EXHIBIT 10.17
FORM OF POHANKA LEASE
LEASE AGREEMENT
BETWEEN
CAPITAL AUTOMOTIVE L.P., LANDLORD
AND
[ ], TENANT
DATED: ____________, 1997
ARTICLE I
LEASE AGREEMENT, LEASED PROPERTY AND TERM..................................1
1.01 Lease Agreement...................................................1
1.02 Contingent Upon Acquisition of the Leased Property................2
1.03 Term..............................................................2
1.04 Holding Over......................................................3
1.05 Surrender.........................................................3
ARTICLE II
RENT.......................................................................4
2.01 Base Rent.........................................................4
2.02 Payment...........................................................4
2.03 Security Deposit..................................................4
2.04 Base Annual Rent Adjustment.......................................5
2.05 Additional Rent...................................................5
2.06 Place(s) of Payment of Rent; Direct Payment of Additional Rent....5
2.07 Net Lease.........................................................5
2.08 No Termination, Abatement, Etc....................................5
ARTICLE III
IMPOSITIONS AND UTILITIES..................................................6
3.01 Payment of Impositions............................................6
3.02 Definition of Impositions.........................................7
3.03 Utilities.........................................................8
3.04 Escrow of Impositions.............................................8
3.05 Discontinuance of Utilities.......................................9
3.06 Liens.............................................................9
ARTICLE IV
INSURANCE..................................................................9
4.01 Insurance.........................................................9
4.02 Insurance Limits.................................................11
4.03 Insurance Requirements...........................................11
4.04 Replacement Cost.................................................12
4.05 Blanket Policy...................................................12
4.06 No Separate Insurance. ..........................................12
4.07 Waiver of Subrogation............................................13
4.08 Mortgages........................................................13
4.09 Other Insurance Requirements.....................................13
ARTICLE V
INDEMNITY; SUBSTANCES OF CONCERN..........................................13
5.01 Tenant's Indemnification.........................................13
5.02 Substances of Concern............................................14
5.03 Audits...........................................................17
5.04 Landlord's Option Re: Compliance.................................17
5.05 Environmental Indemnification....................................17
5.06 Tenant's Cleanup Obligation......................................18
5.07 Existing Environmental Conditions................................18
5.08 Survival of Tenant's Obligations.................................18
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES............................................19
6.01 Use of Leased Properties.........................................19
6.02 Acceptance of Leased Properties..................................19
6.03 Conditions of Use and Occupancy..................................19
6.04 Financial Statements and Other Information.......................20
ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS.......................20
7.01 Maintenance......................................................20
7.02 Compliance with Laws.............................................20
7.03 Required Alterations.............................................21
7.04 Mechanics' Liens.................................................21
7.05 Replacements of Fixtures.........................................21
7.06 Encroachments; Restrictions......................................22
ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTIES................................22
8.01 Tenant's Right to Construct......................................22
8.02 Scope of Right...................................................23
8.03 Cooperation of Landlord..........................................24
8.04 Commencement of Construction.....................................24
8.05 Rights in Tenant Improvements....................................25
8.06 Personal Property................................................25
8.07 Requirements for the Tenant's Personal Property..................25
8.08 Financings of Capital Additions to a Leased Property.............27
ARTICLE IX
DEFAULTS AND REMEDIES.....................................................27
9.01 Events of Default................................................27
9.02 Remedies.........................................................29
9.03 Right of Set-Off.................................................32
9.04 Performance of Tenant's Covenants................................32
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9.05 Late Charge......................................................33
9.06 Litigation; Attorneys' Fees......................................33
9.07 Remedies Cumulative..............................................33
9.08 Escrows and Application of Payments..............................33
9.09 Power of Attorney................................................34
ARTICLE X
DAMAGE AND DESTRUCTION....................................................34
10.01 General..........................................................34
10.02 Landlord's Inspection............................................35
10.03 Landlord's Costs.................................................35
10.04 Rent Abatement...................................................35
10.05 Substantial Damage During Lease Term.............................36
10.06 Damage Near End of Term..........................................36
10.07 Risk of Loss.....................................................37
ARTICLE XI
CONDEMNATION..............................................................37
11.01 Total Taking.....................................................37
11.02 Partial Taking...................................................37
11.03 Restoration......................................................37
11.04 Landlord's Inspection............................................38
11.05 Award Distribution...............................................38
11.06 Temporary Taking.................................................39
ARTICLE XII
ADDITIONAL REPRESENTATIONS, WARRANTIES AND FINANCIAL
COVENANTS.................................................................39
12.01 Organization and Qualification...................................39
12.02 Material Agreements..............................................40
12.03 Changes in Condition.............................................41
12.04 Franchises, Licenses, etc........................................41
12.05 Litigation.......................................................41
12.06 Authorization and Enforceability.................................41
12.07 No Legal Obstacle to Lease.......................................42
12.08 Certain Business Representations.................................42
12.09 Certain Financial Covenants......................................44
12.10 Cash Flow Coverage Ratio Covenant................................44
12.11 Disclosure.......................................................44
12.12 Covenant Not to Acquire..........................................44
ARTICLE XIII
ASSIGNMENT AND SUBLETTING; ATTORNMENT ....................................46
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13.01 Prohibition Against Subletting and Assignment....................46
13.02 Changes of Control...............................................46
13.03 Operating/Service Agreements.....................................47
13.04 Assignment.......................................................48
13.05 REIT Limitations.................................................48
13.06 Attornment.......................................................49
13.07 Severance and Spin-Off...........................................49
ARTICLE XIV
ARBITRATION...............................................................50
14.01 Controversies....................................................50
14.02 Appointment of Arbitrators.......................................50
14.03 Arbitration Procedure............................................50
14.04 Expenses.........................................................50
14.05 Enforcement of the Arbitration Award.............................51
ARTICLE XV
QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT, ESTOPPEL CERTIFICATES.........................................51
15.01 Quiet Enjoyment..................................................51
15.02 Landlord Mortgages; Subordination................................51
15.03 Attornment.......................................................51
15.04 Estoppel Certificates............................................52
15.05 Waiver of Landlord's Lien........................................52
ARTICLE XVI
RIGHT OF FIRST OFFER......................................................53
16.01 Right of First Offer During Lease Term or Extension Term.........53
16.02 Right to Purchase at End of an Extension Term....................54
ARTICLE XVII
MISCELLANEOUS.............................................................55
17.01 Notices..........................................................55
17.02 Advertisement of a Leased Property...............................56
17.03 Landlord's Access................................................56
17.04 Entire Agreement.................................................56
17.05 Severability.....................................................57
17.06 Captions and Headings............................................57
17.07 Governing Law....................................................57
17.08 Memorandum of Lease or Certain Rights Under the Lease............57
17.09 Waiver...........................................................57
17.10 Assignment; Binding Effect.......................................57
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17.11 Consents and Approvals...........................................57
17.12 Single Property..................................................58
17.13 Modification.....................................................58
17.14 Incorporation by Reference.......................................58
17.15 No Merger........................................................58
17.16 Force Majeure....................................................58
17.17 Laches...........................................................58
17.18 Waiver of Jury Trial.............................................58
17.19 Permitted Contests...............................................59
17.20 Construction of Lease............................................59
17.21 Counterparts.....................................................60
17.22 Relationship of Landlord and Tenant..............................60
EXHIBITS
A Leased Properties
B Permitted Liens
C Base Annual Rent Schedule
SCHEDULES
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
12.02 Material Agreements
12.03 Changes in Condition
15.02 Form of Subordination and Non-Disturbance Agreement
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LEASE AGREEMENT
This Lease Agreement ("Lease") dated as of the ______ day of November,
1997 by and between CAPITAL AUTOMOTIVE L.P., a Delaware limited partnership
("Landlord"), having its principal office at [__________________] and [
], a ___________ [corporation], having its principal office at
[________________] ("Tenant").
RECITALS
WHEREAS, Tenant or an Affiliate (as hereafter defined) has conveyed or
will convey to Landlord certain parcels of real estate and improvements thereon
upon which Tenant engages in motor vehicle retail and/or motor vehicle related
businesses (the "Business"), which parcels of real estate and improvements
thereon are described on Schedule A attached hereto and incorporated herein by
reference (each hereinafter a "Leased Property" or collectively, the "Leased
Properties"), and Landlord and Tenant desire to provide for the lease by
Landlord to Tenant of the Leased Properties; and
WHEREAS, Landlord and Tenant desire that each of the Leased Properties
shall be the subject of this Lease and be used by Tenant in its operation of the
Business; and
WHEREAS, this Lease provides that additional real estate and
improvements thereon may be made subject to the operation and effect of this
Lease, upon execution by Landlord and Tenant of a Lease Supplement designating
each such additional property as a Leased Property hereunder.
NOW, THEREFORE, in consideration of the foregoing premises and of
their respective agreements and undertakings herein, and of other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant agree as follows:
ARTICLE I
LEASE AGREEMENT, LEASED PROPERTY AND TERM
1.01 Lease Agreement. Landlord does hereby let and lease unto Tenant,
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and Tenant does hereby take and hire from Landlord, the Leased Properties, which
shall respectively consist of:
(a) The parcels of land described and located at the addresses listed
in Schedule A hereto, as more particularly described therein,
together with any additional parcels of real estate and
improvements thereon subsequently designated as a Leased Property
by the parties pursuant to a Lease Supplement as provided for
herein, together with all rights, titles, appurtenant interests,
covenants, licenses, privileges and benefits thereto belonging,
and any easements, rights-of-way, rights of ingress or egress or
other interests in, on, or to any land, highway, street, road or
avenue, open
or proposed, in, on, across, in front of, abutting or adjoining
such real property including, without limitation, any strips and
gores adjacent to or lying between such real estate and any
adjacent real estate (the "Land");
(b) All buildings, improvements, structures and Fixtures (as
hereinafter defined) now located or to be located or to be
constructed on the Land, including, without limitation,
sidewalks, landscaping, parking lots and structures, roads,
drainage and all above ground and underground utility structures
and conduits (on-site or off-site), equipment systems and other
so-called "infrastructure" improvements (the "Improvements");
(c) All equipment, machinery, fixtures, and other items of real
and/or personal property, including all components thereof,
located in, on or used in connection with, and permanently
affixed to or incorporated into, the Improvements, including,
without limitation, all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control,
waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection
equipment, and similar systems, all of which, to the greatest
extent permitted by law, are hereby deemed to constitute real
estate, together with all replacements, modifications,
alterations and additions thereto (collectively the "Fixtures");
and
(d) All easements, rights and appurtenances relating to the Land
and the Improvements.
SUBJECT, HOWEVER, to the liens, encumbrances, restrictions,
agreements, and other title matters listed or specifically referred to in
Schedule B ("Permitted Exceptions").
The Leased Properties shall however exclude all furniture, equipment,
inventory and items of moveable personal property attached to the Land or
Improvements that relate to the business being conducted on the Leased Property
which items may readily be removed without material damage to the Land and
Improvements whether or not such items might legally be considered to be
"fixtures" (all of which are owned by Tenant and shall hereinafter be defined as
the "Excluded Personal Property").
1.02 Contingent Upon Acquisition of the Leased Property. In the event
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this Lease is executed prior to the conveyance by Tenant or an Affiliate of the
Leased Property to Landlord, the parties acknowledge that the effectiveness of
this Lease in respect of such Leased Property is contingent upon the closing of
such conveyance (the "Commencement Date").
1.03 Term. The initial term of this Lease (the "Term") shall be for a
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fixed term of One Hundred and Twenty (120) months commencing on the Commencement
Date. The
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initial term for any Leased Property designated in a Lease Supplement shall
begin on the date of such Lease Supplement and expire at the end of the Term or
then current Extension Term (as hereafter defined), as the case may be. Tenant
shall have the right to extend this Lease for the Leased Properties as a group,
at Tenant's option, for one One Hundred and Twenty (120) month renewal term from
the expiration of the Term (the "First Extension Term"), provided that no Event
of Default (as defined in Section 9.01 hereof) shall exist and be continuing.
In addition, Tenant shall have the right to extend this Lease for the Leased
Properties as a group at Tenant's option, for a second One Hundred and Twenty
(120) month renewal term from the expiration of the First Extension Term (the
"Second Extension Term", each an "Extension Term", and collectively with the
First Extension Term, the "Extension Terms") provided that no Event of Default
(as defined in Section 9.01 hereof) shall exist and be continuing. Tenant shall
exercise the First Extension Term by written notice to Landlord no later than
twelve months prior to the end of the Term. Tenant shall exercise the Second
Extension Term by written notice to Landlord no later than twelve (12) months
prior to the end of the First Extension Term. Notwithstanding anything else to
the contrary in this Agreement, the Rent during the Second Extension Term shall
be the Fair Market Rent (as hereafter defined) for the Leased Property. Fair
Market Rent shall be determined as soon as possible after receipt by Landlord of
Tenant's notice of option exercise, on the basis of appraisals of independent
appraisers selected in accordance with the provisions of Section 16.02(b).
Tenant shall have the right, in its sole discretion, to rescind the exercise of
Tenant's option to extend the Lease for the Second Extension Term during a
period of five (5) business days after the determination of the Fair Market
Rent. If Tenant shall fail to exercise the right to rescind within such five
(5) day period, the election to extend shall be irrevocable and the Fair Market
Rent so determined shall be the Base Annual Rent during the Second Extension
Term notwithstanding any changes in the market rental rates, whether upward or
downward, which may occur after such determination. However, notwithstanding
anything else in this Agreement, Fair Market Rent shall become the Base Annual
Rent (as defined hereafter) and shall be subject to Base Annual Rent Adjustments
as set forth in Section 2.04.
1.04 Holding Over. Should Tenant, without the express consent of
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Landlord, continue to hold and occupy any Leased Property after the expiration
or earlier termination of the Term or any Extension Term, as the case may be,
such holding over beyond the Term and the acceptance or collection of Rent (as
defined hereinafter) by Landlord shall operate and be construed as creating a
tenancy from month-to-month and not for any other term whatsoever. During any
such holdover period Tenant shall pay to Landlord for each month (or portion
thereof) Tenant remains in such Leased Property, in lieu of the Base Annual Rent
(as defined hereafter) for such Leased Property, an amount equal to the sum of
one-twelfth (1/12) of (i) one hundred seven percent (107%) of such Base Annual
Rent (the "Holdover Rate"), and (ii) as applicable, one hundred percent (100%)
of the Additional Rent (as defined hereinafter) for such Leased Property and
Other Additional Rent (as defined hereinafter) for such Leased Property, each as
in effect on the expiration date. Said month-to-month tenancy may be terminated
by Landlord by giving Tenant thirty (30) days written notice, and at any time
thereafter Landlord may re-enter and take possession of such Leased Property.
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1.05 Surrender. Except as a result of (a) Tenant Improvements and
---------
Capital Additions (as defined hereinafter); (b) normal and reasonable wear and
tear (subject to the obligation of Tenant to maintain each Leased Property in
good order and repair during the Term); and (c) casualty, taking or other damage
and destruction not required to be repaired by Tenant, Tenant shall surrender
and deliver up each Leased Property at the expiration or termination of the Term
or the Extension Term therefor, as the case may be, broom clean, in good order
and repair, free of the Excluded Personal Property and any additional items of
Tenant's personal property (together with the Excluded Personal Property, the
"Tenant's Personal Property"), all of which Tenant shall remove prior to such
surrender and delivery, and in as good order and condition as of the
Commencement Date.
ARTICLE II
RENT
2.01 Base Rent. Tenant shall pay Landlord annual base rent (the "Base
---------
Annual Rent") as to the Leased Property for each year during the Term or the
Extension Term (each such year a "Lease Year"), which Base Annual Rent shall be
subject to upward adjustment pursuant to Section 2.04. In the first Lease Year,
Base Annual Rent shall be in the amount set forth on Schedule A (the "Initial
Base Annual Rent"), paid to Landlord in twelve equal monthly installments.
2.02 Payment. Tenant shall pay Landlord the Base Annual Rent as to
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the Leased Property for each Lease Year, without notice, demand, set-off or
counterclaim in advance, in lawful money of the United States of America and
payable in consecutive monthly installments commencing on the Commencement Date
and thereafter on the first day of each month during the Term. Tenant will, to
the extent that such method of payment is compatible with its business
practices, make such payments by direct deposit of immediately available funds
to the account set forth in Exhibit 2.02 (which Exhibit 2.02 may be modified by
Landlord from time to time upon Notice (as hereafter defined) to Tenant).
2.03 Security Deposit. Prior to the Commencement Date, Tenant shall
----------------
deliver to Landlord an amount equal to one-twelfth (1/12th) of the Base Annual
Rent, which amount shall be held by Landlord as security (the "Security
Deposit") for the performance of Tenant's payment and other obligations under
this Lease. Upon an Event of Default and the continuance thereof, Landlord shall
have the right, but not the obligation, to apply the Security Deposit as set
forth in Section 9.08. Landlord shall return the Security Deposit, without
interest, after expiration of this Lease, if Tenant has fully and faithfully
carried out all of the terms, covenants and conditions hereof. In the event that
Landlord eliminates its standard business policy of requiring security deposits
from tenants, then Landlord shall refund the Security Deposit to Tenant within
thirty (30) days of such policy change.
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2.04 Base Annual Rent Adjustment.
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(a) The Base Annual Rent shall be adjusted during the Lease Term
or the Extension Terms under the procedures set forth in
Exhibit 2.04 (the "Base Annual Rent Adjustment").
(b) As used in Exhibit 2.04, the "Index" shall mean the CPI-U
published by the United States Department of Labor, Bureau
of Labor Statistics Consumer Price Index for All Urban
Consumers, U.S. City Average. If at any time during the Term
or the Extension Term, as the case may be, the Index shall
be discontinued, Landlord shall select a substitute index,
being an existing official index published by the Bureau of
Labor Statistics or its successor or another, similar
governmental agency, which index is most nearly equivalent
to the Index.
2.05 Additional Rent. As to each Leased Property, in addition to the
---------------
Base Annual Rent, Tenant shall pay all other amounts, liabilities, obligations
and Impositions (as hereinafter defined) which Tenant assumes or agrees to pay
under this Lease and any fine, penalty, interest, charge and cost which may be
added for nonpayment or late payment of such items (collectively, the
"Additional Rent").
2.06 Place(s) of Payment of Rent; Direct Payment of Additional Rent.
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The Base Annual Rent and Additional Rent are hereinafter referred to as "Rent."
Landlord shall have all legal, equitable and contractual rights, powers and
remedies provided in this Lease or by statute or otherwise in the case of
nonpayment of the Rent for each Leased Property. Tenant shall make all payments
of Rent at Landlord's address set forth in Section 17.01 or as Landlord may
otherwise from time to time direct in writing, or, if Landlord shall direct
Tenant, directly to a bank account specified by Landlord to Tenant in writing.
At the direction of the Landlord, Tenant shall make payments of Additional Rent
directly to the person or persons to whom such amount is owing at the time and
times when such payments are due, and Tenant shall give to Landlord such
evidence of such direct payments as Landlord shall reasonably request.
2.07 Net Lease. This Lease shall be deemed and construed to be an
---------
"absolute net lease" or "triple net lease," (i.e. that Tenant shall pay all
costs and expenses related to the ownership and operations of each Leased
Property, thereby leaving all Rent as an absolutely net return to Landlord) and
as to each Leased Property, Tenant shall pay all Rent, Impositions, and other
charges and expenses in connection with such Leased Property throughout the Term
and any Extension Term, without abatement, deduction or set-off.
2.08 No Termination, Abatement, Etc. Except as otherwise specifically
------------------------------
provided herein, Tenant shall remain bound by this Lease in accordance with its
terms. Except as otherwise specifically provided herein, Tenant shall not,
without the prior written consent of
5
Landlord, modify, surrender or terminate this Lease as to any Leased Property,
nor seek nor be entitled to any abatement, deduction, deferment or reduction of
Rent, or set-off against the Rent as to any Leased Property for any reason
whatsoever. Except as specifically provided herein, the obligations of Landlord
and Tenant shall not be affected by reason of: (a) the lawful or unlawful
prohibition of, or restriction upon, Tenant's use of any Leased Property, or any
part thereof, the interference with such use by any person, corporation,
partnership or other entity, or by reason of eviction by paramount title; (b)
any claim which Tenant has or might have against Landlord or by reason of any
default or breach of any warranty by Landlord under this Lease or any other
agreement between Landlord and Tenant, or to which Landlord and Tenant are
parties; (c) any bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding up or other proceeding affecting
Landlord or any assignee or transferee of Landlord; (d) any damage to, or
destruction of, any Leased Property or any portion thereof for whatever cause,
or any taking of the Leased Property or any portion thereof; or (e) any other
cause, whether similar or dissimilar to any of the foregoing, other than a
discharge of Tenant from any such obligations as a matter of law. Except as
otherwise specifically provided herein, and to the maximum extent permitted by
law, Tenant hereby specifically waives all rights, including but not limited to
any rights under any statute relating to rights of tenants in the jurisdictions
where the Leased Properties are located, which may now be conferred upon it by
law, relating to: (a) the modification, surrender or termination of this Lease,
or the quitting or surrender of any Leased Property or any portion thereof; (b)
any abatement, reduction, suspension or deferment of the Rent or other sums
payable by Tenant hereunder; or (c) any rights of redemption. As to each Leased
Property, the obligations of Landlord and Tenant hereunder shall be separate and
the Rent and all other sums shall continue to be payable in all events unless
the obligations to pay the same shall be terminated pursuant to the express
provisions of this Lease or by termination of this Lease other than by reason of
an Event of Default.
