Exhibit 10(h)
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MASTER LEASE AGREEMENT
Dated as of July 30, 2001
between
ATLANTIC FINANCIAL GROUP, LTD., as Lessor,
and
ADESA CALIFORNIA, INC. AND CERTAIN OTHER SUBSIDIARIES
OF ADESA CORPORATION, as Lessees
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TABLE OF CONTENTS
(Lease Agreement)
Page
ARTICLE I. DEFINITIONS................................................ 1
ARTICLE II. LEASE OF LEASED PROPERTY................................... 1
2.1 Acceptance and Lease of Property........................... 1
2.2 Acceptance Procedure....................................... 2
ARTICLE III. RENT....................................................... 2
3.1 Basic Rent................................................. 2
3.2 Supplemental Rent.......................................... 2
3.3 Method of Payment.......................................... 3
3.4 Late Payment............................................... 3
3.5 Net Lease; No Setoff, Etc.................................. 3
3.6 Certain Taxes.............................................. 4
3.7 Utility Charges............................................ 5
ARTICLE IV. WAIVERS.................................................... 5
ARTICLE V. LIENS; EASEMENTS; PARTIAL CONVEYANCES...................... 6
ARTICLE VI. MAINTENANCE AND REPAIR; ALTERATIONS,
MODIFICATIONS AND ADDITIONS................................ 7
6.1 Maintenance and Repair; Compliance With Law................ 7
6.2 Alterations................................................ 8
6.3 Title to Alterations....................................... 8
ARTICLE VII. USE........................................................ 8
ARTICLE VIII. INSURANCE.................................................. 9
ARTICLE IX. ASSIGNMENT AND SUBLEASING................................. 11
ARTICLE X. LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE................. 11
10.1 Event of Loss............................................. 11
10.2 Event of Taking........................................... 12
10.3 Casualty.................................................. 13
10.4 Condemnation.............................................. 13
10.5 Verification of Restoration and Rebuilding................ 13
10.6 Application of Payments................................... 13
10.7 Prosecution of Awards..................................... 14
10.8 Application of Certain Payments Not Relating to an Event
of Taking................................................. 15
10.9 Other Dispositions........................................ 15
10.10 No Rent Abatement......................................... 15
ARTICLE XI. INTEREST CONVEYED TO LESSEES.............................. 16
ARTICLE XII. EVENTS OF DEFAULT......................................... 16
ARTICLE XIII. ENFORCEMENT............................................... 19
13.1 Remedies.................................................. 19
13.2 Remedies Cumulative; No Waiver; Consents.................. 21
13.3 Purchase Upon an Event of Default......................... 21
13.4 Limitation on Liability................................... 22
ARTICLE XIV. SALE, RETURN OR PURCHASE OF LEASED PROPERTY; RENEWAL ..... 22
14.1 Lessee's Option to Purchase............................... 22
14.2 Conveyance to Lessee...................................... 23
14.3 Acceleration of Purchase Obligation....................... 23
14.4 Determination of Purchase Price........................... 23
14.5 Purchase Procedure........................................ 23
14.6 Option to Remarket........................................ 24
14.7 Rejection of Sale......................................... 27
14.8 Return of Leased Property................................. 27
14.9 Renewal................................................... 27
ARTICLE XV. LESSEE'S EQUIPMENT........................................ 28
ARTICLE XVI. RIGHT TO PERFORM FOR LESSEE............................... 28
ARTICLE XVII. MISCELLANEOUS............................................. 29
17.1 Reports................................................... 29
17.2 Binding Effect; Successors and Assigns; Survival.......... 29
17.3 Quiet Enjoyment........................................... 29
17.4 Documentary Conventions................................... 29
17.5 Liability of Lessor Limited............................... 29
17.6 Estoppel Certificates..................................... 30
17.7 No Joint Venture.......................................... 30
17.8 No Accord and Satisfaction................................ 30
17.9 No Merger................................................. 30
17.10 Survival.................................................. 31
17.11 Chattel Paper............................................. 31
17.12 Time of Essence........................................... 31
17.13 Recordation of Lease...................................... 31
(ii)
17.14 Investment of Security Funds.............................. 31
17.15 Ground Leases............................................. 32
17.16 Land and Building......................................... 32
17.17 Joint and Several......................................... 32
17.18 IDB Documentation......................................... 32
EXHIBIT A Lease Supplement
(iii)
THIS MASTER LEASE AGREEMENT (as from time to time amended or
supplemented, this "LEASE"), dated as of July 30, 2001, is among ATLANTIC
FINANCIAL GROUP, LTD., a Texas limited partnership (together with its successors
and assigns hereunder, the "LESSOR"), as Lessor, and ADESA CALIFORNIA, INC., a
California corporation, and certain other Subsidiaries of ADESA Corporation
hereafter parties hereto (individually, with its successors and permitted
assigns hereunder, each a "LESSEE" and collectively, the "LESSEES"), as Lessees.
PRELIMINARY STATEMENT
A. Lessor will purchase, or acquire a leasehold interest in, from one
or more third parties designated by the Construction Agent, on a Closing Date,
certain parcels of real property to be specified by the Construction Agent,
together with any improvements thereon.
▇. ▇▇▇▇▇▇ desires to lease to each Lessee, and each Lessee desires to
lease from Lessor, certain of such properties as described on the Lease
Supplement(s) to which such Lessee is a party.
C. If applicable, the Construction Agent will, on behalf of Lessor,
cause to be constructed, certain improvements on such parcels of real property
which as constructed will be the property of Lessor and will become part of such
property subject to the terms of this Lease.
In consideration of the mutual agreements herein contained and other
good and valuable consideration, receipt of which is hereby acknowledged, Lessor
and Lessees hereby agree as follows:
ARTICLE I.
DEFINITIONS
Terms used herein and not otherwise defined shall have the meanings
assigned thereto in Appendix A to the Master Agreement, dated as of July 30,
2001 (as amended, supplemented or otherwise modified from time to time, the
"MASTER AGREEMENT") among ADESA, as a Guarantor, the Lessees, Lessor, the
financial institutions party thereto as Lenders and SunTrust Bank, as Agent, for
all purposes hereof.
ARTICLE II.
LEASE OF LEASED PROPERTY
Section 2.1 ACCEPTANCE AND LEASE OF PROPERTY. On each Closing Date
for Land, Lessor, subject to the satisfaction or waiver of the conditions set
forth in Section 3 of the Master Agreement, hereby agrees to accept delivery on
such Closing Date of such Land (through a Deed
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or a Ground Lease, as applicable) pursuant to the terms of the Master Agreement,
together with any Building or Buildings and other improvements thereon, and
simultaneously to lease to the related Lessee hereunder for the Lease Term,
Lessor's interest in such Land and in such Building or Buildings and other
improvements, together with any Building which thereafter may be constructed
thereon pursuant to the Construction Agency Agreement, and such related Lessee
hereby agrees, expressly for the direct benefit of Lessor, commencing on such
Closing Date for the Lease Term, to lease from Lessor Lessor's interest in such
Land to be delivered on such Closing Date, together with, in the case of Land,
Lessor's interest in the Building or Buildings and other improvements thereon
and/or which thereafter may be constructed thereon pursuant to the Construction
Agency Agreement.
Section 2.2 ACCEPTANCE PROCEDURE. Lessor hereby authorizes one or
more employees of the related Lessee, to be designated by such Lessee, as the
authorized representative or representatives of Lessor to accept delivery on
behalf of Lessor of that Leased Property identified on the applicable Funding
Request. Each Lessee hereby agrees that such acceptance of delivery by such
authorized representative or representatives and the execution and delivery by
such Lessee on each Closing Date for property to be leased hereunder of a Lease
Supplement in substantially the form of EXHIBIT A hereto (each, a "LEASE
SUPPLEMENT") (appropriately completed) shall, without further act, constitute
the irrevocable acceptance by such Lessee of that Leased Property which is the
subject thereof for all purposes of this Lease and the other Operative Documents
on the terms set forth therein and herein, and that such Leased Property,
together with, in the case of Land, any and all Buildings and other improvements
thereon and/or to be constructed thereon pursuant to the Construction Agency
Agreement, shall be deemed to be included in the leasehold estate of this Lease
and shall be subject to the terms and conditions of this Lease as of such
Closing Date. The demise and lease of each parcel of Land and each Building
pursuant to this SECTION 2.2 shall include any additional right, title or
interest in each such parcel of Land and each such Building which may at any
time be acquired by Lessor, the intent being that all right, title and interest
of Lessor in and to each such parcel of Land and each such Building shall at all
times be demised and leased to the related Lessee hereunder.
ARTICLE III.
RENT
Section 3.1 BASIC RENT. Beginning with and including the first
Payment Date occurring after the Initial Closing Date, each Lessee shall pay to
the Agent the Basic Rent for the Leased Properties subject to a Lease Supplement
to which such Lessee is a party, in installments, payable in arrears on each
Payment Date during the Lease Term, subject to Section 2.3(c) of the Master
Agreement.
Section 3.2 SUPPLEMENTAL RENT. Each Lessee shall pay to the Agent, or
to whomever shall be entitled thereto as expressly provided herein or in any
other Operative Document, any and all Supplemental Rent on the date the same
shall become due and payable and in the event of any failure on the part of such
Lessee to pay any Supplemental Rent, the Agent shall have all
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rights, powers and remedies provided for herein or by law or in equity or
otherwise in the case of nonpayment of Basic Rent. All Supplemental Rent to be
paid pursuant to this SECTION 3.2 shall be payable in the type of funds and in
the manner set forth in SECTION 3.3.
Section 3.3 METHOD OF PAYMENT. Basic Rent shall be paid to the Agent,
and Supplemental Rent (including amounts due under ARTICLE XIV hereof) shall be
paid to the Agent (or to such Person as may be entitled thereto) or, in each
case, to such Person as the Agent (or such other Person) shall specify in
writing to the related Lessee, and at such place as the Agent (or such other
Person) shall specify in writing to the related Lessee. Each payment of Rent
(including payments under ARTICLE XIV hereof) shall be made by the Lessees prior
to 12:00 p.m. (noon) Atlanta, Georgia time at the place of payment in funds
consisting of lawful currency of the United States of America which shall be
immediately available on the scheduled date when such payment shall be due,
unless such scheduled date shall not be a Business Day, in which case such
payment shall be made on the next succeeding Business Day.
Section 3.4 LATE PAYMENT. If any Basic Rent shall not be paid on the
date when due, the related Lessee shall pay to the Agent, as Supplemental Rent,
interest (to the maximum extent permitted by law) on such overdue amount from
and including the due date thereof to but excluding the Business Day of payment
thereof at the Overdue Rate.
