LEASE
THIS LEASE (this "Lease") is entered into as of the ____ day of November,
2000 (the "Commencement Date"), by and between Verde Investments, Inc., an
Arizona corporation (the "Landlord"), whose address for purposes of notice
hereunder is 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, 00000, and
Ugly Duckling Car Sales And Finance Corporation, an Arizona corporation (the
"Tenant"), whose address for purposes of notice hereunder is Attn.: General
Counsel, 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000.
R E C I T A L S
This Lease is made with reference to the following facts and objectives:
Landlord is the owner of the following: (i) certain tract(s) or parcel(s)
of land located in Phoenix, Arizona, and more particularly described on the
attached and incorporated Exhibit "A" (the land described above, together with
all rights, interests, easements, rights of way and appurtenances related
thereto, shall hereinafter be referred to as the "Land"); and (ii) a building
located on the Land and all other structures and improvements existing or to be
constructed on the Land, together with all fixtures and equipment therein owned
by Landlord and used in the operation of the same (collectively, the
"Improvements"). The Land and Improvements are hereinafter collectively referred
to as the "Premises." No easement for light, air or view is included with or
appurtenant to the Premises.
Pursuant to all of the terms, conditions, covenants and provisions of this
Lease, Tenant desires to lease the Premises from Landlord, and Landlord desires
to lease the Premises to Tenant, for the rents and during the terms hereinafter
set forth.
Tenant has examined the title of the Premises, the physical condition of
the Premises, environmental studies and reports of the Premises, and the
economic feasibility of conducting its business in and from the Premises. Tenant
has determined that the same are satisfactory to Tenant, and Tenant accepts the
Premises on an "AS IS - WHERE IS" basis. TENANT ACKNOWLEDGES THAT LANDLORD
(WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND
WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES, INCLUDING ANY
WARRANTY OR REPRESENTATION AS TO ITS FITNESS FOR USE OR PURPOSE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE, AS TO THE QUALITY OF THE MATERIAL
OR WORKMANSHIP THEREIN, LATENT OR PATENT, AS TO LANDLORD'S TITLE THERETO, OR AS
TO VALUE, COMPLIANCE WITH SPECIFICATIONS, LOCATION, USE, CONDITION,
MERCHANTABILITY, QUALITY, DESCRIPTION, DURABILITY OR OPERATION, IT BEING AGREED
THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. Tenant acknowledges
that the Premises are of its selection and to its specifications, and that the
Premises have been inspected by Tenant and are satisfactory to it. In the event
of any defect or deficiency in the Premises of any nature, whether patent or
latent, Landlord shall not have any responsibility or liability with respect
thereto or for any incidental or consequential damages (including strict
liability in tort).
It is the parties' objective to provide for an absolute "bond equivalent"
net net net lease to Landlord; the Basic Rent (as hereinafter defined) payable
by Tenant hereunder shall be an absolute "bond equivalent" net net net return to
Landlord and Tenant shall pay all costs and expenses relating to the Premises
and Tenant's operations thereon. Landlord would not have entered into this Lease
if it did not meet the aforesaid criteria.
NOW, THEREFORE, IN CONSIDERATION of the aforesaid Recitals, and in
consideration of the Premises leased by Landlord to Tenant hereby, and in
consideration of the rents and covenants to be paid and performed by Tenant
hereunder, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties covenant and agree as
follows:
1. LEASE.
1.1. Demise of Premises Landlord hereby demises the Premises to Tenant, and
Tenant hereby lets and accepts the Premises from Landlord, for the term herein
described.
1.2. Title and Condition The Premises are demised and let "AS IS" subject
to all matters of record and all other title exceptions, including but not
limited to (a) the rights of any parties in possession and the existing state of
the title as of the commencement of the term of this Lease, (b) any state of
facts which an accurate survey or physical inspection thereof might show, (c)
all zoning regulations, restrictions, rules and ordinances, building
restrictions and other laws and regulations now in effect or hereafter adopted
by any governmental authority having jurisdiction over the condition of any
buildings, structures and other improvements located thereon, all as of the
commencement of the term of this Lease, without representation or warranty by
Landlord. Tenant represents that it has examined the title to and the condition
of the Premises and has found the same to be satisfactory to it.
1.3. Use of Leased Premises
(a) Tenant shall use the Premises for the purpose of commercial
offices and activities incidental and related thereto (the "Intended Use").
Tenant agrees to remain open for business and to operate the Intended Use
in all or substantially all of the Premises during the Term. Tenant may
occupy and use the Premises for no use other than the Intended Use without
Landlord's consent, which shall not be unreasonably withheld conditioned or
delayed. In no event, however, shall the Premises be used for a use which
would (i) have a permanent and material adverse effect on the value of the
Premises, (ii) increase (when compared to use as the Intended Use) the
likelihood that Tenant, Landlord or Lender would incur liability under any
provisions of any Environmental Laws, or (iii) result in or give rise to
any material environmental deterioration or degradation of the Premises.
Tenant shall not create or suffer to exist any public or private nuisance,
hazardous or illegal condition or waste on or with respect to the Premises.
Tenant shall not use, occupy or permit any of the Premises to be used or
occupied, nor do or permit anything to be done in or on any of the
Premises, in a manner which would (A) make void or voidable any insurance
which Tenant is required hereunder to maintain then in force with respect
to any of the Premises, or (B) affect the ability of Tenant to obtain any
insurance which Tenant is required to furnish hereunder, (C) impair
Landlord's title to the Premises, or in such manner as might reasonably
make possible a claim or claims of adverse usage or adverse possession by
the public, as such, or third Persons, or of implied dedication of the
Premises or any portion thereof, or (D) conflict with the terms or
conditions of any instrument or agreement between Landlord and Tenant.
Nothing contained in this Lease and no action by Landlord shall be
construed to mean that Landlord has granted to Tenant any authority to do
any act or make any agreement that may create any such third party or
public right, title, interest, lien, charge or other encumbrance upon the
estate of the Landlord in the Premises.
(b) Tenant shall not conduct its business operation in the Premises
unless and until (and only during such time as) all necessary certificates
of occupancy, permits, licenses and consents from any and all appropriate
governmental authorities have been obtained by Tenant and are in full force
and effect.
1.4. Quiet Enjoyment For so long as no Event of Default (as hereinafter
defined) has occurred and is continuing hereunder, Landlord warrants peaceful
and quiet enjoyment of the Premises by Tenant against acts of Landlord or anyone
claiming through Landlord, provided that Landlord and its agents may enter upon
and examine the Premises at reasonable times. Exercise by Landlord of its rights
to come upon the Premises as set forth in this Lease shall not constitute a
violation of this Section.
2. TERM.
2.1. Term Subject to the terms and conditions hereof, Tenant shall have and
hold the Premises for a primary term (herein called the "Primary Term")
commencing on the Commencement Date and ending at midnight on December 31, 2020
unless this Lease shall be sooner terminated or extended. Tenant shall have the
right and option to extend this Lease for four (4) consecutive extended terms,
of five (5) years each (herein, collectively called the "Extended Terms" and
individually, an "Extended Term" and together with the Primary Term, sometimes
hereinafter called the "Term" "term of this Lease" or "term hereof"). If no
Event of Default shall exist at the time of exercise of such option, each
Extended Term shall commence on the day immediately succeeding the expiration
date of the Primary Term or the preceding Extended Term and shall end at
midnight on the day immediately preceding the fifth anniversary of the first day
of such Extended Term. Provided no Event of Default shall exist at the time of
exercise of such option, Tenant may exercise each said option to extend this
Lease for an Extended Term by giving written notice to that effect at least six
(6) months prior to the expiration of the then existing term. If Tenant fails to
exercise an option to extend the Term six (6) months or more prior to the
expiration of the then current Term, Tenant's option to extend the Term shall
not be terminated and this Lease shall not expire unless Landlord delivers to
Tenant written notice of Tenant's failure to exercise its option to extend the
Term of this Lease and Tenant then fails to exercise the option within fifteen
(15) days after receipt of the written notice from Landlord. If Tenant does not
exercise any such option in a timely manner, then Landlord shall have the right
during the remainder of the Term of this Lease to advertise the availability of
the Premises for reletting and to erect upon the Premises signs appropriate for
the purpose of indicating such availability. The term "Lease Year" shall mean a
calendar year, except that the first partial "Lease Year" (the "First Lease
Year") shall commence on the "Commencement Date and expire on December 31, 2000.
3. BASIC RENT; ADDITIONAL RENT
3.1. Basic Rent Tenant covenants to pay to Landlord as and for the rental
of the Premises the amounts set forth below (the ---------- "Basic Rent"):
(a) For and with respect to the First Lease Year the amount of
$18,750.00 per calendar month (but if the Commencement Date does not occur
on the first day of a calendar month, the installment for the period from
the Commencement Date to the end of the calendar month in which the
Commencement Date occurs shall be paid on the Commencement Date and shall
be prorated based on a thirty (30) day month).
(b) For and with respect to the second Lease Year (i.e., calendar year
2001), the amount of $ 225,000.00, payable in equal monthly installments of
$18,750.00 .
(c) Basic Rent shall be adjusted commencing with the first (1st) day
of the third Lease Year and as of the first (1st) day of each Lease Year
thereafter (each such date being referred to herein as an "BR Adjustment
Date" and each such Lease Year commencing with the third Lease Year being
referred to herein as a "BR Period"). Basic Rent for the first BR Period
and for each subsequent BR Period, including each BR Period during any
Extended Terms, will be adjusted on the first BR Adjustment Date by an
amount calculated by multiplying the Basic Rent then in effect by five
percent (5%).
(d) If an option to extend the Term is exercised, for and with respect
to the applicable Extended Term, at the rate equal to ninety-five percent
(95%) of fair market rental value, but in no event less than the Basic Rent
payable in the last year of the prior portion of the Term ("Extended Term
Basic Rent"). Fair market rental value will be determined as of the first
day of the applicable Extended Term but at the time and on the basis set
forth in Section 11.3 hereof.
Tenant unconditionally and irrevocably agrees to make the Basic Rent
payments directly to Landlord or Landlord's designee and to pay the same on the
first day of each month, commencing on the Commencement Date. After any Event of
Default, Landlord shall have the right to require that such payments be made in
immediately available funds.
