
reports in respect of any Imposition as may be required by governmental
authorities, provided, however, that Tenant shall provide to Landlord copies of
all filings of such tax returns or reports in respect of any real or personal
property owned by Landlord. Tenant shall be entitled to any refund due in
respect of such Impositions from any taxing authority if no Event of Default
shall have occurred hereunder and be continuing. Any refunds in respect of such
Impositions retained by Landlord due to an Event of Default shall be applied as
provided in Section 9.08. Landlord and Tenant shall, upon request of the other,
provide such data as is maintained by the party to whom the request is made with
respect to a Leased Property as may be necessary to prepare any required tax
returns and reports. In the event governmental authorities classify any property
covered by this Lease as personal property, Landlord and Tenant shall file all
personal property tax returns in such jurisdictions where it may legally so file
with respect to their respective owned personal property. Landlord, to the
extent it possesses the same, and Tenant, to the extent it possesses the same,
will provide the other party, upon request, with cost and depreciation records
necessary for filing such returns or reports for any property so classified as
personal property. To the extent that Landlord is legally required to file
personal property tax returns, Tenant will be provided with copies of assessment
notices indicating a value in excess of the reported value in sufficient time
for Tenant to file a protest. Tenant may, upon notice to Landlord, at Tenant's
option and at Tenant's sole cost and expense, protest, appeal, or institute such
other proceedings as Tenant may deem appropriate to effect a reduction of real
estate or personal property assessments and Landlord, at Tenant's expense as
aforesaid, shall fully cooperate with Tenant in such protest, appeal, or other
action. Tenant shall provide Landlord copies of all materials filed or presented
in connection with any such proceeding. Tenant shall promptly reimburse Landlord
for all taxes paid by Landlord, which were not paid with deposits received from
Tenant, upon receipt of xxxxxxxx accompanied by copies of a xxxx therefor and
payments thereof which identify the property with respect to which such payments
are made. Impositions imposed with respect to the tax-fiscal period during which
the Term commences and terminates as to each Leased Property shall be adjusted
and prorated between Landlord and Tenant on a per diem basis, with Tenant being
obligated to pay its pro rata share from and including the Commencement Date to
and including the expiration or termination date of the Term or Extension Term,
as the case may be, whether or not such Imposition is imposed before or after
such commencement or termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination. Tenant shall also pay to Landlord
a sum equal to the amount which Landlord may be caused to pay of any privilege
tax, sales tax, gross receipts tax, rent tax, occupancy tax or like tax
(excluding any tax based on net income), hereinafter levied, assessed, or
imposed by any federal, state, city, county or municipal or other local
governmental authority, or any subdivision thereof, upon or measured by rent or
other consideration required to be paid by Tenant under this Lease.
3.02 Definition of Impositions. "Impositions" means,
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collectively: (a) taxes (including without limitation, all real estate and
personal property ad valorem (whether assessed as part of the real estate or
separately assessed as unsecured personal property), sales and use, business or
occupation, single business, gross receipts, transaction, privilege, rent or
similar taxes, but not including income or franchise or excise taxes payable
with respect to Landlord's
7
receipt of Rent); (b) assessments, whether in the nature of a special assessment
or otherwise (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not to be completed within the Term or any Extension
Term, as the case may be), provided that all assessments shall be paid over the
longest amortization period available without causing a penalty or the accrual
of interest; (c) ground rents, water, sewer or other rents and charges, excises,
tax levies, and fees (including, without limitation, license, permit,
inspection, authorization and similar fees); (d) to the extent they may become a
lien on a Leased Property, all taxes imposed on Tenant's operations of such
Leased Property including without limitation, Tenant's or Affiliates of Tenant's
employee withholding taxes, income taxes and intangible taxes; and (e) all other
governmental charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforseen, of every character in respect of each
Leased Property or any part thereof, the Business conducted by Tenant thereon,
and/or the Rent (including all interest and penalties thereon due to any failure
in payment by Tenant), which at any time prior to, during or in respect of the
Term or any Extension Term, as the case may be, hereof may be assessed or
imposed on or in respect of or be a lien upon (i) Landlord or Landlord's
interest in any Leased Property or any part thereof; (ii) any Leased Property or
any part thereof or any rent therefrom or any estate, right, title or interest
therein; or (iii) any occupancy, operation, use or possession of, or sales from,
or activity conducted on, or in connection with any Leased Property or the
leasing or use of any Leased Property or any part thereof. Tenant shall not,
however, be required to pay: (x) any tax based on net income (whether
denominated as a franchise or capital stock or other tax) imposed on Landlord or
(y) except as provided in Section 13.01, any tax imposed with respect to the
sale, exchange or other disposition by Landlord of a Leased Property or the
proceeds thereof; provided, however, that if any tax, assessment, tax levy or
charge which Tenant is obligated to pay pursuant to the first sentence of this
definition and which is in effect at any time during the Term hereof is totally
or partially repealed, and a tax, assessment, tax levy or charge set forth in
clause (x) or (y) immediately above is levied, assessed or imposed expressly in
lieu thereof Tenant shall then pay such tax, levy, or charge set forth in said
clause (x) or (y).
3.03 Utilities. Tenant shall contract for, in its own name, and
---------
will pay, as Additional Rent all taxes, assessments, charges/deposits, and bills
for utilities, including without limitation charges for water, gas, oil,
sanitary and storm sewer, electricity, telephone service, trash collection, and
all other utilities which may be charged against the occupant of the
Improvements during the Term. Tenant shall at all times maintain that amount of
heat necessary to ensure against the freezing of water lines. Tenant hereby
agrees to indemnify and hold Landlord harmless from and against any liability or
damages to the utility systems of each Leased Property that may result from
Tenant's failure to maintain sufficient heat in the Improvements therefor.
3.04 Escrow of Impositions. If Tenant is in default under this
---------------------
Lease beyond any applicable cure period, Tenant shall thereafter deposit with
Landlord on the first day of each month during the Term hereof and any
Extension Term, as the case may be, a sum equal to one-twelfth (1/12th) of the
Impositions assessed against such Leased Property which sums shall
8
be used by Landlord toward payment of such Impositions. If, at the end of any
applicable tax year, any such funds held by Landlord are insufficient to make
full payment of taxes or other Impositions for which such funds are held,
Tenant, on demand, shall pay to Landlord any additional funds necessary to pay
and discharge in full the obligations of Tenant pursuant to the provisions of
this Section. If, however, at the end of any applicable tax year, such funds
held by Landlord are in excess of the total payment required to satisfy taxes or
other Impositions for which such funds are held, Landlord shall apply such
excess amounts to a tax and Imposition escrow fund for the next tax year. With
respect to each Leased Property, if any such excess exists following the
expiration or earlier termination of this Lease, and subject to Section 8.08
below, Landlord shall promptly refund such excess amounts to Tenant. The receipt
by Landlord of the payment of such Impositions by and from Tenant shall only be
as an accommodation to Tenant and the taxing authorities, and shall not be
construed as rent or income to Landlord, Landlord serving, if at all, only as a
conduit for delivery purposes.
3.05 Discontinuance of Utilities. Landlord will not be liable
---------------------------
for damages to person or property or for injury to, or interruption of, business
for any discontinuance of utilities at any Leased Property nor will such
discontinuance in any way be construed as an eviction of Tenant from such Leased
Property or cause an abatement of Rent as to such Leased Property or operate to
release Tenant from any of Tenant's obligations as to such Leased Property under
this Lease. Notwithstanding the forgoing, however, Landlord shall be liable for
damages to person or property or for injury to, or interruption of business, for
any discontinuance of utilities at any Leased Property, in the event and to the
extent, such damages or injury are caused by the gross negligence or wilful
misconduct of the Landlord.
3.06 Liens. Subject to Section 17.19 relating to contests,
-----
Tenant shall not directly or indirectly create or allow to remain, and will
promptly discharge at its expense, any lien, encumbrance, attachment, title
retention agreement or claim upon any Leased Property or any attachment, levy,
claim or encumbrance in respect of any Rent provided under this Lease, not
including, however: (a) this Lease; (b) utility easements and road rights-of-
way in the customary form (i) provided the same do not adversely affect the
intended use of the Leased Properties (including the Improvements) and do not
create a material adverse effect on the value of the Leased Properties or (ii)
which result solely from the action or inaction of Landlord; (c) zoning and
building laws or ordinances, provided they do not prohibit the use of the Leased
Properties for the Business and so long as the Leased Properties are in
compliance with same; (d) such encumbrances as are subsequently consented to in
writing by Landlord, but excluding liens in respect of Impositions required to
be paid under Section 3.01; (e) liens for Impositions so long as (i) the same
are not yet payable or are payable without the addition of any fine or penalty
or (ii) such liens are being contested as permitted under Section 17.19; and (f)
other encumbrances, easements, rights of way or liens (i) provided the same do
not adversely affect the intended use of the Leased Properties (including the
Improvements) and do not create a material adverse effect on the value of the
Leased properties, or (ii) which result solely from the action or inaction of
Landlord.
9
3.07 Tax Statements. Tenant shall immediately after the
--------------
Commencement Date notify the appropriate taxing authorities in the jurisdiction
in which the Leased Properties are situated that all tax statements, assessments
and bills for Impositions shall be delivered directly to Tenant for payment.
ARTICLE IV
INSURANCE
4.01 Insurance. Tenant shall, at Tenant's expense, keep the
---------
Improvements, Fixtures, and other components of each Leased Property insured
against the following risks:
(a) Loss or damage by fire with extended coverage (including
windstorm and subsidence), vandalism and malicious
mischief, sprinkler leakage and all other physical loss
perils commonly covered by "All Risk" insurance in an
amount not less than one hundred percent (100%) of the
then full replacement cost thereof (as hereinafter
defined). Such policy shall include an agreed amount
endorsement if available at a reasonable cost. Such policy
shall also include endorsements for contingent liability
for operation of building laws, demolition costs, and
increased cost of construction.
(b) Loss or damage by explosion of steam boilers, pressure
vessels, or similar apparatus, now or hereafter installed
on any Leased Property, in commercially reasonable amounts
acceptable to Landlord.
(c) [Intentionally Omitted]
(d) If the Land or any portion thereof related to a Leased
Property is located in whole or in part within a
designated flood plain area, loss or damage caused by
flood in commercially reasonable amounts acceptable to
Landlord.
(e) Loss or damage commonly covered by blanket crime insurance
including employee dishonesty, loss of money orders or
paper currency, depositor's forgery, and loss of property
accepted by Tenant for safekeeping, in commercially
reasonable amounts acceptable to Landlord.
(f) Workers' compensation insurance as required by statute in
respect of any work or other operations on or about each
Leased Property.
10
(g) Comprehensive liability insurance as to each Leased
Property in amounts equal to the greater of (i) One
Million Dollars ($1,000,000) for each occurrence and Two
Million Dollars ($2,000,000) in the aggregate, or (ii) the
limits of liability generally required under the franchise
agreements or other agreements pursuant to which Tenant
operates the Businesses conducted on or about each Leased
Property.
(h) Commercial comprehensive catastrophic liability insurance
with limits of liability of not less than the greater of
(i) Five Million ($5,000,000) and (ii) the limits of
liability generally required under the franchise
agreements or other agreements pursuant to which Tenant
operates the Businesses conducted on or about each Leased
Property.
(i) upon Landlord's request if such insurance is customary in
the region in which the Leased Property is situated,
earthquake insurance in an amount not less than the full
insurable value of each Leased Property.
(j) During the period when any addition, alteration,
construction, installation or demolition is being made or
performed to any part of the Leased Property, contingent
liability, public liability, completed value, builder's
risk (non-reporting form) workers' compensation and other
insurance as is deemed reasonably prudent by Landlord.
4.02 Insurance Limits. Deductible provisions for the insurance
----------------
required under Section 4.01(a) shall not exceed Twenty-Five Thousand Dollars
($25,000) per location per occurrence and One Hundred Thousand Dollars
($100,000) aggregate per occurrence; under clause(d), Twenty-Five Thousand
Dollars ($25,000) per occurrence, except that if federal flood insurance is
available then such deductible shall not be greater than the lowest deductible
available with respect to such federal flood insurance; under clause (g), Fifty
Thousand Dollars ($50,000) per occurrence; under clause (h), Twenty-Five
Thousand Dollars ($25,000) per occurrence; and under clause (j), Twenty-Five
Thousand Dollars ($25,000) per occurrence.
4.03 Insurance Requirements. The following provisions shall apply
-----------------------
to all insurance coverages required hereunder:
(a) The carriers of all policies shall have a Best's Rating of
"A-" or better and a Best's Financial Category of XII or
larger and shall be authorized to do insurance business in
the jurisdiction in which the Leased Property is located.
11
(b) Tenant shall be the "named insured" and Landlord and any
mortgagee of Landlord shall be an "additional named
insured" on each policy with respect to such mortgagee's
and the Landlord's interest in the Leased Property, except
the coverages required under Section 4.01(f) hereto.
(c) Tenant shall deliver to Landlord certificates or policies
showing the required coverages and endorsements. Each
policy or certificate of insurance shall provide that such
policy or certificate (i) may not be canceled, (ii) may
not lapse for failure to renew, and (iii) no material
change or reduction in coverage may be made, without at
least thirty (30) days' prior written notice to Landlord.
(d) The policies shall contain a severability of interest
and/or cross-liability endorsement, provide that the acts
or omissions of Tenant will not invalidate Landlord's
coverage, and provide that Landlord shall not be
responsible for payment of premiums.
(e) All loss adjustment shall require the written consent of
Landlord and Tenant, as their interests may appear.
(f) At least (30) thirty days prior to the expiration of each
policy, Tenant shall deliver to Landlord a certificate
showing renewal of such policy and payment of the annual
premium therefor.
Landlord shall have the right to review the insurance coverages
required hereunder with Tenant from time to time, to obtain the input of third
party professional insurance advisors (at Landlord's expense) with respect to
such insurance coverages, and to consult with Tenant in Tenant's annual review
and renewal of such insurance coverages. All insurance coverages hereunder
shall be in such form, substance and amounts as are customary or standard in
Tenant's industry, but at a minimum shall comply with the requirements set forth
herein.
4.04 Replacement Cost. The term "full replacement cost" means the
----------------
actual replacement cost of the Improvements from time to time including
increased cost of construction, with no reductions or deductions. Tenant shall,
not later than thirty (30) days after the anniversary of each policy of
insurance, increase the amount of the replacement cost endorsement for the
Improvements to the extent necessary to reflect increased costs of construction.
If Tenant makes any Permitted Alterations (as hereinafter defined) to any Leased
Property, Landlord may have such full replacement cost redetermined at any time
after such Permitted Alterations are made, regardless of when the full
replacement cost was last determined.
4.05 Blanket Policy. Tenant may carry the insurance required by
--------------
this Article under a blanket policy of insurance, provided that the coverage
afforded Tenant will not be
12
reduced or diminished or otherwise be different from that which would exist
under a separate policy meeting all of the requirements of this Lease and the
Landlord approves the form of the policy.
4.06 No Separate Insurance. Tenant shall not take out separate
----------------------
insurance concurrent in form or contributing in the event of loss with that
required in this Article, or increase the amounts of any then existing insurance
by securing an additional policy or additional policies, unless all parties
having an insurable interest in the subject matter of the insurance, including
Landlord and any mortgagees, are included therein as additional named insureds
or loss payees, the loss is payable under said insurance in the same manner as
losses are payable under this Lease, and such additional insurance is not
prohibited by the existing policies of insurance required pursuant to this
Article. Tenant shall immediately notify Landlord of the taking out of such
separate insurance or the increasing of any of the amounts of the existing
insurance by securing an additional policy or additional policies. The term
"mortgages" as used in this Lease includes, but is not limited to, Deeds of
Trust and the term "mortgagees" includes, but is not limited to, trustees and
beneficiaries under a Deed of Trust.
4.07 Waiver of Subrogation. Each party hereto hereby waives any
---------------------
and every claim which arises or may arise in its favor and against the other
party hereto during the Term or any Extension Term or renewal thereof, for any
and all loss of, or damage to, any of its property located within or upon, or
constituting a part of, any Leased Property, which loss or damage is covered by
valid and collectible insurance policies, to the extent that such loss or damage
is recoverable in full under such policies. Said mutual waiver shall be in
addition to, and not in limitation or derogation of, any other waiver or release
contained in this Lease with respect to any loss or damage to property of the
parties hereto. Inasmuch as the said waivers will preclude the assignment of
any aforesaid claim by way of subrogation (or otherwise) to an insurance company
(or any other person), each party hereto agrees immediately to give each
insurance company which has issued to it policies of insurance, written notice
of the terms of said mutual waivers, and to have such insurance policies
properly endorsed, if necessary, to prevent the invalidation of said insurance
coverage by reason of said waivers, so long as such endorsement is available at
a reasonable cost.
4.08 Mortgages. The following provisions shall apply if Landlord
---------
at the Commencement Date or thereafter places a mortgage on any Leased Property
or any part thereof: (a) Tenant shall obtain a standard form of mortgage clause
insuring the interest of the mortgagee; (b) Tenant shall deliver evidence of
insurance to such mortgagee; (c) loss adjustment shall require the consent of
the mortgagee but such consent shall not be unreasonably withheld and may not
include any requirement that the funds be paid to mortgagee in lieu of
reconstruction; and (d) Tenant shall obtain such other coverages and provide
such other information and documents as may be reasonably required by the
mortgagee. Tenant shall be required to pay for the cost of the mortgage clause
insuring the interest of the mortgagee only if Landlord places a mortgage on a
Leased Property at the Commencement Date.
13
4.09 Other Insurance Requirements. Notwithstanding anything in
----------------------------
this Lease to the contrary and not by way of limitation, in addition to the
types and amounts of insurance required to be carried by Tenant herein, Tenant
covenants to insure and continue in effect such types and amounts of insurance
as the Tenant shall be required to carry pursuant to any contract, agreement,
instrument, statute, law, rule or regulation relating to the use of the Leased
Property and the operations of any Business or other activities thereon,
including noncancellable written notice to mortgagee.