Section 3.5 NET LEASE; NO SETOFF, ETC. This Lease is a net lease and
notwithstanding any other provision of this Lease, each Lessee shall pay all
Basic Rent and Supplemental Rent, and all costs, charges, assessments and other
expenses foreseen or unforeseen, for which such Lessee or any Indemnitee is or
shall become liable by reason of such Lessee's or such Indemnitee's estate,
right, title or interest in the Leased Properties, or that are connected with or
arise out of the acquisition (except the initial costs of purchase by Lessor of
its interest in any Leased Property, which costs, subject to the terms of the
Master Agreement, shall be funded by the Funding Parties pursuant to the Master
Agreement), construction (except Construction Costs which costs, subject to the
terms of the Master Agreement, shall be funded under the Master Agreement),
installation, possession, use, occupancy, maintenance, ownership, leasing,
repairs and rebuilding of, or addition to, the Leased Properties or any portion
thereof, and any other amounts payable hereunder and under the other Operative
Documents without counterclaim, setoff, deduction or defense and without
abatement, suspension, deferment, diminution or reduction, and each Lessee's
obligation to pay all such amounts throughout the Lease Term, including the
Construction Term, is absolute and unconditional. The obligations and
liabilities of each Lessee hereunder shall in no way be released, discharged or
otherwise affected for any reason, including without limitation: (a) any defect
in the condition, merchantability, design, quality or fitness for use of any
Leased Property or any part thereof, or the failure of any Leased Property to
comply with all Applicable Law, including any inability to occupy or use any
Leased Property by reason of such non-compliance; (b) any damage to, removal,
abandonment, salvage, loss, contamination of or Release from, scrapping or
destruction of or any requisition or taking of any Leased Property or any part
thereof; (c) any restriction, prevention or curtailment of or interference with
any use of any Leased Property or any part thereof including eviction; (d) any
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defect in title to or rights to any Leased Property or any Lien on such title or
rights or on any Leased Property; (e) any change, waiver, extension, indulgence
or other action or omission or breach in respect of any obligation or liability
of or by Lessor, the Agent or any Lender; (f) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceedings relating to any Lessee, Lessor, any Lender, the Agent or any other
Person, or any action taken with respect to this Lease by any trustee or
receiver of any Lessee, Lessor, any Lender, the Agent, any Ground Lessor or any
other Person, or by any court, in any such proceeding; (g) any claim that any
Lessee has or might have against any Person, including without limitation,
Lessor, any vendor, manufacturer, contractor of or for any Leased Property or
any part thereof, the Agent, any Ground Lessor, any Governmental Authority, or
any Lender; (h) any failure on the part of Lessor to perform or comply with any
of the terms of this Lease, any other Operative Document, any applicable IDB
Documentation or of any other agreement; (i) any invalidity or unenforceability
or illegality or disaffirmance of this Lease against or by any Lessee or any
provision hereof or any of the other Operative Documents or any provision of any
thereof whether or not related to the Transaction; (j) the impossibility or
illegality of performance by any Lessee, Lessor or both; (k) any action by any
court, administrative agency or other Governmental Authority; (l) any
restriction, prevention or curtailment of or interference with the Construction
or any use of any Leased Property or any part thereof; or (m) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not any Lessee shall have notice or knowledge of any of the foregoing. Except
as specifically set forth in ARTICLES XIV or X of this Lease, this Lease shall
be noncancellable by each Lessee in any circumstance whatsoever and each Lessee,
to the extent permitted by Applicable Law, waives all rights now or hereafter
conferred by statute or otherwise to quit, terminate or surrender this Lease, or
to any diminution, abatement or reduction of Rent payable by such Lessee
hereunder. Each payment of Rent made by a Lessee hereunder shall be final and
such Lessee shall not seek or have any right to recover all or any part of such
payment from Lessor, the Agent, any Lender or any party to any agreements
related thereto for any reason whatsoever. Each Lessee assumes the sole
responsibility for the condition, use, operation, maintenance, and management of
the Leased Properties leased by it and Lessor shall have no responsibility in
respect thereof and shall have no liability for damage to the property of either
any Lessee or any subtenant of any Lessee on any account or for any reason
whatsoever, other than solely by reason of Lessor's willful misconduct or gross
negligence (except for willful misconduct and gross negligence imputed to Lessor
solely as a result of its interest in any Leased Property).
Section 3.6 CERTAIN TAXES. Without limiting the generality of SECTION
3.5, each Lessee agrees to pay when due all real estate taxes, personal property
taxes, gross sales taxes, including any sales or lease tax imposed upon the
rental payments hereunder or under a sublease, occupational license taxes, water
charges, sewer charges, assessments of any nature and all other governmental
impositions and charges of every kind and nature whatsoever (the "TAX(ES)"),
when the same shall be due and payable without penalty or interest; PROVIDED,
HOWEVER, that this Section shall not apply to any of the taxes covered by the
exclusion described in Section 7.4(b) of the Master Agreement. It is the
intention of the parties hereto that, insofar as the same may lawfully be done,
Lessor shall be, except as specifically provided for herein, free from all
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expenses in any way related to the Leased Properties and the use and occupancy
thereof. Any tax relating to a fiscal period of any taxing authority falling
partially within and partially outside the Lease Term, shall be apportioned and
adjusted between Lessor and the related Lessee. Each Lessee covenants to furnish
Lessor and the Agent, upon the Agent's written request, within forty-five (45)
days after the last date when any tax must be paid by such Lessee as provided in
this SECTION 3.6, official receipts of the appropriate taxing, authority or
other proof satisfactory to Lessor, evidencing the payment thereof.
So long as no Event of Default has occurred and is continuing, the
related Lessee may defer payment of a tax so long as the validity or the amount
thereof is contested by such Lessee with diligence and in good faith; PROVIDED,
HOWEVER, that such Lessee shall pay the tax in sufficient time to prevent
delivery of a tax deed. Such contest shall be at the related Lessee's sole cost
and expense. Each Lessee covenants to indemnify and save harmless Lessor, the
Agent and each Lender from any actual and reasonable costs or expenses incurred
by Lessor, the Agent or any Lender as a result of such contest, which
indemnification shall survive the termination of this Lease; PROVIDED that
neither the Agent nor any Lender shall be entitled to claim any indemnity
against any Lessee pursuant to this sentence with respect to any Construction
Land Interest during the Construction Term therefor.
Section 3.7 UTILITY CHARGES. Each Lessee agrees to pay or cause to be
paid as and when the same are due and payable all charges for gas, water, sewer,
electricity, lights, heat, power, telephone or other communication service and
all other utility services used, rendered or supplied to, upon or in connection
with the Leased Properties leased by it.
ARTICLE IV.
WAIVERS
During the Lease Term, Lessor's interest in the Leased Properties,
including the Equipment, the Building(s) (whether or not completed) and the
Land, is demised and let by Lessor "AS IS" subject to (a) the rights of any
parties in possession thereof, (b) the state of the title thereto existing at
the time Lessor acquired its interest in the Leased Properties, (c) any state of
facts which an accurate survey or physical inspection might show (including the
survey delivered on the related Closing Date), (d) all Applicable Law, and (e)
any violations of Applicable Law which may exist upon or subsequent to the
commencement of the Lease Term. EACH LESSEE ACKNOWLEDGES THAT, ALTHOUGH LESSOR
WILL OWN AND HOLD TITLE TO THE LEASED PROPERTIES, LESSOR IS NOT A MANUFACTURER
OF, OR DEALER IN ANY LEASED PROPERTY, AND IS NOT RESPONSIBLE FOR THE DESIGN,
DEVELOPMENT, BUDGETING AND CONSTRUCTION OF THE BUILDING(S) OR ANY ALTERATIONS.
NEITHER LESSOR, THE AGENT NOR ANY LENDER HAS MADE OR SHALL BE DEEMED TO HAVE
MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OR SHALL BE DEEMED TO
HAVE ANY LIABILITY WHATSOEVER AS TO THE VALUE, MERCHANTABILITY, TITLE,
HABITABILITY,
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CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF THE LEASED PROPERTIES (OR
ANY PART THEREOF), OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS
OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTIES (OR ANY PART THEREOF), ALL
SUCH WARRANTIES BEING HEREBY DISCLAIMED, AND NEITHER LESSOR, THE AGENT NOR ANY
LENDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE
FAILURE OF ANY LEASED PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY
APPLICABLE LAW, except that Lessor hereby represents and warrants that each
Leased Property is and shall be free of Lessor Liens. As between Lessor and the
Lessees, each related Lessee has been afforded full opportunity to inspect each
Leased Property, is satisfied with the results of its inspections of such Leased
Property and is entering into this Lease solely on the basis of the results of
its own inspections and all risks incident to the matters discussed in the two
preceding sentences, as between Lessor, the Agent or the Lenders on the one
hand, and the Lessees, on the other, are to be borne by the Lessees, except for
the foregoing representation and warranty of Lessor relative to the absence of
Lessor Liens. The provisions of this ARTICLE IV have been negotiated, and,
except to the extent otherwise expressly stated, the foregoing provisions are
intended to be a complete exclusion and negation of any representations or
warranties by Lessor, the Agent or the Lenders, express or implied, with respect
to the Leased Properties, that may arise pursuant to any law now or hereafter in
effect, or otherwise.
ARTICLE V.
LIENS; EASEMENTS; PARTIAL CONVEYANCES
No Lessee shall directly or indirectly create, incur or assume, and
each Lessee shall promptly discharge, any Lien on or with respect to any Leased
Property, the title thereto, or any interest therein, including any Liens which
arise out of the possession, use, occupancy, construction, repair or rebuilding
of any Leased Property or by reason of labor or materials furnished or claimed
to have been furnished to a Lessee, or any of its contractors or agents or
Alterations constructed by a Lessee, except, in all cases, Permitted Liens.
Notwithstanding the foregoing paragraph, at the request of a Lessee,
Lessor shall, from time to time during the Lease Term and upon reasonable
advance written notice from such Lessee, and receipt of the materials specified
in the next succeeding sentence, consent to and join in any (i) grant of
easements, licenses, rights of way and other rights in the nature of easements,
including, without limitation, utility easements to facilitate Lessees' use,
development and construction of the Leased Properties, (ii) release or
termination of easements, licenses, rights of way or other rights in the nature
of easements which are for the benefit of the Land or the Building(s) or any
portion thereof, (iii) dedication or transfer of portions of the Land, not
improved with a Building, for road, highway or other public purposes, (iv)
execution of agreements for ingress and egress and amendments to any covenants
and restrictions affecting the Land or the Building(s) or any portion thereof
and (v) request to any Governmental Authority for platting or subdivision or
replatting or resubdivision approval with respect to the
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Land or any portion thereof or any parcel of land of which the Land or any
portion thereof forms a part or a request for rezoning or any variance from
zoning or other governmental requirements. Lessor's obligations pursuant to the
preceding sentence shall be subject to the requirements that:
(a) any such action shall be at the sole cost and expense of
the requesting Lessee and such Lessee shall pay all actual and reasonable
out-of-pocket costs of Lessor, the Agent and any Lender in connection therewith
(including, without limitation, the reasonable fees of attorneys, architects,
engineers, planners, appraisers and other professionals reasonably retained by
Lessor, the Agent or any Lender in connection with any such action),
(b) the requesting Lessee shall have delivered to Lessor and
Agent a certificate of a Responsible Officer of such Lessee stating that
(i) such action will not cause any Leased Property,
the Land or any Building or any portion thereof to fail to comply in
any material respect with the provisions of this Lease or any other
Operative Documents or any applicable IDB Documentation, or in any
material respect with Applicable Law; and
(ii) such action will not materially reduce the Fair
Market Sales Value, utility or useful life of any Leased Property, the
Land or any Building nor Lessor's interest therein; and
(c) in the case of any release or conveyance, if Lessor, the
Agent or any Lender so reasonably requests, the requesting Lessee will cause to
be issued and delivered to Lessor and the Agent by the Title Insurance Company
an endorsement to the Title Policy pursuant to which the Title Insurance Company
agrees that its liability for the payment of any loss or damage under the terms
and provisions of the Title Policy will not be affected by reason of the fact
that a portion of the real property referred to in Schedule A of the Title
Policy has been released or conveyed by Lessor.
ARTICLE VI.