3.2 Lease Security On or before the Commencement Date, Tenant shall pay to
Landlord the sum of $375,000.00 as and for a security deposit (the "Security
Deposit"). The Security Deposit shall be held by Landlord as security for the
faithful performance by Tenant of all the terms, covenants, and conditions of
this Lease to be kept and performed by Tenant during the Lease Term. Landlord is
not required to hold the Security Deposit in trust and may hold and commingle
the Security Deposit with other funds of Landlord. Landlord shall not be
required to pay to Tenant any interest on the Security Deposit at any time. If
Tenant defaults with respect to any provision of this Lease, Landlord may, but
shall not be required to, use, apply or retain all or any part of this Security
Deposit for the payment of any Rent or any other amount payable by Tenant, or
for the payment of any amount which Landlord may spend or become obligated to
spend by reason of Tenant's default, or to compensate Landlord for any other
loss or damage which Landlord may suffer by reason of Tenant's default. If any
portion of the Security Deposit is so used or applied, Tenant shall, within five
(5) days after written demand therefor, deposit cash with Landlord in an amount
sufficient to restore the Security Deposit to its original amount and Tenant's
failure to do so shall be a material breach of this Lease. If Landlord
terminates this Lease as a result of any default of Tenant, then the Security
Deposit shall be applied to the damages suffered by. If Tenant shall fully and
faithfully perform every provision of this Lease to be performed by it, the
Security Deposit or any balance thereof shall be returned to Tenant or, at
Landlord's option, to the last assignee of Tenant's interest hereunder, no
earlier than thirty (30) days after the expiration of the Lease Term. In the
event of termination of Landlord's interest in this Lease, Landlord shall
transfer the Security Deposit to Landlord's successor in interest and Landlord
shall be discharged from all liability in regard thereto. No
successor-in-interest to Landlord shall be liable for the return of all or any
portion of the Security Deposit to Tenant except to the extent the Security
Deposit transferred to such successor-in-interest. Performance of Tenant's
obligations under this Lease shall also be secured by the Tenant's interests in
and possession of the Premises. Upon the occurrence of any event of default by
Tenant, Landlord may terminate Tenant's interests in and possession of the
Premises in accordance with Section 10 hereof. Performance of Tenant's
obligations under this Lease shall also be secured by a statutory lien on all
personal property of Tenant at any time located on or at the Premises and Tenant
shall execute any and all security agreements and financing statements as
Landlord may require from time to time to evidence and perfect the statutory
lien. Neither the Security Deposit, Tenant's interest in and possession of the
Premises, Landlord's statutory lien or any other security for Tenant's
obligations under this Lease shall limit or reduce Landlord's exercise of any or
all of its rights and remedies under this Lease.
3.3. Additional Rent Tenant shall pay and discharge before the imposition
of any fine, lien, interest or penalty may be added thereto for late payment
thereof, as Additional Rent, all other amounts and obligations which Tenant
assumes or agrees to pay or discharge pursuant to this Lease, together with
every fine, penalty, interest and cost which may be added by the party to whom
such payment is due for nonpayment or late payment thereof. All references in
this Lease to Basic Rent shall include the Additional Rent payable by Tenant
pursuant to this Lease. In the event of any failure by Tenant to pay or
discharge any of the foregoing, Landlord shall have all rights, powers and
remedies provided herein, by law or otherwise, in the event of nonpayment of
Basic Rent.
3.4. Late Charge If any installment of Basic Rent is not paid within five
(5) days after notice that the same is due and not paid, Tenant shall pay to
Landlord or Lender, as the case may be, on demand, as Additional Rent, a late
charge equal to three percent (3%) (the "Late Charge") on such overdue
installment of Basic Rent. Such payment shall be in addition to, and not in lieu
of, the interest payable pursuant to Section 11.17.
3.5. True Lease Landlord and Tenant agree that this Lease is a true lease
and does not represent a financing arrangement. Each party shall reflect the
transactions represented by this Lease in all applicable books, records and
reports (including, without limitation, income tax filings) in a manner
consistent with "true lease" treatment rather than "financing" treatment.
3.6. Net Lease; Non-Terminability
(a) This is an absolutely net lease to Landlord. It is the intent of
the parties hereto that the Basic Rent payable under this Lease shall be an
absolutely net return to Landlord and that Tenant shall pay all costs and
expenses relating to the Premises and operations carried on therein,
including but not limited to costs and expenses relating to any period
prior to the Commencement Date. Any amount or obligation herein relating to
the Premises which is not expressly declared to be that of Landlord shall
be deemed to be an obligation of Tenant to be timely performed by Tenant at
Tenant's expense. Basic Rent, Additional Rent and all other sums payable
hereunder by Tenant, shall be paid without notice, demand, set-off,
counterclaim, abatement, suspension, deduction or defense.
(b) This Lease shall not terminate nor shall Tenant have any right to
terminate this Lease, nor shall Tenant be entitled to any abatement or
reduction of rent hereunder, nor shall the obligations of Tenant under this
Lease be affected by reason of: (i) any damage to or destruction of all or
any part of the Premises from whatever cause; (ii) the taking in whole or
in part of the Premises or any portion thereof by condemnation, requisition
or otherwise except as provided in Article 7; (iii) the prohibition,
limitation or restriction of Tenant's use of all or any part of the
Premises, or any interference with such use; (iv) any eviction by paramount
title or otherwise; (v) Tenant's acquisition or ownership of all or any of
the Premises otherwise than as expressly provided herein; (vi) any default
on the part of Landlord under this Lease, or under any other agreement to
which Landlord and Tenant may be parties; (vii) any abandonment of the
Premises by Tenant or (viii) any other cause whether similar or dissimilar
to the foregoing, any present or future law to the contrary
notwithstanding. It is the intention of the parties hereto that the
obligations of Tenant hereunder shall be separate and independent covenants
and agreements, that the Basic Rent, the Additional Rent and all other sums
payable by Tenant hereunder shall continue to be payable in all events and
that the obligations of Tenant hereunder shall continue unaffected, unless
the requirement to pay or perform the same shall have been terminated
pursuant to Article 7 of this Lease.
(c) Tenant agrees that it will remain obligated under this Lease in
accordance with its terms, and it will not take any action to terminate,
rescind or avoid this Lease because of: (i) any readjustment, liquidation,
dissolution, or winding-up or other proceeding affecting Landlord or its
successors-in-interest or (ii) any action with respect to this Lease which
may be taken by any trustee or receiver of Landlord or its
successors-in-interest or by any court in any such proceeding.
(d) To the extent permitted by applicable law, Tenant waives all
rights which may now or hereafter be conferred by law (i) to quit,
terminate or surrender this Lease or the Premises or any part thereof, or
(ii) to any abatement, suspension, deferment or reduction of the Basic
Rent, Additional Rent or any other sums payable under this Lease.
4. PAYMENT OF IMPOSITIONS, TAXES AND ASSESSMENTS; COMPLIANCE WITH LAW;
ENVIRONMENTAL MATTERS
4.1. Payment of Impositions Tenant shall pay or discharge all Impositions
(as hereinafter defined) when due, including but not limited to Impositions
relating to any period prior to the Commencement Date. Notwithstanding the
foregoing provision of this Section 4.1, Tenant shall not be required to pay any
franchise, corporate, estate, inheritance, succession, transfer (other than
transfer taxes, recording fees, or similar charges payable in connection with a
conveyance hereunder to Tenant), income or excess profits taxes of Landlord
hereunder. Tenant agrees to furnish to Landlord and Lender, evidence of the
payment of the taxes described in Section 11.12(a)(i) within thirty (30) days
after payment thereof. Tenant agrees to furnish evidence of payment of other
Impositions with fifteen (15) days of Landlord's request therefor. In the event
that any Imposition levied or assessed against the Premises becomes due and
payable during the term hereof and may be legally paid in installments, Tenant
shall have the option to pay such Imposition in installments. In such event,
Tenant shall be liable only for those installments which become due and payable
during the term hereof or which were due and payable prior to the term hereof.
4.2. Compliance with Laws Tenant shall, at its expense, comply with and
shall cause the Premises to comply with all governmental statutes, laws, rules,
orders, regulations and ordinances, including without limitation, the Americans
with Disabilities Act of 1990, as the same may be amended from time to time, all
fire regulations, occupational health and safety laws, applicable point of sale
laws, building codes, Environmental Laws, zoning and land use laws and
regulations, and any other law the failure to comply with which at any time
would materially affect Landlord or the Premises or any part thereof, or the use
thereof, including those which require the making of any structural, unforeseen
or extraordinary changes, whether or not any of the same involve a change of
policy on the part of the body enacting the same. Tenant shall, at its expense,
comply with all changes required in order to obtain the Required Insurance (as
hereinafter defined), and with the provisions of all contracts, agreements,
instruments and restrictions existing at the commencement of this Lease or
thereafter suffered or permitted by Tenant affecting the Premises or any part
thereof or the ownership, occupancy or use thereof.
4.3. Permitted Contests Provided that Tenant shall have complied with, and
shall continue to comply with, its obligations under Section 4.2, Tenant may
contest, in good faith and at its expense and in accordance with all laws and
governmental requirements, the existence, the amount or the validity of the
requirements imposed pursuant to Section 4.2, or the extent of its liability
therefor, by appropriate proceedings. At least thirty (30) days prior to any
such contest, and as a condition thereto, Tenant shall notify Landlord as to the
proposed contest in reasonable detail, and Landlord shall have the right to
require Tenant to post security in amount and form reasonably required by
Landlord. No such contest or proceedings shall in any way eliminate or otherwise
interfere with Tenant's obligation to make timely payments of Basic Rent and
Additional Rent under this Lease. Tenant further agrees that each such contest
shall be promptly prosecuted to a final conclusion. Tenant shall pay, indemnify
and save Landlord harmless against, any and all losses, judgments, decrees and
costs (including all attorneys' fees, appearance costs and expenses) incurred by
Landlord during the Lease Term in connection with any such contest and shall,
promptly after the final settlement, compromise or determination of such
contest, fully pay and discharge the amounts which shall be levied, assessed,
charged or imposed or be determined to be payable therein or in connection
therewith, together with all penalties, fines, interests, costs and expenses
thereof or in connection therewith, and perform all acts, the performance of
which shall be ordered or decreed as a result thereof. No such contest shall
subject Landlord to the risk of any criminal liability or shall subject the
Premises to the risk of foreclosure.
