EXHIBIT 10.41
LEASE AGREEMENT
This Lease Agreement ("Lease") dated as of the date stated in the Summary
of Terms by and between CAPITAL AUTOMOTIVE L.P., a Delaware limited partnership
("Landlord"), having its principal office at 0000 Xxxxxxxxxx Xxxx, Xxxxx 000,
XxXxxx, Xxxxxxxx 00000 and the person or entity stated in the Summary of Terms
("Tenant").
RECITALS
WHEREAS, Tenant or an Affiliate (as hereafter defined) has conveyed or will
convey to Landlord certain parcels of real estate and improvements thereon upon
which Tenant engages in motor vehicle retail and/or motor vehicle related
businesses (the "Business"), which parcels of real estate and improvements
thereon are described on Schedule A attached hereto and incorporated herein by
reference (each hereinafter a "Leased Property" or collectively, the "Leased
Properties"), and Landlord and Tenant desire to provide for the lease by
Landlord to Tenant of the Leased Properties; and
WHEREAS, Landlord and Tenant desire that each of the Leased Properties
shall be the subject of this Lease and be used by Tenant in its operation of the
Business; and
WHEREAS, this Lease provides that additional real estate and improvements
thereon may be made subject to the operation and effect of this Lease, upon
execution by Landlord and Tenant of a Lease Supplement designating each such
additional property as a Leased Property hereunder.
NOW, THEREFORE, in consideration of the foregoing premises and of their
respective agreements and undertakings herein, and of other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant agree as follows:
I. LEASE AGREEMENT. LEASED PROPERTY AND TERM
1.01 Lease Agreement. Landlord does hereby let and lease unto Tenant, and
Tenant does hereby take and hire from Landlord, the Leased Properties, which
shall respectively consist of:
(a) The parcels of land described and located at the addresses listed in
Schedule A hereto, as more particularly described therein, together
with any additional parcels of real estate and improvements thereon
subsequently designated as a Leased Property by the parties pursuant
to a Lease Supplement as provided for herein, together with all
fights, titles, appurtenant interests, covenants, licenses, privileges
and benefits thereto belonging, and any easements, fights-of-way,
rights of ingress or egress or other interests in, on, or to any land,
highway, street, road or avenue, open or proposed, in, on, across, in
front of, abutting or adjoining such real property including, without
limitation, any strips and gores adjacent
to or lying between such real estate and any adjacent real estate (the
"Land");
(b) All buildings, improvements, structures and Fixtures (as hereinafter
defined) now located or to be located or to be constructed on the
Land, including, without limitation, sidewalks, landscaping, parking
lots and structures, roads, drainage and all above ground and
underground utility structures and conduits (on-site or off-site),
equipment systems and other so-called "infrastructure" improvements
(the "Improvements");
(c) All equipment, machinery, fixtures, and other items of real and/or
personal property, including all components thereof, located in, on or
used in -connection with, and permanently affixe4 to or incorporated
into, the Improvements, including, without limitation, all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection equipment,
and similar systems, all of which, to the greatest extent permitted by
law, are hereby deemed to constitute real estate, together with all
replacements, modifications, alterations and additions thereto
(collectively the "Fixtures"); and
(d) All easements, rights and appurtenances relating to the Land and the
Improvements.
SUBJECT, HOWEVER, to the liens, encumbrances, restrictions, agreements, and
other title matters listed or specifically referred to in Schedule B ("Permitted
Exceptions").
The Leased Properties shall however exclude all furniture, equipment,
inventory and items of moveable personal property attached to the Land or
Improvements that relate to the business being conducted on the Leased Property
which items may readily be removed without material damage to the Land and
Improvements whether or not such items might legally be considered to be
"fixtures" (all of which are owned by Tenant and shall hereinafter be defined as
the "Excluded Personal Property").
1.02 Contingent Upon Acquisition of the Leased Property. In the event this
Lease is executed prior to the conveyance of the Leased Property by Tenant, or
an Affiliate, to Landlord, the parties acknowledge that the effectiveness of
this Lease in respect of such Leased Property is contingent upon the closing of
such conveyance. The commencement date of this Lease shall be the date of the
closing of such conveyance (the "Commencement Date").
1.03 Term. The initial term of this Lease (the "Term") shall be for a
fixed term of One Hundred and Eighty (180) months commencing on the Commencement
Date. The initial term for any Leased Property designated in a Lease Supplement
shall begin on the date of such Lease Supplement and expire at the end of the
Term or then current Extension Term (as hereafter
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defined), as the case may be. Tenant shall have the right to extend this Lease
for the Leased Properties as a group, at Tenant's option, for one Sixty (60)
month renewal term from the expiration of the Term (the "First Extension Term"),
provided that no Event of Default (as defined in Section 9.01 hereof) shall
exist and be continuing. In addition, Tenant shall have the right to extend this
Lease for the Leased Properties as a group at Tenant's option: (i) for a second
Sixty (60) month renewal term from the expiration of the First Extension Term
(the "Second Extension Term") provided that no Event of Default (as defined in
Section 9.01 hereof) shall exist and be continuing and (iii) for a third Sixty
(60) month renewal term from the expiration of the Second Extension Term (the
"Third Extension"; along with the First Extension Term and the Second Extension
Term, each an "Extension Term," and collectively the "Extension Terms") provided
that no Event of Default (as defined in Section 9.01 hereof) shall exist and be
continuing. Tenant shall exercise its right to extend this Lease pursuant to the
respective Extension Terms by giving written notice to Landlord no later than
twelve (12) months prior to the end of the then current Term. Notwithstanding
anything else to the contrary in this Agreement, the Base Annual Rent for the
Second and Third Extension Terms shall be the Fair Market Rent (as hereafter
defined) for the Leased Property. Fair Market Rent shall be determined as soon
as possible after receipt by Landlord of Tenant's notice of exercise of an
option for the Second Extension Term or Third Extension Term on the basis of
appraisals of independent appraisers selected in accordance with the provisions
of Section 16.01. Tenant shall have the right, in its sole discretion, to
rescind the exercise of Tenants option to extend the Lease for the Second
Extension Term or the Third Extension Term during a period of five (5) business
days after the determination of the Fair Market Rent. If Tenant shall fail to
exercise the right to rescind within such five (5) day period, the election to
extend shall be irrevocable and the Fair Market Rent so determined shall be the
Base Annual Rent during the Second Extension Term or the Third Extension Term,
as applicable, notwithstanding any changes in the market rental rates, whether
upward or downward, which may occur after such determination. However,
notwithstanding anything else in this Agreement, Fair Market Rent shall become
the Base Annual Rent (as defined hereafter) and shall be subject to Base Annual
Rent Adjustments as set forth in Section 2.04.
1.04 Holding Over. Should Tenant, without the express consent of Landlord,
continue to hold and occupy any Leased Property after the expiration or earlier
termination of the Term or any Extension Term, as the case may be, such holding
over beyond the Term and the acceptance or collection of Rent (as defined
hereinafter) by Landlord shall operate and be construed as creating a tenancy
from month-to-month and not for any other term whatsoever. During any such
holdover period Tenant shall pay to Landlord for each month (or portion thereof)
Tenant remains in such Leased Property, in lieu of the Base Annual Rent (as
defined hereafter) for such Leased Property, an amount equal to the sum of
one-twelfth (1/12) of (i) one hundred fifty percent (150%) of such Base Annual
Rent (the "Holdover Rate"), and (ii) as applicable, one hundred percent (100%)
of the Additional Rent (as defined hereinafter) for such Leased Property, each
as in effect on the expiration date. Said month-to-month tenancy may be
terminated by Landlord by giving Tenant thirty (30) days written notice, and at
any time thereafter Landlord may re-enter and take possession of such Leased
Property.
1.05 Surrender. Except as a result of (a) Tenant Improvements and Capital
Additions
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(as defined hereinafter); (b) normal and reasonable wear and tear (subject to
the obligation of Tenant to maintain each Leased Property in good order and
repair during the Term); and (c) casualty, taking or other damage and
destruction not required to be repaired by Tenant, Tenant shall surrender and
deliver up each Leased Property at the expiration or termination of the Term or
the Extension Term therefor, as the case may be, broom clean, in good order and
repair, free of the Excluded Personal Property and any additional items of
Tenant's personal property (together with the Excluded Personal Property, the
"Tenant's Personal Property"), all of which Tenant shall remove prior to such
surrender and delivery, and in as good order and condition as of the
Commencement Date.
1.06 Deliveries at Commencement. On the Commencement Date, Tenant shall
deliver to Landlord:
(a) A binding insurance certificate stating that Capital Automotive L.P.
is an additional named insured under the Tenant's insurance policy;
(b) A certified copy of the Tenant's organizational documents; as amended
and in existence on that date; and
(c) A certificate of good standing from the jurisdiction in which Tenant
is organized, and if Tenant is organized in a jurisdiction other than
the situs of the Leased Property, a certificate of good standing and
foreign qualification from the jurisdiction in which the Leased
Property is located;
(d) A consent or resolutions of the Tenant authorizing the Tenant to enter
into this Lease.
II. RENT
2.01 Base Rent. Tenant shall pay Landlord annual base rent (the "Base
Annual Rent") as to the Leased Property for each year during the Term or the
Extension Term (each such year a "Lease Year"), which Base Annual Rent shall be
subject to upward adjustment pursuant to Section 2.04. In the first Lease Year,
Base Annual Rent shall be in the amount set forth in the Summary of Terms (the
"Initial Base Annual Rent"), paid to Landlord in twelve equal monthly
installments.
2.02. Additional Rent. As to each Leased Property, in addition to the Base
Annual Rent, Tenant shall pay all other amounts, liabilities, obligations and
Impositions (as defined in Section 3.02 hereto) which Tenant assumes or agrees
to pay under this Lease and any fine, penalty, interest, charge and cost which
may be added for nonpayment or late payment of such items (collectively, the
"Additional Rent"). The Base Annual Rent and Additional Rent are hereinafter
referred to as "Rent."
2.03 Base Annual Rent Adjustment.
(a) he Base Annual Rent shall be adjusted during the Lease Term or
the Extension Terms under the procedures set forth in the Summary
of Terms (the "Base Annual Rent Adjustment").
(b) As used herein and in the Summary of Terms, "CPI" shall mean the
CPI- published by the United States Department of Labor, Bureau
of Labor Statistics Consumer Price Index for All Urban Consumers,
U.S. City Average. If at any time during the Term or the
Extension Term, as the case may be, the CPI shall be
discontinued, Landlord shall select a substitute index, being an
existing official index published by the Bureau of Labor
Statistics or its successor or another, similar governmental
agency, which index is most nearly equivalent to the CPI.
2.04 Security Deposit. Prior to the Commencement Date, Tenant shall deliver
to Landlord the amount stated in the Summary of Terms, which amount shall be
held by Landlord as security (the "Security Deposit") for the performance of
Tenants payment and other obligations under this Lease. Upon an Event of Default
and the continuance thereof, Landlord shall have the right, but not the
obligation, to apply the Security Deposit as set forth in Section 9.08. Landlord
shall return the Security Deposit, without interest, after expiration of this
Lease, if Tenant has fully and faithfully carried out all of the terms,
covenants and conditions hereof. If at or on the second Cash Flow Measurement
Date, Tenant and Guarantor have failed to maintain the Cash Flow Coverage Ration
provided in Section 12.10 hereto, the Landlord shall have the right to collect
as an additional security deposit (the "Additional Security Deposit") amount
equal to two months of the then current Base Annual Rent. Amount collected by
the Landlord as the Additional Security Deposit shall be refunded to Tenant upon
(i) Landlord's waiver of the Cash Flow Coverage Ratio requirement or (ii) upon
subsequent notification to Landlord that Tenant and Guarantor have met the Cash
Flow Coverage Ratio at or on the immediately subsequent Cash Flow Measurement
Date.
2.05 Place of Payment of Rent: Direct Payment of Additional Rent. Landlord
shall have all legal, equitable and contractual rights, powers and remedies
provided in this Lease or by statute or otherwise in the case of nonpayment of
the Rent for each Leased Property. Tenant shall pay the Base Annual Rent without
notice, demand, set-off or counterclaim in advance, in lawful money of the
United States of America and payable in consecutive monthly installments
commencing on the Commencement Date and thereafter on the first day of each
month during the Term. Unless Landlord shall direct otherwise, Tenant shall make
all payments of Base Annual Rent to Landlord by direct deposit of immediately
available funds to the bank account specified in Exhibit 2.05 (which account
Landlord may change from time to time upon Notice to Tenant). At the direction
of the Landlord, Tenant shall make payments of Additional Rent directly to the
person or persons to whom such amount is owing at the time and times when such
payments are due, and Tenant shall give to Landlord such evidence of such direct
payments as Landlord shall reasonably request.
2.06 Net Lease. This Lease shall be deemed and construed to be an "absolute
net
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lease" or "triple net lease," (i.e. that Tenant shall pay all costs and
expenses related to the ownership and operations of each Leased Property,
thereby leaving all Rent as an absolutely net return to Landlord) and as to each
Leased Property, Tenant shall pay all Rent, Impositions, and other charges and
expenses in connection with such Leased Property throughout the Term and any
Extension Term, without abatement, deduction or set-off.
2.07 No Termination, Abatement, Etc. Except as otherwise specifically
provided herein, Tenant shall remain bound by this Lease in accordance with its
terms. Except as otherwise specifically provided herein, Tenant shall not,
without the prior written consent of Landlord, modify, surrender or terminate
this Lease as to any Leased Property, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent as to any
Leased Property for any reason whatsoever. Except as specifically provided
herein, the obligations of Landlord and Tenant shall not be affected by reason
of: (a) the lawful or unlawful prohibition of, or restriction upon, Tenant's use
of any Leased Property, or any part thereof, the interference with such use by
any person, corporation, partnership or other entity, or by reason of eviction
by paramount title; (b) any claim which Tenant has or might have against
Landlord or by reason of any default or breach of any warranty by Landlord under
this Lease or any other agreement between Landlord and Tenant, or to which
Landlord and Tenant are parties; (c) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other
proceeding affecting Landlord or any assignee or transferee of Landlord; (d) any
damage to, or destruction of, any Leased Property or any portion thereof for
whatever cause, or any taking of the Leased Property or any portion thereof; or
(e) any other cause, whether similar or dissimilar to any of the foregoing,
other than a discharge of Tenant from any such obligations as a matter of law.
Except as otherwise specifically provided herein, and to the maximum extent
permitted by law, Tenant hereby specifically waives all rights, including but
not limited to any rights under any statute relating to rights of tenants in the
jurisdictions where the Leased Properties are located, which may now be
conferred upon it by law, relating to: (a) the modification, surrender or
termination of this Lease, or the quitting or surrender of any Leased Property
or any portion thereof; (b) any abatement, reduction, suspension or deferment of
the Rent or other sums payable by Tenant hereunder; (c) any rights of redemption
and (d) any right to demand or notice of termination or eviction. As to each
Leased Property, the obligations of Landlord and Tenant hereunder shall be
separate and the Rent and all other sums shall continue to be payable in all
events unless the obligations to pay the same shall be terminated pursuant to
the express provisions of this Lease or by termination of this Lease other than
by reason of an Event of Default.
III. IMPOSITIONS AND UTILITIES
3.01 Payment of Impositions. The Landlord and Tenant intend that Landlord
shall bear none of the costs of the ownership and operation of the Leased
Property except for payment of the federal, state or local income taxes, and
that Tenant shall pay all costs in every respect of the ownership and operation
of the Leased Property except for Landlord's payment of federal, state or local
income taxes. By way of example and in no means by way of limitation, the Tenant
shall pay as follows: subject to the adjustments set forth herein, Tenant shall
pay, in the manner set
forth in Section 3.04, as Additional Rent, to the Landlord an amount equal to
the amount necessary to pay all Impositions that may be levied or become a lien
on any Leased Property or any part thereof at any time (whether prior to or
during the Term), without regard to prior ownership of said Leased Property,
before the same becomes delinquent. Tenant's obligation to pay such Impositions
shall be deemed absolutely fixed upon the date such Impositions become a lien
upon any Leased Property or any part thereof Tenant, at its expense, shall
prepare and file all tax returns and reports in respect of any Imposition as may
be required by governmental authorities, provided, however, that Tenant shall
provide to Landlord copies of all filings of such tax returns or reports in
respect of any real or personal property owned by Landlord. Tenant shall be
entitled to any refund due in respect of such Impositions from any taxing
authority if no Event of Default shall have occurred hereunder and be
continuing. Any refunds in respect of such Impositions retained by Landlord due
to an Event of Default shall be applied as provided in Section 9.08. Landlord
and Tenant shall, upon request of the other, provide such data as is maintained
by the party to whom the request is made with respect to a Leased Property as
may be necessary to prepare any required tax returns and reports. In the event
governmental authorities classify any property covered by this Lease as personal
property, Landlord and Tenant shall file all personal property tax returns in
such jurisdictions where it may legally so file with respect to their respective
owned personal property. Landlord, to the extent it possesses the same, and
Tenant, to the extent it possesses the same, will provide the other party, upon
request, with cost and depreciation records necessary for filing such returns or
reports for any property so classified as personal property. To the extent that
Landlord is legally required to file personal property tax returns, Tenant will
be provided with copies of assessment notices indicating a value in excess of
the reported value in sufficient time for Tenant to file a protest. Tenant may,
upon notice to Landlord, at Tenant's option and at Tenant's sole cost and
expense, protest, appeal, or institute such other proceedings as Tenant may deem
appropriate to effect a reduction of real estate or personal property
assessments and Landlord, at Tenant's expense as aforesaid, shall fully
cooperate with Tenant in such protest, appeal, or other action. Tenant shall
provide Landlord copies of all materials filed or presented in connection with
any such proceeding. Tenant shall promptly reimburse Landlord for all taxes paid
by Landlord, which were not paid with deposits received from Tenant, upon
receipt of xxxxxxxx accompanied by copies of a xxxx therefor and payments
thereof which identify the property with respect to which such payments are
made. Impositions imposed with respect to the tax-fiscal period during which the
Term commences and terminates as to each Leased Property shall be adjusted and
prorated between Landlord and Tenant on a per diem basis, with Tenant being
obligated to pay its pro rata share from and including the Commencement Date to
and including the expiration or termination date of the Term or Extension Term,
as the case may be, whether or not such Imposition is imposed before or after
such commencement or termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination. Tenant shall also pay to Landlord
a sum equal to the amount which Landlord may be caused to pay of any privilege
tax, sales tax, gross receipts tax, rent tax, occupancy tax or like tax
(excluding any tax based on net income), hereinafter levied, assessed, or
imposed by any federal, state, city, county or municipal or other local
governmental authority, or any subdivision thereof, upon or measured by rent or
other consideration required to be paid by Tenant under this Lease.