MAINTENANCE AND REPAIR;
ALTERATIONS, MODIFICATIONS AND ADDITIONS
Section 6.1 MAINTENANCE AND REPAIR; COMPLIANCE WITH LAW. Each Lessee,
at its own expense, shall at all times after the Completion Date for the related
Leased Property (a) maintain each Leased Property leased by it in good repair
and condition (subject to ordinary wear and tear), in accordance with prudent
industry standards and, in any event, in no less a manner as other similar
property owned or leased by such Lessee or its Affiliates, (b) make all
Alterations in accordance with, and maintain (whether or not such maintenance
requires structural modifications or Alterations) and operate and otherwise keep
each Leased Property in compliance in all material respects with, all Applicable
Laws and insurance requirements, and
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(c) make all material repairs, replacements and renewals of each Leased Property
or any part thereof which may be required to keep such Leased Property in the
condition required by the preceding CLAUSES (a) and (b). Each Lessee shall
perform the foregoing maintenance obligations regardless of whether any Leased
Property is occupied or unoccupied. Each Lessee waives any right that it may now
have or hereafter acquire to (i) require Lessor, the Agent or any Lender to
maintain, repair, replace, alter, remove or rebuild all or any part of any
Leased Property or (ii) make repairs at the expense of Lessor, the Agent or any
Lender pursuant to any Applicable Law or other agreements or otherwise. NEITHER
LESSOR, THE AGENT NOR ANY LENDER SHALL BE PERSONALLY LIABLE TO ANY LESSEE OR TO
ANY CONTRACTORS, SUBCONTRACTORS, LABORERS, MATERIALMEN, SUPPLIERS OR VENDORS FOR
SERVICES PERFORMED OR MATERIAL PROVIDED ON OR IN CONNECTION WITH ANY LEASED
PROPERTY OR ANY PART THEREOF. Neither Lessor, the Agent nor any Lender shall be
required to maintain, alter, repair, rebuild or replace any Leased Property in
any way.
Section 6.2 ALTERATIONS. Each Lessee may, with the prior written
consent of Lessor, which consent shall not be unreasonably withheld (unless the
reasonably anticipated cost of such Alteration is less than $1,000,000, in which
case no such consent shall be required), at such Lessee's own cost and expense,
make Alterations which do not materially adversely affect the Fair Market Sales
Value, utility, remaining useful life or residual value of the related Leased
Property and do not materially violate or conflict with, or constitute or result
in a material default under, any Applicable Law or any insurance policy required
hereunder.
Section 6.3 TITLE TO ALTERATIONS. Title to all Alterations shall
without further act vest in Lessor (subject to each Lessee's right to remove
trade fixtures, personal property and equipment which do not constitute
Alterations and which were not acquired with funds advanced by Lessor or any
Lender) and shall be deemed to constitute a part of the Leased Properties and be
subject to this Lease.
ARTICLE VII.
USE
Each Lessee may use each Leased Property leased by it or any part
thereof for any lawful purpose, and in a manner consistent with the standards
applicable to properties of a similar nature in the geographic area in which
such Leased Property is located, PROVIDED that such use does not materially
adversely affect the Fair Market Sales Value, utility, remaining useful life or
residual value of such Leased Property, and does not materially violate or
conflict with, or constitute or result in a material default under, any
Applicable Law or any insurance policy required hereunder. In the event that any
use of any of the Leased Property changes the character or original intended use
of such Leased Property, as such character and intended use existed on the
Closing Date therefor, or Completion Date therefor and the Lessees do not
purchase the Leased Properties at the end of the Lease Term, the related Lessee,
upon request of
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Lessor, shall restore such Leased Property to its general character and intended
use on the Closing Date or Completion Date therefor, ordinary wear and tear
excepted. No Lessee shall commit or permit any waste of any Leased Property or
any material part thereof.
ARTICLE VIII.
INSURANCE
The provisions of this ARTICLE VIII shall not apply to any Construction
Land Interest during the Construction Term therefor; during the Construction
Term for any Leased Property, the Construction Agent shall maintain insurance in
accordance with Section 2.9 of the Construction Agency Agreement.
(a) At any time during which any part of any Building or any
Alteration is under construction, which construction is reasonably anticipated
to cost more than $1,000,000, and as to any part of any Building or any
Alteration under construction, the related Lessee shall maintain, or cause to be
maintained, at its sole cost and expense, as a part of its blanket policies or
otherwise, "all risks" non-reporting completed value form of builder's risk
insurance.
(b) During the Lease Term and with respect to each Leased
Property leased by it, each related Lessee shall maintain, or cause to be
maintained, at its sole cost and expense, as a part of its blanket policies or
otherwise, insurance against loss or damage to any Building by fire and other
risks, including comprehensive boiler and machinery coverage, on terms and in
amounts no less favorable than insurance covering other similar properties owned
or leased by such Lessee or its Affiliates and which is of the type usually
carried by corporations engaged in the same or similar business, similarly
situated with the related Lessee, and owning or operating similar property, and
which cover risks of all kind customarily insured against by such corporations,
but in no event less than the replacement cost of such Building from time to
time. If at any time during the Lease Term with respect to a Leased Property
subject hereto the area in which such Leased Property is located is designated a
"100 year flood-prone" area pursuant to the Flood Disaster Protection Act of
1973, or any amendments or supplements thereto, then the related Lessee shall
comply with the National Flood Insurance Program as set forth in the Flood
Disaster Protection Act of 1973. In addition, the related Lessee will fully
comply with the requirements of the National Flood Insurance Act of 1968 and the
Flood Disaster Protection Act of 1973, as each may be amended from time to time,
and with any other Applicable Law, concerning flood insurance to the extent that
it may apply to any such Leased Property.
(c) During the Lease Term and with respect to each Leased
Property leased by it, each related Lessee shall maintain, or cause to be
maintained, at its sole cost and expense, commercial general liability insurance
which is of the type usually carried by corporations engaged in the same or
similar business, similarly situated with the related Lessee, and owning or
operating similar property, and which cover risks of all kind customarily
insured against by such corporations. Such insurance shall be on terms and in
amounts that are no less favorable
9
than insurance maintained by such Lessee or its Affiliates with respect to
similar properties that it owns or leases, but in no event less than $1,000,000
per occurrence, with an umbrella policy with at least $10,000,000 per occurrence
coverage. Nothing in this ARTICLE VIII shall prohibit any Additional Insured
from carrying at its own expense other insurance on or with respect to the
Leased Properties, PROVIDED that any insurance carried by such Additional
Insured shall not prevent any Lessee from carrying the insurance required
hereby.
(d) Each policy of insurance required to be maintained by a
Lessee pursuant to PARAGRAPHS (a) and (b) of this ARTICLE VIII shall provide
that all insurance proceeds in respect of any loss or occurrence shall be
adjusted by such Lessee, except (a) that with respect to any loss, the estimated
cost of restoration of which is in excess of the greater of $5,000,000 and 50%
of the Funded Amounts with respect to the related Leased Property, the
adjustment thereof shall be subject to the prior written approval of Lessor,
which approval shall not be unreasonably withheld, delayed or conditioned, and
the insurance proceeds therefor shall be paid to the Agent for application in
accordance with this Lease, and (b) if, and for so long as, an Event of Default
exists, all losses shall be adjusted solely by, and all insurance proceeds shall
be paid solely to, the Agent for application pursuant to this Lease.
(e) On the Initial Closing Date and on each anniversary of the
Initial Closing Date, each Lessee shall furnish Lessor, or cause to be furnished
to Lessor, with certificates, which may be blanket certificates covering all of
the Leased Properties leased by it and other properties owned by such Lessee or
its Affiliates, showing the insurance required under this ARTICLE VIII to be in
effect and naming the Additional Insureds, as additional insureds (with respect
to the insurance described in PARAGRAPH (c)) or, in the case of the Agent with
respect to the circumstances described in PARAGRAPH (d), loss payee, as
applicable.
(f) Each policy of insurance maintained by, or on behalf of, a
Lessee pursuant to this ARTICLE VIII shall (i) provide that such insurance shall
be primary, without right of contribution from any other insurance that is
covered by any Additional Insured, (ii) provide that all of the provisions
thereof, except the limits of liability, shall operate in the same manner as if
there were a separate policy covering each Additional Insured, (iii) provide
that the related insurer waives any right of set-off or counterclaim against
each Additional Insured, (iv) provide that no Additional Insured shall have any
obligation or liability for premiums, commissions, assessments or calls in
connection with such insurance, (v) contain the waiver of any right of
subrogation of the insurer against each Additional Insured, (vi) provide that in
respect of the interests of each Additional Insured, such policies shall not be
invalidated by any fraud, action, inaction or misrepresentation of any Lessee or
any other Person (other than, with respect to such Person, the acts of such
Person) and shall insure each Additional Insured regardless of any breach of any
terms, conditions or warranty contained in such policy by any Lessee or any
other Person (other than, with respect to such Person, breaches or violations by
such Person) and (vii) provide that if the related insurer cancels such
insurance for any reason whatsoever, or such insurance is allowed to lapse for
nonpayment of premium or the scope of coverage thereof is changed in any
material way, such cancellation, shall not be effective as to any Additional
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Insured until thirty (30) days after written notice is given by such insurer to
such Additional Insured or such lapse shall not be effective as to any
Additional Insured until ten (10) days after written notice is given by such
insurer to such Additional Insured.
(g) All insurance policies carried in accordance with this
ARTICLE VIII shall be maintained with insurers of recognized responsibility
rated at least A by A.M. Best & Company, and in all cases the insurer shall be
qualified to insure risks in the State where each Leased Property is located.
ARTICLE IX.
ASSIGNMENT AND SUBLEASING
No Lessee may assign any of its right, title or interest in, to or
under this Lease, except as set forth in the following sentence. Each Lessee may
sublease all or any portion of any Leased Property, PROVIDED that with respect
to a sublease (a) all obligations of such Lessee shall continue in full effect
as obligations of a principal and not of a guarantor or surety, as though no
sublease had been made; (b) such sublease shall be expressly subject and
subordinate to this Lease, the Loan Agreement and the other Operative Documents;
and (c) each such sublease shall terminate on or before the Lease Termination
Date. Each Lessee shall give the Agent and Lessor prompt written notice of any
such sublease.
Except pursuant to an Operative Document, this Lease shall not be
mortgaged or pledged by any Lessee, nor shall any Lessee mortgage or pledge any
interest in any Leased Property or any portion thereof. Any such mortgage or
pledge shall be void.
ARTICLE X.
LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE
Section 10.1 EVENT OF LOSS. Any event (i) which would otherwise
constitute a Casualty during the Base Term, and (ii) which, in the good-faith
judgment of the related Lessee, (A) renders repair and restoration of a Leased
Property impossible or impractical, or requires repairs to the related Leased
Property that, with the exercise of reasonable diligence, are impossible to
complete by the Lease Termination Date or (B) requires repairs to a Leased
Property that would cost in excess of 50% of the original cost of such Leased
Property, and as to which such Lessee has determined not to rebuild, shall
constitute an "EVENT OF LOSS". Within sixty (60) days after the occurrence of
such event, the related Lessee shall deliver to Lessor an Officer's Certificate
notifying Lessor of such event and, in the case of an event described in the
foregoing CLAUSE (ii), of such Lessee's determination not to rebuild. In the
case of any other event which constitutes a Casualty, the related Lessee shall
restore such Leased Property pursuant to SECTION 10.3. If an Event of Loss shall
occur, the related Lessee shall pay to Lessor on the earlier of (i) the Lease
Termination Date and (ii) the next Payment Date occurring not less than thirty
(30) days after the delivery of the Officer's Certificate pursuant to this
SECTION 10.1 above an amount equal to the
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related Leased Property Balance. Upon Lessor's receipt of such Leased Property
Balance on such date, Lessor shall cause Lessor's interest in such Leased
Property to be conveyed to the related Lessee in accordance with and subject to
the provisions of SECTION 14.5 hereof; upon completion of such purchase, but not
prior thereto, this Lease with respect to such Leased Property and all
obligations hereunder with respect to such Leased Property shall terminate,
except with respect to obligations and liabilities hereunder, actual or
contingent, that have arisen or relate to events occurring on or prior to such
date of purchase, or which are expressly stated herein to survive termination of
this Lease.
Upon the consummation of the purchase of any Leased Property pursuant
to this SECTION 10.1, any proceeds derived from insurance required to be
maintained by the related Lessee pursuant to this Lease for any Leased Property
remaining after payment of such purchase price shall be paid over to, or
retained by, such Lessee or as it may direct, and Lessor shall assign to such
Lessee, without warranty, all of Lessor's rights to and interest in such
insurance required to be maintained by such Lessee pursuant to this Lease.