4.4. Hazardous Materials Tenant shall:
(a) not cause, or permit any Hazardous Material (as defined below) to
exist on or discharge from the Premises (except for items sold or used in
the ordinary course of Tenant's business and for which any required
licenses and permits are issued and in any event in accordance with
Environmental Laws), and shall promptly: (i) pay any claim against Tenant,
Landlord, Lender or the Premises; (ii) remove any charge or lien upon any
of the Premises; and (iii) defend, indemnify and hold Landlord and Lender
harmless from any and all claims, expenses, liability, loss or damage
(including reasonable attorneys' fees) resulting from any Hazardous
Material that at any time exists on or is discharged from the Premises
except to the extent it is the direct result of the actual gross negligence
or willful misconduct of Landlord;
(b) not cause or permit any Hazardous Material to exist on or
discharge from any property owned or used by Tenant which would result in
any charge or lien upon the Premises and shall promptly: (i) pay any claim
against Tenant, Landlord, Lender or the Premises; (ii) remove any charge or
lien upon the Premises; and (iii) defend, indemnify and hold Landlord and
Lender harmless from any and all claims, expenses, liability, loss or
damage (including reasonable attorneys' fees) resulting from the existence
or discharge of any such Hazardous Material except to the extent it is the
direct result of the actual gross negligence or willful misconduct of
Landlord;
(c) notify Landlord and Lender within ten (10) days after Tenant first
has knowledge of any of the following:
(i) that Hazardous Material exists on or has been discharged from
or onto the Premises (whether originating thereon or migrating to the
Premises from other property);
(ii) that Tenant is subject to investigation by any governmental
authority evaluating whether any remedial action is needed to respond
to the release or threatened release of any Hazardous Material into
the environment from the Premises;
(iii) notice or claim to the effect that Tenant is or may be
liable to any person as a result of the release or threatened release
of any Hazardous Material into the environment from the Premises;
(iv) notice that the Premises are subject to an environmental
lien;
(v) notice of violation to Tenant or awareness by Tenant of a
condition which might reasonably result in a notice of violation of
any applicable Environmental Law.
(d) comply, and cause the Premises to comply, with all statutes, laws,
ordinances, rules and regulations of all local, state or federal
authorities having authority over the Premises or any portion thereof or
their use, including without limitation, relative to any Hazardous
Material, petroleum products, asbestos containing materials or PCB's.
(e) comply with all provisions of that certain Prospective Purchaser
Agreement with the Arizona Department of Environmental Quality dated on or
about May 28, 1999.
(f) "Hazardous Material" means any hazardous or toxic material,
substance or waste which is defined by those or similar terms or is
regulated as such under any Environmental Laws. "Environmental Laws" means
any statute, law, ordinance, rule or regulation of any local, county, state
or federal authority having jurisdiction over the Property or any portion
thereof or its use as the same may be amended from time to time, including
but not limited to: (i) the Federal Water Pollution Control Act (33 U.S.C.
Section 1317) as amended; (ii) the Federal Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.) as amended; (iii) the
Comprehensive Environmental Response Compensation and Liability Act (42
U.S.C. Section 9601 et seq.) as amended; (iv) the Toxic Substance Control
Act (15 U.S.C. Section 2601) as amended; and (v) the Clean Air Act (42
U.S.C. Section 7401) as amended.
(g) The Tenant's obligations and liabilities under this Section 4.4
shall survive the expiration or termination of this Lease and shall
include, without limitation, matters arising prior to the Commencement
Date.
5. MAINTENANCE AND REPAIR; ALTERATIONS
5.1. Maintenance and Repair Tenant acknowledges that it has received the
Premises in good condition, repair and appearance. Tenant agrees that, at its
expense, it will keep and maintain the Premises, including any altered, rebuilt,
additional or substituted buildings, structures and other improvements thereto,
in good condition and repair. It will make promptly, all structural and
nonstructural, foreseen and unforeseen, ordinary and extraordinary changes and
repairs or replacements of every kind which may be required to be made to keep
and maintain the Premises in such good condition, repair and appearance and it
will keep the Premises orderly and free and clear of rubbish. Tenant covenants
not to install any underground storage tanks on the Premises. Tenant agrees that
its obligation to maintain and repair the Premises as set forth in this Section
5.1 benefit both Landlord and Tenant, are the sole responsibility of Tenant, and
may not be delegated. Tenant further covenants to perform or observe all terms,
covenants or conditions of any reciprocal easement or maintenance agreement to
which it may at any time be a party or to which the Premises are currently
subject. Tenant shall, at its expense, use its best efforts to enforce
compliance with any reciprocal easement or maintenance agreement benefiting the
Premises by any other person subject to such agreement. Landlord shall not be
required to maintain, repair or rebuild, or to make any Alterations of any
nature to the Premises, or any part thereof, whether ordinary or extraordinary,
structural or nonstructural, foreseen or not foreseen, or to maintain the
Premises or any part thereof in any way. Tenant hereby expressly waives the
right to make repairs at the expense of Landlord which may be provided for in
any law in effect at the time of the commencement of the term of this Lease or
which may thereafter be enacted. If Tenant shall abandon the Premises, it shall
give Landlord and Lender immediate notice thereof. The obligations of the Tenant
to pay Basic Rent and Additional Rent shall not be eliminated, reduced,
suspended, or otherwise impaired by reason of such abandonment of the Premises.
In the event that the Premises shall violate any law and as a result of such
violation an enforcement action is threatened or commenced against Tenant or
with respect to the Premises, then Tenant shall either (i) obtain valid and
effective waivers or settlements of all claims, liabilities and damages
resulting from each such violation, whether the same shall affect Landlord,
Tenant or both, or (ii) take such action as shall be necessary to remove such
violation, including, if necessary, making any necessary repairs or
replacements, structural or otherwise.
5.2. Engineering Report Beginning the Sixth Lease Year, and every five (5)
years thereafter, Tenant shall provide Landlord, upon Landlord's written
request, with an engineering study of the Premises ("Engineering Report")
addressed to Landlord, in form, content and scope reasonably acceptable to
Landlord, prepared by a qualified engineering firm. The Engineering Report shall
include, without limitation, a study or analysis of (a) all structural
components of the Premises, (b) all mechanical, electrical, plumbing, HVAC,
sprinkler, fire suppression, elevators, and other building systems and equipment
designated by Landlord, and (c) the roof of all buildings.
5.3. Encroachments If any Improvements situated on the Premises at any time
during the Term of this Lease shall encroach upon any property, street or
right-of-way adjoining or adjacent to the Premises, or shall violate the
agreements or conditions contained in any restrictive covenant affecting the
Premises or any part thereof, or shall impair the rights of others under or
hinder or obstruct any easement or right-of-way to which the Premises are
subject, then, promptly after the written request of Landlord or any person
affected by any such encroachment, violation, impairment, hindrance or
obstruction, Tenant shall, at its expense, either (i) obtain effective waivers,
or settlements of all claims, liabilities and damages resulting from each such
encroachment, violation, impairment, hindrance or obstruction whether the same
shall affect Landlord, Tenant or both, or (ii) make such changes in the
improvements on the Premises and take such other action as shall be necessary to
remove such encroachments, hindrances or obstructions and to end such violations
or impairments, including, if necessary, the alteration or removal of any
improvement on the Premises. Any such alteration or removal shall be made in
conformity with the requirements of Section 5.4 hereof to the same extent as if
such alteration or removal were an Alteration under the provisions of Section
5.4.
5.4. Alterations Tenant may, at its expense, make additions to and
alterations of the Improvements to the Premises and make substitutions and
replacements thereto (sometimes hereinafter collectively referred to as
"Alterations"), provided that: (i) Landlord approves, which approval shall not
be unreasonably withheld, conditioned or delayed, any Alterations to the
Premises before such alterations are commenced, after having received from
Tenant a complete set of plans and specifications for the proposed work, (ii) in
Landlord's reasonable judgment, the market value of the Premises and the
Intended Use shall not thereby be reduced or impaired and the appearance of the
Property will not be adversely affected; (iii) the Alterations are
architecturally consistent with existing Improvements; (iv) the Alterations
shall be performed in a good and workmanlike manner; (v) such work shall not
violate any term of any restriction to which the Premises are subject or the
requirements of any insurance policy required to be maintained by Tenant
hereunder, and shall be expeditiously completed in compliance with all laws,
ordinances, rules, regulations and requirements applicable thereto, including
without limitation, the Americans with Disabilities Act of 1990 and all
regulations issued thereunder, as the same may be amended from time to time; and
(vi) no Improvements shall be demolished unless Tenant shall have first
furnished Landlord with such surety bonds or other security acceptable to
Landlord as shall be necessary to assure rebuilding of such Improvements. Tenant
shall promptly pay all costs and expenses of each such Alteration, discharge all
liens arising therefrom and procure and pay for all permits and licenses
required in connection therewith. All such Alterations shall be and remain part
of the realty and the property of Landlord and shall be subject to this Lease.
Tenant may place upon the Premises any inventory, trade fixtures, machinery or
equipment belonging to Tenant or third parties and may remove the same at any
time during the Term. Tenant shall repair any damage to the Premises or any
portion thereof (including all Improvements thereon) caused by such removal.
5.5. No Liens Tenant will not, directly or indirectly, create or permit to
be created or to remain, and shall within thirty (30) days of filing of any,
mechanics, contractors or other liens, discharge or bond, at its expense, any
liens with respect to, the Premises or any part thereof or Tenant's interest
therein or the Basic Rent, Additional Rent or other sums payable by Tenant under
this Lease, other than the lien for real estate taxes which are not yet due and
payable. Nothing contained in this Lease shall be construed as constituting the
consent or request, expressed or implied, by Landlord to the performance of any
labor or services or of the furnishing of any materials for any Alterations,
repair or demolition of or to the Premises or any part thereof by any
contractor, subcontractor, laborer, materialman or vendor. Notice is hereby
given that Landlord will not be liable for any labor, services or materials
furnished or to be furnished to Tenant, or to anyone holding the Premises or any
part thereof, and that no mechanic's or other liens for any such labor services
or materials shall attach to or affect the interest of Landlord in and to the
Premises.