ARTICLE V
INDEMNITY; SUBSTANCES OF CONCERN
5.01 Tenant's Indemnification. Subject to Section 4.07, Tenant
------------------------
hereby agrees to indemnify and hold harmless Landlord, its agents, and employees
from and against any and all demands, claims, causes of action, fines,
penalties, damages (including punitive and consequential damages), losses,
liabilities (including strict liability), judgments, costs and expenses
(including, without limitation, attorneys' fees, court costs, and the costs set
forth in Section 9.06) (the "Claims") incurred in connection with or arising
from: (a) the use, condition, operation or occupancy of the Leased Properties;
(b) any activity, work, or thing done, or permitted or suffered by Tenant in, on
or about the Leased Properties; (c) any acts, omissions, or negligence of Tenant
or any person claiming under Tenant, or the contractors, agents, employees,
invitees, or visitors of Tenant or any such person; (d) any breach, violation,
or nonperformance by Tenant or any person claiming under Tenant or the
employees, agents, contractors, invitees, or visitors of Tenant or of any such
person, of any term, representation, warranty, covenant, or provision of this
Lease or any law, ordinance, or governmental requirement of any kind; (e) any
injury or damage to the person, property or Business of Tenant, its employees,
agents, contractors, invitees, visitors, or any other person entering upon any
Leased Property; (f) any accident, injury to or death of persons or loss or
damage to any item of property occurring on or about any Leased Property; (g)
any Environmental Law or any pollution or other threat to human health or the
environment at, arising out of or relating to any Leased Property as set forth
in Section 5.05, and (h) any brokers' or agents' fees and commissions. If any
action or proceeding is brought against Landlord, its employees, or agents by
reason of any such demand, claim, or cause of action, Tenant, upon notice from
Landlord, will defend the same at Tenant's expense with counsel reasonably
satisfactory to Landlord. In the event Landlord reasonably determines that its
interests and the interests of Tenant in any such action or proceeding are not
substantially the same and that Tenant's counsel cannot adequately represent the
interests of Landlord therein, Landlord shall have the right to hire separate
counsel in any such action or proceeding and the reasonable costs thereof shall
be paid for by Tenant. Tenant's indemnification obligations with respect to a
Claim shall survive the expiration or earlier termination of this Lease until
the later of (i) two (2) years from the date hereof, or (ii) the expiration of
the period ninety (90) days after the date on which Landlord has actual
knowledge of the existence of such Claim, provided, however, that Tenant's
indemnification obligations shall survive the expiration or earlier termination
of this Lease until ninety (90) days after the expiration of the applicable
statute of limitations for Claims incurred in connection with, arising out of,
or related to (i) Section 5.01(g) or (ii) the failure to pay, as provided for in
this Agreement, any Imposition. Nothing herein is
14
intended to have Tenant indemnify or hold harmless Landlord for any actions or
failures to act by Landlord, its agents, employees, servants and invitees.
5.02 Substances of Concern.
---------------------
(a) For purposes of this Section 5:
(i) "Substances of Concern" means, without limitation,
chemicals, pollutants, contaminants, wastes, toxic
substances, radioactive materials or genetically
modified organisms, which are, have been or become
regulated by any federal, state or local
government authority including, without
limitation, (1) petroleum or any fraction thereof,
(2) asbestos, (3) any substance or material
defined as a "hazardous substance" pursuant to (S)
101 of the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. (S)
9601), or (4) any substance or material defined as
a "hazardous chemical" pursuant to the federal
Hazard Communication Standard (29 C.F.R. (S)
1910.1200).
(ii) "Environmental Laws" means all federal, state,
local, and foreign laws and regulations relating
to pollution or protection of human health or the
environment (including, without limitation,
ambient air, surface water, ground water,
wetlands, land surface, subsurface strata, and
indoor and outdoor workplace), including, without
limitation, (1) laws and regulations relating to
emissions, discharges, releases, or threatened
releases of Substances of Concern, and (2) common
law principles of tort liability.
(b) Tenant shall not, either with or without negligence,
injure, overload, deface, damage or otherwise harm any
Leased Property or any part or component thereof;
commit any nuisance; permit the emission of any
Substances of Concern; allow the release or other
escape of any biologically or chemically active
substances or materials or other Substances of Concern
so as to impregnate, impair or in any manner affect,
even temporarily, any element or part of any Leased
Property or neighboring property, or allow the storage
or use of such substances or materials in any manner
not sanctioned by law and by reasonable standards
prevailing in the automobile retail and related
industries for the storage and use of such substances
or materials; nor shall Tenant permit the
15
occurrence of objectionable noise or odors; or make,
allow or suffer any waste whatsoever to any Leased
Property. Landlord may inspect each Leased Property
from time to time, and Tenant will cooperate with such
inspections.
(c) Notwithstanding the foregoing, Tenant anticipates
using, storing and disposing of certain Substances of
Concern in connection with operation of its Business.
Such Substances of Concern include, but are not limited
to, the following: motor oil, waste motor oil and
filters, transmission fluid, antifreeze, refrigerants,
waste paint and lacquer thinner, batteries, solvents,
lubricants, degreasing agents, gasoline and diesel
fuels. Tenant shall ascertain and comply fully with all
applicable Environmental Laws and environmental
standards and requirements set by federal, state or
local laws, rules, regulations or governmental
directives related to the Leased Properties or Tenant's
use or occupancy of the Leased Property ("Environmental
Standards"), including but not limited to any laws or
standards (a) regulating the use, storage, generation
or disposal of Substances of Concern, (b) regulating
the monitoring or use of any underground or aboveground
storage tanks at the Leased Properties, or (c)
establishing any permitting, notification or reporting
requirements. As promptly as practicable after the
Commencement Date (but in no event later than 120 days
thereafter), Tenant shall establish and implement a
program of compliance with all applicable Environmental
Laws and Environmental Standards ("Environmental
Compliance Program"). Tenant shall update such
Environmental Compliance Program every three (3) years
during the Term. Tenant shall submit its Environmental
Compliance Program and each update thereto to Landlord;
provided, however, such submittal shall not relieve
Tenant of its obligations pursuant to this Section 5.
Tenant's Environmental Compliance Program shall include
a program for monitoring Tenant's compliance with
Environmental Laws and Environmental Standards and a
plan for correcting immediately any incident of
noncompliance. Tenant shall comply with its
Environmental Compliance Program.
(d) In the event of any noncompliance with any
Environmental Laws or Environmental Standards or any
spill, release or discharge of Substances of Concern in
a reportable quantity under federal, state or local
law, Tenant shall:
16
(i) give Landlord immediate notice of the incident
by telephone or facsimile, providing as much
detail as possible. Such notice shall be
provided to Landlord's National Dealership Real
Estate Manager or to such other person as
Landlord shall designate in accordance with
Section 16.01 below;
(ii) as soon as possible, but no later than seventy-
two (72) hours, after discovery of an incident
of noncompliance, submit a written report to
Landlord, identifying the source or case of the
noncompliance or spill, release or discharge
(including the names and quantities of any
Substances of Concern involved) and the method
or action required to correct the problem; and
(iii) cooperate with Landlord or its designated agents
or contractors with respect to the investigation
and correction of such problem.
Tenant shall also be solely responsible for providing any
notice to any federal, state or local governmental authority required by
applicable laws and regulations as a result of such incident.
5.03 Audits. Landlord shall have the right to conduct, at its
------
expense, periodic audits of Tenant's compliance with the Environmental
Compliance Program and management of Substances of Concern at the Leased
Properties and/or periodic tests of air, soil, surface water or groundwater at
or near the Leased Properties. Landlord shall not be obligated to provide
Tenant with the results of any audit or tests unless such results are the basis
for a claim by Landlord that Tenant has breached its obligations under this
Lease or a demand by Landlord that Tenant modify its Environmental Compliance
Program or operations or remediate or remove a spill, release or discharge of
Substances of Concern in accordance with Section 5.06 below. Tenant agrees
promptly to modify its Environmental Compliance Program or the conduct of its
operations in accordance with Landlord's reasonable recommendations directed at
improvement of Tenant's handling, use and disposal of Substances of Concern in,
on or from any Leased Property to bring Tenant into compliance with
Environmental Laws. If, as a result of an environmental audit performed by
Landlord with respect to any Leased Property, Landlord reasonably determines in
its judgment that alterations or improvements of equipment or buildings located
on the Leased Property are necessary to comply with Environmental Laws, Tenant
shall perform such alterations or improvements as are reasonable under the
circumstances and pay all costs and expenses relating thereto. If Tenant shall
fail to pay any such costs or expenses, Tenant shall deposit with Landlord the
full amount necessary to pay such costs in full within ten (10) days of
Landlord's demand. Nothing contained herein shall be construed to obligate or
require Landlord to perform any audits, tests, inquiry or investigation. Should
17
Landlord elect or be required to disclose to Tenant the results of any audit or
tests, Landlord shall not be liable in any way for the truth or accuracy of such
information.
5.04 Landlord's Option Re: Compliance. If Tenant, after notice
--------------------------------
from Landlord, fails to comply with or perform any of its obligations pursuant
to this Section 5, including, but not limited to, obligations to clean up
spills, releases or discharges, Landlord may, but shall not be obligated to,
perform such obligations and Tenant shall pay Landlord within ten (10) days of
demand Landlord's costs therefor, including any overhead and administrative
costs.
5.05 Environmental Indemnification. Tenant shall indemnify and
-----------------------------
hold harmless Landlord from and against all demands, claims, causes of action,
fines, penalties, damages (including punitive and consequential damages),
losses, liabilities (including strict liability), judgments, and expenses
(including, without limitation, attorneys' fees, court costs, and the costs set
forth in Section 9.06) imposed upon or asserted against Tenant, Landlord or any
Leased Property on account of any Environmental Law (irrespective of whether
there has occurred any violation of any Environmental Law) relating to any
Leased Property, including (a) response costs and costs of removal and remedial
action incurred by the United States Government or any state or local
governmental unit to any other person or entity, or damages from injury to or
destruction or loss of natural resources, including the reasonable costs of
assessing such injury, destruction or loss, incurred pursuant to any
Environmental Law, (b) costs and expenses of abatement, investigation, removal,
remediation, correction or cleanup, fines, damages, response costs or penalties
which arise from the provisions of any Environmental Law, (c) liability for
personal injury or property damage arising under any statutory or common-law
tort theory, including damages assessed for the maintenance of a public or
private nuisance or for carrying on of a dangerous activity, (d) liability by
reason of a breach of an environmental representation or warranty by Tenant, and
(e) failure of Tenant to complete in a timely manner alterations or improvements
of equipment or buildings located on the Leased Property deemed necessary or
advisable by Landlord pursuant to Section 5.03 in a manner acceptable to
Landlord.
5.06 Tenant's Cleanup Obligation. If any spill, release or
---------------------------
discharge of Substances of Concern occurs on, at or from the Leased Properties
during the Term, Tenant shall promptly take all actions, at its sole expense, as
are necessary to remove or remediate such spill, release or discharge and to
return the Leased Property to the condition existing prior to the introduction
of any such Substances of Concern to the Leased Property, provided that
Landlord's approval of such action shall first be obtained, which approval shall
not be unreasonably withheld so long as such actions would not potentially have
any material adverse effect on the Leased Property.
5.07 Existing Environmental Conditions. Tenant acknowledges that
---------------------------------
it has had the opportunity to review the Environmental Reports attached hereto
as Exhibit 5.07. Tenant hereby represents that it has reviewed and is aware of
------------
the matters disclosed in the Environmental Reports.
18
As a material consideration for Landlord's willingness to
enter into this Lease, Tenant, for itself and its Affiliates, and each of their
shareholders, directors, officers, employees, agents, contractors,
representatives, insurers, successors and assigns hereby waives and releases
Landlord and its Affiliates and each of their shareholders, directors, officers,
employees, representatives, agents, contractors, representatives, insurers,
successors and assigns from any and all claims, demands, liabilities, costs,
expenses, causes of action and rights of action whatsoever, past, present or
future, known or unknown, suspected or unsuspected, which arise out of or relate
in any way to the violation of Environmental Laws or the use, storage,
treatment, disposal, presence, spill, release, or discharge of Substances of
Concern at, on or from the Leased Properties before the Commencement Date
(collectively, the "Released Claims").
In the event that Landlord is ordered by a governmental
agency, or determines that it is in its best interest, to remedy any violation
of Environmental Laws or to remove or remediate any Substances of Concern
present on, under or about the Leased Properties on the Commencement Date, or
spilled, released or discharged on, at or from the Leased Properties before the
Commencement Date, Tenant shall immediately upon notice from Landlord take all
actions, at Tenant's sole expense, to promptly complete such removal or
remediation.
5.08 Survival of Tenant's Obligations. Tenant's obligations
--------------------------------
under this Section 5 shall survive the expiration or earlier termination of this
Lease. During any period of time employed by Tenant after the termination of
this Lease to complete the removal from the Leased Property of any Substances of
Concern, if the premises are not rentable for uses contemplated under this
Lease, Tenant shall continue to pay the full amount of Rent due under this
Lease, which Rent shall be prorated daily for the final month of such period of
time.
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES
6.01 Use of Leased Properties. For so long as this Lease is in
------------------------
effect (including following any sublease or assignment thereof), Tenant shall
use and occupy each Leased Property exclusively for the purpose of conducting
the Business or for any other legal purpose for which such Leased Property is
being used as of the Commencement Date, and for no other purpose without the
prior written consent of Landlord. Tenant shall obtain and maintain all
approvals, licenses, and consents needed to use and operate the Leased
Properties for such purposes. Tenant shall promptly deliver to Landlord complete
copies of surveys, examinations, certification and licensure inspections,
compliance certificates, and other similar reports issued to Tenant by any
governmental agency.
6.02 Acceptance of Leased Properties. Except as otherwise
-------------------------------
specifically provided in this Lease, Tenant acknowledges (i) Tenant and its
agents have had an opportunity to inspect each Leased Property; (ii) Tenant has
found each Leased Property fit for Tenant's use; (iii) delivery of each Leased
Property to Tenant is in an "as-is" condition; (iv) Landlord is not
19
obligated to make any improvements or repairs to any Leased Property; and (v)
the roof, walls, foundation, heating, ventilating, air conditioning, telephone,
sewer, electrical, mechanical, utility, plumbing, and other portions of each
Leased Property are in good working order. Tenant waives any claim or action
against Landlord with respect to the condition of any Leased Property. LANDLORD
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE
LEASED PROPERTIES OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN
OR CONDITION OR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO QUALITY OR THE
MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH
RISKS ARE TO BE BORNE BY TENANT.
6.03 Conditions of Use and Occupancy. Tenant agrees that during
-------------------------------
the Term it shall use and keep each Leased Property in a careful, safe and
proper manner; not commit or suffer waste thereon; not use or occupy any Leased
Property for any unlawful purposes; not use or occupy any Leased Property or
permit the same to be used or occupied, for any purpose or business deemed extra
hazardous on account of fire or otherwise; keep each Leased Property in such
repair and condition as may be required by the local board of health, or other
city, state or federal authorities, free of all cost to Landlord; not permit any
acts to be done which will cause the cancellation, invalidation, or suspension
of any insurance policy; and permit Landlord and its agents to enter upon each
Leased Property at all reasonable times after notice to Tenant to examine the
condition thereof. In addition, at any time and from time to time upon not less
than fifteen (15) days prior written notice, Tenant shall permit Landlord and
any mortgagee or lender and their authorized representatives, to inspect the
Leased Properties during normal Business hours, provided that such inspections
shall not unreasonably interfere with Business of Tenant.
6.04 Financial Statements and Other Information. Tenant shall
------------------------------------------
provide Landlord and any mortgagee or lender regularly (or more often as may be
reasonably requested by Landlord in writing), the following financial
information from Cross-Continent Auto Retailers, Inc.: (a) as to each Leased
Property within thirty (30) days after each fiscal quarter during the Term or
any Extension Term, as the case may be, (except the fourth quarter), Tenant-
prepared financial statements prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied; and (b) as to each Leased
Property and itself, Tenant shall use its best efforts to provide Landlord
within ninety (90) days after the end of each fiscal year of Tenant during the
Term or any Extension Term, as the case may be, and in no event later than one
hundred and twenty (120) days after the end of each fiscal year of Tenant during
the Term or any Extension Term, as the case may be, financial statements,
audited, reviewed or compiled by a certified public accountant (the "Annual
Financial Statements"). Tenant shall also deliver to Landlord such additional
financial information as Landlord may reasonably request, provided the same is
of a type normally maintained by Tenant or can be obtained without undue cost or
burden on Tenant's personnel and does not constitute information which Tenant
reasonably determines to be proprietary or confidential. Additionally, upon
Landlord's request, Tenant shall provide Landlord with copies of Tenant's annual
capital expenditure budgets for each Leased Property and any reports generated
by Tenant regarding maintenance
20
and repairs of each Leased Property and statements delivered by Tenant to its
automobile franchisors.
ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS
7.01 Maintenance. Tenant shall maintain each Leased Property in
-----------
good order, repair and appearance, and repair each Leased Property, including
without limitation, all interior and exterior, structural and nonstructural
repairs and replacements to the roof, foundations, exterior walls, building
systems, HVAC systems, parking areas, sidewalks, water, sewer and gas
connections, pipes, and mains. Tenant shall pay as Additional Rent the full
cost of such maintenance, repairs, and replacements, and to the extent that
Tenant has paid such costs directly to third parties, Tenant shall receive a
credit against Additional Rent payments for such amounts. Tenant shall maintain
all drives, sidewalks, parking areas, and lawns on or about each Leased Property
in a clean and orderly condition, free of accumulations of dirt, rubbish, snow
and ice. Tenant shall permit Landlord to inspect each Leased Property at all
reasonable times, and shall implement all reasonable suggestions of Landlord as
to the maintenance and repair of each Leased Property.