ARTICLE III
IMPOSITIONS AND UTILITIES
3.01 Payment of Impositions. Subject to the adjustments set forth
----------------------
herein, Tenant shall pay, in the manner set forth in Section 3.04, as Additional
Rent, to the Landlord an amount equal to the amount necessary to pay all
Impositions (as hereinafter defined) that may be levied or become a lien on any
Leased Property or any part thereof at any time (whether prior to or during the
Term), without regard to prior ownership of said Leased Property, before the
same becomes delinquent. Tenant's obligation to pay such Impositions shall be
deemed absolutely fixed upon the date such I mpositions become a lien upon any
Leased Property or any part thereof. Tenant, at its expense, shall prepare and
file all tax returns and reports in respect of any Imposition as may be required
by governmental authorities, provided, however, that Tenant shall provide to
Landlord copies of all filings of such tax returns or reports in respect of any
real or personal property owned by Landlord. Tenant shall be entitled to any
refund due in respect of such Impositions from any taxing authority if no Event
of Default shall have occurred hereunder and be continuing. Any refunds in
respect of such Impositions retained by Landlord due to an
6
Event of Default shall be applied as provided in Section 9.08. Landlord and
Tenant shall, upon request of the other, provide such data as is maintained by
the party to whom the request is made with respect to a Leased Property as may
be necessary to prepare any required tax returns and reports. In the event
governmental authorities classify any property covered by this Lease as personal
property, Landlord and Tenant shall file all personal property tax returns in
such jurisdictions where it may legally so file with respect to their respective
owned personal property. Landlord, to the extent it possesses the same, and
Tenant, to the extent it possesses the same, will provide the other party, upon
request, with cost and depreciation records necessary for filing such returns or
reports for any property so classified as personal property. To the extent that
Landlord is legally required to file personal property tax returns, Tenant will
be provided with copies of assessment notices indicating a value in excess of
the reported value in sufficient time for Tenant to file a protest. Tenant may,
upon notice to Landlord, at Tenant's option and at Tenant's sole cost and
expense, protest, appeal, or institute such other proceedings as Tenant may deem
appropriate to effect a reduction of real estate or personal property
assessments and Landlord, at Tenant's expense as aforesaid, shall fully
cooperate with Tenant in such protest, appeal, or other action. Tenant shall
provide Landlord copies of all materials filed or presented in connection with
any such proceeding. Tenant shall promptly reimburse Landlord for all taxes
paid by Landlord, which were not paid with deposits received from Tenant, upon
receipt of ▇▇▇▇▇▇▇▇ accompanied by copies of a ▇▇▇▇ therefor and payments
thereof which identify the property with respect to which such payments are
made. Impositions imposed with respect to the tax-fiscal period during which
the Term commences and terminates as to each Leased Property shall be adjusted
and prorated between Landlord and Tenant on a per diem basis, with Tenant being
obligated to pay its pro rata share from and including the Commencement Date to
and including the expiration or termination date of the Term or Extension Term,
as the case may be, whether or not such Imposition is imposed before or after
such commencement or termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination. Tenant shall also pay to Landlord
a sum equal to the amount which Landlord may be caused to pay of any privilege
tax, sales tax, gross receipts tax, rent tax, occupancy tax or like tax
(excluding any tax based on net income), hereinafter levied, assessed, or
imposed by any federal, state, city, county or municipal or other local
governmental authority, or any subdivision thereof, upon or measured by rent or
other consideration required to be paid by Tenant under this Lease.
3.02 Definition of Impositions. "Impositions" means, collectively:
-------------------------
(a) taxes (including without limitation, all real estate and personal property
ad valorem (whether assessed as part of the real estate or separately assessed
as unsecured personal property), sales and use, business or occupation, single
business, gross receipts, transaction, privilege, rent or similar taxes, but not
including income or franchise or excise taxes payable with respect to Landlord's
receipt of Rent); (b) assessments, whether in the nature of a special assessment
or otherwise (including, without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not to be completed within the Term or any Extension
Term, as the case may be); (c) ground rents, water, sewer or other rents and
charges, excises, tax levies, and fees (including, without limitation, license,
permit, inspection, authorization and similar fees); (d) to the extent they may
become a lien on a Leased
7
Property, all taxes imposed on Tenant's operations of such Leased Property
including without limitation, employee withholding taxes, income taxes and
intangible taxes; and (e) all other governmental charges, in each case whether
general or special, ordinary or extraordinary, or foreseen or unforseen, of
every character in respect of each Leased Property or any part thereof, the
Business conducted by Tenant thereon, and/or the Rent (including all interest
and penalties thereon due to any failure in payment by Tenant), which at any
time prior to, during or in respect of the Term or any Extension Term, as the
case may be, hereof may be assessed or imposed on or in respect of or be a lien
upon (i) Landlord or Landlord's interest in any Leased Property or any part
thereof; (ii) any Leased Property or any part thereof or any rent therefrom or
any estate, right, title or interest therein; or (iii) any occupancy, operation,
use or possession of, or sales from, or activity conducted on, or in connection
with any Leased Property or the leasing or use of any Leased Property or any
part thereof. Tenant shall not, however, be required to pay: (x) any tax based
on net income (whether denominated as a franchise or capital stock or other tax)
imposed on Landlord or (y) except as provided in Section 13.01, any tax imposed
with respect to the sale, exchange or other disposition by Landlord of a Leased
Property or the proceeds thereof; provided, however, that if any tax,
assessment, tax levy or charge which Tenant is obligated to pay pursuant to the
first sentence of this definition and which is in effect at any time during the
Term hereof is totally or partially repealed, and a tax, assessment, tax levy or
charge set forth in clause (x) or (y) immediately above is levied, assessed or
imposed expressly in lieu thereof Tenant shall then pay such tax, levy, or
charge set forth in said clause (x) or (y).
3.03 Utilities. Tenant shall contract for, in its own name, and will
---------
pay, as Additional Rent all taxes, assessments, charges/deposits, and bills for
utilities, including without limitation charges for water, gas, oil, sanitary
and storm sewer, electricity, telephone service, trash collection, and all other
utilities which may be charged against the occupant of the Improvements during
the Term. Tenant shall at all times maintain that amount of heat necessary to
ensure against the freezing of water lines. Tenant hereby agrees to indemnify
and hold Landlord harmless from and against any liability or damages to the
utility systems of each Leased Property that may result from Tenant's failure to
maintain sufficient heat in the Improvements therefor.
3.04 Escrow of Impositions. Unless waived by written notice from
---------------------
Landlord to Tenant, Tenant shall thereafter deposit with Landlord on the first
day of each month during the Term hereof and any Extension Term, as the case may
be, a sum equal to one-twelfth (1/12th) of the Impositions assessed against such
Leased Property which sums shall be used by Landlord toward payment of such
Impositions. If, at the end of any applicable tax year, any such funds held by
Landlord are insufficient to make full payment of taxes or other Impositions for
which such funds are held, Tenant, on demand, shall pay to Landlord any
additional funds necessary to pay and discharge in full the obligations of
Tenant pursuant to the provisions of this Section. If, however, at the end of
any applicable tax year, such funds held by Landlord are in excess of the total
payment required to satisfy taxes or other Impositions for which such funds are
held, Landlord shall apply such excess amounts to a tax and Imposition escrow
fund for the next tax year. With respect to each Leased Property, if any such
excess exists following the expiration or
8
earlier termination of this Lease, and subject to Section 8.08 below, Landlord
shall promptly refund such excess amounts to Tenant. The receipt by Landlord of
the payment of such Impositions by and from Tenant shall only be as an
accommodation to Tenant and the taxing authorities, and shall not be construed
as rent or income to Landlord, Landlord serving, if at all, only as a conduit
for delivery purposes.
3.05 Discontinuance of Utilities. Landlord will not be liable for
---------------------------
damages to person or property or for injury to, or interruption of, business for
any discontinuance of utilities at any Leased Property nor will such
discontinuance in any way be construed as an eviction of Tenant from such Leased
Property or cause an abatement of Rent as to such Leased Property or operate to
release Tenant from any of Tenant's obligations as to such Leased Property under
this Lease. Notwithstanding the forgoing, however, Landlord shall be liable for
damages to person or property or for injury to, or interruption of business, for
any discontinuance of utilities at any Leased Property, in the event and to the
extent, such damages or injury are caused by the wilful misconduct of the
Landlord.
3.06 Liens. Subject to Section 17.19 relating to contests, Tenant
-----
shall not directly or indirectly create or allow to remain, and will promptly
discharge at its expense, any lien, encumbrance, attachment, title retention
agreement or claim upon any Leased Property or any attachment, levy, claim or
encumbrance in respect of any Rent provided under this Lease, not including,
however: (a) this Lease; (b) utility easements and road rights-of-way in the
customary form (i) provided the same do not adversely affect the intended use of
the Leased Properties (including the Improvements) and do not create a Material
Adverse Effect on the value of the Leased Properties or (ii) which result solely
from the action or inaction of Landlord; (c) zoning and building laws or
ordinances, provided they do not prohibit the use of the Leased Properties for
the Business and so long as the Leased Properties are in compliance with same;
(d) such encumbrances as are subsequently consented to in writing by Landlord,
but excluding liens in respect of Impositions required to be paid under Section
3.01; (e) liens for Impositions so long as (i) the same are not yet payable or
are payable without the addition of any fine or penalty or (ii) such liens are
being contested as permitted under Section 16.18; and (f) other encumbrances,
easements, rights of way or liens (i) provided the same do not adversely affect
the intended use of the Leased Properties (including the Improvements) and do
not create a Material Adverse Effect on the value of the Leased properties, or
(ii) which result solely from the action or inaction of Landlord.
ARTICLE IV
INSURANCE
4.01 Insurance. Tenant shall, at Tenant's expense, keep the
---------
Improvements, Fixtures, and other components of each Leased Property insured
against the following risks:
9
(a) Loss or damage by fire with extended coverage (including
windstorm and subsidence), vandalism and malicious mischief,
sprinkler leakage and all other physical loss perils
commonly covered by "All Risk" insurance in an amount not
less than one hundred percent (100%) of the then full
replacement cost thereof (as hereinafter defined). Such
policy shall include an agreed amount endorsement if
available at a reasonable cost. Such policy shall also
include endorsements for contingent liability for operation
of building laws, demolition costs, and increased cost of
construction.
(b) Loss or damage by explosion of steam boilers, pressure
vessels, or similar apparatus, now or hereafter installed on
any Leased Property, in commercially reasonable amounts
acceptable to Landlord.
(c) Loss of rent under a rental value or Business interruption
insurance policy covering risk of loss during the first
twelve (12) months of reconstruction necessitated by the
occurrence of any hazards described in Sections 4.01(a) or
4.01(b), above, and which causes an abatement of Rent as
provided in Article X hereof, in an amount sufficient to
prevent Landlord or Tenant from becoming a co-insurer,
containing endorsements for extended period of indemnity and
premium adjustment, and written with an agreed amount
clause, if the insurance provided for in this clause (c) is
available.
(d) If the Land or any portion thereof related to a Leased
Property is located in whole or in part within a designated
flood plain area, loss or damage caused by flood in
commercially reasonable amounts acceptable to Landlord.
(e) Loss or damage commonly covered by blanket crime insurance
including employee dishonesty, loss of money orders or paper
currency, depositor's forgery, and loss of property accepted
by Tenant for safekeeping, in commercially reasonable
amounts acceptable to Landlord.
(f) Workers' compensation insurance as required by statute in
respect of any work or other operations on or about each
Leased Property.
(g) Comprehensive liability insurance as to each Leased Property
in amounts equal to the greater of (i) One Million Dollars
10
($1,000,000) for each occurrence and Two Million Dollars
($2,000,000) in the aggregate, or (ii) the limits of
liability generally required under the franchise agreements
or other agreements pursuant to which Tenant operates the
Businesses conducted on or about each Leased Property.
(h) Commercial comprehensive catastrophic liability insurance
with limits of liability of not less than the greater of (i)
Five Million ($5,000,000) and (ii) the limits of liability
generally required under the franchise agreements or other
agreements pursuant to which Tenant operates the Businesses
conducted on or about each Leased Property.
(i) upon Landlord's request, earthquake insurance in an amount
not less than the full insurable value of each Leased
Property.
(j) During the period when any addition, alteration,
construction, installation or demolition is being made or
performed to any part of the Leased Property, contingent
liability, public liability, completed value, builder's risk
(non-reporting form) workers' compensation and other
insurance as is deemed prudent by Landlord.
4.02 Insurance Limits. Deductible provisions for the insurance
----------------
required under Section 4.01(a) shall not exceed Twenty-Five Thousand Dollars
($25,000) per location per occurrence and One Hundred Thousand Dollars
($100,000) aggregate per occurrence; under clause(d), Twenty-Five Thousand
Dollars ($25,000) per occurrence, except that if federal flood insurance is
available then such deductible shall not be greater than the lowest deductible
available with respect to such federal flood insurance; under clause (g),
Twenty-Five Thousand Dollars ($25,000) per occurrence; under clause (h),
Twenty-FiveThousand Dollars ($25,000) per occurrence; and under clause (j),
Twenty-Five Thousand Dollars ($25,000) per occurrence.
4.03 Insurance Requirements. The following provisions shall apply to
----------------------
all insurance coverages required hereunder:
(a) The carriers of all policies shall have a Best's
Rating of "A-" or better and a Best's Financial Category of
XII or larger and shall be authorized to do insurance
business in the jurisdiction in which the Leased Property is
located.
(b) Tenant shall be the "named insured" and Landlord and any
mortgagee of Landlord shall be an "additional named insured"
on each policy.
11
(c) Tenant shall deliver to Landlord certificates or policies
showing the required coverages and endorsements. Each policy
or certificate of insurance shall provide that such policy
or certificate (i) may not be canceled, (ii) may not lapse
for failure to renew, and (iii) no material change or
reduction in coverage may be made, without at least thirty
(30) days' prior written notice to Landlord.
(d) The policies shall contain a severability of interest and/or
cross-liability endorsement, provide that the acts or
omissions of Tenant will not invalidate Landlord's coverage,
and provide that Landlord shall not be responsible for
payment of premiums.
(e) All loss adjustment shall require the written consent of
Landlord and Tenant, as their interests may appear.
(f) At least (30) thirty days prior to the expiration of each
policy, Tenant shall deliver to Landlord a certificate
showing renewal of such policy and payment of the annual
premium therefor.
Landlord shall have the right to review the insurance coverages
required hereunder with Tenant from time to time, to obtain the input of third
party professional insurance advisors (at Landlord's expense) with respect to
such insurance coverages, and to consult with Tenant in Tenant's annual review
and renewal of such insurance coverages. All insurance coverages hereunder shall
be in such form, substance and amounts as are customary or standard in Tenant's
industry, but at a minimum shall comply with the requirements set forth herein.
4.04 Replacement Cost. The term "full replacement cost" means the
----------------
actual replacement cost of the Improvements from time to time including
increased cost of construction, with no reductions or deductions. Tenant shall,
not later than thirty (30) days after the anniversary of each policy of
insurance, increase the amount of the replacement cost endorsement for the
Improvements to the extent necessary to reflect increased costs of construction.
If Tenant makes any Permitted Alterations (as hereinafter defined) to any Leased
Property, Landlord may have such full replacement cost redetermined at any time
after such Permitted Alterations are made, regardless of when the full
replacement cost was last determined.
4.05 Blanket Policy. Tenant may carry the insurance required by this
--------------
Article under a blanket policy of insurance, provided that the coverage afforded
Tenant will not be reduced or diminished or otherwise be different from that
which would exist under a separate policy meeting all of the requirements of
this Lease and the Landlord approves the form of the policy.
4.06 No Separate Insurance. Tenant shall not take out separate
---------------------
insurance concurrent in form or contributing in the event of loss with that
required in this Article, or
12
increase the amounts of any then existing insurance by securing an additional
policy or additional policies, unless all parties having an insurable interest
in the subject matter of the insurance, including Landlord and any mortgagees,
are included therein as additional named insureds or loss payees, the loss is
payable under said insurance in the same manner as losses are payable under this
Lease, and such additional insurance is not prohibited by the existing policies
of insurance required pursuant to this Article. Tenant shall immediately notify
Landlord of the taking out of such separate insurance or the increasing of any
of the amounts of the existing insurance by securing an additional policy or
additional policies. The term "mortgages" as used in this Lease includes, but
is not limited to, Deeds of Trust and the term "mortgagees" includes, but is not
limited to, trustees and beneficiaries under a Deed of Trust.
4.07 Waiver of Subrogation. Each party hereto hereby waives any and
---------------------
every claim which arises or may arise in its favor and against the other party
hereto during the Term or any Extension Term or renewal thereof, for any and all
loss of, or damage to, any of its property located within or upon, or
constituting a part of, any Leased Property, which loss or damage is covered by
valid and collectible insurance policies, to the extent that such loss or damage
is recoverable in full under such policies. Said mutual waiver shall be in
addition to, and not in limitation or derogation of, any other waiver or release
contained in this Lease with respect to any loss or damage to property of the
parties hereto. Inasmuch as the said waivers will preclude the assignment of any
aforesaid claim by way of subrogation (or otherwise) to an insurance company (or
any other person), each party hereto agrees immediately to give each insurance
company which has issued to it policies of insurance, written notice of the
terms of said mutual waivers, and to have such insurance policies properly
endorsed, if necessary, to prevent the invalidation of said insurance coverage
by reason of said waivers, so long as such endorsement is available at a
reasonable cost.
4.08 Mortgages. The following provisions shall apply if Landlord now
---------
or hereafter places a mortgage on any Leased Property or any part thereof: (a)
Tenant shall obtain a standard form of mortgage clause insuring the interest of
the mortgagee; (b) Tenant shall deliver evidence of insurance to such mortgagee;
(c) loss adjustment shall require the consent of the mortgagee but such consent
shall not be unreasonably withheld and may not include any requirement that the
funds be paid to mortgagee in lieu of reconstruction; and (d) Tenant shall
obtain such other coverages and provide such other information and documents as
may be reasonably required by the mortgagee.
4.09 Other Insurance Requirements. Notwithstanding anything in this
----------------------------
Lease to the contrary and not by way of limitation, in addition to the types and
amounts of insurance required to be carried by Tenant herein, Tenant covenants
to insure and continue in effect such types and amounts of insurance as the
Tenant shall be required to carry pursuant to any contract, agreement,
instrument, statute, law, rule or regulation relating to the use of the Leased
Property and the operations of any Business or other activities thereon,
including noncancellable written notice to mortgagee.
13
ARTICLE V
INDEMNITY; SUBSTANCES OF CONCERN
5.01 Tenant's Indemnification. Subject to Section 4.07, Tenant hereby
------------------------
agrees to indemnify and hold harmless Landlord, its agents, and employees from
and against any and all demands, claims, causes of action, fines, penalties,
damages (including punitive and consequential damages), losses, liabilities
(including strict liability), judgments, costs and expenses (including, without
limitation, attorneys' fees, court costs, and the costs set forth in Section
9.06) (the "Claims") incurred in connection with or arising from: (a) the use,
condition, operation or occupancy of the Leased Properties; (b) any activity,
work, or thing done, or permitted or suffered by Tenant in, on or about the
Leased Properties; (c) any acts, omissions, or negligence of Tenant or any
person claiming under Tenant, or the contractors, agents, employees, invitees,
or visitors of Tenant or any such person; (d) any breach, violation, or
nonperformance by Tenant or any person claiming under Tenant or the employees,
agents, contractors, invitees, or visitors of Tenant or of any such person, of
any term, representation, warranty, covenant, or provision of this Lease or any
law, ordinance, or governmental requirement of any kind; (e) any injury or
damage to the person, property or Business of Tenant, its employees, agents,
contractors, invitees, visitors, or any other person entering upon any Leased
Property; (f) any accident, injury to or death of persons or loss or damage to
any item of property occurring on or about any Leased Property; (g) any
Environmental Law or any pollution or other threat to human health or the
environment at, arising out of or relating to any Leased Property as set forth
in Section 5.05, and (h) any brokers' or agents' fees and commissions. If any
action or proceeding is brought against Landlord, its employees, or agents by
reason of any such demand, claim, or cause of action, Tenant, upon notice from
Landlord, will defend the same at Tenant's expense with counsel reasonably
satisfactory to Landlord. In the event Landlord reasonably determines that its
interests and the interests of Tenant in any such action or proceeding are not
substantially the same and that Tenant's counsel cannot adequately represent the
interests of Landlord therein, Landlord shall have the right to hire separate
counsel in any such action or proceeding and the reasonable costs thereof shall
be paid for by Tenant. Tenant's indemnification obligations with respect to a
Claim shall survive the expiration or earlier termination of this Lease until
the later of (i) two (2) years from the date hereof, or (ii) the expiration of
the period ninety (90) days after the date on which Landlord has actual
knowledge of the existence of such Claim, provided, however, that Tenant's
indemnification obligations shall survive the expiration or earlier termination
of this Lease until ninety (90) days after the expiration of the applicable
statute of limitations for Claims incurred in connection with, arising out of,
or related to (i) Section 5.01(g) or (ii) the failure to pay, as provided for in
this Agreement, any Imposition.
5.02 Substances of Concern.
---------------------
(a) For purposes of this Section 5:
(i) "Substances of Concern" means, without limitation,
chemicals, pollutants, conta minants, wastes, toxic
14
substances, radioactive materials or genetically
modified organisms, which are, have been or become
regulated by any federal, state or local government
authority including, without limitation, (1)
petroleum or any fraction thereof, (2) asbestos, (3)
any substance or material defined as a "hazardous
substance" pursuant to (S) 101 of the Comprehensive
Environmental Response Compensation and Liability Act
(42 U.S.C. (S) 9601), or (4) any substance or
material defined as a "hazardous chemical" pursuant
to the federal Hazard Communication Standard (29
C.F.R. (S) 1910.1200).
(ii) "Environmental Laws" means all federal, state, local,
and foreign laws and regulations relating to
pollution or protection of human health or the
environment (including, without limitation, ambient
air, surface water, ground water, wetlands, land
surface, subsurface strata, and indoor and outdoor
workplace), including, without limitation, (1) laws
and regulations relating to emissions, discharges,
releases, or threatened releases of Substances of
Concern, and (2) common law principles of tort
liability.
(b) Tenant shall not, either with or without negligence, injure,
overload, deface, damage or otherwise harm any Leased
Property or any part or component thereof; commit any
nuisance; permit the emission of any Substances of Concern;
allow the release or other escape of any biologically or
chemically active substances or materials or other
Substances of Concern so as to impregnate, impair or in any
manner affect, even temporarily, any element or part of any
Leased Property or neighboring property, or allow the
storage or use of such substances or materials in any manner
not sanctioned by law and by reasonable standards prevailing
in the automobile retail and related industries for the
storage and use of such substances or materials; nor shall
Tenant permit the occurrence of objectionable noise or
odors; or make, allow or suffer any waste whatsoever to any
Leased Property. Landlord may inspect each Leased Property
from time to time, and Tenant will cooperate with such
inspections.
(c) Notwithstanding the foregoing, Tenant anticipates using,
storing and disposing of certain Substances of Concern in
connection with operation of its Business. Such Substances
of Concern include, but are not limited to, the following:
motor oil, waste motor oil and
15
filters, transmission fluid, antifreeze, refrigerants, waste
paint and lacquer thinner, batteries, solvents, lubricants,
degreasing agents, gasoline and diesel fuels. Tenant shall
ascertain and comply fully with all applicable Environmental
Laws and environmental standards and requirements set by
federal, state or local laws, rules, regulations or
governmental directives related to the Leased Properties or
Tenant's use or occupancy of the Leased Property
("Environmental Standards"), including but not limited to
any laws or standards (a) regulating the use, storage,
generation or disposal of Substances of Concern, (b)
regulating the monitoring or use of any underground or
aboveground storage tanks at the Leased Properties, or (c)
establishing any permitting, notification or reporting
requirements. As promptly as practicable after the
Commencement Date (but in no event later than 120 days
thereafter), Tenant shall establish and implement a program
of compliance with all applicable Environmental Laws and
Environmental Standards ("Environmental Compliance
Program"). Tenant shall update such Environmental Compliance
Program every three (3) years during the Term. Tenant shall
submit its Environmental Compliance Program and each update
thereto to Landlord; provided, however, such submittal shall
not relieve Tenant of its obligations pursuant to this
Section 5. Tenant's Environmental Compliance Program shall
include a program for monitoring Tenant's compliance with
Environmental Laws and Environmental Standards and a plan
for correcting immediately any incident of noncompliance.
Tenant shall comply with its Environmental Compliance
Program.
(d) In the event of any noncompliance with any Environmental
Laws or Environmental Standards or any spill, release or
discharge of Substances of Concern in a reportable quantity
under federal, state or local law, Tenant shall:
(i) give Landlord immediate notice of the incident by
telephone or facsimile, providing as much detail as
possible. Such notice shall be provided to Landlord's
National Dealership Real Estate Manager or to such
other person as Landlord shall designate in
accordance with Section 16.01 below;
(ii) as soon as possible, but no later than seventy-two
(72) hours, after discovery of an incident of
noncompliance, submit a written report to Landlord,
identifying the source
16
or case of the noncompliance or spill, release or
discharge (including the names and quantities of any
Substances of Concern involved) and the method or
action required to correct the problem; and
(iii) cooperate with Landlord or its designated agents or
contractors with respect to the investigation and
correction of such problem.
Tenant shall also be solely responsible for providing any notice
to any federal, state or local governmental authority required by applicable
laws and regulations as a result of such incident.
5.03 Audits. Landlord shall have the right to conduct, at its
------
expense, periodic audits of Tenant's compliance with the Environmental
Compliance Program and management of Substances of Concern at the Leased
Properties and/or periodic tests of air, soil, surface water or groundwater at
or near the Leased Properties. Landlord shall not be obligated to provide Tenant
with the results of any audit or tests unless such results are the basis for a
claim by Landlord that Tenant has breached its obligations under this Lease or a
demand by Landlord that Tenant modify its Environmental Compliance Program or
operations or remediate or remove a spill, release or discharge of Substances of
Concern in accordance with Section 5.06 below. Tenant agrees promptly to modify
its Environmental Compliance Program or the conduct of its operations in
accordance with Landlord's reasonable recommendations directed at improvement of
Tenant's handling, use and disposal of Substances of Concern in, on or from any
Leased Property. If, as a result of an environmental audit performed by Landlord
with respect to any Leased Property, Landlord reasonably determines in its
judgment that alterations or improvements of equipment or buildings located on
the Leased Property are necessary, Tenant shall perform such alterations or
improvements as are reasonable under the circumstances and pay all costs and
expenses relating thereto. If Tenant shall fail to pay any such costs or
expenses, Tenant shall deposit with Landlord the full amount necessary to pay
such costs in full within ten (10) days of Landlord's demand. Nothing contained
herein shall be construed to obligate or require Landlord to perform any audits,
tests, inquiry or investigation. Should Landlord elect or be required to
disclose to Tenant the results of any audit or tests, Landlord shall not be
liable in any way for the truth or accuracy of such information.
5.04 Landlord's Option Re: Compliance. If Tenant, after notice from
--------------------------------
Landlord, fails to comply with or perform any of its obligations pursuant to
this Section 5, including, but not limited to, obligations to clean up spills,
releases or discharges, Landlord may, but shall not be obligated to, perform
such obligations and Tenant shall pay Landlord within ten (10) days of demand
Landlord's costs therefor, including any overhead and administrative costs.
5.05 Environmental Indemnification. Tenant shall indemnify and hold
-----------------------------
harmless Landlord from and against all demands, claims, causes of action, fines,
penalties,
17
damages (including punitive and consequential damages), losses, liabilities
(including strict liability), judgments, and expenses (including, without
limitation, attorneys' fees, court costs, and the costs set forth in Section
9.06) imposed upon or asserted against Tenant, Landlord or any Leased Property
on account of any Environmental Law (irrespective of whether there has occurred
any violation of any Environmental Law) relating to any Leased Property,
including (a) response costs and costs of removal and remedial action incurred
by the United States Government or any state or local governmental unit to any
other person or entity, or damages from injury to or destruction or loss of
natural resources, including the reasonable costs of assessing such injury,
destruction or loss, incurred pursuant to any Environmental Law, (b) costs and
expenses of abatement, investigation, removal, remediation, correction or
cleanup, fines, damages, response costs or penalties which arise from the
provisions of any Environmental Law, (c) liability for personal injury or
property damage arising under any statutory or common-law tort theory, including
damages assessed for the maintenance of a public or private nuisance or for
carrying on of a dangerous activity, (d) liability by reason of a breach of an
environmental representation or warranty by Tenant, and (e) failure of Tenant to
complete in a timely manner alterations or improvements of equipment or
buildings located on the Leased Property deemed necessary or advisable by
Landlord pursuant to Section 5.03 in a manner acceptable to Landlord.
5.06 Tenant's Cleanup Obligation. If any spill, release or discharge
---------------------------
of Substances of Concern occurs on, at or from the Leased Properties during the
Term, Tenant shall promptly take all actions, at its sole expense, as are
necessary to remove or remediate such spill, release or discharge and to return
the Leased Property to the condition existing prior to the introduction of any
such Substances of Concern to the Leased Property, provided that Landlord's
approval of such action shall first be obtained, which approval shall not be
unreasonably withheld so long as such actions would not potentially have any
material adverse effect on the Leased Property.
5.07 Existing Environmental Conditions. Tenant acknowledges that it
---------------------------------
has had the opportunity to review the Environmental Reports attached hereto as
Exhibit 5.07. Tenant hereby represents that it has reviewed and is aware of the
matters disclosed in the Environmental Reports.
As a material consideration for Landlord's willingness to enter
into this Lease, Tenant, for itself and its Affiliates, and each of their
shareholders, directors, officers, employees, agents, contractors,
representatives, insurers, successors and assigns hereby waives and releases
Landlord and its Affiliates and each of their shareholders, directors, officers,
employees, representatives, agents, contractors, representatives, insurers,
successors and assigns from any and all claims, demands, liabilities, costs,
expenses, causes of action and rights of action whatsoever, past, present or
future, known or unknown, suspected or unsuspected, which arise out of or relate
in any way to the violation of Environmental Laws or the use, storage,
treatment, disposal, presence, spill, release, or discharge of Substances of
Concern at, on or from the Leased Properties before the Commencement Date
(collectively, the "Released Claims").
18
In the event that Landlord is ordered by a governmental agency,
or determines that it is in its best interest, to remedy any violation of
Environmental Laws or to remove or remediate any Substances of Concern present
on, under or about the Leased Properties on the Commencement Date, or spilled,
released or discharged on, at or from the Leased Properties before the
Commencement Date, Tenant shall immediately upon notice from Landlord take all
actions, at Tenant's sole expense, to promptly complete such removal or
remediation.
5.08 Survival of Tenant's Obligations. Tenant's obligations under
--------------------------------
this Section 5 shall survive the expiration or earlier termination of this
Lease. During any period of time employed by Tenant after the termination of
this Lease to complete the removal from the Leased Property of any Substances of
Concern, if the premises are not rentable for uses contemplated under this
Lease, Tenant shall continue to pay the full amount of Rent due under this
Lease, which Rent shall be prorated daily for the final month of such period of
time.
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES
6.01 Use of Leased Properties. For so long as this Lease is in effect
------------------------
(including following any sublease or assignment thereof), Tenant shall use and
occupy each Leased Property exclusively for the purpose of conducting the
Business or for any other legal purpose for which such Leased Property is being
used as of the Commencement Date, and for no other purpose without the prior
written consent of Landlord. Tenant shall obtain and maintain all approvals,
licenses, and consents needed to use and operate the Leased Properties for such
purposes. Tenant shall promptly deliver to Landlord complete copies of surveys,
examinations, certification and licensure inspections, compliance certificates,
and other similar reports issued to Tenant by any governmental agency.
6.02 Acceptance of Leased Properties. Except as otherwise
-------------------------------
specifically provided in this Lease, Tenant acknowledges (i) Tenant and its
agents have had an opportunity to inspect each Leased Property; (ii) Tenant has
found each Leased Property fit for Tenant's use; (iii) delivery of each Leased
Property to Tenant is in an "as-is" condition; (iv) Landlord is not obligated to
make any improvements or repairs to any Leased Property; and (v) the roof,
walls, foundation, heating, ventilating, air conditioning, telephone, sewer,
electrical, mechanical, utility, plumbing, and other portions of each Leased
Property are in good working order. Tenant waives any claim or action against
Landlord with respect to the condition of any Leased Property. LANDLORD MAKES
NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
PROPERTIES OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION OR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO QUALITY OR THE
MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH
RISKS ARE TO BE BORNE BY TENANT.
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6.03 Conditions of Use and Occupancy. Tenant agrees that during the
-------------------------------
Term it shall use and keep each Leased Property in a careful, safe and proper
manner; not commit or suffer waste thereon; not use or occupy any Leased
Property for any unlawful purposes; not use or occupy any Leased Property or
permit the same to be used or occupied, for any purpose or business deemed extra
hazardous on account of fire or otherwise; keep each Leased Property in such
repair and condition as may be required by the local board of health, or other
city, state or federal authorities, free of all cost to Landlord; not permit any
acts to be done which will cause the cancellation, invalidation, or suspension
of any insurance policy; and permit Landlord and its agents to enter upon each
Leased Property at all reasonable times after notice to Tenant to examine the
condition thereof. In addition, at any time and from time to time upon not less
than fifteen (15) days prior written notice, Tenant shall permit Landlord and
any mortgagee or lender and their authorized representatives, to inspect the
Leased Properties during normal Business hours, provided that such inspections
shall not unreasonably interfere with Business of Tenant.
6.04 Financial Statements and Other Information. Tenant shall provide
------------------------------------------
Landlord and any mortgagee or lender regularly (or more often as may be
reasonably requested by Landlord in writing), the following financial
information: (a) as to each Leased Property within thirty (30) days after each
fiscal quarter during the Term or any Extension Term, as the case may be,
(except the fourth quarter), Tenant-prepared financial statements prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied; and (b) as to each Leased Property and itself, Tenant shall use its
best efforts to provide Landlord within ninety (90) days after the end of each
fiscal year of Tenant during the Term or any Extension Term, as the case may be,
and in no event later than one hundred and twenty (120) days after the end of
each fiscal year of Tenant during the Term or any Extension Term, as the case
may be, financial statements, audited, reviewed or compiled by a certified
public accountant (the "Annual Financial Statements"). Tenant shall also
deliver to Landlord such additional financial information as Landlord may
reasonably request, provided the same is of a type normally maintained by Tenant
or can be obtained without undue cost or burden on Tenant's personnel and does
not constitute information which Tenant reasonably determines to be proprietary
or confidential. Additionally, upon Landlord's request, Tenant shall provide
Landlord with copies of Tenant's annual capital expenditure budgets for each
Leased Property and any reports generated by Tenant regarding maintenance and
repairs of each Leased Property.
ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS
7.01 Maintenance. Tenant shall maintain each Leased Property in good
-----------
order, repair and appearance, and repair each Leased Property, including without
limitation, all interior and exterior, structural and nonstructural repairs and
replacements to the roof, foundations, exterior walls, building systems, HVAC
systems, parking areas, sidewalks, water, sewer and gas connections, pipes, and
mains. Tenant shall pay as Additional Rent the full cost of such
20
maintenance, repairs, and replacements. Tenant shall maintain all drives,
sidewalks, parking areas, and lawns on or about each Leased Property in a clean
and orderly condition, free of accumulations of dirt, rubbish, snow and ice.
Tenant shall permit Landlord to inspect each Leased Property at all reasonable
times, and shall implement all reasonable suggestions of Landlord as to the
maintenance and repair of each Leased Property.
7.02 Compliance with Laws. Tenant shall comply with all laws,
--------------------
ordinances, orders, rules, regulations, and other governmental requirements
relating to the use, condition, or occupancy of each Leased Property, whether
now or hereafter enacted and in force including without limitation: (a)
licensure requirements for operation of the Business; (b) requirements of any
board of casualty insurance underwriters or insurance service office for any
other similar body having jurisdiction over any Leased Property; (c) all zoning
and building codes; and (d) Environmental Laws. At Landlord's request, from
time to time, Tenant shall deliver to Landlord copies of certificates or permits
evidencing compliance with such laws, including without limitation, copies of
any applicable licenses, certificates of occupancy and building permits. Tenant
shall provide Landlord with copies of any notice from any governmental authority
alleging any non-compliance by Tenant or any Leased Property with any of the
foregoing requirements and such evidence as Landlord may reasonably require of
Tenant's remediation thereof. Tenant hereby agrees to defend, indemnify and
hold Landlord, its agents, and employees from and against any and all demands,
claims, causes of action, fines, penalties, damages (including punitive and
consequential damages), losses, liabilities (including strict liability),
judgments, costs and expenses (including, without limitation, attorneys' fees,
court costs, and the costs set forth in Section 9.06) resulting from any failure
by Tenant to comply with any laws, ordinances, rules, regulations, and other
governmental requirements.
7.03 Required Alterations. Tenant shall, at Tenant's sole cost and
--------------------
expense, make any additions, changes, improvements or alterations to each Leased
Property, including structural alterations, which may be required by any
governmental authorities, including those required to continue to satisfy any
licensure requirements related to the operation of the Business, whether such
changes are required by Tenant's use, changes in the law, ordinances, or
governmental regulations, defects existing as of the date of this Lease, or any
other cause whatsoever. Tenant shall provide thirty (30) days prior written
notice to Landlord of any changes to a Leased Property pursuant to this Section
7.03 which involve changes to the structural integrity thereof or materially
affect the operational capabilities thereof. All such additions, changes,
improvements or alterations shall be deemed to be a Tenant Improvement and shall
comply with all laws relating to such alterations and with the provisions of
Section 8.01.
7.04 Mechanics' Liens. Tenant shall have no authority to permit or
----------------
create a lien against Landlord's interest in any Leased Property, and Tenant
shall post notices or file such documents as may be required to protect
Landlord's interest in each Leased Property against liens. Tenant hereby agrees
to defend, indemnify, and hold Landlord harmless from and against any mechanics'
liens against any Leased Property by reason of work, labor services or materials
21
supplied or claimed to have been supplied on or to such Leased Property. Tenant
shall immediately remove, bond-off, or otherwise obtain the release of any
mechanics' lien filed against any Leased Property. Tenant shall pay all
expenses in connection therewith, including without limitation, damages,
interest, court costs and reasonable attorneys' fees.
7.05 Replacements of Fixtures. Tenant shall not remove Fixtures from
-------------------------
any Leased Property except to replace such Fixtures with other items used for
similar or analogous purposes, which replacement items are of equal or greater
quality and value. Items being replaced by Tenant may be removed and shall
become the property of Tenant and items replacing the same shall be and remain
the property of Landlord. Tenant shall execute, upon written request from
Landlord, any and all documents necessary to evidence Landlord's ownership of
the Fixtures and replacements therefor. Tenant may not finance replacements by
security agreement or equipment lease unless: (a) Landlord has consented to the
terms and conditions of the equipment lease or security agreement; (b) the
equipment lessor or lender has entered into a non-disturbance agreement with
Landlord upon terms and conditions acceptable to Landlord, including without
limitation (i) Landlord shall have the right (but not the obligation) to assume
such security agreement or equipment lease upon the occurrence of an Event of
Default by Tenant hereunder; (ii) the equipment lessor or lender shall promptly
notify Landlord of any default by Tenant under the equipment lease or security
agreement and give Landlord a reasonable opportunity to cure such default; and
(iii) Landlord shall have the right to assign its rights under the equipment
lease, security agreement, or non-disturbance agreement; (c) the equipment
lessor or lender shall subordinate its security interest to the security
interest of any of Landlord's lessors, mortgagors or lenders, whether now
created or hereafter existing, and (d) Tenant shall, within ten (10) days after
receipt of an invoice from Landlord, reimburse Landlord for all costs and
expenses incurred in reviewing and approving the equipment lease, security
agreement, and non-disturbance agreement, including without limitation,
reasonable attorneys' fees and costs.
7.06 Encroachments; Restrictions. If any of the Improvements shall,
---------------------------
at any time, encroach upon any property, street or right-of-way adjacent to a
Leased Property, or shall violate the agreements or conditions contained in any
restrictive covenant or other agreement affecting a Leased Property, other than
one which is created or consented to by Landlord without Tenant's consent, or
shall impair the rights of others under an easement or right-of-way to which a
Leased Property is subject, other than one which is created or consented to by
Landlord without Tenant's consent, then promptly upon the request of Landlord or
at the request of any person affected by any such encroachment, violation or
impairment, Tenant shall, at its expense, subject to its right to contest the
existence of any encroachment, violation or impairment and in such case, in the
event of an adverse final determination, either (a) obtain valid and effective
waivers or settlements of all claims, liabilities and damages resulting from
each such encroachment, violation or impairment, whether the same shall affect
Landlord or Tenant or (b) make such changes in the Improvements and take such
other actions as shall be necessary to remove such encroachment and to end such
violation or impairment, including, if necessary, the alteration of
22
improvements. Any such alteration shall be made in conformity with the
requirements of Article VIII.
ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTIES
8.01 Tenant's Right to Construct. As to each Leased Property, during
---------------------------
the Term of this Lease or any Extension Term, as the case may be, so long as no
Event of Default shall have occurred and be continuing as to such Leased
Property, Tenant may make Capital Additions (as defined herein), or other
alterations, additions, changes and/or improvements to such Leased Property as
deemed necessary or useful to operate such Leased Property for Tenant's Business
(individually, a "Tenant Improvement," or collectively, the "Tenant
Improvements"). "Capital Additions" shall mean the construction of one or more
new buildings or one or more additional structures annexed to any portion of any
of the Improvements on a Leased Property, which are constructed on any parcel
or portion of the Land comprising a Leased Property, including the construction
of a new floor, or the repair, replacement, restoration, remodeling or
rebuilding of the Improvements or any portion thereof on a Leased Property which
are not normal, ordinary or recurring to maintain such Leased Property. Except
as otherwise agreed to by Landlord herein or otherwise in writing, any such
Tenant Improvement or Capital Addition shall be made at Tenant's sole expense
and shall become the property of Landlord upon termination of this Lease. Unless
made on an emergency basis to prevent injury to person or property, as to each
Leased Property, Tenant must obtain Landlord's prior written approval, such
approval not to be unreasonably withheld or delayed, for any Capital Addition or
for any Tenant Improvement which is not a Capital Addition and which has a cost
of more than One Hundred Thousand Dollars ($100,000) or a cost which, when
aggregated with the costs of all such Tenant Improvements on such Leased
Property in a given Lease Year, would cause the total costs of all such Tenant
Improvements on such Leased Property to exceed Two Hundred Fifty Thousand
Dollars ($250,000). Additionally, in connection with any Tenant Improvement,
including any Capital Addition, Tenant shall provide Landlord with copies of any
plans and specification therefor, Tenant's budget relating thereto, any required
governmental permits or approvals, any construction contracts or agreements
relating thereto, and any other information relating to such Tenant Improvement
as Landlord shall reasonably request.
8.02 Scope of Right. Subject to Section 8.01 herein and Section 7.03
--------------
concerning required alterations, at Tenant's cost and expense, Tenant shall have
the right to:
(a) seek any governmental approvals, including building permits,
licenses, conditional use permits and any certificates of
need that Tenant requires to construct any Tenant
Improvement;
23
(b) erect upon each Leased Property such Tenant Improvements as
Tenant deems desirable;
(c) make additions, alterations, changes and improvements in any
Tenant Improvement so erected; and
(d) engage in any other lawful activities that Tenant determines
are necessary or desirable for the development of each
Leased Property in accordance with the Tenant's Business;
provided, however, Tenant shall not make any Tenant Improvement which would, in
Landlord's reasonable judgment, impair the value of the Leased Property or the
Tenant's Business without Landlord's prior written consent and provided, further
that Tenant shall not be permitted to create a mortgage, lien or any other
encumbrance on any Leased Property without Landlord's prior written consent.
8.03 Cooperation of Landlord. Landlord shall cooperate with Tenant
-----------------------
and take such actions, including the execution and delivery to Tenant of any
applications or other documents, reasonably requested by Tenant in order to
obtain any governmental permits, licenses or approvals sought by Tenant to
construct any Tenant Improvement within fifteen (15) business days following the
later of: (a) the date Landlord receives Tenant's request or (b) the date of
delivery of any such application or document to Landlord; provided, the taking
of such action by Landlord, including the execution of said applications or
documents, shall be without cost to Landlord (or if there is a cost to Landlord,
such cost shall be reimbursed by Tenant), shall not cause Landlord to be in
violation of any law, ordinance or regulation, and shall not be deemed a waiver
by Landlord of any of its rights or of any of Tenant's obligations, including
but not limited to indemnification.
8.04 Commencement of Construction. Tenant agrees that:
----------------------------
(a) Tenant shall diligently seek all governmental approvals
relating to the construction of any Tenant Improvement;
(b) Once Tenant begins the construction of any Tenant
Improvement, Tenant shall diligently oversee any such
construction to completion in accordance with applicable
insurance requirements and the laws, rules and regulations
of all governmental bodies or agencies having jurisdiction
over the subject Leased Property;
(c) Landlord shall have the right at any time and from time to
time to post and maintain upon each Leased Property such
notices as may be necessary to protect Landlord's interest
from mechanics' liens, materialmen's liens or liens of a
similar nature;
24
(d) Tenant shall not suffer or permit any mechanics' liens or
any other claims or demands arising from the work of
construction of any Tenant Improvement to be enforced
against any Leased Property or any part thereof, and Tenant
agrees to hold Landlord, its agents and employees and said
Leased Property free and harmless from all demands, claims,
causes of action, fines, penalties, damages (including
punitive and consequential damages), losses, liabilities
(including strict liability), judgments, costs and expenses
(including, without limitation, attorneys' fees, court
costs, and the costs set forth in Section 9.06) incurred in
connection with or arising therefrom;
(e) All work shall be performed in a satisfactory and
workmanlike manner consistent with standards in the
industry; and
(f) Subject to Section 8.08 in the case of Capital Additions,
Tenant shall not secure any construction or other financing
for the Tenant Improvements which is secured by a portion of
any Leased Property without Landlord's prior written
consent, and any such financing (i) shall not exceed the
cost of the Tenant Improvements, (ii) shall be subordinate
to any mortgage or encumbrance now existing or hereinafter
created with respect to such Leased Property, and (iii)
shall be limited solely to Tenant's interest in the subject
Leased Property.
8.05 Rights in Tenant Improvements. Notwithstanding anything to the
------------------------------
contrary in this Lease, all Tenant Improvements existing on the Leased Property
or constructed upon each Leased Property pursuant to Section 8.01, any and all
subsequent additions thereto and alterations and replacements thereof shall be
the sole and absolute property of Tenant during the Term and any Extension Term,
as the case may be, of this Lease (in respect of such Leased Property). Upon
the expiration or early termination of this Lease in respect of a Leased
Property, all such Tenant Improvements located thereon shall become the property
of Landlord. Without limiting the generality of the foregoing, prior to the
expiration or early termination of this Lease in respect of a Leased Property,
Tenant shall be entitled to all federal and state income tax benefits associated
with all Tenant Improvements located on such Leased Property.
8.06 Personal Property. Tenant shall install, place, and use on each
-----------------
Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Fixtures as may be required or as Tenant
may, from time to time, deem necessary or useful to operate such Leased Property
in the operation of the Business.
8.07 Requirements for the Tenant's Personal Property. Tenant shall
-----------------------------------------------
comply with all of the following requirements in connection with the Tenant's
Personal Property:
25
(a) RESERVED.
(b) The Tenant's Personal Property shall be installed in a good
and workmanlike manner, in compliance with all governmental
laws, ordinances, rules, and regulations and all insurance
requirements, and be installed free and clear of any
mechanics' liens.
(c) Tenant shall, at Tenant's sole cost and expense, maintain,
repair, and replace the Tenant's Personal Property.
(d) Tenant shall, at Tenant's sole cost and expense, keep the
Tenant's Personal Property insured against loss or damage by
fire, vandalism and malicious mischief, sprinkler leakage,
and other physical loss perils commonly covered by fire and
extended coverage, boiler and machinery, and difference in
conditions insurance (which insurance shall meet the
requirements of Section 4.03 hereof) in an amount not less
than the full replacement cost thereof or such other amount
as appears on a schedule submitted by Tenant to Landlord,
which schedule shall be subject to Landlord's approval, and
Tenant shall use the proceeds from any such policy for the
repair and replacement of such items of Tenant's Personal
Property; provided, however, that if Landlord fails to
object to the schedule so submitted by Tenant within five
(5) business days of Landlord's receipt of such schedule,
Landlord's approval of such schedule shall be deemed given.
(e) Tenant shall pay all Impositions and other taxes applicable
to Tenant's Personal Property.
(f) If Tenant's Personal Property is damaged or destroyed by
fire or otherwise, Tenant shall promptly repair or replace
Tenant's Personal Property unless Tenant is entitled to and
elects to terminate the Lease pursuant to Section 10.05.
(g) As to each Leased Property, unless an Event of Default (or
any event which, with the giving of notice or lapse of time,
or both, would constitute an Event of Default) has occurred
and remains uncured beyond any applicable grace period,
Tenant may remove Tenant's Personal Property from such
Leased Property from time to time provided that: (i) the
items removed are not required or necessary to operate the
Business on such Leased Property (unless such items are
being replaced by Tenant) and (ii) Tenant promptly
26
repairs any damage to such Leased Property resulting from
the removal of Tenant's Personal Property.
(h) As to each Leased Property, Tenant shall remove all of
Tenant's Personal Property upon the termination or
expiration of the Lease and shall promptly repair any damage
to such Leased Property resulting from the removal thereof
to the reasonable satisfaction of Landlord; provided,
however, if Tenant fails to remove Tenant's Personal
Property from such Leased Property within thirty (30) days
after the termination or expiration of this Lease with
respect thereto, then Tenant shall be deemed to have
abandoned such items of Tenant's Personal Property, all of
which shall become the property of Landlord, and Landlord
may remove, store and dispose of such property and Tenant
shall have no claim or right against Landlord for such
property or the value thereof regardless of the disposition
thereof by Landlord. Tenant shall pay Landlord, upon
demand, all expenses incurred by Landlord in removing,
storing, and disposing of such items of Tenant's Personal
Property and repairing any damage caused by such removal.
Tenant's obligations hereunder shall survive the termination
or expiration of this Lease as to such Leased Property.
(i) Tenant shall perform its obligations under any equipment
lease or security agreement for Tenant's Personal Property.
8.08 Financings of Capital Additions to a Leased Property. Landlord
-----------------------------------------------------
may, but shall be under no obligation to, provide or arrange construction,
permanent or other financing for any Capital Addition proposed to be made to a
Leased Property by Tenant. Any financing so provided by Landlord shall be made
in accordance with, and subject to, a written Addendum to this Lease.
ARTICLE IX
DEFAULTS AND REMEDIES
9.01 Events of Default. The occurrence of any one or more of the
-----------------
following shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of Rent, or any
other monetary obligation payable by Tenant to Landlord
hereunder, within ten (10) days after the due date thereof
and after written notice thereof and an opportunity to cure
within a ten (10) day period after such notice is given to
Tenant by Landlord. In the
27
event of Tenant's failure to make timely payment of such
obligations two (2) times during any twelve (12) month
period, each subsequent such failure within the twelve (12)
months immediately following such second failure shall
immediately constitute an Event of Default, and Landlord
shall not be required to provide notice thereof, nor shall
Tenant have any further opportunity to cure such failure;
(b) Tenant fails to observe and perform any covenant (other than
the covenant in respect of insurance set forth in Article
IV), condition or agreement hereunder to be performed by
Tenant (except those described in Section 9.01(a) of this
Lease) and such failure continues for a period of twenty
(20) days after written notice thereof is given to Tenant by
Landlord; or if, by reason of the nature of such default,
the same cannot with due diligence be remedied within said
twenty (20) days, such failure will not be deemed to
continue if Tenant proceeds promptly and with due diligence
to remedy the failure and diligently completes the remedy
thereof; provided, however, said cure period will not extend
beyond forty (40) days if the facts or circumstances giving
rise to the default are creating a further harm to Landlord
or the subject Leased Property and Landlord makes a good
faith determination that Tenant is not undertaking remedial
steps that Landlord would cause to be taken if this Lease
were then to terminate;
(c) If Tenant: (i) admits in writing its inability to pay its
debts generally as they become due; (ii) files a petition in
bankruptcy or a petition to take advantage of any insolvency
act; (iii) makes an assignment for the benefit of its
creditors; (iv) is unable to pay its debts as they mature;
(v) consents to the appointment of a receiver of itself or
of the whole or any substantial part of its property; or
(vi) files a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or
any state thereof;
(d) If Tenant, on insolvency proceedings or on a petition in
bankruptcy filed against it, is adjudicated as bankrupt or a
court of competent jurisdiction enters an order or decree
appointing, without the consent of Tenant, a receiver of
Tenant of the whole or substantially all of its property, or
approving a petition filed against it seeking reorganization
or arrangement of Tenant under
28
the federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state
thereof, and such judgment, order or decree is not vacated,
dismissed or set aside within sixty (60) days from the date
of the entry thereof;
(e) If the estate or interest of Tenant in a Leased Property or
any part thereof is levied upon or attached in any
proceeding and the same is not vacated or discharged within
fifteen (15) days after commencement thereof (unless Tenant
is contesting such lien or attachment in accordance with
this Lease) or if such estate or interest of Tenant is
assigned, conveyed or involuntarily transferred in violation
of this Lease;
(f) Any representation, warranty or covenant made by Tenant on
behalf of itself or an Affiliate in this Lease or in any
certificate, demand or request made pursuant hereto proves
to be incorrect, in any material respect, as of the date of
issuance or making thereof;
(g) Conviction of Tenant or an Affiliate of a crime or offense
constituting a felony in the jurisdiction in which committed
or under federal law which conviction results in the
termination of the franchise.
(h) Termination or relinquishment of the franchise or license
pursuant to which Tenant or an Affiliate conducts business
on or from any Leased Property, provided that such event
shall not constitute an Event of Default if (i) no other
Event of Default enumerated in this Section 9.01 shall occur
and be continuing, and (ii) at a date no later than twenty-
four (24) months following such date of termination or
relinquishment, Tenant or an Affiliate has entered into
written new or amended franchises or licenses for operation
of motor vehicle retail or motor vehicle related businesses
at such Leased Property satisfactory to Landlord in its
discretion applying commercially reasonable standards;
(i) Default under any franchise or license pursuant to which
Tenant or an Affiliate conducts business at a Leased
Property, if in the Landlord's judgment such default in
light of commercially reasonable standards and industry
practice would have a Material Adverse Effect (as hereafter
defined) on the Leased Property;
(j) A final, non-appealable judgment or judgments for the
payment of money not fully covered (excluding deductibles)
by insurance is
29
rendered against Tenant and the same remains undischarged,
unvacated, unbonded, unappealed or unstayed for a period of
thirty (30) consecutive days;
(k) Tenant shall fail to observe the covenant in respect to
insurance under Article IV provided Landlord shall have
provided notice of such failure to Tenant and Tenant shall
have failed to cure such failure within three (3) business
days of such notice; or
(l) Except after the effective date of a permitted assignment
meeting the requirements of Article XIII, if Tenant is
liquidated or dissolved, or begins proceedings toward
liquidation or dissolution, or in any manner permits the
sale or divestiture of substantially all of its assets.
9.02 Remedies. To the extent an Event of Default is applicable only
--------
to a specific Leased Property or specific Leased Properties (in accordance with
Section 9.01 above), the remedies set forth herein shall be exercisable solely
with respect to such Leased Property or Leased Properties, and shall not be
exercisable with respect to any other Leased Property. To the extent an Event
of Default constitutes an Event of Default as to all of the Leased Properties
(in accordance with Section 9.01 above), the remedies set forth herein shall be
exercisable with respect to all of the Leased Properties. Subject to the
foregoing provisions, Landlord may exercise any one or more of the following
remedies upon the occurrence of an Event of Default:
(a) Landlord may terminate this Lease, exclude Tenant from
possession of the subject Leased Property and use reasonable
efforts to lease the subject Leased Property to others. If
this Lease is terminated pursuant to the provisions of this
subparagraph (a) with respect to one or more, but less than
all, of the Leased Properties identified on Schedule A
hereto, Tenant will remain liable to Landlord for the Rent
for all of the Leased Properties identified on Schedule A
and other sums then due and for the balance of the Term as
if the Lease had not been terminated with respect to the
subject Leased Property, less the net proceeds, if any, of
any re-letting of the subject Leased Property by Landlord
subsequent to such termination, after deducting all
Landlord's expenses in connection with such re-letting,
including without limitation, the expenses set forth in
Section 9.02(b)(ii) below. Notwithstanding the termination
of this Lease with respect to a subject Leased Property,
Tenant shall pay to Landlord all amounts due as Rent, and
such other amounts then due, under this Lease on the days
that such Rent and such other amounts become due and payable
as required by this Lease.
30
(b) Without demand or notice, Landlord may re-enter and take
possession of the subject Leased Property or any part
thereof; and repossess such Leased Property as of Landlord's
former estate; and expel Tenant and those claiming through
or under Tenant from such Leased Property; and, remove the
effects of both or either, without being deemed guilty of
any manner of trespass and without prejudice to any remedies
for arrears of Rent or preceding breach of covenants or
conditions. If Landlord elects to re-enter, as provided in
this paragraph (b) or if Landlord takes possession of such
Leased Property pursuant to legal proceedings or pursuant to
any notice provided by law, Landlord may, from time to time,
without terminating any portion of this Lease, re-let such
Leased Property or any part of such Leased Property, either
alone or in conjunction with other portions of the
Improvements of which such Leased Property are a part, in
Landlord's name but for the account of Tenant, for such term
or terms (which may be greater or less than the period which
would otherwise have constituted the balance of the Term of
this Lease) and on such terms and conditions (which may
include concessions of free rent, and the alteration and
repair of such Leased Property) as Landlord, in its
uncontrolled discretion, may determine. Landlord may
collect and receive the Rents for such Leased Property.
Landlord will not be responsible or liable for any failure
to re-let such Leased Property, or any part of such Leased
Property, or for any failure to collect any Rent due upon
such re-letting. No such re-entry or taking possession of
such Leased Property by Landlord will be construed as an
election on Landlord's part to terminate this Lease unless a
written notice of such intention is given to Tenant. No
notice from Landlord under this Lease or under a forcible
entry and detainer statute or similar law will constitute an
election by Landlord to terminate this Lease unless such
notice specifically says so. Landlord reserves the right
following any such re-entry or re-letting, or both, to
exercise its right to terminate this Lease by giving Tenant
such written notice, and, in that event such Lease will
terminate as specified in such notice.
(c) If Landlord elects to take possession of a Leased Property
according to subparagraph (b) of this Section 9.02 without
terminating this Lease, Tenant will pay Landlord (A) the
Rent and other sums which would be payable under this Lease
with respect to such Leased Property if such repossession
had not occurred, less (B) the net proceeds, if any, of any
re-letting of such Leased Property after deducting all of
Landlord's expenses incurred in
31
connection with such re-letting, including without
limitation, all repossession costs, brokerage commissions,
legal expense, attorneys' fees, expense of employees,
alteration, remodeling, repair costs, and expense of
preparation for such re-letting. If, in connection with any
re-letting, any resulting lease term for the subject Leased
Property extends beyond the existing Term or Extension Term,
as the case may be, or such Leased Property covered by such
re-letting includes areas which are not part of such Leased
Property, a fair apportionment of the Rent received from
such re-letting and the expenses incurred in connection with
such re-letting will be made in determining the net proceeds
received from such re-letting. In addition, in determining
the net proceeds from such re-letting, any rent concessions
will be apportioned over the term of the new lease. Tenant
will pay such amounts to Landlord monthly on the days on
which the Rent and all other amounts owing under this Lease
would have been payable if possession had not been retaken,
and Landlord will be entitled to receive the rent and other
amounts from Tenant on each such day. Notwithstanding
anything herein to the contrary, Landlord, at its option,
may collect and apply any Rent received from such re-letting
in accordance herewith and in such case shall remit any
balance thereof to Tenant. Landlord shall incur no liability
or obligation to Tenant arising out of the collection or
application of Rent by Landlord hereunder.
(d) Landlord may re-enter the applicable Leased Property and
have, repossess and enjoy such Leased Property as if this
Lease had not been made, and in such event, Tenant and its
successors and assigns shall remain liable for any
contingent or unliquidated obligations or sums owing at the
time of such repossession.
(e) Landlord may take whatever action at law or in equity as may
appear necessary or desirable to collect the Rent and other
amounts payable hereunder with respect to the subject Leased
Property then due and thereafter to become due, or to
enforce performance and observance of any obligations,
agreements or covenants of Tenant under this Lease.
9.03 Right of Set-Off. Landlord may, and is hereby authorized by
-----------------
Tenant, at any time and from time to time, after advance notice to Tenant, to
set-off and apply any and all sums held by Landlord in respect of a Leased
Property, including all sums held in any escrow for Impositions, any
indebtedness of Landlord to Tenant, and any claims by Tenant against Landlord,
against any obligations of Tenant under this Lease in respect of such Leased
Property
32
and against any claims by Landlord against Tenant, whether or not Landlord has
exercised any other remedies hereunder. Landlord shall set-off and apply such
sums first, to delinquent real estate taxes, unless such taxes are being
protested in good faith and no lien has attached to any Leased Property with
respect thereto, second, to currently due and owing real estate taxes, and next,
to other Tenant's obligations in the order which Landlord may determine. The
rights of Landlord under this Section are in addition to any other rights and
remedies Landlord may have against Tenant.
9.04 Performance of Tenant's Covenants. Landlord may, without waiving
---------------------------------
or releasing any obligation of Tenant, and without waiving or releasing any
obligation or default, perform any obligation of Tenant which Tenant has failed
to perform within five (5) business days after Landlord has sent a written
notice to Tenant informing it of its specific failure (provided no such notice
shall be required if Landlord has previously notified Tenant of such failure
under the provisions of Section 9.01). In the event Landlord deems, in its
discretion, that Tenant's failure to perform such obligation has given rise to
an emergency situation, Landlord may perform such obligation without waiving or
releasing any obligation of Tenant, and without waiving or releasing any
obligation or default; provided, however, that Landlord shall notify Tenant of
such performance as soon as it is reasonably practicable to do so. Tenant shall
reimburse Landlord on demand, as Additional Rent, for any expenditures thus
incurred by Landlord and shall pay interest thereon at the New York Prime Rate.
9.05 Late Charge. Any payment not made by Tenant for more than five
-----------
(5) business days after the due date shall be subject to a late charge payable
by Tenant as Rent of four percent (4%) of the amount of such overdue payment.
Notwithstanding the foregoing, in the event that Tenant's payment is not made
more than five (5) business days after the due date more than two (2) times
during any twelve (12) month period, any such subsequent overdue payments within
the twelve (12) months immediately following such second failure shall be
subject to a late charge payable by Tenant as Rent of seven percent (7%) of the
amount of such overdue payment.
9.06 Litigation; Attorneys' Fees. Within ten (10) days after Tenant
----------------------------
has knowledge of any litigation or other proceeding related to or arising out of
this Agreement or the Leased Property in which claims are asserted in an amount
in excess of $50,000, that (1) may be instituted against Tenant, (2) may be
instituted against any Leased Property to secure or recover possession thereof,
or (3) may affect the title to or the interest of Landlord in any Leased
Property, Tenant shall give written notice thereof to Landlord. In the event
that Landlord determines that Tenant has failed to give adequate cooperation or
information with respect to any such litigation, investigation, receivership,
administrative, bankruptcy, insolvency or other similar proceeding, Landlord
may, after notice to Tenant, undertake such investigation or proceeding and
Tenant shall pay all reasonable costs and expenses (the "Costs") related thereto
that are incurred by Landlord, whether or not Landlord has received notice from
Tenant of such investigation or proceeding, and whether or not an Event of
Default has actually occurred or has been declared and thereafter cured, which
Costs shall include, without limitation: (a) the fees,
33
expenses, and costs of any litigation, investigation, receivership,
administrative, bankruptcy, insolvency or other similar proceeding; (b)
reasonable attorney, paralegal, consulting and witness fees and disbursements;
and (c) the expenses, including, without limitation, lodging, meals, and
transportation, of Landlord and its employees, agents, attorneys, and witnesses
in investigating or preparing for litigation, administrative, bankruptcy,
insolvency or other similar proceedings and attendance at hearings, depositions,
and trials in connection therewith. Within ten (10) days of Landlord's
presentation of an invoice of Costs incurred by Landlord pursuant to the
preceeding sentence or otherwise incurred by Landlord in enforcing or preserving
Landlord's rights under this Lease, whether or not an Event of Default has
actually occurred or has been declared and thereafter cured, Tenant shall pay
all such Costs. All such Costs as incurred shall be deemed to be Additional
Rent under this Lease.
9.07 Remedies Cumulative. The remedies of Landlord herein are
-------------------
cumulative to and not in lieu of any other remedies available to Landlord at law
or in equity. The use of, or failure to use, any one remedy shall not be taken
to exclude or waive the right to use any other remedy.
9.08 Escrows and Application of Payments. As security for the
-----------------------------------
performance of its obligations hereunder, Tenant hereby assigns to Landlord all
its right, title and interest in and to all monies escrowed with Landlord under
this Lease and all deposits with utility companies, taxing authorities, and
insurance companies; provided, however, that Landlord shall not exercise its
rights hereunder with respect to any Leased Property until an Event of Default
has occurred in respect of such Leased Property. Any payments received by
Landlord under any provisions of this Lease during the existence, or continuance
of an Event of Default shall be applied to Tenant's obligations, first, to
delinquent real estate taxes, unless such taxes are being protested in good
faith and no lien has attached to any Leased Property with respect thereto,
second, to currently due and owing real estate taxes, and next, to other
Tenant's obligations in the order which Landlord may determine.
9.09 Power of Attorney. Tenant hereby irrevocably and unconditionally
-----------------
appoints Landlord, or Landlord's authorized officer, agent, employee or
designee, as Tenant's true and lawful attorney-in-fact, to act, after an Event
of Default, for Tenant in Tenant's name, place, and stead, and for Tenant's and
Landlord's use and benefit, to execute, deliver and file all applications and
any and all other necessary documents or things, to effect a transfer,
reinstatement, renewal and/or extension of any and all licenses and other
governmental authorizations issued to Tenant in connection with Tenant's
operation of the Leased Properties, and to do any and all other acts incidental
to any of the foregoing. Tenant irrevocably and unconditionally grants to
Landlord as its attorney-in-fact full power and authority to do and perform,
after an Event of Default, every act necessary and proper to be done in the
exercise of any of the foregoing powers as fully as Tenant might or could do if
personally present or acting, with full power of substitution, hereby ratifying
and confirming all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and is
irrevocable prior to the full performance of Tenant's obligations hereunder.
34
ARTICLE X
DAMAGE AND DESTRUCTION
10.01 General. Tenant shall notify Landlord if any Leased Property is
-------
damaged or destroyed by reason of fire or any other cause. Tenant shall
promptly repair, rebuild, or restore such Leased Property, at Tenant's expense,
so as to make such Leased Property at least equal in value to such Leased
Property existing immediately prior to such occurrence and as nearly similar to
it in character as is practicable and reasonable. Before beginning such repairs
or rebuilding, or executing any contracts in connection with such repairs or
rebuilding, Tenant will submit for Landlord's approval, which approval Landlord
will not unreasonably withhold or delay, complete and detailed plans and
specifications for such repairs or rebuilding. Promptly after receiving
Landlord's approval of the plans and specifications, Tenant will begin such
repairs or rebuilding and will oversee the repairs and rebuilding to completion
with diligence, subject, however, to strikes, lockouts, acts of God, embargoes,
governmental restrictions, and other causes beyond Tenant's reasonable control.
Landlord will make available to Tenant the net proceeds of any fire or other
casualty insurance paid to Landlord for such repair or rebuilding as the same
progresses, after deduction of any costs of collection, including attorneys'
fees. Payment will be made against properly certified vouchers of a competent
architect in charge of the work and approved by Landlord. Prior to commencing
the repairing or rebuilding, Tenant shall deliver to Landlord for Landlord's
approval a schedule setting forth the estimated monthly draws for such work.
Landlord will contribute to such payments out of the insurance proceeds an
amount equal to the proportion that the total net amount received by Landlord
from insurers bears to the total estimated cost of the rebuilding or repairing,
multiplied by the payment by Tenant on account of such work. Landlord may,
however, withhold ten percent (10%) from each such payment and shall disburse
such amount after: (a) the work of repairing or rebuilding is completed and
proof has been furnished to Landlord that no lien or liability has attached or
will attach to such Leased Property or to Landlord in connection with such
repairing or rebuilding and (b) Tenant has obtained a certificate of use and
occupancy (or its functional equivalent) for the portion of such Leased Property
being repaired or rebuilt. Upon the completion of rebuilding or repairing and
the furnishing of such proof, the balance of the net proceeds of such insurance
payable to Tenant on account of such repairs or rebuilding will be paid to
Tenant. Tenant will obtain and deliver to Landlord a temporary or final
certificate of occupancy before such Leased Property is reoccupied for any
purpose. Tenant shall complete such repairs or rebuilding free and clear of
mechanic's or other liens, and in accordance with the building codes and all
applicable laws, ordinances, regulations, or orders of any state, municipal, or
other public authority affecting the repairs or rebuilding, and also in
accordance with all requirements of the insurance rating organization, or
similar body. Any remaining proceeds of insurance after such restoration will
be Tenant's property.
10.02 Landlord's Inspection. During the progress of such repairs or
----------------------
rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the subject Leased Property and will be furnished, if required by them,
with copies of all plans, shop drawings, and
35
specifications relating to such repairs or rebuilding. Tenant will keep all
plans, shop drawings, and specifications available, and Landlord and its
architects and engineers may examine them at all reasonable times. If, during
such repairs or rebuilding, Landlord and its architects and engineers determine
that the repairs or rebuilding are not being done in accordance with the
approved plans and specifications, Landlord will give prompt notice in writing
to Tenant, specifying in detail the particular deficiency, omission, or other
respect in which Landlord claims such repairs or rebuilding do not accord with
the approved plans and specifications. Upon the receipt of any such notice,
Tenant will cause corrections to be made to any deficiencies, omissions, or such
other respect. Tenant's obligations to supply insurance, according to Article
IV, will be applicable to any repairs or rebuilding under this Section 10.02.
10.03 Landlord's Costs. Tenant shall, within fifteen (15) days after
----------------
receipt of an invoice from Landlord, pay the reasonable costs, expenses, and
fees of any architect or engineer employed by Landlord to review any plans and
specifications and to supervise and approve any construction, or for any
services rendered by such architect or engineer to Landlord as contemplated by
any of the provisions of this Lease, or for any services performed by Landlord's
attorneys in connection therewith; provided, however, that Landlord will consult
with Tenant and notify Tenant of the estimated amount of such expenses.
10.04 Rent Abatement. In the event that the provisions of Section
--------------
10.01 above shall become applicable as to any Leased Property, and subject to
the last sentence of this Section 10.04, the applicable Base Annual Rent shall
be abated or reduced proportionately during any period in which, by reason of
such damage or destruction, there is substantial interference with the operation
of the Business of Tenant in such Leased Property, having regard to the extent
to which Tenant may be required to discontinue any Business on such Leased
Property, and such abatement or reduction shall continue for the period
commencing with such destruction or damage and ending with the substantial
completion by Tenant of such work or repair and/or reconstruction. In the event
that only a portion of any Leased Property is rendered untenantable or incapable
of such use, the Base Annual Rent payable hereunder in respect thereof shall be
reduced proportionately considering the extent to which the Tenant is unable to
practicably use the Leased Property for Business. Tenant shall use reasonably
diligent efforts to make the Leased Property tenantable and capable of such use.
Notwithstanding any other provision hereof, such rental abatement shall be
limited to the amount of any rental or Business interruption insurance proceeds
actually received by Landlord under Article IV.
10.05 Substantial Damage During Lease Term. Provided Tenant has fully
------------------------------------
complied with Section 4.01 hereof (including actually maintaining in effect
rental value insurance or Business interruption insurance provided for in clause
(c) thereof) and has satisfied the conditions of the last sentence of this
Section 10.05, if, at any time during the Term or any Extension Term, as the
case may be, of this Lease, any Leased Property is so damaged by fire or
otherwise that it is Completely Destroyed or Partially Destroyed (as such terms
are hereafter defined), Tenant may, within one hundred and eighty (180) days
after such damage, give notice of its election to terminate this Lease with
respect to such Leased Property and, subject to the
36
further provisions of this Section, this Lease will cease with respect to such
Leased Property on the thirtieth (30th) day after the delivery of such notice.
If the Lease is so terminated, Tenant will have no obligation to repair, rebuild
or replace such Leased Property, and the entire insurance proceeds will belong
to Landlord. If the Lease is not so terminated, Tenant shall rebuild such
Leased Property in accordance with Section 10.01. If Tenant elects to terminate
this Lease pursuant to this Section 10.05, Tenant will pay (or cause to be paid)
to Landlord, an amount equal to the excess amount, if any, of the book value of
the damaged property as shown in Landlord's financial statements as of the date
of such termination, over the amount of all insurance proceeds received by
Landlord. A Leased Property shall be deemed to be "Completely Destroyed" if
there is sufficient damage to such Leased Property that Landlord and Tenant
agree to its classification as such. A Leased Property shall be deemed to be
"Partially Destroyed" if, as a result of damages to it, a substantial part of
the Business (as determined by a reasonable dealer in the trade, in light of
standard trade practices) cannot be conducted on it within one hundred and
eighty (180) days of the occurrence of such damages. In the event that Landlord
and Tenant are unable to agree to a determination of whether any Leased Property
is Completely Destroyed, Partially Destroyed or otherwise, such determination
shall be made pursuant to the Arbitration provisions set forth in Article XIV.
10.06 Damage Near End of Term. Notwithstanding any provisions of
-----------------------
Sections 10.01 or 10.05 to the contrary, if damage to or destruction of any
Leased Property occurs during the last twenty-four (24) months of the Term, and
if such damage or destruction renders the Leased Property Completely Destroyed
or Partially Destroyed, either party shall have the right to terminate this
Lease as to such Leased Property by giving notice to the other within ten (10)
days after the date of damage or destruction, in which event Landlord shall be
entitled to retain the insurance proceeds and Tenant shall pay to Landlord on
demand the amount of any deductible or uninsured loss arising in connection
therewith; provided, however, that any such notice given by Landlord shall be
void and of no force and effect if Tenant exercises an available option for an
Extension Term with respect to such Leased Property pursuant to provisions of
this Lease within ten (10) business days following receipt of such termination
notice.
10.07 Risk of Loss. Notwithstanding anything herein to the contrary,
------------
during the Term or any Extension Term, as the case may be, the risk of loss of
or decrease in the enjoyment and beneficial use of the Leased Properties in
consequence of the damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise is assumed by Tenant, and Landlord
shall in no event be answerable or accountable therefor except in the case of
gross negligence, willful misconduct or breach of this Lease by Landlord
resulting in such damage or destruction. In addition, all risk of loss or
decrease in enjoyment and beneficial use in consequence of foreclosures,
attachments, levies or executions is assumed by Tenant except for foreclosure
due to Landlord's indebtedness.
37
ARTICLE XI
CONDEMNATION
11.01 Total Taking. If at any time during the Term or any Extension
------------
Term, as the case may be, any Leased Property is totally and permanently taken
by right of eminent domain or by conveyance made in response to the threat of
the exercise of such right ("Condemnation"), this Lease shall terminate as to
such Leased Property on the Date of Taking (which shall mean the date the
condemning authority has the right to possession of the property being
condemned), and Tenant shall promptly pay all outstanding applicable Rent and
other charges through the date of termination, provided, however, this Lease
shall not so terminate if the Condemnation occurred due to the failure of Tenant
to maintain such Leased Property as required by Article VII hereof or other
applicable provisions hereof, whether or not such failure on the part of Tenant
constituted an Event of Default hereunder at the time of the Condemnation.
11.02 Partial Taking. If a portion of a Leased Property is taken by
--------------
Condemnation, this Lease shall remain in effect as to such Leased Property if
such Leased Property is not thereby rendered Unsuitable for the continuation of
Tenant's Business on that Leased Property (which shall mean that such Leased
Property is in such a state or condition such that in the good faith judgment of
Tenant, reasonably exercised, it cannot be used on a commercially practicable
basis in the operation of the Business), but if such Leased Property is thereby
rendered Unsuitable for the continuation of Tenant's Business on that Leased
Property, this Lease shall terminate as to such Leased Property on the Date of
Taking, provided such Condemnation was not as a result of Tenant's failure to
maintain such Leased Property as provided for in Section 11.01.
11.03 Restoration. If there is a partial taking of any Leased Property
-----------
and this Lease remains in full force and effect pursuant to Section 11.02,
Landlord shall retain the amount of any Landlord Award (as hereafter defined)
received by Landlord, Landlord shall apply such Landlord Award to accomplish all
necessary restoration to the Leased Property, and any excess after such
application shall be retained by Landlord. If there is a partial taking of any
Leased Property and this Lease remains in full force and effect pursuant to
Section 11.02, Tenant shall retain the amount of any Tenant Award (as hereafter
defined) received by Tenant, Tenant shall apply such Tenant Award to accomplish
all necessary restoration of Tenant's property, and any excess after such
application shall be retained by Tenant. Notwithstanding anything in this
Section to the contrary, in the event that there is a partial taking of any
Leased Property and this Lease remains in full force and effect pursuant to
Section 11.02, and there is a single Award with respect to such partial taking,
then the Landlord and Tenant shall use their good faith efforts to determine the
proper apportionment of such Award (as hereafter defined) to restoration of
Landlord's and Tenant's respective properties. In the event that the parties
are unable to agree on such apportionment within thirty (30) days, the parties
shall submit to arbitration of an apportionment subject to the arbitration
provisions set forth in Article XIV.
38
11.04 Landlord's Inspection. During the progress of such restoration,
---------------------
Landlord and its architects and engineers may, from time to time, inspect the
subject Leased Property and will be furnished, if required by them, with copies
of all plans, shop drawings, and specifications relating to such restoration.
Tenant will keep all plans, shop drawings, and specifications available, and
Landlord and its architects and engineers may examine them at all reasonable
times. If, during such restoration, Landlord and its architects and engineers
determine that the restoration is not being done in accordance with the approved
plans and specifications, Landlord will give prompt notice in writing to Tenant,
specifying in detail the particular deficiency, omission, or other respect in
which Landlord claims such restoration does not accord with the approved plans
and specifications. Upon the receipt of any such notice, Tenant will cause
corrections to be made to any deficiencies, omissions, or such other respect.
Tenant's obligations to supply insurance, according to Article IV, will be
applicable to any restoration under this Section.
11.05 Award Distribution. The entire compensation, sums or anything of
------------------
value awarded, paid or received on a total or partial Condemnation of a Leased
Property that is awarded to Landlord shall belong to Landlord (the "Landlord
Award"). The entire compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation of a Leased Property that is awarded
to Tenant shall belong to Tenant (the "Tenant Award", collectively with the
Landlord Award, the "Awards", and each, individually, an "Award").
Notwithstanding anything in this Section to the contrary, in the event that
there is a total or partial Condemnation of a Leased Property and there is a
single Award with respect to such Condemnation, then the Landlord and Tenant
shall use their good faith efforts to determine the proper apportionment of such
Award to Landlord's and Tenant's respective properties. In the event that the
parties are unable to agree on such apportionment within thirty (30) days, the
parties shall submit to arbitration of an apportionment subject to the
arbitration provisions set forth in Article XIV.
11.06 Temporary Taking. The taking of any Leased Property, or any part
----------------
thereof, by military or other public authority shall constitute a taking by
Condemnation only when the use and occupancy by the taking authority has
continued for longer than twenty four (24) months. During any such twenty-four
(24) month period, which shall be a temporary taking, all the provisions of this
Lease shall remain in full force and effect as to such Leased Property with no
abatement of rent payable by Tenant hereunder. In the event of any such
temporary taking, the entire amount of any such Award made for such temporary
taking allocable to the Term hereof, whether paid by way of damages, Rent or
otherwise, shall be paid to Tenant.
39
ARTICLE XII
ADDITIONAL REPRESENTATIONS, WARRANTIES AND FINANCIAL COVENANTS
Tenant hereby represents, warrants and covenants to Landlord as
follows:
12.01 Organization and Qualification.
------------------------------
(a) Tenant is a [__________] corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation or organization, with all power and authority,
corporate or otherwise, necessary to: (i) enter into and
perform this Lease and (ii) own and lease its assets and
properties, and conduct its Business, as it is now being
conducted or proposed to be conducted. Tenant is duly
qualified as a foreign corporation or other entity, as the
case may be, to conduct its Business and own and lease its
assets and properties, and is in good standing, in each
jurisdiction where the character of its assets and
properties owned or held under lease or the nature of its
Business makes such qualification necessary or advisable,
and is duly qualified and licensed under all laws,
regulations, ordinances or orders of public or governmental
authorities, or otherwise to carry on its Business and own
or lease its assets and properties in the places and in the
manner in which they are owned, leased or conducted or
proposed to be owned, leased or conducted, except where the
failure to be so organized, qualified and in good standing
or to have such authority, qualification or licensing could
not result in a Material Adverse Change. Complete and
correct copies of Tenant's Charter, as in effect on the date
hereof, and Tenant's by-laws, also as in effect on the date
hereof, have been delivered to Landlord.
(b) Each Affiliate that conducts operations or business on or
from any Leased Property, whether now or at any time in the
future, is duly organized, validly existing and in good
standing under the laws of its organization, with all power
and authority, corporate or otherwise, necessary to own and
lease its assets and properties, and conduct its business,
as it is now being conducted or proposed to be conducted.
Each Affiliate is duly qualified as a foreign corporation or
other entity, as the case may be, to do business and own and
lease its assets and properties, and is in good standing, in
each jurisdiction where the character of its assets and
properties owned or held under lease or the nature of its
activities or business makes such qualification necessary or
advisable, and is duly qualified and licensed under all
laws, regulations, ordinances or orders or public or
governmental authorities or otherwise to carry on its
business and own or lease its assets and properties in the
places and in the manner in which they are owned, leased or
is conducted or proposed to be owned, leased or conducted,
40
except where the failure to be so organized, qualified and
in good standing or to have such authority, qualification or
licensing could not result in a Material Adverse Change.
"Material Adverse Change" since a particular specified date, or a date
which may be specified from the circumstances existing immediately prior to the
happening of a specified event or occurrence, or, if no date or event is
specified, with reference to the most recent Annual Financial Statements
delivered pursuant to this Lease, means a material adverse change in the
Business, assets, properties, franchises, financial condition or income of
Tenant or the operations, business, assets, properties, franchises, financial
condition, income or prospects of any Affiliate, whether or not such event or
occurrence is an Event of Default. Nothing that would otherwise be a breach of
any representation, warranty, covenant or obligation herein by any Affiliate
shall be a breach of this Agreement, unless such breach constitutes or causes a
material adverse effect on the Business.
"Affiliate" means with respect to any Person, (i) any Person that holds
direct or indirect beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of voting securities or other
voting interests representing at least five percent (5%) of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least five percent (5%) of the outstanding equity securities or
interests in a Person, or (ii) any Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with such Person.
A "Person" shall mean and include natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts, Indian tribes or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
12.02 Material Agreements. Tenant has previously furnished to Landlord
-------------------
correct and complete copies of (including all exhibits, schedules and amendments
thereto) each agreement listed in Exhibit 12.02, each as in effect on the date
hereof (the "Material Agreements").
12.03 Changes in Condition. Since the date of the latest Annual
---------------------
Financial Statements, no Material Adverse Change has occurred between such date
and the date hereof, and neither Tenant nor any Affiliate has entered into any
material transaction outside the ordinary course of its or their operations or
business, including the Business, except as set forth in Exhibit 12.03 and the
matters contemplated by this Lease.
12.04 Franchises, Licenses, etc. Tenant and its subsidiaries own, or
--------------------------
have sufficient interests in, all franchises, trademarks, trademark rights,
trade names, trade name rights, copyrights, licenses, permits, authorizations
and other rights as are necessary for the conduct of Tenant's Business and its
subsidiaries' businesses as now conducted or proposed to be
41
conducted by Tenant or any Affiliate, as well as rights under any agreement
under which Tenant or its subsidiaries has access to confidential information
used by Tenant or its subsidiaries in Tenants' Business or the businesses of its
subsidiaries, as the case may be (collectively, the "Intellectual Property").
All Intellectual Property is in full force and effect in all material respects,
and Tenant and its subsidiaries are in substantial compliance with the foregoing
without any conflict with the valid rights of others, which has resulted, or
could be reasonably likely to result in any Material Adverse Change. Neither
Tenant nor any Affiliate has violated, or received any communication that by
conducting its Business or any Affiliate's businesses, it or any Affiliate would
violate any franchises, licenses, patents, trademarks, service marks, trade
names, copyrights, trade secrets, proprietary rights or processes of any other
Person (as hereafter defined) nor is Tenant or any Affiliate aware of any such
violations. No event has occurred which permits, or after notice or lapse of
time or both would permit, the revocation or termination of any such license,
franchise or other right or affect the rights of Tenant or any Affiliate so as
to result in or reasonably be likely to result in any Material Adverse Change.
There is no litigation or other proceeding or dispute or, to the knowledge of
Tenant or any Affiliate, threat thereof with respect to the validity or, where
applicable, the extension or renewal, of any of the foregoing which has
resulted, or could result, in any Material Adverse Change.
12.05 Litigation. No litigation, at law or in equity, or any
-----------
proceeding before any court, board or other governmental or administrative
agency or any arbitrator or other forum of alternative dispute resolution is
pending or, to the knowledge of Tenant or any Affiliate, threatened which
involves any risk of any final judgment, order or liability which, after giving
effect to any applicable insurance, has resulted, or could result, in any
Material Adverse Change or which seeks to enjoin the execution and consummation
of this Lease and the performance of Tenant's obligations hereunder. No
judgment, decree or order of any court, board or other governmental or
administrative agency or any arbitrator has been issued against or binds Tenant
or any Affiliate, which has resulted, or could result, in any Material Adverse
Change.
12.06 Authorization and Enforceability. Tenant has taken all corporate
---------------------------------
or other action required to execute, deliver and perform this Lease. This Lease
constitutes the legal, valid and binding obligation of Tenant and is enforceable
against Tenant in accordance with its terms.
12.07 No Legal Obstacle to Lease. Neither the execution and delivery of
---------------------------
this Lease nor the performance of any obligation hereunder has constituted or
resulted in or will constitute or result in:
(a) any breach, violation of, conflict with, default under or
termination of any agreement, contract, mortgage,
instrument, deed or lease to which Tenant or any Affiliate
is a party or by which it or they are bound;
42
(b) the violation of or conflict with any law, statute,
ordinance, judgment, decree, order, rule or regulation
applicable to Tenant, any Affiliate, any Improvements or any
Leased Property; or
(c) any violation of or conflict with Tenant's or any
Affiliate's Charter or By-Laws or other organizational
documents, as the case may be.
No approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority or any other Person is
required to be obtained or made by Tenant in connection with the execution,
delivery and performance of this Lease.
12.08 Certain Business Representations:
--------------------------------
(a) Labor Relations. No dispute or controversy between Tenant or
---------------
any Affiliate and its or their employees has resulted in, or
is reasonably likely to result in, any Material Adverse
Change, and neither Tenant nor any Affiliate anticipates
that its relationships with its unions or employees will
result, or are reasonably likely to result, in any Material
Adverse Change. Tenant and each Affiliate is in compliance
in all material respects with all federal and state laws
relating to employees and labor relations, including, but
not limited to, laws relating to health and safety in the
workplace, non-discrimination in employment and the payment
of wages.
(b) Antitrust. Tenant and each Affiliate is in compliance in all
----------
material respects with all federal and state antitrust laws
relating to Tenant's Business and the subsidiaries'
businesses and the geographic concentration thereof.
(c) Consumer Protection. Neither Tenant nor any Affiliate is in
--------------------
violation of any rule, regulation, order, or interpretation
of any rule, regulation or order of the Federal Trade
Commission (including truth-in-lending) or other federal,
state or local public or governmental authority or agency,
with which the failure to comply, in the aggregate, has
resulted in, could result in, a Material Adverse Change.
(d) Future Expenditures. Neither Tenant nor any Affiliate,
-------------------
anticipates that further expenditures, if any, by Tenant or
any Affiliate needed to meet the provisions of any federal,
state or foreign governmental statutes, orders, rules or
regulation could result in any Material Adverse Change.
43
(e) Benefit Liabilities. Neither Tenant nor any ERISA Affiliate
-------------------
(as hereafter defined) maintains, contributes to, or is
obligated to contribute to, nor has Tenant or any ERISA
Affiliate maintained, contributed to, been obligated to
contribute to, or had any direct, indirect, or contingent
liability with respect to, any Title IV Plan (as hereafter
defined). Tenant and each ERISA Affiliate have timely made
all contributions required to be made with respect to each
of their Tenant Benefit Plans (as hereafter defined). Each
Tenant Benefit Plan has been maintained in compliance with
its terms and with applicable laws (including specifically
the Code and the Employee Retirement Income Security Act of
1974 ("ERISA"). Neither Tenant nor any ERISA Affiliate has
incurred any obligation in connection with the termination
or withdrawal from any Tenant Benefit Plan. Contributions
made by Tenant or its ERISA Affiliates, as the case may be,
to any Tenant Benefit Plan have been accounted for, and the
liabilities associated therewith are disclosed, in Tenant's
or its ERISA Affiliates', as the case may be, financial
statements for the fiscal year ending before the date as of
which this representation is given. The present value of the
accrued benefit liabilities (whether or not vested) under
each Tenant Benefit Plan, determined as of the end of
Tenant's or its ERISA Affiliates', as the case may be, most
recently ended fiscal year on the basis of actuarial
assumptions, each of which is reasonable, did not exceed the
current value of the assets of such Tenant Benefit Plan
allocable to such benefit liabilities. "Tenant Benefit Plan"
means any plan, fund, or other similar program described in
Section 3(2) of ERISA and established or maintained or with
respect to which Tenant and/or any ERISA Affiliate has an
obligation to contribute for the benefit of its employees
(or for which Tenant could be directly or contingently
liable). "Title IV Plan" means an "employee benefit plan"
(as defined in Section 3(3) of ERISA) that is subject to
Title IV of ERISA and is or has been established or
maintained, by Tenant or any ERISA Affiliate, or to which
contributions are, have been, or should have been made.
"ERISA Affiliate" means any trade or business, whether or
not incorporated, that, together with Tenant, is or has been
under common control, within the meaning of Section 414(b),
(c), (m), or (o) of the Code or Section 4001 of ERISA.
12.09 Certain Financial Covenants. Tenant or an Affiliate, as
---------------------------
applicable, is in compliance in all material respects with all financial
covenants required to be maintained pursuant to any franchise or other agreement
pursuant to which Tenant or such Affiliate operates its business, except in such
respects as shall not result in any franchisor under any franchise or
44
operating agreement to which Tenant is a party taking any action that could
result in a Material Adverse Change.
12.10 Cash Flow Coverage Ratio Covenant. On the date of this Lease and
---------------------------------
measured at a date that is twenty-four (24) months following such date (each a
"Cash Flow Measurement Date"), and on each anniversary date that is twenty-four
(24) months following a prior Cash Flow Measurement Date, Tenant shall have
maintained a Cash Flow Coverage Ratio of not less than 1.5 to 1.0 based on the
Annual Financial Statements to be delivered to Landlord in accordance with
Section 6.04 hereof. "Cash Flow Coverage Ratio" means the aggregate of net
income before taxes plus mortgage interest, rent expense, depreciation,
compensation of principals of the Business, management fees plus the annual LIFO
adjustment and other non-cash expenses, less recurring capital expenditures and
gain (loss) on sale of real estate, dividends and/or profits taken out of Tenant
divided by the aggregate of the Tenant's obligations under this Lease.
Notwithstanding anything herein to the contrary, in the event that Tenant shall
not be in compliance with this covenant at a Cash Flow Measurement Date or
Tenant shall have knowledge of such non-compliance prior to any Cash Flow
Measurement Date, the Tenant shall have the right to cure such breach through
any reasonable commercial means, including, but not limited to, providing
guarantees acceptable to Landlord, increasing capital, or cross collateralizing
with any other property of Tenant or an Affiliate, provided that such breach is
cured within one hundred and eighty (180) days after Notice by Landlord to
Tenant of the existence of such breach.
12.11 Disclosure. This Lease does not contain any untrue statement of
----------
a material fact or omit to state a material fact necessary in order to make any
statement contained herein not misleading in light of the circumstances under
which it was made. To Tenant's knowledge, there is no event, fact or occurrence
that has resulted, or in the future (so far as Tenant can reasonably foresee)
could result, in any Material Adverse Change, except to the extent that present
or future general and sector-specific economic conditions may result in a
Material Adverse Change.
12.12 Covenant Not to Acquire. Tenant covenants and agrees that during
-----------------------
the Term and any Extension Term, as the case may be, Tenant and its controlling
shareholders or its or their Affiliates will not acquire, directly or
indirectly, more that 9.90% of the outstanding common shares of beneficial
interest of Capital Automotive REIT. Tenant covenants and agrees that it will
divest itself of such shares of Capital Automotive REIT as may be necessary to
satisfy the limitations of this Section 12.12.
45
ARTICLE XIII
ASSIGNMENT AND SUBLETTING; ATTORNMENT
13.01 Prohibition Against Subletting and Assignment. Subject to
---------------------------------------------
Section 13.03, Tenant shall not, without the prior written consent of Landlord,
or upon compliance with any conditions established by Landlord, in its sole
discretion, assign, mortgage, pledge, hypothecate, encumber or otherwise
transfer (except to an Affiliate) this Lease or any interest herein, or all or
any part of any Leased Property, or suffer or permit this Lease or the leasehold
estate created hereby or any other rights arising hereunder to be assigned,
transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in
part, whether voluntarily, involuntarily or by operation of law. For purposes
of this Section 13.01, an assignment of this Lease shall be deemed to include
any Change of Control of Tenant, as if such Change of Control were an assignment
of the Lease. In the event that (i) Landlord shall withhold any consent to any
assignment or transfer of this Lease or any interest herein, and (ii) such
assignee or transferee is approved by the relevant manufacturer for continuation
as a franchisee, there shall be a presumption that such assignment or transfer
was reasonable and Landlord shall have the burden of rebutting such presumption
and of proving that such consent was in fact reasonably withheld (or that such
conditions were reasonable).
13.02 Changes of Control. A Change of Control requiring the consent
------------------
of Landlord shall mean:
(a) the issuance and/or sale by Tenant or the sale by any
shareholder or equity holder of Tenant of a Controlling
(which shall mean, as applied to any Person, the
possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of
such Person, whether through the ownership of voting
securities, by contract or otherwise) interest in Tenant
to a Person other than an Affiliate of Tenant, other than
in either case a distribution to the public pursuant to an
effective registration statement under the Securities Act
of 1933, as amended (a "Registered Offering");
(b) the sale, conveyance or other transfer of all or
substantially all of the assets of Tenant (whether by
operation of law or otherwise) provided, however, that no
Change of Control shall be deemed to have occurred in the
event of the transfer of assets as a result of the death
of a person involved in the Business, so long as the
transferee is approved by the manufacturer for the
continuation of the Business; or
46
(c) any transaction pursuant to which Tenant is merged with or
consolidated into another entity (other than an entity
owned and Controlled by an Affiliate), and Tenant is not
the surviving entity.
13.03 Operating/Service Agreements.
-----------------------------
(a) Permitted Agreements. Tenant shall, without Landlord's
--------------------
prior approval, be permitted to enter into such
operating/service agreements for portions of each Leased
Property to various licensees in connection with Tenant's
Business as are customarily associated with or incidental
to the operation of such Leased Property, which agreements
may be in the nature of a sublease agreement.
(b) Terms of Agreements. Each operating/service agreement
-------------------
concerning a Leased Property shall be subject and
subordinate to the provisions hereof. No agreement made as
permitted by Section 13.03(a) shall affect or reduce any
of the obligations of Tenant hereunder, and all such
obligations shall continue in full force and effect as if
no agreement had been made. No agreement shall impose any
additional obligations on Landlord hereunder.
(c) Copies. Tenant shall, within ten (10) days after the
------
execution and delivery of any operating/service agreement
permitted by Section 13.03(a), deliver a duplicate
original thereof to Landlord.
(d) Assignment of Rights in Agreements. As security for
----------------------------------
performance of its obligations hereunder, Tenant hereby
grants, conveys and assigns to Landlord all right, title
and interest of Tenant in and to all operating/service
agreements now in existence or hereinafter entered into
for each Leased Property, and all extensions,
modifications and renewals thereof and all rents, issues
and profits therefrom, to the extent the same are
assignable by Tenant. Landlord hereby grants to Tenant a
license to collect and enjoy all rents and other sums of
money payable under any such agreement; provided, however,
that Landlord shall have the absolute right at any time
after the occurrence and continuance of an Event of
Default upon notice to Tenant and any vendors or licensees
to revoke said license and to collect such rents and sums
of money and to retain the same. Tenant shall not (i)
after the occurrence and continuance of an Event of
Default, consent to, cause, or allow, any material
modification or alteration of any of the terms, conditions
or covenants of any of the agreements or the
47
termination thereof, without the prior written approval of
Landlord nor (ii) accept any rents (other than customary
security deposits) more than thirty (30) days in advance
of the accrual thereof nor permit anything to be done, the
doing of which, nor omit or refrain from doing anything,
the omission of which, will or could be a breach of or
default in the terms of any of the agreements.
(e) Licenses, Etc. For purposes of Section 13.03, the
-------------
operating/service agreements shall mean any licenses,
concession arrangements, or other arrangements relating to
the possession or use of all or any part of any Leased
Property.
13.04 Assignment. If Landlord shall withhold its consent to any
----------
assignment or if Landlord shall have established conditions to approval of any
assignment but such conditions shall not have been complied with, to the
satisfaction of Landlord, such assignment shall not in any way impair the
continuing primary liability of Tenant hereunder. No consent to any assignment
in a particular instance shall be deemed to be a general waiver of the
prohibition set forth in Article XIII. Any assignment shall be solely of
Tenant's entire interest in this Lease with respect to the subject Leased
Property or Leased Properties. Any assignment or other transfer of all or any
portion of Tenant's interest in this Lease in contravention of Article XIII
shall be voidable at Landlord's option.
13.05 REIT Limitations.
----------------
(a) Anything contained herein to the contrary notwithstanding,
Tenant shall not: (a) sublet or assign a Leased Property
or this Lease on any basis such that the rental or other
amounts to be paid by the sublessee or assignee thereunder
would be based, in whole or in part, on the income or
profits derived by the business activities of the
sublessee or assignee; (b) sublet or assign a Leased
Property or this Lease to any Person that, under Section
856(d)(2)(B) of the Internal Revenue Code of 1986, as
amended (the "Code"), Landlord or its general partner
owns, directly or indirectly (by applying constructive
ownership rules set forth in Section 856(d) (5) of the
Code, a ten percent (10%) or greater interest; or (c)
sublet or assign a Leased Property or this Lease in any
other manner or otherwise derive any income which could
cause any portion of the amounts received by Landlord
pursuant hereto or any sublease to fail to qualify as
"rents from real property" within the meaning of Section
856(d) of the Code, or which could cause any other income
received by Landlord to fail to qualify as income
described in Section 856(c) (2) of the Code. The
requirements of
48
this Section 13.05 shall likewise apply to any further
subleasing by any subtenant.
(b) Tenant acknowledges that Capital Automotive REIT, a
Maryland real estate investment trust and the general
partner of Landlord (the "Company"), intends to elect to
be taxed as a real estate investment trust (a "REIT")
under the Code. Tenant shall not do anything which would
adversely affect the Company's status as a REIT. Tenant
hereby agrees to modifications of this Lease which do not
materially adversely affect Tenant's rights and
liabilities if such modifications are required to retain
or clarify the Company's status as a REIT.
13.06 Attornment. Tenant shall insert in each sublease permitted
----------
under Section 13.03(a) provisions to the effect that: (a) such sublease is
subject and subordinate to all of the terms and provisions of this Lease and to
the rights of Landlord hereunder; (b) in the event this Lease shall terminate
before the expiration of such sublease, the sublessee thereunder will, at
Landlords' option, attorn to Landlord and waive any right the sublessee may have
to terminate the sublease or to surrender possession thereunder, as a result of
the termination hereof; and (c) in the event the sublessee receives a written
notice from Landlord or Landlord's assignees, if any, stating that Tenant is in
default under this Lease, the sublessee shall thereafter be obligated to pay all
rentals accruing under said sublease directly to the party giving such notice,
or as such party may direct. All rentals received from the sublessee by Landlord
or Landlord's assignees in respect of a Leased Property, if any, as the case may
be, shall be credit against the amounts owing by Tenant hereunder with respect
to such Leased Property.
13.07 Severance and Spin-Off. If at any time while this Lease is in
----------------------
effect any Leased Property shall be utilized by Tenant in the operation of more
than one automobile franchise, then provided that there is no existing Event of
Default and there exists no condition which, with the passage of time, could
become an Event of Default, Tenant shall have the right (the "Spin-Off Right")
to sever and spin-off one or more parcels (each referred to as a "Spin-Off
Parcel") of the Leased Property from this Lease, subject to compliance with the
requirements of Section 13.08.
13.08 Assignment. If the Leased Property is not a separate subdivided
----------
lot, Landlord may condition its approval of an assignment upon Tenant showing
that there are appropriate provisions (such as a condominium regime,
subdivision, and/or reciprocal easements, lender and/or franchisor consents if
necessary, and separate tax lots) which allow the Leased Property to be
separately owned and operated without interference from or dependence upon,
another person as to items such as access, real estate taxes, or utilities.
49
ARTICLE XIV
ARBITRATION
14.01 Controversies. Except with respect to the payment of Rent
-------------
hereunder, which shall be subject to the provisions of Section 9.02, in the
event a controversy arises between the parties as to any of the requirements of
this Lease or the performance hereunder, which the parties are unable to
resolve, the parties agree to waive the remedy of litigation (except for
extraordinary relief in an emergency situation) and agree that such controversy
or controversies shall be determined by arbitration as hereafter provided in
this Article.
14.02 Appointment of Arbitrators. The party or parties requesting
--------------------------
arbitration shall serve upon the other a demand therefor, in writing, specifying
in detail the controversy and matter(s) to be submitted to arbitration before
the American Arbitration Association. The selection of arbitrators shall be
conducted pursuant to the rules for resolution of commercial disputes
promulgated by the American Arbitration Association. The party or parties giving
notice shall request a listing of available arbitrators from the American
Arbitration Association, and each party shall respond in the selection process
within fifteen (15) days after each receipt of such listings until a panel of
three (3) arbitrators has been designated. If either party fails to respond
within fifteen (15) days, it is agreed that the American Arbitration Association
may make such selections as are necessary to complete the panel of three (3)
arbitrators.
14.03 Arbitration Procedure. Within five (5) business days after the
---------------------
selection of the arbitration panel, the arbitrators shall give written notice to
each party as to the time and the place of each meeting, which shall be held in
Washington, D.C., at which the parties may appear and be heard, which shall be
no later than fifteen (15) days after certification of the arbitration panel.
The parties specifically waive discovery, and further waive the applicability of
rules of evidence or rules of procedure in the proceedings. The applicable rules
shall be those in effect at the time for the resolution of commercial disputes
promulgated by the American Arbitration Association. Notwithstanding the
foregoing, the substantive law governing the arbitration shall be the laws of
the State of Delaware (without application of choice of law provisions). The
arbitrators shall take such testimony and make such examination and
investigations as the arbitrators reasonably deem necessary. The decision of the
arbitrators shall be in writing signed by a majority of the panel which decision
shall be final and binding upon the parties to the controversy. Provided,
however, in rendering their decisions and making awards, the arbitrators shall
not add to, subtract from or otherwise modify the provisions of this Lease.
14.04 Expenses. The expenses of the arbitration shall be assessed by
--------
the arbitrators and specified in the written decision. In the absence of a
determination or assessment of expenses of the arbitration procedure in the
award, all of the expenses of such arbitration shall be divided equally between
Landlord and Tenant. Each party in interest shall be responsible for and pay the
fees, costs and expenses of its own counsel, unless the arbitration award
provides for an assessment of reasonable attorneys' fees and costs.
50
14.05 Enforcement of the Arbitration Award. There shall be no appeal
------------------------------------
from the decision of the arbitrators, and upon the rendering of an award, any
party thereto may file the arbitrators' decision in the United States District
Court for the Eastern District of Virginia for enforcement as provided by
applicable law.
ARTICLE XV
QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT, ESTOPPEL CERTIFICATES
15.01 Quiet Enjoyment. So long as Tenant performs all of its
---------------
obligations under this Lease, Tenant's possession of the Leased Properties will
not be disturbed by or through Landlord.
15.02 Landlord Mortgages; Subordination. Subject to Section 15.03,
---------------------------------
without the consent of Tenant, Landlord may, from time to time, directly or
indirectly, create or otherwise cause to exist any liens, encumbrances, security
interests or title retention agreements on any Leased Property, or any portion
thereof or any interest therein, whether to secure any borrowing or other means
of financing or refinancing. Tenant shall execute, acknowledge and deliver to
Landlord, at any time and from time to time upon demand by Landlord or any
mortgagee or any holder of any mortgage or other instrument described in this
Section, without cost to Landlord, a Subordination and Non-Disturbance Agreement
in the form attached hereto as Exhibit 15.02, which provides that (i) Tenant's
rights hereunder are subordinate to any ground lease or underlying lease, first
mortgage, first deed of trust, or other first lien against any Leased Property,
together with any renewal, consolidation, extension, modification, or
replacement thereof, which now or at any subsequent time affects any Leased
Property or any interest of Landlord in any Leased Property, except to the
extent that any such instrument expressly provides that this Lease is superior;
and (ii) in the event such party succeeds to Landlord's interest under the Lease
and provided that no Event of Default by Tenant exists, such party will not
disturb Tenant's possession, use or occupancy of the subject Leased Property. If
Tenant fails or refuses to execute, acknowledge, and deliver such Subordination
and Non-Disclosure Agreement within ten (10) business days after written demand,
then Landlord shall send to Tenant a second written demand. If Tenant fails or
refuses to execute, acknowledge and deliver such Subordination and Non-
Disclosure Agreement within ten (10) days after such second written demand, then
Landlord or such successor in interest may execute, acknowledge and deliver such
Subordination and Non-Disclosure Agreement on behalf of Tenant as Tenant's
attorney-in-fact. Tenant hereby constitutes and irrevocably appoints Landlord,
its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant the Subordination and Non-
Disclosure Agreement. This power of attorney is coupled with an interest and is
irrevocable.
15.03 Attornment. If any holder of any mortgage, indenture, deed of
----------
trust, or other similar instrument described in Section 15.02 succeeds to
Landlord's interest in any Leased
51
Property, Tenant will pay to such holder all Rent subsequently payable hereunder
as to such Leased Property. Tenant shall, upon request of anyone succeeding to
the interest of Landlord, automatically become the tenant of, and attorn to,
such successor in interest without changing this Lease. The successor in
interest will not be bound by: (a) any payment of Rent for more than one (1)
month in advance; (b) any amendment or modification hereof made without its
written consent; (c) any claim against Landlord arising prior to the date on
which the successor succeeded to Landlord's interest; or (d) any claim or offset
of Rent against Landlord.
15.04 Estoppel Certificates. At the request of Landlord or any
---------------------
mortgagee or purchaser of a Leased Property, Tenant shall execute, acknowledge,
and deliver an estoppel certificate, in recordable form, in favor of Landlord or
any mortgagee or purchaser of any Leased Property certifying the following as to
such Leased Property: (a) that this Lease is unmodified and in full force and
effect, or if there have been modifications that the same is in full force and
effect as modified and stating the modifications; (b) the date to which Rent and
other charges have been paid; (c) that neither Tenant nor Landlord is in default
nor is there any fact or condition which, with notice or lapse of time, or both,
would constitute a default, if that be the case, or specifying any existing
default; (d) that Tenant has accepted and occupies such Leased Property; (e)
that Tenant has no defenses, set-offs, deductions, credits, or counterclaims
against Landlord, if that be the case, or specifying such that exist; (f) that
Landlord has no outstanding construction or repair obligations; and (g) such
other information as may reasonably be requested by Landlord or any mortgagee or
purchaser. Any purchaser or mortgagee may rely on this estoppel certificate. If
Tenant fails to deliver the estoppel certificates to Landlord within ten (10)
business days after the request of Landlord, then Landlord shall request such
delivery a second time. If Tenant fails to deliver the estoppel certificates to
Landlord within ten (10) days after such second request by Landlord, then Tenant
shall be deemed to have certified that: (a) this Lease is in full force and
effect and has not been modified, or that this Lease has been modified as set
forth in the certificate delivered to Tenant; (b) Tenant has not prepaid any
Rent or other charges except for the current month; (c) Tenant has accepted and
occupies such Leased Property; (d) neither Tenant nor Landlord is in default nor
is there any fact or condition which, with notice or lapse of time, or both,
would constitute a default; (e) Landlord has no outstanding construction or
repair obligation; and (f) Tenant has no defenses, set-offs, deductions,
credits, or counterclaims against Landlord. Tenant hereby irrevocably appoints
Landlord as Tenant's attorney-in-fact to execute, acknowledge and deliver on
Tenant's behalf any estoppel certificate which Tenant does not object to within
twenty (20) days after Landlord sends the certificate to Tenant. This power of
attorney is coupled with an interest and is irrevocable.
15.05 Waiver of Landlord's Lien. Landlord agrees to and does hereby
-------------------------
Waiver its Landlord's lien and any other rights that it may have with respect to
property or assets representing the security or collateral under Tenant's
"floor-plan" or similar financing arrangements, during the Term or any Extension
Term. Landlord shall, upon request by any such lender, execute an acknowledgment
of such waiver.
52
ARTICLE XVI
RIGHT OF FIRST OFFER
16.01 Right of First Offer During Lease Term or Extension Term.
---------------------------------------------------------
(a) If and when during the Term or Extension Term, as the case
may be, Landlord shall decide to sell the Leased
Properties to a Person who is not an Affiliate of Landlord
(the "Decision to Sell"), provided that no Event of
Default has occurred and is continuing under the Lease,
Landlord shall notify Tenant in writing within ten (10)
business days after Landlord makes a Decision to Sell.
Tenant shall have ten (10) business days thereafter in
which to notify Landlord in writing of its desire to
purchase the Leased Properties. If Tenant shall give such
notice, Tenant shall have a period of thirty (30) days
within which to make a written offer to purchase the
property (the "First Offer"). The First Offer must set
forth the purchase price, deposit amounts and closing date
and any and all other terms and conditions being proposed
by Tenant.
(b) Within thirty (30) days of receipt of the First Offer,
Landlord shall give Tenant written notice of its
acceptance or rejection thereof. If accepted, Tenant
shall, within five (5) days after receipt of the
acceptance notice, make the deposit called for in the
First Offer and the parties shall proceed to contract and
closing upon the terms thereof. If the First Offer is
rejected, then, subject to the provisions of subsections
(c) and (d) of this Section 16.01, Tenant shall have no
further rights with respect to the purchase of the Leased
Properties during the Term or Extension Term, as the case
may be.
(c) If Landlord shall reject the First Offer, for a one year
period thereafter it may proceed to sell the Leased
Properties, subject to the Lease and the remaining Term or
Extension Term thereof, as the case may be, to any third
party, provided (i) the purchase price of such sale shall
exceed that specified in the First Offer, or (ii) if the
purchase price of such sale does not exceed that specified
in the First Offer, the terms of such sale, taken
together, are more favorable to Landlord, in Landlord's
reasonable judgement, than those of the First Offer. There
shall be a presumption that Landlord's judgment was
reasonable and Tenant shall have the burden of rebutting
such presumption and of proving that such judgment was in
fact unreasonable.
53
(d) If no sale is effected by Landlord within the period
specified in subsection (c) above, then if Landlord
thereafter desires to sell the Leased Properties, the
procedure set forth in subsections (a), (b) and (c) shall
be followed.
(e) This option shall terminate in any event twenty (20) years
after the death of the last descendant of the father of
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ living at the time of execution of this
Lease.
16.02 Right to Purchase at End of an Extension Term.
----------------------------------------------
(a) Landlord hereby grants the Tenant the right and option to
purchase the Leased Properties (the "Option to Purchase")
at an amount equal to the Property Consideration (as
hereafter defined) upon termination of an Extension Term
of this Lease. The Option to Purchase shall not be granted
if Tenant does not extend the Term of this Lease pursuant
to Section 1.03 or if on the Option Exercise Date (as
hereafter defined) an Event of Default with respect to any
Leased Property exists and has not been cured. The Tenant
shall notify Landlord in writing of its intent to exercise
this Option to Purchase, thirty (30) days prior to the end
of an Extension Term of this Lease (the "Option Exercise
Date").
(b) The consideration to be paid for the Leased Properties
upon exercise of the Option to Purchase (the "Property
Consideration") shall be the Appraised Value (as hereafter
defined) determined by (1) an independent appraiser, who
is a member of the Appraisal Institute, and will be
selected by Landlord, (the "Landlord MAI Appraiser"), (2)
a second appraiser, who is a member of the Appraisal
Institute, and will be selected by the Tenant (the "Tenant
MAI Appraiser"), and (3) a third MAI Appraiser selected by
agreement of the Landlord MAI Appraiser and the Tenant MAI
Appraiser (the "Third MAI Appraiser") (each an "Appraiser"
and, collectively, the "Appraisers"). Landlord and Tenant
shall, as promptly as possible, but in no event later than
ten (10) days following the Option Exercise Date, select
its respective Appraiser. The Third MAI Appraiser shall be
selected no later than five (5) days after the selection
of the other Appraisers. The costs of the Appraisers'
appraisals shall be shared equally by the parties. As
promptly as possible but in no event later than fifteen
(15) days after selection of the Third Appraiser, each
Appraiser shall deliver his or her written report of the
Appraisers' determination of the fair market value of the
Leased Property,
54
which determination shall be based, for each Leased
Property, upon the highest and best use of such Leased
Property, taking into consideration the location of such
Leased Property and other properties comparable thereto.
The "Appraised Value" of the Real Property shall be equal
to the arithmetic mean of the two (2) fair market value
determinations of the Appraisers that are closest in
value. In the event that the values of (i) the difference
between the highest appraisal value and the next lower
appraisal value, and (ii) the difference between the
lowest appraisal value and the next higher appraisal
value, are equal, then the "Appraised Value" shall be
equal to the arithmetic mean of the fair market value
determinations of all Appraisers.
(c) Upon determination of the Property Consideration, Landlord
and Tenant agree to cooperate to close the sale and
purchase of the Leased Property entirely for cash on an "
as is, where as basis" and with no warranties by Landlord
other than in a special warranty deed, within forty-five
(45) days after the date of determination of the Property
Consideration (the "Option Closing Period"). If the sale
and purchase of the Leased Property does not close within
the Option Closing Period due to Tenant's default,
Landlord shall have no further obligations to Tenant
pursuant to this Section 16.02 (a).
ARTICLE XVII
MISCELLANEOUS
17.01 Notices. Landlord and Tenant hereby agree that all notices,
-------
demands, requests, and consents (hereinafter "Notices") required to be given
pursuant to the terms of this Lease shall be in writing and shall be addressed
as follows:
If to Tenant:
[ ]
[ ]
[ ]
[ ]
Attention:
With a copy to:
[ ]
[ ]
[ ]
55
[ ]
Attention:
If to Landlord:
Capital Automotive L.P.
[ ]
[ ]
[ ]
Attention:
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
and shall be served by: (a) personal delivery; (b) certified mail, return
receipt requested, postage prepaid; or (c) nationally recognized overnight
courier. All notices shall be deemed to be given upon the earlier of actual
receipt or three (3) days after mailing, or one (1) business day after deposit
with the overnight courier. Any Notices meeting the requirements of this
Section shall be effective, regardless of whether or not actually received.
Landlord or Tenant may change its notice address at any time by giving the other
party Notice of such change. Any such Notice of change of address shall be
effective five (5) days after delivery.
17.02 Advertisement of a Leased Property. In the event the parties
----------------------------------
hereto have not executed a renewal lease, or agreed to the Extension Term, as to
the Leased Property within twelve (12) months prior to the expiration of the
Term or an Extension Term, as the case may be, then Landlord or its agent shall
have the right to enter such Leased Property at all reasonable times for the
purpose of exhibiting such Leased Property to others and to place upon such
Leased Property for and during the period commencing two-hundred seventy (270)
days prior to the expiration of the Term or an Extension Term, as the case may
be, "for sale" or "for rent" notices or signs.
17.03 Landlord's Access. Landlord, or its designated agents or
-----------------
contractors, shall have the right to enter upon each Leased Property, upon
reasonable prior notice to Tenant, for purposes of inspecting the same and
assuring Tenant's compliance with this Lease provided, any such entry by
Landlord shall be subject to all rules, guidelines and procedures prescribed by
Tenant in connection therewith. Landlord shall not be allowed entry to a Leased
Property unless accompanied by such of Tenant's personnel as Tenant shall
require and which Tenant shall promptly provide.
56
17.04 Entire Agreement. This Lease contains the entire agreement
----------------
between Landlord and Tenant with respect to the subject matter hereof. No
representations, warranties, and agreements have been made by Landlord or Tenant
except as set forth in this Lease.
17.05 Severability. If any term or provision of this Lease is held by
------------
Landlord to be invalid or unenforceable as to a Leased Property, such holding
shall not affect the remainder of this Lease as to such Leased Property, or the
validity or enforceability of this Lease as to any other Leased Property, and
the same shall remain in full force and effect, unless such holding
substantially deprives Tenant of the use of such Leased Property or Landlord of
the Rents therefor, in which case this Lease shall forthwith terminate as to
such Leased Property as if by expiration of the Term or an Extension Term, as
the case may be, but shall remain in full force and effect with respect to each
other Leased Property.
17.06 Captions and Headings. The captions and headings are inserted
----------------------
only as a matter of convenience and for reference and in no way define, limit or
describe the scope of this Lease or the intent of any provision hereof.
17.07 Governing Law. This Lease shall be construed under the laws of
-------------
the State of Virginia (without application of choice of law provisions).
17.08 Memorandum of Lease or Certain Rights Under the Lease. Landlord
-----------------------------------------------------
and Tenant agree that a record of this Lease or of certain rights under this
Lease may be recorded by either party in a memorandum of lease approved by
Landlord and Tenant with respect to each Leased Property. The party recording
such memorandum must bear all costs of such recording.
17.09 Waiver. No waiver by Landlord of any condition or covenant
------
herein contained, or of any breach of any such condition or covenant, shall be
held or taken to be a waiver of any subsequent breach of such covenant or
condition, or to permit or excuse its continuance or any future breach thereof
or of any condition or covenant, nor shall the acceptance of Rent by Landlord at
any time when Tenant is in default in the performance or observance of any
condition or covenant herein be construed as a waiver of such default, or of
Landlord's right to terminate this Lease or exercise any other remedy granted
herein on account of such default.
17.10 Assignment; Binding Effect. Except as otherwise set forth
--------------------------
herein, this Lease shall not be assignable by Tenant, without the prior written
consent of Landlord. This Lease will be binding upon and inure to the benefit of
the heirs, successors, personal representatives, and permitted assigns of
Landlord and Tenant.
17.11 Consents and Approvals. In each instance in this Lease where
----------------------
the Landlord is required or permitted to give a consent or approval, or to make
a determination, the Landlord's decision and any conditions thereon must be
reasonable under the circumstances. Except as provided in Sections 8.07(d) and
13.01, there shall be a presumption that each such
57
decision and any conditions thereon by Landlord was in fact reasonable, and
Tenant shall have the burden of proof in any attempt to rebut that presumption.
With respect to Sections 8.07(d) and 13.01, there shall be a presumption that
each such decision and any conditions thereon by Landlord was in fact
unreasonable, and Landlord shall have the burden of proof in any attempt to
rebut that presumption.
17.12 Single Property. Throughout the form of this Lease there are
---------------
references to "Leased Properties". If, in fact, there is only one Leased
Property being leased hereunder, all such references shall, without further
action, be deemed amended to refer solely to such Leased Property and all
provisions relating to Leased Properties, including remedies applicable to only
one Leased Property, shall likewise be amended to the extent necessary, but only
to the extent necessary, to give effect to the fact that there is only one
Leased Property.
17.13 Modification. This Lease may only be modified by a writing
------------
signed by both Landlord and Tenant.
17.14 Incorporation by Reference. All schedules and exhibits referred
---------------------------
to in this Lease are incorporated herein by reference.
17.15 No Merger. As to each Leased Property, the surrender of this
---------
Lease by Tenant or the cancellation of this Lease by agreement of Tenant and
Landlord or the termination of this Lease on account of Tenant's default will
not work a merger, and will, at Landlord's option, terminate any subleases or
operate as an assignment to Landlord of any subleases. Landlord's option under
this paragraph will be exercised by notice to Tenant and all known subtenants of
such Leased Property.
17.16 Force Majeure. Landlord, its agents and employees, will not be
-------------
liable for any loss, injury, death, or damage (including consequential damages)
to persons, property, or Tenant's Business occasioned by theft, act of God,
public enemy, injunction, riot, strike, insurrection, war, court order,
requisition, order of governmental body or authority, fire, explosion, falling
objects, steam, water, rain or snow, leak or flow of water (including water from
the elevator system), rain or snow from any Leased Property or into any Leased
Property or from the roof, street, subsurface or from any other place, or by
dampness or from the breakage, leakage, obstruction, or other defects of the
pipes, sprinklers, wires, appliances, plumbing, air conditioning, or lighting
fixtures of any Leased Property, or from construction, repair, or alteration of
any Leased Property or from any acts or omissions of any other occupant or
visitor of any Leased Property, or from the release, emission, discharge,
presence or disposal of any hazardous substance or material on or from any
Leased Property, or from any other cause beyond Landlord's control.
17.17 Laches. No delay or omission by either party hereto to exercise
------
any right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
58
17.18 Waiver of Jury Trial. To the extent that there is any claim by
--------------------
one party against the other that is not to be settled by arbitration as provided
in Article XIV hereof, Landlord and Tenant waive trial by jury in any action,
proceeding or counterclaim brought by either of them against the other on all
matters arising out of this Lease or the use and occupancy of any Leased
Property (except claims for personal injury or property damage). If Landlord
commences any summary proceeding for nonpayment of Rent, Tenant will not
interpose, and waives the right to interpose, any counterclaim in any such
proceeding.
17.19 Permitted Contests. Tenant, on its own or on Landlord's behalf
-------------------
(or in Landlord's name), but at Tenant's expense, may contest, by appropriate
legal proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or any legal
requirement or insurance requirement or any lien, attachment, levy, encumbrance,
charge or claim provided that: (a) in the case of an unpaid Imposition, lien,
attachment, levy, encumbrance, charge or claim, the commencement and
continuation of such proceedings shall suspend the collection thereof from
Landlord and from the subject Leased Property; (b) neither the subject Leased
Property nor any Rent therefrom nor any part thereof or interest therein would
be in any immediate danger of being sold, forfeited, attached or lost; (c) in
the case of a legal requirement, Landlord would not be in any immediate danger
of civil or criminal liability for failure to comply therewith pending the
outcome of such proceedings; (d) in the event that any such contest shall
involve a sum of money or potential loss in excess of Twenty Five Thousand
Dollars ($25,000), Tenant shall deliver to Landlord and its counsel an opinion
of Tenant's counsel to the effect set forth in clauses (a), (b) and (c), to the
extent applicable; (e) in the case of a legal requirement and/or an Imposition,
lien, encumbrance, or charge, Tenant shall give such reasonable security as may
be demanded by Landlord to insure ultimate payment of the same and to prevent
any sale or forfeiture of a subject Leased Property or the Rent in respect
thereof by reason of such nonpayment or noncompliance; provided, however, the
provisions of this Section shall not be construed to permit Tenant to contest
the payment of Rent (except as to contests concerning the method of computation
or the basis of levy of any Imposition or the basis for the assertion of any
other claim) or any other sums payable by Tenant to Landlord hereunder; (f) in
the case of an insurance requirement, the coverage required by Article IV shall
be maintained; and (g) if such contest be finally resolved against Landlord or
Tenant, Tenant shall, as Additional Rent due hereunder, promptly pay the amount
required to be paid, together with all interest and penalties accrued thereon,
or comply with the applicable legal requirement or insurance requirement.
Landlord, at Tenant's expense, shall execute and deliver to Tenant such
authorizations and other documents as may be reasonably required in any such
contest, and, if reasonably requested by Tenant or if Landlord so desires,
Landlord shall join as a party therein. Tenant hereby agrees to indemnify and
hold harmless Landlord, its officers, trustees, employees, shareholders,
affiliates and agents from and against any and all demands, claims, causes of
action, fines, penalties, damages (including punitive and consequential
damages), losses, liabilities (including strict liability), judgments, costs and
expenses (including, without limitation, attorneys' fees, court costs, and the
costs set forth in Section 9.06) that may be incurred in connection with or
arise from any such contest.
59
17.20 Construction of Lease. This Lease has been reviewed by Landlord
---------------------
and Tenant and their respective professional advisors. Landlord and Tenant
believe that this Lease is the product of all their efforts, that they express
their agreement, and agree that they shall not be interpreted in favor of either
Landlord or Tenant or against either Landlord or Tenant merely because of any
party's efforts in preparing such documents.
17.21 Counterparts. This Lease may be executed in duplicate
-------------
counterparts, each of which shall be deemed an original hereof or thereof.
17.22 Relationship of Landlord and Tenant. The relationship of
-----------------------------------
Landlord and Tenant is the relationship of lessor and lessee. Landlord and
Tenant are not partners, joint venturers, or associates.
60
IN WITNESS WHEREOF, the parties hereto have executed this Lease or
caused the same to be executed by their respective duly authorized officers as
of the date first set forth above.
CAPITAL AUTOMOTIVE L.P.
By: Capital Automotive REIT,
Its General Partner
By:
Its:
[ ]
By:
Its:
61
POHANKA LEASE AGREEMENT EXHIBITS AND SCHEDULES
EXHIBITS
A Leased Properties
B Permitted Liens
C Base Annual Rent Schedule
SCHEDULES
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
12.02 Material Agreements
12.03 Changes in Condition
15.02 Form of Subordination and Non-Disturbance Agreement
EXHIBIT A
---------
LEASED PROPERTIES
----------------------------------------------------------------------------------------------------
Lease Lessees and Lessees Total Annual Initial Base Properties Covered
Rent for Leased Properties by Lease
----------------------------------------------------------------------------------------------------
1 Pohanka Auto Center, Inc. & Pohanka 4601 St. Barnabas
Oldsmobile-GMC Truck, Inc. Rd., ▇▇▇▇▇▇
Heights, MD 20757
$483,486 + $__________* (Tax Id. 06-
0590109)
▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇
▇▇., ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(Tax Id. 06-
0590091)
4619 St. Barnabas
*Amount attributable to closing costs, as set forth in Section Rd., ▇▇▇▇▇▇
7.5.1 of the Contribution Agreement, dated as of November Heights, MD 20757
21, 1997, relating to this Property. (Tax Id. 06-
038205)
----------------------------------------------------------------------------------------------------
EXHIBIT A
---------
LEASED PROPERTIES
----------------------------------------------------------------------------------------------------
Lease Lessees and Lessees Total Annual Initial Base Properties Covered
Rent for Leased Properties by Lease
----------------------------------------------------------------------------------------------------
2 Pohanka Hyundai, Inc. ▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇
▇▇., ▇▇▇▇▇▇
$166,386 + ▇________* ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(Tax Id. 06-
0590125)
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
*Amount attributable to closing costs, as set forth in Section (Tax Id. 06-
7.5.1 of the Contribution Agreement, dated as of November 0590117)
21, 1997, relating to this Property.
----------------------------------------------------------------------------------------------------
EXHIBIT A
---------
LEASED PROPERTIES
-------------------------------------------------------------------------------------------------------
Lease Lessees and Lessees Total Annual Initial Base Properties Covered
Rent for Leased Properties by Lease
-------------------------------------------------------------------------------------------------------
3 Pohanka Imports, Inc. ▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇ ▇▇.,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
$395,571 + $_______* (Tax Id. ▇▇-▇▇▇▇▇▇▇)
*Amount attributable to closing costs, as set forth in Section
7.5.1 of the Contribution Agreement, dated as of November
21, 1997, relating to this Property.
-------------------------------------------------------------------------------------------------------
EXHIBIT A
---------
LEASED PROPERTIES
---------------------------------------------------------------------------------------------------------
Lease Lessees and Lessees Total Annual Initial Base Properties Covered
Rent for Leased Properties by Lease
---------------------------------------------------------------------------------------------------------
4 Pohanka Oldsmobile-GMC Truck, Inc. ▇▇▇▇ ▇▇▇▇▇ ▇▇.,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
$94,500 + ________* MD 20757
(Id. No. 06-
0605873)
4764 Stamp Rd.,
▇▇▇▇▇▇ Heights,
*Amount attributable to closing costs, as set forth MD 20757
in Section 7.5.1 of the Contribution Agreement, (Id. No. 06-
dated as of November 21, 1997, relating to this 0059247)
Property.
---------------------------------------------------------------------------------------------------------
EXHIBIT A
---------
LEASED PROPERTIES
-------------------------------------------------------------------------------------------------
Lease Lessees and Lessees Total Annual Initial Base Properties Covered
Rent for Leased Properties by Lease
-------------------------------------------------------------------------------------------------
5 Pohanka Virginia Properties 16660 Governor
Br. Rd., Bowie,
$434,500 + _________* MD 20716
(07-0801472)
*Amount attributable to closing costs, as set forth
in Section 7.5.1 of the Contribution Agreement,
dated as of November 21, 1997, relating to this
Property.
-------------------------------------------------------------------------------------------------
EXHIBIT A
---------
LEASED PROPERTIES
--------------------------------------------------------------------------------------------------
Lease Lessees and Lessees Total Annual Initial Base Properties Covered
Rent for Leased Properties by Lease
--------------------------------------------------------------------------------------------------
6 Pohanka of Chantilly, Inc. 13901 ▇▇▇ ▇▇▇▇▇▇▇
Memorial
$354,750 + ____________* ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
(Id. 034-4-01-00-
0051)
13909 ▇▇▇ ▇▇▇▇▇▇▇
Memorial
Highway,
*Amount attributable to closing costs, as set forth Chantilly, VA
in Section 7.5.1 of the Contribution Agreement, 22021
dated as of November 21, 1997, relating to this (Id. 034-4-01-00-
Property. 0050)
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
(Id. 034-4-01-00-
0050-A)
--------------------------------------------------------------------------------------------------
EXHIBIT A
---------
LEASED PROPERTIES
-----------------
------------------------------------------------------------------------------------------------
Lease Lessees and Lessees Total Annual Initial Base Properties Covered
Rent for Leased Properties by Lease
------------------------------------------------------------------------------------------------
7 Pohanka Auto West, Inc. & Pohanka Chevrolet- 13911 ▇▇▇ ▇▇▇▇▇▇▇
GEO, Inc. -- Memorial
$449,486 + _________* ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
(Tax Id. 034-4-01-
*Amount attributable to closing costs, as set forth 00-0049)
in Section 7.5.1 of the Contribution Agreement,
dated as of November 21, 1997, relating to this
Property.
------------------------------------------------------------------------------------------------
EXHIBIT A
LEASED PROPERTIES
------------------------------------------------------------------------------------------------
Lease Lessees and Lessees Total Annual Initial Base Properties Covered
Rent for Leased Properties by Lease
------------------------------------------------------------------------------------------------
8 Pohanka Virginia Properties 13915 ▇▇▇ ▇▇▇▇▇▇▇
Memorial
$623,789 + $_______* Highway,
Chantilly, VA
*Amount attributable to closing costs, as set forth 20151
in Section 7.5.1 of the Contribution Agreement, (Tax Id. 034-4-01-
dated as of November 21, 1997, relating to this 00-0053)
Property.
------------------------------------------------------------------------------------------------
EXHIBIT A
LEASED PROPERTIES
--------------------------------------------------------------------------------------------
Lease Lessees and Lessees Total Annual Initial Base Properties Covered
Rent for Leased Properties by Lease
--------------------------------------------------------------------------------------------
9 Pohanka Auto Center, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇,
$383,108 + _________* ▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
(Id. 024-6-A10)
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
(Id. 024-6-A20)
*Amount attributable to closing costs, as set forth 5200 Jefferson
in Section 7.5.1 of the Contribution Agreement, ▇▇▇▇▇ Highway,
dated as of November 21, 1997, relating to this ▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇. ▇▇▇▇▇
(Id. 024-6-A21)
--------------------------------------------------------------------------------------------
EXHIBIT B
---------
PERMITTED LIENS
To be in form and substance acceptable to Landlord and provided by Tenant
on or before the Commencement Date.
EXHIBIT C
INITIAL BASE ANNUAL RENT SCHEDULE
See Exhibit A for Initial Base Annual Rent payments due on Leased Property.
SCHEDULE 2.02
-------------
PAYMENT ACCOUNT INFORMATION
Wiring instructions for the Landlord's operating account are as follows:
FIRST UNION NATIONAL BANK OF VIRGINIA
CHARLOTTE, NC
ABA# ▇▇▇▇▇▇▇▇▇
For Credit to: CAPITAL AUTOMOTIVE REIT, Operating Account
Account # 2050000478240
SCHEDULE 2.04
-------------
BASE ANNUAL RENT ADJUSTMENT
The Base Annual Rent shall be increased, effective as of the commencement
of the third Lease Year and as of each subsequent odd-numbered Lease Year by an
amount equal to fifty percent (50%) of the change in the Index during the
immediately preceding one (1) year period; provided, however that,
(a) in the event that the above-calculated adjustment is less than
one percent (1%), such adjustment shall be equal to one percent
(1%), and
(b) in the event that the above-calculated adjustment is greater than
two percent (2%), such adjustment shall be equal to two percent
(2%).
NO. 1
EXHIBIT 5.07
ENVIRONMENTAL REPORTS
1. Phase I Environmental Site Assessment for SATURN OF ▇▇▇▇▇▇ HEIGHTS, PRINCE
GEORGE'S COUNTY, MARYLAND (Prepared by G.M.T. Environmental Technologies,
Inc., GMTI Project No. 97-EV-4091-D, Nov. 7, 1997).
2. Phase I Environmental Site Assessment for POHANKA OLDSMOBILE - GMC - ISUZU,
PRINCE GEORGE'S COUNTY, MARYLAND (Prepared by G.M.T. Environmental
Technologies, Inc., GMTI Project No. 97-EV-4091-C, Nov. 7, 1997).
NO. 2
EXHIBIT 5.07
ENVIRONMENTAL REPORTS
1. Phase I Environmental Site Assessment for POHANKA HYUNDAI - SUBARU, PRINCE
GEORGE'S COUNTY, MARYLAND (Prepared by G.M.T. Environmental Technologies,
Inc., GMTI Project No. 97-EV-4091-B2, Nov. 7, 1997).
NO. 3
EXHIBIT 5.07
ENVIRONMENTAL REPORTS
1. Phase I Environmental Site Assessment for POHANKA HONDA, PRINCE GEORGE'S
COUNTY, MARYLAND (Prepared by G.M.T. Environmental Technologies, Inc., GMTI
Project No. 97-EV-4091-B1, Nov. 7, 1997).
NO. 4
EXHIBIT 5.07
ENVIRONMENTAL REPORTS
1. Phase I Environmental Site Assessment for POHANKA OLDSMOBILE - GMC BODY
SHOP, PRINCE GEORGE'S COUNTY, MARYLAND (Prepared by G.M.T. Environmental
Technologies, Inc., GMTI Project No. 97-EV-4091-B3, Nov. 7, 1997).
NO. 5
EXHIBIT 5.07
ENVIRONMENTAL REPORTS
1. Phase I Environmental Site Assessment for SATURN OF BOWIE, PRINCE GEORGE'S
COUNTY, MARYLAND (Prepared by G.M.T. Environmental Technologies, Inc., GMTI
Project No. 97-EV-4091-E, Nov. 7, 1997).
NO. 6
EXHIBIT 5.07
ENVIRONMENTAL REPORTS
1. Phase I Environmental Site Assessment for POHANKA LEXUS, FAIRFAX COUNTY,
VIRGINIA (Prepared by G.M.T. Environmental Technologies, Inc., GMTI Project
No. 97-EV-4091-A3, Nov. 7, 1997).
NO. 7
EXHIBIT 5.07
ENVIRONMENTAL REPORTS
1. Phase I Environmental Site Assessment for POHANKA ACURA, FAIRFAX COUNTY,
VIRGINIA (Prepared by G.M.T. Environmental Technologies, Inc., GMTI Project
No. 97-EV-4091-A1, Nov. 7, 1997).
NO. 8
EXHIBIT 5.07
ENVIRONMENTAL REPORTS
1. Phase I Environmental Site Assessment for ▇▇▇▇▇▇▇▇ PROPERTY, FAIRFAX
COUNTY, VIRGINIA (Prepared by G.M.T. Environmental Technologies, Inc., GMTI
Project No. 97-EV-4091-A4, Nov. 7, 1997).
2. Phase I Environmental Site Assessment for POHANKA CHEVROLET, FAIRFAX
COUNTY, VIRGINIA (Prepared by G.M.T. Environmental Technologies, Inc., GMTI
Project No. 97-EV-4091-A2, Nov. 7, 1997).
NO. 9
EXHIBIT 5.07
ENVIRONMENTAL REPORTS
1. Phase I Environmental Site Assessment for POHANKA NISSAN - CADILLAC -
OLDSMOBILE -HYUNDAI, SPOTSYLVANIA COUNTY, VIRGINIA (Prepared by G.M.T.
Environmental Technologies, Inc., GMTI Project No. 97-EV-4091-F, Nov. 7,
1997).
SCHEDULE 12.02
MATERIAL AGREEMENTS
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To be in form and substance acceptable to Landlord and provided by Tenant
on or before the Commencement Date.
SCHEDULE 9.19
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CHANGES IN CONDITION
To be in form and substance acceptable to Landlord and provided by Tenant
on or before the Commencement Date.
SCHEDULE 15.02
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See attached Form of Subordination and Non-Disturbance Agreement.
Form
SUBORDINATION AND NON-DISTURBANCE AGREEMENT
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THIS AGREEMENT is made as of this ___ day of __________, 1997, among
_____________, a ___________ organized under the laws of the State of
_____________ ("Lender"), __________________ ("Tenant"), and CAPITAL AUTOMOTIVE
L.P., a Delaware limited partnership ("Landlord").
WITNESSETH:
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WHEREAS, Landlord and Tenant have entered into a certain Lease, dated
____________________ , which lease and all amendments, modifications,
assignments, subleases and other agreements related thereto are attached hereto
as Exhibit A and incorporated herein by this reference (collectively, the
---------
"Lease"), which Lease relates to the premises described therein (the
"Premises"), and
WHEREAS, Lender has made or has committed to make a first mortgage loan to
Landlord in the principal amount not to exceed $_________ (the "Loan"), the Loan
being secured by a mortgage, deed of trust or security deed (collectively, the
"Mortgage") and an assignment(s) of leases and rents from Landlord to Lender
covering the Premises; and
WHEREAS, Tenant has agreed that the Lease shall be subject and subordinate
to the Mortgage held by Lender, provided Tenant is assured of continued
occupancy of the Premises under the terms of the Lease;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the sum of Ten Dollars ($10.00) and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
and notwithstanding anything in the Lease to the contrary, it is hereby agreed
as follows:
1. SUBORDINATION OF LEASE. Lender, Tenant and Landlord do hereby
----------------------
covenant and agree that the Lease with all rights, options, liens and charges
created thereby, is and shall continue to be subject and subordinate in all
respects to the Mortgage and to any renewals, modifications, consolidations,
replacements and extensions thereof and to all advancements made thereunder.
2. NONDISTURBANCE OF TENANT. Lender does hereby agree with Tenant that,
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in the event Lender becomes the owner of the Premises by foreclosure, conveyance
in lieu of foreclosure or otherwise, so long as Tenant complies with and
performs its obligations under the Lease, (a) Lender will take no action which
will interfere with or disturb Tenant's possession or use of the Premises or
other rights under the Lease, and (b) the Premises shall be subject to the Lease
and Lender shall recognize Tenant as the tenant of the Premises for the
remainder of the terms of the Lease in accordance with the provisions thereof,
provided, however, that Lender
Form
shall not be subject to any offsets or defenses which Tenant might have against
any prior landlord except those which arose under the provisions of the Lease
out of such landlord's default and accrued after Tenant had notified Lender and
given Lender the opportunity to cure same as hereinbelow provided, nor shall
Lender be liable for any act or omission of any prior landlord, nor shall Lender
be bound by any rent or additional rent which Tenant might have paid for more
than the current month to any prior landlord nor shall it be bound by any
amendment or modification of the Lease made without its consent.
3. ATTORNMENT BY TENANT. Tenant does hereby agree with Lender that, in
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the event Lender becomes the owner of the Premises by foreclosure, conveyance in
lieu of foreclosure or otherwise, then Tenant shall attorn to and recognize
Lender as the landlord under the Lease for the remainder of the term thereof,
and Tenant shall perform and observe its obligations thereunder, subject only to
the terms and conditions of the Lease. In such event, Lender shall not be
liable for any act or omission of any prior landlord, liable for return of the
security deposit unless same was actually delivered to Lender, bound by any
amendment to or assignment of the Lease made without its consent, bound by any
rent paid more than thirty (30) days in advance, or be subject to any set-off or
defense Tenant might have had against any prior landlord. Tenant further
covenants and agrees to execute and deliver upon request of Lender or its
assigns, an appropriate Agreement of Attornment to Lender and any subsequent
titleholder of the Premises.
4. ACKNOWLEDGMENT OF ACQUISITION RIGHTS. Lender acknowledges that Tenant
------------------------------------
has certain purchase rights under the lease. So long as Tenant complies with
the provisions of the Lease, Lender acknowledges that Tenant may exercise such
rights and Lender will honor such rights so long as Tenant pays the acquisition
price to Lender or otherwise obtains a release from Lender.
5. CURATIVE RIGHTS, MODIFICATION OF LEASE, AND ADVANCE PAYMENT OF RENT.
-------------------------------------------------------------------
So long as the Mortgage remains outstanding and unsatisfied:
(a) Tenant will mail or deliver to Lender, at the address and in the
manner hereinbelow provided, a copy of all notices permitted or required to be
given to the Landlord by Tenant under and pursuant to the terms and provisions
of the Lease. At any time before the rights of the Landlord shall have been
forfeited or adversely affected because of any default of the Landlord, or
within the time permitted the Landlord for curing any default under the Lease as
therein provided, Lender may, but shall have no obligation to, pay any taxes and
assessments, make any repairs and improvements, make any deposits or do any
other act or thing required of the Landlord by the terms of the Lease; and all
payments so made and all things so done and performed by Lender shall be as
effective to prevent the rights of the Landlord from being forfeited or
adversely affected because of any default under the Lease as the same would have
been if done and performed by the Landlord.
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(b) Tenant will not consent to the modification of the Lease, nor to the
termination thereof, without the prior written consent of Lender, such consent
not to be unreasonably withheld or delayed, nor will Tenant pay any rent under
the Lease more than thirty (30) days in advance.
6. CONSENT TO ASSIGNMENT. Tenant acknowledges that Landlord will execute
---------------------
and deliver to Lender an assignment of the Lease as security for the Loan, and
Tenant hereby expressly consents to such assignment.
7. LIMITATION OF LIABILITY. So long as Lender complies with its
-----------------------
obligations hereunder, Lender shall have no liability whatsoever hereunder prior
to becoming the owner of the Premises; and Tenant agrees that if Lender becomes
the owner of the Premises, Tenant shall look solely to the estate or interest of
Lender in the Premises for satisfaction of any obligation which may be or
become owing by Lender to Tenant hereunder or under the Lease.
8. LANDLORD AND TENANT CERTIFICATIONS. Landlord and Tenant hereby
----------------------------------
certify to Lender that the Lease has been duly executed by Landlord and Tenant
and is in full force and effect, that the Lease and any modifications and
amendments specified herein are a complete statement of the agreement between
Landlord and Tenant with respect to the leasing of the Premises, and the Lease
has not been modified or amended except as specified herein; that to the
knowledge of Landlord and Tenant, no party to the Lease is in default
thereunder; that no rent under the Lease has been paid more than thirty (30)
days in advance of its due date; and that Tenant, as of this date, has no
charge, lien or claim of offset under the Lease, or otherwise, against the rents
or other charges due or to become due thereunder.
9. TENANT ESTOPPEL CERTIFICATIONS. With the knowledge that Lender, as
------------------------------
beneficiary of the mortgage encumbering the premises, will place substantial
reliance thereon in connection with the closing and funding of the Loan, Tenant
hereby makes the following certifications:
(a) The term of the Lease commenced on ________, 19__, and will terminate
on ______________.
(b) The Lease, as described above, has not been modified, amended,
assigned or subleased except as set forth in Exhibit A attached hereto, and is
---------
in good standing and in full force and effect.
(c) The Lease provides for rental payments over the term of the Lease, all
as specifically provided in the Lease. No rent under the Lease has been paid
more than thirty (30) days in advance of the due date of same. For the year
____, monthly payments, which are due on the first (1st) day of each month, are
as follows:
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Basic Rent - $________
Payment of the above amount was timely made for the months of ______,
___and _____, ____, and the next payment of the above amount will be due on
________, ____. In addition to the above amount, certain additional sums are
due to Landlord from Tenant under the Lease, all as specifically set forth in
the Lease.
(d) Tenant has paid a security deposit under the Lease.
(e) Except as stated on the attached Exhibit B, to Tenant's knowledge
there are no defaults by Landlord under the Lease and there are no existing
circumstances which, with the passage of time, or notice, or both, would give
rise to a default under the Lease.
(f) Tenant has accepted and is occupying the Premises, and Landlord has no
unperformed obligation under the Lease to construct any improvements for the
Tenant related to the Premises.
(g) Except as stated on the attached Exhibit B, Tenant has no charge,
lien, claim of set-off or defense against rents or other charges due or to
become due under the Lease or otherwise under any of the terms, conditions, or
covenants contained therein.
(h) Except as stated on the attached Exhibit B, Tenant has received no
notice from any insurance company of any defects or inadequacies in the Premises
or in any part thereof which would adversely affect the insurability of the
Premises.
(i) Except as provided in the Lease, Tenant does not have any right or
option to purchase the Premises.
(j) Except as provided in the Lease, Tenant does not have any rights or
options to renew the Lease or to lease additional space in any building owned by
the Landlord.
10. TENANT COVENANTS.
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(a) From and after the date hereof, Tenant will not pay any rent under the
Lease more than thirty (30) days in advance of its due date.
(b) From and after the date hereof, so long as there shall be any
assignment of Landlord's interest in the Lease to Lender, or any successor
thereto, Tenant will not: consent to
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the modification of the Lease nor to the termination thereof without the prior
written consent of the Lender or any successor holder of the Loan or the
Mortgage which consent shall not be unreasonably withheld or delayed (either of
them being called "Mortgagee"), nor seek to terminate the Lease by reason of any
act or omission of Landlord until Tenant shall have given written notice of such
act or omission to such Mortgagee's last address furnished Tenant) and until a
reasonable period of time shall have elapsed following the giving of such
notice, during which period the Mortgagee shall have the right, but not the
obligation, to remedy such act or omission.
(c) Upon written notice of the default by Landlord under any of the loan
documents held by Mortgagee and assignment of the Landlord's interest under the
Lease by Landlord to Mortgagee, Tenant, if Mortgagee so requests, will recognize
such Mortgagee as the Landlord under the Lease and will thereafter pay rent and
other sums to Mortgagee (or to the party designated by the Mortgagee in writing)
in accordance with the terms of the Lease, and, in such event, such Mortgagee
will not be liable for any act or omission of any prior lessor, liable for
return of the security deposit unless same was actually delivered to Mortgagee,
bound by any amendment to or assignment of the Lease made without its consent,
bound by any rent paid more than thirty (30) days in advance, or be subject to
any set-off or defense Tenant might have had against any prior lessor.
11. NOTICES. Unless and except as otherwise specifically provided herein,
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any and all notices, elections, approvals, consents, demands, requests and
responses thereto ("Communications") permitted or required to be given under
this Agreement shall be in writing, signed by or on behalf of the party giving
the same, and shall be deemed to have been properly given and shall be effective
upon the earlier of receipt thereof or three (3) days after deposit thereof in
the United States mail, postage prepaid, certified with return receipt
requested, to the other party at the address of such other party set forth
hereinbelow or at such other address within the continental United States as
such other party may designate by notice specifically designated as a notice of
change of address and given in accordance herewith; provided, however, that the
time period in which a response to any Communication must be given shall
commence on the date of receipt thereof, and provided further that no notice of
change of address shall be effective with respect to Communications sent prior
to the third day after receipt of such change. Receipt of Communications
hereunder shall occur upon actual delivery (whether by mail, messenger, courier
service, or otherwise) to an individual party or to an officer, member, or
general or limited partner of a party or to any agent or employee of such party
at the address of such party set forth hereinbelow, subject to change as
provided hereinabove. An attempted delivery in accordance with the foregoing,
acceptance of which is refused or rejected, shall be deemed to be and shall
constitute receipt; and an attempted delivery in accordance with the foregoing
by mail, messenger, or courier service (whichever is chosen by the sender) which
is not completed because of changed address of which no notice was received by
the sender in accordance with
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this provision prior to the sending of the Communication shall also be deemed to
be and constitute receipt. Any Communication, if given to Lender, must be
addressed as follows, subject to change as provided hereinabove:
__________________________
__________________________
and, if given to Tenant, must be addressed as follows, subject to change as
provided hereinabove:
__________________________
__________________________
__________________________
and, if given to Landlord, must be addressed as follows, subject to change as
provided hereinabove:
Capital Automotive, L.P.
__________________________
__________________________
12. MISCELLANEOUS. This Agreement shall be binding upon and inure to the
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benefit of the parties hereto and their respective heirs, legal representatives,
successors, successors-in-title and assigns. When used herein, the term
"Landlord" or "landlord" refers to Landlord and to any successor to the interest
of Landlord under the Lease.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above written.
LENDER:
Signed, sealed and delivered
in the presence of: By:
Title:
____________________________ _________________________
Witness
(CORPORATE SEAL)
TENANT:
Signed, sealed and delivered
in the presence of: By:
Title:
____________________________ _________________________
Witness (CORPORATE SEAL)
LANDLORD:
Signed, sealed and delivered
in the presence of: By:
Title:
____________________________ _________________________
Witness (PARTNERSHIP SEAL)
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EXHIBIT A
Lease Dated __________ from ________________ to _______________ with Exhibit A
attached, all in the form attached hereto as Attachment to Exhibit A.
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County of _______________________:
SS:
State of ________________________:
This is to certify that on this ____ day of ________, 1997, personally
appeared before me, a notary public of the County (City) aforesaid, known to me
(or satisfactorily identified to me) to be the individual signing on behalf of
Lender in the capacity stated by his signature, and that he acknowledged the
within document to be the act and deed of the Lender.
________________________________________
Notary Public
My commission expires:
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County of ______________________:
SS:
State of ________________________:
This is to certify that on this ____ day of _________, 1997, personally
appeared before me, a notary public of the County (City) aforesaid, known to me
(or satisfactorily identified to me) to be the individual signing on behalf of
Tenant in the capacity stated by his signature, and that he acknowledged the
within document to be the act and deed of the Tenant.
____________________________________
Notary Public
My commission expires:
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County of ________________________
SS:
State of _________________________
This is to certify that on this ____ day of _______, 1997, personally
appeared before me, a notary public of the County (City) aforesaid, known to me
(or satisfactorily identified to me) to be the individual signing on behalf of
Landlord in the capacity stated by his signature, and that he acknowledged the
within document to be the act and deed of the Landlord.
_______________________________
Notary Public
My commission expires:
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