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3.02 Definition of Impositions. "Impositions" means, collectively: (a)
taxes (including without limitation, all real estate and personal property ad
valorem (whether assessed as part of the real estate or separately assessed as
unsecured personal property), sales and use, business or occupation, single
business, gross receipts, transaction, privilege, rent or similar taxes, but not
including income or franchise or excise taxes payable with respect to Landlord's
receipt of Rent); (b) assessments, whether in the nature of a special assessment
or otherwise (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not to be completed within the Term or any Extension
Term, as the case may be); (c) ground rents, water, sewer or other rents and
charges, excises, tax levies, and fees (including, without limitation, license,
permit, inspection, authorization and similar fees); (d) to the extent they may
become a lien on a Leased Property, all taxes imposed on Tenant's operations of
such Leased Property including without limitation, employee withholding taxes,
income taxes and intangible taxes; and (e) all other governmental charges, in
each case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen, of every character in respect of each Leased Property or any part
thereof, the Business conducted by Tenant thereon, and/or the Rent (including
all interest and penalties thereon due to any failure in payment by Tenant),
which at any time prior to, during or in respect of the Term or any Extension
Term, as the case may be, hereof may be assessed or imposed on or in respect of
or be a lien upon (i) Landlord or Landlord's interest in any Leased Property or
any part thereof; (ii) any Leased Property or any part thereof or any rent
therefrom or any estate, right, title or interest therein; or (iii) any
occupancy, operation, use or possession of, or sales from, or activity conducted
on, or in connection with any Leased Property or the leasing or use of any
Leased Property or any part thereof. Tenant shall not, however, be required to
pay: (x) any tax based on net income (whether denominated as a franchise or
capital stock or other tax) imposed on Landlord or (y) except as provided in
Section 13.01, any tax imposed with respect to the sale, exchange or other
disposition by Landlord of a Leased Property or the proceeds thereof; provided,
however, that if any tax, assessment, tax levy or charge which Tenant is
obligated to pay pursuant to the first sentence of this definition and which is
in effect at any time during the Term hereof is totally or partially repealed,
and a tax, assessment, tax levy or charge set forth in clause (x) or (y)
immediately above is levied, assessed or imposed expressly in lieu thereof
Tenant shall then pay such tax, levy, or charge set forth in said clause (x) or
(y).
3.03 Utilities. Tenant shall contract for, in its own name, and will pay,
as Additional Rent all taxes, assessments, charges/deposits, and bills for
utilities, including without limitation charges for water, gas, oil, sanitary
and storm sewer, electricity, telephone service, trash collection, and all other
utilities which may be charged against the occupant of the Improvements during
the Term. Tenant shall at all times maintain that amount of heat necessary to
ensure against the freezing of water lines. Tenant hereby agrees to indemnify
and hold Landlord harmless from and against any liability or damages to the
utility systems of each Leased Property that may result from Tenant's failure to
maintain sufficient heat in the Improvements therefor.
3.04 Escrow of Impositions. During the existence of any material default of
the terms of this Lease by the Tenant, unless waived by written notice from
Landlord to Tenant, Tenant shall thereafter deposit with Landlord on the first
day of each month during the Term hereof
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and any Extension Term, as the case may be, a sum equal to one-twelfth (1/12th)
of the Impositions assessed against such Leased Property which sums shall be
used by Landlord toward payment of such Impositions. If; at the end of any
applicable tax year, any such funds held by Landlord are insufficient to make
full payment of taxes or other Impositions for which such funds are the Tenant,
on demand, shall pay to Landlord any additional funds necessary to pay and
discharge in full the obligations of Tenant pursuant to the provisions of this
Section. If, however, at the end of any applicable tax year, such funds held by
Landlord are in excess of the total payment required to satisfy taxes or other
Impositions for which such funds are held, Landlord shall apply such excess
amounts to a tax and Imposition escrow fund for the next tax year. With respect
to each Leased Property, if any such excess exists following the expiration or
earlier termination of this Lease, and subject to Section 8.08 below, Landlord
shall promptly refund such excess amounts to Tenant. The receipt by Landlord of
the payment of such Impositions by and from Tenant shall only be as an
accommodation to Tenant and the taxing authorities, and shall not be construed
as rent or income to Landlord, Landlord serving, if at all, only as a conduit
for delivery purposes.
3.05 Discontinuance of Utilities. Landlord will not be liable for damages
to person or property or for injury to, or interruption of; business for any
discontinuance of utilities at any Leased Property nor will such discontinuance
in any way be construed as an eviction of Tenant from such Leased Property or
cause an abatement of Rent as to such Leased Property or operate to release
Tenant from any of Tenant's obligations as to such Leased Property under this
Lease. Notwithstanding the forgoing, however, Landlord shall be liable for
damages to person or property or for injury to, or interruption of business, for
.any discontinuance of utilities at any Leased Property, in the event and to the
extent, such damages or injury are caused by the willful misconduct of the
Landlord.
3.06 Liens. Subject to Section 17.19 relating to contests, Tenant shall not
directly or indirectly create or allow to remain, and will promptly discharge at
its expense, any lien, encumbrance, attachment, title retention agreement or
claim upon any Leased Property or any attachment, levy, claim or encumbrance in
respect of any Rent provided under this Lease, not including, however: (a) this
Lease; (b) utility easements and road rights-of-way in the customary 3 form (i)
provided the same do not adversely affect the intended use of the Leased
Properties (including the Improvements) and do not create a material adverse
effect on the value of the Leased Properties or (ii) which result solely from
the action or inaction of Landlord; (c) zoning and building laws or ordinances,
provided they do not prohibit the use of the Leased Properties for the Business
and so long as the Leased Properties are in compliance with same; (d) such
encumbrances as are subsequently consented to in writing by Landlord, but
excluding liens in respect of Impositions required to be paid under Section
3.01; (e) liens for Impositions so long as (i) the same are not yet payable or
are payable without the addition of any fine or (f) other en penalty or (ii)
such liens are being contested as permitted under Section 17.19; and cumbrances,
easements, rights of way or liens (i) provided the same do not adversely affect
the intended use of the Leased Properties (including the Improvements) and do
not create a material adverse effect on the value of the Leased properties, or
(ii) which result solely from the action or inaction of Landlord.
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3.07 Impositions Statements. Tenant shall immediately after the
Commencement Date notify the appropriate taxing authorities, utility providers,
and other entities that would send invoices for Impositions in the jurisdiction
in which the Leased Properties are situated that all tax statements, assessments
and bills for Impositions shall be delivered directly to Tenant for payment.
Tenant shall deliver to Landlord copies of all statements of taxes, special
assessments or other Impositions within ten (10) days of Tenant's receipt
thereof.
IV. INSURANCE
4.01 Insurance. Tenant shall, at Tenant's expense, keep the Improvements,
Fixtures, and other components of each Leased Property insured against the
following risks:
(a) Loss or damage by fire with extended coverage (including windstorm and
subsidence), vandalism and malicious mischief, sprinkler leakage and
all other physical loss perils commonly covered by "All Risk"
insurance in an amount not less than one hundred percent (100%) of the
then full replacement cost thereof (as hereinafter defined). Such
policy shall include an agreed amount endorsement if available at a
reasonable cost. Such policy shall also include endorsements for
contingent liability for operation of building laws, demolition costs,
and increased cost of construction.
(b) Loss or damage by explosion of steam boilers, pressure vessels, or
similar apparatus, now or hereafter installed on any Leased Property,
in commercially reasonable amounts acceptable to Landlord.
(c) Loss of rent under a rental value or Business interruption insurance
policy covering risk of loss during the first twelve (12) months of
reconstruction necessitated by the occurrence of any hazards described
in Sections 4.01(a) or 4.01(b), above, and which causes an abatement
of Rent as provided in Article X hereof; in an amount sufficient to
prevent Landlord or Tenant from becoming a co-insurer, containing
endorsements for extended period of indemnity and premium adjustment,
and written with an agreed amount clause, if the insurance provided
for in this clause (c) is available.
(d) If the Land or any portion thereof related to a Leased Property is
located in whole or in part within a designated flood plain area, loss
or damage caused by flood in commercially reasonable amounts
acceptable to Landlord.
(e) Loss or damage commonly covered by blanket crime insurance including
employee dishonesty, loss of money orders or paper currency,
depositor's forgery, and loss of property accepted by Tenant for
safekeeping, in commercially reasonable amounts acceptable to
Landlord.
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(f) Workers' compensation insurance as required by statute in respect of
any work or other operations on or about each Leased Property.
(g) Comprehensive liability insurance as to each Leased Property in
amounts equal to the greater of (i) One Million Dollars ($1,000,000)
for each occurrence and Two Million Dollars ($2,000,000) in the
aggregate, or (ii) the limits of liability generally required under
the franchise agreements or other agreements pursuant to which Tenant
operates the Businesses conducted on or about each Leased Property.
(h) Commercial comprehensive catastrophic liability insurance with limits
of liability of not less than the greater of (i) Five Million
($5,000,000) and (ii) the limits of liability generally required under
the franchise agreements or other agreements pursuant to which Tenant
operates the Businesses conducted on or about each Leased Property.
(i) upon Landlord's request, earthquake insurance in an amount not less
than the full insurable value of each Leased Property.
(j) During the period when any addition, alteration, construction,
installation or demolition is being made or performed to any part of
the Leased Property, contingent liability, public liability, completed
value, builder's risk (non reporting form) workers compensation and
other insurance as is deemed prudent by Landlord.
4.02 Insurance Limits. Deductible provisions for the insurance required
under Section 4.01(a) shall not exceed Twenty-Five Thousand Dollars ($25,000)
per location per occurrence and One Hundred Thousand Dollars ($100,000)
aggregate per occurrence; under clause (d), Twenty-Five Thousand Dollars
($25,000) per occurrence, except that if federal flood insurance is available
then such deductible shall not be greater than the lowest deductible available
with respect to such federal flood insurance; under clause (g), Twenty-Five
Thousand Dollars ($25,000) per occurrence; under clause (h), Twenty-Five
Thousand Dollars ($25,000) per occurrence; and under clause (j), Twenty-Five
Thousand Dollars ($25,000) per occurrence.
4.03 Insurance Requirements. The following provisions shall apply to all
insurance coverages required hereunder:
(a) The carriers of all policies shall have a Best's Rating of "A-" or
better and a Best's Financial Category of XII or larger and shall be
authorized to do insurance business in the jurisdiction in which the
Leased Property is located.
(b) Tenant shall be the "named insured" and Landlord and any mortgagee of
Landlord shall be an "additional named insured" on each policy, except
the insurance required by Section 4.0 1(f) hereto.
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(c) Tenant shall deliver to Landlord certificates or policies showing the
required coverages and endorsements. Each policy or certificate ~6f
insurance shall provide that such policy or certificate (i) may not be
canceled, (ii) may not lapse for failure to renew, and (iii) no
material change or reduction in coverage may be made, without
Landlord's approval after at least thirty (30) days' prior written
notice to Landlord.
(d) The policies shall contain a severability of interest and/or
cross-liability endorsement, provide that the acts or omissions of
Tenant will not invalidate Landlord's coverage, and provide that
Landlord shall not be responsible for payment of premiums.
(e) All loss adjustment shall require the written consent of Landlord and
Tenant, as their interests may appear.
(f) At least (30) thirty days prior to the expiration of each policy,
Tenant shall deliver to Landlord a certificate showing renewal of such
policy and payment of the annual premium therefor. Landlord shall have
the right to review the insurance coverages required hereunder with
Tenant from time to time, to obtain the input of third party
professional insurance advisors (at Landlord's expense) with respect
to such insurance coverages, and to consult with Tenant in Tenant's
annual review and renewal of such insurance coverages. All insurance
coverages hereunder shall be in such form, substance and amounts as
are customary or standard in Tenant's industry, but at a minimum shall
comply with the requirements set forth herein.
4.04 Replacement Cost. The term "full replacement cost" means the actual
replacement cost of the Improvements from time to time including increased cost
of construction, with no reductions or deductions. Tenant shall, not later than
thirty (30) days after the anniversary of each policy of insurance, increase the
amount of the replacement cost endorsement for the Improvements to the extent
necessary to reflect increased costs of construction. If Tenant makes any
Permitted Alterations (as hereinafter defined) to any Leased Property, Landlord
may have such full replacement cost redetermined at any time after such
Permitted Alterations are made, regardless of when the full replacement cost was
last determined.
4.05 Blanket Policy. Tenant may carry the insurance required by this
Article under a blanket policy of insurance, provided that the coverage afforded
Tenant will not be reduced or diminished or otherwise be different from that
which would exist under a separate policy meeting all of the requirements of
this Lease and the Landlord approves the form of the policy.
4.06 No Separate Insurance. Tenant shall not take out separate insurance
concurrent
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in form or contributing in the event of loss with that required in this Article,
or increase the amounts of any then existing insurance by securing an additional
policy or additional policies, unless all parties having an insurable interest
in the subject matter of the insurance, including Landlord and any mortgagees,
are included therein as additional named insureds or loss payees, the loss is
payable under said insurance in the same manner as losses are payable under this
Lease, and such additional insurance is not prohibited by the existing policies
of insurance required pursuant to this Article. Tenant shall immediately notify
Landlord of the taking out of such separate insurance or the increasing of any
of the amounts of the existing insurance by securing an additional policy or
additional policies. The term "mortgages" as used in this Lease includes, but is
not limited to, Deeds of Trust and the term "mortgagees" includes, but is not
limited to, trustees and beneficiaries under a Deed of Trust.
4.07 Waiver of Subrogation. Each party hereto hereby waives any and
every claim which arises or may arise in its favor and against the other party
hereto during the Term or any Extension Term or renewal thereof, for any and all
loss of, or damage to, any of its property located within or upon, or
constituting a part of, any Leased Property, which loss or damage is covered by
valid and collectible insurance policies, to the extent that such loss or damage
is recoverable in full under such policies. Said mutual waiver shall be in
addition to, and not in limitation or derogation of, any other waiver or release
contained in this Lease with respect to any loss or damage to property of the
parties hereto. Inasmuch as the said waivers will preclude the assignment of any
aforesaid claim by way of subrogation (or otherwise) to an insurance company (or
any other person), each party hereto agrees immediately to give each insurance
company which has issued to it policies of insurance, written notice of the
terms of said mutual waivers, and to have such insurance policies properly
endorsed, if necessary, to prevent the invalidation of said insurance coverage
by reason of said waivers, so long as such endorsement is available at a
reasonable cost.
4.08 Mortgages. The following provisions shall apply if Landlord now or
hereafter places a mortgage on any Leased Property or any part thereof: (a)
Tenant shall obtain a standard form of mortgage clause insuring the interest of
the mortgagee; (b) Tenant shall deliver evidence of insurance to such mortgagee;
(c) loss adjustment shall require the consent of the mortgagee but such consent
shall not be unreasonably withheld and may not include any requirement that the
funds be paid to mortgagee in lieu of reconstruction; and (d) Tenant shall
obtain such other coverages and provide such other information and documents as
may be reasonably required by the mortgagee.
4.09 Other Insurance Requirements. Notwithstanding anything in this Lease
to the contrary and not by way of limitation, in addition to the types and
amounts of insurance required to be carried by Tenant herein, Tenant covenants
to insure and continue in effect such types and amounts of insurance as the
Tenant shall be required to carry pursuant to any contract, agreement,
instrument, statute, law, rule or regulation relating to the use of the Leased
Property and the operations of any Business or other activities thereon,
including noncancellable written notice to mortgagee.