Section 10.2 EVENT OF TAKING. Any event (i) which constitutes a
Condemnation of all of, or substantially all of, a Leased Property, or (ii) (A)
which would otherwise constitute a Condemnation and (B) which, in the good-faith
judgment of the related Lessee, (1) renders restoration and rebuilding of a
Leased Property impossible or impractical, or requires restoration to the
related Leased Property that, with the exercise of reasonable diligence, is
impossible to complete by the Lease Termination Date or (2) requires repairs to
a Leased Property that would cost in excess of 50% of the original cost of such
Leased Property, and as to which such Lessee has determined not to rebuild shall
constitute an "EVENT OF TAKING". Within sixty (60) days after the occurrence of
such event, the related Lessee shall deliver to Lessor an Officer's Certificate
notifying Lessor of such event and, in the case of an event described in the
foregoing CLAUSE (ii), of such Lessee's determination not to rebuild. In the
case of any other event which constitutes a Condemnation, the related Lessee
shall restore and rebuild such Leased Property pursuant to SECTION 10.4. If an
Event of Taking shall occur, the related Lessee shall pay to Lessor (1) on the
earlier of (A) the Lease Termination Date and (B) the next Payment Date
occurring not less than thirty (30) days after the occurrence of such Event of
Taking, in the case of an Event of Taking described in CLAUSE (i) above, or (2)
on the earlier of (A) the Lease Termination Date and (B) the next Payment Date
occurring not less than thirty (30) days after the delivery of the Officer's
Certificate pursuant to CLAUSE (ii) above, in the case of an Event of Taking
described in CLAUSE (ii) above, an amount equal to the related Leased Property
Balance. Upon Lessor's receipt of such Leased Property Balance on such date,
Lessor shall cause Lessor's interest in such Leased Property, and in all
condemnation proceeds related thereto, to be conveyed to the related Lessee in
accordance with and subject to the provisions of SECTION 14.5 hereof (provided
that such conveyance shall be subject to all rights of the condemning
authority); upon completion of such purchase, but not prior thereto, this Lease
with respect to such Leased Property and all obligations hereunder with respect
to such Leased Property shall terminate, except with respect to obligations and
liabilities hereunder, actual or contingent, that have arisen or relate to
events
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occurring on or prior to such date of purchase, or which are expressly stated
herein to survive termination of this Lease.
Upon the consummation of the purchase of such Leased Property pursuant
to this SECTION 10.2, all Awards received by Lessor, after deducting any
reasonable out-of-pocket costs incurred by Lessor in collecting such Awards,
received or payable on account of an Event of Taking with respect to such Leased
Property during the related Lease Term shall be promptly paid to the related
Lessee, and all rights of Lessor in Awards not then received shall be assigned
to Lessee by Lessor.
Section 10.3 CASUALTY. If a Casualty shall occur which is not an Event
of Loss, the related Lessee shall rebuild and restore the affected Leased
Property, will complete the same prior to the Lease Termination Date, and will
cause the condition set forth in Section 3.5 (c) of the Master Agreement to be
fulfilled with respect to such restoration and rebuilding prior to the Lease
Termination Date, regardless of whether insurance proceeds received as a result
of such Casualty are sufficient for such purpose.
Section 10.4 CONDEMNATION. If a Condemnation shall occur which is not
an Event of Taking, the related Lessee shall rebuild and restore the affected
Leased Property, will complete the same prior to the Lease Termination Date, and
will cause the condition set forth in Section 3.5 (c) of the Master Agreement to
be fulfilled with respect to such restoration and rebuilding prior to the Lease
Termination Date.
Section 10.5 VERIFICATION OF RESTORATION AND REBUILDING. In the event
of Casualty or Condemnation that involves, or is reasonably expected to involve,
repair or rebuilding costs in excess of $1,000,000, to verify the related
Lessee's compliance with the foregoing SECTION 10.3 or 10.4, as appropriate,
Lessor, the Agent, the Lenders and their respective authorized representatives
may, upon five (5) Business Days' notice to such Lessee, make a reasonable
number of inspections of the affected Leased Property with respect to (i) the
extent of the Casualty or Condemnation and (ii) the restoration and rebuilding
of the related Building and the Land. All actual and reasonable out-of-pocket
costs of such inspections incurred by Lessor, the Agent or any Lender will be
paid by the related Lessee promptly after written request. No such inspection
shall unreasonably interfere with the related Lessee's operations or the
operations of any other occupant of such Leased Property. None of the inspecting
parties shall have any duty to make any such inspection or inquiry and none of
the inspecting parties shall incur any liability or obligation by reason of
making or not making any such inspection or inquiry.
Section 10.6 APPLICATION OF PAYMENTS. All proceeds (except for
payments under insurance policies maintained other than pursuant to ARTICLE VIII
of this Lease) received at any time by Lessor, any Lessee or the Agent from any
insurer, Governmental Authority or other Person with respect to any Condemnation
or Casualty to any Leased Property or any part thereof or with respect to an
Event of Loss or an Event of Taking, PLUS the amount of any payment that
13
would have been due from an insurer but for a Lessee's self-insurance or
deductibles ("LOSS PROCEEDS"), shall (except to the extent SECTION 10.9 applies)
be applied as follows:
(a) In the event the related Lessee purchases such Leased
Property pursuant to SECTION 10.1 or SECTION 10.2, such Loss Proceeds
shall be applied as set forth in SECTION 10.1 or SECTION 10.2, as the
case may be;
(b) In the event of a Casualty at such time when no Event of
Default has occurred and is continuing and the related Lessee is
obligated to repair and rebuild such Leased Property pursuant to
SECTION 10.3, such Lessee may, in good faith and subsequent to the date
of such Casualty, certify to Lessor and to the applicable insurer that
no Event of Default has occurred and is continuing, in which event the
applicable insurer shall pay the Loss Proceeds to such Lessee, unless
the estimated cost of restoration exceeds the greater of $5,000,000 or
50% of the original cost of such Leased Property, in which case such
Loss Proceeds shall be paid to the Agent and shall be promptly released
to the related Lessee upon certification by such Lessee to the Agent
that such Lessee has incurred costs in the amount requested to be
released for repair and rebuilding of such Leased Property;
(c) In the event of a Condemnation at such time when no Event
of Default has occurred and is continuing and the related Lessee is
obligated to repair and rebuild such Leased Property pursuant to
SECTION 10.4, such Lessee may, in good faith and subsequent to the date
of such Condemnation, certify to Lessor and the Agent that no Event of
Default has occurred and is continuing, in which event the applicable
Award shall be paid over to such Lessee, unless the estimated cost of
restoration exceeds the greater of $5,000,000 or 50% of the original
cost of such Leased Property, in which case such Loss Proceeds shall be
paid to the Agent and shall be promptly released to the related Lessee
upon certification by such Lessee to the Agent that such Lessee has
incurred costs in the amount requested to be released for repair and
rebuilding of such Leased Property; and
(d) As provided in SECTION 10.8, if such section is
applicable.
During any period of repair or rebuilding pursuant to this ARTICLE X,
this Lease will remain in full force and effect and Basic Rent shall continue to
accrue and be payable without abatement or reduction. Each Lessee shall maintain
records setting forth information relating to the receipt and application of
payments in accordance with this SECTION 10.6. Such records shall be kept on
file by each Lessee at its offices and shall be made available to Lessor, the
Lenders and the Agent upon request.
Section 10.7 PROSECUTION OF AWARDS. (a) If any Condemnation shall
occur, the party receiving the notice of such Condemnation shall give to the
other party and the Agent promptly, but in any event within thirty (30) days
after the occurrence thereof, written notice of such occurrence and the date
thereof, generally describing the nature and extent of such
14
Condemnation. With respect to any Event of Taking or any Condemnation, the
related Lessee shall control the negotiations with the relevant Governmental
Authority as to any proceeding in respect of which Awards are required, under
SECTION 10.6, to be assigned or released to such Lessee, unless an Event of
Default shall have occurred and be continuing, in which case (i) the Agent (or
Lessor if the Loans have been fully paid) shall control such negotiations; and
(ii) such Lessee hereby irrevocably assigns, transfers and sets over to Lessor
all rights of such Lessee to any Award on account of any Event of Taking or any
Condemnation and, if there will not be separate Awards to Lessor and such Lessee
on account of such Event of Taking or Condemnation, irrevocably authorizes and
empowers the Agent (or Lessor if the Loans have been fully paid) during the
continuance of an Event of Default, with full power of substitution, in the name
of such Lessee or otherwise (but without limiting the obligations of such Lessee
under this ARTICLE X), to file and prosecute what would otherwise be such
Lessee's claim for any such Award and to collect, receipt for and retain the
same. In any event Lessor and the Agent may participate in such negotiations,
and no settlement will be made without the prior consent of the Agent (or Lessor
if the Loans have been fully paid), not to be unreasonably withheld.
(b) Notwithstanding the foregoing, each Lessee may prosecute, and
Lessor shall have no interest in, any claim with respect to such Lessee's
personal property and equipment not financed by or otherwise property of Lessor,
business interruption or similar award and such Lessee's relocation expenses.
Section 10.8 APPLICATION OF CERTAIN PAYMENTS NOT RELATING TO AN EVENT
OF TAKING. In case of a requisition for temporary use of all or a portion of any
Leased Property which is not an Event of Taking, this Lease shall remain in full
force and effect with respect to such Leased Property, without any abatement or
reduction of Basic Rent, and the Awards for such Leased Property shall, unless
an Event of Default has occurred and is continuing, be paid to the related
Lessee.
Section 10.9 OTHER DISPOSITIONS. Notwithstanding the foregoing
provisions of this ARTICLE X, so long as an Event of Default shall have occurred
and be continuing, any amount that would otherwise be payable to or for the
account of, or that would otherwise be retained by, Lessee pursuant to this
ARTICLE X shall be paid to the Agent (or Lessor if the Loans have been fully
paid) as security for the obligations of the Lessees under this Lease and, at
such time thereafter as no Event of Default shall be continuing, such amount
shall be paid promptly to the related Lessee to the extent not previously
applied by Lessor or the Agent in accordance with the terms of this Lease or the
other Operative Documents.
Section 10.10 NO RENT ABATEMENT. Rent shall not ▇▇▇▇▇ hereunder by
reason of any Casualty, any Event of Loss, any Event of Taking or any
Condemnation of any Leased Property, and each Lessee shall continue to perform
and fulfill all of such Lessee's obligations, covenants and agreements hereunder
notwithstanding such Casualty, Event of Loss, Event of Taking or Condemnation
until the Lease Termination Date.
15
ARTICLE XI.
INTEREST CONVEYED TO LESSEES
Notwithstanding anything contained in this Lease to the contrary, in
the event there is a conflict between other provisions of this Lease and this
ARTICLE XI, this ARTICLE XI shall control. Each Lessee and Lessor intend that
this Lease be treated, for accounting purposes, as an operating lease. For
purposes of federal and state income taxes, and commercial and bankruptcy law,
each Lessee and Lessor intend that the transaction represented by this Lease be
treated as a financing transaction; for such purposes, it is the intention of
the parties hereto (i) that this Lease be treated as a mortgage or deed of trust
(whichever is applicable in the jurisdictions in which the Leased Properties are
located) and security agreement, encumbering the Leased Properties, and that
each Lessee, as grantor, hereby grants to Lessor, as mortgagee or beneficiary
and secured party, or any successor thereto, a first and paramount Lien on each
Leased Property in which such Lessee has an interest, (ii) that Lessor shall
have, as a result of such determination, all of the rights, powers and remedies
of a mortgagee, deed of trust beneficiary or secured party available under
Applicable Law to take possession of and sell (whether by foreclosure or
otherwise) any Leased Property, (iii) that the effective date of such mortgage,
security deed or deed of trust shall be the effective date of this Lease, or the
related Lease Supplement, if later, (iv) that the recording of this Lease or a
Lease Supplement shall be deemed to be the recording of such mortgage, security
deed or deed of trust, (v) that the obligations secured by such mortgage,
security deed or deed of trust shall include the Funded Amounts and all Basic
Rent and Supplemental Rent hereunder and all other obligations of and amounts
due from each Lessee hereunder and under the Operative Documents and (vi) that
the related Lessee will be treated as the owner of the Leased Properties leased
by such Lessee for tax purposes, and that Lessor and the related Lessee shall
each report the transactions contemplated by this Lease consistent with such
treatment and shall take no position contrary thereto, unless otherwise required
by a determination pursuant to Section 1313 of the Code or similar provision of
state or local law.