7.02 Compliance with Laws. Tenant shall comply with all laws,
--------------------
ordinances, orders, rules, regulations, and other governmental requirements
relating to the use, condition, or occupancy of each Leased Property, whether
now or hereafter enacted and in force including without limitation: (a)
licensure requirements for operation of the Business; (b) requirements of any
board of casualty insurance underwriters or insurance service office for any
other similar body having jurisdiction over any Leased Property; (c) all zoning
and building codes; and (d) Environmental Laws. At Landlord's request, from
time to time, Tenant shall deliver to Landlord copies of certificates or permits
evidencing compliance with such laws, including without limitation, copies of
any applicable licenses, certificates of occupancy and building permits. Tenant
shall provide Landlord with copies of any notice from any governmental authority
alleging any non-compliance by Tenant or any Leased Property with any of the
foregoing requirements and such evidence as Landlord may reasonably require of
Tenant's remediation thereof. Tenant hereby agrees to defend, indemnify and
hold Landlord, its agents, and employees from and against any and all demands,
claims, causes of action, fines, penalties, damages (including punitive and
consequential damages), losses, liabilities (including strict liability),
judgments, costs and expenses (including, without limitation, attorneys' fees,
court costs, and the costs set forth in Section 9.06) resulting from any failure
by Tenant to comply with any laws, ordinances, rules, regulations, and other
governmental requirements.
7.03 Required Alterations. Tenant shall, at Tenant's sole cost
--------------------
and expense, make any additions, changes, improvements or alterations to each
Leased Property, including structural alterations, which may be required by any
governmental authorities, including those
21
required to continue to satisfy any licensure requirements related to the
operation of the Business, whether such changes are required by Tenant's use,
changes in the law, ordinances, or governmental regulations, defects existing as
of the date of this Lease, or any other cause whatsoever. Tenant shall provide
thirty (30) days prior written notice to Landlord of any changes to a Leased
Property pursuant to this Section 7.03 which involve changes to the structural
integrity thereof or materially affect the operational capabilities thereof. All
such additions, changes, improvements or alterations shall be deemed to be a
Tenant Improvement and shall comply with all laws relating to such alterations
and with the provisions of Section 8.01.
7.04 Mechanics' Liens. Tenant shall have no authority to permit
----------------
or create a lien against Landlord's interest in any Leased Property, and Tenant
shall post notices or file such documents as may be required to protect
Landlord's interest in each Leased Property against liens. Tenant hereby agrees
to defend, indemnify, and hold Landlord harmless from and against any mechanics'
liens against any Leased Property by reason of work, labor services or materials
supplied or claimed to have been supplied on or to such Leased Property. Tenant
shall immediately remove, bond-off, or otherwise obtain the release of any
mechanics' lien filed against any Leased Property. Tenant shall pay all
expenses in connection therewith, including without limitation, damages,
interest, court costs and reasonable attorneys' fees.
7.05 Replacements of Fixtures. Tenant shall not remove Fixtures
-------------------------
from any Leased Property except to replace such Fixtures with other items used
for similar or analogous purposes, which replacement items are of equal or
greater quality and value. Items being replaced by Tenant may be removed and
shall become the property of Tenant and items replacing the same shall be and
remain the property of Landlord. Tenant shall execute, upon written request
from Landlord, any and all documents necessary to evidence Landlord's ownership
of the Fixtures and replacements therefor. Tenant may not finance Fixture
replacements by security agreement or equipment lease unless: (a) Landlord has
consented to the terms and conditions of the equipment lease or security
agreement; (b) the equipment lessor or lender has entered into a non-disturbance
agreement with Landlord upon terms and conditions acceptable to Landlord,
including without limitation (i) Landlord shall have the right (but not the
obligation) to assume such security agreement or equipment lease upon the
occurrence of an Event of Default by Tenant hereunder; (ii) the equipment lessor
or lender shall promptly notify Landlord of any default by Tenant under the
equipment lease or security agreement and give Landlord a reasonable opportunity
to cure such default; and (iii) Landlord shall have the right to assign its
rights under the equipment lease, security agreement, or non-disturbance
agreement; (c) the equipment lessor or lender shall subordinate its security
interest to the security interest of any of Landlord's lessors, mortgagors or
lenders, whether now created or hereafter existing, and (d) Tenant shall, within
ten (10) days after receipt of an invoice from Landlord, reimburse Landlord for
all costs and expenses incurred in reviewing and approving the equipment lease,
security agreement, and non-disturbance agreement, including without limitation,
reasonable attorneys' fees and costs.
22
7.06 Encroachments; Restrictions. If any of the Improvements
---------------------------
shall, at any time, encroach upon any property, street or right-of-way adjacent
to a Leased Property, or shall materially violate the agreements or conditions
contained in any restrictive covenant or other agreement affecting a Leased
Property, other than one which is created or consented to by Landlord without
Tenant's consent, or shall materially impair the rights of others under an
easement or right-of-way to which a Leased Property is subject, other than one
which is created or consented to by Landlord without Tenant's consent, then
promptly upon the request of Landlord or at the request of any person affected
by any such encroachment, violation or impairment, Tenant shall, at its expense,
subject to its right to contest the existence of any encroachment, violation or
impairment and in such case, in the event of an adverse final determination,
either (a) obtain valid and effective waivers or settlements of all claims,
liabilities and damages resulting from each such encroachment, violation or
impairment, whether the same shall affect Landlord or Tenant or (b) make such
changes in the Improvements and take such other actions as shall be necessary to
remove such encroachment and to end such violation or impairment, including, if
necessary, the alteration of improvements. Any such alteration shall be made in
conformity with the requirements of Article VIII. For purposes of this Section
7.06, "materially" shall mean any violation of restrictive covenants or
agreements or impairment of rights for which Landlord or Tenant receives any
notice from any person, entity, governmental authority or other source.
ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTIES
8.01 Tenant's Right to Construct. As to each Leased Property,
---------------------------
during the Term of this Lease or any Extension Term, as the case may be, so long
as no Event of Default shall have occurred and be continuing as to such Leased
Property, Tenant may make Capital Additions (as defined herein), or other
alterations, additions, changes and/or improvements to such Leased Property as
deemed necessary or useful to operate such Leased Property for Tenant's Business
(individually, a "Tenant Improvement," or collectively, the "Tenant
Improvements"). "Capital Additions" shall mean the construction of one or more
new buildings or one or more additional structures annexed to any portion of any
of the Improvements on a Leased Property, which are constructed on any parcel
or portion of the Land comprising a Leased Property, including the construction
of a new floor, or the repair, replacement, restoration, remodeling or
rebuilding of the Improvements or any portion thereof on a Leased Property which
are not normal, ordinary or recurring to maintain such Leased Property. Except
as otherwise agreed to by Landlord herein or otherwise in writing, any such
Tenant Improvement or Capital Addition shall be made at Tenant's sole expense
and shall become the property of Landlord upon termination of this Lease. Unless
made on an emergency basis to prevent injury to person or property, as to each
Leased Property, Tenant must obtain Landlord's prior written approval, such
approval not to be unreasonably withheld or delayed, for any Capital Addition or
for any Tenant Improvement which is not a Capital Addition and which has a cost
of more than One Hundred Thousand
23
Dollars ($100,000) or a cost which, when aggregated with the costs of all such
Tenant Improvements on such Leased Property in a given Lease Year, would cause
the total costs of all such Tenant Improvements on such Leased Property to
exceed Two Hundred Fifty Thousand Dollars ($250,000). Additionally, in
connection with any Tenant Improvement, including any Capital Addition, Tenant
shall provide Landlord with copies of any plans and specification therefor,
Tenant's budget relating thereto, any required governmental permits or
approvals, any construction contracts or agreements relating thereto, and any
other information relating to such Tenant Improvement as Landlord shall
reasonably request. In addition to the preceding rights and obligations, Tenant
or its franchisor may erect on the Property the maximum amount of signage
permitted by applicable laws.
8.02 Scope of Right. Subject to Section 8.01 herein and Section
--------------
7.03 concerning required alterations, at Tenant's cost and expense, Tenant shall
have the right to:
(a) seek any governmental approvals, including building
permits, licenses, conditional use permits and any
certificates of need that Tenant requires to construct
any Tenant Improvement;
(b) erect upon each Leased Property such Tenant
Improvements as Tenant deems desirable;
(c) make additions, alterations, changes and improvements
in any Tenant Improvement so erected; and
(d) engage in any other lawful activities that Tenant
determines are necessary or desirable for the
development of each Leased Property in accordance with
the Tenant's Business;
provided, however, Tenant shall not make any Tenant Improvement which would, in
Landlord's reasonable judgment, impair the value of the Leased Property without
Landlord's prior written consent and provided, further that Tenant shall not be
permitted to create a mortgage, lien or any other encumbrance on any Leased
Property without Landlord's prior written consent.
8.03 Cooperation of Landlord. Landlord shall cooperate with
-----------------------
Tenant and take such actions, including the execution and delivery to Tenant of
any applications or other documents, reasonably requested by Tenant in order to
obtain any governmental permits, licenses or approvals sought by Tenant to
construct any Tenant Improvement within ten (10) business days following the
later of: (a) the date Landlord receives Tenant's request or (b) the date of
delivery of any such application or document to Landlord; provided, the taking
of such action by Landlord, including the execution of said applications or
documents, shall be without cost to Landlord (or if there is a cost to Landlord,
such cost shall be reimbursed by Tenant), shall not cause Landlord to be in
violation of any law, ordinance or regulation, and shall not be deemed a
24
waiver by Landlord of any of its rights or of any of Tenant's obligations,
including but not limited to indemnification.
8.04 Commencement of Construction. Tenant agrees that:
----------------------------
(a) Tenant shall diligently seek all governmental approvals
relating to the construction of any Tenant Improvement;
(b) Once Tenant begins the construction of any Tenant
Improvement, Tenant shall diligently oversee any such
construction to completion in accordance with
applicable insurance requirements and the laws, rules
and regulations of all governmental bodies or agencies
having jurisdiction over the subject Leased Property;
(c) Landlord shall have the right at any time and from time
to time to post and maintain upon each Leased Property
such notices as may be necessary to protect Landlord's
interest from mechanics' liens, materialmen's liens or
liens of a similar nature;
(d) Tenant shall not suffer or permit any mechanics' liens
or any other claims or demands arising from the work of
construction of any Tenant Improvement to be enforced
against any Leased Property or any part thereof, and
Tenant agrees to hold Landlord, its agents and
employees and said Leased Property free and harmless
from all demands, claims, causes of action, fines,
penalties, damages (including punitive and
consequential damages), losses, liabilities (including
strict liability), judgments, costs and expenses
(including, without limitation, attorneys' fees, court
costs, and the costs set forth in Section 9.06)
incurred in connection with or arising therefrom;
(e) All work shall be performed in a satisfactory and
workmanlike manner consistent with standards in the
industry; and
(f) Subject to Section 8.08 in the case of Capital
Additions, Tenant shall not secure any construction or
other financing for the Tenant Improvements which is
secured by a portion of any Leased Property without
Landlord's prior written consent, and any such
financing (i) shall not exceed the cost of the Tenant
Improvements, (ii) shall be subordinate to any mortgage
or encumbrance now existing or hereinafter created with
respect to such Leased Property, and (iii) shall be
limited solely to Tenant's interest in the subject
Leased Property.
25
8.05 Rights in Tenant Improvements. Notwithstanding anything to
------------------------------
the contrary in this Lease, all Tenant Improvements existing on the Leased
Property or constructed upon each Leased Property pursuant to Section 8.01, any
and all subsequent additions thereto and alterations and replacements thereof
shall be the sole and absolute property of Tenant during the Term and any
Extension Term, as the case may be, of this Lease (in respect of such Leased
Property). Upon the expiration or early termination of this Lease in respect of
a Leased Property, all such Tenant Improvements located thereon shall become the
property of Landlord. Without limiting the generality of the foregoing, prior
to the expiration or early termination of this Lease in respect of a Leased
Property, Tenant shall be entitled to all federal and state income tax benefits
associated with all Tenant Improvements located on such Leased Property.
8.06 Personal Property. Tenant shall install, place, and use on
-----------------
each Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Fixtures Tenant may, from time to time,
deem necessary or useful to operate such Leased Property in the operation of the
Business.
8.07 Requirements for the Tenant's Personal Property. Tenant
-----------------------------------------------
shall comply with all of the following requirements in connection with the
Tenant's Personal Property:
(a) RESERVED.
(b) The Tenant's Personal Property shall be installed in a
good and workmanlike manner, in compliance with all
governmental laws, ordinances, rules, and regulations
and all insurance requirements, and be installed free
and clear of any mechanics' liens.
(c) Tenant shall, at Tenant's sole cost and expense,
maintain, repair, and replace the Tenant's Personal
Property.
(d) Tenant shall, at Tenant's sole cost and expense, keep
the Tenant's Personal Property insured against loss or
damage by fire, vandalism and malicious mischief,
sprinkler leakage, and other physical loss perils
commonly covered by fire and extended coverage, boiler
and machinery, and difference in conditions insurance
(which insurance shall meet the requirements of Section
4.03 hereof) in an amount not less than the full
replacement cost thereof or such other amount as
appears on a schedule submitted by Tenant to Landlord,
which schedule shall be subject to Landlord's approval,
and Tenant shall use the proceeds from any such policy
for the repair and replacement of such items of
Tenant's Personal Property; provided, however, that if
Landlord fails to object to the schedule so submitted
by Tenant within five
26
(5) business days of Landlord's receipt of such schedule,
Landlord's approval of such schedule shall be deemed given.
(e) Tenant shall pay all Impositions and other taxes applicable
to Tenant's Personal Property.
(f) If Tenant's Personal Property is damaged or destroyed by
fire or otherwise, Tenant shall promptly repair or replace
Tenant's Personal Property unless Tenant is entitled to and
elects to terminate the Lease pursuant to Section 10.05.
(g) As to each Leased Property, unless an Event of Default (or
any event which, with the giving of notice or lapse of time,
or both, would constitute an Event of Default) has occurred
and remains uncured beyond any applicable grace period,
Tenant may remove Tenant's Personal Property from such
Leased Property from time to time provided that Tenant
promptly repairs any damage to such Leased Property
resulting from the removal of Tenant's Personal Property.
(h) As to each Leased Property, Tenant shall remove all of
Tenant's Personal Property upon the termination or
expiration of the Lease and shall promptly repair any damage
to such Leased Property resulting from the removal thereof
to the reasonable satisfaction of Landlord; provided,
however, if Tenant fails to remove Tenant's Personal
Property from such Leased Property within thirty (30) days
after the termination or expiration of this Lease with
respect thereto, then Tenant shall be deemed to have
abandoned such items of Tenant's Personal Property, all of
which shall become the property of Landlord, and Landlord
may remove, store and dispose of such property and Tenant
shall have no claim or right against Landlord for such
property or the value thereof regardless of the disposition
thereof by Landlord. Tenant shall pay Landlord, upon
demand, all expenses incurred by Landlord in removing,
storing, and disposing of such items of Tenant's Personal
Property and repairing any damage caused by such removal.
Tenant's obligations hereunder shall survive the termination
or expiration of this Lease as to such Leased Property.
(i) Tenant shall perform its obligations under any equipment
lease or security agreement for Tenant's Personal Property.
27
8.08 Financings of Capital Additions to a Leased Property.
-----------------------------------------------------
Landlord may, but shall be under no obligation to, provide or arrange
construction, permanent or other financing for any Capital Addition proposed to
be made to a Leased Property by Tenant. Any financing so provided by Landlord
shall be made in accordance with, and subject to, a written Addendum to this
Lease.
ARTICLE IX
DEFAULTS AND REMEDIES
9.01 Events of Default. The occurrence of any one or more of the
-----------------
following shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of Rent, or
any other monetary obligation payable by Tenant to
Landlord hereunder, within ten (10) days after the due
date thereof and after written notice thereof and an
opportunity to cure within a ten (10) day period after
such notice is given to Tenant by Landlord. In the
event of Tenant's failure to make timely payment of
such obligations two (2) times during any twelve (12)
month period, each subsequent such failure within the
twelve (12) months immediately following such second
failure shall immediately constitute an Event of
Default, and Landlord shall not be required to provide
notice thereof, nor shall Tenant have any further
opportunity to cure such failure;
(b) Tenant fails to observe and perform any covenant (other
than the covenant in respect of insurance set forth in
Article IV), condition or agreement hereunder to be
performed by Tenant (except those described in Section
9.01(a) of this Lease) and such failure continues for a
period of thirty (30) days after written notice thereof
is given to Tenant by Landlord; or if, by reason of the
nature of such default, the same cannot with due
diligence be remedied within said thirty (30) days,
such failure will not be deemed to continue if Tenant
proceeds promptly and with due diligence to remedy the
failure and diligently completes the remedy thereof;
provided, however, said cure period will not extend
beyond sixty (60) days if the facts or circumstances
giving rise to the default are creating a further harm
to Landlord or the subject Leased Property and Landlord
makes a good faith determination that Tenant is not
undertaking remedial steps that Landlord would cause to
be taken if this Lease were then to terminate;
28
(c) If Tenant: (i) admits in writing its inability to pay its
debts generally as they become due; (ii) files a petition in
bankruptcy or a petition to take advantage of any insolvency
act; (iii) makes an assignment for the benefit of its
creditors; (iv) is unable to pay its debts as they mature;
(v) consents to the appointment of a receiver of itself or
of the whole or any substantial part of its property; or
(vi) files a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or
any state thereof;
(d) If Tenant, on insolvency proceedings or on a petition in
bankruptcy filed against it, is adjudicated as bankrupt or a
court of competent jurisdiction enters an order or decree
appointing, without the consent of Tenant, a receiver of
Tenant of the whole or substantially all of its property, or
approving a petition filed against it seeking reorganization
or arrangement of Tenant under the federal bankruptcy laws
or any other applicable law or statute of the United States
of America or any state thereof, and such judgment, order or
decree is not vacated, dismissed or set aside within sixty
(60) days from the date of the entry thereof, and within an
additional thirty (30) days, provided that under applicable
laws, rules and regulations no action can be taken within
such thirty (30) day period by the party obtaining such
judgment, order or decree;
(e) If the estate or interest of Tenant in a Leased Property or
any part thereof is levied upon or attached in any
proceeding and the same is not vacated or discharged within
fifteen (15) days after commencement thereof (unless Tenant
is contesting such lien or attachment in accordance with
this Lease) or if such estate or interest of Tenant is
assigned, conveyed or involuntarily transferred in violation
of this Lease;
(f) Any representation, warranty or covenant made by Tenant on
behalf of itself or an Affiliate in this Lease or in any
certificate, demand or request made pursuant hereto proves
to be incorrect, in any material respect, as of the date of
issuance or making thereof;
(g) Conviction of Tenant or an Affiliate of a crime or offense
constituting a felony in the jurisdiction in which committed
or under federal law which conviction results in the
termination of the franchise.