6. INSURANCE; INDEMNIFICATION
6.1. Insurance Tenant shall maintain, or cause to be maintained, at its
sole expense, the following insurance on the Premises --------- (herein called
the "Required Insurance"):
(a) Insurance against loss or damage to the Improvements (the
"Improvements Insurance") under a fire and broad form of all risk extended
coverage insurance policy (which shall include flood insurance if the
Premises is located within a flood hazard area), together with an agreed
value endorsement. Such insurance shall be in amounts sufficient to prevent
Landlord or Tenant from becoming a co-insurer under the applicable
policies, and not less than the full replacement cost of the Improvements
(excluding footings and foundations and other parts of the Improvements
which are not insurable) as reasonably determined from time to time by
Landlord but not more frequently than once in any 12-month period. Such
insurance policies may contain reasonable exclusions and deductible amounts
as are common to properties similar to the Premises.
(b) General public liability insurance for the benefit of Landlord,
Tenant and Lender against claims for damages to person or property
occurring on, in or about the Premises and the adjoining streets,
sidewalks, gutters, curbs, passageways and other areas adjacent thereto, if
any, with a combined single limit of at least Five Million Dollars
($5,000,000.00) for personal injury and property damage, such insurance to
include full coverage of the indemnity set forth in Section 6.10. Policies
for such insurance shall be for the mutual benefit of Landlord, Tenant and
Lender, as their respective interests may appear.
(c) Workers' compensation insurance to the extent necessary to protect
Landlord, Tenant and the Premises against workers' compensation claims,
covering all persons employed in connection with any work done on or about
the Premises with respect to which claims for death or bodily injury could
be asserted against Landlord, Tenant or the Premises. Such policy of
workers' compensation insurance shall comply with all of the requirements
of applicable state law.
(d) At any time when any portion of the Premises are being
constructed, altered or replaced, builder's risk insurance (in completed
value non-reporting form) in an amount no less than the actual replacement
value of the Improvements, exclusive of foundations and excavations.
6.2. Permitted Insurers The Required Insurance shall be written by
companies of recognized financial standing authorized to do insurance business
in the state in which the Premises are located and have Bests ratings of A X or
better. The Required Insurance shall name as the insured parties thereunder
Landlord and Tenant, as their interests may appear, and Lender as an additional
insured under a standard "mortgagee" endorsement or its equivalent satisfactory
to Landlord. Landlord shall not be required to prosecute any claim against, or
to contest any settlement proposed by, an insurer. Tenant may, at its expense,
prosecute any such claim or contest any such settlement in the name of Landlord,
Tenant or both with the consent of Landlord, and Landlord will join therein at
Tenant's written request upon the receipt by Landlord of an indemnity from
Tenant against all costs, liabilities and expenses in connection therewith.
6.3. Insurance Claims Insurance claims by reason of damage to or
destruction of any portion of the Premises shall be primarily adjusted by
Tenant, but both Landlord and Lender shall have the right to join with Tenant in
adjusting any such loss and approve any adjustment proposed by Tenant.
6.4. Insured Parties Any loss under any such policy shall be made payable
to Landlord (or, if Landlord so elects, to Lender), subject to the requirements
of Section 6.9. Every policy of Required Insurance shall contain an agreement
that the insurer will not cancel such policy except after thirty (30) days'
written notice to Landlord and Lender and that any loss otherwise payable
thereunder shall be payable notwithstanding any act or negligence of Landlord,
Tenant or Lender which might, absent such agreement, result in a forfeiture of
all or a part of such insurance payment and notwithstanding (i) any foreclosure
or other action taken by a creditor pursuant to any provision of any Mortgage or
other Loan Document upon the happening of a default or Event of Default
thereunder or (ii) any change in ownership of the Premises.
6.5. Delivery of Policies Tenant shall deliver to Landlord promptly after
the delivery of this Lease, the original or duplicate policies or Accord-27 form
certificates of insurers, satisfactory to Lender, evidencing all of the Required
Insurance. Tenant shall, prior to the expiration of any such policy, deliver to
Landlord another original or duplicate of such policy or certificates evidencing
the renewal of any such policy. If Tenant fails to maintain or renew any
Required Insurance, or to pay the premium therefor, or to deliver such
certificate, then Landlord, at its option, but without obligation to do so,
procure such insurance. Any sums so expended by Landlord shall be Additional
Rent hereunder and shall be repaid by Tenant within five (5) days after notice
to Tenant of such expenditure and the amount thereof. together with interest
thereon at the Interest Rate.
6.6. No Double Coverage Tenant shall not obtain or carry separate insurance
covering the same risks as any Required Insurance unless Tenant, Landlord and
Lender are included therein as named insured, with loss payable as provided in
this Lease and the policy contains a first mortgagee endorsement in favor of the
Lender. Tenant shall immediately notify Landlord whenever any such separate
insurance is obtained and shall deliver to Landlord the policies or certificates
evidencing the same. Any insurance which Landlord may elect to carry shall be
excess and not primary coverage.
6.7. Blanket Insurance Anything contained in this Article 6 to the contrary
notwithstanding, all Required Insurance may be carried under a "blanket" or
"umbrella" policy or policies covering other property or liabilities of Tenant,
provided that such policies otherwise comply with the provisions of this Lease
and specify the coverage and amounts thereof with respect to the Premises.
6.8. Damages for Tenant's Failure to Properly Insure Landlord or Lender
shall not be limited in the proof of any damages which Landlord or Lender may
claim against Tenant arising out of or by reason of Tenant's failure to provide
and keep in force insurance, as provided above, to the amount of the insurance
premium or premiums not paid or incurred by Tenant and which would have been
payable under such insurance; but Landlord and Lender shall also be entitled to
recover as damages for such breach, the uninsured amount of any loss, to the
extent of any deficiency in the Required Insurance and damages, costs and
expenses of suit suffered or incurred by reason of or damage to, or destruction
of, the Premises, occurring during any period when Tenant shall have failed to
provide the Required Insurance. Tenant shall indemnify, defend and hold harmless
Landlord and Lender for any liability incurred by Landlord or Lender arising out
of any deductibles for Required Insurance.
6.9. Casualty If all or any part of the Premises shall be damaged or
destroyed by casualty which is insured or required to be insured under this
Lease, or by any other casualty if the cost to repair such other casualty does
not exceed twenty percent (20%) of the total replacement cost of the
Improvements, Tenant shall promptly notify the Landlord thereof, and shall, with
reasonable promptness and diligence, rebuild, replace and repair any damage or
destruction to the Premises, at its expense, in conformity with the requirements
of Section 5.4(a) hereof, in such manner as to restore the same to the same or
better condition as existed prior to such casualty, using materials of the same
or better grade than that of the materials being replaced, and there shall be no
abatement of Basic Rent or Additional Rent. Proceeds of casualty insurance of
$100,000.00 or less shall be paid to Tenant. Proceeds in excess of $100,000.00
shall be held by Landlord or a proceeds trustee (which may be Lender, an escrow
or title company, or a bank or trust company designated by Landlord) and paid to
Tenant, but only against certificates of Tenant, appropriate lien waivers and
such other information reasonably required by Landlord or the proceeds trustee
delivered to Landlord from time to time, but not more frequently than once per
calendar month, as such work or repair progresses. Each such certificate shall
describe the work or repair for which Tenant is requesting payment and the cost
incurred by Tenant in connection therewith and stating that Tenant has not
theretofore received payment for such work and has sufficient funds remaining to
complete the work free of liens or claims. Any proceeds remaining after Tenant
has repaired the Premises shall be delivered to Tenant No payment shall be made
to Tenant if there exists any Event of Default under this Lease. If Tenant is
not required to restore after a casualty, this Lease shall nevertheless remain
in full force and effect, with no abatement of Basic Rent or Additional Rent,
except that Landlord shall have the right to terminate this Lease by notice to
Tenant if Tenant does not agree to restore within sixty (60) days after the
casualty, or if Tenant agrees to restore but does not diligently proceed to do
so.
6.10. Indemnification
(a) Tenant agrees to pay, and to protect, defend, indemnify and save
harmless Landlord, Lender and their agents from and against any and all
actual liabilities, losses, damages, costs, expenses (including all
reasonable attorneys' fees and expenses of Landlord but excluding lost
profits and all other indirect or consequential damages), causes of action,
suits, claims, demands or judgments of any nature whatsoever (i) arising
from any injury to, or the death of, any person or damage to property
(including property of employees and invitees of Tenant) on the Premises or
upon adjoining sidewalks, streets or ways, to the extent not occasioned by
the actual gross negligence or willful misconduct of Landlord, (ii) arising
from the use, non-use, condition, maintenance, repair or occupation of the
Premises or any part thereof or adjoining sidewalks, streets or ways, to
the extent not occasioned by the actual gross negligence or willful
misconduct of Landlord, (iii) arising from violation by Tenant of any
agreement or condition of this Lease or any sublease (including without
limitation the failure to pay Impositions), or any contract or agreement to
which Tenant is a party, or any restriction, law, ordinance or regulation
(including without limitation, the Americans With Disabilities Act of 1990
and all regulations issued thereunder) affecting the Premises or any part
thereof or the ownership, occupancy or use thereof, to the extent not
occasioned by the actual gross negligence or willful misconduct of
Landlord; or (iv) arising out of any permitted contest referred to in
Section 4.3 (collectively, "Indemnified Matters"). Without limiting the
generality of the foregoing, the Indemnified Matters shall include matters
arising prior to the Commencement Date. If Landlord, Lender or any agent of
Landlord or Lender shall be made a party to any such litigation commenced
against Tenant, and if Tenant, at its expense, shall fail to provide
Landlord, Lender or their agents with counsel (upon Landlord's request)
reasonably approved by Landlord, Tenant shall pay all costs and attorneys'
fees and expenses incurred or paid by Landlord, Lender or their agents in
connection with such litigation. Tenant's obligations and liabilities under
this Section 6.10 shall survive the expiration of this Lease. Tenant waives
all claims against Landlord arising from any liability described in this
Section 6.10 (a), except to the extent caused by the actual gross
negligence or willful misconduct of Landlord. The waiver and indemnity
provisions in this paragraph are intended to exculpate and indemnify
Landlord (i) from and against the direct consequences of its own negligence
or fault when Landlord is solely negligent or contributorily, partially,
jointly, comparatively or concurrently negligent with Tenant or any other
person (but is not grossly negligent and has not committed willful
misconduct) and (ii) from and against any liability of Landlord based on
any applicable doctrine of strict liability unless resulting from the gross
negligence or willful misconduct of Landlord.