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V. INDEMNITY; SUBSTANCES OF CONCERN
5.01 Tenant's Indemnification. Subject to Section 4.07, Tenant hereby
agrees to indemnify and hold harmless Landlord, its agents, and employees from
and against any and all demands, claims, causes of action, fines, penalties,
damages (including punitive and consequential damages), losses, liabilities
(including strict liability), judgments, costs and expenses (including, without
limitation, attorneys' fees, court costs, and the costs set forth in Section
9.06) (the "Claims") incurred in connection with or arising from: (a) the use,
condition, operation or occupancy of the Leased Properties (whether such use,
condition, operation or occupancy occurred or arose prior to or after the
Commencement of this Lease); (b) any activity, work, or thing done, or permitted
or suffered by Tenant in, on or about the Leased Properties; (c) any acts,
omissions, or negligence of Tenant or any person claiming under Tenant, or the
contractors, agents, employees, invitees, or visitors of Tenant or any such
person; (d) any breach, violation, or nonperformance by Tenant or any person
claiming under Tenant or the employees, agents, contractors, invitees, or
visitors of Tenant or of any such person, of any term, representation, warranty,
covenant, or provision of this Lease or any law, ordinance, or governmental
requirement of any kind; (e) any injury or damage to the person, property or
Business of Tenant, its employees, agents, contractors, invitees, visitors, or
any other person entering upon any Leased Property; (f) any accident, injury to
or death of persons or loss or damage to any item of property occurring on or
about any Leased Property; (g) any Environmental Law or any pollution or other
threat to human health or the environment at, arising out of or relating to any
Leased Property as set forth in Section 5.05, and (h) any brokers' or agents'
fees and commissions. If any action or proceeding is brought against Landlord,
its employees, or agents by reason of any such demand, claim, or cause of
action, Tenant, upon notice from Landlord, will defend the same at Tenant's
expense with counsel reasonably satisfactory to Landlord. In the event Landlord
reasonably determines that its interests and the interests of Tenant in any such
action or proceeding are not substantially the same and that Tenant's counsel
cannot adequately represent the interests of Landlord therein, Landlord shall
have the right to hire separate counsel in any such action or proceeding and the
reasonable costs thereof shall be paid for by Tenant. Tenant's indemnification
obligations with respect to a Claim shall survive the expiration or earlier
termination of this Lease until the later of(i) two (2) years from the date
hereof, or (ii) the expiration of the period ninety (90) days after the date on
which Landlord has actual knowledge of the existence of such Claim, provided,
however, that Tenant's indemnification obligations shall survive the expiration
or earlier termination of this Lease until ninety (90) days after the expiration
of the applicable statute of limitations for Claims incurred in connection with,
arising out of, or related to (i) Section 5.0 1(g) or (ii) the failure to pay,
as provided for in this Agreement, any Imposition.
5.02 Substances of Concern.
(a) For purposes of this Section 5:
(i) "Substances of Concern" means, without limitation,
chemicals, pollutants, contaminants, wastes, toxic
substances, radioactive
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materials or genetically modified organisms, which are, have
been or become regulated by any federal, state or local
government authority including, without limitation, (1)
petroleum or any fraction thereof, (2) asbestos, (3) any
substance or material defined as a "hazardous substance"
pursuant toss.101 of the Comprehensive Environmental
Response Compensation and Liability Act (42 U.S C.ss.9601),
or (4) any substance or material defined as a "hazardous
chemical" pursuant to the federal Hazard Communication
Standard (29 X.X.X.xx. 1910.1200).
(ii) "Environmental Laws" means all federal, state, local, and
foreign laws and regulations relating to pollution or
protection of human health or the environment (including,
without limitation, ambient air, surface water, ground
water, wetlands, land surface, subsurface strata, and indoor
and outdoor workplace), including, without limitation, (1)
laws and regulations relating to emissions, discharges,
releases, or threatened releases of Substances of Concern,
and (2) common law principles of tort liability.
(b) Tenant shall not, either with or without negligence, injure,
overload, deface, damage or otherwise harm any Leased Property or
any part or component thereof; commit any nuisance; permit the
emission of any Substances of Concern; allow the release or other
escape of any biologically or chemically actives substances or
materials or other Substances of Concern so as to impregnate,
impair or in any manner affect, even temporarily, any element or
part of any Leased Property or neighboring property, or allow the
storage or use of such substances or materials in any manner not
sanctioned by law and by reasonable standards prevailing in the
automobile retail and related industries for the storage and use
of such substances or materials; nor shall Tenant permit the
occurrence of objectionable noise or odors; or make, allow or
suffer any waste whatsoever to any Leased Property. Landlord may
inspect each Leased Property from time to time, and Tenant will
cooperate with such inspections.
(c) Notwithstanding the foregoing, Tenant anticipates using, storing
and disposing of certain Substances of Concern in connection with
operation of its Business. Such Substances of Concern include,
but are not limited to, the following: motor oil, waste motor oil
and filters, transmission fluid, antifreeze, refrigerants, waste
paint and lacquer thinner, batteries, solvents, lubricants,
degreasing agents, gasoline and diesel fuels. Tenant shall
ascertain and comply fully with all applicable Environmental Laws
and environmental standards and requirements set by federal,
state or local laws, rules, regulations or governmental
directives related to the Leased Properties or Tenant's use or
occupancy of the Leased
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Property ("Environmental Standards"), including but not limited
to any laws or standards (a) regulating the use, storage,
generation or disposal of Substances of Concern, (b) regulating
the monitoring or use of any underground or aboveground storage
tanks at the Leased Properties, or (c) establishing any
permitting, notification or reporting requirements. As promptly
as practicable after the Commencement Date (but in no event later
than 120 days thereafter), Tenant shall establish and implement a
program of compliance with all applicable Environmental Laws and
Environmental Standards ("Environmental Compliance Program").
Tenant shall update such Environmental Compliance Program every
three (3) years during the Term. Tenant shall submit its
Environmental Compliance Program and each update thereto to
Landlord; provided, however, such submittal shall not relieve
Tenant of its obligations pursuant to this Section 5. Tenants
Environmental Compliance Program shall include a program for
monitoring Tenants' compliance with Environmental Laws and
Environmental Standards and a plan for correcting immediately any
incident of noncompliance. Tenant shall comply with its
Environmental Compliance Program.
(d) In the event of any noncompliance with any Environmental Laws or
Environmental Standards or any spill, release or discharge of
Substances of Concern in a reportable quantity under federal,
state or local law, Tenant shall:
(i) give Landlord immediate notice of the incident by telephone
or facsimile, providing as much detail as possible. Such
notice shall be provided to Landlord's National Dealership
Real Estate Manager or to such other person as Landlord
shall designate in accordance with Section 16.01 below;
(ii) as soon as possible, but no later than seventy-two (72)
hours, after discovery of an incident of noncompliance,
submit a written report to Landlord, identifying the source
or case of the noncompliance or spill, release or discharge
(including the names and quantities of any Substances of
Concern involved) and the method or action required to
correct the problem; and
(iii) cooperate with Landlord or its designated agents or
contractors with respect to the investigation and correction
of such problem.
Tenant shall also be solely responsible for providing any notice to any federal,
state or local governmental authority required by applicable laws and
regulations as a result of such incident.
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5.03 Audits. Landlord shall have the right to conduct, at its expense,
periodic audits of Tenant's compliance with the Environmental Compliance Program
and management of Substances of Concern at the Leased Properties and/or periodic
tests of air, soil, surface water or groundwater at or near the Leased
Properties. Landlord shall not be obligated to provide Tenant with the results
of any audit or tests unless such results are the basis for a claim by Landlord
that Tenant has breached its obligations under this Lease or a demand by
Landlord that Tenant modify its Environmental Compliance Program or operations
or remediate or remove a spill, release or discharge of Substances of Concern in
accordance with Section 5.06 below. Tenant agrees promptly to modify its
Environmental Compliance Program or the conduct of its operations in accordance
with Landlord's reasonable recommendations directed at improvement of Tenant's
handling, use and disposal of Substances of Concern in, on or from any Leased
Property. If, as a result of an environmental audit performed by Landlord with
respect to any Leased Property, Landlord reasonably determines in its judgment
that alterations or improvements of equipment or buildings located on the Leased
Property are necessary, Tenant shall perform such alterations or improvements as
are reasonable under the circumstances and pay all costs and expenses relating
thereto. If Tenant shall fail to pay any such costs or expenses, Tenant shall
deposit with Landlord the full amount necessary to pay such costs in full within
ten (10) days of Landlord's demand. Nothing contained herein shall be construed
to obligate or require Landlord to perform any audits, tests, inquiry or
investigation. Should Landlord elect or be required to disclose to Tenant the
results of any audit or tests, Landlord shall not be liable in any way for the
truth or accuracy of such information.
5.04 Landlord's Option Re: Compliance. If Tenant, after notice from
Landlord, fails to comply with or perform any of its obligations pursuant to
this Article 5, including, but not limited to, obligations to clean up spills,
releases or discharges, Landlord may, but shall not be obligated to, perform
such obligations and Tenant shall pay Landlord within ten (10) days of demand
Landlord's costs therefor, including any overhead and administrative costs.
5.05 Environmental Indemnification. Tenant shall indemnify and hold
harmless Landlord from and against all demands, claims, causes of action, fines,
penalties, damages (including punitive and consequential damages), losses,
liabilities (including strict liability), judgments, and expenses 3 (including,
without limitation, attorneys' fees, court costs, and the costs set forth in
Section 9.06) imposed upon or asserted against Tenant, Landlord or any Leased
Property on account of any Environmental Law (irrespective of whether there has
occurred any violation of any Environmental Law) relating to any Leased
Property, including (a) response costs and costs of removal and remedial action
incurred by the United States Government or any state or local governmental unit
to any other person or entity, or damages from injury to or destruction or loss
of natural resources, including the reasonable costs of assessing such injury,
destruction or loss, incurred pursuant to any Environmental Law, (b) costs and
expenses of abatement, investigation, removal, remediation, correction or
cleanup, fines, damages, response costs or penalties which arise from the
provisions of any Environmental Law, (c) liability for personal injury or
property damage arising under any statutory or common-law tort theory, including
damages assessed for the maintenance of a public or private nuisance or for
carrying on of a dangerous activity, (d) liability by reason of a breach of an
environmental representation
17
or warranty by Tenant, and (e) failure of Tenant to complete in a timely manner
alterations or improvements of equipment or buildings located on the Leased
Property deemed necessary or advisable by Landlord pursuant to Section 5.03 in a
manner acceptable to Landlord.
5.06 Tenant's Cleanup Obligation. If any spill, release or discharge of
Substances of Concern occurs on, at or from the Leased Properties during the
Term, Tenant shall promptly take all actions, at its sole expense, as are
necessary to remove or remediate such spill, release or discharge and to return
the Leased Property to the condition existing prior to the introduction of any
such Substances of Concern to the Leased Property, provided that Landlord's
approval of such action shall first be obtained, which approval shall not be
unreasonably withheld so long as such actions would not potentially have any
material adverse effect on the Leased Property.
5.07 Existing Environmental Conditions. Tenant acknowledges that it has had
the opportunity to review the Environmental Reports identified in Exhibit 5.07
hereto. Tenant hereby represents that it has reviewed and is aware of the
matters disclosed in the Environmental Reports.
As a material consideration for Landlord's willingness to enter into this
Lease, Tenant, for itself and its Affiliates, and each of their shareholders,
directors, officers, employees, agents, contractors, representatives, insurers,
successors and assigns hereby waives and releases Landlord and its Affiliates
and each of their shareholders, directors, officers, employees, representatives,
agents, contractors, representatives, insurers, successors and assigns from any
and all claims, demands, liabilities, costs, expenses, causes of action and
rights of action whatsoever, past, present or future, known or unknown,
suspected or unsuspected, which arise out of or relate in any way to the
violation of Environmental Laws or the use, storage, treatment, disposal,
presence, spill, release, or discharge of Substances of Concern at, on or from
the Leased Properties before the Commencement Date (collectively, the "Released
Claims").
In the event that Landlord is ordered by a governmental agency, or
determines that it is in its best interest, to remedy any violation of
Environmental Laws or to remove or remediate any Substances of Concern present
on, under or about the Leased Properties on the Commencement 3 Date, or spilled,
released or discharged on, at or from the Leased Properties before the
Commencement Date, Tenant shall immediately upon notice from Landlord take all
actions, at Tenant's sole expense, to promptly complete such removal or
remediation.
5.08 Survival of Tenant's Obligations. Tenant's obligations under this
Section 5 shall survive the expiration or earlier termination of this Lease.
During any period of time employed by Tenant after the termination of this Lease
to complete the removal from the Leased Property of any Substances of Concern,
if the premises are not rentable for uses contemplated under this Lease, Tenant
shall continue to pay the full amount of Rent due under this Lease, which Rent
shall be prorated daily for the final month of such period of time.
VI. USE AND ACCEPTANCE OF PREMISES
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6.01 Use of Leased Properties. For so long as this Lease is in effect
(including following any sublease or assignment thereof), Tenant shall use and
occupy each Leased Property exclusively for the purpose of conducting the
Business or for any other legal purpose for which such Leased Property is being
used as of the Commencement Date, and for no other purpose without the prior
written consent of Landlord. Tenant shall obtain and maintain all approvals,
licenses, and consents needed to use and operate the Leased Properties for such
purposes. Tenant shall promptly deliver to Landlord complete copies of surveys,
examinations, certification and licensure inspections, compliance certificates,
and other similar reports issued to Tenant by any governmental agency.
6.02 Acceptance of Leased Properties. Except as otherwise specifically
provided in this Lease, Tenant acknowledges (i) Tenant and its agents have had
an opportunity to inspect each Leased Property; (ii) Tenant has found each
Leased Property fit for Tenant's use; (iii) delivery of each Leased Property to
Tenant is in an "as-is" condition; (iv) Landlord is not obligated to make any
improvements or repairs to any Leased Property; and (v) the roof, walls,
foundation, heating, ventilating, air conditioning, telephone, sewer,
electrical, mechanical, utility, plumbing, and other portions of each Leased
Property are in good working order. Tenant waives any claim or action `against
Landlord with respect to the condition of any Leased Property. LANDLORD MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, TN RESPECT OF THE LEASED
PROPERTIES OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION OR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO QUALITY OR THE
MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH
RISKS ARE TO BE BORNE BY TENANT.
6.03 Conditions of Use and Occupancy. Tenant agrees that during the Term it
shall use and keep each Leased Property in a careful, safe and proper manner;
not commit or suffer waste thereon; not use or occupy any Leased Property for
any unlawful purposes; not use or occupy any Leased Property or permit the same
to be used or occupied, for any purpose or business deemed extra hazardous on
account of fire or otherwise; keep each Leased Property in such repair and
condition as may be required by the local board of health, or other city, state
or federal authorities, free of all cost to Landlord; not permit any acts to be
done which will cause the cancellation, invalidation, or suspension of any
insurance policy; and permit Landlord and its agents to enter upon each Leased
Property at all reasonable times after notice to Tenant to examine the condition
thereof. In addition, at any time and from time to time upon not less than
fifteen (15) days prior written notice, Tenant shall permit Landlord and any
mortgagee or lender and their authorized representatives, to inspect the Leased
Properties during normal Business hours, provided that such inspections shall
not unreasonably interfere with Business of Tenant.
6.04 Financial Statements and Other Information. Tenant shall provide
Landlord and any mortgagee or lender regularly (or more often as may be
reasonably requested by Landlord in writing), the following financial
information: (a) as to each Leased Property within thirty (30) days after each
fiscal quarter during the Term or any Extension Term, as the case may be,
(except the fourth quarter), Tenant-prepared financial statements prepared in
accordance with
19
generally accepted accounting principles ("GAAP") consistently applied; and (b)
as to each Leased Property, itself, and Guarantor, Tenant shall use its best
efforts to provide Landlord within ninety (90) days after the end of each fiscal
year of Tenant, and Guarantor, respectively, during the Term or any Extension
Term, as the case may be, and in no event later than one hundred and twenty
(120) days after the end of each fiscal year of Tenant or Guarantor,
respectively, during the Term or any Extension Term, as the case may be,
financial statements, audited, reviewed or compiled by a certified public
accountant (the "Annual Financial Statements"). Tenant shall also deliver to
Landlord such additional financial information as Landlord may reasonably
request, provided the same is of a type normally maintained by Tenant or can be
obtained without undue cost or burden on Tenant's personnel and does not
constitute information which Tenant reasonably determines to be proprietary or
confidential. Additionally, upon Landlord's request, Tenant shall provide
Landlord with copies of Tenant's annual capital expenditure budgets for each
Leased Property and any reports generated by Tenant regarding maintenance and
repairs of each Leased Property.
VII. REPAIRS. COMPLIANCE WITH LAWS. AND MECHANICS' LIENS
7.01 Maintenance. Tenant shall maintain each Leased Property in good order,
repair and appearance, and repair each Leased Property, including without
limitation, all interior and exterior, structural and nonstructural repairs and
replacements to the roof, foundations, exterior walls, building systems, HVAC
systems, parking areas, sidewalks, water, sewer and gas connections, pipes, and
mains. Tenant shall pay as Additional Rent the full cost of such maintenance,
repairs, and replacements. Tenant shall maintain all drives, sidewalks, parking
areas, and lawns on or about each Leased Property in a clean and orderly
condition, free of accumulations of dirt, rubbish, snow and ice. Tenant shall
permit Landlord to inspect each Leased Property at all reasonable times, and
shall implement all reasonable suggestions of Landlord as to the maintenance and
repair of each Leased Property.
7.02 Compliance with Laws. Tenant shall comply with all laws, ordinances,
orders, rules, regulations, and other governmental requirements relating to the
use, condition, or occupancy of each Leased Property, whether now or hereafter
enacted and in force including without limitation: (a) licensure requirements
for operation of the Business; (b) requirements of any board of casualty
insurance underwriters or insurance service office for any other similar body
having jurisdiction over any Leased Property; (c) all zoning and building codes;
and (d) Environmental Laws. At Landlord's request, from time to time, Tenant
shall deliver to Landlord copies of certificates or permits evidencing
compliance with such laws, including without limitation, copies of any
applicable licenses, certificates of occupancy and building permits. Tenant
shall provide Landlord with copies of any notice from any governmental authority
alleging any non-compliance by Tenant or any Leased Property with any of the
foregoing requirements and such evidence as Landlord may reasonably require of
Tenants remediation thereof Tenant hereby agrees to defend, indemnify and hold
Landlord, its agents, and employees from and against any and all demands,
claims, causes of action, fines, penalties, damages (including punitive and
consequential damages), losses, liabilities (including strict liability),
judgments, costs and expenses (including, without limitation, attorneys' fees,
court costs, and the
20
costs set forth in Section 9.06) resulting from any failure by Tenant to comply
with any laws, ordinances, rules, regulations, and other governmental
requirements.
7.03 Required Alterations. Tenant shall, at Tenant's sole cost and expense,
make any additions, changes, improvements or alterations to each Leased
Property, including structural alterations, which may be required by any
governmental authorities, including those required to continue to satisfy any
licensure requirements related to the operation of the Business, whether such
changes are required by Tenant's use, changes in the law, ordinances, or
governmental regulations, defects existing as of the date of this Lease, or any
other cause whatsoever. Tenant shall provide thirty (30) days prior written
notice to Landlord of any changes to a Leased Property pursuant to this Section
7.03 which involve changes to the structural integrity thereof or materially
affect the operational capabilities thereof All such additions, changes,
improvements or alterations shall be deemed to be a Tenant Improvement and shall
comply with all laws relating to such alterations and with the provisions of
Section 8.01.
7.04 Mechanics' Liens. Tenant shall have no authority to permit or create a
lien against Landlord's interest in any Leased Property, and Tenant shall post
notices or file such documents as may be required to protect Landlords interest
in each Leased Property against liens. Tenant hereby agrees to defend,
indemnify, and hold Landlord harmless from and against any mechanics' liens
against any Leased Property by reason of work, labor services or materials
supplied or claimed to have been supplied on or to such Leased Property. Tenant
shall immediately remove, bond-off, or otherwise obtain the release of any
mechanics' lien filed against any Leased Property. Tenant shall pay all expenses
in connection therewith, including without limitation, damages, interest, court
costs and reasonable attorneys fees.
7.05 Replacements of Fixtures. Tenant shall not remove Fixtures from any
Leased Property except to replace such Fixtures with other items used for
similar or analogous purposes, which replacement items are of equal or greater
quality and value. Items being replaced by Tenant may be removed and shall
become the property of Tenant and items replacing the same shall be and remain
the property of Landlord. Tenant shall execute, upon written request from
Landlord, any and all documents necessary to evidence Landlord's ownership of
the Fixtures and replacements therefor. Tenant may not finance replacements by
security agreement or equipment lease unless: (a) Landlord has consented to the
terms and conditions of the equipment lease or security agreement; (b) the
equipment lessor or lender has entered into a non-disturbance agreement with
Landlord upon terms and conditions acceptable to Landlord, including without
limitation (i) Landlord shall have the right (but not the obligation) to assume
such security agreement or equipment lease upon the occurrence of an Event of
Default by Tenant hereunder; (ii) the equipment lessor or lender shall promptly
notify Landlord of any default by Tenant under the equipment lease or security
agreement and give Landlord a reasonable opportunity to cure such default; and
(iii) Landlord shall have the right to assign its rights under the equipment
lease, security agreement, or non-disturbance agreement; (c) the equipment
lessor or lender shall subordinate its security interest to the security
interest of any of Landlord's lessors, mortgagors or lenders, whether now
created or hereafter existing, and (d) Tenant shall, within ten (10) days after
receipt of an invoice from Landlord, reimburse Landlord for all costs and
expenses incurred
21
in reviewing and approving the equipment lease, security agreement, and
non-disturbance agreement, including without limitation, reasonable attorneys'
fees and costs.
7.06 Encroachments: Restrictions. If any of the Improvements shall, at any
time, encroach upon any property, street or right-of-way adjacent to a Leased
Property, or shall violate the agreements or conditions contained in any
restrictive covenant or other agreement affecting a Leased Property, other than
one which is created or consented to by Landlord without Tenant's consent, or
shall impair the rights of others under an easement or right-of-way to which a
Leased Property is subject, other than one which is created or consented to by
Landlord without Tenant's consent, then promptly upon the request of Landlord or
at the request of any person affected by any such encroachment, violation or
impairment, Tenant shall, at its expense, subject to its right to contest the
existence of any encroachment, violation or impairment and in such case, in the
event of an adverse final determination, either (a) obtain valid and effective
waivers or settlements of all claims, liabilities and damages resulting from
each such encroachment, violation or impairment, whether the same shall affect
Landlord or Tenant or (b) make such changes in the Improvements and take such
other actions as shall be necessary to remove such encroachment and to end such
violation or impairment, including, if necessary, the alteration of improvements
Any such alteration shall be made in conformity with the requirements of Article
VIII.
VIII. ALTERATIONS AND SIGNS: TENANT'S PROPERTY: CAPITAL ADDITIONS TO THE LEASED
PROPERTIES
8.01 Tenant's Right to Construct. As to each Leased Property, during the
Term of this Lease or any Extension Term, as the case may be, so long as no
Event of Default shall have occurred and be continuing as to such Leased
Property, Tenant may make Capital Additions (as defined herein), or other
alterations, additions, changes and/or improvements to such Leased Property as
deemed necessary or useful to operate such Leased Property for Tenants Business
(individually, a "Tenant Improvement," or collectively, the "Tenant
Improvements"). "Capital Additions" shall mean the construction of one or more
new buildings or one or more additional structures annexed to any portion of any
of the Improvements on a Leased Property, which are constructed on any parcel or
portion of the Land comprising a Leased Property, including the construction of
a new floor, or the repair, replacement, restoration, remodeling or rebuilding
of the Improvements or any portion thereof on a Leased Property which are not
normal, ordinary or recurring to maintain such Leased Property. Except as
otherwise agreed to by Landlord herein or otherwise in writing, any such Tenant
Improvement or Capital Addition shall be made at Tenant's sole expense and shall
become the property of Landlord upon termination of this Lease. Unless made on
an emergency basis to prevent injury to person or property, as to each Leased
Property, Tenant must obtain Landlord's prior written approval, such approval
not to be unreasonably withheld or delayed, for any Capital Addition or for any
Tenant Improvement which is not a Capital Addition and which has a cost of more
than One Hundred Thousand Dollars ($100,000) or a cost which, when aggregated
with the costs of all such Tenant Improvements on such Leased Property in a
given Lease Year, would cause the total costs of all such Tenant Improvements on
such Leased Property to exceed Two Hundred Fifty Thousand
22
Dollars ($250,000). Additionally, in connection with any Tenant Improvement,
including any Capital Addition, Tenant shall provide Landlord with copies of any
plans and specification therefor, Tenant's budget relating thereto, any required
governmental permits or approvals, any construction contracts or agreements
relating thereto, and any other information relating to such Tenant Improvement
as Landlord shall reasonably request.
8.02 Scope of Right. Subject to Section 8.01 herein and Section 7.03
concerning required alterations, at Tenant's cost and expense, Tenant shall have
the right to:
(a) seek any governmental approvals, including building permits,
licenses, conditional use permits and any certificates of need
that Tenant requires to construct any Tenant Improvement;
(b) erect upon each Leased Property such Tenant Improvements as
Tenant deems desirable;
(c) make additions, alterations, changes and improvements in any
Tenant Improvement so erected; and
(d) engage in any other lawful activities that Tenant determines are
necessary or desirable for the development of each Leased
Property in accordance with the Tenant's Business;
provided, however, Tenant shall not make any Tenant Improvement which would, in
Landlord's reasonable judgment, impair the value of the Leased Property or the
Tenant's Business without Landlord's prior written consent and provided, further
that Tenant shall not be permitted to create a mortgage, lien or any other
encumbrance on any Leased Property without Landlord's prior written consent.
8.03 Cooperation of Landlord. Landlord shall cooperate with Tenant and take
such actions, including the execution and delivery to Tenant of any applications
or other documents, reasonably requested by Tenant in order to obtain any
governmental permits, licenses or approvals sought by Tenant to construct any
Tenant Improvement within fifteen (15) business days following the later of: (a)
the date Landlord receives Tenant's request or (b) the date of delivery of any
such application or document to Landlord; provided, the taking of such action by
Landlord, including the execution of said applications or documents, shall be
without cost to Landlord (or if there is a cost to Landlord, such cost shall be
reimbursed by Tenant), shall not cause Landlord to be in violation of any law,
ordinance or regulation, and shall not be deemed a waiver by Landlord of any of
its rights or of any of Tenant's obligations, including but not limited to
indemnification.
8.04 Commencement of Construction. Tenant agrees that:
(a) Tenant shall diligently seek all governmental approvals relating
to the
23
construction of any Tenant Improvement;
(b) Once Tenant begins the construction of any Tenant Improvement,
Tenant shall diligently oversee any such construction to
completion in accordance with applicable insurance requirements
and the laws, rules and regulations of all governmental bodies or
agencies having jurisdiction over the subject Leased Property;
(c) Landlord shall have the right at any time and from time to time
to post and maintain upon each Leased Property such notices as
may be necessary to protect Landlord's interest from mechanics'
liens, materialmen's liens or liens of a similar nature;
(d) Tenant shall not suffer or permit any mechanics' liens or any
other claims or demands arising from the work of construction of
any Tenant Improvement to be enforced against any Leased Property
or any part thereof and Tenant agrees to hold Landlord, its
agents and employees and said Leased Property free and harmless
from all demands, claims, causes of action, fines, penalties,
damages (including punitive and consequential damages), losses,
liabilities (including strict liability), judgments, costs and
expenses (including, without limitation, attorneys' fees, court
costs, and the costs set forth in Section 9.06) incurred in
connection with or arising therefrom;
(e) All work shall be performed in a satisfactory and workmanlike
manner consistent with standards in the industry; and
(f) Subject to Section 8.08 in the case of Capital Additions, Tenant
shall not secure any construction or other financing for the
Tenant Improvements which is secured by a portion of any Leased
Property without Landlord's prior written consent, and any such
financing (i) shall not exceed the cost of the Tenant
Improvements, (ii) shall be subordinate to any mortgage or
encumbrance now existing or hereinafter created with respect to
such Leased Property, and (iii) shall be limited solely to
Tenant's interest in the subject Leased Property.
8.05 Rights in Tenant Improvements. Notwithstanding anything to the
contrary in this Lease, all Tenant Improvements existing on the Leased Property
or constructed upon each Leased Property pursuant to Section 8.01, any and all
subsequent additions thereto and alterations and replacements thereof shall be
the sole and absolute property of Tenant during the Term and any Extension Term,
as the case may be, of this Lease (in respect of such Leased Property). Upon the
expiration or early termination of this Lease
24
in respect of a Leased Property, all such Tenant Improvements located thereon
shall become the property of Landlord. Without limiting the generality of the
foregoing, prior to the expiration or early termination of this Lease in respect
of a Leased Property, Tenant shall be entitled to all federal and state income
tax benefits associated with all Tenant Improvements located on such Leased
Property.
8.06 Personal Property. Tenant shall install, place, and use on each Leased
Property such fixtures, furniture, equipment, inventory and other personal
property in addition to the Fixtures as may be required or as Tenant may, from
time to time, deem necessary or useful to operate such Leased Property in the
operation of the Business.
8.07 Requirements for the Tenant's Personal Property. Tenant shall comply
with all of the following requirements in connection with the Tenant's Personal
Property:
(a) The Tenant's Personal Property shall be installed in a good and
workmanlike manner, in compliance with all governmental laws,
ordinances, rules, and regulations and all insurance
requirements, and be installed free and clear of any mechanics'
liens.
(b) Tenant shall, at Tenant's sole cost and expense, maintain,
repair, and replace the Tenant's Personal Property.
(c) Tenant shall, at Tenant's sole cost and expense, keep the
Tenant's Personal Property insured against loss or damage by
fire, vandalism and malicious mischief, sprinkler leakage, and
other physical loss perils commonly covered by fire and extended
coverage, boiler and machinery, and difference in conditions
insurance (which insurance shall meet the requirements of Section
4.03 hereof) in an amount not less than the full replacement cost
thereof or such other amount as appears on a schedule submitted
by Tenant to Landlord, which schedule shall be subject to
Landlord's approval, and Tenant shall use the proceeds from any
such policy for the repair and replacement of such items of
Tenant's Personal Property; provided, however, that if Landlord
fails to object to the schedule so submitted by Tenant within
five (5) business days of Landlord's receipt of such schedule,
Landlord's approval of such schedule shall be deemed given.
(d) Tenant shall pay all Impositions and other taxes applicable to
Tenant's Personal Property.
(e) If Tenant's Personal Property is damaged or destroyed by fire or
otherwise, Tenant shall promptly repair or replace Tenant's
Personal Property unless Tenant is entitled to and elects to
terminate the Lease pursuant to Section 10.05.
(f) As to each Leased Property, unless an Event of Default (or any
event which, with the giving of notice or lapse of time, or both,
would constitute
25
an Event of Default) has occurred and remains uncured beyond any
applicable grace period, Tenant may remove Tenant's Personal
Property from such Leased Property from time to time provided
that: (i) the items removed are not required or necessary to
operate the Business on such Leased Property (unless such items
are being replaced by Tenant) and (ii) Tenant promptly repairs
any damage to such Leased Property resulting from the removal of
Tenant's Personal Property.
(g) As to each Leased Property, Tenant shall remove all of Tenant's
Personal Property upon the termination or expiration of the Lease
and shall promptly repair any damage to such Leased Property
resulting from the removal thereof to the reasonable satisfaction
of Landlord; provided, however, if Tenant fails to remove Tenants
Personal Property from such Leased Property within thirty (30)
days after the termination or expiration of this Lease with
respect thereto, then Tenant shall be deemed to have abandoned
such items of Tenant's Personal Property, all of which shall
become the property of Landlord, and Landlord may remove, store
and dispose of such property and Tenant shall have no claim or
right against Landlord for such property or the value thereof
regardless of the disposition thereof by Landlord. Tenant shall
pay Landlord, upon demand, all expenses incurred by Landlord in
removing, storing, and disposing of such items of Tenant's
Personal Property and repairing any damage caused by such
removal. Tenant's obligations hereunder shall survive the
termination or expiration of this Lease as to such Leased
Property.
(h) Tenant shall perform its obligations under any equipment lease or
security agreement for Tenant's Personal Property.
8.08 Financings of Capital Additions to a Leased Property. Landlord may,
but shall be under no obligation to, provide or arrange construction; permanent
or other financing for any Capital Addition proposed to be made to a Leased
Property by Tenant. Any financing so provided by Landlord shall be made in
accordance with, and subject to, a written Addendum to this Lease.
IX. DEFAULTS AND REMEDIES
9.01 Events of Default. The occurrence of any one or more of the following
shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of Rent, or any other
monetary obligation payable by Tenant to Landlord hereunder,
within ten (10) days after the due date thereof and after written
notice thereof and an opportunity to cure within a ten (10) day
period after such notice is given to Tenant by Landlord. In the
event of Tenant's failure to make timely
26
payment of such obligations one (1) time during any twelve (12)
month period, each subsequent such failure within the twelve (12)
months immediately following such failure shall immediately
constitute an Event of Default, and Landlord shall not be
required to provide notice thereof, nor shall Tenant have any
further opportunity to cure such failure;
(b) Tenant fails to observe and perform any covenant (other than the
covenant in respect of insurance set forth in Article IV),
condition or agreement hereunder to be performed by Tenant
(except those described in Section 9.01(a) of this Lease) and
such failure continues for a period of twenty (20) days after
written notice thereof is given to Tenant by Landlord;
(c) If Tenant: (i) admits in writing its inability to pay its debts
generally as they become due; (ii) files a petition in bankruptcy
or a petition to take advantage of any insolvency act; (iii)
makes an assignment for the benefit of its creditors; (iv) is
unable to pay its debts as they mature; (v) consents to the
appointment of a receiver of itself or of the whole or any
substantial part of its property; or (vi) files a petition or
answer seeking reorganization or arrangement under the federal
bankruptcy laws or any other applicable law or statute of the
United States of America or any state thereof;
(d) If Tenant, on insolvency proceedings or on a petition in
bankruptcy filed against it, is adjudicated as bankrupt or a
court of competent jurisdiction enters an order or decree
appointing, without the consent of Tenant, a receiver of Tenant
of the whole or substantially all of its property, or approving a
petition filed against it seeking reorganization or arrangement
of Tenant under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any
state thereof, and such judgment, order or decree is not vacated,
dismissed or set aside within sixty (60) days from the date of
the entry thereof;
(e) If the estate or interest of Tenant in a Leased Property or any
part thereof is levied upon or attached in any proceeding and the
same is not vacated or discharged within fifteen (15) days after
commencement thereof (unless Tenant is contesting such lien or
attachment in accordance with this Lease) or if such estate or
interest of Tenant is assigned, conveyed or involuntarily
transferred in violation of this Lease;
(f) Any representation, warranty or covenant made by Tenant on behalf
of itself or an Affiliate in this Lease or in any certificate,
demand or request made pursuant hereto proves to be incorrect, in
any material respect, as of the date of issuance or making
thereof;
(g) Conviction of Tenant or an Affiliate of a crime or offense
constituting a
27
felony in the jurisdiction in which committed or under federal
law which conviction results in the termination of the franchise.