29
(h) Termination or relinquishment of the franchise or license
pursuant to which Tenant or an Affiliate conducts business
on or from any Leased Property, provided that such event
shall not constitute an Event of Default if (i) no other
Event of Default enumerated in this Section 9.01 shall occur
and be continuing, and (ii) at a date no later than twenty-
four (24) months following such date of termination or
relinquishment, Tenant or an Affiliate has entered into
written new or amended franchises or licenses for operation
of motor vehicle retail or motor vehicle related businesses
at such Leased Property satisfactory to Landlord in its
discretion applying commercially reasonable standards;
(i) Default, beyond any applicable cure period, under any
franchise or license pursuant to which Tenant or an
Affiliate conducts business at a Leased Property, if in the
Landlord's judgment such default in light of commercially
reasonable standards and industry practice would have a
material adverse effect on the Leased Property;
(j) A final, non-appealable judgment or judgments for the
payment of money not fully covered (excluding deductibles)
by insurance is rendered against Tenant and the same remains
undischarged, unvacated, unbonded, unappealed or unstayed
for a period of thirty (30) consecutive days, and within an
additional thirty (30) days, provided that under applicable
laws, rules and regulations no action can be taken within
such thirty (30) day period by the party obtaining such
judgment, order or decree;
(k) Tenant shall fail to observe the covenant in respect to
insurance under Article IV provided Landlord shall have
provided notice of such failure to Tenant and Tenant shall
have failed to cure such failure within five (5) business
days of such notice; or
(l) Except after the effective date of a permitted assignment
meeting the requirements of Article XIII, if Tenant is
liquidated or dissolved, or begins proceedings toward
liquidation or dissolution, or in any manner permits the
sale or divestiture of substantially all of its assets.
9.02 Remedies. To the extent an Event of Default is applicable
--------
only to a specific Leased Property or specific Leased Properties (in accordance
with Section 9.01 above), the remedies set forth herein shall be exercisable
solely with respect to such Leased Property or Leased Properties, and shall not
be exercisable with respect to any other Leased Property. To the extent an
Event of Default constitutes an Event of Default as to all of the Leased
Properties (in
30
accordance with Section 9.01 above), the remedies set forth herein shall be
exercisable with respect to all of the Leased Properties. Subject to the
foregoing provisions, Landlord may exercise any one or more of the following
remedies upon the occurrence of an Event of Default:
(a) Landlord may terminate this Lease, exclude Tenant from
possession of the subject Leased Property and use reasonable
efforts to lease the subject Leased Property to others. If
this Lease is terminated pursuant to the provisions of this
subparagraph (a) with respect to one or more, but less than
all, of the Leased Properties identified on Schedule A
----------
hereto, Tenant will remain liable to Landlord for the Rent
for all of the Leased Properties identified on Schedule A
----------
and other sums then due and for the balance of the Term as
if the Lease had not been terminated with respect to the
subject Leased Property, less the net proceeds, if any, of
any re-letting of the subject Leased Property by Landlord
subsequent to such termination, after deducting all
Landlord's expenses in connection with such re-letting,
including without limitation, the expenses set forth in
Section 9.02(b)(ii) below. Notwithstanding the termination
of this Lease with respect to a subject Leased Property,
Tenant shall pay to Landlord all amounts due as Rent, and
such other amounts then due, under this Lease on the days
that such Rent and such other amounts become due and payable
as required by this Lease.
(b) Without demand or notice, Landlord may re-enter and take
possession of the subject Leased Property or any part
thereof; and repossess such Leased Property as of Landlord's
former estate; and expel Tenant and those claiming through
or under Tenant from such Leased Property; and, remove the
effects of both or either, without being deemed guilty of
any manner of trespass and without prejudice to any remedies
for arrears of Rent or preceding breach of covenants or
conditions. If Landlord elects to re-enter, as provided in
this paragraph (b) or if Landlord takes possession of such
Leased Property pursuant to legal proceedings or pursuant to
any notice provided by law, Landlord, without terminating
any portion of this Lease, shall use reasonable efforts to
re-let such Leased Property or any part of such Leased
Property, either alone or in conjunction with other portions
of the Improvements of which such Leased Property are a
part, in Landlord's name but for the account of Tenant, for
such term or terms (which may be greater or less than the
period which would otherwise have constituted the balance of
the Term of this Lease) and on such terms and conditions
(which may include concessions of free rent,
31
and the alteration and repair of such Leased Property) as
Landlord, in its reasonable discretion, may determine.
Landlord may collect and receive the Rents for such Leased
Property. Unless Tenant can establish that Landlord's
efforts to re-let were unreasonable or that Landlord's
efforts to collect Rents were unreasonable, Landlord will
not be responsible or liable for any failure to re-let such
Leased Property, or any part of such Leased Property, or for
any failure to collect any Rent due upon such re-letting. No
such re-entry or taking possession of such Leased Property
by Landlord will be construed as an election on Landlord's
part to terminate this Lease unless a written notice of such
intention is given to Tenant. No notice from Landlord under
this Lease or under a forcible entry and detainer statute or
similar law will constitute an election by Landlord to
terminate this Lease unless such notice specifically says
so. Landlord reserves the right following any such re-entry
or re-letting, or both, to exercise its right to terminate
this Lease by giving Tenant such written notice, and, in
that event such Lease will terminate as specified in such
notice.
(c) If Landlord elects to take possession of a Leased Property
according to subparagraph (b) of this Section 9.02 without
terminating this Lease, Tenant will pay Landlord (A) the
Rent and other sums which would be payable under this Lease
with respect to such Leased Property if such repossession
had not occurred, less (B) the net proceeds, if any, of any
re-letting of such Leased Property after deducting all of
Landlord's reasonable expenses incurred in connection with
such re-letting, including without limitation, all
reasonable repossession costs, brokerage commissions, legal
expense, attorneys' fees, expense of employees, alteration,
remodeling, repair costs, and expense of preparation for
such re-letting. If, in connection with any re-letting, any
resulting lease term for the subject Leased Property extends
beyond the existing Term or Extension Term, as the case may
be, or such Leased Property covered by such re-letting
includes areas which are not part of such Leased Property, a
fair apportionment of the Rent received from such re-letting
and the expenses incurred in connection with such re-letting
will be made in determining the net proceeds received from
such re-letting. In addition, in determining the net
proceeds from such re-letting, any rent concessions will be
apportioned over the term of the new lease. Tenant will pay
such amounts to Landlord monthly on the days on which the
Rent and all other amounts owing under this Lease would have
been payable if possession had not been retaken, and
Landlord will be entitled to
32
receive the rent and other amounts from Tenant on each such
day. Notwithstanding anything herein to the contrary,
Landlord, at its option, may collect and apply any Rent
received from such re-letting in accordance herewith and in
such case shall remit any balance thereof to Tenant.
Landlord shall incur no liability or obligation to Tenant
arising out of the collection or application of Rent by
Landlord hereunder.
(d) Landlord may re-enter the applicable Leased Property and
have, repossess and enjoy such Leased Property as if this
Lease had not been made, and in such event, Tenant and its
successors and assigns shall remain liable for any
contingent or unliquidated obligations or sums owing at the
time of such repossession.
(e) Landlord may take whatever action at law or in equity as may
appear necessary or desirable to collect the Rent and other
amounts payable hereunder with respect to the subject Leased
Property then due and thereafter to become due, or to
enforce performance and observance of any obligations,
agreements or covenants of Tenant under this Lease.
9.03 Right of Set-Off. Landlord may, and is hereby authorized by
-----------------
Tenant, at any time and from time to time, after advance notice to Tenant, to
set-off and apply any and all sums held by Landlord in respect of a Leased
Property, including all sums held in any escrow for Impositions, any
indebtedness of Landlord to Tenant, and any claims by Tenant against Landlord,
against any obligations of Tenant under this Lease in respect of such Leased
Property and against any claims by Landlord against Tenant, whether or not
Landlord has exercised any other remedies hereunder. Landlord shall set-off and
apply such sums first, to delinquent real estate taxes, unless such taxes are
being protested in good faith and no lien has attached to any Leased Property
with respect thereto, second, to currently due and owing real estate taxes, and
next, to other Tenant's obligations in the order which Landlord may determine.
The rights of Landlord under this Section are in addition to any other rights
and remedies Landlord may have against Tenant.
9.04 Performance of Tenant's Covenants. Landlord may, without
---------------------------------
waiving or releasing any obligation of Tenant, and without waiving or releasing
any obligation or default, perform any obligation of Tenant which Tenant has
failed to commence to perform within fifteen (15) business days after Landlord
has sent a written notice to Tenant informing it of its specific failure
(provided no such notice shall be required if Landlord has previously notified
Tenant of such failure under the provisions of Section 9.01). In the event
Landlord deems, in its discretion, that Tenant's failure to perform such
obligation has given rise to an emergency situation, Landlord may perform such
obligation without waiving or releasing any obligation of Tenant, and without
waiving or releasing any obligation or default; provided, however, that Landlord
33
shall notify Tenant of such performance as soon as it is reasonably practicable
to do so. Tenant shall reimburse Landlord on demand, as Additional Rent, for
any reasonable expenditures thus incurred by Landlord and shall pay interest
thereon at the New York Prime Rate.
9.05 Late Charge. Any payment not made by Tenant for more than
-----------
five (5) business days after the due date shall be subject to a late charge
payable by Tenant as Rent of four percent (4%) of the amount of such overdue
payment. Notwithstanding the foregoing, in the event that Tenant's payment is
not made more than five (5) business days after the due date more than two (2)
times during any twelve (12) month period, any such subsequent overdue payments
within the twelve (12) months immediately following such second failure shall be
subject to a late charge payable by Tenant as Rent of seven percent (7%) of the
amount of such overdue payment.
9.06 Litigation; Attorneys' Fees. Within ten (10) business days
----------------------------
after Tenant has knowledge of any litigation or other proceeding related to or
arising out of this Agreement or the Leased Property in which claims are
asserted in an amount in excess of $50,000, that (1) may be instituted against
Tenant, (2) may be instituted against any Leased Property to secure or recover
possession thereof, or (3) may affect the title to or the interest of Landlord
in any Leased Property (other than litigation or proceedings relating to
Landlord's indebtedness on the Leased Property or claims caused solely by
Landlord), Tenant shall give written notice thereof to Landlord. In the event
that Landlord determines that Tenant has failed to give adequate cooperation or
information with respect to any such litigation, investigation, receivership,
administrative, bankruptcy, insolvency or other similar proceeding, Landlord
may, after notice to Tenant, undertake such investigation or proceeding and
Tenant shall pay all reasonable costs and expenses (the "Costs") related thereto
that are incurred by Landlord, whether or not Landlord has received notice from
Tenant of such investigation or proceeding, and whether or not an Event of
Default has actually occurred or has been declared and thereafter cured, which
Costs shall include, without limitation: (a) the reasonable fees, expenses, and
costs of any litigation, investigation, receivership, administrative,
bankruptcy, insolvency or other similar proceeding; (b) reasonable attorney,
paralegal, consulting and witness fees and disbursements; and (c) the reasonable
expenses, including, without limitation, lodging, meals, and transportation, of
Landlord and its employees, agents, attorneys, and witnesses in investigating or
preparing for litigation, administrative, bankruptcy, insolvency or other
similar proceedings and attendance at hearings, depositions, and trials in
connection therewith. Within ten (10) days of Landlord's presentation of an
invoice of Costs incurred by Landlord pursuant to the preceeding sentence or
otherwise incurred by Landlord in enforcing or preserving Landlord's rights
under this Lease, whether or not an Event of Default has actually occurred or
has been declared and thereafter cured, Tenant shall pay all such Costs. All
such Costs as incurred shall be deemed to be Additional Rent under this Lease.
9.07 Remedies Cumulative. The remedies of Landlord herein are
-------------------
cumulative to and not in lieu of any other remedies available to Landlord at law
or in equity. The use of, or
34
failure to use, any one remedy shall not be taken to exclude or waive the right
to use any other remedy.
9.08 Escrows and Application of Payments. As security for the
-----------------------------------
performance of its obligations hereunder, Tenant hereby assigns to Landlord all
its right, title and interest in and to all monies escrowed with Landlord under
this Lease and all deposits with utility companies, taxing authorities, and
insurance companies; provided, however, that Landlord shall not exercise its
rights hereunder with respect to any Leased Property until an Event of Default
has occurred in respect of such Leased Property. Any payments received by
Landlord under any provisions of this Lease during the existence, or continuance
of an Event of Default shall be applied to Tenant's obligations, first, to
delinquent real estate taxes, unless such taxes are being protested in good
faith and no lien has attached to any Leased Property with respect thereto,
second, to currently due and owing real estate taxes, and next, to other
Tenant's obligations in the order which Landlord may determine.
9.09 Power of Attorney. Tenant hereby irrevocably and
-----------------
unconditionally appoints Landlord, or Landlord's authorized officer, agent,
employee or designee, as Tenant's true and lawful attorney-in-fact, to act,
after an Event of Default, for Tenant in Tenant's name, place, and stead, and
for Tenant's and Landlord's use and benefit, to execute, deliver and file all
applications and any and all other necessary documents or things, to effect a
transfer, reinstatement, renewal and/or extension of any and all licenses and
other governmental authorizations issued to Tenant in connection with Tenant's
operation of the Leased Properties, and to do any and all other acts incidental
to any of the foregoing. Tenant irrevocably and unconditionally grants to
Landlord as its attorney-in-fact full power and authority to do and perform,
after an Event of Default, every act necessary and proper to be done in the
exercise of any of the foregoing powers as fully as Tenant might or could do if
personally present or acting, with full power of substitution, hereby ratifying
and confirming all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and is
irrevocable prior to the full performance of Tenant's obligations hereunder.
ARTICLE X
DAMAGE AND DESTRUCTION
10.01 General. Tenant shall notify Landlord if any Leased
-------
Property is damaged or destroyed by reason of fire or any other cause. Tenant
shall promptly repair, rebuild, or restore such Leased Property, at Tenant's
expense, so as to make such Leased Property at least equal in value to such
Leased Property existing immediately prior to such occurrence and as nearly
similar to it in character as is practicable and reasonable. Before beginning
such repairs or rebuilding, or executing any contracts in connection with such
repairs or rebuilding, Tenant will submit for Landlord's approval, which
approval Landlord will not unreasonably withhold or delay, complete and detailed
plans and specifications for such repairs or rebuilding. Promptly after
receiving Landlord's approval of the plans and specifications, Tenant will begin
such repairs
35
or rebuilding and will oversee the repairs and rebuilding to completion with
diligence, subject, however, to strikes, lockouts, acts of God, embargoes,
governmental restrictions, and other causes beyond Tenant's reasonable control.
Landlord will make available to Tenant the net proceeds of any fire or other
casualty insurance paid to Landlord for such repair or rebuilding as the same
progresses, less (if Landlord has accrued collection costs after Tenant has
failed to diligently pursue collection of such insurance proceeds) any
reasonable costs of collection, including attorney's fees. Payment will be made
against properly certified vouchers of a competent architect in charge of the
work and approved by Landlord. Prior to commencing the repairing or rebuilding,
Tenant shall deliver to Landlord for Landlord's approval a schedule setting
forth the estimated monthly draws for such work. Landlord will contribute to
such payments out of the insurance proceeds an amount equal to the proportion
that the total net amount received by Landlord from insurers bears to the total
estimated cost of the rebuilding or repairing, multiplied by the payment by
Tenant on account of such work. Landlord may, however, withhold ten percent
(10%) from each such payment and shall disburse such amount after: (a) the work
of repairing or rebuilding is completed and proof has been furnished to Landlord
that no lien or liability has attached or will attach to such Leased Property or
to Landlord in connection with such repairing or rebuilding and (b) Tenant has
obtained a certificate of use and occupancy (or its functional equivalent) for
the portion of such Leased Property being repaired or rebuilt. Upon the
completion of rebuilding or repairing and the furnishing of such proof, the
balance of the net proceeds of such insurance payable to Tenant on account of
such repairs or rebuilding will be paid to Tenant. Tenant will obtain and
deliver to Landlord a temporary or final certificate of occupancy before such
Leased Property is reoccupied for any purpose. Tenant shall complete such
repairs or rebuilding free and clear of mechanic's or other liens, and in
accordance with the building codes and all applicable laws, ordinances,
regulations, or orders of any state, municipal, or other public authority
affecting the repairs or rebuilding, and also in accordance with all
requirements of the insurance rating organization, or similar body. Any
remaining proceeds of insurance after such restoration will be Tenant's
property.
10.02 Landlord's Inspection. During the progress of such repairs
----------------------
or rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the subject Leased Property and will be furnished, if required by them,
with copies of all plans, shop drawings, and specifications relating to such
repairs or rebuilding. Tenant will keep all plans, shop drawings, and
specifications available, and Landlord and its architects and engineers may
examine them at all reasonable times. If, during such repairs or rebuilding,
Landlord and its architects and engineers determine that the repairs or
rebuilding are not being done in accordance with the approved plans and
specifications, Landlord will give prompt notice in writing to Tenant,
specifying in detail the particular deficiency, omission, or other respect in
which Landlord claims such repairs or rebuilding do not accord with the approved
plans and specifications. Upon the receipt of any such notice, Tenant will
cause corrections to be made to any deficiencies, omissions, or such other
respect. Tenant's obligations to supply insurance, according to Article IV,
will be applicable to any repairs or rebuilding under this Section 10.02.
36
10.03 Landlord's Costs. Tenant shall, within fifteen (15) days
----------------
after receipt of an invoice from Landlord, pay the reasonable costs, expenses,
and fees of any architect or engineer employed by Landlord to review any plans
and specifications and to supervise and approve any construction, or for any
services rendered by such architect or engineer to Landlord as contemplated by
any of the provisions of this Lease, or for any services performed by Landlord's
attorneys in connection therewith; provided, however, that Landlord will consult
with Tenant and notify Tenant of the estimated amount of such expenses.
10.04 Rent Abatement. Notwithstanding the occurrence of any event
--------------
that causes any interruption, disruption or interference of any kind (whether or
not substantial) of Tenant's Business on the Leased Property, Tenant shall
continue to pay to Landlord the full amount of the Base Annual Rent as required
by this Lease without abatement, reduction, interruption, or delay of any kind.