(b) Should any claim be made against Landlord by a person not a party
to this Lease with respect to any Indemnified Matter, Landlord shall
promptly give Tenant written notice of any such claim, and Tenant shall
thereafter defend or settle any such claim, at its sole expense, on its own
behalf and with counsel of its selection; provided, however, that Tenant's
counsel shall be competent counsel experienced in the type of litigation or
claim at issue and shall be acceptable to Landlord, acting reasonably. Upon
Tenant's assumption of the defense of any claim against Landlord pursuant
to Tenant's indemnity, Landlord shall have the right to participate in the
defense or settlement of the claim with counsel retained and paid by it and
Tenant shall cause the attorneys retained by it to consult and cooperate
fully with counsel for Landlord. In such defense or settlement of any
claims, Landlord shall provide Tenant with originals or copies of all
relevant documents and shall cooperate with and assist Tenant, at no
expense to Landlord. Notwithstanding any provision of this Section 6.10 to
the contrary, Tenant shall not enter into any settlement or agreement in
connection with any Indemnified Matters binding upon or adversely affecting
either Landlord or Lender, or admit any liability or fact in controversy
binding upon or adversely affecting either Landlord or Lender, without the
prior written consent of Landlord or Lender, as the case may be, in such
party's sole discretion.
(c) Landlord agrees to pay, and to protect, defend, indemnify and save
harmless Tenant and its agents from and against any and all liabilities,
losses, damages (actual and consequential), costs, expenses (including all
reasonable attorneys' fees and expenses of Tenant), causes of action,
suits, claims, demands or judgments of any nature whatsoever arising from
the actual gross negligence or willful misconduct of Landlord in connection
with the Premises.
7. CONDEMNATION.
7.1. Assignment of Award Subject to the rights of Tenant set forth in this
Article 7, Tenant hereby irrevocably assigns to Landlord any award or payment to
which Tenant may be or become entitled with respect to Complete, Partial or
Temporary Taking of the Premises or any part thereof, by condemnation or other
eminent domain proceedings pursuant to any law, general or special, by any
governmental authority, whether the same shall be paid or payable in respect of
Tenant's leasehold interest hereunder or otherwise. Notwithstanding the
foregoing, Tenant may recover the value of its personal property at the
Premises, including leasehold improvements if taken, so long as the amount of
the Net Award received by Landlord is at least equal to the net book value of
the Premises as reflected on Landlord's financial statements. Landlord and
Lender shall be entitled to participate in any such proceeding.
7.2. Definitions for Article 7
(a) "Complete Taking" shall mean the occurrence of any actual or
threatened condemnation or other eminent domain proceeding pursuant to any
general or special law, or any agreement with an authority having the power
of eminent domain, which results in the taking or conveyance of (i) the
entire Premises or (ii) such a significant portion of the Premises that, in
the good faith judgment of either Tenant or Landlord, it is uneconomic to
rebuild or restore the remaining portion of the Premises for the continued
operation of the business.
(b) "Partial Taking" shall mean the occurrence of any taking of a
portion of the Premises by condemnation or other eminent domain
proceedings, or any agreement with an authority having the power of eminent
domain, which does not result in the taking or conveyance of such a
significant portion of the Premises that, in the good faith judgment of
either Tenant or Landlord, it is uneconomic to rebuild or restore the
remaining portion of the Premises for the continued operation of the
business.
(c) "Temporary Taking" shall mean the occurrence of a temporary taking
of the use or occupancy of the Premises or any part thereof by any
governmental authority.
(d) "Net Award" shall mean all amounts payable as a result of any
condemnation or other eminent domain proceeding and all amounts payable
pursuant to any agreement with any condemning authority (which agreement
shall be deemed to be a taking) which has been made in settlement of or
under threat of any condemnation or other eminent domain proceeding
affecting the Premises, less all expenses incurred as a result thereof not
otherwise paid by Tenant and the collection of such amounts.
(e) "Purchase Offer" shall mean a purchase offer as described in this
Article 7.
7.3. Complete Taking Upon the occurrence of a Complete Taking Landlord or
Tenant may elect to terminate this Lease by delivering a notice of termination
specifying a Termination Date occurring not less than sixty (60) days after the
delivery of such notice, and this Lease shall continue in full force and effect
without abatement of rent until the Termination Date.
7.4. Partial Taking Upon the occurrence of any Partial Taking, this Lease
shall continue in full effect without abatement or reduction of Basic Rent,
Additional Rent or other sums payable by Tenant. In the event Landlord receives
a Net Award in connection with any such Partial Taking Landlord shall, provided
there is no Event of Default hereunder, make the Net Award available to Tenant,
and Tenant shall, regardless of the adequacy of the award, make repairs in
accordance with the requirements of Section 5.4(a) hereof so that, thereafter,
the Premises shall be, as nearly as possible, in a condition as good as the
condition thereof immediately prior to such Taking, but, if such Net Award shall
be in excess of One Hundred Thousand Dollars ($100,000), the proceeds shall be
held by Landlord or a proceeds trustee (which may be Lender or Lender's
designee, or a bank or trust company designated by Landlord), and paid only upon
delivery to Landlord of (i) certificates of Tenant identifying the repair work
for which Tenant is requesting payment and the cost incurred by Tenant in
connection therewith and stating that Tenant has not theretofore received
payment for such work; (ii) appropriate lien waivers; and (iii) such other
information as may be reasonably required by the proceeds trustee. Any Net Award
remaining after such repairs have been made shall be delivered to Tenant if no
Event of Default exists; otherwise, the excess shall be paid to Landlord.
7.5. Temporary Taking Upon the occurrence of any Temporary Taking, Tenant
shall, promptly after any such Temporary Taking ceases, at its expense, repair
any damage caused thereby in conformity with the requirements of Section 5.4(a)
hereof so that, thereafter, the Premises shall be, as nearly as possible, in a
condition as good as the condition thereof immediately prior to such Temporary
Taking. In the event of such Temporary Taking, Tenant shall be entitled to
receive the entire Net Award payable by reason of such Temporary Taking, less
any costs incurred by the Landlord in connection therewith. If the cost of any
repairs required to be made by Tenant pursuant to this Section 7.5 shall exceed
the amount of the Net Award, the deficiency shall be paid by Tenant. No payments
shall be made to Tenant pursuant to this Section 7.5, if any Event of Default
shall exist under this Lease. No Basic Rent or Additional Rent shall xxxxx
through the duration of such Temporary Taking.
8. ASSIGNMENT AND SUBLETTING.
8.1. Power to Assign and Sublet With Landlord's prior written consent,
which shall not be unreasonably withheld, conditioned or delayed, Tenant may
sublet all of the Premises and may assign all its rights and interests under
this Lease (provided that each such sublease or assignment shall expressly be
made subject to all of the provisions, including the use provisions of Section
1.3 of this Lease). Tenant shall, within ten (10) days after the execution and
delivery of any such assignment or the sublease of all of the Premises, deliver
a conformed copy thereof to Landlord.
8.2. Assumption by Assignee; Tenant Remains Liable If Tenant assigns its
rights and interests under this Lease, the assignee under such assignment shall
expressly assume all the obligations of Tenant hereunder in an instrument
delivered to Landlord at the time of such assignment. No assignment or sublease
made as permitted by this Article 8 shall affect or reduce any of the
obligations of Tenant hereunder or the obligations of any guarantor of Tenant,
and all such obligations shall continue in full force and effect as obligations
of a principal and not as obligations of a guarantor or surety, to the same
extent as though no assignment or subletting had been made, provided that
performance by any such assignee or sublessee of any of the obligations of
Tenant under this Lease shall be deemed to be performance by Tenant. No sublease
or assignment made as permitted by this Article 8 shall impose any obligations
on Landlord or otherwise affect any of the rights of Landlord under this Lease.
Tenant hereby grants a security interest to Landlord in all subleases and all
rents, issues and profits derived and to be derived therefrom, to secure
performance of Tenant's obligations under this Lease. Landlord hereby grants to
Tenant a license to collect all rents payable under any sublease (up to one
month in advance), but upon any Event of Default, Landlord may in its sole
discretion revoke such license and collect the rents directly from any sublessee
and retain the same.
8.3. Other Transfers Void Neither this Lease nor the Term hereby demised
shall be mortgaged by Tenant, nor shall Tenant mortgage or pledge the interest
of Tenant in and to any sublease of the Premises or the rentals payable
thereunder. Any mortgage, pledge, sublease or assignment made in violation of
this Article 8 shall be void.
9. FINANCIAL INFORMATION.
Tenant will furnish to Landlord and Lender (i) Tenant's annual audited
financial statements within ninety (90) days after the end of Tenant's fiscal
year, and (ii) Tenant's unaudited quarterly financial statements within
forty-five (45) days after the end of each quarter.