(h) Termination or relinquishment of the franchise or license
pursuant to which Tenant or an Affiliate conducts business on or
from any Leased Property, provided that such event shall not
constitute an Event of Default if (i) no other Event of Default
enumerated in this Section 9.01 shall occur and be continuing,
and (ii) at a date no later than twenty-four (24) months
following such date of termination or relinquishment, Tenant or
an Affiliate has entered into written new or amended franchises
or licenses for operation of motor vehicle retail or motor
vehicle related businesses at such Leased Property satisfactory
to Landlord in its discretion applying commercially reasonable
standards;
(i) Default under any franchise or license pursuant to which Tenant
or an Affiliate conducts business at a Leased Property, if in the
Landlord's judgment such default in light of commercially
reasonable standards and industry practice would have a material
adverse effect on the Leased Property;
(j) A final, non-appealable judgment or judgments for the payment of
money not fully covered (excluding deductibles) by insurance is
rendered against Tenant and the same remains undischarged,
unvacated, unbonded, unappealed or unstayed for a period of
thirty (30) consecutive days;
(k) Tenant shall fail to observe the covenant in respect to insurance
under Article IV provided Landlord shall have provided notice of
such failure to Tenant and Tenant shall have failed to cure such
failure within three (3) business days of such notice; or
(1) Except after the effective date of a permitted assignment meeting
the requirements of Article XIII, if Tenant is liquidated or
dissolved, or begins proceedings toward liquidation or
dissolution, or in any manner permits the sale or divestiture of
substantially all of its assets.
9.02 Remedies. To the extent an Event of Default is applicable only to a
specific Leased Property or specific Leased Properties (in accordance with
Section 9.01 above), the remedies set forth herein shall be exercisable solely
with respect to such Leased Property or Leased Properties, and shall not be
exercisable with respect to any other Leased Property. To the extent an Event of
Default constitutes an Event of Default as to all of the Leased Properties (in
accordance with Section 9.01 above), the remedies set forth herein shall be
exercisable with respect to all of the Leased Properties. Subject to the
foregoing provisions, Landlord may exercise any one or more of the following
remedies upon the occurrence of an Event of Default:
28
(a) Landlord may terminate this Lease, exclude Tenant from possession
of the subject Leased Property and use reasonable efforts to
lease the subject Leased Property to others. If this Lease is
terminated pursuant to the provisions of this subparagraph (a)
with respect to one or more, but less than all, of the Leased
Properties identified on Schedule A hereto, Tenant will remain
liable to Landlord for the Rent for all of the Leased Properties
identified on Schedule A and other sums then due and for the
balance of the Term as if the Lease had not been terminated with
respect to the subject Leased Property, less the net proceeds, if
any, of any re-letting of the subject Leased Property by Landlord
subsequent to such termination, after deducting all Landlord's
expenses in connection with such re-letting, including without
limitation, the expenses set forth in Section 9.02(b)(ii) below.
Notwithstanding the termination of this Lease with respect to a
subject Leased Property, Tenant shall pay to Landlord all amounts
due as Rent, and such other amounts then due, under this Lease on
the days that such Rent and such other amounts become due and
payable as required by this Lease.
(b) Without demand or notice, Landlord may re-enter and take
possession of the subject Leased Property or any part thereof and
repossess such Leased Property as of Landlord's former estate;
and expel Tenant and those claiming through or under Tenant from
such Leased Property; and, remove the effects of both or either,
without being deemed guilty of any manner of trespass and without
prejudice to any remedies for arrears of Rent or preceding breach
of covenants or conditions. If Landlord elects to re-enter, as
provided in this paragraph (b) or if Landlord takes possession of
such Leased Property pursuant to legal proceedings or pursuant to
any notice provided by law, Landlord may, from time to time,
without terminating any portion of this Lease, re-let such Leased
Property or any part of such Leased Property, either alone or in
conjunction with other portions of the Improvements of which such
Leased Property are a part, in Landlord's name but for the
account of Tenant, for such term or terms (which may be greater
or less than the period which would otherwise have constituted
the balance of the Term of this Lease) and on such terms and
conditions (which may include concessions of free rent, and the
alteration and repair of such Leased Property) as Landlord, in
its sole and unreviewable discretion, may determine. Landlord may
collect and receive the Rents for such Leased Property. Landlord
will not be responsible or liable for any failure to re-let such
Leased Property, or any part of such Leased Property, or for any
failure to collect any Rent due upon such re-letting. No such
re-entry or taking possession of such Leased Property by Landlord
will be construed as an election on Landlord's part to terminate
this Lease unless a written notice of such intention is given to
Tenant. No notice from Landlord under this Lease or under a
forcible entry
29
and detainer statute or similar law will constitute an election
by Landlord to terminate this Lease unless such notice
specifically says so. Landlord reserves the right following any
such re-entry or re-letting, or both, to exercise its right to
terminate this Lease by giving Tenant such written notice, and,
in that event such Lease will terminate as specified in such
notice.
(c) If Landlord elects to take possession of a Leased Property
according to subparagraph (b) of this Section 9.02 without
terminating this Lease, Tenant will pay Landlord (A) the Rent and
other sums which would be payable under this Lease with respect
to such Leased Property if such repossession had not occurred,
less (B) the net proceeds, if any, of any re-letting of such
Leased Property after deducting all of Landlord's expenses
incurred in connection with such re-letting, including without
limitation, all repossession costs, brokerage commissions, legal
expense, attorneys' fees, expense of employees, alteration,
remodeling, repair costs, and expense of preparation for such
re-letting. If, in connection with any re-letting, any resulting
lease term for the subject Leased Property extends beyond the
existing Term or Extension Term, as the case may be, or such
Leased Property covered by such re-letting includes areas which
are not part of such Leased Property, a fair apportionment of the
Rent received from such re-letting and the expenses incurred in
connection with such re-letting will be made in determining the
net proceeds received from such re-letting. In addition, in
determining the net proceeds from such re-letting, any rent
concessions will be apportioned over the term of the new lease.
Tenant will pay such amounts to Landlord monthly on the days on
which the Rent and all other amounts owing under this Lease would
have been payable if possession had not been retaken, and
Landlord will be entitled to receive the rent and other amounts
from Tenant on each such day. Notwithstanding anything herein to
the contrary, Landlord, at its option, may collect and apply any
Rent received from such re-letting in accordance herewith and in
such case shall remit any balance thereof to Tenant. Landlord
shall incur no liability or obligation to Tenant arising out of
the collection or application of Rent by Landlord hereunder.
(d) Landlord may re-enter the applicable Leased Property and have,
repossess and enjoy such Leased Property as if this Lease had not
been made, and in such event, Tenant and its successors and
assigns shall remain liable for any contingent or unliquidated
obligations or sums owing at the time of such repossession.
(e) Landlord may take whatever action at law or in equity as may
appear necessary or desirable to collect the Rent and other
amounts payable hereunder with respect to the subject Leased
Property then due
30
and thereafter to become due, or to enforce performance and
observance of any obligations, agreements or covenants of Tenant
under this Lease.
9.03 Right of Set-Off. Landlord may, and is hereby authorized by Tenant, at
any time and from time to time, after advance notice to Tenant, to set-off and
apply any and all sums held by Landlord in respect of a Leased Property,
including all sums held in any escrow for Impositions, any indebtedness of
Landlord to Tenant, and any claims by Tenant against Landlord, against any
obligations of Tenant under this Lease in respect of such Leased Property and
against any claims by Landlord against Tenant, whether or not Landlord has
exercised any other remedies hereunder. Landlord shall set-off and apply such
sums first, to delinquent real estate taxes, unless such taxes are being
protested in good faith and no lien has attached to any Leased Property with
respect thereto, second, to currently due and owing real estate taxes, and next,
to other Tenant's-obligations in the order which Landlord may determine. The
rights of Landlord under this Section are in addition to any other rights and
remedies Landlord may have against Tenant.
9.04 Performance of Tenant's Covenants. Landlord may, without waiving or
releasing any obligation of Tenant, and without waiving or releasing any
obligation or default, perform any obligation of Tenant which Tenant has failed
to perform within five (5) business days after Landlord has sent a written
notice to Tenant informing it of its specific failure (provided no such notice
shall be required if Landlord has previously notified Tenant of such failure
under the provisions of Section 9.01). In the event Landlord deems, in its
discretion, that Tenant's failure to perform such obligation has given rise to
an emergency situation, Landlord may perform such obligation without waiving or
releasing any obligation of Tenant, and without waiving or releasing any
obligation or default; provided, however, that Landlord shall notify Tenant of
such performance as soon as it is reasonably practicable to do so. Tenant shall
reimburse Landlord on demand, as Additional Rent, for any expenditures thus
incurred by Landlord and shall pay interest thereon at the New York Prime Rate.
9.05 Late Charge. Any payment not made by Tenant for more than five (5)
business days after the due date shall be subject to a late charge payable by
Tenant as Rent of four percent (4%) of the amount of such overdue payment. If
any payment is not made by Tenant for more than five (5) business days after the
due date for a second time during any twelve (12) month period, any overdue
payments made subsequent to such second failure within the twelve months
immediately following such second overdue payment shall be subject to a late
charge payable by Tenant as Rent of seven percent (7%) of the amount of such
overdue payment and shall constitute an Event of Default under the Lease.
9.06 Litigation: Attorneys' Fees. Within ten (10) days after Tenant has
knowledge of any litigation or other proceeding related to or arising out of
this Agreement or the Leased Property in which claims are asserted in an amount
in excess of $50,000, that (1) may be instituted against Tenant, (2) may be
instituted against any Leased Property to secure or recover possession thereof,
or (3) may affect the title to or the interest of Landlord in any Leased
Property, Tenant shall give written notice thereof to Landlord. In the event
that Landlord
31
determines that Tenant has failed to give adequate cooperation or information
with respect to any such litigation, investigation, receivership,
administrative, bankruptcy, insolvency or other similar proceeding, Landlord
may, after notice to Tenant, undertake such investigation or proceeding and
Tenant shall pay all reasonable costs and expenses (the "Costs") related thereto
that are incurred by Landlord, whether or not Landlord has received notice from
Tenant of such investigation or proceeding, and whether or not an Event of
Default has actually occurred or has been declared and thereafter cured, which
Costs shall include, without limitation: (a) the fees, expenses, and costs of
any litigation, investigation, receivership, administrative, bankruptcy,
insolvency or other similar proceeding; (b) reasonable attorney, paralegal,
consulting and witness fees and disbursements; and (c) the expenses, including,
without limitation, lodging, meals, and transportation, of Landlord and its
employees, agents, attorneys, and witnesses in investigating or preparing for
litigation, administrative, bankruptcy, insolvency or other similar proceedings
and attendance at hearings, depositions, and trials in connection therewith.
Within ten (10) days of Landlord's presentation of an invoice of Costs incurred
by Landlord pursuant to the preceding sentence or otherwise incurred by Landlord
in enforcing or preserving Landlords rights under this Lease, whether or not an
Event of Default has actually occurred or has been declared and thereafter
cured, Tenant shall pay all such Costs. All such Costs as incurred shall be
deemed to be Additional Rent under this Lease.
9.07 Remedies Cumulative. The remedies of Landlord herein are cumulative to
and not in lieu of any other remedies available to Landlord at law or in equity.
The use of, or failure to use, any one remedy shall not be taken to exclude or
waive the right to use any other remedy.
9.08 Escrows and Application of Payments. As security for the performance
of its obligations hereunder, Tenant hereby assigns to Landlord all its right,
title and interest in and to all monies escrowed with Landlord under this Lease
and all deposits with utility companies, taxing authorities, and insurance
companies; provided, however, that Landlord shall not exercise its rights
hereunder with respect to any Leased Property until an Event of Default has
occurred in respect of such Leased Property. Any payments received by Landlord
under any provisions of this Lease during the existence, or continuance of an
Event of Default shall be applied to Tenant's obligations, first, to delinquent
real estate taxes, unless such taxes are being protested in good faith and no
lien has attached to any Leased Property with respect thereto, second, to
currently due and owing real estate taxes, and next, to other Tenant's
obligations in the order which Landlord may determine.
9.09 Power of Attorney. Tenant hereby irrevocably and unconditionally
appoints Landlord, or Landlord's authorized officer, agent, employee or
designee, as Tenant's true and lawful attorney-in-fact, to act, after an Event
of Default, for Tenant in Tenant's name, place, and stead, and for Tenant's and
Landlord's use and benefit, to execute, deliver and file all applications and
any and all other necessary documents or things, to effect a transfer,
reinstatement, renewal and/or extension of any and all licenses and other
governmental authorizations issued to Tenant in connection with Tenant's
operation of the Leased Properties, and to do any and all other acts incidental
to any of the foregoing. Tenant irrevocably and unconditionally grants to
Landlord as its attorney-in-fact full power and authority to do and
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perform, after an Event of Default, every act necessary and proper to be done in
the exercise of any of the foregoing powers as fully as Tenant might or could do
if personally present or acting, with full power of substitution, hereby
ratifying and confirming all that said attorney shall lawfully do or cause to be
done by virtue hereof. This power of attorney is coupled with an interest and is
irrevocable prior to the full performance of Tenant's obligations hereunder.
X. DAMAGE AND DESTRUCTION
10.01 General. Tenant shall notify Landlord if any Leased Property is
damaged or destroyed by reason of fire or any other cause. Tenant shall promptly
repair, rebuild, or restore such Leased Property, at Tenant's expense, so as to
make such Leased Property at least equal in value to such Leased Property
existing immediately prior to such occurrence and as nearly similar to it in
character as is practicable and reasonable. Before beginning such repairs or
rebuilding, or executing any contracts in connection with such repairs or
rebuilding, Tenant will submit for Landlord's approval, which approval Landlord
will not unreasonably withhold or delay, complete and detailed plans and
specifications for such repairs or rebuilding. Promptly after receiving
Landlord's approval of the plans and specifications, Tenant will begin such
repairs or rebuilding and will prosecute the repairs and rebuilding to
completion with diligence, subject, however, to strikes, lockouts, acts of God,
embargoes, governmental restrictions, and other causes beyond Tenants reasonable
control. Landlord will make available to Tenant the net proceeds of any fire or
other casualty insurance paid to Landlord for such repair or rebuilding as the
same progresses, after deduction of any costs of collection, including
attorneys' fees. Payment will be made against properly certified vouchers of a
competent architect in charge of the work and approved by Landlord. Prior to
commencing the repairing or rebuilding, Tenant shall deliver to Landlord for
Landlord's approval a schedule setting forth the estimated monthly draws for
such work. Landlord will contribute to such payments out of the insurance
proceeds an amount equal to the proportion that the total net amount received by
Landlord from insurers bears to the total estimated cost of the rebuilding or
repairing, multiplied by the payment by Tenant on account of such work. Landlord
may, however, withhold ten percent (10%) from each such payment and shall
disburse such amount after: (a) the work of repairing or rebuilding is completed
and proof has been furnished to Landlord that no lien or liability has attached
or will attach to such Leased Property or to Landlord in connection with such
repairing or rebuilding and (b) Tenant has obtained a certificate of use and
occupancy (or its functional equivalent) for the portion of such Leased Property
being repaired or rebuilt. Upon the completion of rebuilding or repairing and
the furnishing of such proof, the balance of the net proceeds of such insurance
payable to Tenant on account of such repairs or rebuilding will be paid to
Tenant. Tenant will obtain and deliver to Landlord a temporary or final
certificate of occupancy before such Leased Property is reoccupied for any
purpose. Tenant shall complete such repairs or rebuilding free and clear of
mechanic's or other liens, and in accordance with the building codes and all
applicable laws, ordinances, regulations, or orders of any state, municipal, or
other public authority affecting the repairs or rebuilding, and also in
accordance with all requirements of the insurance rating organization, or
similar body. Any remaining proceeds of insurance after such restoration will be
Tenant's property.
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10.02 Landlord's Inspection. During the progress of such repairs or
rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the subject Leased Property and will be furnished, if required by them,
with copies of all plans, shop drawings, and specifications relating to such
repairs or rebuilding. Tenant will keep all plans, shop drawings, and
specifications available, and Landlord and its architects and engineers may
examine them at all reasonable times. If, during such repairs or rebuilding,
Landlord and its architects and engineers determine that the repairs or
rebuilding are not being done in accordance with the approved plans and
specifications, Landlord will give prompt notice in writing to Tenant,
specifying in detail the particular deficiency, omission, or other respect in
which Landlord claims such repairs or rebuilding do not accord with the approved
plans and specifications. Upon the receipt of any such notice, Tenant will cause
corrections to be made to any deficiencies, omissions, or such other respect.
Tenant's obligations to supply insurance, according to Article IV, will be
applicable to any repairs or rebuilding under this Section 10.02.
10.03 Landlord's Costs. Tenant shall, within fifteen (15) days after
receipt of an invoice from Landlord, pay the reasonable costs, expenses, and
fees of any architect or engineer employed by Landlord to review any plans and
specifications and to supervise and approve any construction, or for any
services rendered by such architect or engineer to Landlord as contemplated by
any of the provisions of this Lease, or for any services performed by Landlord's
attorneys in connection therewith.
10.04 Rent Abatement. In the event that the provisions of Section 10.01
above shall become applicable as to any Leased Property, and subject to the last
sentence of this Section 10.04, the applicable Base Annual Rent shall be abated
or reduced proportionately during any period in which, by reason of such damage
or destruction, there is substantial interference with the operation of the
Business of Tenant in such Leased Property, having regard to the extent to which
Tenant may be required to discontinue any Business on such Leased Property, and
such abatement or reduction shall continue for the period commencing with such
destruction or damage and ending with the substantial completion by Tenant of
such work or repair and/or reconstruction. In the event that only a portion of
any Leased Property is rendered untenantable or incapable of such use, the Base
Annual Rent payable hereunder in respect thereof shall be reduced
proportionately considering the extent to which the Tenant is unable to
practicably use the Leased Property for Business. Tenant shall use reasonably
diligent efforts to make the Leased Property tenantable and capable of such use.
Notwithstanding any other provision hereof, such rental abatement shall be
limited to the amount of any rental or Business interruption insurance proceeds
actually received by Landlord under Article IV.
10.05 Substantial Damage During Lease Term. Notwithstanding Section 10.01
and provided that Tenant has fully complied with Section 4.01 hereof (including
actually maintaining in effect rental value insurance or Business interruption
insurance provided for in clause (c) thereof), if, at any time during the Term
or any Extension Term of this Lease, any Leased Property is damaged by fire or
otherwise to such a magnitude that the improvements thereon cannot be rebuilt or
repaired through diligent prosecution of such repairs and rebuilding so as to
allow Tenant to conduct a substantial part of its Business (as determined by a
reasonable dealer
34
in the trade, in light of standard trade practices) within one calendar year,
then Tenant may, within thirty (30) days after such damage, give notice of its
election to terminate this Lease with respect to such Leased Property and,
subject to the further provisions of this Section, this Lease will cease with
respect to such Leased Property on the thirtieth (30th) day after the delivery
of such notice, unless Landlord disagrees with Tenant's contention as to the
magnitude of the damage and the length of time necessary to repair or rebuild
the Leased Property and has requested Arbitration pursuant to Article XIV during
this thirty (30) day period, in which case this Lease shall continue in full
force and effect unless and until the Arbitration proceeding shall result in a
final award upholding the Tenant's position. If the Lease is terminated pursuant
to Tenant's election under this Section 10.05, (a) Tenant will have no
obligation to repair, rebuild or replace such Leased Property, and the entire
insurance proceeds will belong to Landlord, and (b) Tenant will pay (or cause to
be paid) to Landlord, an amount equal to the difference between the book value
of the damaged property as shown in Landlord's financial statements as of the
date of such termination and the amount of the insurance proceeds received by
Landlord. If the Lease is not terminated pursuant to this Section 10.05, Tenant
shall rebuild such Leased Property in accordance with Section 10.01.
10.06 Damage Near End of Term. Notwithstanding any provisions of Sections
10.01 or 10.05 to the contrary, if damage to or destruction of any Leased
Property occurs during the last twelve (12) months of the Term, and if such
damage or destruction renders the Leased Property completely destroyed or
partially destroyed, either party shall have the right to terminate this Lease
as to such Leased Property by giving notice to the other within ten (10) days
after the date of damage or destruction, in which event Landlord shall be
entitled to retain the insurance proceeds and Tenant shall pay to Landlord on
demand the amount of any deductible or uninsured loss arising in connection
therewith; provided, however, that any such notice given by Landlord shall be
void and of no force and effect if Tenant exercises an available option for an
Extension Term with respect to such Leased Property pursuant to provisions of
this Lease within ten (10) business days following receipt of such termination
notice.
10.07 Risk of Loss. Notwithstanding anything herein to the contrary, during
the Term or any Extension Term, as the case may be, the risk of loss of or
decrease in the enjoyment and beneficial use of the Leased Properties in
consequence of the damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise is assumed by Tenant, and Landlord
shall in no event be answerable or accountable therefor except in the case of
gross negligence, willful misconduct or breach of this Lease by Landlord
resulting in such damage or destruction. In addition, all risk of loss or
decrease in enjoyment and beneficial use in consequence of foreclosures,
attachments, levies or executions is assumed by Tenant except for foreclosure
due to Landlord's indebtedness.
XI. CONDEMNATION
11.01 Total Taking. If at any time during the Term or any Extension Term,
as the case may be, any Leased Property is totally and permanently taken by
right of eminent domain or by conveyance made in response to the threat of the
exercise of such right ("Condemnation"), this Lease
35
shall terminate as to such Leased Property on the Date of Taking (which shall
mean the date the condemning authority has the right to possession of the
property being condemned), and Tenant shall promptly pay all outstanding
applicable Rent and other charges through the date of termination, provided,
however, this Lease shall not so terminate if the Condemnation occurred due to
the failure of Tenant to maintain such Leased Property as required by Article
VII hereof or other applicable provisions hereof; whether or not such failure on
the part of Tenant constituted an Event of Default hereunder at the time of the
Condemnation.
11.02 Partial Taking. If a portion of a Leased Property is taken by
Condemnation, this Lease shall remain in effect as to such Leased Property if
such Leased Property is not thereby rendered Unsuitable for the continuation of
Tenant's Business on that Leased Property (which shall mean that such Leased
Property is in such a state or condition such that in the good faith judgment of
Tenant, reasonably exercised, it cannot be used on a commercially practicable
basis in the operation of the Business), but if such Leased Property is thereby
rendered Unsuitable for the continuation of Tenant's Business on that Leased
Property, this Lease shall terminate as to such Leased Property on the Date of
Taking, provided such Condemnation was not as a result of Tenant's failure to
maintain such Leased Property as provided for in Section 11.01.
11.03 Restoration. If there is a partial taking of any Leased Property and
this Lease remains in full force and effect pursuant to Section 11.02, Landlord
shall retain the amount of any Landlord Award (as hereafter defined) received by
Landlord, Landlord shall apply such Landlord Award to accomplish all necessary
restoration to the Leased Property, and any excess after such application shall
be retained by Landlord. If there is a partial taking of any Leased Property and
this Lease remains in full force and effect pursuant to Section 11.02, Tenant
shall retain the amount of any Tenant Award (as hereafter defined) received by
Tenant, Tenant shall apply such Tenant Award to accomplish all necessary
restoration of Tenant's property, and any excess after such application shall be
retained by Tenant. Notwithstanding anything in this Section to the contrary, in
the event that there is a partial taking of any Leased Property and this Lease
remains in full force and effect pursuant to Section 11.02, and there is a
single Award with respect to such partial taking, then the Landlord and Tenant
shall use their good faith efforts to determine the proper apportionment of such
Award (as hereafter defined) to restoration of Landlord's and Tenant's
respective properties. In the event that the parties are unable to agree on such
apportionment within thirty (30) days, the parties shall submit to arbitration
of an apportionment subject to the arbitration provisions set forth in Article
XIV.
11.04 Landlord's Inspection. During the progress of such restoration,
Landlord and its architects and engineers may, from time to time, inspect the
subject Leased Property and will be furnished, if required by them, with copies
of all plans, shop drawings, and specifications relating to such restoration.
Tenant will keep all plans, shop drawings, and specifications available, and
Landlord and its architects and engineers may examine them at all reasonable
times. If, during such restoration, Landlord and its architects and engineers
determine that the restoration is not being done in accordance with the approved
plans and specifications, Landlord will give prompt notice in writing to Tenant,
specifying in detail the particular deficiency, omission, or other respect in
which Landlord claims such restoration does not accord with the
36
approved plans and specifications. Upon the receipt of any such notice, Tenant
will cause corrections to be made to any deficiencies, omissions, or such other
respect. Tenant's obligations to supply insurance, according to Article IV, will
be applicable to any restoration under this Section.
11.05 Award Distribution. The entire compensation, sums or anything of
value awarded, paid or received on a total or partial Condemnation of a Leased
Property that is awarded to Landlord shall belong to Landlord (the "Landlord
Award"). The entire compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation of a Leased Property that is awarded
to Tenant shall belong to Tenant (the "Tenant Award", collectively with the
Landlord Award, the "Awards", and each, individually, an "Award").
Notwithstanding anything in this Section to the contrary, in the event that
there is a total or partial Condemnation of a Leased Property and there is a
single Award with respect to such Condemnation, then the Landlord and Tenant
shall use their good faith efforts to determine the proper apportionment of such
Award to Landlord's and Tenant's respective properties. In the event that the
parties are unable to agree on such apportionment within thirty (30) days, the
parties shall submit to arbitration of an apportionment subject to the
arbitration provisions set forth in Article XIV.
11.06 Temporary Taking. The taking of any Leased Property, or any part
thereof; by military or other public authority shall constitute a taking by
Condemnation only when the use and occupancy by the taking authority has
continued for longer than twenty four (24) months. During any such twenty-four
(24) month period, which shall be a temporary taking, all the provisions of this
Lease shall remain in full force and effect as to such Leased Property with no
abatement of rent payable by Tenant hereunder. In the event of any such
temporary taking, the entire amount of any such Award made for such temporary
taking allocable to the Term hereof, whether paid by way of damages, Rent or
otherwise, shall be paid to Tenant.
XII. ADDITIONAL REPRESENTATIONS. WARRANTIES AND FINANCIAL COVENANTS
Tenant hereby represents, warrants and covenants to Landlord as follows:
12.01 Organization and Qualification.
(a) Tenant is duly organized, validly existing and in good standing
under the laws of its state of incorporation or organization,
with all power and authority, corporate or otherwise, necessary
to: (i) enter into and perform this Lease and (ii) own and lease
its assets and properties, and conduct its Business, as it is now
being conducted or proposed to be conducted. Tenant is duly
qualified as a foreign corporation or other entity, as the case
may be, to conduct its Business and own and lease its assets and
properties, and is in good standing, in each jurisdiction where
the character of its assets and properties owned or held under
lease or the nature of its Business makes such qualification
necessary or advisable,
37
and is duly qualified and licensed under all laws, regulations,
ordinances or orders of public or governmental authorities, or
otherwise to carry on its Business and own or lease its assets
and properties in the places and in the manner in which they are
owned, leased or conducted or proposed to be owned, leased or
conducted, except where the failure to be so organized, qualified
and in good standing or to have such authority, qualification or
licensing could not result in a Material Adverse Change. Complete
and correct copies of Tenant's Charter, as in effect on the date
hereof; and Tenant's by-laws, also as in effect on the date
hereof; have been delivered to Landlord.
(b) Each Affiliate that conducts operations or business on or from
any Leased Property, whether now or at any time in the future, is
duly organized, validly existing and in good standing under the
laws of its organization, with all power and authority, corporate
or otherwise, necessary to own and lease its assets and
properties, and conduct its business, as it is now being
conducted or proposed to be conducted. Each Affiliate is duly
qualified as a foreign corporation or other entity, as the case
may be, to do business and own and lease its assets and
properties, and is in good standing, in each jurisdiction where
the character of its assets and properties owned or held under
lease or the nature of its activities or business makes such
qualification necessary or advisable, and is duly qualified and
licensed under all laws, regulations, ordinances or orders or
public or governmental authorities or otherwise to carry on its
business and own or lease its assets and properties in the places
and in the manner in which they are owned, leased or is conducted
or proposed to be owned, leased or conducted, except where the
failure to be so organized, qualified and in good standing or to
have such authority, qualification or licensing could not result
in a Material Adverse Change.
"Material Adverse Change" since a particular specified date, or a date
which may be specified from the circumstances existing immediately prior to the
happening of a specified event or occurrence, or, if no date or event is
specified, with reference to the most recent Annual Financial Statements
delivered pursuant to this Lease, means a material adverse change in the
Business, assets, properties, franchises, financial condition or income of
Tenant or the operations, business, assets, properties, franchises, financial
condition, income or prospects of any Affiliate, whether or not such event or
occurrence is an Event of Default.
"Affiliate" means with respect to any Person, (i) any Person that holds
direct or indirect beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of voting securities or other
voting interests representing at least five percent (5%) of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least five percent (5%) of the outstanding equity securities or
interests in a Person, or (ii) any Person that directly, or indirectly through
one or more intermediaries,
38
controls, or is controlled by, or is under common control with such Person.
A "Person" shall mean and include natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts, Indian tribes or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
12.02 Material Agreements. Schedule 12.02 is a complete list of all
agreements to which Tenant is a party that are material to the ownership and use
of the Leased Property or the operation of Tenant's Business, and Tenant has
delivered to Landlord a copy of each of these agreements (including all
exhibits, schedules and amendments thereto).
12.03 Changes in Condition. Since the date of the latest Annual Financial
Statements, no Material Adverse Change has occurred between such date and the
date hereof; and neither Tenant nor any Affiliate has entered into any material
transaction outside the ordinary course of its or their operations or business,
including the Business, except as set forth in Schedule 12.03 and the matters
contemplated by this Lease.
12.04 Franchises. Licenses. etc. Tenant and its subsidiaries own, or have
sufficient interests in, all franchises, trademarks, trademark rights, trade
names, trade name rights, copyrights, licenses, permits, authorizations and
other rights as are necessary for the conduct of Tenant's Business and its
subsidiaries' businesses as now conducted or proposed to be conducted by Tenant
or any Affiliate, as well as rights under any agreement under which Tenant or
its subsidiaries has access to confidential information used by Tenant or its
subsidiaries in Tenants' Business or the businesses of its subsidiaries, as the
case may be (collectively, the "Intellectual Property"). All Intellectual
Property is in full force and effect in all material respects, and Tenant and
its subsidiaries are in substantial compliance with the foregoing without any
conflict with the valid rights of others, which has resulted, or could be
reasonably likely to result in any Material Adverse Change. Neither Tenant nor
any Affiliate has violated, or received any communication that by conducting its
Business or any Affiliate's businesses, it or any Affiliate would violate any
franchises, licenses, patents, trademarks, service marks, trade names,
copyrights, trade secrets, proprietary rights or processes of any other Person
(as hereafter defined) nor is Tenant or any Affiliate aware of any such
violations. No event has occurred which permits, or after notice or lapse of
time or both would permit, the revocation or termination of any such license,
franchise or other right or affect the rights of Tenant or any Affiliate so as
to result in or reasonably be likely to result in any Material Adverse Change.
There is no litigation or other proceeding or dispute or, to the knowledge of
Tenant or any Affiliate, threat thereof with respect to the validity or, where
applicable, the extension or renewal, of any of the foregoing which has
resulted, or could result, in any Material Adverse Change.
12.05 Litigation. No litigation, at law or in equity, or any proceeding
before any court, board or other governmental or administrative agency or any
arbitrator or other forum of alternative dispute resolution is pending or, to
the knowledge of Tenant or any Affiliate, threatened which involves any risk of
any final judgment, order or liability which, after giving
39
effect to any applicable insurance, has resulted, or could result, in any
Material Adverse Change or which seeks to enjoin the execution and consummation
of this Lease and the performance of Tenant's obligations hereunder. No
judgment, decree or order of any court, board or other governmental or
administrative agency or any arbitrator has been issued against or binds Tenant
or any Affiliate, which has resulted, or could result, in any Material Adverse
Change.
12.06 Authorization and Enforceability. Tenant has taken all corporate or
other action required to execute, deliver and perform this Lease. This Lease
constitutes the legal, valid and binding obligation of Tenant and is enforceable
against Tenant in accordance with its terms.
12.07 No Legal Obstacle to Lease. Neither the execution and delivery of
this Lease nor the performance of any obligation hereunder has constituted or
resulted in or will constitute or result in:
(a) any breach, violation of; conflict with, default under or
termination of any agreement, contract, mortgage, instrument,
deed or lease to which Tenant or any Affiliate is a party or by
which it or they are bound;
(b) the violation of or conflict with any law, statute, ordinance,
judgment, decree, order, rule or regulation applicable to Tenant,
any Affiliate, any Improvements or any Leased Property; or
(c) any violation of or conflict with Tenant's or any Affiliate's
Charter or By-Laws or other organizational documents, as the case
may be.
No approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority or any other Person is
required to be obtained or made by Tenant in connection with the execution,
delivery and performance of this Lease.
12.08 Certain Business Representations:
(a) Labor Relations. No dispute or controversy between Tenant or any
Affiliate and its or their employees has resulted in, or is
reasonably likely to result in, any Material Adverse Change, and
neither Tenant nor any Affiliate anticipates that its
relationships with its unions or employees will result, or are
reasonably likely to result, in any Material Adverse Change.
Tenant and each Affiliate is in compliance in all material
respects with all federal and state laws relating to employees
and labor relations, including, but not limited to, laws relating
to health and safety in the workplace, non-discrimination in
employment and the payment of wages.
(b) Antitrust. Tenant and each Affiliate is in compliance in all
material respects with all federal and state antitrust laws
relating to Tenant's Business and the subsidiaries' businesses
and the geographic
40
concentration thereof.
(c) Consumer Protection. Neither Tenant nor any Affiliate is in
violation of any rule, regulation, order, or interpretation of
any rule, regulation or order of the Federal Trade Commission
(including truth-in-lending) or other federal, state or local
public or governmental authority or agency, with which the
failure to comply, in the aggregate, has resulted in, could
result in, a Material Adverse Change.
(d) Future Expenditures. Neither Tenant nor any Affiliate,
anticipates that further expenditures, if any, by Tenant or any
Affiliate needed to meet the provisions of any federal, state or
foreign governmental statutes, orders, rules or regulation could
result in any Material Adverse Change. 20 (e)Benefit Liabilities.
Neither Tenant nor any ERISA Affiliate maintains, contributes to,
or is obligated to contribute to, nor has Tenant or any ERISA
Affiliate maintained, contributed to, been obligated to
contribute to, or had any direct, indirect, or contingent
liability with respect to, any Title IV Plan (as hereafter
defined). Each Tenant Benefit Plan has been maintained in
compliance with its terms and with applicable laws (including
specifically the Code and the Employee Retirement Income Security
Act of 1974 ("ERISA"). "Tenant Benefit Plan" means any plan,
find, or other similar program described in Section 3(2) of ERISA
and established or maintained or with respect to which Tenant
and/or any ERISA Affiliate has an obligation to contribute for
the benefit of its employees (or for which Tenant could be
directly or contingently liable). "Title IV Plan" means an
"employee benefit plan" (as defined in Section 3(3) of ERISA)
that is subject to Title IV of ERISA and is or has been
established or maintained, by Tenant or any ERISA Affiliate, or
to which contributions are, have been, or should have been made.
"ERISA Affiliate" means any trade or business, whether or not
incorporated, that, together with Tenant, is or has been under
common control, within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001 of ERISA.
12.09 Certain Financial Covenants. Tenant or an Affiliate, as applicable,
is in compliance in all material respects with all financial covenants required
to be maintained pursuant to any franchise or other agreement pursuant to which
Tenant or such Affiliate operates its business, except in such respects as shall
not result in any franchisor under any franchise or operating agreement to which
Tenant is a party taking any action that could result in a Material Adverse
Change.
12.10 Cash Flow Coverage Ratio Covenant. On the date of this Lease and
measured at a date that is twelve (12) months following such date (each a "Cash
Flow Measurement Date"), and on each anniversary date that is twelve (12) months
following a prior Cash Flow
41
Measurement Date, Guarantor and Tenant collectively shall have maintained a Cash
Flow Coverage Ratio of not less than 1.5 to 1.0 based on the Annual Financial
Statements to be delivered to Landlord in accordance with Section 6.04 hereof.
"Cash Flow Coverage Ratio" means the aggregate of net income before taxes plus
mortgage interest, rent expense, depreciation, compensation of principals of the
Business, management fees plus the annual LIFO adjustment and other non-cash
expenses, less recurring capital expenditures and gain (loss) on sale of real
estate, dividends and/or profits taken out of Tenant and Guarantor divided by
the aggregate of the Tenant's and Guarantor's obligations under this Lease.
Notwithstanding anything herein to the contrary, in the event that Tenant and
Guarantor shall not be in compliance with this covenant at a Cash Flow
Measurement Date or Tenant and Guarantor shall have knowledge of such
non-compliance prior to any Cash Flow Measurement Date, Tenant and Guarantor
shall have the right to cure such breach through any reasonable commercial
means, including, but not limited to, providing guarantees acceptable to
Landlord, increasing capital, or cross collateralizing with any other property
of Tenant or Guarantor or an Affiliate of either party, provided that such
breach is cured within one hundred and eighty (180) days after Notice by
Landlord to Tenant of the existence of such breach.
12.11 Disclosure. This Lease does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make any
statement contained herein not misleading in light of the circumstances under
which it was made. To Tenant's knowledge, there is no event, fact or occurrence
that has resulted, or in the future (so far as Tenant can reasonably foresee)
could result, in any Material Adverse Change, except to the extent that present
or future general and sector-specific economic conditions may result in a
Material Adverse Change.
12.12 Covenant Not to Acquire. Tenant covenants and agrees that during the
Term and any Extension Term, as the case may be, Tenant and its controlling
shareholders or its or their Affiliates will not acquire, directly or
indirectly, more that 9.90% of the outstanding common shares of beneficial
interest of Capital Automotive REIT. Tenant covenants and agrees that it will
divest itself of such shares of Capital Automotive REIT as may be necessary to
satisfy the limitations of this Section 12.12.
XIII. ASSIGNMENT AND SUBLE'FVNG: ATTORNMENT
13.01 Prohibition Against Subletting and Assignment.
(a) Subject to Section 13.03, Tenant shall not, without the prior
written consent of Landlord, or upon compliance with any
conditions established by Landlord, in its sole discretion,
assign, mortgage, pledge, hypothecate, encumber or otherwise
transfer (except to an Affiliate) this Lease or any interest
herein, or all or any part of any Leased Property, or suffer or
permit this Lease or the leasehold estate created hereby or any
other rights arising hereunder to be assigned, transferred,
mortgaged, pledged, hypothecated or encumbered, in whole or in
part, whether voluntarily, involuntarily or by operation of law.
For purposes of this Section 13.01,
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an assignment of this Lease shall be deemed to include any Change
of Control of Tenant, as if such Change of Control were an
assignment of the Lease. In the event that (i) Landlord shall
withhold any consent to any assignment or transfer of this Lease
or any interest herein, and (ii) such assignee or transferee is
approved by the relevant manufacturer for continuation as a
franchisee, there shall be a presumption that such assignment or
transfer was reasonable and Landlord shall have the burden of
rebutting such presumption and of proving that such consent was
in fact reasonably withheld (or that such conditions were
reasonable). No assignment shall in any way impair the continuing
primary liability of the assigning Tenant hereunder for a period
of two years after the effective date of such assignment.
Notwithstanding the foregoing, to the extent that any such
assignment from Tenant is to a Person that (i) engages in the
Business and (ii) at the time of such assignment is a lessee
under any lease agreement with Landlord that is similar to this
Lease (a "Company Lessee"), and such Company Lessee is not in a
state of material default of any such lease agreement and
satisfies the Cash Flow Coverage Ratio provided in Section 12.10
above, the assigning Tenant shall be released from continuing
primary liability hereunder as of the effective date of such
assignment.
(b) The parties hereto agree that Tenant may enter into sublease
agreements with Xxxxxxxxx Chevrolet, Inc. and Xxxxxxxxx
Lincoln-Mercury, Inc. without the prior written consent of
Landlord, provided that the terms of such subleases are
commercially reasonable and made available to Landlord prior to
execution of such subleases for the Landlord's review and
comment.
(c) Tenant shall pay any and all costs incurred by Landlord in
connection with any requested consent by Tenant to assign or
transfer any portion of the Leased Property and any and all costs
incurred by Landlord in connection with any resulting assignment
or transfer or any portion of the Leased Property by Tenant.
13.02 Changes of Control. A Change of Control requiring the consent of
Landlord shall mean:
(a) the issuance and/or sale by Tenant or the sale by any shareholder
or equity holder of Tenant of a Controlling (which shall mean, as
applied to any Person, the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities, by contract or otherwise) interest in Tenant to a
Person other than an Affiliate of Tenant, other than in either
case a distribution to the public pursuant to an
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effective registration statement under the Securities Act of
1933, as amended (a "Registered Offering");
(b) the sale, conveyance or other transfer of all or substantially
all of the assets of Tenant (whether by operation of law or
otherwise) provided, however, that no Change of Control shall be
deemed to have occurred in the event of the transfer of assets as
a result of the death of a person involved in the Business, so
long as the transferee is approved by the manufacturer for the
continuation of the Business; or
(c) any transaction pursuant to which Tenant is merged with or
consolidated into another entity (other than an entity owned and
Controlled by an Affiliate), and Tenant is not the surviving entity.
13.03 Operating/Service Agreements.
(a) Permitted Agreements. Tenant shall, without Landlord's prior
approval, be permitted to enter into such operating/service
agreements for portions of each Leased Property to various
licensees in connection with Tenant's Business as are customarily
associated with or incidental to the operation of such Leased
Property, which agreements may be in the nature of a sublease
agreement.
(b) Terms of Agreements. Each operating/service agreement concerning
a Leased Property shall be subject and subordinate to the
provisions hereof No agreement made as permitted by Section
13.03(a) shall affect or reduce any of the obligations of Tenant
hereunder, and all such obligations shall continue in full force
and effect as if no agreement had been made. No agreement shall
impose any additional obligations on Landlord hereunder.
(c) Copies. Tenant shall, within ten (10) days after the execution
and delivery of any operating/service agreement permitted by
Section 13.03(a), deliver a duplicate original thereof to
Landlord.
(d) Assignment of Rights in Agreements. As security for performance
of its obligations hereunder, Tenant hereby grants, conveys and
assigns to Landlord all right, title and interest of Tenant in
and to all operating/service agreements now in existence or
hereinafter entered into for each Leased Property, and all
extensions, modifications and renewals thereof and all rents,
issues and profits therefrom, to the extent the same are
assignable by Tenant. Landlord hereby grants to Tenant a license
to collect and enjoy all rents and other sums of money payable
under any such agreement; provided, however, that Landlord shall
have the absolute right at any time after the occurrence and
continuance of an Event of
44
Default upon notice to Tenant and any vendors or licensees to
revoke said license and to collect such rents and sums of money
and to retain the same. Tenant shall not (i) after the occurrence
and continuance of an Event of Default, consent to, cause, or
allow, any material modification or alteration of any of the
terms, conditions or covenants of any of the agreements or the
termination thereof, without the prior written approval of
Landlord nor (ii) accept any rents (other than customary security
deposits) more than thirty (30) days in advance of the accrual
thereof nor permit anything to be done, the doing of which, nor
omit or refrain from doing anything, the omission of which, will
or could be a breach of or default in the terms of any of the
agreements.
(e) Licenses. Etc. For purposes of Section 13.03, the
operating/service agreements shall mean any licenses, concession
arrangements, or other arrangements relating to the possession or
use of all or any part of any Leased Property.
13.04 Assignment. If Landlord shall withhold its consent to any assignment
or if Landlord shall have established conditions to approval of any assignment
but such conditions shall not have been complied with, to the satisfaction of
Landlord, such assignment shall not in any way impair the continuing primary
liability of Tenant hereunder. No consent to any assignment in a particular
instance shall be deemed to be a general waiver of the prohibition set forth in
Article XIII. Any assignment shall be solely of Tenant's entire interest in this
Lease with respect to the subject Leased Property or Leased Properties and shall
not relieve Tenant of its obligations hereunder. Any assignment or other
transfer of all or any portion of Tenant's interest in this Lease in
contravention of Article XIII shall be voidable at Landlord's option.
13.05 REIT Limitations.
(a) Anything contained herein to the contrary notwithstanding, Tenant
shall not: (a) sublet or assign a Leased Property or this Lease
on any basis such that the rental or other amounts to be paid by
the sublessee or assignee thereunder would be based, in whole or
in part, on the income or profits derived by the business
activities of the sublessee or assignee; (b) sublet or assign a
Leased Property or this Lease to any Person that, under Section
856(d)(2)(B) of the Internal Revenue Code of 1986, as amended
(the "Code"), Landlord or its general partner owns, directly or
indirectly (by applying constructive ownership rules set forth in
Section 856(d) (5) of the Code, a ten percent (10%) or greater
interest; or (c) sublet or assign a Leased Property or this Lease
in any other manner or otherwise derive any income which could
cause any portion of the amounts received by Landlord pursuant
hereto or any sublease to fail to qualify as "rents from real
property" within the meaning of Section 856(d) of the Code, or
which could cause any other income received by Landlord to fail
to qualify as
45
income described in Section 856(c) (2) of the Code. The
requirements of this Section 13.05 shall likewise apply to any
further subleasing by any subtenant.
(b) Tenant acknowledges that Capital Automotive REIT, a Maryland real
estate investment trust and the general partner of Landlord (the
"Company"), intends to elect to be taxed as a real estate
investment trust (a "REIT") under the Code. Tenant shall not do
anything which would adversely affect the Company's status as a
REIT. Tenant hereby agrees to modifications of this Lease which
do not materially adversely affect Tenant's rights and
liabilities if such modifications are required to retain or
clarify the Company's status as a REIT.
13.06 Attornment. Tenant shall insert in each sublease permitted under
Section 13.03(a) provisions to the effect that: (a) such sublease is subject and
subordinate to all of the terms and provisions of this Lease and to the rights
of Landlord hereunder; (b) in the event this Lease shall terminate before the
expiration of such sublease, the sublessee thereunder will, at Landlords'
option, attorn to Landlord and waive any right the sublessee may have to
terminate the sublease or to surrender possession thereunder, as a result of the
termination hereof; and (c) in the event the sublessee receives a written notice
from Landlord or Landlord's assignees, if any, stating that Tenant is in default
under this Lease, the sublessee shall thereafter be obligated to pay all rentals
accruing under said sublease directly to the party giving such notice, or as
such party may direct. All rentals received from the sublessee by Landlord or
Landlord's assignees in respect of a Leased Property, if any, as the case may
be, shall be credit against the amounts owing by Tenant hereunder with respect
to such Leased Property.
XIV. ARBITRATION
14.01 Controversies. Except with respect to the payment of Rent hereunder,
which shall be subject to the provisions of Section 9.02, in the event a
controversy arises between the parties as to any of the requirements of this
Lease or the performance hereunder, which the parties are unable to resolve, the
parties agree to waive the remedy of litigation (except for extraordinary relief
in an emergency situation)and agree that such controversy or controversies shall
be determined by arbitration as hereafter provided in this Article.
14.02 Appointment of Arbitrators. The party or parties requesting
arbitration shall serve upon the other a demand therefor, in writing, specifying
in detail the controversy and matter(s) to be submitted to arbitration before
the American Arbitration Association. The selection of arbitrators shall be
conducted pursuant to the rules for resolution of commercial disputes
promulgated by the American Arbitration Association. The party or parties giving
notice shall request a listing of available arbitrators from the American
Arbitration Association, and each party shall respond in the selection process
within fifteen (15) days after each receipt of such listings until a panel of
three (3) arbitrators has been designated. If either party fails to respond
within fifteen (15) days, it is agreed that the American Arbitration Association
may make such
46
selections as are necessary to complete the panel of three (3) arbitrators.
14.03 Arbitration Procedure. Within five (5) business days after the
selection of the arbitration panel, the arbitrators shall give written notice to
each party as to the time and the place of each meeting, which shall be held in
Washington, D.C., at which the parties may appear and be heard, which shall be
no later than fifteen (15) days after certification of the arbitration panel.
The parties specifically waive discovery, and further waive the applicability of
rules of evidence or rules of procedure in the proceedings. The applicable rules
shall be those in effect at the time for the resolution of commercial disputes
promulgated by the American Arbitration Association. The arbitrators shall take
such testimony and make such examination and investigations as the arbitrators
reasonably deem necessary. The decision of the arbitrators shall be in writing
signed by a majority of the panel which decision shall be final and binding upon
the parties to the controversy. Provided, however, in rendering their decisions
and making awards, the arbitrators shall not add to, subtract from or otherwise
modify the provisions of this Lease.
14.04 Expenses. The expenses of the arbitration shall be assessed by the
arbitrators and specified in the written decision. In the absence of a
determination or assessment of expenses of the arbitration procedure in the
award, all of the expenses of such arbitration shall be divided equally between
Landlord and Tenant. Each party in interest shall be responsible for and pay the
fees, costs and expenses of its own counsel, unless the arbitration award
provides for an assessment of reasonable attorneys' fees and costs.
14.05 Enforcement of the Arbitration Award. There shall be no appeal from
the decision of the arbitrators, and upon the rendering of an award, any party
thereto may file the arbitrators decision in the United States District Court
for the Eastern District of Virginia for enforcement as provided by applicable
law.
XV. QUIET ENJOYMENT. SUBORDINATION. ATTORNMENT. ESTOPPEL CERTIFICATES
15.01 Quiet Enjoyment. So long as Tenant performs all of its obligations
under this Lease, Tenant's possession of the Leased Properties will not be
disturbed by or through Landlord.
15.02 Landlord Mortgages: Subordination. Subject to Section 15.03, without
the consent of Tenant, Landlord may, from time to time, directly or indirectly,
create or otherwise cause to exist any liens, encumbrances, security interests
or title retention agreements on any Leased Property, or any portion thereof or
any interest therein, whether to secure any borrowing or other means of
financing or refinancing. Tenant shall execute, acknowledge and deliver to
Landlord, at any time and from time to time upon demand by Landlord or any
mortgagee or any holder of any mortgage or other instrument described in this
Section, without cost to Landlord, a Subordination and Non-Disturbance Agreement
in the form attached hereto as Exhibit 15.02. which provides that (i) Tenant's
rights hereunder are subordinate to any ground lease or underlying lease, first
mortgage, first deed of trust, or other first lien against any Leased Property,
together with any
47
renewal, consolidation, extension, modification, or replacement thereof, which
now or at any subsequent time affects any Leased Property or any interest of
Landlord in any Leased Property, except to the extent that any such instrument
expressly provides that this Lease is superior; and (ii) in the event such party
succeeds to Landlord's interest under the Lease and provided that no Event of
Default by Tenant exists, such party will not disturb Tenant's possession, use
or occupancy of the subject Leased Property. If Tenant fails or refuses to
execute, acknowledge and deliver such Subordination and Non-Disturbance
Agreement within ten (10) days after such second written demand, then Landlord
or such successor in interest may execute, acknowledge and deliver such
Subordination and Non- Disturbance Agreement on behalf of Tenant as Tenant's
attorney-in-fact. Tenant hereby constitutes and irrevocably appoints Landlord,
its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant the Subordination and
Non-Disturbance Agreement. This power of attorney is coupled with an interest
and is irrevocable.
15.03 Attornment. If any holder of any mortgage, indenture, deed of trust,
or other similar instrument described in Section 15.02 succeeds to Landlord's
interest in any Leased Property, Tenant will pay to such holder all Rent
subsequently payable hereunder as to such Leased Property. Tenant shall, upon
request of anyone succeeding to the interest of Landlord, automatically become
the tenant of, and attorn to, such successor in interest without changing this
Lease. The successor in interest will not be bound by: (a) any payment of Rent
for more than one (1) month in advance; (b) any amendment or modification hereof
made without its written consent; (c) any claim against Landlord arising prior
to the date on which the successor succeeded to Landlord's interest; or (d) any
claim or offset of Rent against Landlord.
15.04 Estoppel Certificates. At the request of Landlord or any mortgagee or
purchaser of a Leased Property, Tenant shall execute, acknowledge, and deliver
an estoppel certificate substantially in the form attached hereto as Exhibit
15.04. in favor of Landlord or any mortgagee or purchaser of any Leased Property
certifying the following as to such Leased Property: (a) that this Lease is
unmodified and in full force and effect, or if there have been modifications
that the same is in full force and effect as modified and stating the
modifications; (b) the date to which Rent and other charges have been paid; (c)
that neither Tenant nor Landlord is in default nor is there any fact or
condition which, with notice or lapse of time, or both, would constitute a
default, if that be the case, or specifying any existing default; (d) that
Tenant has accepted and occupies such Leased Property; (e) that Tenant has no
defenses, set-offs, deductions, credits, or counterclaims against Landlord, if
that be the case, or specifying such that exist; (f) that Landlord has no
outstanding construction or repair obligations; and (g) such other information
as may reasonably be requested by Landlord or any mortgagee or purchaser. Any
purchaser or mortgagee may rely on this estoppel certificate. If Tenant fails to
deliver the estoppel certificates to Landlord within ten (10) days after such
request by Landlord, then Tenant shall be deemed to have certified that: (a)
this Lease is in full force and effect and has not been modified, or that this
Lease has been modified as set forth in the certificate delivered to Tenant; (b)
Tenant has not prepaid any Rent or other charges except for the current month;
(c) Tenant has accepted and occupies such Leased Property; (d) neither Tenant
nor Landlord is in default nor is there any fact or condition which, with notice
or lapse of time, or both, would constitute a default; (e) Landlord
48
has no outstanding construction or repair obligation; and (f) Tenant has no
defenses, set-offs, deductions, credits, or counterclaims against Landlord.
Tenant hereby irrevocably appoints Landlord as Tenant's attorney-in-fact to
execute, acknowledge and deliver on Tenant's behalf any estoppel certificate
which Tenant does not object to within ten (10) days after Landlord sends the
certificate to Tenant. This power of attorney is coupled with an 1 interest and
is irrevocable.
15.05 Waiver of Landlord's Lien. Landlord agrees to and does hereby waive
its Landlord's lien and any other rights that it may have with respect to
property or assets representing the security or collateral under Tenant's
"floor-plan" or similar financing arrangements, during the Term or any Extension
Term. Landlord shall, upon request by any such lender, execute an acknowledgment
of such waiver.
XVI. APPRAISAL METHOD
16.01 Appraisal Method. When an appraisal is required under this Lease, the
Appraised Value of the Leased Property shall be determined by (1) an independent
appraiser, who is a member of the Appraisal Institute, and will be selected by
Landlord, (the "Landlord MAI Appraiser"), (2) a second appraiser, who is a
member of the Appraisal Institute, and will be selected by the Tenant (the
"Tenant MAI Appraiser"), and (3) a third MAI Appraiser selected by agreement of
the Landlord MAI Appraiser and the Tenant MAI Appraiser (the "Third MAI
Appraiser") (each an "Appraiser" and, collectively, the "Appraisers"). Landlord
and Tenant shall, as promptly as possible, but in no event later than ten (10)
days following the date an appraisal is required, select its respective
Appraiser. The Third MM Appraiser shall be selected no later than five (5) days
after the selection of the other Appraisers. The costs of the Appraisers'
appraisals shall be shared equally by the parties. As promptly as possible but
in no event later than fifteen (15) days after selection of the Third Appraiser,
each Appraiser shall deliver his or her written report of the Appraisers'
determination of the fair market value of the Leased Property, which
determination shall be based, for each Leased Property, upon the highest and
best use of such Leased Property, taking into consideration the location of such
Leased Property and other properties comparable thereto. The "Appraised Value"
of the Real Property shall be equal to the arithmetic mean of the two (2) fair
market value determinations of the Appraisers that are closest in value. In the
event that the values of (i) the difference between the highest appraisal value
and the next lower appraisal value, and (ii) the difference between the lowest
appraisal value and the next higher appraisal value, are equal, then the
"Appraised Value" shall be equal to the arithmetic mean of the fair market value
determinations of all Appraisers.
XVII. MISCELLANEOUS
17.01 Notices. Landlord and Tenant hereby agree that all notices, demands,
requests, and consents (hereinafter "Notices") required to be given pursuant to
the terms of this Lease shall be in writing and shall be addressed as follows:
If to Tenant, then to the address given in the Summary of Terms.
49
If to Landlord:
Capital Automotive REIT
0000 Xxxxxxxxxx Xxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attn: Portfolio Manager
With a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxxx, Esq. and
Xxxx X. Xxxxxxx, Esq.
and shall be served by: (a) personal delivery; (b) certified mail, return
receipt requested, postage prepaid; or (c) nationally recognized overnight
courier. All notices shall be deemed to be given upon the earlier of actual
receipt or three (3) days after mailing, or one (1) business day after deposit
with the overnight courier. Any Notices meeting the requirements of this Section
shall be effective, regardless of whether or not actually received. Landlord or
Tenant may change its notice address at any time by giving the other party
Notice of such change. Any such Notice of change of address shall be effective
five (5) days after delivery.
17.02 Advertisement of a Leased Property. In the event the parties hereto
have not executed a renewal lease, or agreed to the Extension Term, as to the
Leased Property within twelve (12) months prior to the expiration of the Term or
an Extension Term, as the case may be, then Landlord or its agent shall have the
right to enter such Leased Property at all reasonable times for the purpose of
exhibiting such Leased Property to others and to place upon such Leased Property
for and during the period commencing twelve (12) months prior to the expiration
of the Term or an Extension Term, as the case may be, "for sale" or "for rent"
notices or signs.
17.03 Landlord's Access. Landlord, or its designated agents or contractors,
shall have the right to enter upon each Leased Property, upon reasonable prior
notice to Tenant, for purposes of inspecting the same and assuring Tenant's
compliance with this Lease provided, any such entry by Landlord shall be subject
to all rules, guidelines and procedures prescribed by Tenant in connection
therewith. Landlord shall not be allowed entry to a Leased Property unless
accompanied by such of Tenant's personnel as Tenant shall require and which
Tenant shall promptly provide.
17.04 Entire Agreement. This Lease contains the entire agreement between
Landlord and Tenant with respect to the subject matter hereof No
representations, warranties, and agreements have been made by Landlord or Tenant
except as set forth in this Lease.
50
17.05 Severability. If any term or provision of this Lease is held by
Landlord to be invalid or unenforceable as to a Leased Property, such holding
shall not affect the remainder of this Lease as to such Leased Property, or the
validity or enforceability of this Lease as to any other Leased Property, and
the same shall remain in full force and effect, unless such holding
substantially deprives Tenant of the use of such Leased Property or Landlord of
the Rents therefor, in which case this Lease shall forthwith terminate as to
such Leased Property as if by expiration of the Term or an Extension Term, as
the case may be, but shall remain in full force and effect with respect to each
other Leased Property.
17.06 Captions and Headings. The captions and headings are inserted only as
a matter of convenience and for reference and in no way define, limit or
describe the scope of this Lease or the intent of any provision hereof.
17.07 Governing Law. This Lease shall be construed under the laws of the
State of Virginia (without application of choice of law provisions).
17.08 Memorandum of Lease or Certain Rights Under the Lease. Landlord and
Tenant agree that a record of this Lease or of certain rights under this Lease
may be recorded by either party in a memorandum of lease approved by Landlord
and Tenant with respect to each Leased Property. The party recording such
memorandum must bear all costs of such recording.
17.09 Waiver. No waiver by Landlord of any condition or covenant herein
contained, or of any breach of any such condition or covenant, shall be held or
taken to be a waiver of any subsequent breach of such covenant or condition, or
to permit or excuse its continuance or any future breach thereof or of any
condition or covenant, nor shall the acceptance of Rent by Landlord at any time
when Tenant is in default in the performance or observance of any condition or
covenant herein be construed as a waiver of such default, or of Landlord's right
to terminate this Lease or exercise any other remedy granted herein on account
of such default.
17.10 Assignment: Binding Effect. Except as otherwise set forth herein,
this Lease shall not be assignable by Tenant, without the prior written consent
of Landlord. This Lease will be binding upon and inure to the benefit of the
heirs, successors, personal representatives, and permitted assigns of Landlord
and Tenant.
17.11 Consents and Approvals. In each instance in this Lease where the
Landlord is required or permitted to give a consent or approval, or to make a
determination, the Landlord's decision and any conditions thereon must be
reasonable under the circumstances. Except as provided in Sections 8.07(d) and
13.01, there shall be a presumption that each such decision and any conditions
thereon by Landlord was in fact reasonable, and Tenant shall have the burden of
proof in any attempt to rebut that presumption. With respect to Sections 8.07(d)
and 13.01, there shall be a presumption that each such decision and any
conditions thereon by Landlord was in fact - unreasonable, and Landlord shall
have the burden of proof in any attempt to rebut that presumption.
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17.12 Single Property. Throughout the form of this Lease there are
references to "Leased Properties". If, in fact, there is only one Leased
Property being leased hereunder, all such references shall, without further
action, be deemed amended to refer solely to such Leased Property and all
provisions relating to Leased Properties, including remedies applicable to only
one Leased Property, shall likewise be amended to the extent necessary, but only
to the extent necessary, to give effect to the fact that there is only one
Leased Property.
17.13 Modification. This Lease may only be modified by a writing signed by
both Landlord and Tenant.
17.14 Incorporation by Reference. All schedules and exhibits referred to in
this Lease are incorporated herein by reference.
17.15 No Merger. As to each Leased Property, the surrender of this Lease by
Tenant or the cancellation of this Lease by agreement of Tenant and Landlord or
the termination of this Lease on account of Tenant's default will not work a
merger, and will, at Landlord's option, terminate any subleases or operate as an
assignment to Landlord of any subleases. Landlord's option under this paragraph
will be exercised by notice to Tenant and all known subtenants of such Leased
Property.
17.16 Force Majeure. Landlord, its agents and employees, will not be liable
for any loss, injury, death, or damage (including consequential damages) to
persons, property, or Tenant's Business occasioned by theft, act of God, public
enemy, injunction, riot, strike, insurrection, war, court order, requisition,
order of governmental body or authority, fire, explosion, falling objects,
steam, water, rain or snow, leak or flow of water (including water from the
elevator system), rain or snow from any Leased Property or into any Leased
Property or from the roof, street, subsurface or from any other place, or by
dampness or from the breakage, leakage, obstruction, or other defects of the
pipes, sprinklers, wires, appliances, plumbing, air conditioning, or lighting
fixtures of any Leased Property, or from construction, repair, or alteration of
any Leased Property or from any acts or omissions of any other occupant or
visitor of any Leased Property, or from the release, emission, discharge,
presence or disposal of any hazardous substance or material on or from any
Leased Property, or from any other cause beyond Landlord's control.
17.17 Laches. No delay or omission by either party hereto to exercise any
right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
17.18 Waiver of Jury Trial. To the extent that there is any claim by one
party against the other that is not to be settled by arbitration as provided in
Article XIV hereof; Landlord and Tenant waive trial by jury in any action,
proceeding or counterclaim brought by either of them against the other on all
matters arising out of this Lease or the use and occupancy of any Leased
Property (except claims for personal injury or property damage). If Landlord
commences any summary proceeding for nonpayment of Rent, Tenant will not
interpose, and waives the right to
52
interpose, any counterclaim in any such proceeding.
17.19 Permitted Contests. Tenant, on its own or on Landlord's behalf (or in
Landlord's name), but at Tenant's expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or any legal
requirement or insurance requirement or any lien, attachment, levy, encumbrance,
charge or claim provided that: (a) in the case of an unpaid Imposition, lien,
attachment, levy, encumbrance, charge or claim, the commencement and
continuation of such proceedings shall suspend the collection thereof from
Landlord and from the subject Leased Property; (b) neither the subject Leased
Property nor any Rent therefrom nor any part thereof or interest therein would
be in any immediate danger of being sold, forfeited, attached or lost; (c) in
the case of a legal requirement, Landlord would not be in any immediate danger
of civil or criminal liability for failure to comply therewith pending the
outcome of such proceedings; (d) in the event that any such contest shall
involve a sum of money or potential loss in excess of Twenty Five Thousand
Dollars ($25,000), Tenant shall deliver to Landlord and its counsel an opinion
of Tenant's counsel to the effect set forth in clauses (a), (b) and (c), to the
extent applicable; (e) in the case of a legal requirement and/or an Imposition,
lien, encumbrance, or charge, Tenant shall give such reasonable security as may
be demanded by Landlord to insure ultimate payment of the same and to prevent
any sale or forfeiture of a subject Leased Property or the Rent in respect
thereof by reason of such nonpayment or noncompliance; provided, however, the
provisions of this Section shall not be construed to permit Tenant to contest
the payment of Rent (except as to contests concerning the method of computation
or the basis of levy of any Imposition or the basis for the assertion of any
other claim) or any other sums payable by Tenant to Landlord hereunder; (f) in
the case of an insurance requirement, the coverage required by Article IV shall
be maintained; and (g) if such contest be finally resolved against Landlord or
Tenant, Tenant shall, as Additional Rent due hereunder, promptly pay the amount
required to be paid, together with all interest and penalties accrued thereon,
or comply with the applicable legal requirement or insurance requirement.
Landlord, at Tenant's expense, shall execute and deliver to Tenant such
authorizations and other documents as may be reasonably required in any such
contest, and, if reasonably requested by Tenant or if Landlord so desires,
Landlord shall join as a party therein. Tenant hereby agrees to indemnify and
hold harmless Landlord, its officers, trustees, employees, shareholders,
affiliates and agents from and against any and all demands, claims, causes of
action, fines, penalties, damages (including punitive and consequential
damages), losses, liabilities (including strict liability), judgments, costs and
expenses (including, without limitation, attorneys' fees, court costs, and the
costs set forth in Section 9.06) that may be incurred in connection with or
arise from any such contest.
17.20 Construction of Lease. This Lease has been reviewed by Landlord and
Tenant and their respective professional advisors. Landlord and Tenant believe
that this Lease is the product of all their efforts, that they express their
agreement, and agree that they shall not be interpreted in favor of either
Landlord or Tenant or against either Landlord or Tenant merely because of any
party's efforts in preparing such documents.
17.21 Counterparts. This Lease maybe executed in duplicate counterparts,
each of which
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shall be deemed an original hereof or thereof.
17.22 Relationship of Landlord and Tenant. The relationship of Landlord and
Tenant is the relationship of lessor and lessee. Landlord and Tenant are not
partners, joint venturers, or associates.
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