10.05 Substantial Damage During Lease Term. Provided Tenant has
------------------------------------
fully complied with Section 4.01 hereof and has satisfied the conditions of the
last sentence of this Section 10.05, if, at any time during the Term or any
Extension Term, as the case may be, of this Lease, any Leased Property is so
damaged by fire or otherwise that it is Completely Destroyed or Partially
Destroyed (as such terms are hereafter defined), Tenant may, within one hundred
and eighty (180) days after such damage, give notice of its election to
terminate this Lease with respect to such Leased Property and, subject to the
further provisions of this Section, this Lease will cease with respect to such
Leased Property on the thirtieth (30th) day after the delivery of such notice.
If the Lease is so terminated, Tenant will have no obligation to repair, rebuild
or replace such Leased Property, and the entire insurance proceeds will belong
to Landlord. If the Lease is not so terminated, Tenant shall rebuild such
Leased Property in accordance with Section 10.01. If Tenant elects to terminate
this Lease pursuant to this Section 10.05, Tenant will pay (or cause to be paid)
to Landlord, an amount equal to the excess amount, if any, of the book value of
the damaged property (excluding the land) as shown in Landlord's financial
statements as of the date of such termination, over the amount of all insurance
proceeds received by Landlord. A Leased Property shall be deemed to be
"Completely Destroyed" if there is sufficient damage to such Leased Property
that Landlord and Tenant agree to its classification as such. A Leased Property
shall be deemed to be "Partially Destroyed" if, as a result of damages to it, a
substantial part of the Business (as determined by a reasonable dealer in the
trade, in light of standard trade practices) cannot be conducted on it within
one hundred and eighty (180) days of the occurrence of such damages. In the
event that Landlord and Tenant are unable to agree to a determination of whether
any Leased Property is Completely Destroyed, Partially Destroyed or otherwise,
such determination shall be made pursuant to the Arbitration provisions set
forth in Article XIV.
10.06 Damage Near End of Term. Notwithstanding any provisions of
-----------------------
Sections 10.01 or 10.05 to the contrary, if damage to or destruction of any
Leased Property occurs during the last twenty-four (24) months of the Term or
any Extension Term, and if such damage or destruction renders the Leased
Property Completely Destroyed or Partially Destroyed, either party shall have
the right to terminate this Lease as to such Leased Property by giving notice to
37
the other within ten (10) days after the date of damage or destruction, in which
event Landlord shall be entitled to retain the insurance proceeds and Tenant
shall pay to Landlord on demand the amount of any deductible or uninsured loss
arising in connection therewith; provided, however, that any such notice given
by Landlord shall be void and of no force and effect if Tenant exercises an
available option for an Extension Term with respect to such Leased Property
pursuant to provisions of this Lease within ten (10) business days following
receipt of such termination notice.
10.07 Risk of Loss. Notwithstanding anything herein to the
------------
contrary, during the Term or any Extension Term, as the case may be, the risk of
loss of or decrease in the enjoyment and beneficial use of the Leased Properties
in consequence of the damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise is assumed by Tenant, and Landlord
shall in no event be answerable or accountable therefor except in the case of
gross negligence, willful misconduct or breach of this Lease by Landlord
resulting in such damage or destruction. In addition, all risk of loss or
decrease in enjoyment and beneficial use in consequence of foreclosures,
attachments, levies or executions is assumed by Tenant except for foreclosure
due to Landlord's indebtedness.
ARTICLE XI
CONDEMNATION
11.01 Total Taking. If at any time during the Term or any
------------
Extension Term, as the case may be, any Leased Property is totally and
permanently taken by right of eminent domain or by conveyance made in response
to the threat of the exercise of such right ("Condemnation"), this Lease shall
terminate as to such Leased Property on the Date of Taking (which shall mean the
date the condemning authority has the right to possession of the property being
condemned), and Tenant shall promptly pay all outstanding applicable Rent and
other charges through the date of termination, provided, however, this Lease
shall not so terminate if the Condemnation occurred due to the failure of Tenant
to maintain such Leased Property as required by Article VII hereof or other
applicable provisions hereof, whether or not such failure on the part of Tenant
constituted an Event of Default hereunder at the time of the Condemnation.
11.02 Partial Taking. If a portion of a Leased Property is taken
--------------
by Condemnation, this Lease shall remain in effect as to such Leased Property if
such Leased Property is not thereby rendered Unsuitable for the continuation of
Tenant's Business on that Leased Property (which shall mean that such Leased
Property is in such a state or condition such that in the good faith judgment of
Tenant, reasonably exercised, it cannot be used on a commercially practicable
basis in the operation of the Business), but if such Leased Property is thereby
rendered Unsuitable for the continuation of Tenant's Business on that Leased
Property, this Lease shall terminate as to such Leased Property on the Date of
Taking, provided such Condemnation was not as a result of Tenant's failure to
maintain such Leased Property as provided for in Section 11.01.
38
11.03 Restoration. If there is a partial taking of any Leased
-----------
Property and this Lease remains in full force and effect pursuant to Section
11.02, Landlord shall retain the amount of any Landlord Award (as hereafter
defined) received by Landlord, Landlord shall apply such Landlord Award to
accomplish all necessary restoration to the Leased Property, and any excess
after such application shall be retained by Landlord. If there is a partial
taking of any Leased Property and this Lease remains in full force and effect
pursuant to Section 11.02, Tenant shall retain the amount of any Tenant Award
(as hereafter defined) received by Tenant, Tenant shall apply such Tenant Award
to accomplish all necessary restoration of Tenant's property, and any excess
after such application shall be retained by Tenant. Notwithstanding anything in
this Section to the contrary, in the event that there is a partial taking of any
Leased Property and this Lease remains in full force and effect pursuant to
Section 11.02, and there is a single Award with respect to such partial taking,
then the Landlord and Tenant shall use their good faith efforts to determine the
proper apportionment of such Award (as hereafter defined) to restoration of
Landlord's and Tenant's respective properties. In the event that the parties
are unable to agree on such apportionment within thirty (30) days, the parties
shall submit to arbitration of an apportionment subject to the arbitration
provisions set forth in Article XIV.
11.04 Landlord's Inspection. During the progress of such
---------------------
restoration, Landlord and its architects and engineers may, from time to time,
inspect the subject Leased Property and will be furnished, if required by them,
with copies of all plans, shop drawings, and specifications relating to such
restoration. Tenant will keep all plans, shop drawings, and specifications
available, and Landlord and its architects and engineers may examine them at all
reasonable times. If, during such restoration, Landlord and its architects and
engineers determine that the restoration is not being done in accordance with
the approved plans and specifications, Landlord will give prompt notice in
writing to Tenant, specifying in detail the particular deficiency, omission, or
other respect in which Landlord claims such restoration does not accord with the
approved plans and specifications. Upon the receipt of any such notice, Tenant
will cause corrections to be made to any deficiencies, omissions, or such other
respect. Tenant's obligations to supply insurance, according to Article IV,
will be applicable to any restoration under this Section.
11.05 Award Distribution. The entire compensation, sums or
------------------
anything of value awarded, paid or received on a total or partial Condemnation
of a Leased Property that is awarded to Landlord shall belong to Landlord (the
"Landlord Award"). The entire compensation, sums or anything of value awarded,
paid or received on a total or partial Condemnation of a Leased Property that is
awarded to Tenant shall belong to Tenant (the "Tenant Award", collectively with
the Landlord Award, the "Awards", and each, individually, an "Award").
Notwithstanding anything in this Section to the contrary, in the event that
there is a total or partial Condemnation of a Leased Property and there is a
single Award with respect to such Condemnation, then the Landlord and Tenant
shall use their good faith efforts to determine the proper apportionment of such
Award to Landlord's and Tenant's respective properties. In the event that the
parties are unable to agree on such apportionment within thirty (30) days, the
39
parties shall submit to arbitration of an apportionment subject to the
arbitration provisions set forth in Article XIV.
11.06 Temporary Taking. The taking of any Leased Property, or any
----------------
part thereof, by military or other public authority shall constitute a taking by
Condemnation only when the use and occupancy by the taking authority has
continued for longer than twenty four (24) months. During any such twenty-four
(24) month period, which shall be a temporary taking, all the provisions of this
Lease shall remain in full force and effect as to such Leased Property with no
abatement of rent payable by Tenant hereunder. In the event of any such
temporary taking, the entire amount of any such Award made for such temporary
taking allocable to the Term hereof, whether paid by way of damages, Rent or
otherwise, shall be paid to Tenant.
ARTICLE XII
ADDITIONAL REPRESENTATIONS, WARRANTIES AND FINANCIAL COVENANTS
Tenant hereby represents, warrants and covenants to Landlord as
follows:
12.01 Organization and Qualification.
------------------------------
(a) Tenant is a [_________] corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation or organization, with all power and authority,
corporate or otherwise, necessary to: (i) enter into and perform
this Lease and (ii) own and lease its assets and properties, and
conduct its Business, as it is now being conducted or proposed
to be conducted. Tenant is duly qualified as a foreign
corporation or other entity, as the case may be, to conduct its
Business and own and lease its assets and properties, and is in
good standing, in each jurisdiction where the character of its
assets and properties owned or held under lease or the nature of
its Business makes such qualification necessary or advisable,
and is duly qualified and licensed under all laws, regulations,
ordinances or orders of public or governmental authorities, or
otherwise to carry on its Business and own or lease its assets
and properties in the places and in the manner in which they are
owned, leased or conducted or proposed to be owned, leased or
conducted, except where the failure to be so organized,
qualified and in good standing or to have such authority,
qualification or licensing could not result in a Material
Adverse Change. Complete and correct copies of Tenant's Charter,
as in effect on the date hereof, and Tenant's by-laws, also as
in effect on the date hereof, have been delivered to Landlord.
(b) Each Affiliate that conducts operations or business on or from
any Leased Property, whether now or at any time in the future,
is duly organized,
40
validly existing and in good standing under the laws of its
organization, with all power and authority, corporate or
otherwise, necessary to own and lease its assets and properties,
and conduct its business, as it is now being conducted or
proposed to be conducted. Each Affiliate is duly qualified as a
foreign corporation or other entity, as the case may be, to do
business and own and lease its assets and properties, and is in
good standing, in each jurisdiction where the character of its
assets and properties owned or held under lease or the nature of
its activities or business makes such qualification necessary or
advisable, and is duly qualified and licensed under all laws,
regulations, ordinances or orders or public or governmental
authorities or otherwise to carry on its business and own or
lease its assets and properties in the places and in the manner
in which they are owned, leased or is conducted or proposed to
be owned, leased or conducted, except where the failure to be so
organized, qualified and in good standing or to have such
authority, qualification or licensing could not result in a
Material Adverse Change.
"Material Adverse Change" since a particular specified date, or a date
which may be specified from the circumstances existing immediately prior to the
happening of a specified event or occurrence, or, if no date or event is
specified, with reference to the most recent Annual Financial Statements
delivered pursuant to this Lease, means a material adverse change in the
Business, assets, properties, franchises, financial condition or income of
Tenant or the operations, business, assets, properties, franchises, financial
condition, income or prospects of any Affiliate, whether or not such event or
occurrence is an Event of Default.
"Affiliate" means with respect to any Person, (i) any Person that
holds direct or indirect beneficial ownership (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) of voting securities or other
voting interests representing at least five percent (5%) of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least five percent (5%) of the outstanding equity securities or
interests in a Person, or (ii) any Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with such Person.
A "Person" shall mean and include natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts, Indian tribes or other organizations, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
12.02 Material Agreements. Schedule 12.02 is a complete list of
------------------- --------------
all agreements to which Tenant is a party that are material to the ownership and
use of the Leased Property or the operation of Tenant's Business, and Tenant has
delivered to Landlord a copy of each of these agreements (including all
exhibits, schedules and amendments thereto).
41
12.03 Changes in Condition. Since the date of the latest Annual
---------------------
Financial Statements, no Material Adverse Change has occurred between such date
and the date hereof, and neither Tenant nor any Affiliate has entered into any
material transaction outside the ordinary course of its or their operations or
business, including the Business, except as set forth in Schedule 12.03 and the
--------------
matters contemplated by this Lease.
12.04 Franchises, Licenses, etc. Tenant and its subsidiaries own,
--------------------------
or have sufficient interests in, all franchises, trademarks, trademark rights,
trade names, trade name rights, copyrights, licenses, permits, authorizations
and other rights as are necessary for the conduct of Tenant's Business and its
subsidiaries' businesses as now conducted or proposed to be conducted by Tenant
or any Affiliate, as well as rights under any agreement under which Tenant or
its subsidiaries has access to confidential information used by Tenant or its
subsidiaries in Tenants' Business or the businesses of its subsidiaries, as the
case may be (collectively, the "Intellectual Property"). All Intellectual
Property is in full force and effect in all material respects, and Tenant and
its subsidiaries are in substantial compliance with the foregoing without any
conflict with the valid rights of others, which has resulted, or could be
reasonably likely to result in any Material Adverse Change. Neither Tenant nor
any Affiliate has violated, or received any communication that by conducting its
Business or any Affiliate's businesses, it or any Affiliate would violate any
franchises, licenses, patents, trademarks, service marks, trade names,
copyrights, trade secrets, proprietary rights or processes of any other Person
(as hereafter defined) nor is Tenant or any Affiliate aware of any such
violations. No event has occurred which permits, or after notice or lapse of
time or both would permit, the revocation or termination of any such license,
franchise or other right or affect the rights of Tenant or any Affiliate so as
to result in or reasonably be likely to result in any Material Adverse Change.
There is no litigation or other proceeding or dispute or, to the knowledge of
Tenant or any Affiliate, threat thereof with respect to the validity or, where
applicable, the extension or renewal, of any of the foregoing which has
resulted, or could result, in any Material Adverse Change.
12.05 Litigation. No litigation, at law or in equity, or any
-----------
proceeding before any court, board or other governmental or administrative
agency or any arbitrator or other forum of alternative dispute resolution is
pending or, to the knowledge of Tenant or any Affiliate, threatened which
involves any risk of any final judgment, order or liability which, after giving
effect to any applicable insurance, has resulted, or could result, in any
Material Adverse Change or which seeks to enjoin the execution and consummation
of this Lease and the performance of Tenant's obligations hereunder. No
judgment, decree or order of any court, board or other governmental or
administrative agency or any arbitrator has been issued against or binds Tenant
or any Affiliate, which has resulted, or could result, in any Material Adverse
Change.
12.06 Authorization and Enforceability. Tenant has taken all
---------------------------------
corporate or other action required to execute, deliver and perform this Lease.
This Lease constitutes the legal, valid and binding obligation of Tenant and is
enforceable against Tenant in accordance with its terms.
42
12.07 No Legal Obstacle to Lease. Neither the execution and delivery
---------------------------
of this Lease nor the performance of any obligation hereunder has constituted or
resulted in or will constitute or result in:
(a) any breach, violation of, conflict with, default under or
termination of any agreement, contract, mortgage,
instrument, deed or lease to which Tenant or any Affiliate
is a party or by which it or they are bound;
(b) the violation of or conflict with any law, statute,
ordinance, judgment, decree, order, rule or regulation
applicable to Tenant, any Affiliate, any Improvements or
any Leased Property; or
(c) any violation of or conflict with Tenant's or any
Affiliate's Charter or By-Laws or other organizational
documents, as the case may be.
No approval, authorization or other action by, or declaration to or
filing with, any governmental or administrative authority or any other Person is
required to be obtained or made by Tenant in connection with the execution,
delivery and performance of this Lease.
12.08 Certain Business Representations:
--------------------------------
(a) Labor Relations. No dispute or controversy between Tenant
---------------
or any Affiliate and its or their employees has resulted
in, or is reasonably likely to result in, any Material
Adverse Change, and neither Tenant nor any Affiliate
anticipates that its relationships with its unions or
employees will result, or are reasonably likely to result,
in any Material Adverse Change. Tenant and each Affiliate
is in compliance in all material respects with all federal
and state laws relating to employees and labor relations,
including, but not limited to, laws relating to health and
safety in the workplace, non-discrimination in employment
and the payment of wages.
(b) Antitrust. Tenant and each Affiliate is in compliance in
---------
all material respects with all federal and state antitrust
laws relating to Tenant's Business and the subsidiaries'
businesses and the geographic concentration thereof.
(c) Consumer Protection. Neither Tenant nor any Affiliate is in
-------------------
violation of any rule, regulation, order, or interpretation
of any rule, regulation or order of the Federal Trade
Commission (including truth-in-lending) or other federal,
state or local public or governmental authority or agency,
with which the failure to
43
comply, in the aggregate, has resulted in, could result in,
a Material Adverse Change.
(d) Future Expenditures. Neither Tenant nor any Affiliate,
-------------------
anticipates that further expenditures, if any, by Tenant or
any Affiliate needed to meet the provisions of any federal,
state or foreign governmental statutes, orders, rules or
regulation could result in any Material Adverse Change.
(e) Benefit Liabilities. Neither Tenant nor any ERISA Affiliate
-------------------
maintains, contributes to, or is obligated to contribute
to, nor has Tenant or any ERISA Affiliate maintained,
contributed to, been obligated to contribute to, or had any
direct, indirect, or contingent liability with respect to,
any Title IV Plan (as hereafter defined). Each Tenant
Benefit Plan has been maintained in compliance with its
terms and with applicable laws (including specifically the
Code and the Employee Retirement Income Security Act of
1974 ("ERISA"). "Tenant Benefit Plan" means any plan, fund,
or other similar program described in Section 3(2) of ERISA
and established or maintained or with respect to which
Tenant and/or any ERISA Affiliate has an obligation to
contribute for the benefit of its employees (or for which
Tenant could be directly or contingently liable). "Title IV
Plan" means an "employee benefit plan" (as defined in
Section 3(3) of ERISA) that is subject to Title IV of ERISA
and is or has been established or maintained, by Tenant or
any ERISA Affiliate, or to which contributions are, have
been, or should have been made. "ERISA Affiliate" means any
trade or business, whether or not incorporated, that,
together with Tenant, is or has been under common control,
within the meaning of Section 414(b), (c), (m), or (o) of
the Code or Section 4001 of ERISA.