10. DEFAULT.
10.1. Events of Default Any of the following occurrences or acts shall
constitute an event of default (herein called an "Event of Default") under this
Lease:
(a) If Tenant, at any time during the continuance of this Lease (and
regardless of the pendency of any bankruptcy, reorganization, receivership,
insolvency or other proceedings at law, in equity, or before any
administrative tribunal, which have or might have the effect of preventing
Tenant from complying with the terms of this Lease), shall (i) fail to make
any payment when due of Basic Rent, Additional Rent or other sum herein
required to be paid by Tenant hereunder for ten (10) days after written
notice of such failure; (ii) fail to continuously operate the Premises for
the Intended Use in accordance with the terms and conditions of Section 1.3
of this Lease for thirty (30) days after written notice of such failure; or
(iii) fail to observe or perform any other provision hereof for thirty (30)
days after written notice of such failure to observe or perform; or
(b) If any representation or warranty of Tenant hereunder or set forth
in any notice, certificate, demand, request or other instrument delivered
pursuant to, or in connection with this Lease or in connection with the
acquisition of the Premises by Landlord, shall either prove to be false or
misleading in any material respect as of the time when the same shall have
been made and Landlord actually suffers damages as a proximate cause
thereof which are not paid by Tenant; or
(c) If Tenant shall file a petition commencing a voluntary case under
the Federal Bankruptcy Code or any federal or state law (as now or
hereafter in effect) relating bankruptcy, insolvency, reorganization,
winding-up or adjustment of debts (hereinafter collectively called
"Bankruptcy Law") or if Tenant shall: (i) apply for or consent to the
appointment of, or the taking of possession by, any receiver, custodian,
trustee, United States Trustee or liquidator (or other similar official) of
the Premises or any part thereof or of any substantial portion of Tenant's
property; or (ii) generally not pay its debts as they become due, or admit
in writing its inability to pay its debts generally as they become due; or
(iii) make a general assignment for the benefit of its creditors; or (iv)
file a petition commencing a voluntary case under or seeking to take
advantage of any Bankruptcy Law; or (v) fail to controvert in timely and
appropriate manner, or in writing acquiesce to, any petition commencing an
involuntary case against Tenant or otherwise filed against Tenant pursuant
to any Bankruptcy Law; or (vi) take any action in furtherance of any of the
foregoing; or
(d) If an order for relief against Tenant shall be entered in any
involuntary case under the Federal Bankruptcy Code or any similar order
against Tenant shall be entered pursuant to any other Bankruptcy Law, or if
a petition commencing an involuntary case against Tenant or proposing the
reorganization of Tenant under any Bankruptcy Law shall be filed and not be
discharged or denied within ninety (90)) days after such filing, or if a
proceeding or case shall be commenced in any court of competent
jurisdiction seeking: (i) the liquidation, reorganization, dissolution,
winding-up or adjustment of debts of Tenant; or (ii) the appointment of a
receiver, custodian, trustee, United States Trustee or liquidator (or any
similar official) of the Premises or any part thereof or of Tenant or of
any substantial portion of Tenant's property; (iii) the attachment of the
Premises or any portion thereof, or (iv) any similar relief as to Tenant
pursuant to any Bankruptcy Law, and any such proceeding or case shall
continue undismissed for ninety (90) days after such relief is granted; or
(e) If the Premises shall be left both unattended and without
maintenance as provided herein, for a period of thirty (30) consecutive
days or more; or
(f) If there occurs an "Event of Default" (as defined therein) under
any of the leases listed on Exhibit "C" and the Event of Default is not
cured within the applicable cure period and as a result thereof Landlord
either terminates the other lease or recovers possession of the premises
leased pursuant to the other lease.
10.2. Landlord's Remedies
(a) In the event of an Event of Default and Tenant's failure to cure
the Event of Default within the applicable cure period, Landlord shall have
the right at its election to give Tenant ten (10) days' written notice of
Landlord's intention to terminate the term of this Lease on a date
specified in such notice. Thereupon, the term of this Lease and the estate
hereby granted shall terminate on such date as completely and with the same
effect as if such date were the date fixed herein for the expiration of the
term of this Lease, and all rights of Tenant hereunder shall terminate, but
Tenant shall remain liable as provided herein.
(b) In the event of an Event of Default and Tenant's failure to cure
the Event of Default within the applicable cure period, Landlord shall have
the immediate right, whether or not the term of this Lease shall have been
terminated pursuant to Section 10.2(a), to (i) re-enter and repossess the
Premises or any part thereof by force, summary proceedings, ejection or
otherwise, and (ii) remove all persons and property therefrom, Tenant
hereby expressly waiving any and all notices to quit, cure or vacate
provided by current or any future law. Landlord shall be under no liability
by reason of any such re-entry, repossession or removal. No such re-entry
or taking of possession of the Premises by Landlord shall be construed as
an election on Landlord's part to terminate the term of this Lease unless a
written notice of such intention to be given to Tenant pursuant to Section
10.2(a).
(c) At any time or from time to time after the repossession of the
Premises or any part thereof pursuant to Section 10.2(b), whether or not
the term of this Lease shall have been terminated pursuant to Section
10.2(a), Landlord may (but shall be under no obligation to) relet the
Premises or any part thereof for the account of Tenant, in the name of
Tenant or Landlord or otherwise, without notice to 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
reasonable conditions (which may include concessions or free rent) and for
such uses as Landlord may reasonably determine, and Landlord may collect
and receive any rents payable by reason of such reletting. Landlord shall
not be responsible or liable for any failure to relet the Premises or any
part thereof or for any failure to collect any rent due upon any such
reletting.
(d) No termination of the term of this Lease pursuant to Section
10.2(a), by operation of law or otherwise, and no repossession of the
Premises or any part thereof pursuant to Section 10.2(b) or otherwise, and
no reletting of the Premises or any part thereof pursuant to Section
10.2(c), shall relieve Tenant of its liabilities and obligations hereunder,
all of which shall survive such expiration, termination, repossession or
reletting.
(e) In the event of any such termination or repossession, Tenant will
pay to Landlord the Basic Rent, Additional Rent and other sums required to
be paid by Tenant to and including the date of such termination or
repossession (together with interest at the Interest Rate on past due
amounts); and, thereafter, Tenant shall, until the end of what would have
been the term of this Lease in the absence of such termination or
repossession, and whether or not the Premises or any part thereof shall
have been relet, be liable to Landlord for, and shall pay to Landlord, as
liquidated and agreed current damages: (i) the Basic Rent, Additional Rent
and other sums which would be payable under this Lease by Tenant in the
absence of such termination or repossession, less (ii) the net proceeds, if
any, of any reletting effected for the account of Tenant pursuant to
Section 10.2(c), after deducting from such proceeds all of Landlord's
reasonable out-of-pocket expenses incurred in connection with such
reletting (including, without limitation, all repossession costs, brokerage
commissions, legal expenses, attorneys' fees, employees' expenses, and
expenses of preparation for such reletting). Tenant will pay such current
damages on the days on which the Basic Rent would have been payable under
this Lease in the absence of such termination or repossession, and Landlord
shall be entitled to recover the same from Tenant on each such day.
(f) At any time after such termination or repossession by reason of
the occurrence of any Event of Default, whether or not Landlord shall have
collected any current damages pursuant to Section 10.2(e), Landlord shall
be entitled to recover from Tenant, and Tenant will pay to Landlord on
demand, as and for liquidated and agreed final damages for Tenant's default
and in lieu of all current damages beyond the date of such demand (it being
agreed that it would be impracticable or extremely difficult to fix the
actual damages), an amount equal to the present value of all rent payable
under the Lease beyond the date of such demand over the then present value
of the then fair market rental for the Premises, at the date of such demand
for what would be the unexpired term of the Lease, which present value
shall in each case be determined by the application of a discount factor of
ten percent (10%) per annum. If any law shall be construed to limit the
amount of such liquidated final damages to less than the amount above
agreed upon, Landlord shall be entitled to the maximum amount allowable
under such statute or rule of law.
(g) Notwithstanding anything to the contrary stated herein, if an
Event of Default shall have happened and be continuing, whether or not
Tenant shall have abandoned the Premises, Landlord may elect to continue
this Lease in effect for so long as the Landlord does not terminate
Tenant's right to possession of the Premises and Landlord may enforce all
of its rights and remedies hereunder including, without limitation, the
right to recover all Basic Rent, Additional Rent and other sums payable
hereunder as the same become due.
10.3. Additional Rights of Landlord No right or remedy herein conferred
upon or reserved to Landlord is intended to be exclusive of any other right or
remedy, and each and every right and remedy shall be cumulative and in addition
to any other right or remedy given hereunder or now or hereafter existing at law
or in equity or by statute. The failure of Landlord to insist at any time upon
the strict performance of any covenant or agreement or to exercise any option,
right, power or remedy contained in this Lease shall not be construed as waiver
or a relinquishment thereof for the future. A receipt by Landlord of any Basic
Rent, any Additional Rent or any other sum payable hereunder with knowledge of
the breach of any covenant or agreement contained in this Lease shall not be
deemed a waiver of such breach, and no waiver by Landlord of any provision of
this Lease shall be deemed to have been made unless expressed in writing and
signed by Landlord. In addition to other remedies provided in this Lease,
Landlord shall be entitled, to the extent permitted by applicable law, to
injunctive relief in case of the violation, or attempted or threatened
violation, of any of the covenants, agreements, conditions or provisions of this
Lease, or to a decree compelling performance of any of the covenants,
agreements, conditions or provisions of this Lease, including but not limited to
the provisions of this Lease setting forth Tenant's operating covenant, or to
any other remedy allowed to Landlord at law or in equity.
10.4. Waivers by Tenant To the extent permitted by applicable law, Tenant
hereby waives and surrenders for itself and all those claiming under it,
including creditors of all kinds, (i) any right or privilege which it or any of
them may have under any present or future construction, statute or rule of law
to redeem the Premises or to have a continuance of this Lease for the term
hereby demised after termination of Tenant's right of occupancy by order or
judgment of any court or by any legal process or writ, or under the terms of
this Lease or after the termination of the term of this Lease as herein
provided, and (ii) the benefits of any present or future constitution, statute
or rule of law which exempts property from liability for debt or for distress
for rent.
10.5. Attorneys' Fees In the event of an Event of Default and Tenant's
failure to cure the Event of Default within the applicable cure period, if an
action shall be brought by Landlord for the enforcement of any right set forth
herein in connection with, and subject to, the indemnification provisions
contained in Section 6.10 hereof, Tenant shall be liable for all of the
reasonable out-of-pocket expenses incurred by Landlord in connection therewith,
including without limitation, attorneys' fees. However, should Tenant prevail in
an action for violation of quiet enjoyment under this Lease, then and only in
such event shall Landlord be liable for reasonable out-of-pocket expenses
incurred by Tenant in connection therewith, including attorneys' fees.