ARTICLE XII.
EVENTS OF DEFAULT
The following events shall constitute Events of Default (whether any
such event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body):
(a) any Lessee shall fail to make any payment of Basic Rent within five
(5) days after the date that such Basic Rent is due;
(b) any Lessee shall fail to make any payment of Rent (other than Basic
Rent and other than as set forth in CLAUSE (c)) or any other amount payable
hereunder or under any of the other Operative Documents (other than Basic Rent
and other than as set forth in CLAUSE (c)), and
16
such failure shall continue for a period of ten days after written notice
thereof from Lessor or the Agent to ADESA;
(c) any Lessee shall fail to pay the Funded Amount or Lease Balance
when due pursuant to SECTION 10.1, 10.2, 14.1 or 14.2, or any Lessee shall fail
to pay the Recourse Deficiency Amount when required pursuant to ARTICLE XIV or
the Construction Agent shall fail to make any payment when due under the
Construction Agency Agreement;
(d) any Lessee shall fail to maintain insurance as required by ARTICLE
VIII hereof, and such failure shall continue until the earlier of (i) fifteen
(15) days after written notice thereof from Lessor and (ii) the day immediately
preceding the date on which any applicable insurance coverage would otherwise
finally lapse or terminate;
(e) there shall occur any default or event of default with respect to,
or any event that might become such with notice or the passage of time or both,
or any similar event with respect to, or any event that requires the prepayment
(other than mandatory prepayment at a time when no event of default exists with
respect to such Indebtedness unless such mandatory prepayment results from a
change in control) of, Indebtedness of ADESA or any Subsidiary in the aggregate
amount of $10,000,000 or more, or of the Parent in the aggregate amount of
$20,000,000 or more, or the acceleration of the maturity thereof under the terms
of any evidence of Indebtedness or other agreement issued or assumed or entered
into by the Parent, ADESA or any Subsidiary, or under the terms of any
indenture, agreement or other instrument under which any such Indebtedness in
the aggregate amount of $10,000,000 or more (in the case of ADESA or any
Subsidiary) or $20,000,000 or more (in the case of the Parent) is evidenced,
issued, assumed, secured, or guaranteed, and such default, event of default or
event shall continue beyond any applicable period of grace;
(f) (i) if the entry of a decree or order by a court or agency or
supervisory authority of competent jurisdiction for the appointment of a
conservator, receiver, liquidator or trustee for the Parent, ADESA or any Lessee
in any bankruptcy, receivership, conservatorship, insolvency or similar
proceedings, or for the winding up or liquidation of its affairs, and any such
decree or order continues unstayed and in effect for a period of 90 consecutive
days, or (ii) the consent by the Parent, ADESA or any Lessee to the appointment
of a conservator, receiver, liquidator or trustee for the Parent, ADESA or any
Lessee in any bankruptcy, receivership, conservatorship, insolvency or similar
proceedings of or relating to the Parent, ADESA or any Lessee or relating to
substantially all its property, the admission in writing by the Parent, ADESA or
any Lessee of its inability to pay its debts generally as they become due, the
filing by the Parent, ADESA or any Lessee of a petition to take advantage of any
applicable bankruptcy, receivership, conservatorship, insolvency or similar
statue, the making by the Parent, ADESA or any Lessee of an assignment for the
benefit of its creditors or the voluntary suspension by the Parent, ADESA or any
Lessee of payment of its obligations.
17
(g) an event or condition shall occur or exist with respect to any Plan
or Multiemployer Plan if as a result of such event or condition, together with
all other such events or conditions, the Parent, ADESA or any ERISA Affiliate
shall incur or in the opinion of the Required Lenders shall be reasonably likely
to incur a liability to a Plan, a Multiemployer Plan or the PBGC (or any
combination of the foregoing) which could, in the determination of the Required
Lenders, have a Material Adverse Effect.
(h) (i) one or more non-interlocutory judgments, non-interlocutory
orders, decrees of arbitration awards is entered against the Parent, ADESA or
any Subsidiary involving in the aggregate a liability (to the extent not covered
by independent third-party insurance as to which the insurer does not dispute
coverage) as to any single or related series of transactions, incidents or
conditions, of $5,000,000 or more (in the case of ADESA and its Subsidiaries on
a consolidated basis) or $20,000,000 or more (in the case of the Parent) and the
same shall remain unsatisfied, unvacated and unstayed pending appeal for a
period of 60 days after the entry thereof; or
(ii) any non-monetary judgment, order or decree is entered against
the Parent, ADESA or any Subsidiary which does or would reasonably be expected
to have a material and adverse effect on the business, assets, liabilities,
financial condition, continued operations or business prospects of the Parent,
ADESA or any Subsidiary, and there shall be a period of 20 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect;
(i) if any of the Operative Documents shall be cancelled, terminated,
revoked or rescinded or any action at law, suit or in equity or other legal
proceeding to cancel, revoke or rescind any of the Operative Documents shall be
commenced by or on behalf of any Obligor, or any court or any other governmental
or regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the effect
that, any one or more of the Operative Documents is illegal, invalid or
unenforceable in accordance with the terms thereof in any material respect;
(j) any representation or warranty by ADESA or any Lessee in any
Operative Document or in any certificate or document delivered to Lessor, the
Agent or any Funding Party pursuant to any Operative Document shall have been
incorrect in any material respect when made; or
(k) any Lessee or ADESA shall fail in any material respect to timely,
perform or observe any covenant or agreement (not included in CLAUSE (a) through
(j) of this ARTICLE XII) to be performed or observed by it hereunder or under
any other Operative Document and such failure shall continue for a period of
thirty (30) days (or 10 Business Days in the case of financial covenants) after
such Lessee's or ADESA's receipt of written notice thereof from Lessor, the
Agent or any Funding Party or such Lessee or ADESA shall have knowledge of such
failure; PROVIDED, HOWEVER, that if such failure is capable of cure, but is not
capable of cure
18
within such thirty day period, so long as such Lessee or ADESA
shall be diligently pursuing such cure, such failure shall not constitute an
Event of Default unless it shall continue for a period of ninety (90) days after
such Lessee's or ADESA's receipt of notice or knowledge thereof.
ARTICLE XIII.
ENFORCEMENT
Section 13.1 REMEDIES. Upon the occurrence and during the continuance
of any Event of Default, Lessor may do one or more of the following as Lessor in
its sole discretion shall determine, without limiting any other right or remedy
Lessor may have on account of such Event of Default (including, without
limitation, the obligation of the Lessees to purchase the Leased Properties as
set forth in SECTION 14.3):
(a) Lessor may, by notice to ADESA, rescind or terminate this Lease as
of the date specified in such notice; however, (A) no reletting, reentry or
taking of possession of any Leased Property by Lessor will be construed as an
election on Lessor's part to terminate this Lease unless a written notice of
such intention is given to ADESA, (B) notwithstanding any reletting, reentry or
taking of possession, Lessor may at any time thereafter elect to terminate this
Lease for a continuing Event of Default, and (C) no act or thing done by Lessor
or any of its agents, representatives or employees and no agreement accepting a
surrender of any Leased Property shall be valid unless the same be made in
writing and executed by Lessor;
(b) Lessor may (i) demand that the Lessees, and the Lessees shall upon
the written demand of Lessor, return the Leased Properties promptly to Lessor in
the manner and condition required by, and otherwise in accordance with all of
the provisions of, ARTICLES VI and XIV hereof as if the Leased Properties were
being returned at the end of the Lease Term, and Lessor shall not be liable for
the reimbursement of any Lessee for any costs and expenses incurred by such
Lessee in connection therewith and (ii) without prejudice to any other remedy
which Lessor may have for possession of the Leased Properties, and to the extent
and in the manner permitted by Applicable Law, enter upon any Leased Property
and take immediate possession of (to the exclusion of the related Lessee) any
Leased Property or any part thereof and expel or remove the related Lessee and
any other person who may be occupying such Leased Property, by summary
proceedings or otherwise, all without liability to any Lessee for or by reason
of such entry or taking of possession, whether for the restoration of damage to
property caused by such taking or otherwise and, in addition to Lessor's other
damages, the Lessees shall be responsible for the actual and reasonable costs
and expenses of reletting, including brokers' fees and the reasonable
out-of-pocket costs of any alterations or repairs made by Lessor;
(c) Lessor may (i) sell all or any part of any Leased Property at
public or private sale, as Lessor may determine, free and clear of any rights of
any Lessee and without any duty to account to any Lessee with respect to such
action or inaction or any proceeds with respect
19
thereto (except to the extent required by Applicable Law or CLAUSE (ii) below if
Lessor shall elect to exercise its rights thereunder) in which event the related
Lessee's obligation to pay Basic Rent for such Leased Property hereunder for
periods commencing after the date of such sale shall be terminated or
proportionately reduced, as the case may be; and (ii) if Lessor shall so elect,
demand that the Lessees pay to Lessor, and the Lessees shall pay to Lessor, on
the date of such sale, as liquidated damages for loss of a bargain and not as a
penalty (the parties agreeing that Lessor's actual damages would be difficult to
predict, but the aforementioned liquidated damages represent a reasonable
approximation of such amount) (in lieu of Basic Rent due for periods commencing
on or after the Payment Date coinciding with such date of sale (or, if the sale
date is not a Payment Date, the Payment Date next preceding the date of such
sale)), an amount equal to (a) the excess, if any, of (1) the sum of (A) all
Rent due and unpaid to and including such Payment Date and (B) the Lease
Balance, computed as of such date, over (2) the net proceeds of such sale (that
is, after deducting all out-of-pocket costs and expenses incurred by Lessor, the
Agent or any Lender incident to such conveyance (including, without limitation,
all costs, expenses, fees, premiums and taxes described in SECTION 14.5(b)));
PLUS (b) interest at the Overdue Rate on the foregoing amount from such Payment
Date until the date of payment;
(d) Lessor may, at its option, not terminate this Lease, and continue
to collect all Basic Rent, Supplemental Rent, and all other amounts (including,
without limitation, the Funded Amount) due Lessor (together with all costs of
collection) and enforce the Lessees' obligations under this Lease as and when
the same become due, or are to be performed, and at the option of Lessor, upon
any abandonment of any Leased Property by Lessee or re-entry of same by Lessor,
Lessor may, in its sole and absolute discretion, elect not to terminate this
Lease with respect thereto and may make such reasonable alterations and
necessary repairs in order to relet such Leased Property, and relet such Leased
Property or any part thereof for such term or terms (which may be for a term
extending beyond the term of this Lease) and at such rental or rentals and upon
such other terms and conditions as Lessor in its reasonable discretion may deem
advisable; and upon each such reletting all rentals actually received by Lessor
from such reletting shall be applied to the Lessees' obligations hereunder in
such order, proportion and priority as Lessor may elect in Lessor's sole and
absolute discretion. If such rentals received from such reletting during any
Rent Period are less than the Rent to be paid during that Rent Period by the
Lessees hereunder, the Lessees shall pay any deficiency, as reasonably
calculated by Lessor, to Lessor on the Payment Date for such Rent Period;
(e) Lessor may, whether or not Lessor shall have exercised or shall
thereafter at any time exercise any of its rights under PARAGRAPH (b), (c) or
(d) of this ARTICLE XIII, demand, by written notice to ADESA specifying a date
(the "FINAL RENT PAYMENT DATE") not earlier than 30 days after the date of such
notice, that Lessees purchase, on the Final Rent Payment Date, all of the
remaining Leased Properties in accordance with the provisions of SECTIONS 14.2,
14.4 and 14.5; PROVIDED, HOWEVER, that (1) such purchase shall occur on the date
set forth in such notice, notwithstanding the provision in SECTION 14.2 calling
for such purchase to occur on the Lease Termination Date; and (2) Lessor's
obligations under SECTION 14.5(a) shall be limited to delivery
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of a special warranty deed and quit claim ▇▇▇▇ of sale of such Leased
Properties, without recourse or warranty, but free and clear of Lessor Liens and
the Liens of the Operative Documents;
(f) Lessor may exercise any other right or remedy that may be available
to it under Applicable Law, or proceed by appropriate court action (legal or
equitable) to enforce the terms hereof or to recover damages for the breach
hereof. Separate suits may be brought to collect any such damages for any Rent
Period(s), and such suits shall not in any manner prejudice Lessor's right to
collect any such damages for any subsequent Rent Period(s), or Lessor may defer
any such suit until after the expiration of the Lease Term, in which event such
suit shall be deemed not to have accrued until the expiration of the Lease Term;
or
(g) Lessor may retain and apply against Lessor's damages all sums which
Lessor would, absent such Event of Default, be required to pay to, or turn over
to, a Lessee pursuant to the terms of this Lease.