12.09 Certain Financial Covenants. Tenant or an Affiliate, as
----------------------------
applicable, is in compliance in all material respects with all financial
covenants required to be maintained pursuant to any franchise or other agreement
pursuant to which Tenant or such Affiliate operates its business, except in such
respects as shall not result in any franchisor under any franchise or operating
agreement to which Tenant is a party taking any action that could result in a
Material Adverse Change.
12.10 Cash Flow Coverage Ratio Covenant. On the date of this
---------------------------------
Lease and measured at a date that is twenty-four (24) months following such date
(each a "Cash Flow Measurement Date"), and on each anniversary date that is
twenty-four (24) months following a prior Cash Flow Measurement Date, Tenant
shall have maintained a Cash Flow Coverage Ratio
44
of not less than 1.5 to 1.0 based on the Annual Financial Statements to be
delivered to Landlord in accordance with Section 6.04 hereof. "Cash Flow
Coverage Ratio" means the aggregate of net income before taxes plus mortgage
interest, rent expense, depreciation, compensation of principals of the
Business, management fees plus the annual LIFO adjustment and other non-cash
expenses, less recurring capital expenditures and gain (loss) on sale of real
estate, dividends and/or profits taken out of Tenant divided by the aggregate of
the Tenant's obligations under this Lease. Notwithstanding anything herein to
the contrary, in the event that Tenant shall not be in compliance with this
covenant at a Cash Flow Measurement Date or Tenant shall have knowledge of such
non-compliance prior to any Cash Flow Measurement Date, the Tenant shall have
the right to cure such breach through any reasonable commercial means,
including, but not limited to, providing guarantees acceptable to Landlord,
increasing capital, or cross collateralizing with any other property of Tenant
or an Affiliate, provided that such breach is cured within one hundred and
eighty (180) days after Notice by Landlord to Tenant of the existence of such
breach.
12.11 Disclosure. This Lease does not contain any untrue
----------
statement of a material fact or omit to state a material fact necessary in order
to make any statement contained herein not misleading in light of the
circumstances under which it was made. To Tenant's knowledge, there is no
event, fact or occurrence that has resulted, or in the future (so far as Tenant
can reasonably foresee) could result, in any Material Adverse Change, except to
the extent that present or future general and sector-specific economic
conditions may result in a Material Adverse Change.
12.12 Covenant Not to Acquire. Tenant covenants and agrees that
-----------------------
during the Term and any Extension Term, as the case may be, Tenant and its
controlling shareholders or its or their Affiliates will not acquire, directly
or indirectly, more that 9.90% of the outstanding common shares of beneficial
interest of Capital Automotive REIT. Tenant covenants and agrees that it will
divest itself of such shares of Capital Automotive REIT as may be necessary to
satisfy the limitations of this Section 12.12.
ARTICLE XIII
ASSIGNMENT AND SUBLETTING; ATTORNMENT
13.01 Prohibition Against Subletting and Assignment. Subject to
---------------------------------------------
Section 13.03, Tenant shall not, without the prior written consent of Landlord,
or upon compliance with any conditions established by Landlord, in its sole
discretion, assign, mortgage, pledge, hypothecate, encumber or otherwise
transfer (except to an Affiliate) this Lease or any interest herein, or all or
any part of any Leased Property, or suffer or permit this Lease or the leasehold
estate created hereby or any other rights arising hereunder to be assigned,
transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in
part, whether voluntarily, involuntarily or by operation of law. For purposes
of this Section 13.01, an assignment of this Lease shall be
45
deemed to include any Change of Control of Tenant, as if such Change of Control
were an assignment of the Lease. In the event that (i) Landlord shall withhold
any consent to any assignment or transfer of this Lease or any interest herein,
and (ii) such assignee or transferee is approved by the relevant manufacturer
for continuation as a franchisee, there shall be a presumption that such
assignment or transfer was reasonable and Landlord shall have the burden of
rebutting such presumption and of proving that such consent was in fact
reasonably withheld (or that such conditions were reasonable).
13.02 Changes of Control. A Change of Control requiring the
------------------
consent of Landlord shall mean:
(a) the issuance and/or sale by Tenant or the sale by any
shareholder or equity holder of Tenant of a Controlling
(which shall mean, as applied to any Person, the
possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of
such Person, whether through the ownership of voting
securities, by contract or otherwise) interest in Tenant to
a Person other than an Affiliate of Tenant, other than in
either case a distribution to the public pursuant to an
effective registration statement under the Securities Act
of 1933, as amended (a "Registered Offering");
(b) the sale, conveyance or other transfer of all or
substantially all of the assets of Tenant (whether by
operation of law or otherwise) provided, however, that no
Change of Control shall be deemed to have occurred in the
event of the transfer of assets as a result of the death of
a person involved in the Business, so long as the
transferee is approved by the manufacturer for the
continuation of the Business; or
(c) any transaction pursuant to which Tenant is merged with or
consolidated into another entity (other than an entity
owned and Controlled by an Affiliate), and Tenant is not
the surviving entity.
13.03 Operating/Service Agreements.
-----------------------------
(a) Permitted Agreements. Tenant shall, without Landlord's
--------------------
prior approval, be permitted to enter into such
operating/service agreements for portions of each Leased
Property to various licensees in connection with Tenant's
Business as are customarily associated with or incidental
to the operation of such Leased Property, which agreements
may be in the nature of a sublease agreement.
46
(b) Terms of Agreements. Each operating/service agreement
-------------------
concerning a Leased Property shall be subject and
subordinate to the provisions hereof. No agreement made as
permitted by Section 13.03(a) shall affect or reduce any of
the obligations of Tenant hereunder, and all such
obligations shall continue in full force and effect as if
no agreement had been made. No agreement shall impose any
additional obligations on Landlord hereunder.
(c) Copies. Tenant shall, within ten (10) days after the
------
execution and delivery of any operating/service agreement
permitted by Section 13.03(a), deliver a duplicate original
thereof to Landlord.
(d) Assignment of Rights in Agreements. As security for
----------------------------------
performance of its obligations hereunder, Tenant hereby
grants, conveys and assigns to Landlord all right, title
and interest of Tenant in and to all operating/service
agreements now in existence or hereinafter entered into for
each Leased Property, and all extensions, modifications and
renewals thereof and all rents, issues and profits
therefrom, to the extent the same are assignable by Tenant.
Landlord hereby grants to Tenant a license to collect and
enjoy all rents and other sums of money payable under any
such agreement; provided, however, that Landlord shall have
the absolute right at any time after the occurrence and
continuance of an Event of Default upon notice to Tenant
and any vendors or licensees to revoke said license and to
collect such rents and sums of money and to retain the
same. Tenant shall not (i) after the occurrence and
continuance of an Event of Default, consent to, cause, or
allow, any material modification or alteration of any of
the terms, conditions or covenants of any of the agreements
or the termination thereof, without the prior written
approval of Landlord nor (ii) accept any rents (other than
customary security deposits) more than thirty (30) days in
advance of the accrual thereof nor permit anything to be
done, the doing of which, nor omit or refrain from doing
anything, the omission of which, will or could be a breach
of or default in the terms of any of the agreements.
(e) Licenses, Etc. For purposes of Section 13.03, the
-------------
operating/service agreements shall mean any licenses,
concession arrangements, or other arrangements relating to
the possession or use of all or any part of any Leased
Property.
13.04 Assignment. If Landlord shall withhold its consent to any
----------
assignment or if Landlord shall have established conditions to approval of any
assignment but such conditions
47
shall not have been complied with, to the satisfaction of Landlord, such
assignment shall not in any way impair the continuing primary liability of
Tenant hereunder. No consent to any assignment in a particular instance shall be
deemed to be a general waiver of the prohibition set forth in Article XIII. Any
assignment shall be solely of Tenant's entire interest in this Lease with
respect to the subject Leased Property or Leased Properties. Any assignment or
other transfer of all or any portion of Tenant's interest in this Lease in
contravention of Article XIII shall be voidable at Landlord's option.
13.05 REIT Limitations.
----------------
(a) Anything contained herein to the contrary notwithstanding,
Tenant shall not: (a) sublet or assign a Leased Property or
this Lease on any basis such that the rental or other
amounts to be paid by the sublessee or assignee thereunder
would be based, in whole or in part, on the income or
profits derived by the business activities of the sublessee
or assignee; (b) sublet or assign a Leased Property or this
Lease to any Person that, under Section 856(d)(2)(B) of the
Internal Revenue Code of 1986, as amended (the "Code"),
Landlord or its general partner owns, directly or
indirectly (by applying constructive ownership rules set
forth in Section 856(d) (5) of the Code, a ten percent
(10%) or greater interest; or (c) sublet or assign a Leased
Property or this Lease in any other manner or otherwise
derive any income which could cause any portion of the
amounts received by Landlord pursuant hereto or any
sublease to fail to qualify as "rents from real property"
within the meaning of Section 856(d) of the Code, or which
could cause any other income received by Landlord to fail
to qualify as income described in Section 856(c)(2) of the
Code. The requirements of this Section 13.05 shall likewise
apply to any further subleasing by any subtenant.
(b) Tenant acknowledges that Capital Automotive REIT, a
Maryland real estate investment trust and the general
partner of Landlord (the "Company"), intends to elect to be
taxed as a real estate investment trust (a "REIT") under
the Code. Tenant shall not do anything which would
adversely affect the Company's status as a REIT. Tenant
hereby agrees to modifications of this Lease which do not
materially adversely affect Tenant's rights and liabilities
if such modifications are required to retain or clarify the
Company's status as a REIT.
13.06 Attornment. Tenant shall insert in each sublease permitted
----------
under Section 13.03(a) provisions to the effect that: (a) such sublease is
subject and subordinate to all of the
48
terms and provisions of this Lease and to the rights of Landlord hereunder; (b)
in the event this Lease shall terminate before the expiration of such sublease,
the sublessee thereunder will, at Landlords' option, attorn to Landlord and
waive any right the sublessee may have to terminate the sublease or to surrender
possession thereunder, as a result of the termination hereof; and (c) in the
event the sublessee receives a written notice from Landlord or Landlord's
assignees, if any, stating that Tenant is in default under this Lease, the
sublessee shall thereafter be obligated to pay all rentals accruing under said
sublease directly to the party giving such notice, or as such party may direct.
All rentals received from the sublessee by Landlord or Landlord's assignees in
respect of a Leased Property, if any, as the case may be, shall be credit
against the amounts owing by Tenant hereunder with respect to such Leased
Property.
13.07 Severance and Spin-Off. If at any time while this Lease is
----------------------
in effect any Leased Property shall be utilized by Tenant in the operation of
more than one automobile franchise, then provided that there is no existing
Event of Default and there exists no condition which, with the passage of time,
could become an Event of Default, Tenant shall have the right (the "Spin-Off
Right") to sever and spin-off one or more parcels (each referred to as a
"Spin-Off Parcel") of the Leased Property from this Lease, subject to compliance
with the requirements of Section 13.08.
13.08 Assignment. If the Leased Property is not a separate
----------
subdivided lot, Landlord may condition its approval of an assignment upon Tenant
showing that there are appropriate provisions (such as a condominium regime,
subdivision, and/or reciprocal easements, lender and/or franchisor consents if
necessary, and separate tax lots) which allow the Leased Property to be
separately owned and operated without interference from or dependence upon,
another person as to items such as access, real estate taxes, or utilities.
ARTICLE XIV
ARBITRATION
14.01 Controversies. Except with respect to the payment of Rent
-------------
hereunder, which shall be subject to the provisions of Section 9.02, in the
event a controversy arises between the parties as to any of the requirements of
this Lease or the performance hereunder, which the parties are unable to
resolve, the parties agree to waive the remedy of litigation (except for
extraordinary relief in an emergency situation) and agree that such controversy
or controversies shall be determined by arbitration as hereafter provided in
this Article.
14.02 Appointment of Arbitrators. The party or parties requesting
--------------------------
arbitration shall serve upon the other a demand therefor, in writing, specifying
in detail the controversy and matter(s) to be submitted to arbitration before
the American Arbitration Association. The selection of arbitrators shall be
conducted pursuant to the rules for resolution of commercial disputes
promulgated by the American Arbitration Association. The party or parties
giving notice shall request a listing of available arbitrators from the American
Arbitration Association,
49
and each party shall respond in the selection process within fifteen (15) days
after each receipt of such listings until a panel of three (3) arbitrators has
been designated. If either party fails to respond within fifteen (15) days, it
is agreed that the American Arbitration Association may make such selections as
are necessary to complete the panel of three (3) arbitrators.
14.03 Arbitration Procedure. Within five (5) business days after
---------------------
the selection of the arbitration panel, the arbitrators shall give written
notice to each party as to the time and the place of each meeting, which shall
be held in Washington, D.C., at which the parties may appear and be heard, which
shall be no later than fifteen (15) days after certification of the arbitration
panel. The parties specifically waive discovery, and further waive the
applicability of rules of evidence or rules of procedure in the proceedings. The
applicable rules shall be those in effect at the time for the resolution of
commercial disputes promulgated by the American Arbitration Association.
Notwithstanding the foregoing, the substantive law governing the arbitration
shall be the laws of the State of Delaware (without application of choice of law
provisions). The arbitrators shall take such testimony and make such
examination and investigations as the arbitrators reasonably deem necessary.
The decision of the arbitrators shall be in writing signed by a majority of the
panel which decision shall be final and binding upon the parties to the
controversy. Provided, however, in rendering their decisions and making awards,
the arbitrators shall not add to, subtract from or otherwise modify the
provisions of this Lease.
14.04 Expenses. The expenses of the arbitration shall be assessed
--------
by the arbitrators and specified in the written decision. In the absence of a
determination or assessment of expenses of the arbitration procedure in the
award, all of the expenses of such arbitration shall be divided equally between
Landlord and Tenant. Each party in interest shall be responsible for and pay
the fees, costs and expenses of its own counsel, unless the arbitration award
provides for an assessment of reasonable attorneys' fees and costs.
14.05 Enforcement of the Arbitration Award. There shall be no
------------------------------------
appeal from the decision of the arbitrators, and upon the rendering of an award,
any party thereto may file the arbitrators' decision in the United States
District Court for the Eastern District of Virginia for enforcement as provided
by applicable law.
ARTICLE XV
QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT, ESTOPPEL CERTIFICATES
15.01 Quiet Enjoyment. So long as Tenant performs all of its
---------------
obligations under this Lease, Tenant's possession of the Leased Properties will
not be disturbed by or through Landlord.
15.02 Landlord Mortgages; Subordination. Subject to Section 15.03,
---------------------------------
without the consent of Tenant, Landlord may, from time to time, directly or
indirectly, create or otherwise
50
cause to exist any liens, encumbrances, security interests or title retention
agreements on any Leased Property, or any portion thereof or any interest
therein, whether to secure any borrowing or other means of financing or
refinancing. Tenant shall execute, acknowledge and deliver to Landlord, at any
time and from time to time (up to three times per calendar year) upon demand by
Landlord or any mortgagee or any holder of any mortgage or other instrument
described in this Section, without cost to Landlord, a Subordination and Non-
Disturbance Agreement in substantially the form attached hereto as Exhibit
-------
15.02, which provides that (i) Tenant's rights hereunder are subordinate to any
-----
ground lease or underlying lease, first mortgage, first deed of trust, or other
first lien against any Leased Property, together with any renewal,
consolidation, extension, modification, or replacement thereof, which now or at
any subsequent time affects any Leased Property or any interest of Landlord in
any Leased Property, except to the extent that any such instrument expressly
provides that this Lease is superior; and (ii) in the event such party succeeds
to Landlord's interest under the Lease and provided that no Event of Default by
Tenant exists, such party will not disturb Tenant's possession, use or occupancy
of the subject Leased Property or Tenant's rights under this Lease. If Tenant
fails or refuses to execute, acknowledge, and deliver such Subordination and
Non-Disclosure Agreement within ten (10) business days after written demand,
then Landlord shall send to Tenant a second written demand. If Tenant fails or
refuses to execute, acknowledge and deliver such Subordination and Non-
Disclosure Agreement within ten (10) days after such second written demand, then
Landlord or such successor in interest may execute, acknowledge and deliver such
Subordination and Non-Disclosure Agreement on behalf of Tenant as Tenant's
attorney-in-fact. Tenant hereby constitutes and irrevocably appoints Landlord,
its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant the Subordination and Non-
Disclosure Agreement. This power of attorney is coupled with an interest and is
irrevocable.
15.03 Attornment. If any holder of any mortgage, indenture, deed
----------
of trust, or other similar instrument described in Section 15.02 succeeds to
Landlord's interest in any Leased Property, Tenant will pay to such holder all
Rent subsequently payable hereunder as to such Leased Property. Tenant shall,
upon request of anyone succeeding to the interest of Landlord, automatically
become the tenant of, and attorn to, such successor in interest without changing
this Lease. The successor in interest will not be bound by: (a) any payment of
Rent for more than one (1) month in advance; (b) any amendment or modification
hereof made without its written consent; (c) any claim against Landlord arising
prior to the date on which the successor succeeded to Landlord's interest; or
(d) any claim or offset of Rent against Landlord.