11. MISCELLANEOUS.
11.1. Notices, Demands and Other Instruments All notices, demands,
requests, consents, approvals and other instruments required or permitted to be
given pursuant to the terms of this Lease shall be in writing and shall be
deemed to have been properly given if (a) with respect to Tenant, sent by
registered or certified mail with a return receipt requested, postage prepaid,
or sent by facsimile, nationally recognized overnight express carrier or
delivered by hand, in each case addressed to Tenant at its notice address first
above set forth, and (b) with respect to Landlord, sent by registered or
certified mail with a return receipt request, postage prepaid, or sent by
facsimile, nationally recognized overnight express courier or delivered by hand
in each case, addressed to the Landlord at its address first above set forth
along with a copy to the Lender (if Tenant shall have been given Lender's
address). Landlord and Tenant shall each have the right from time to time to
specify as its address for purposes of this Lease any other address in the
United States of America upon giving fifteen (15) days written notice thereof,
similarly given, to the other party. Notices shall be deemed communicated upon
the earlier of receipt, or seventy-two (72) hours from the time of mailing if
mailed as provided in this Section 11.1.
11.2. Estoppel Certificates and Consents
(a) Tenant will, from time to time, upon not less than twenty (20)
days prior written request by Landlord or by Lender, execute, acknowledge
and deliver a certificate certifying: (i) that this Lease is unmodified and
in full effect (or setting forth any modifications along with the statement
that this Lease as modified is in full effect ); (ii) that the Basic Rent
and Additional Rent payable and the dates to which the Basic Rent,
Additional Rent and other sums payable hereunder have been paid; (iii) that
to the best knowledge of Tenant, Landlord is not in any default of the
Lease; (iv) the commencement and expiration dates of the Lease; (v) the
amount of any security or other deposits; (vi) that either Tenant is in
possession of the Premises or who is in possession; (vii) any concessions
or other rights that Tenant (including first refusal, option or other
occupancy claims) or Landlord may have; and (viii) such other matters as
may reasonably be required by the requesting party. Any such certificate
may be relied upon by any Lender, prospective purchaser, or prospective
Lender of the Premises. Tenant further agrees to reasonably cooperate with
Lender and its affiliates in the preparation of disclosure documents which
may be issued in connection with a secondary market transaction involving a
sale or securitization of its loan.
(b) From time to time during the term of this Lease, Landlord expects
to secure financing of its interest in the Premises by assigning Landlord's
interest in this Lease and the sums payable hereunder. In the event of any
such assignment to the Lender, Tenant will, upon not less than twenty (20)
days prior written request by Landlord, execute, acknowledge and deliver to
Landlord a consent clearly indicating (i) that Tenant is to make Basic Rent
payments or portions thereof directly to Lender if required by Lender, and
(ii) consent to such assignment addressed to such Lender in a form
satisfactory to Lender; and Tenant will produce, at Tenant's expense, such
certificates and other documents as may be reasonably requested by the
Lender. Tenant acknowledges that, by execution hereof, it has agreed to
make payments of Basic Rent or portions thereof directly to Lender, without
further notice or direction if required by Lender, and Landlord consents to
said payments by Tenant to Landlord.
11.3. Determination of Fair Market Rental Value Fair market rental value
for purposes of setting Extended Term Basic Rent shall be determined by an
appraisal, which shall be performed by an appraiser selected by Landlord within
thirty (30) days after notice to Landlord of Tenant's exercise of the option for
the applicable Extended Term and paid one half by Tenant and one half by
Landlord. Any appraiser selected by Landlord shall have qualifications that
include a minimum of five (5) years of experience in the appraisal of commercial
real estate in the State in which the Premises are located. Such appraiser shall
be disinterested, and shall be a member of a nationally recognized appraisal
association. Further, any such appraiser shall comply with any licensing law
then in effect for appraisers authorized to perform general appraisals within
such State. If there are then any existing Federal laws governing appraisers,
said appraiser shall be in compliance with the then applicable Federal laws for
appraisers performing appraisals of commercial real estate. In the event that
Tenant disputes the appraised fair market rental value determined by an
appraiser (hereinafter the "First Appraiser"), who performed an appraisal
pursuant to this Section 11.3, it shall so notify Landlord within fifteen (15)
days after receipt of such written determination by the First Appraiser, and the
disagreement shall be resolved as follows:
(a) Within five (5) days after the service of such notice by Tenant to
Landlord, Tenant shall designate a second appraiser (the "Second
Appraiser"), who shall appraise the fair market rental value of the
Premises. This Second Appraiser shall render its opinion of the fair market
rental value no later than thirty (30) days after the service of notice by
Tenant stated above. In the event that the higher of the two appraised fair
market rental values rendered herein is not more than ten percent (10%)
greater than the lower of the two appraised fair market rental values, then
the mean between the two appraised values shall be utilized to fix the
appraised fair market rental value.
(b) In the event that the higher of the two appraised fair rental
values is more than ten percent (10%) higher than the lower of the two
appraised fair market rental values, then the First Appraiser and the
Second Appraiser will meet within fifteen (15) days after receipt and
acceptance of the Second Appraisal by Tenant, to attempt to agree upon the
appraised fair market rental value. If the First Appraiser and Second
Appraiser do not agree upon the appraised fair rental value after such
meeting, then they shall appoint a third appraiser (the "Third Appraiser").
(c) If the First and Second Appraiser shall be unable to agree upon
the appointment of the Third Appraiser within fifteen (15) days after
receipt and acceptance of the Second Appraisal by Tenant, then the Third
Appraiser shall be selected by the Tenant and Landlord themselves. If
Tenant and Landlord cannot agree on the third appraiser, within a further
period of five (5) days, then either, on behalf of both, may apply to the
United States District Court for the District of where the Premises are
located, for the selection of the Third Appraiser. The fees and costs of
the Second Appraiser will be borne by Tenant, and the fees and costs of the
Third Appraiser, will be divided equally between Tenant and Landlord. The
cost of application to the United States District Court shall be divided
equally between Tenant and Landlord. In the event of the failure, refusal
or inability of any appraiser to act, a new appraiser shall be appointed in
its stead, which appointment shall be made in the same manner as provided
herein; e.g., if the Second Appraiser must be replaced, then Tenant will
have the right to designate its replacement. In the event that a Third
Appraiser is selected in the manner aforesaid, it shall perform an
appraisal of the fair market rental value of the Premises in accordance
with the terms of this Section 11.3 within thirty (30) days after its
appointment. In the event that the appraised fair market rental value
rendered by the Third Appraiser is higher than the lower appraised fair
market rental value, but lower than the higher appraised fair market rental
value, as rendered by the First Appraiser and the Second Appraiser, then
the appraised fair market rental value rendered by the Third Appraiser
shall become the appraised value. In the event that the appraised value
rendered by the Third Appraiser is lower than the lower appraised value or
higher than the higher appraised fair rental value, as rendered by the
First Appraiser and Second Appraiser, than an Appraisal Panel shall be
convened.
The "Appraisal Panel," consisting of the First, Second and Third
Appraiser, shall convene within fifteen (15) days after submission of a
written appraisal to Landlord and Tenant by the Third Appraiser (which
Third Appraisal does not resolve the appraised fair market value question
in accordance with this Section 11.3). The purpose of the formation of the
Appraisal Panel will be to attempt to reach a decision by two members of
the Appraisal Panel on the appraised fair rental value. A decision joined
in by any two of the appraisers of the Appraisal Panel shall be the
decision of the Appraisal Panel, and shall be binding upon the parties
hereto following written notice thereof, which notice shall state the
appraised fair rental value of the Premises. If no two members of the
Appraisal Panel can concur in a decision of the appraised fair rental value
within fifteen (15) days after the submission of the appraisal by the Third
Appraiser to the parties, then the parties shall go to a neutral mediator
for mediation. If the parties are unable to agree upon a fair rental value
through mediation, the matter will be submitted to binding arbitration
under the rules of the American Arbitration Association.
(d) Each appraiser shall be instructed to assume that the provisions
of this Lease (excluding the Basic Rent provision) would govern for a five
(5) year term, that the Premises may be used for any lawful commercial use
(regardless of their actual use), and that, as set forth in the Recitals to
this Lease, the Premises being leased (and the fair market rent applicable
thereto) includes the Land and the Improvements.
11.4. No Merger There shall be no merger of this Lease or the leasehold
estate hereby created with the fee estate in the Premises or any part thereof by
reason of the same person acquiring or holding, directly or indirectly, this
Lease or the leasehold estate hereby created or any interest in this Lease or in
such leasehold estate as well as the fee estate in the Premises or any portion
thereof.
11.5. Surrender Upon the termination of this Lease, Tenant shall peaceably
surrender the Premises to Landlord in the same condition in which they were
received from Landlord at the commencement of this Lease, except as altered as
permitted or required by this Lease and except for normal wear and tear. Tenant
shall remove from the Premises prior to or within a reasonable time after such
termination (not to exceed thirty (30) days) all its personal property that is
capable of removal without causing damage to the Premises, and, at Tenant's
expense, shall at such times of removal, repair any damage caused by such
removal. Property not so removed shall become the property of Landlord. Landlord
may thereafter cause such property to be removed and disposition of and the cost
of repairing any damage caused by such removal shall be borne by Tenant. Any
holding over by Tenant of the Premises after the expiration or earlier
termination of the term of this Lease or any extensions thereof, with the
consent of Landlord, shall operate and be construed as a tenancy from month to
month only, at one hundred ten (110%) of the Basic Rent reserved herein and upon
the same terms and conditions as contained in this Lease. Notwithstanding the
foregoing, any holding over without Landlord's consent shall entitle Landlord,
in addition to collecting Basic Rent at a rate of one hundred ten percent (110%)
thereof, to exercise all rights and remedies provided by law or in equity.
11.6. Separability Each and every covenant and agreement contained in this
Lease is separate and independent, and the breach of any thereof by Landlord
other than the covenant of quiet enjoyment in Section 1.4, shall not discharge
or relieve Tenant from any obligation hereunder. If any term or provision of
this Lease or the application thereof to any person or circumstances or at any
time to any extent be invalid and unenforceable, the remainder of this Lease, or
the application of such term or provision to persons or circumstances or at any
time other than those to which it is invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Lease shall be valid and
shall be enforced to the extent permitted by law.