Section 13.2 REMEDIES CUMULATIVE; NO WAIVER; CONSENTS. To the extent
permitted by, and subject to the mandatory requirements of, Applicable Law, each
and every right, power and remedy herein specifically given to Lessor or
otherwise in this Lease shall be cumulative and shall be in addition to every
other right, power and remedy herein specifically given or now or hereafter
existing at law, in equity or by statute, and each and every right, power and
remedy whether specifically herein given or otherwise existing may be exercised
from time to time and as often and in such order as may be deemed expedient by
Lessor, and the exercise or the beginning of the exercise of any power or remedy
shall not be construed to be a waiver of the right to exercise at the same time
or thereafter any right, power or remedy. No delay or omission by Lessor in the
exercise of any right, power or remedy or in the pursuit of any remedy shall
impair any such right, power or remedy or be construed to be a waiver of any
default on the part of any Lessee or to be an acquiescence therein. Lessor's
consent to any request made by any Lessee shall not be deemed to constitute or
preclude the necessity for obtaining Lessor's consent, in the future, to all
similar requests. No express or implied waiver by Lessor of any Event of Default
shall in any way be, or be construed to be, a waiver of any future or subsequent
Potential Event of Default or Event of Default. To the extent permitted by
Applicable Law, each Lessee hereby waives any rights now or hereafter conferred
by statute or otherwise that may require Lessor to sell, lease or otherwise use
any Leased Property or part thereof in mitigation of Lessor's damages upon the
occurrence of an Event of Default or that may otherwise limit or modify any of
Lessor's rights or remedies under this ARTICLE XIII.
Section 13.3 PURCHASE UPON AN EVENT OF DEFAULT. Upon the occurrence
and during the continuance of an Event of Default, until such time as Lessor has
performed or undertaken material preparations for the sale or re-lease of the
Leased Properties, the Lessees may purchase all, but not less than all, of the
Leased Properties for the Lease Balance, including any amounts due pursuant to
Section 7.5 of the Master Agreement. Such purchase shall be made in accordance
with SECTION 14.5, upon not less than five (5) Business Days' written notice
(which
21
shall be irrevocable) to Lessor, which notice shall set forth the date of
purchase (which shall be a date no later than 30 days from the date of such
notice).
Section 13.4 LIMITATION ON LIABILITY. Notwithstanding the provisions
of SECTION 13.1, the Lessees' recourse liability to Lessor as a consequence of
the occurrence of a Limited Event of Default shall be limited to the payment by
the Lessees of the Recourse Deficiency Amount; PROVIDED, HOWEVER if Lessor used
commercial reasonable standards in determining that such Limited Event of
Default occurred, then the Lessor shall be entitled to exercise any of the
remedies set forth in SECTION 13.1.
ARTICLE XIV.
SALE, RETURN OR PURCHASE OF LEASED PROPERTY; RENEWAL
Section 14.1 LESSEE'S OPTION TO PURCHASE. (a) Subject to the terms,
conditions and provisions set forth in this ARTICLE XIV, each Lessee shall have
the option (the "PURCHASE OPTION"), to be exercised as set forth below, to
purchase from Lessor, Lessor's interest in all of the Leased Properties;
PROVIDED that, except as set forth in PARAGRAPH (b) below, such option must be
exercised with respect to all, but not less than all, of the Leased Properties
under all of the Lease Supplements. Such option must be exercised by written
notice to Lessor not later than twelve months prior to the Lease Termination
Date which notice shall be irrevocable; such notice shall specify the date that
such purchase shall take place, which date shall be a date occurring not less
than thirty (30) days after such notice or the Lease Termination Date (whichever
is earlier). If the Purchase Option is exercised pursuant to the foregoing,
then, subject to the provisions set forth in this ARTICLE XIV, on the applicable
purchase date or the Lease Termination Date, as the case may be, Lessor shall
convey to each Lessee, by special warranty deed and ▇▇▇▇ of sale, without
recourse or warranty (other than as to the absence of Lessor Liens and Liens of
the Operative Documents) and each Lessee shall purchase from Lessor, Lessor's
interest in the Leased Properties leased by such Lessee.
(b) Subject to the terms, conditions and provisions set forth in this
ARTICLE XIV, each Lessee shall have the option (the "PARTIAL PURCHASE OPTION"),
to be exercised as set forth below, to purchase from Lessor Lessor's interest in
any Leased Property leased by such Lessee; PROVIDED that, after giving effect to
such purchase no less than one Leased Property remain subject to this Lease.
Such option may be exercised by written notice to Lessor at any time prior to
the last twelve months of the term of this Lease, which notice shall be
irrevocable; such notice shall specify the Leased Property to be purchased and
the date that such purchase shall take place, which date shall be a date
occurring not less than thirty (30) days after such notice. If a Partial
Purchase Option is exercised pursuant to the foregoing, subject to the
provisions set forth in this ARTICLE XIV, on the applicable purchase date,
Lessor shall convey to the related Lessee, and such Lessee shall purchase from
Lessor, Lessor's interest in the Leased Property that is the subject of such
Partial Purchase Option pursuant to SECTION 14.5.
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Section 14.2 CONVEYANCE TO LESSEE. Unless (a) the Lessees shall have
properly exercised the Purchase Option and purchased the Leased Properties
pursuant to SECTION 14.1(a) or 14.1(b) hereof, or (b) the Lessees shall have
properly exercised the Remarketing Option and shall have fulfilled all of the
conditions of SECTION 14.6 hereof, then, subject to the terms, conditions and
provisions set forth in this ARTICLE XIV, each Lessee shall purchase from
Lessor, and Lessor shall convey to each Lessee, on the Lease Termination Date
all of Lessor's interest in the Leased Properties leased to such Lessee. Any
Lessee may designate, in a notice given to Lessor not less than ten (10)
Business Days prior to the closing of such purchase, or any purchase pursuant to
SECTION 14.1(a) or (b),(time being of the essence), the transferee to whom the
conveyance shall be made (if other than to such Lessee), in which case such
conveyance shall (subject to the terms and conditions set forth herein) be made
to such designee; PROVIDED, HOWEVER, that such designation of a transferee shall
not cause any Lessee to be released, fully or partially, from any of its
obligations under this Lease.
Section 14.3 ACCELERATION OF PURCHASE OBLIGATION. The Lessees shall be
obligated to purchase Lessor's interest in the Leased Properties immediately,
automatically and without notice upon the occurrence of any Event of Default
specified in CLAUSE (f) of ARTICLE XII, for the purchase price set forth in
SECTION 14.4. Upon the occurrence and during the continuance of any other Event
of Default, the Lessees shall be obligated to purchase Lessor's interest in the
Leased Properties for the purchase price set forth in SECTION 14.4 upon notice
of such obligation from Lessor.
Section 14.4 DETERMINATION OF PURCHASE PRICE. Upon the purchase by the
Lessees of Lessor's interest in the Leased Properties upon the exercise of the
Purchase Option or pursuant to SECTION 14.2 or 14.3, the aggregate purchase
price for all of the Leased Properties shall be an amount equal to the Lease
Balance as of the closing date for such purchase, including any amount due
pursuant to Section 7.5(f) of the Master Agreement as a result of such purchase.
Upon the purchase by a Lessee of Lessor's interest in a Leased Property upon the
exercise of a Partial Purchase Option, the purchase price for such Leased
Property shall be an amount equal to the Leased Property Balance for such Leased
Property as of the closing date for such purchase, including any amount due
pursuant to Section 7.5(f) of the Master Agreement as the result of such
purchase.
Section 14.5 PURCHASE PROCEDURE. (a) If a Lessee shall purchase
Lessor's interest in a Leased Property pursuant to any provision of this Lease,
(i) such Lessee shall accept from Lessor and Lessor shall convey such Leased
Property by a duly executed and acknowledged special warranty deed and quit
claim ▇▇▇▇ of sale of such a Leased Property in recordable form, (ii) upon the
date fixed for any purchase of Lessor's interest in Leased Property hereunder,
the related Lessee(s) shall pay to the order of the Agent (or Lessor if the
Loans have been paid in full) the Lease Balance or Leased Property Balance, as
applicable, including any amount due pursuant to Section 7.5 of the Master
Agreement as a result of such purchase, by wire transfer of immediately
available funds, (iii) Lessor will execute and deliver to the related Lessee
such other documents, including releases, affidavits, termination agreements and
termination statements, as
23
may be legally required or as may be reasonably requested by such Lessee in
order to effect such conveyance, free and clear of Lessor Liens and the Liens of
the Operative Documents and (iv) if such Leased Property is subject to a Ground
Lease, Lessor will execute and deliver to the related Lessee an assignment or
termination of such Ground Lease, as directed by such Lessee, in such form as
may be reasonably requested by such Lessee, and such Lessee shall pay any
amounts due with respect thereto under such Ground Lease.
(b) Each Lessee shall, at such Lessee's sole cost and expense, obtain
all required governmental and regulatory approval and consents and in connection
therewith shall make such filings as required by Applicable Law; in the event
that Lessor is required by Applicable Law to take any action in connection with
such purchase and sale, the Lessees shall pay prior to transfer all reasonable
out-of-pocket costs incurred by Lessor in connection therewith. Without limiting
the foregoing, all costs incident to such conveyance, including, without
limitation, each Lessee's attorneys' fees, Lessor's attorneys' fees,
commissions, each Lessee's and Lessor's escrow fees, recording fees, title
insurance premiums and all applicable documentary transfer or other transfer
taxes and other taxes required to be paid in order to record the transfer
documents that might be imposed by reason of such conveyance and the delivery of
such deed shall be borne entirely by and paid by the Lessees.
(c) Upon expiration or termination of this Lease resulting in
conveyance of Lessor's interest in the title to the Leased Properties to the
Lessees, there shall be no apportionment of rents (including, without
limitation, water rents and sewer rents), taxes, insurance, utility charges or
other charges payable with respect to the Leased Properties, all of such rents,
taxes, insurance, utility or other charges due and payable with respect to the
Leased Properties prior to termination being payable by the Lessees hereunder
and all due after such time being payable by the Lessees as the then owners of
the Leased Properties.
Section 14.6 OPTION TO REMARKET. Subject to the fulfillment of each of
the conditions set forth in this SECTION 14.6, the Lessees shall have the option
to market all of, but not less than all of, the Leased Properties for Lessor
(the "REMARKETING OPTION").
The Lessees' effective exercise and consummation of the Remarketing
Option shall be subject to the due and timely fulfillment of each of the
following provisions, the failure of any of which, unless waived in writing by
Lessor and the Lenders, shall render the Remarketing Option and the Lessees'
exercise thereof null and void, in which event, each Lessee shall be obligated
to perform its obligations under SECTION 14.2.
(a) Not later than twelve months prior to the Lease
Termination Date, ADESA shall give to Lessor and the Agent written
notice of the Lessees' exercise of the Remarketing Option.
(b) Not later than ten (10) Business Days prior to the Lease
Termination Date, each Lessee shall deliver to Lessor and the Agent an
environmental assessment of each
24
Leased Property leased by it dated not earlier than forty-five (45)
days prior to the Lease Termination Date. Such environmental assessment
shall be prepared by an environmental consultant selected by the
related Lessee and reasonably satisfactory to the Required Funding
Parties, shall be in form, detail and substance reasonably satisfactory
to the Required Funding Parties, and shall otherwise indicate no
degradation in environmental conditions beyond those described in the
related Environmental Audit and shall not include a recommendation for
further investigation to make such determination.
(c) On the date of ADESA's notice to Lessor and the Agent of
the Lessees' exercise of the Remarketing Option, each of the
Construction Conditions shall have been timely satisfied and no Event
of Default or Potential Event of Default shall exist, and thereafter,
no Event of Default or Potential Event of Default shall exist under
this Lease.
(d) Each Lessee shall have completed all Alterations,
restoration and rebuilding of the Leased Properties leased by it
pursuant to SECTIONS 6.1, 6.2, 10.3 and 10.4 (as the case may be) and
shall have fulfilled in all material respects all of the conditions and
requirements in connection therewith pursuant to said SECTIONS, in each
case by the date on which Lessor and the Agent receive ADESA's notice
of the Lessees' exercise of the Remarketing Option (time being of the
essence), regardless of whether the same shall be within such Lessee's
control.
(e) Upon request by the Agent, each Lessee shall promptly
provide any maintenance records relating to each Leased Property leased
by it to Lessor, the Agent and any potential purchaser, and shall
otherwise do all things necessary to deliver possession of such Leased
Property to the potential purchaser at the appropriate closing date.
Each Lessee shall allow Lessor, the Agent and any potential purchaser
reasonable access during normal business hours to any Leased Property
for the purpose of inspecting the same.
(f) On the Lease Termination Date, each Lessee shall surrender
the Leased Properties leased by it in accordance with SECTION 14.8
hereof.
(g) In connection with any such sale of the Leased Properties,
each Lessee will provide to the purchaser all customary "seller's"
indemnities requested by the potential purchaser (taking into account
the location and nature of the Leased Properties), representations and
warranties regarding title, absence of Liens (except Lessor Liens and
the Liens of the Operative Documents) and the condition of the Leased
Properties. Each Lessee shall fulfill all of the requirements set forth
in CLAUSE (b) of SECTION 14.5, and such requirements are incorporated
herein by reference. As to Lessor, any such sale shall be made on an
"as is, with all faults" basis without representation or warranty by
Lessor, other than the absence of Lessor Liens and the Liens of the
Operative Documents.
25
(h) In connection with any such sale of Leased Properties,
each Lessee shall pay directly, and not from the sale proceeds, all
prorations, credits, costs and expenses of the sale of the Leased
Properties leased by it, whether incurred by Lessor, any Lender, the
Agent or such Lessee, including without limitation, to the extent not
paid by the purchaser, the cost of all title insurance, surveys,
environmental reports, appraisals, transfer taxes, Lessor's and the
Agent's attorneys' fees, such Lessee's attorneys' fees, commissions,
escrow fees, recording fees, and all applicable documentary and other
transfer taxes.
(i) The Lessees, jointly and severally, shall pay to the Agent
on the Lease Termination Date (or to such other Person as Agent shall
notify Lessee in writing, or in the case of Supplemental Rent, to the
Person entitled thereto) an amount equal to the Recourse Deficiency
Amount, PLUS all accrued and unpaid Basic Rent and Supplemental Rent,
and all other amounts hereunder which have accrued prior to or as of
such date, in the type of funds specified in SECTION 3.3 hereof.
If the Lessees have exercised the Remarketing Option, the following additional
provisions shall apply: During the period commencing on the date twelve months
prior to the scheduled expiration of the Lease Term, one or more of the Lessees
shall, as nonexclusive agent for Lessor, use commercially reasonable efforts to
sell Lessor's interest in the Leased Properties and will attempt to obtain the
highest purchase price therefor. All such marketing of the Leased Properties
shall be at the Lessees' sole expense. Lessee promptly shall submit all bids to
Lessor and the Agent; the Agent will have the right to review the same; and the
Agent and Lessor will have the right to submit any one or more bids. All bids
shall be on an all-cash basis. In no event shall such bidder be a Lessee or any
Subsidiary or Affiliate of a Lessee. The written offer must specify the Lease
Termination Date as the closing date. If, and only if, the aggregate selling
price (net of closing costs and prorations, as reasonably estimated by the
Agent) is less than the difference between the Lease Balance at such time minus
the Recourse Deficiency Amount, then Lessor or the Agent may, in its sole and
absolute discretion, by notice to ADESA, given within 30 days of receipt of such
offer, reject such offer to purchase, in which event the parties will proceed
according to the provisions of SECTION 14.7 hereof. If neither Lessor nor the
Agent rejects such purchase offer as provided above, the closing of such
purchase of the Leased Properties by such purchaser shall occur on the Lease
Termination Date, contemporaneously with the Lessees' surrender of the Leased
Properties in accordance with SECTION 14.8 hereof, and the gross proceeds of the
sale (i.e., without deduction for any marketing, closing or other costs,
prorations or commissions) shall be paid directly to the Agent (or Lessor if the
Funded Amounts have been fully paid); PROVIDED, HOWEVER, that if the sum of the
gross proceeds from such sale plus the Recourse Deficiency Amount paid by the
Lessees on the Lease Termination Date pursuant to SECTION 14.6(i), minus any and
all reasonable costs and expenses (including broker fees, appraisal costs,
reasonable legal fees and transfer taxes) incurred by the Agent or Lessor in
connection with the marketing of the Leased Properties or the sale thereof
exceeds the Lease Balance as of such date, then the excess shall be paid to
ADESA on the Lease Termination Date.
26
No Lessee shall have the right, power or authority to bind Lessor in connection
with any proposed sale of the Leased Properties.
Section 14.7 REJECTION OF SALE. Notwithstanding anything contained
herein to the contrary, if Lessor or the Agent rejects the purchase offer for
the Leased Properties as provided in (and subject to the conditions set forth
in) SECTION 14.6, then (a) the Lessees, jointly and severally, shall pay to the
Agent the Recourse Deficiency Amount on the Lease Termination Date pursuant to
SECTION 14.6(i), and (b) Lessor shall retain title to the Leased Properties.
Section 14.8 RETURN OF LEASED PROPERTY. If Lessor retains title to any
Leased Property pursuant to SECTION 14.7 hereof, then each Lessee shall, on the
Lease Termination Date, and at its own expense, return possession of the Leased
Properties leased by it to Lessor for retention by Lessor or, if the Lessees
properly exercise the Remarketing Option and fulfill all of the conditions of
SECTION 14.6 hereof and neither Lessor nor the Agent rejects such purchase offer
pursuant to SECTION 14.6, then each Lessee shall, on such Lease Termination
Date, and at its own cost, transfer possession of the Leased Properties leased
by it to the independent purchaser thereof, in each case by surrendering the
same into the possession of Lessor or such purchaser, as the case may be, free
and clear of all Liens other than Lessor Liens and the Liens of the Operative
Documents, in as good condition as it was on the Completion Date therefor in the
case of new Construction, or the Closing Date (as modified by Alterations
permitted by this Lease), ordinary wear and tear excepted, and in compliance in
all material respects with Applicable Law. Each Lessee shall, on and within a
reasonable time before and after the Lease Termination Date, cooperate with
Lessor and the independent purchaser of any Leased Property leased by such
Lessee in order to facilitate the ownership and operation by such purchaser of
such Leased Property after the Lease Termination Date, which cooperation shall
include the following, all of which such Lessee shall do on or before the Lease
Termination Date or as soon thereafter as is reasonably practicable: providing
all books and records regarding the related Lessee's maintenance of such Leased
Property and all know-how, data and technical information relating thereto,
providing a copy of the Plans and Specifications within the possession of such
Lessee or ADESA, granting or assigning all licenses (to the extent assignable)
necessary for the operation and maintenance of such Leased Property, and
cooperating in seeking and obtaining all necessary Governmental Action. Each
Lessee shall have also paid the cost of all Alterations commenced prior to the
Lease Termination Date. The obligations of such Lessee under this ARTICLE XIV
shall survive the expiration or termination of this Lease.
Section 14.9 RENEWAL. Subject to the conditions set forth herein,
ADESA may, by written notice to Lessor and the Agent given not later than twelve
months and not earlier than sixteen months, prior to the then scheduled Lease
Termination Date, request to renew this Lease for five years, commencing on the
date following such Lease Termination Date. No later than the date that is 45
days after the date the request to renew has been delivered to each of Lessor
and the Agent, the Agent will notify ADESA whether or not Lessor and the Lenders
consent to such renewal request (which consent may be granted or denied in the
Lessor's and each Lender's sole discretion and may be conditioned on such
conditions precedent as may be specified by
27
Lessor or such Lender). If the Agent fails to respond in such time frame, such
failure shall be deemed to be a rejection of such request.
ARTICLE XV.
LESSEE'S EQUIPMENT
After any repossession of any Leased Property (whether or not this
Lease has been terminated), the related Lessee, at its expense and so long as
such removal of such trade fixture, personal property or equipment shall not
result in a violation of Applicable Law, shall, within a reasonable time after
such repossession or within ninety (90) days after such Lessee's receipt of
Lessor's written request (whichever shall first occur), remove all of such
Lessee's trade fixtures, personal property and equipment from such Leased
Property (to the extent that the same can be readily removed from such Leased
Property without causing material damage to such Leased Property); PROVIDED,
HOWEVER, that such Lessee shall not remove any such trade fixtures, personal
property or equipment that has been financed by Lessor and/or the Lenders under
the Operative Documents or otherwise constituting Leased Property (or that
constitutes a replacement of such property). Any of a Lessee's trade fixtures,
personal property and equipment not so removed by such Lessee within such period
shall be considered abandoned by such Lessee, and title thereto shall without
further act vest in Lessor, and may be appropriated, sold, destroyed or
otherwise disposed of by Lessor without notice to any Lessee and without
obligation to account therefor and the related Lessee will pay Lessor, upon
written demand, all reasonable costs and expenses incurred by Lessor in
removing, storing or disposing of the same and all costs and expenses incurred
by Lessor to repair any damage to such Leased Property caused by such removal.
Each Lessee will immediately repair at its expense all damage to such Leased
Property caused by any such removal (unless such removal is effected by Lessor,
in which event such Lessee shall pay all reasonable costs and expenses incurred
by Lessor for such repairs). Lessor shall have no liability in exercising
Lessor's rights under this ARTICLE XV, nor shall Lessor be responsible for any
loss of or damage to any Lessee's personal property and equipment.
ARTICLE XVI.
RIGHT TO PERFORM FOR LESSEE
If any Lessee shall fail to perform or comply with any of its
agreements contained herein and either such failure shall continue for a period
of 10 or more days after notice to ADESA or to such Lessee by Lessor or the
Agent (or such longer time as is reasonably necessary to cure such failure, so
long as ADESA or such Lessee is diligently prosecuting such cure) or such
failure has resulted in immediate material danger to any Leased Property or
Lessor's or the Agent's interest therein, Lessor, upon reasonable notice to
ADESA or such Lessee, may perform or comply with such agreement, and Lessor
shall not thereby be deemed to have waived any default caused by such failure,
and the amount of such payment and the amount of the actual and
28
reasonable expenses of Lessor (including actual and reasonable attorneys' fees
and expenses) incurred in connection with such payment or the performance of or
compliance with such agreement, as the case may be, shall be deemed Supplemental
Rent, payable by the related Lessee to Lessor within thirty (30) days after
written demand therefor.
ARTICLE XVII.
MISCELLANEOUS
Section 17.1 REPORTS. To the extent required under Applicable Law and
to the extent it is reasonably practical for a Lessee to do so, such Lessee
shall prepare and file in timely fashion, or, where such filing is required to
be made by Lessor or it is otherwise not reasonably practical for a Lessee to
make such filing, Lessee shall prepare and deliver to Lessor (with a copy to the
Agent) within a reasonable time prior to the date for filing and Lessor shall
file, any material reports with respect to the condition or operation of such
Leased Property that shall be required to be filed with any Governmental
Authority.
Section 17.2 BINDING EFFECT; SUCCESSORS AND ASSIGNS; SURVIVAL. The
terms and provisions of this Lease, and the respective rights and obligations
hereunder of Lessor and the Lessees, shall be binding upon their respective
successors, legal representatives and assigns (including, in the case of Lessor,
any Person to whom Lessor may transfer any Leased Property or any interest
therein in accordance with the provisions of the Operative Documents), and inure
to the benefit of their respective permitted successors and assigns, and the
rights granted hereunder to the Agent and the Lenders shall inure (subject to
such conditions as are contained herein) to the benefit of their respective
permitted successors and assigns. Each Lessee hereby acknowledges that Lessor
has assigned all of its right, title and interest to, in and under this Lease to
the Agent and the Lenders pursuant to the Loan Agreement and related Operative
Documents, and that all of Lessor's rights hereunder may be exercised by the
Agent.
Section 17.3 QUIET ENJOYMENT. Lessor covenants that it will not
interfere in the related Lessee's or any of its permitted sublessees' quiet
enjoyment of the Leased Properties in accordance with this Lease during the
Lease Term, so long as no Event of Default has occurred and is continuing. Such
right of quiet enjoyment is independent of, and shall not affect, Lessor's
rights otherwise to initiate legal action to enforce the obligations of the
Lessees under this Lease.
Section 17.4 DOCUMENTARY CONVENTIONS. The Documentary Conventions
shall apply to this Lease.
Section 17.5 LIABILITY OF LESSOR LIMITED. Except as otherwise
expressly provided below in this SECTION 17.5, it is expressly understood and
agreed by and between each Lessee, Lessor and their respective successors and
assigns that nothing herein contained shall be construed as creating any
liability of Lessor or any of its Affiliates or any of their respective
officers, directors, employees or agents, individually or personally, for any
failure to perform
29
any covenant, either express or implied, contained herein, all such liability
(other than that resulting from Lessor's gross negligence or willful misconduct,
except to the extent imputed to Lessor by virtue of any Lessee's action or
failure to act), if any, being expressly waived by each Lessee and by each and
every Person now or hereafter claiming by, through or under any Lessee, and
that, so far as Lessor or any of its Affiliates or any of their respective
officers, directors, employees or agents, individually or personally, is
concerned, each Lessee and any Person claiming by, through or under any Lessee
shall look solely to the right, title and interest of Lessor in and to the
Leased Properties and any proceeds from Lessor's sale or encumbrance thereof
(PROVIDED, HOWEVER, that no Lessee shall be entitled to any double recovery) for
the performance of any obligation under this Lease and under the Operative
Documents and the satisfaction of any liability arising therefrom (other than
that resulting from Lessor's gross negligence or willful misconduct, except to
the extent imputed to Lessor by virtue of any Lessee's action or failure to
act).
Section 17.6 ESTOPPEL CERTIFICATES. Each party hereto agrees that at
any time and from time to time during the Lease Term, it will promptly, but in
no event later than thirty (30) days after request by the other party hereto,
execute, acknowledge and deliver to such other party or to any prospective
purchaser (if such prospective purchaser has signed a commitment or letter of
intent to purchase any Leased Property or any part thereof or any Note),
assignee or mortgagee or third party designated by such other party, a
certificate stating (a) that this Lease is unmodified and in force and effect
(or if there have been modifications, that this Lease is in force and effect as
modified, and identifying the modification agreements); (b) the date to which
Basic Rent has been paid; (c) whether or not there is any existing default by
any Lessee in the payment of Basic Rent or any other sum of money hereunder, and
whether or not there is any other existing default by either party with respect
to which a notice of default has been served, and, if there is any such default,
specifying the nature and extent thereof; (d) whether or not, to the knowledge
of the signer, there are any setoffs, defenses or counterclaims against
enforcement of the obligations to be performed hereunder existing in favor of
the party executing such certificate and (e) other items that may be reasonably
requested; PROVIDED that no such certificate may be requested unless the
requesting party has a good faith reason for such request.
Section 17.7 NO JOINT VENTURE. Any intention to create a joint
venture, partnership or other fiduciary relationship between Lessor and any
Lessee is hereby expressly disclaimed.
Section 17.8 NO ACCORD AND SATISFACTION. The acceptance by Lessor of
any sums from any Lessee (whether as Basic Rent or otherwise) in amounts which
are less than the amounts due and payable by the Lessees hereunder is not
intended, nor shall be construed, to constitute an accord and satisfaction of
any dispute between Lessor and any Lessee regarding sums due and payable by any
Lessee hereunder, unless Lessor specifically deems it as such in writing.
Section 17.9 NO MERGER. In no event shall the leasehold interests,
estates or rights of any Lessee hereunder, or of the holder of any Notes secured
by a security interest in this Lease, merge with any interests, estates or
rights of Lessor in or to the Leased Properties, it being
30
understood that such leasehold interests, estates and rights of each Lessee
hereunder, and of the holder of any Notes secured by a security interest in this
Lease, shall be deemed to be separate and distinct from Lessor's interests,
estates and rights in or to the Leased Properties, notwithstanding that any such
interests, estates or rights shall at any time or times be held by or vested in
the same person, corporation or other entity.
Section 17.10 SURVIVAL. The obligations of the parties to be
performed under this Lease prior to the Lease Termination Date and the
obligations of the parties pursuant to ARTICLES III, X, XI, XIII, SECTIONS 14.2,
14.3, 14.4, 14.5, 14.8, Articles XV and XVI, and SECTION 17.5 shall survive the
expiration or termination of this Lease. The extension of any applicable statute
of limitations by Lessor, any Lessee, the Agent or any Indemnitee shall not
affect such survival.
Section 17.11 CHATTEL PAPER. To the extent that this Lease constitutes
chattel paper (as such term is defined in the Uniform Commercial Code in any
applicable jurisdiction), no security interest in this Lease may be created
through the transfer or possession of any counterpart other than the sole
original counterpart, which shall be identified as the original counterpart by
the receipt of the Agent.
Section 17.12 TIME OF ESSENCE. Time is of the essence of this Lease.
Section 17.13 RECORDATION OF LEASE. Each Lessee will, at its expense,
cause each Lease Supplement or a memorandum of lease in form and substance
reasonably satisfactory to Lessor and such Lessee (if permitted by Applicable
Law) to be recorded in the proper office or offices in the States and the
municipalities in which the Land is located.
Section 17.14 INVESTMENT OF SECURITY FUNDS. The parties hereto agree
that any amounts not payable to a Lessee pursuant to any provision of ARTICLE
VIII, X or XIV or this SECTION 17.14 shall be held by the Agent (or Lessor if
the Loans have been fully paid) as security for the obligations of the Lessees
under this Lease and the Master Agreement and of Lessor under the Loan
Agreement. At such time as such amounts are payable to the Lessee, such amounts,
net of any amounts previously applied to the Lessees' obligations hereunder or
under the Master Agreement (which application is hereby agreed to by Lessee),
shall be paid to the related Lessee. Any such amounts which are held by the
Agent (or Lessor if the Loans have been fully paid) pending payment to a Lessee
shall until paid to such Lessee, as provided hereunder or until applied against
the Lessees' obligations herein and under the Master Agreement and distributed
as provided in the Loan Agreement or herein (after the Loan Agreement is no
longer in effect) in connection with any exercise of remedies hereunder, be
invested by the Agent or Lessor, as the case may be, as directed from time to
time in writing by Lessee (PROVIDED, HOWEVER, if an Event of Default has
occurred and is continuing it will be directed by the Agent or, if the Loans
have been fully paid, Lessor) and at the expense and risk of the Lessees, in
Permitted Investments. Any gain (including interest received) realized as the
result of any such investment (net of any fees, commissions and other expenses,
if any, incurred in connection with such investment) shall be applied in the
same manner as the principal invested. Lessee upon demand shall pay to the
31
Agent or Lessor, as appropriate, the amount of any loss incurred in connection
with all such investments and the liquidation thereof.
Section 17.15 GROUND LEASES. Each Lessee will, at its expense, timely
perform all of the obligations of Lessor, in its capacity as ground lessee,
under each Ground Lease and, if requested by Lessor shall provide satisfactory
evidence to Lessor of such performance.
Section 17.16 LAND AND BUILDING. If any Building and the Land on which
such Building is located are subject to separate Lease Supplements, at any time
that the related Lessee exercises an option to purchase such Building or such
Land, or to renew this Lease with respect to such Building or such Land, or is
obligated to purchase such Building or such Land as a result of an Event of
Loss, an Event of Taking or an Event of Default, such purchase or renewal shall
be made simultaneously with respect to all of such Building and such Land.
Section 17.17 JOINT AND SEVERAL. Each obligation of each Lessee
hereunder shall be a joint and several obligation of all of the Lessees.
Section 17.18 IDB DOCUMENTATION. If any Leased Property is subject to
an IDB Lease, this Lease shall be deemed to be a sublease. Each Lessee hereby
agrees to perform all of its obligations and all obligations of Lessor under all
IDB Documentation related to any Leased Property. In the event that a Lessee
purchases any Leased Property that is the subject of IDB Documentation, such
Lessee shall prepay, or cause to be prepaid, the Bonds related to such Leased
Property or shall assume all obligations of the Lessor related to such IDB
Documentation and cause the Lessor to be released therefrom pursuant to
documentation reasonably satisfactory to the Lessor. The parties hereto hereby
acknowledge that the Leased Property located in San ▇▇▇▇▇▇▇ County, California
is not subject to any IDB Documentation.
[Signature page follows]
32
IN WITNESS WHEREOF, the undersigned have each caused this Lease
Agreement to be duly executed and delivered and attested by their respective
officers thereunto duly authorized as of the day and year first above written
Witnessed: ADESA CALIFORNIA, INC., as a Lessee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------- ------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Treasurer
----------------
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------
LEASE AGREEMENT S-1
ATLANTIC FINANCIAL GROUP, LTD.,
as Lessor
By: Atlantic Financial Managers,
Inc., its General Partner
Witnessed:
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------- ---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------- Title: President
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
LEASE
S-2 AGREEMENT
STATE OF INDIANA )
-------------- ) ss.:
COUNTY OF ▇▇▇▇▇▇ )
-------------
The foregoing Lease Agreement was acknowledged before me, the
undersigned Notary Public, in the County of ▇▇▇▇▇▇ this 27 day of July, 2001,
by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, as Treasurer, of ADESA CALIFORNIA, INC., a California
corporation, on behalf of the corporation.
[Notarial Seal] /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Notary Public
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Printed Name
County of Residence: ▇▇▇▇▇▇
---------
My commission expires: 4/9/09
------
▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇▇
NOTARY PUBLIC STATE OF INDIANA
▇▇▇▇▇▇ COUNTY
MY COMMISSION EXP. APR. 9, 2009
LEASE
▇-▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ )
--------- ) ss.:
COUNTY OF Dallas )
--------
The foregoing Lease Agreement was acknowledged before me, the
undersigned Notary Public, in the County of Dallas, TX, this 25 day of July,
2001, by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, as PRESIDENT of Atlantic Financial Group, Ltd.,
on behalf of such partnership.
[Notarial Seal]
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ --------------------
NOTARY PUBLIC NOTARY PUBLIC Notary Public
STATE OF TEXAS State of Texas
Comm. Exp. 12-17-2001
My commission expires:
----------
LEASE
N-2 AGREEMENT