15.04 Estoppel Certificates. At the request of Landlord or any
---------------------
mortgagee or purchaser of a Leased Property, Tenant shall execute, acknowledge,
and deliver an estoppel certificate, in recordable form, in favor of Landlord or
any mortgagee or purchaser of any Leased Property certifying the following as to
such Leased Property: (a) that this Lease is unmodified and in full force and
effect, or if there have been modifications that the same is in full force and
effect as modified and stating the modifications; (b) the date to which Rent and
other charges have been paid; (c) that neither Tenant nor Landlord is in default
nor is there any fact or
51
condition which, with notice or lapse of time, or both, would constitute a
default, if that be the case, or specifying any existing default; (d) that
Tenant has accepted and occupies such Leased Property; (e) that Tenant has no
defenses, set-offs, deductions, credits, or counterclaims against Landlord, if
that be the case, or specifying such that exist; (f) that Landlord has no
outstanding construction or repair obligations; and (g) such other information
as may reasonably be requested by Landlord or any mortgagee or purchaser. Any
purchaser or mortgagee may rely on this estoppel certificate. If Tenant fails to
deliver the estoppel certificates to Landlord within ten (10) business days
after the request of Landlord, then Landlord shall request such delivery a
second time. If Tenant fails to deliver the estoppel certificates to Landlord
within ten (10) days after such second request by Landlord, then Tenant shall be
deemed to have certified that: (a) this Lease is in full force and effect and
has not been modified, or that this Lease has been modified as set forth in the
certificate delivered to Tenant; (b) Tenant has not prepaid any Rent or other
charges except for the current month; (c) Tenant has accepted and occupies such
Leased Property; (d) neither Tenant nor Landlord is in default nor is there any
fact or condition which, with notice or lapse of time, or both, would constitute
a default; (e) Landlord has no outstanding construction or repair obligation;
and (f) Tenant has no defenses, set-offs, deductions, credits, or counterclaims
against Landlord. Tenant hereby irrevocably appoints Landlord as Tenant's
attorney-in-fact to execute, acknowledge and deliver on Tenant's behalf any
estoppel certificate which Tenant does not object to within twenty (20) days
after Landlord sends the certificate to Tenant. This power of attorney is
coupled with an interest and is irrevocable.
15.05 Waiver of Landlord's Lien. Landlord agrees to and does
-------------------------
hereby waive its Landlord's lien and any other rights that it may have with
respect to property or assets representing the security or collateral under
Tenant's "floor-plan" or similar financing arrangements, during the Term or any
Extension Term. Landlord shall, upon request by any such lender, execute such
reasonable documents as are requested by Tenant's lender to acknowledge such
waiver and allow the lender access to the Leased Property.
ARTICLE XVI
RIGHT OF FIRST OFFER
16.01 Right of First Offer During Lease Term or Extension Term.
---------------------------------------------------------
(a) If and when during the Term or Extension Term, as the case
may be, Landlord shall decide to sell the Leased Properties
to a Person who is not an Affiliate of Landlord (the
"Decision to Sell"), provided that no Event of Default has
occurred and is continuing under the Lease, Landlord shall
notify Tenant in writing within ten (10) business days
after Landlord makes a Decision to Sell. Tenant shall have
ten (10) business days thereafter in which to notify
Landlord in writing of its desire to purchase the Leased
52
Properties. If Tenant shall give such notice, Tenant shall
have a period of thirty (30) days within which to make a
written offer to purchase the property (the "First Offer").
The First Offer must set forth the purchase price, deposit
amounts and closing date and any and all other terms and
conditions being proposed by Tenant.
(b) Within thirty (30) days of receipt of the First Offer,
Landlord shall give Tenant written notice of its acceptance
or rejection thereof. If accepted, Tenant shall, within
five (5) days after receipt of the acceptance notice, make
the deposit called for in the First Offer and the parties
shall proceed to contract and closing upon the terms
thereof. If the First Offer is rejected, then, subject to
the provisions of subsections (c) and (d) of this Section
16.01, Tenant shall have no further rights with respect to
the purchase of the Leased Properties during the Term or
Extension Term, as the case may be.
(c) If Landlord shall reject the First Offer, for a one year
period thereafter it may proceed to sell the Leased
Properties, subject to the Lease and the remaining Term or
Extension Term thereof, as the case may be, to any third
party, provided (i) the purchase price of such sale shall
exceed that specified in the First Offer, or (ii) if the
purchase price of such sale does not exceed that specified
in the First Offer, the terms of such sale, taken together,
are more favorable to Landlord, in Landlord's reasonable
judgement, than those of the First Offer. There shall be a
presumption that Landlord's judgment was reasonable and
Tenant shall have the burden of rebutting such presumption
and of proving that such judgment was in fact unreasonable.
(d) If no sale is effected by Landlord within the period
specified in subsection (c) above, then if Landlord
thereafter desires to sell the Leased Properties, the
procedure set forth in subsections (a), (b) and (c) shall
be followed.
(e) This option shall terminate in any event twenty (20) years
after the death of the last descendant of Xxxxxxx Xxxxxxxxx
Xxxxxxx, current President of the United States, living at
the time of execution of this Lease.
53
16.02 Right to Purchase at End of an Extension Term.
---------------------------------------------
(a) Landlord hereby grants the Tenant the right and option to
purchase the Leased Properties (the "Option to Purchase")
at an amount equal to the Property Consideration (as
hereafter defined) upon termination of an Extension Term of
this Lease. The Option to Purchase shall not be granted if
Tenant does not extend the Term of this Lease pursuant to
Section 1.03 or if on the Option Exercise Date (as
hereafter defined) an Event of Default with respect to any
Leased Property exists and has not been cured. The Tenant
shall notify Landlord in writing of its intent to exercise
this Option to Purchase, thirty (30) days prior to the end
of an Extension Term of this Lease (the "Option Exercise
Date").
(b) The consideration to be paid for the Leased Properties upon
exercise of the Option to Purchase (the "Property
Consideration") shall be the Appraised Value (as hereafter
defined) determined by (1) an independent appraiser, who is
a member of the Appraisal Institute, and will be selected
by Landlord, (the "Landlord MAI Appraiser"), (2) a second
appraiser, who is a member of the Appraisal Institute, and
will be selected by the Tenant (the "Tenant MAI
Appraiser"), and (3) a third MAI Appraiser selected by
agreement of the Landlord MAI Appraiser and the Tenant MAI
Appraiser (the "Third MAI Appraiser") (each an "Appraiser"
and, collectively, the "Appraisers"). Landlord and Tenant
shall, as promptly as possible, but in no event later than
ten (10) days following the Option Exercise Date, select
its respective Appraiser. The Third MAI Appraiser shall be
selected no later than five (5) days after the selection of
the other Appraisers. The costs of the Appraisers'
appraisals shall be shared equally by the parties. As
promptly as possible but in no event later than fifteen
(15) days after selection of the Third Appraiser, each
Appraiser shall deliver his or her written report of the
Appraisers' determination of the fair market value of the
Leased Property, which determination shall be based, for
each Leased Property, upon the highest and best use of such
Leased Property, taking into consideration the location of
such Leased Property and other properties comparable
thereto. The "Appraised Value" of the Real Property shall
be equal to the arithmetic mean of the two (2) fair market
value determinations of the Appraisers that are closest in
value. In the event that the values of (i) the difference
between the highest appraisal value and the next lower
appraisal value, and (ii) the difference between the lowest
appraisal value and the next
54
higher appraisal value, are equal, then the "Appraised
Value" shall be equal to the arithmetic mean of the fair
market value determinations of all Appraisers.
(c) Upon determination of the Property Consideration, Landlord
and Tenant agree to cooperate to close the sale and
purchase of the Leased Property entirely for cash on an "
as is, where as basis" and with no warranties by Landlord
other than in a special warranty deed, within forty-five
(45) days after the date of determination of the Property
Consideration (the "Option Closing Period"). If the sale
and purchase of the Leased Property does not close within
the Option Closing Period due to Tenant's default, Landlord
shall have no further obligations to Tenant pursuant to
this Section 16.02 (a).
ARTICLE XVII
MISCELLANEOUS
17.01 Notices. Landlord and Tenant hereby agree that all notices,
-------
demands, requests, and consents (hereinafter "Notices") required to be given
pursuant to the terms of this Lease shall be in writing and shall be addressed
as follows:
If to Tenant:
[tenant]
c/o Cross-Continent Auto Retailers, Inc.
0000 X. Xxxxxx
X.X. Xxx 000
Xxxxxxxx, Xxxxx 00000
Attention: R. Xxxxx Xxxxx, Esq.
With a copy to:
Sprouse, Mozola, Xxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
If to Landlord:
Capital Automotive L.P.
0000 Xxxxx Xxxx Xxxxxx
Xxxxx 000
00
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
With a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
and shall be served by: (a) personal delivery; (b) certified mail, return
receipt requested, postage prepaid; or (c) nationally recognized overnight
courier. All notices shall be deemed to be given upon the earlier of actual
receipt or three (3) days after mailing, or one (1) business day after deposit
with the overnight courier. Any Notices meeting the requirements of this
Section shall be effective, regardless of whether or not actually received.
Landlord or Tenant may change its notice address at any time by giving the other
party Notice of such change. Any such Notice of change of address shall be
effective five (5) days after delivery.
17.02 Advertisement of a Leased Property. In the event the parties
----------------------------------
hereto have not executed a renewal lease, or agreed to the Extension Term, as to
the Leased Property within twelve (12) months prior to the expiration of the
Term or an Extension Term, as the case may be, then Landlord or its agent shall
have the right to enter such Leased Property at all reasonable times for the
purpose of exhibiting such Leased Property to others and to place upon such
Leased Property for and during the period commencing two-hundred seventy (270)
days prior to the expiration of the Term or an Extension Term, as the case may
be, "for sale" or "for rent" notices or signs.
17.03 Landlord's Access. Landlord, or its designated agents or
-----------------
contractors, shall have the right to enter upon each Leased Property, upon
reasonable prior notice to Tenant, for purposes of inspecting the same and
assuring Tenant's compliance with this Lease provided, any such entry by
Landlord shall be subject to all rules, guidelines and procedures prescribed by
Tenant in connection therewith. Landlord shall not be allowed entry to a Leased
Property unless accompanied by such of Tenant's personnel as Tenant shall
require and which Tenant shall promptly provide.
17.04 Entire Agreement. This Lease contains the entire agreement
----------------
between Landlord and Tenant with respect to the subject matter hereof. No
representations, warranties, and agreements have been made by Landlord or Tenant
except as set forth in this Lease.
17.05 Severability. If any term or provision of this Lease is
------------
held by Landlord to be invalid or unenforceable as to a Leased Property, such
holding shall not affect the remainder of this Lease as to such Leased Property,
or the validity or enforceability of this Lease as to any other Leased Property,
and the same shall remain in full force and effect, unless such holding
56
substantially deprives Tenant of the use of such Leased Property or Landlord of
the Rents therefor, in which case this Lease shall forthwith terminate as to
such Leased Property as if by expiration of the Term or an Extension Term, as
the case may be, but shall remain in full force and effect with respect to each
other Leased Property.
17.06 Captions and Headings. The captions and headings are inserted
---------------------
only as a matter of convenience and for reference and in no way define, limit or
describe the scope of this Lease or the intent of any provision hereof.
17.07 Governing Law. This Lease shall be construed under the laws
-------------
of the State of Virginia (without application of choice of law provisions).
17.08 Memorandum of Lease or Certain Rights Under the Lease. Landlord
-----------------------------------------------------
and Tenant agree that a record of this Lease or of certain rights under this
Lease may be recorded by either party in a memorandum of lease approved by
Landlord and Tenant with respect to each Leased Property. The party recording
such memorandum must bear all costs of such recording.
17.09 Waiver. No waiver by Landlord of any condition or covenant
------
herein contained, or of any breach of any such condition or covenant, shall be
held or taken to be a waiver of any subsequent breach of such covenant or
condition, or to permit or excuse its continuance or any future breach thereof
or of any condition or covenant, nor shall the acceptance of Rent by Landlord at
any time when Tenant is in default in the performance or observance of any
condition or covenant herein be construed as a waiver of such default, or of
Landlord's right to terminate this Lease or exercise any other remedy granted
herein on account of such default.
17.10 Assignment; Binding Effect. Except as otherwise set forth
--------------------------
herein, this Lease shall not be assignable by Tenant, without the prior written
consent of Landlord. This Lease will be binding upon and inure to the benefit
of the heirs, successors, personal representatives, and permitted assigns of
Landlord and Tenant.
17.11 Consents and Approvals. In each instance in this Lease where
----------------------
the Landlord is required or permitted to give a consent or approval, or to make
a determination, the Landlord's decision and any conditions thereon must be
reasonable under the circumstances. Except as provided in Sections 8.07(d),
13.01 and 13.07, there shall be a presumption that each such decision and any
conditions thereon by Landlord was in fact reasonable, and Tenant shall have the
burden of proof in any attempt to rebut that presumption. With respect to
Sections 8.07(d), 13.01 and 13.07, there shall be a presumption that each such
decision and any conditions thereon by Landlord was in fact unreasonable, and
Landlord shall have the burden of proof in any attempt to rebut that
presumption.
17.12 Single Property. Throughout the form of this Lease there are
---------------
references to "Leased Properties". If, in fact, there is only one Leased
Property being leased hereunder, all
57
such references shall, without further action, be deemed amended to refer solely
to such Leased Property and all provisions relating to Leased Properties,
including remedies applicable to only one Leased Property, shall likewise be
amended to the extent necessary, but only to the extent necessary, to give
effect to the fact that there is only one Leased Property.
17.13 Modification. This Lease may only be modified by a writing
------------
signed by both Landlord and Tenant.
17.14 Incorporation by Reference. All schedules and exhibits
---------------------------
referred to in this Lease are incorporated herein by reference.
17.15 No Merger. As to each Leased Property, the surrender of this
---------
Lease by Tenant or the cancellation of this Lease by agreement of Tenant and
Landlord or the termination of this Lease on account of Tenant's default will
not work a merger, and will, at Landlord's option, terminate any subleases or
operate as an assignment to Landlord of any subleases. Landlord's option under
this paragraph will be exercised by notice to Tenant and all known subtenants of
such Leased Property.
17.16 Force Majeure. Landlord, its agents and employees, will not
-------------
be liable for any loss, injury, death, or damage (including consequential
damages) to persons, property, or Tenant's Business occasioned by theft, act of
God, public enemy, injunction, riot, strike, insurrection, war, court order,
requisition, order of governmental body or authority, fire, explosion, falling
objects, steam, water, rain or snow, leak or flow of water (including water from
the elevator system), rain or snow from any Leased Property or into any Leased
Property or from the roof, street, subsurface or from any other place, or by
dampness or from the breakage, leakage, obstruction, or other defects of the
pipes, sprinklers, wires, appliances, plumbing, air conditioning, or lighting
fixtures of any Leased Property, or from construction, repair, or alteration of
any Leased Property or from any acts or omissions of any other occupant or
visitor of any Leased Property, or from the release, emission, discharge,
presence or disposal of any hazardous substance or material on or from any
Leased Property, or from any other cause beyond Landlord's control.
17.17 Laches. No delay or omission by either party hereto to
-------
exercise any right or power accruing upon any noncompliance or default by the
other party with respect to any of the terms hereof shall impair any such right
or power or be construed to be a waiver thereof.
17.18 Waiver of Jury Trial. To the extent that there is any claim
--------------------
by one party against the other that is not to be settled by arbitration as
provided in Article XIV hereof, Landlord and Tenant waive trial by jury in any
action, proceeding or counterclaim brought by either of them against the other
on all matters arising out of this Lease or the use and occupancy of any Leased
Property (except claims for personal injury or property damage). If Landlord
commences any summary proceeding for nonpayment of Rent, Tenant will not
interpose, and waives the right to interpose, any counterclaim in any such
proceeding.
58
17.19 Permitted Contests. Tenant, on its own or on Landlord's
-------------------
behalf (or in Landlord's name), but at Tenant's expense, may contest, by
appropriate legal proceedings conducted in good faith and with due diligence,
the amount or validity or application, in whole or in part, of any Imposition or
any legal requirement or insurance requirement or any lien, attachment, levy,
encumbrance, charge or claim provided that: (a) in the case of an unpaid
Imposition, lien, attachment, levy, encumbrance, charge or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from Landlord and from the subject Leased Property; (b) neither the
subject Leased Property nor any Rent therefrom nor any part thereof or interest
therein would be in any immediate danger of being sold, forfeited, attached or
lost; (c) in the case of a legal requirement, Landlord would not be in any
immediate danger of civil or criminal liability for failure to comply therewith
pending the outcome of such proceedings; (d) in the event that any such contest
shall involve a sum of money or potential loss in excess of Twenty Five Thousand
Dollars ($25,000), Tenant shall deliver to Landlord and its counsel an opinion
of Tenant's counsel to the effect set forth in clauses (a), (b) and (c), to the
extent applicable; (e) in the case of a legal requirement and/or an Imposition,
lien, encumbrance, or charge, Tenant shall give such reasonable security as may
be demanded by Landlord to insure ultimate payment of the same and to prevent
any sale or forfeiture of a subject Leased Property or the Rent in respect
thereof by reason of such nonpayment or noncompliance; provided, however, the
provisions of this Section shall not be construed to permit Tenant to contest
the payment of Rent (except as to contests concerning the method of computation
or the basis of levy of any Imposition or the basis for the assertion of any
other claim) or any other sums payable by Tenant to Landlord hereunder; (f) in
the case of an insurance requirement, the coverage required by Article IV shall
be maintained; and (g) if such contest be finally resolved against Landlord or
Tenant, Tenant shall, as Additional Rent due hereunder, promptly pay the amount
required to be paid, together with all interest and penalties accrued thereon,
or comply with the applicable legal requirement or insurance requirement.
Landlord, at Tenant's expense, shall execute and deliver to Tenant such
authorizations and other documents as may be reasonably required in any such
contest, and, if reasonably requested by Tenant or if Landlord so desires,
Landlord shall join as a party therein. Tenant hereby agrees to indemnify and
hold harmless Landlord, its officers, trustees, employees, shareholders,
affiliates and agents from and against any and all demands, claims, causes of
action, fines, penalties, damages (including punitive and consequential
damages), losses, liabilities (including strict liability), judgments, costs and
expenses (including, without limitation, attorneys' fees, court costs, and the
costs set forth in Section 9.06) that may be incurred in connection with or
arise from any such contest.
17.20 Construction of Lease. This Lease has been reviewed by
---------------------
Landlord and Tenant and their respective professional advisors. Landlord and
Tenant believe that this Lease is the product of all their efforts, that they
express their agreement, and agree that they shall not be interpreted in favor
of either Landlord or Tenant or against either Landlord or Tenant merely because
of any party's efforts in preparing such documents.
17.21 Counterparts. This Lease may be executed in duplicate
-------------
counterparts, each of which shall be deemed an original hereof or thereof.
59
17.22 Relationship of Landlord and Tenant. The relationship of
-----------------------------------
Landlord and Tenant is the relationship of lessor and lessee. Landlord and
Tenant are not partners, joint venturers, or associates.
{remainder of this page left intentionally blank}
60
IN WITNESS WHEREOF, the parties hereto have executed this Lease or
caused the same to be executed by their respective duly authorized officers as
of the date first set forth above.
CAPITAL AUTOMOTIVE L.P.
By: Capital Automotive REIT,
Its General Partner
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
[ ]
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
61
PLAINS CHEVROLET, INC. LEASE AGREEMENT SCHEDULES AND EXHIBITS
SCHEDULES
A Leased Properties
B Permitted Liens
12.02 Material Agreements
12.03 Changes in Condition
EXHIBITS
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
15.02 Form of Subordination and Non-Disturbance Agreement
MIDWAY CHEVROLET, INC. LEASE AGREEMENT SCHEDULES AND EXHIBITS
SCHEDULES
A Leased Properties
B Permitted Liens
12.02 Material Agreements
12.03 Changes in Condition
EXHIBITS
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
15.02 Form of Subordination and Non-Disturbance Agreement
WESTGATE CHEVROLET, INC. LEASE
AGREEMENT SCHEDULES AND EXHIBITS
SCHEDULES
A Leased Properties
B Permitted Liens
12.02 Material Agreements
12.03 Changes in Condition
EXHIBITS
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
15.02 Form of Subordination and Non-Disturbance Agreement
QUALITY NISSAN, INC. LEASE AGREEMENT SCHEDULES AND EXHIBITS
SCHEDULES
A Leased Properties
B Permitted Liens
12.02 Material Agreements
12.03 Changes in Condition
EXHIBITS
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
15.02 Form of Subordination and Non-Disturbance Agreement
XXXXXXX MOTORS, INC. LEASE AGREEMENT SCHEDULES AND EXHIBITS
SCHEDULES
A Leased Properties
B Permitted Liens
12.02 Material Agreements
12.03 Changes in Condition
EXHIBITS
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
15.02 Form of Subordination and Non-Disturbance Agreement
T-WEST SALES & SERVICE, INC.
LEASE AGREEMENT SCHEDULES AND EXHIBITS
SCHEDULES
A Leased Properties
B Permitted Liens
12.02 Material Agreements
12.03 Changes in Condition
EXHIBITS
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
15.02 Form of Subordination and Non-Disturbance Agreement
SCHEDULE A
----------
Leased Properties
Lessee: Plains Chevrolet, Inc.
Leased Property: 0000 X-00 Xxxx
Xxxxxxxx, Xxxxx 00000
0000 X-00 Xxxx
Xxxxxxxx, Xxxxx 00000
0000 X-00 Xxxx
Xxxxxxxx, Xxxxx 00000
Initial Base Rent: $517,000
SCHEDULE A
----------
Leased Properties
Lessee: Midway Chevrolet, Inc.
Leased Property: 00000 Xxxxxxxxxx X-00
Xxxxxxxx, Xxxxx 00000
Initial Base Rent: $341,000
SCHEDULE A
----------
Leased Properties
Lessee: Westgate Chevrolet, Inc.
Leased Property: 0000 X-00 Xxxx
Xxxxxxxx, Xxxxx 00000
Initial Base Rent: $484,000
SCHEDULE A
----------
Leased Properties
Lessee: Quality Nissan, Inc.
Leased Property: 0000 X. Xxxxxxx
Xxxxxxxx, Xxxxx 00000
Initial Base Rent: $110,000
SCHEDULE A
----------
Leased Properties
Lessee: Xxxxxxx Motors, Inc.
Leased Property: 0000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxxxx 00000
Initial Base Rent: $979,000
SCHEDULE A
----------
Leased Properties
Lessee: T-West Sales & Service, Inc.
Leased Property: 0000 Xxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Initial Base Rent: $1,452,000
SCHEDULE B
----------
Permitted Liens
SCHEDULE B
----------
Permitted Liens
SCHEDULE B
----------
Permitted Liens
SCHEDULE B
----------
Permitted Liens
SCHEDULE B
----------
Permitted Liens
SCHEDULE B
----------
Permitted Liens
SCHEDULE 12.02
--------------
Material Agreements
-------------------
SCHEDULE 12.03
--------------
Changes in Condition
EXHIBIT 2.02
------------
Payment Account Information
Wiring instructions for the Landlord's operating account are as follows:
FIRST UNION NATIONAL BANK OF VIRGINIA
CHARLOTTE, NC
ABA# 000000000
For Credit to: CAPITAL AUTOMOTIVE REIT, Operating Account
Account # 2050000478240
EXHIBIT 2.04
------------
Base Annual Rent Adjustment
The Base Annual Rent shall be increased, effective as of the commencement of
the fourth Lease Year and as of each subsequent Lease Year by an amount equal to
the Base Annual Rent multiplied by 100 percent (100%) of the change in the Index
during the immediately preceding one (1) year period; provided, however, that,
in the event that the above-calculated adjustment is greater than two percent
and one-half (2 1/2%), such adjustment shall be equal to two and one-half
percent (2 1/2%).
EXHIBIT 5.07
------------
Environmental Reports
EXHIBIT 15.02
-------------
Subordination and Non-Disturbance Agreement
-------------------------------------------
THIS AGREEMENT is made as of this ___ day of __________, 1998, among
_____________, a ___________ organized under the laws of the State of
_____________ ("Lender"), __________________ ("Tenant"), and CAPITAL AUTOMOTIVE
L.P., a Delaware limited partnership ("Landlord").
WITNESSETH:
-----------
WHEREAS, Landlord and Tenant have entered into a certain Lease, dated
____________________ , which lease and all amendments, modifications,
assignments, subleases and other agreements related thereto are attached hereto
as Exhibit A and incorporated herein by this reference (collectively, the
---------
"Lease"), which Lease relates to the premises described therein (the
"Premises"), and
WHEREAS, Lender has made or has committed to make a first mortgage loan to
Landlord in the principal amount not to exceed $_________ (the "Loan"), the Loan
being secured by a mortgage, deed of trust or security deed (collectively, the
"Mortgage") and an assignment(s) of leases and rents from Landlord to Lender
covering the Premises; and
WHEREAS, Tenant has agreed that the Lease shall be subject and subordinate
to the Mortgage held by Lender, provided Tenant is assured of continued
occupancy of the Premises under the terms of the Lease;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the sum of Ten Dollars ($10.00) and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
and notwithstanding anything in the Lease to the contrary, it is hereby agreed
as follows:
1. Subordination of Lease. Lender, Tenant and Landlord do hereby
----------------------
covenant and agree that the Lease with all rights, options, liens and charges
created thereby, is and shall continue to be subject and subordinate in all
respects to the Mortgage and to any renewals, modifications, consolidations,
replacements and extensions thereof and to all advancements made thereunder.
2. Nondisturbance of Tenant. Lender does hereby agree with Tenant that,
------------------------
in the event Lender becomes the owner of the Premises by foreclosure, conveyance
in lieu of foreclosure or otherwise, so long as Tenant complies with and
performs its obligations under the Lease, (a) Lender will take no action which
will interfere with or disturb Tenant's possession or use of the Premises or
other rights under the Lease, and (b) the Premises shall be subject to the Lease
and Lender shall recognize Tenant as the tenant of the Premises for the
remainder of the terms of the Lease in accordance with the provisions thereof,
provided, however, that Lender
shall not be subject to any offsets or defenses which Tenant might have against
any prior landlord except those which arose under the provisions of the Lease
out of such landlord's default and for which Tenant had notified Lender and
given Lender the opportunity to cure same as hereinbelow provided, nor shall
Lender be bound by any rent or additional rent which Tenant might have paid for
more than the current month.
3. Attornment by Tenant. Tenant does hereby agree with Lender that, in
--------------------
the event Lender becomes the owner of the Premises by foreclosure, conveyance in
lieu of foreclosure or otherwise, then Tenant shall attorn to and recognize
Lender as the landlord under the Lease for the remainder of the term thereof,
and Tenant shall perform and observe its obligations thereunder, subject only to
the terms and conditions of the Lease. In such event, Lender shall not be
liable for any act or omission of any prior landlord for which Tenant had
notified Lender and given Lender the opportunity to cure the same, liable for
return of the security deposit unless same was actually delivered to Lender,
bound by any rent paid more than thirty (30) days in advance, or be subject to
any set-off or defense Tenant might have had against any prior landlord. Tenant
further covenants and agrees to execute and deliver upon request of Lender or
its assigns, an appropriate Agreement of Attornment to Lender and any subsequent
titleholder of the Premises.
4. Acknowledgment of Acquisition Rights. Lender acknowledges that Tenant
------------------------------------
has certain purchase rights under the lease. So long as Tenant complies with
the provisions of the Lease, Lender acknowledges that Tenant may exercise such
rights and Lender will honor such rights so long as Tenant pays the acquisition
price to Lender or otherwise obtains a release from Lender.
5. Curative Rights, Modification of Lease, and Advance Payment of Rent.
-------------------------------------------------------------------
So long as the Mortgage remains outstanding and unsatisfied:
(a) Tenant will mail or deliver to Lender, at the address and in the
manner hereinbelow provided, a copy of all notices permitted or required to be
given to the Landlord by Tenant under and pursuant to the terms and provisions
of the Lease. At any time before the rights of the Landlord shall have been
forfeited or adversely affected because of any default of the Landlord, or
within the time permitted the Landlord for curing any default under the Lease as
therein provided, Lender may, but shall have no obligation to, pay any taxes and
assessments, make any repairs and improvements, make any deposits or do any
other act or thing required of the Landlord by the terms of the Lease; and all
payments so made and all things so done and performed by Lender shall be as
effective to prevent the rights of the Landlord from being forfeited or
adversely affected because of any default under the Lease as the same would have
been if done and performed by the Landlord.
(b) Tenant will not consent to the modification of the Lease, nor to
the termination thereof, without the prior written consent of Lender, such
consent not to be unreasonably withheld or delayed, nor will Tenant pay any rent
under the Lease more than thirty
-2-
(30) days in advance. If Lender fails to grant or deny its consent within ten
(10) days after receiving Tenant's request, such consent shall be deemed to have
been given.
6. Consent to Assignment. Tenant acknowledges that Landlord will execute
---------------------
and deliver to Lender an assignment of the Lease as security for the Loan, and
Tenant hereby expressly consents to such assignment.
7. Limitation of Liability. Tenant agrees that if Lender becomes the
-----------------------
owner of the Premises, Tenant shall look solely to the estate or interest of
Lender in the Premises for satisfaction of any obligation which may be or
become owing by Lender to Tenant hereunder or under the Lease.
8. Landlord and Tenant Certifications. Landlord and Tenant hereby
----------------------------------
certify to Lender that the Lease has been duly executed by Landlord and Tenant
and is in full force and effect, that the Lease and any modifications and
amendments specified herein are a complete statement of the agreement between
Landlord and Tenant with respect to the leasing of the Premises, and the Lease
has not been modified or amended except as specified herein; that to the
knowledge of Landlord and Tenant, no party to the Lease is in default
thereunder; that no rent under the Lease has been paid more than thirty (30)
days in advance of its due date; and that Tenant, as of this date, has no
charge, lien or claim of offset under the Lease, or otherwise, against the rents
or other charges due or to become due thereunder.
9. Tenant Estoppel Certifications. With the knowledge that Lender, as
------------------------------
beneficiary of the mortgage encumbering the premises, will place substantial
reliance thereon in connection with the closing and funding of the Loan, Tenant
hereby makes the following certifications:
(a) The term of the Lease commenced on ________, 19__, and will
terminate on ______________.
(b) The Lease, as described above, has not been modified, amended,
assigned or subleased except as set forth in Exhibit A attached hereto, and is
---------
in good standing and in full force and effect.
(c) The Lease provides for rental payments over the term of the Lease,
all as specifically provided in the Lease. No rent under the Lease has been
paid more than thirty (30) days in advance of the due date of same. For the
year ____, monthly payments, which are due on the first (1st) day of each month,
are as follows:
Basic Rent - $________
-3-
Payment of the above amount was timely made for the months of ______,
___and _____, ____, and the next payment of the above amount will be due on
________, ____. In addition to the above amount, certain additional sums are
due to Landlord from Tenant under the Lease, all as specifically set forth in
the Lease.
(d) Tenant has paid a security deposit under the Lease.
(e) To Tenant's knowledge there are no defaults by Landlord under the
Lease and there are no existing circumstances which, with the passage of time,
or notice, or both, would give rise to a default under the Lease.
(f) Tenant has accepted and is occupying the Premises, and Landlord
has no unperformed obligation under the Lease to construct any improvements for
the Tenant related to the Premises.
(g) As of the date of this Agreement, Tenant has no charge, lien,
claim of set-off or defense against rents or other charges due or to become due
under the Lease or otherwise under any of the terms, conditions, or covenants
contained therein.
(h) Tenant has received no notice from any insurance company of any
defects or inadequacies in the Premises or in any part thereof which would
adversely affect the insurability of the Premises.
(i) Except as provided in the Lease, Tenant does not have any right or
option to purchase the Premises.
(j) Except as provided in the Lease, Tenant does not have any rights
or options to renew the Lease or to lease additional space in any building owned
by the Landlord.
10. Tenant Covenants. In addition to other covenants and obligations of
----------------
Tenant contained herein:
(a) From and after the date hereof, Tenant will not pay any rent under
the Lease more than thirty (30) days in advance of its due date.
(b) From and after the date hereof, so long as there shall be any
assignment of Landlord's interest in the Lease to Lender, or any successor
thereto, Tenant will not: nor seek to terminate the Lease by reason of any act
or omission of Landlord until Tenant shall have given written notice of such act
or omission to such Lender's last address furnished Tenant, and until a
reasonable period of time shall have elapsed following the giving of such notice
(not to exceed thirty (30) days, during which period the Lender shall have the
right, but not the obligation, to remedy such act or omission.
-4-
(c) Upon written notice of the default by Landlord under any of the
loan documents held by Lender and assignment of the Landlord's interest under
the Lease by Landlord to Lender, Tenant, if Lender so requests, will recognize
such Lender as the Landlord under the Lease and will thereafter pay rent and
other sums to Lender (or to the party designated by the Lender in writing) in
accordance with the terms of the Lease, and, in such event, such Lender will not
be liable for return of the security deposit unless same was actually delivered
to Lender, bound by any rent paid more than thirty (30) days in advance, or be
subject to any set-off or defense Tenant might have had against any prior
lessor.
11. Notices. Unless and except as otherwise specifically provided herein,
-------
any and all notices, elections, approvals, consents, demands, requests and
responses thereto ("Communications") permitted or required to be given under
this Agreement shall be in writing, signed by or on behalf of the party giving
the same, and shall be deemed to have been properly given and shall be effective
upon the earlier of receipt thereof or three (3) days after deposit thereof in
the United States mail, postage prepaid, certified with return receipt
requested, to the other party at the address of such other party set forth
hereinbelow or at such other address within the continental United States as
such other party may designate by notice specifically designated as a notice of
change of address and given in accordance herewith; provided, however, that the
time period in which a response to any Communication must be given shall
commence on the date of receipt thereof, and provided further that no notice of
change of address shall be effective with respect to Communications sent prior
to the time of receipt of such change. Receipt of Communications hereunder
shall occur upon actual delivery (whether by mail, facsimile transmission,
messenger, courier service, or otherwise) to an individual party or to an
officer, member, or general or limited partner of a party or to any agent or
employee of such party at the address of such party set forth hereinbelow,
subject to change as provided hereinabove. An attempted delivery in accordance
with the foregoing, acceptance of which is refused or rejected, shall be deemed
to be and shall constitute receipt; and an attempted delivery in accordance with
the foregoing by mail, messenger, or courier service (whichever is chosen by the
sender) which is not completed because of changed address of which no notice was
received by the sender in accordance with this provision prior to the sending of
the Communication shall also be deemed to be and constitute receipt. Any
Communication, if given to Lender, must be addressed as follows, subject to
change as provided hereinabove:
----------------------------------
----------------------------------
and, if given to Tenant, must be addressed as follows, subject to change as
provided hereinabove:
----------------------------------
----------------------------------
----------------------------------
-5-
and, if given to Landlord, must be addressed as follows, subject to change as
provided hereinabove:
Capital Automotive, L.P.
0000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
12. Miscellaneous. This Agreement shall be binding upon and inure to the
-------------
benefit of the parties hereto and their respective heirs, legal representatives,
successors, successors-in-title and assigns. When used herein, the term
"Landlord" or "landlord" refers to Landlord and to any successor to the interest
of Landlord under the Lease.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-6-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above written.
LENDER:
Signed, sealed and delivered
in the presence of: By:
Title:
------------------------------ ------------------------------
Witness (CORPORATE SEAL)
TENANT:
Signed, sealed and delivered
in the presence of: By:
Title:
------------------------------ ------------------------------
Witness (CORPORATE SEAL)
LANDLORD:
Signed, sealed and delivered
in the presence of: By:
Title:
------------------------------ ------------------------------
Witness (PARTNERSHIP SEAL)
-7-
EXHIBIT A
Lease Dated __________ from ________________ to _______________ with Exhibit A
attached, all in the form attached hereto as Attachment to Exhibit A.
------------------------
-8-
County of ________________________________:
SS:
State of _________________________________:
This is to certify that on this ____ day of ________, 1998, personally
appeared before me, a notary public of the County (City) aforesaid, known to me
(or satisfactorily identified to me) to be the individual signing on behalf of
Lender in the capacity stated by his signature, and that he acknowledged the
within document to be the act and deed of the Lender.
------------------------------
Notary Public
My commission expires:
-9-
County of ________________________________:
SS:
State of _________________________________:
This is to certify that on this ____ day of _________, 1998, personally
appeared before me, a notary public of the County (City) aforesaid, known to me
(or satisfactorily identified to me) to be the individual signing on behalf of
Tenant in the capacity stated by his signature, and that he acknowledged the
within document to be the act and deed of the Tenant.
------------------------------
Notary Public
My commission expires:
-10-
County of ________________________________:
SS:
State of _________________________________:
This is to certify that on this ____ day of _______, 1998, personally
appeared before me, a notary public of the County (City) aforesaid, known to me
(or satisfactorily identified to me) to be the individual signing on behalf of
Landlord in the capacity stated by his signature, and that he acknowledged the
within document to be the act and deed of the Landlord.
------------------------------
Notary Public
My commission expires:
-11-