11.7. Merger, Consolidation or Sale of Assets It shall be a condition
precedent to the merger of Tenant into another corporation, to the consolidation
of Tenant with one or more other corporations and to the sale or other
disposition of all or substantially all the assets of Tenant to one or more
other entities that the surviving entity or transferee of assets, as the case
may be, shall deliver to Landlord and to Lender an acknowledged instrument in
recordable form assuming all obligations, covenants and responsibilities of
Tenant hereunder and under any instrument executed by Tenant consenting to the
assignment of Landlord's interest in this Lease to the Lender as security for
indebtedness. Tenant covenants that it will not merge or consolidate or sell or
otherwise dispose of all or substantially all of its assets unless such an
instrument shall have been so delivered and unless the entity with which it
intends to merge, consolidate, sell or otherwise transfer its assets to has a
credit rating at least equal to Tenant's then current credit rating.
11.8. Savings Clause No provision contained in this Lease which purports to
obligate Tenant to pay any amount of interest or any fees, costs or expenses
which are in excess of the maximum permitted by applicable law, shall be
effective to the extent that it calls for payment of any interest or other sums
in excess of such maximum.
11.9. Binding Effect; Limitation of Liability All of the covenants,
conditions and obligations contained in this Lease shall be binding upon and
inure to the benefit of the respective successors and assigns of Landlord and
Tenant to the same extent as if each successor and assign were in each case
named, except that a successor and assign of Landlord shall only be bound as to
covenants, conditions and obligations arising after the transfer.
Notwithstanding anything to the contrary set forth in this Lease, if Landlord
shall fail to perform any covenant, term or condition of this Lease upon
Landlord's part to be performed, and if as a consequence of such default Tenant
shall recover a judgment against Landlord, such judgment shall be satisfied only
out of the proceeds of sale received upon execution of such judgment and levy
thereon against the right, title and interest of Landlord in the Premises, and
Landlord shall not be personally liable therefor, provided Landlord then owns
the Premises and such limitation of liability shall not apply if Landlord does
not then own the Premises.
11.10. Table of Contents and Headings The table of contents and headings
used in this Lease are for convenience of reference only and shall not to any
extent have the effect of modifying, amending or changing the provisions of this
Lease.
11.11. Governing Law This Lease shall be governed by and interpreted under
the laws of the state in which the Premises is located, but not including such
state's conflict of laws rules.
11.12. Certain Definitions
(a) The term "Imposition" means:
(i) All real estate taxes imposed by governmental authorities of
any kind;
(ii) All other taxes and any payments in lieu thereof,
assessments (including assessments for benefits from public works or
improvements, whether or not begun or completed prior to the
commencement of the term of this Lease and whether or not to be
completed within said term), levies, fees, water and sewer rents and
charges, and all other governmental charges of every kind, general and
special, ordinary and extraordinary, whether or not the same shall
have been within the express contemplation of the parties hereto,
together with any interest and penalties thereon, which are, , imposed
or levied upon or assessed against: (A) the Premises or any part
thereof; (B) any Basic Rent, any Additional Rent reserved or payable
hereunder; and/or (C) this Lease or the leasehold estate created
hereby or which arise in respect of the operation, possession,
occupancy or use of the Premises, to the extent payable during the
Lease Term.
(iii) Any gross receipts or similar taxes imposed or levied upon,
assessed against or measured by the Basic Rent, Additional Rent or any
other sums payable by Tenant hereunder or levied upon or assessed
against the Premises to the extent payable during the Lease Term;
(iv) All sales and use taxes which may be levied or assessed
against or payable by Landlord and Tenant on account of the
acquisition, leasing or use of the Premises or any portion thereof
including but not limited to any taxes levied on the rental payable
hereunder to the extent payable during the Lease Term; and
(v) All charges for water, gas, light, heat, telephone,
electricity, power and other utilities and communications services
rendered or used on or about the Premises during the Lease Term.
(b) The term "Landlord" means the owner, for the time being, of the
rights of the lessor under this Lease, and its successors and assigns, and
upon any assignment or transfer of such rights, except an assignment or
transfer made as security for an obligation, the assignor or transferor
shall be relieved of all future duties and obligations under this Lease,
provided the assignee or transferee assumes in writing in recordable form
all such future duties and obligations of Landlord and such written
assumption is delivered to Tenant.
(c) The term "Lease" means this Lease as amended and modified from
time to time together with any memorandum or short form of lease entered
into for the purpose of recording.
(d) The term "Lender" means the holder of a mortgage or deed of trust
("Mortgage") or other security agreement encumbering Landlord's interest in
the Premises and its successors and assigns. The documents, including but
not limited to the Mortgage, evidencing and securing any loan encumbering
Landlord's interest in the Premises are herein called "Loan Documents".
(e) The term "Tenant's Certificate" means a written certificate signed
by the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President or the Secretary of Tenant.
(f) The term "Termination Date" means the date on which this Lease
terminates in accordance with its terms, and shall be any business day and
not a Saturday, Sunday or legal holiday.
11.13. Exhibits The exhibits to this Lease are hereby incorporated by
reference herein and made a part hereof. The Guaranty attached hereto as Exhibit
B is being executed and delivered on the Commencement Date, and such execution
and delivery, at the election of Landlord, shall be a condition to the
effectiveness of this Lease.
11.14. Integration This Lease, the exhibits hereto and the memorandum, if
any, hereof, constitute the entire agreement between the parties hereto with
regard to the subject matter hereof, and supersede any prior understandings,
agreements or negotiations. This Lease may not be amended or modified except by
a writing executed by Tenant and Landlord, with the consent of any Lender.
11.15. Lease Memorandum Each of Landlord and Tenant shall execute,
acknowledge and deliver to the other a written memorandum of this Lease
("Memorandum") to be recorded in the appropriate land records of the
jurisdiction in which the Premises is located, in order to give public notice
and protect the validity of this Lease. In the event of any discrepancy between
the provisions of the recorded Memorandum and the provisions of this Lease, the
provisions of this Lease shall prevail.
11.16. Subordination to Landlord Financing
(a) (i) Subject to the provisions of Section 11.16(a)(ii) below,
Tenant agrees that this Lease shall at all times be subject and
subordinate to the lien of any Mortgage, provided the original
principal amount of the Mortgage does not exceed 90% of the fair
market value of the Premises at the time of origination of the
Mortgage and Tenant agrees, upon demand, without cost, to execute
instruments as may be reasonably required to further effectuate or
confirm such subordination.
(ii) Tenant's agreement to subordinate set forth in Section
11.16(a)(ii) above is conditioned upon the Lender agreeing that:
Tenant's tenancy and Tenant's rights under this Lease shall not be
disturbed, terminated or otherwise adversely affected, nor shall this
Lease be affected, by any default under any Mortgage, and in the event
of a foreclosure or other enforcement of any Mortgage, or sale in lieu
thereof, the purchaser at such foreclosure sale shall be bound to
Tenant for the Term of this Lease, the rights of Tenant under this
Lease shall expressly survive, and this Lease shall in all respects
continue in full force and effect so long as no Event of Default has
occurred and is continuing; provided, however, that such purchaser
shall not:
(A) be liable for any prior act or omission of Landlord;
(B) be subject to any defense, counterclaim, set-off or
offset which Tenant may then have against Landlord;
(C) be bound by any payment of rent that Tenant may have
made to Landlord more than thirty (30) days before the date such
rent was first due and payable under this Lease with respect to
any period after the date of attornment other than, and only to
the extent that, this Lease expressly required such a prepayment;
(D) be bound by any obligation to make any payment to Tenant
which was required to be made prior to the time such successor
landlord succeeded to Landlord's interest;
(E) be bound by any obligation to perform any work or to
make improvements to the Premises; or
(b) Notwithstanding the provisions of Section 11.16(a), the holder of
any Mortgage to which this Lease is subject and subordinate shall have the
right, at its sole option, at any time, to subordinate and subject the
Mortgage, in whole or in part, to this Lease by recording a unilateral
declaration to such effect.
(c) At any time prior to the expiration of the Term, Tenant agrees, at
the election and upon demand of any owner of the Leased Premises, or of a
Lender who has granted non-disturbance to Tenant pursuant to Section
11.16(a) above, to attorn, from time to time, to any such owner or lender,
upon the terms and conditions of this Lease, for the remainder of the Term.
The provisions of this Section 11.16(c) shall inure to the benefit of any
such owner or Lender, shall apply notwithstanding that, as a matter of law,
this Lease may terminate upon the foreclosure of the Mortgage, shall be
self-operative upon any such demand, and no further instrument shall be
required to give effect to said provisions.
(d) Each of Tenant, Landlord and Lender, however, upon written demand
of the other, hereby agrees to execute, from time to time, instruments in
confirmation of the foregoing provisions of Sections 11.16(a) and 11.16(c),
in the form customarily used by such Lender to the extent consistent with
the requirements of such Sections, acknowledging such subordination,
non-disturbance and attornment as are provided in such Sections and setting
forth the terms and conditions of its tenancy.
11.17 Waiver of Statutory Liens Landlord hereby forever waives and releases
any and all liens, security interests and rights of Landlord created, granted or
imposed by statute, law or regulation ("Statutory Liens") on, in or to any
tangible personal property of Tenant located at any time at the Premises (the
"Tenant Personalty"). Landlord acknowledges and agrees that Tenant may convey
the Tenant Personalty, including granting security interests in the Tenant
Personalty, from time to time free and clear of all Statutory Liens. Landlord
and Lender shall, upon written demand of Tenant from time to time, execute and
deliver to Tenant such documents as may reasonably be required to evidence and
confirm Landlord's waiver of the Statutory Liens.
11.18 Interest Rate Any amount due from either party to the other under
this Lease which is not paid within ten (10) days after written notice that such
amount was not received when due (including, without limitation, amounts due as
reimbursement for costs incurred in performing obligations of such party
hereunder upon its failure to so perform) shall bear interest at the prime rate
of Bank of America NA ("Interest Rate") from the date due until paid, unless
otherwise specifically provided herein, but the payment of such interest shall
not excuse or cure any default by Tenant under this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day
and year first above set forth.
LANDLORD: Verde Investments, Inc.,
an Arizona corporation
By:
Title:
TENANT: Ugly Duckling Car Sales and Finance
Corporation, a Delaware corporation
By:
Title:
By:
Title:
