EXHIBIT 10.39
CAPITAL AUTOMOTIVE L.P.
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REAL PROPERTY PURCHASE AGREEMENT
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▇▇▇▇▇▇ Family Limited Partnership
January 10, 1998
TABLE OF CONTENTS
Page
I. PURCHASE AND SALE................................................. - 1 -
1.1 Certain Definitions.................................... - 1 -
1.2 Agreement to Purchase and Sell......................... - 2 -
1.3 Encumbrances........................................... - 2 -
1.4 Purchase Price......................................... - 3 -
1.5 Capitalized Terms...................................... - 3 -
II. OPERATION OF PROPERTY THROUGH CLOSING............................. - 3 -
2.1 Business Practice...................................... - 3 -
2.2 No Sale or Encumbrance................................. - 3 -
2.3 Leases, Service Contracts and Management Contracts..... - 4 -
2.4 Termination of Leases; New Company Leases.............. - 4 -
2.5 Compliance............................................. - 4 -
2.6 Notice of Inaccuracy or Incompleteness................. - 4 -
2.7 Access................................................. - 4 -
2.8 Insurance.............................................. - 5 -
2.9 Fulfillment of Obligation.............................. - 5 -
2.10 Financial Statements and Reports....................... - 5 -
2.11 Under Construction Properties.......................... - 5 -
III. STATUS OF TITLE TO PROPERTY....................................... - 8 -
3.1 State of Title......................................... - 8 -
3.2 Preliminary Evidence of Title.......................... - 8 -
3.3 Title Defects.......................................... - 10 -
IV. CLOSING PRORATIONS AND ADJUSTMENTS................................ - 11 -
4.1 Prorations and Adjustments............................. - 11 -
V. CLOSING........................................................... - 12 -
5.1 Closing Date........................................... - 12 -
5.2 Closing Documents...................................... - 12 -
5.3 Conditions to the Partnership's Obligation to Close.... - 15 -
5.4 Conditions to the Seller's Obligation to Close......... - 17 -
5.5 Transaction Costs...................................... - 17 -
VI. CASUALTY LOSS AND CONDEMNATION.................................... - 18 -
6.1 Casualty............................................... - 18 -
6.2 Condemnation or Taking................................. - 19 -
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VII. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.................... - 19 -
7.1 Organization.......................................... - 19 -
7.2 Authority............................................. - 19 -
7.3 Interest in Contributed Properties.................... - 20 -
7.4 No Defaults........................................... - 20 -
7.5 No Litigation; No Condemnation........................ - 21 -
7.6 No Violation.......................................... - 21 -
7.7 Required Obligations.................................. - 21 -
7.8 Condition of Properties............................... - 22 -
7.9 Warranties............................................ - 22 -
7.10 Utilities............................................. - 22 -
7.11 Zoning................................................ - 22 -
7.12 Improvements.......................................... - 22 -
7.13 Environmental Matters................................. - 22 -
7.14 Insurance............................................. - 25 -
7.15 Compliance............................................ - 25 -
7.16 Leases................................................ - 26 -
7.17 Service Contracts; Management Contracts............... - 27 -
7.18 Permits............................................... - 27 -
7.19 Other Liabilities..................................... - 27 -
7.20 Tax Matters........................................... - 27 -
7.21 Taxes................................................. - 27 -
7.22 Special Filings....................................... - 28 -
7.23 Books and Records..................................... - 28 -
7.24 No Brokers............................................ - 28 -
7.25 All Material Information.............................. - 28 -
7.26 Survival of Warranties................................ - 28 -
VIII. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PARTNERSHIP............................................................. - 29 -
8.1 Organization, Good Standing and Qualification......... - 29 -
8.2 Authorization......................................... - 29 -
8.3 No Violation.......................................... - 30 -
8.4 Tax Status............................................ - 30 -
8.5 No Litigation......................................... - 30 -
8.6 No Brokers............................................ - 30 -
8.7 Survival.............................................. - 30 -
IX. COVENANTS........................................................ - 30 -
9.1 Covenants of the Company and the Partnership........... - 30 -
9.2 Covenants of the Sellers............................... - 32 -
9.3 No Claim Against Property - 33 -
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X. DUE DILIGENCE PERIOD.............................................. - 33 -
10.1 Due Diligence Period.................................. - 33 -
10.2 Access to Properties and Materials.................... - 33 -
10.3 Adjustment Following Due Diligence.................... - 34 -
XI. DEFAULTS AND REMEDIES............................................. - 34 -
11.1 Indemnification by Sellers............................ - 34 -
11.2 Remedies.............................................. - 35 -
11.3 Indemnification by the Company and the Partnership.... - 37 -
11.4 Indemnification Procedures............................ - 37 -
XII. MISCELLANEOUS..................................................... - 41 -
12.1 Assignment............................................ - 41 -
12.2 Entire Agreement...................................... - 41 -
12.3 Notices............................................... - 41 -
12.4 Governing Law......................................... - 42 -
12.5 Litigation Costs...................................... - 42 -
12.6 Counterparts.......................................... - 42 -
12.7 Offer and Acceptance.................................. - 42 -
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EXHIBITS
2.4(a) Form of Company Lease
5.2.1(m) Opinion of Seller's Counsel
5.2.2(d) Opinion of Company Counsel
SCHEDULES
1.2 Schedule of Properties; Ownership Interests in Properties and
Purchase Price
2.1 Prior Occupants
2.11(a) Construction Contracts
2.11(b) Plans and Specifications
7.4 Material Defaults
7.8 Condition of Properties
7.11 Zoning
7.13.4 Known Environmental Circumstances
7.13.5(a) The Treatment, Storage and Disposal Locations for Substances of
Concern
7.13.5(b) Storage Tanks
7.13.5(c) Existence of Asbestos
7.13.5(f) Environmental Permits and Authorizations
7.14 Insurance
7.17 Service Contracts and Management Contracts
7.19 Other Liabilities
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CAPITAL AUTOMOTIVE L.P.
REAL PROPERTY PURCHASE AGREEMENT
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THIS REAL PROPERTY PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of this 10th day of January 1998, by and among the ▇▇▇▇▇▇ FAMILY LIMITED
PARTNERSHIP, a Maryland limited partnership, having offices at c/o Good News
Salisbury, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (sometimes
referred to as "Seller"), and CAPITAL AUTOMOTIVE L.P., a Delaware limited
partnership (the "Partnership"), having offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and CAPITAL AUTOMOTIVE REIT, a Maryland real
estate investment trust (the "Company"), having offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on its own behalf and as the
general partner of the Partnership.
RECITALS
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A. The Sellers are the legal and beneficial owners of all of the
interests in fee simple title to all of the real property and improvements set
forth on such Schedule 1.2 hereto (including the residual interests in any
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tenant improvements thereon), which are individually referred to as a "Property"
and collectively, the "Properties." Such Properties are identified on Schedule
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1.2 by street address and property tax identification number, or if such
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Properties constitute more than one parcel, by the several applicable property
tax identification numbers.
B. Each Seller desires to sell all of its interest in each of the
Properties to the Partnership and the Partnership desires to purchase all of the
Sellers' interests in such Properties.
NOW THEREFORE, in consideration of and in reliance upon the above Recitals,
the terms, covenants and conditions contained in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. PURCHASE AND SALE
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1.1 Certain Definitions. For purposes of this Agreement:
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1.1.1 "Mortgage Debt" means the aggregate amount of mortgage
indebtedness, if any, encumbering the Properties as set
forth opposite the description of each Property on
Schedule 1.2.
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1.1.2 "Purchase Price" means the amount, in U.S. dollars,
that is the purchase price of each Property, as
identified on Schedule 1.2 for each such Property.
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1.1.3 "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.
1.1.4 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.
1.1.5 For purposes of this Agreement, the "knowledge" of a
Person shall mean the actual knowledge of such Person's
officers, senior executives, managing partners, general
partners, majority shareholders, key employees or their
equivalents.
1.2 Agreement to Purchase and Sell. Subject to the terms and
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conditions of this Agreement, at the Closing (as hereinafter defined), each
Seller shall sell, transfer and convey to the Partnership, and the Partnership
shall purchase and accept from the Sellers, all of the Sellers' right, title and
interest in and to the Properties identified on Schedule 1.2, excluding items of
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movable personal property attached to such Properties that relate to the
business conducted on such Properties and may readily be removed from such
Properties without material damage whether or not such items are "fixtures,"
("Excluded Personal Property").
1.3 Encumbrances. The Partnership shall acquire each Property free
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and clear of all liabilities, obligations and commitments of Sellers and free
and clear of all liens and encumbrances other than Permitted Exceptions.
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1.4 Purchase Price. On the terms and subject to the conditions of
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this Agreement, at the Closing Sellers shall sell, transfer, convey, assign and
deliver to the Partnership, and the Partnership shall purchase and accept from
Sellers all the right, title and interest of Sellers to and under the Properties
for an aggregate purchase price (the "Aggregate Purchase Price") in an amount
equal to:
FOUR MILLION EIGHTY-SIX THOUSAND TWO HUNDRED SIXTY AND 00/100
U.S. DOLLARS ($4,086,260)
The Aggregate Purchase Price will be adjusted pursuant to Sections 3.3,
5.2.1(k), 5.2.1(l), 6.1, 6.2, 10.3 as applicable.
1.5 Capitalized Terms. Capitalized terms used in this Agreement that
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are not otherwise defined herein shall have the meanings required by context.
II. OPERATION OF PROPERTY THROUGH CLOSING
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Through the Closing Date:
2.1 Business Practice. Except as otherwise provided in this Article
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2, the Sellers shall continue, or shall cause any Affiliate, tenant, or third
party managing, maintaining or occupying, as the case may be, any of the
Properties (referred to herein individually as a "Prior Occupant" and
collectively as the "Prior Occupants") to continue, to manage, to maintain and
to operate the Properties in accordance with sound and prudent business
practices and keep the Properties and the tangible personal property thereon in
good condition and repair, ordinary wear and tear excepted. The Sellers shall
instruct such Prior Occupant not to make any change in its management,
maintenance or operation of the Properties or in its normal and customary other
practices. The Prior Occupants are identified on Schedule 2.1 to this Agreement.
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2.2 No Sale or Encumbrance. None of the Sellers shall sell,
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mortgage, pledge, hypothecate or otherwise transfer or dispose of all, or any
part of any Property or any interest therein, nor shall any Seller initiate,
consent to, approve or otherwise take any action with respect to zoning or any
other governmental rules or regulations presently applicable to all or any part
of any Property, nor shall any Seller permit any new limited or general
partners, shareholders or members to be admitted to any Seller. Notwithstanding
the foregoing, Sellers shall have, with the written consent of the Partnership
(which consent shall not be unreasonably withheld): (a) the right to admit new
partners to the ▇▇▇▇▇▇ Family Limited Partnership between the date hereof and
the Closing Date; and (b) the right prior to Closing to convert the ▇▇▇▇▇▇
Family Limited Partnership from a limited partnership into another form of
entity and to transfer the Properties from the ▇▇▇▇▇▇ Family Limited Partnership
to such converted entity; provided that such converted entity shall be in a form
approved by the Partnership; and further provided that such converted entity
executes this Agreement and agrees to be bound by its terms and conditions and
to assume all of Sellers'
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obligations hereunder, including, but not limited to, the covenant under Section
11.2.3 hereto to maintain a net worth of no less than two million dollars
($2,000,000) (U.S.) for a period of no less than two (2) years following the
Closing of the transactions contemplated by this Agreement; and further provided
that the members, shareholders, partners, or other owners of such converted
entity shall include ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (the general
partners of the ▇▇▇▇▇▇ Family Limited Partnership).
2.3 Leases, Service Contracts and Management Contracts. Except as
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provided in Section 2.4, the Sellers shall not, nor shall they cause or permit
any Prior Occupant to, terminate, modify, extend, amend or renew any Lease (as
defined in Section 4.1.3 hereof), Service Contract (as defined in Section 7.17
hereof), or Management Contract (as defined in Section 7.17 hereof) or enter
into any new Lease (other than the Company Lease pursuant to Section 2.4 of this
Agreement) or Service Contract without the prior written consent of the Company
or the Partnership; provided, however, that the failure of the Company or the
Partnership to object to any such action within thirty (30) days after written
notice to it by Seller shall be deemed to reflect the Company's or the
Partnership's consent thereto. Notwithstanding the foregoing, all Service
Contracts and Management Contracts relating to the respective Properties shall
remain in effect after the Closing Date, except for those Service Contracts and
Management Contracts that the Partnership requires, in writing, to be terminated
as of the Closing Date.
2.4 Termination of Leases; New Company Leases. Prior to the Closing
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Date, the Sellers shall cause the termination of all Leases. Not later than
five (5) days before the Closing Date (as defined herafter), the Sellers shall
cause the Prior Occupant of each Property, or an Affiliate thereof, to execute
and deliver to the Partnership an occupancy lease with the Partnership for each
of the Properties substantially in the form attached hereto as Exhibit 2.4(a)
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(referred to hereafter individually as a "Company Lease" and collectively as the
"Company Leases"), on terms and conditions (including Rent (as defined in such
Company Lease)) acceptable to the Partnership. The Base Annual Rent (as defined
in the Company Lease) called for under the Company Lease for each Property shall
be eleven and one-half percent (11.5%) of the Purchase Price (the "Rate of
Return") for such Property.
2.5 Compliance. None of the Sellers shall knowingly take or fail to
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take any action that will cause the Properties to fail to comply with any
federal, state, municipal and other governmental laws, ordinances, requirements,
rules, regulations, notices, codes and orders, or any agreements, covenants,
conditions, easements and restrictions currently in effect relating to the
Properties.
2.6 Notice of Inaccuracy or Incompleteness. The Sellers shall
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promptly give written notice to the Company of the occurrence of any event of
which Sellers have knowledge and which may adversely affect the completeness or
accuracy of any representation or warranty made or to be made by Sellers under
or pursuant to this Agreement.
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2.7 Access. The Sellers shall cause the Company and the Partnership
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and its representatives to have reasonable access to the Properties, subject to
the prior rights, if any, of any Prior Occupant; provided, however, that without
the consent of the Seller, the representatives of the Partnership shall not
disclose to any Prior Occupant the existence of this Agreement or the
transactions contemplated hereby.
2.8 Insurance. The Sellers shall cause the existing insurance
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coverages on the Properties and the business of the Sellers to be maintained in
full force and effect through the Closing Date.
2.9 Fulfillment of Obligation. To the extent any Seller is
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obligated, pursuant to any contract, agreement, covenant, lease, including any
Lease, or other understanding entered into prior to the date hereof with any
Prior Occupant, governmental subdivision or any other third party, to effect any
construction, make any improvements or take any action, the Sellers shall cause
any such construction, improvements and/or action to be taken, completed and
fully paid for by such Seller, at its expense, prior to the Closing Date. No
such obligation shall be unfulfilled, and no liability for or payment in respect
of any such obligation shall be unsatisfied as of the Closing Date.
2.10 Financial Statements and Reports. The Sellers shall provide to
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the Company financial statements, agings of accounts receivable, and other
financial, operating or statistical information for each Property upon any
reasonable request of the Company (provided that such such statements, reports
or information are produced in the ordinary course of any Seller's business),
and the general partner or chief financial officer, as the case may be, of each
Seller shall certify that, to the best of his or its knowledge, such financial
statements and other reports are true, accurate and complete in all material
respects.
2.11 Under Construction Properties. Notwithstanding anything to the
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contrary contained in this Agreement, the Partnership and the Company recognize
that the Property identified on Schedule 1.2 to this Agreement as the three
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parcels compromising the Toyota/Mercedes automobile dealership at ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (the "Under Construction Property")
is presently being improved pursuant to the construction contracts listed on
Exhibit 2.11(a) hereto and the plans and specifications listed on Exhibit
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2.11(b) hereto. The contracts, plans and specifications so listed are referred
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to herein, collectively, as the "Contract Documents." With respect to the Under
Construction Property, the parties to this Agreement agree as follows:
2.11.1 The Purchase Price of each such property, as stated in
Schedule 1.2 to this Agreement, is based upon the
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assumption that each such property will be conveyed to
the Partnership at the Closing Date identified in
Section 5.1 hereto, but in no event later
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than the date to which the Sellers and the Partnership
shall agree in writing:
a. with all improvements called for under the Contract
Documents complete in all respects and in substantial
conformity with all requirements of the Contract
Documents;
b. free of all liens and claims of any and all persons,
firms, companies, corporations or other entities
supplying any labor, services, materials, supplies or
other things of value in connection with or in respect
of any construction or other improvement to the Under
Construction Property or either of them (the
"Construction Service/Material Suppliers"); and
c. with certificates of occupancy and/or other
certificates issued by all appropriate governmental
bodies or agencies attesting to the fact of the
completion of all improvements in conformity with all
building, zoning and other applicable codes or
regulations so as to permit the immediate occupancy of
the improvements for the purposes contemplated by the
Company Lease.
2.11.2 The Seller of the Under Construction Property agrees
that it will do all things necessary to convey the
Under Construction Property as contemplated in Section
2.11.1 hereto.
2.11.3 If the Seller of the Under Construction Property shall
have any dispute with any Construction Service/Material
Supplier referred to in Section 2.11.1.b above, and
that dispute prevents the delivery of the properties or
either of them free of any lien or claim, such Seller
may deliver the property so affected subject to such
lien or claim; provided however that:
a. by such Seller's "bonding off" or posting money with
the Partnership's Title Insurer, such Title
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Insurer will "insure over" the lien or claim in
question; and
b. such Seller diligently pursues the dispute to its
conclusion.
2.11.4 If for any reason (including the resolution of a
dispute specified in Section 2.11.3 above) the Seller
is required to pay more money (the "Excess") than is
specified in the Contract Documents as they exist on
the date of this Agreement, then if the Partnership
determines that the Excess, when added to the Purchase
Price specified in this Agreement, results in an
aggregate amount not in excess of fair market value of
the property in question, the Purchase Price specified
in this Agreement for the property in question will be
increased by the amount of the Excess and the Base
Annual Rent payable under the applicable Company Lease
will be increased by an amount equal to the amount of
the Excess times the Rate of Return.
2.11.5 The Seller of the Under Development Property agrees
that nothing in this Section 2.11 shall lessen the
Seller's obligations under other provisions of this
Agreement or lower the requirements with respect to
such Property as specified herein.
2.11.6 Notwithstanding the foregoing provisions of this
Section 2.11, the closing of the conveyance of the
Under Construction Property shall occur on the Closing
Date provided in Section 5.1 hereto only if the
construction project on the Under Construction Property
shall be substantially complete. For purposes of this
Section 2.11.6, "substantially complete" means
completion except for the typical "punch-list" items (a
list of which shall be completed by Seller (as the
agent for the Partnership) and the contractor), which
items are capable of completion within thirty (30) days
of the Closing Date. The Seller shall enforce its right
to obtain completion of the construction under the
Contract Documents by way of hold-back or other
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mechanism to guaranty to the Partnership that the
punch-list items are completed within thirty (30) days
of the Closing Date. If the construction project on the
Under Construction Property is not substantially
complete as of the Closing Date, Sellers and the
Partnership shall agree to an alternative date to close
the conveyance of the Under Construction Property to
the Partnership, which date shall be no later than
forty-five (45) days following the completion of the
construction project.
III. STATUS OF TITLE TO PROPERTY
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3.1 State of Title. At Closing, the Sellers shall own, beneficially
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and of record, good and marketable fee simple title to the Properties, subject
only to the mortgages creating the Mortgage Debt listed on Schedule 1.2 hereto
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and those covenants, conditions, restrictions and other matters affecting title
as set forth in the land Title Commitments, UCC Searches and/or Surveys to be
delivered to the Partnership hereunder and found to be acceptable to the
Partnership under Section 3.3 hereto (the "Scheduled Exceptions"). The Mortgage
Debt and Scheduled Exceptions are referred to collectively herein as the
"Permitted Exceptions."
3.2 Preliminary Evidence of Title. Within no more than 30 days after
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the date hereof, the Sellers and the Partnership shall obtain, in a form
acceptable to the Partnership, the following documents to evidence the condition
of the title to each of the Properties:
3.2.1 Commitments (the "Title Commitments") to the
Partnership for ALTA Form B (1987) Owner's Title
Insurance Policies committing to insure, at standard
rates, title to each Property as being good and
marketable, subject only to the Permitted Exceptions,
in the amount of the fair market value of each such
Property, issued by a title company acceptable to the
Company and the Partnership (the "Title Insurer"). The
Title Commitments shall be effective as of the Closing
Date, and shall reflect that fee simple title is held
by the respective Seller. Each Owner's Title Insurance
Policy to be issued to the Partnership at Closing
pursuant to Section 7.2.2 below ("Title Insurance
Policies") shall contain an extended coverage
endorsement over the general or standard exceptions
which are a part of the printed
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form of the policy and subject only to the Permitted
Exceptions. Each Title Insurance Policy shall, in
addition, (a) include provisions for co-insurance, in
such amounts of liability acceptable to the Partnership
and the Company; (b) not contain any survey exception,
(c) not contain any exceptions for (i) liens for labor
or material, whether or not of record, (ii) parties in
possession (other than Prior Occupants under the
Leases, solely as such Prior Occupants), (iii)
unrecorded easements, and (iv) taxes and special
assessments not shown on the public records, (d)
provide for the following endorsements: (i) an access
endorsement insuring that there is direct and
unencumbered access to the land from all adjacent
public streets and roads, (ii) a survey endorsement
insuring that all foundations in place as of the date
of such policy are within the lot lines and applicable
setback lines, that the improvements do not encroach on
adjoining land or any easements, and that there are no
encroachments of improvements from adjoining land on
any or the Properties or any part thereof, (iii) an
ALTA Form 3.1 zoning endorsement insuring that the
Properties are zoned for the buildings and the
operation thereof as contemplated by the terms and
provisions of this Agreement, (iv) a non-imputation
endorsement, by which the Title Insurer waives any
defense based upon knowledge of any person or entity
(other than the knowledge of the Partnership or its
designees), (v) a statement that each Property
constitutes a separate lot of record and is separately
assessed for real estate tax purposes, (vi) an
endorsement commonly referred to as a "Fairway
endorsement," providing among other things, that the
Title Insurer waives any defense based on a dissolution
or termination of the insured partnership or the
formation of a new partnership solely by reason of one
or more transfers of all or any part of the partnership
interests of any one or more of the general partners of
the insured to the Company or the Partnership and/or
any one or more of the limited partners of the insured,
and/or the transfer of any one or more of the limited
partner's interests to
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the current general partner, the Company or the
Partnership, and (vii) such other endorsements as the
Partnership and the Company may reasonably require.
3.2.2 Written results of searches reflecting any liens,
judgements, tax liens, bankruptcies, and open dockets
(the "UCC Searches"), conducted by a company reasonably
acceptable to the Partnership. The UCC Searches shall
name each Seller, Prior Occupant, and Property, and
shall search the appropriate land records and central
filing office for Uniform Commercial Code financing
statements.
3.2.3 Legible copies of all documents of record referred to
in any Title Commitment or disclosed by the UCC
Searches, and all other documents evidencing or, to the
extent in the possession or control of the Sellers,
relating to, matters reflected in any Title Commitment
or the UCC Searches.
3.2.4 Current ALTA/ACSM land title surveys of each of the
Properties (the "Surveys") dated on or after the date
of this Agreement, certified to the Partnership and the
Title Insurer (and such other persons or entities as
the Partnership may designate) by a surveyor registered
in the State where the Property is located. Each Survey
shall be in form and substance acceptable to the
Partnership and the Title Insurer.
3.3 Title Defects. The Partnership shall have the right to review the
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Title Commitments, UCC Searches or Surveys (or any revision or update of any of
them) and to require the Seller to remove, correct, and cure any defects in the
title or other such matters relating to the title that the Partnership
determines, in its sole discretion, are unacceptable. The Partnership shall
notify the Sellers in writing within ten (10) business days after the
Partnership receives the Title Commitments, UCC Searches or Surveys, as the case
may be, of any such defects or matters that the Partnership finds to be
unacceptable, and, within sixty (60) days from the receipt of notice, such
Sellers shall, (i) as to any such exception or other matter of a nonmonetary
nature, use reasonable efforts to remove, correct and cure such defects or such
other matters, and (ii) as to any such defect or other matter of a monetary
nature, cause such lien or encumbrance or other matter to be discharged and
released, in each case to the reasonable satisfaction of the Partnership, except
that such Seller shall not be required to expend more than $100,000 with respect
thereto. If such Seller
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fails to remove, correct and cure such defects or such other matters, the
Partnership may, at its option and as its exclusive remedy, (x) terminate this
Agreement, in which event this Agreement, without further action of the parties,
shall become null and void and neither party shall have any further rights or
obligations under this Agreement, (y) terminate this Agreement with respect to
such Property and reduce the Aggregate Purchase Price by the Purchase Price for
such Property with respect to which the Seller fails to correct and cure such
defects or other such matters, or (z) elect to accept title to such Property and
discharge or release any liens, encumbrances or other matters of a monetary
nature or which may otherwise be discharged, released or removed by the payment
of a monetary sum and reduce the Aggregate Purchase Price by the lesser of (a)
the amount necessary to correct or cure such monetary liens, encumbrances or
other matters or (b) $100,000. If the Partnership fails to make any such
election, the Partnership shall be deemed to have elected the option contained
in clause (y).
IV. CLOSING PRORATIONS AND ADJUSTMENTS
----------------------------------
4.1 Prorations and Adjustments. All prorations and adjustments (the
--------------------------
"Prorations") with respect to each Property, for the period up to and through
the Closing Date, shall be the responsibility of or belong to the Sellers and
all Prorations for the period after the Closing Date shall be the responsibility
of or belong to the tenant under the applicable Company Lease. The Company and
the Partnership shall have no responsibility for, and will receive no benefit
from, the Prorations, and the Seller shall have liability for such Prorations.
Such Prorations shall include, but not be limited to, the following:
4.1.1 real estate and personal property taxes and
assessments;
4.1.2 common area maintenance fees and reimbursements for
prior years property taxes payable by Prior Occupants;
4.1.3 the rent payable by Prior Occupants under leases in
effect immediately prior to the Closing Date (the
"Leases") as set forth on Schedule 2.1 hereto;
------------
4.1.4 the full amount of security deposits paid under the
Leases, together with interest thereon if required by
law or otherwise;
4.1.5 water, electric, telephone and all other utility and
fuel charges (those that are meter read will be read by
the appropriate utility and service transferred as of
the Closing Date);
-11-
4.1.6 amounts due and prepayments under the Service
Contracts;
4.1.7 assignable license and permit fees;
4.1.8 other expenses of operation and similar items; and
4.1.9 all or any other disbursements, payments, and
obligations relating to the Property.
4.1.10 notwithstanding the foregoing, any refunds of real or
personal property taxes for tax years beginning prior
to the Closing Date shall belong to Sellers, and if
paid to the Partnership shall be promptly refunded by
the Partnership to Sellers in cash.
4.1.11 with respect to Mortgage Debt, at the time of Closing,
all obligations accrued up to the Closing Date, whether
the same shall constitute principal, interest, or other
payments, shall be paid by the Seller by way of a
reduction of the Aggregate Purchase Price in the amount
of such obligations.
V. CLOSING
-------
5.1 Closing Date. The closing of the transactions contemplated by
------------
this Agreement (the "Closing") shall occur at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇, at 10:00 a.m. on
February 27, 1998, or such other time or place as shall follow the closing of
the initial public offering of Initial Shares of the Company pursuant to the
Registration Statement (but in no event later [than the earlier of (i) thirty
days after the closing of the public offering or (ii)] May 29, 1998), provided
that all conditions to Closing have been satisfied or waived, or at such other
time and place as the Sellers and the Company shall agree in writing. The
"Closing Date" shall be the date of the Closing. If the Closing Date is to be a
date other than February 27, 1998, the Partnership shall deliver to Sellers
facsimile notice of such Closing Date no later than five (5) business days prior
to such Closing Date.
5.2 Closing Documents
-----------------
5.2.1 Sellers. Not later than five (5) business days prior
-------
to the Closing Date, the Sellers shall deliver to the
Company and the Partnership the following:
-12-
a. deeds and assignments for the Properties;
b. executed copies of all Company Leases, effective at
Closing;
c. any affidavits, certificates and other documents
(including without limitation non-imputation affidavits
and/or certificates) that are reasonably necessary for
the Title Insurer to issue the Owner's Title Insurance
Policies in the form and condition required by this
Agreement;
d. evidence satisfactory to the Partnership that all
mortgages and other indebtedness secured by the
Properties have been paid in full;
e. for each Seller that is a corporation, a corporate
resolution authorizing the transactions contemplated by
this Agreement, a certificate of good standing, a
certified copy of its articles or certificate of
incorporation and bylaws, and a certificate of
incumbency certifying the titles and signatures of the
corporate officers authorized to consummate the
transactions contemplated hereunder on behalf of Seller
and such other evidence of such Seller's power and
authority as the Company or Partnership reasonably
requests;
f. for each Seller that is a partnership or a limited
liability company, a partnership resolution authorizing
the transactions contemplated by this Agreement, a
certificate of good standing, a certified copy of the
partnership or operating agreement governing such
Seller, and a certificate of incumbency certifying the
titles and signatures of the general partners or
members authorized to consummate the transactions
contemplated hereunder on behalf of such Seller and
such other evidence of power and authority of such
Seller as the Company or Partnership reasonably
requests;
g. for each Seller, an affidavit stating, under penalty of
perjury, its U.S. taxpayer identification number and
-13-
that it is not a foreign person within the meaning of
Section 1445 of the Internal Revenue Code of 1986, as
amended (the "Code");
h. agreements from each Prior Occupant who leases any
Property terminating its Leases with Sellers and an
estoppel certificate from such Prior Occupant stating
that it has no claims under the Lease;
i. all of the original Leases, written Service Contracts
and Management Contracts and any and all building
plans, surveys, site plans, engineering plans and
studies, utility plans, landscaping plans, development
plans, specifications drawings, marketing artwork,
construction drawings, soil tests, complete warranty
book including all contractors and subcontractors and
other documentation concerning all or any part of each
Property to the extent that any of the foregoing
documents are in the possession or control of Sellers;
j. any bonds, warranties or guaranties which are in any
way applicable to any Property or any part thereof to
the extent any of the foregoing are in the possession
or control of Sellers;
k. If the Company or Partnership shall so request, each
Seller shall deliver to the Company a letter (an
"Estoppel Letter") in a form acceptable to the Company,
dated not more than thirty (30) days prior to the
Closing Date, from each Prior Occupant under each
Lease. The Estoppel Letter shall be fully completed in
a manner reasonably satisfactory to the Company, and
with no modifications other than those reasonably
acceptable to the Company. In the event Estoppel
Letters in form and content reasonably satisfactory to
the Company are not received by the Company and the
Partnership within the time prescribed herein, then the
Partnership and the Company, at their option and as a
non-exclusive remedy, upon notice to the Sellers, may
immediately terminate this Agreement, or may terminate
this Agreement with respect to the
-14-
relevant Property, in which case the Aggregate Purchase
Price shall be reduced by the Purchase Price of such
Property.
l. [Intentionally Omitted]
m. an opinion of Seller's counsel substantially in the
form attached hereto as Exhibit 5.2.1(m); and
----------------
n. all other documents reasonably required by the
Partnership or the Company in connection with the
transactions contemplated by this Agreement.
5.2.2 Partnership. At the Closing, the Partnership shall deliver the
-----------
following:
a. [Intentionally Omitted]
b. for the Company, a resolution of its Board of Trustees
authorizing the transactions contemplated hereby and a
certificate of good standing from the State Department
of Assessments and Taxation of the State of Maryland;
c. for the Partnership, evidence of the Partnership's
authorization of the transactions contemplated hereby
and a certified copy of the Partnership Agreement and
a Certificate of Limited Partnership certified by the
Secretary of State of Delaware; and
d. an opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
substantially in the form attached hereto as Exhibit
-------
5.2.2(d).
--------
5.3 Conditions to the Partnership's Obligation to Close. At the
---------------------------------------------------
option of the Partnership, the obligations of the Company and the Partnership
under this Agreement are subject to the satisfaction of the following conditions
(unless explicitly waived in writing):
5.3.1 Each Seller shall have terminated such existing
Management Contracts that Partnership has required, in
writing, to be terminated prior to the Closing Date.
-15-
5.3.2 Each Seller shall have terminated all Leases prior to
the Closing Date.
5.3.3 Each Seller shall have terminated such existing Service
Contracts that the Partnership has required, in
writing, to be terminated prior to the Closing Date.
5.3.4 Each and every representation and warranty of the
Sellers contained in this Agreement is true, correct
and complete in all material respects as of the date
hereof and at all times through the Closing Date.
5.3.5 The Sellers shall have fully performed and satisfied
each and every material obligation, term and condition
to be performed and satisfied by them under this
Agreement.
5.3.6 All consents, authorizations, certificates, Estoppel
Letters, Lender's Estoppel Certificates and approvals
required to be obtained by the Sellers in connection
with the Agreement shall have been obtained, including
but not limited to all consents, approvals and
authorizations (without any conditions or requirements)
required to be obtained under any Mortgage, deed of
trust or other instrument relating to any of the
Properties or pursuant to which any of the Sellers are
bound in order to complete the transactions
contemplated under this Agreement.
5.3.7 The Company shall have closed its initial public
offering according to the Registration Statement.
5.3.8 The Sellers shall have paid in full such Mortgage Debt
and other indebtedness secured by the Properties as
required by the Company and Partnership and shall have
provided the Company and Partnership with satisfactory
evidence thereof, and to the extent that such Mortgage
Debt is to be paid off following Closing, the mortgagee
shall deliver pay-off letters to the Company and the
Partnership.
-16-
5.3.9 The condition of the Property shall not have materially
changed.
5.3.10 The Partnership shall have received an Owner's Title
Insurance Policy (or marked-up commitment therefor) for
each Property insuring fee simple title to such
Property in the amount of the Purchase Price of such
Property subject only to Permitted Exceptions, and
otherwise in the form and condition required by this
Agreement.
5.3.11 If the Sellers do not deliver completed Schedules to
---------
the Company and Partnership at the time of the
execution of this Agreement, the Sellers shall deliver
to the Company and Partnership, in substantially
completed form, all Schedules required by this
---------
Agreement within five (5) business days after the date
of the execution of this Agreement.
5.3.12 The Sellers shall have delivered to the Company all
closing documents required by Section 5.2.1 hereof.
5.4 Conditions to the Seller's Obligation to Close. The obligations
----------------------------------------------
of the Seller under this Agreement are subject to the satisfaction of the
following conditions (unless explicitly waived in writing):
5.4.1 Each of the representations and warranties of the
Partnership contained in this Agreement is true,
correct and complete as of the date hereof and at all
times through the Closing Date.
5.4.2 The Partnership and the Company shall have fully
performed and satisfied each and every obligation, term
and condition to be performed and satisfied by them
under this Agreement.
5.4.3 The Company shall have completed its initial public
offering pursuant to the Registration Statement on or
before the earlier of May 29, 1998 or the date that the
Company withdraws the Registration Statement.
-17-
5.4.4 All consents, authorizations and approvals required to
have been obtained by the Company and the Partnership
in connection with this Agreement shall have been
obtained.
5.5 Transaction Costs.
-----------------
5.5.1 The Sellers shall pay all costs (including, but not
limited to, any recordation and transfer taxes,
surveys, title insurance (including all special
endorsements), searches made pursuant to Section 3.2.2
hereof, fees and expenses of going to record) in
connection with the transfer by the Sellers of the
Properties (collectively referred to as the "Closing
Costs"). The Company and the Partnership shall bear the
cost of their due diligence activities.
5.5.2 The Sellers shall pay all assumption fees, prepayment
penalties, premiums, lender's consent fees or other
such charges ("Consent Fees") imposed in connection
with the transactions contemplated hereby, and all
Consent Fees imposed by all other lenders in connection
with the transactions contemplated hereby.
5.5.3 Except as specified above and elsewhere in this
Agreement, each party shall bear and pay its expenses
in connection with this Agreement and the transactions
contemplated herein, including the fees of their
respective professional advisors.
VI. CASUALTY LOSS AND CONDEMNATION
------------------------------
6.1 Casualty. Prior to Closing, all risk of loss shall belong to the
--------
Sellers. If, prior to Closing, the Properties or any part thereof shall be
destroyed or materially damaged by fire or other casualty, the Partnership (a)
shall first offer the Seller the option not to rebuild; Seller may exercise this
option if such Property is insured to the full amount of the Purchase Price of
the Improvements; and if Seller exercises this option, the Partnership may
terminate this Agreement with respect to such Property upon notice to the
Seller, and reduce the Aggregate Purchase Price by the Purchase Price of such
Property, except that if the tenant under the Price Lease or the Tenant elects
to pay the Base Annual Rent under the Company Lease for the entire term of the
Company Lease on such Property despite the election not to rebuild, the
Partnership shall not terminate this
-18-
Agreement with respect to such Property; and (b) if the Seller does not exercise
its option under (a), may, at its option, either (i) require the appropriate
Sellers to repair such damage prior to Closing to the reasonable satisfaction of
the Partnership, at no cost or expense to the Company or the Partnership, in
which event the proceeds of any insurance applicable thereto shall be paid to
the Seller, or (ii) itself settle the loss under all policies of insurance
applicable to the destruction or damage and receive the proceeds of insurance
applicable thereto, and the Seller shall, at Closing and thereafter, execute and
deliver to the Partnership all required proofs of loss, assignments of claims
and other similar items. Notwithstanding anything in this Section 6.1 to the
contrary, in the event such loss or casualty shall constitute a total or
substantial loss or casualty or, in the opinion of the Company, in its sole
discretion, shall render the Property unsuitable for its intended purpose for a
period of ninety (90) days or longer, then the Company and the Partnership, at
their option, may terminate this Agreement with respect to such Property upon
notice to the Seller, and reduce the Aggregate Purchase Price by the Purchase
Price of such Property, except that if the Tenant nevertheless elects to pay the
Base Annual Rent under the Company Lease for the entire term of the Company
Lease on such Property, the Partnership shall not terminate this Agreement with
respect to such Property.
6.2 Condemnation or Taking. If, prior to Closing, any Property or
----------------------
any part thereof shall be condemned or taken and such condemnation or taking
materially interferes with the existing business use of the Property, the
Company and the Partnership may (i) terminate this Agreement either as to all
the Properties or solely as to such Property, in the discretion of the
Partnership and the Company, or (ii) complete the transactions contemplated by
this Agreement notwithstanding such condemnation. If the Company and the
Partnership elect to complete the transactions contemplated hereby, the
Partnership shall be entitled to receive the condemnation proceeds and the
appropriate Seller shall, at Closing and thereafter, execute and deliver to the
Partnership and the Company all required assignments of claims and other similar
items. If the Partnership and the Company elect to terminate this Agreement,
then upon written notice to the Sellers and without further action of the
parties, this Agreement shall become null and void and no party shall have any
rights or obligations under this Agreement. If the Partnership and the Company
elect to terminate this Agreement solely with respect to the affected Property,
the Aggregate Purchase Price shall be reduced by the Purchase Price of such
Property.
VII. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
---------------------------------------------
The Sellers, jointly and severally, represent[s] and warrant[s] to the
Company and the Partnership that, except as described on the Schedules attached
---------
hereto and incorporated by reference herein, the following are true, complete
and correct as of the date of this Agreement and as of the Closing Date:
7.1 Organization. Each Seller is duly organized and validly existing
------------
and in good standing under the laws of the state of its organization and the
State of Maryland, and has all requisite power and authority to own or lease and
operate its properties (including the Properties)
-19-
and assets and conduct its business in the manner in which they are being owned
or leased and operated and conducted, as the case may be. Each Seller is duly
qualified and authorized and is in good standing in all jurisdictions where its
ownership, lease or operation of assets and properties (including the
Properties) or the conduct of its business requires such qualification or
authorization.
7.2 Authority. The execution and delivery of this Agreement and all
---------
agreements, documents and instruments contemplated hereby and the performance of
all transactions contemplated herein or therein, have been duly and validly
authorized by all requisite partnership, corporate or trust action, as the case
may be, and by the general partners, board of directors, stockholders, or
trustees of each Seller, as the case may be. This Agreement and the agreements,
documents and instruments executed and delivered in connection herewith
constitute the legal, valid and binding obligations of the Sellers, enforceable
in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and except to the
extent that rights to indemnification and sale and purchase under or
contemplated by this Agreement or such other agreements may be limited by
federal or state securities laws or public policy relating thereto. To the
knowledge of the Sellers, none of the Sellers are required to obtain any
consent, authorization, approval or waiver from any governmental agency or
authority or from any third party in connection with the execution and delivery
of, and the performance of the obligations to be performed under, this Agreement
and the documents and instruments executed and delivered in connection herewith,
or if any of the foregoing is required, it has been obtained.
7.3 Interest in Contributed Properties. Each Seller is the record
----------------------------------
and beneficial owner of, and has good and marketable and insurable fee simple
title to, the interests in the Properties set forth opposite such Seller's name
on Schedule 1.2, free and clear of all liens, options, adverse claims or
------------
encumbrances, except the Permitted Exceptions, and Schedule 1.2 is true,
------------
accurate and complete in all material respects as to each seller. Between the
date hereof and the Closing Date, no liens, claims or encumbrances will be
created or permitted to be created on any Property other than the Permitted
Exceptions. Prior to or at the Closing all monetary encumbrances on any
Property, other than the Permitted Exceptions, shall be duly canceled, removed
and discharged of record, and proof thereof satisfactory to the Title Insurer,
the Company and the Partnership shall be delivered to the Company and the
Partnership. Except for Prior Occupants, there are no parties in possession of
any part of the Properties as of the Closing Date, and there are no other rights
of possession, or agreements providing for the sale, assignment or transfer of
title to any Property or portion thereof (other than this Agreement), which
have been granted to any third parties. Such Seller has the full power,
capacity and authority to sell, transfer and assign the legal and equitable
ownership of his/her or its interest to the Partnership as provided in this
Agreement, and the Sellers have not entered into any agreement and have no
knowledge of any agreement or understanding to issue any additional interests in
any Seller to any other person or entity.
-20-
7.4 No Defaults. (a) No Seller is in default of any of its material
-----------
obligations under any agreement, franchise, license, contract, deed, mortgage,
lease, instrument, certificate, affidavit or covenant affecting title to the
Properties; (b) there are no contracts or agreements, such as maintenance,
service, or utility contracts affecting the Properties other than the Service
Contracts, and no party to such contracts is in material default or breach under
the terms and conditions thereof; and (c) there are no contracts or agreements,
and there will be no contract or agreement in effect, between Seller and any
third party for the management or leasing of any Property other than the
Management Contracts and no such contract is in material default or breach under
the terms and conditions thereof, and there will be no leasing commission due
and owing, or to become due and owing, in connection with any of the Leases; and
(d) except for the Permitted Exceptions, the Service Contracts and the
Management Contracts, there are no contracts, agreements, liabilities, claims or
obligations of any kind or nature relating to the Properties and to which any
Seller will be bound or the Properties will be subject after the Closing except
as expressly described in Schedule 7.4 attached hereto.
------------
7.5 No Litigation; No Condemnation. There are no actions, suits,
------------------------------
proceedings or claims pending, or to the knowledge of any Seller, threatened or
contemplated, with respect to or in any manner affecting the Properties, or any
Seller's interest therein; or the ability of any Sellers to complete the
transactions contemplated by this Agreement or which could prevent any Seller
from satisfying its obligations under this Agreement. No Seller has received
notice of any pending or threatened condemnation or similar proceedings or
special assessments affecting the Properties, or any part thereof.
7.6 No Violation. The execution and delivery of this Agreement and
------------
the agreements, documents and instruments executed and delivered in connection
herewith, the consummation of the transactions contemplated hereby or thereby,
and the operation of any Property shall not: (a) conflict with, or result in a
breach of, the terms, conditions or provisions of, or constitute a default
under, any agreement, contract, mortgage, deed, lease, license, franchise or
instrument to which any Seller is a party or is subject or to which any Property
is subject; (b) to Sellers' knowledge, violate any agreement, contract,
mortgage, deed, lease, license, franchise, restriction, easement, restrictive
covenant, or instrument to which any Seller or any Property is subject; (c) to
Sellers' knowledge, constitute a violation of any applicable code, resolution,
law, statute, regulation, ordinance, rule, judgment, decree or order; (d) with
respect to each Seller that is an entity, violate any provision of its charter,
bylaws or other organizational document; (e) except as to any indebtedness in
respect of which the consent of the lender shall have been obtained prior to the
Closing Date, result in the acceleration of any indebtedness or any encumbrance
pertaining to any Seller or any Property, or the cancellation of any contract,
agreement, franchise, license, instrument or lease pertaining to any Property
(other than as specifically requested by the Company or the Partnership pursuant
to this Agreement); except that, if any Seller discovers during the Due
Diligence period that an approval to such Seller's execution, delivery, or
performance of this Agreement is required from any third party, such Seller
shall have a period of fifteen (15) business days or until five (5) days before
the Closing Date, whichever period is shorter, to obtain such approval; or (f)
except as to any Permitted Exceptions, result in the creation of any lien,
-21-
encumbrance or security interest upon any Property. None of the Sellers have
received any written notice of any violation (both as to condition of the
Property and use) of any applicable laws, statutes, ordinances, codes
(including, but not limited to, zoning, building, subdivision, pollution,
environmental protection, water disposal, health, fire and safety engineering
codes, and laws and regulations with respect to the submetering of any utilities
serving any Property), and the rules and regulations of, by governmental
authority having jurisdiction over the Properties.
7.7 Required Obligations. The Sellers have paid and performed all
--------------------
material obligations relating to the Properties required to have been paid or
performed prior to the date hereof and will have paid and performed all such
material obligations prior to the Closing Date, including but not limited to all
principal installments, interest payments, taxes, penalties and other charges in
connection with all indebtedness relating to or secured by any of the Properties
or an interest in any of the Properties.
7.8 Condition of Properties. Except as disclosed on Schedule 7.8, no
----------------------- ------------
Seller has been notified that the structural, mechanical, electrical, plumbing,
roofing and other major systems on any Property and items of equipment and
components located thereon, require to be replaced or are in need of material
repair.
7.9 Warranties. To the Sellers' present knowledge, the Sellers have
----------
not released or modified any warranties of builders, contractors, manufacturers
or other tradespersons that have been given to any Seller without the consent of
the Company or the Partnership.
7.10 Utilities. None of the Properties are connected to sanitary
---------
sewers or public water. Usable storm sewers and electrical utilities
(collectively, the "Utilities") of adequate capacity required for the operation
of the Properties, are installed in, and are duly connected to, the Properties
and can be used without any charge except the normal user charges for the normal
and usual charges imposed for gas and electric utilities.
7.11 Zoning. Each Property is currently located in the areas zoned
------
for its current use (including by variance), as indicated on the Schedule 7.11
-------------
hereto, which classification permits the development, use and operation of the
improvements on such Property as such improvements currently are being used
without special exception or permit. The Sellers have no knowledge of any threat
of, and have not received written notice of, any proceeding to change adversely
or down-zone the existing zoning classification as to any portion of any
Property.
7.12 Improvements. To Sellers' knowledge, all improvements on the
------------
Properties have been constructed in accordance with, and substantially comply
with, all requirements of all applicable laws, ordinances, regulations and
orders, including without limitation applicable zoning, building and fire safety
codes and all restrictive covenants, if any, and other easements, encumbrances
or agreements affecting title to any Properties or improvements. For purposes of
this Section 7.12, "substantially" means that Sellers shall not be permitted to
engage in even de minimis non-compliance with applicable laws, ordinance,
regulations and orders if such de minimis non-
-22-
compliance could result in any governmental, administrative or other authority
executing any penalty, fine, remedy or other disciplinary action against such
Seller or such Seller's Business (as defined in the Company Lease).
7.13 Environmental Matters.
---------------------
7.13.1 For purposes of this Agreement:
a. "Environmental Claim" means any claim, action,
cause of action, investigation, or notice (written
or oral) by any person or entity alleging
potential liability (including, without
limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs,
natural resource damages, property damages,
personal injuries, or civil or criminal penalties)
arising out of or resulting from (i) the actual or
alleged presence or release into the environment
of any Substance of Concern at any location,
whether or not owned or operated by the Seller, or
(ii) circumstances forming the basis of any actual
or alleged violation of any Environmental Law .
b. "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, (i) laws and regulations relating to
emissions, discharges, releases, or threatened
releases of Substances of Concern, and (ii) common
law principles of tort liability.
c. "Substances of Concern" means chemicals,
pollutants, contaminants, wastes, toxic
substances, hazardous 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, (i) petroleum or any fraction
thereof, (ii) asbestos, (iii) any substance or
material defined as
-23-
a "hazardous substance" pursuant to (S) 101 of the
Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. (S)
9601), or (iv) any substance or material defined
as a "hazardous chemical" pursuant to the federal
Hazard Communication Standard (29 C.F.R. (S)
1910.1200).
7.13.2 To the Sellers' knowledge, each Seller and
Property are in full compliance with all
applicable Environmental Laws, which compliance
includes, but is not limited to, possession by
each Seller of all permits and other governmental
authorizations required under applicable
Environmental Laws, and compliance with the terms
and conditions thereof. No Seller has received any
communication (written or oral), whether from a
governmental authority, citizens group, employee
or otherwise, that alleges that such Seller or
Property is not in full compliance with the
Environmental Laws, and, to the Sellers' best
knowledge after due inquiry, there are no
circumstances that may prevent or interfere with
such full compliance in the future.
7.13.3 There is no Environmental Claim pending against
any Seller or, to each Seller's best knowledge
after due inquiry, against any person or entity
whose liability for any Environmental Claim any
Seller has retained or assumed either
contractually or by operation of law, and no
Seller has been notified by the appropriate
authorities of the State of Maryland or the United
States that any Environmental Claim may be brought
against any Seller.
7.13.4 To the Sellers' knowledge, there are no past or
present actions, activities, circumstances,
conditions, events or incidents, including,
without limitation, the release, emission,
discharge, presence, or disposal of any Substance
of Concern, at or relating to any of the
Properties that could form the basis of any
Environmental Claim against any Seller or, to each
Seller's best knowledge after due inquiry, against
any person or entity whose
-24-
liability for any Environmental Claim any Seller
has retained or assumed either contractually or by
operation of law. In addition to the foregoing,
Sellers are aware of the circumstances listed on
Schedule 7.13.4 that might have resulted in
---------------
an Environmental Claim but for which Sellers have
obtained a no action letter (or a written
statement indicating no intent to pursue remedies
under the law) from the approptiate authority of
State of Maryland.
7.13.5 Without in any way limiting the generality of the
foregoing, to the best of any Seller's knowledge,
(a) all on-site and off-site locations where any
Seller has treated, disposed, or arranged for the
disposal of Substances of Concern or stored
hazardous wastes (as defined under the Resource
Conservation and Recovery Act or analogous state
laws) are identified in Schedule 7.13.5(a); (b)
------------------
all underground and aboveground storage tanks,
whether or not currently in use, and the capacity
and contents of such tanks, located on any of the
Properties are identified in Schedule 7.13.5(b),
------------------
and, except as set forth in Schedule 7.13.5(b), no
------------------
underground or above ground storage tank that has
been removed from any Property, or that is
currently located at any Property, has leaked or
is leaking; (c) except as set forth on Schedule
--------
7.13.5(c), there is no asbestos contained in or
---------
forming part of any building, building component,
structure or office space on any Property; (d) no
polychlorinated biphenyls (PCBs) are used or
stored on any Property; (e) the Sellers have
previously provided to the Company copies of all
environmental audit reports, Phase I and Phase II
investigation reports, technical reports regarding
environmental sampling results, and similar
environmental reports in the possession of the
Sellers or their contractors or agents relating to
any Property; and (f) all permits and other
governmental authorizations currently held by any
Seller for any Property pursuant to the
Environmental Laws are identified in Schedule
--------
7.13.5(f).
---------
-25-
7.14 Insurance. Schedule 7.14 contains a complete and correct
--------- -------------
description of all policies of insurance presently maintained by the Sellers
with respect to all Properties and the operations thereof. To the knowledge of
the Sellers, each Seller and Property is in compliance with the requirements of
each such policy, there is no violation of any of the provisions thereof, and
each such policy is in full force and effect. No Seller has received from any
insurance company which carries underwriters insurance on any Property, or any
Board of Fire Underwriters, any notice of any defect or inadequacy in connection
with any Property or its operation which, since the date of such notice, has not
been corrected.
7.15 Compliance. To each Seller's knowledge, each Seller, and each
----------
Affiliate or Tenant of Seller, has complied in all material respects with all
laws, ordinances, rules, regulations and orders of all governmental authorities
applicable to the ownership, management, operation, construction, maintenance
and repair of any Property.
7.16 Leases.
------
7.16.1 Copies of all Leases for each of the Properties
and all parts thereof, as amended through the date
hereof have been made available to the Company and
the Partnership; such copies are and shall be, in
all material respects, true, accurate and complete
records of all agreements and understandings with
respect to the use or lease of all or any portion
of any of the Properties or otherwise constituting
Leases that are currently outstanding including
all amendments and modifications thereto.
7.16.2 Schedule 2.1 contains a true, complete and correct
------------
list of all current Leases for the Properties or
any part thereof.
7.16.3 No Prior Occupant has an option or right of
refusal to purchase any Property or any part
thereof.
7.16.4 Except as specified in the Estoppel Letter
approved by the Company and sent to a Prior
Occupant, no Prior Occupant is entitled to any
rebate, concession, deduction or offset.
7.16.5 Except as specified in the Estoppel Letter
approved by the Company and sent to a Prior
Occupant, no Prior Occupant has paid any rent,
additional rent or
-26-
other charge of any nature for a period of more
than thirty (30) days in advance.
7.16.6 No Prior Occupant has any claim or basis for any
claim for reduction, deduction or set-off against
the landlord or the rent under such Lease.
7.16.7 No Prior Occupant has refused to execute and
deliver the Company Lease at Closing, or no Prior
Occupant has refused to vacate its premises or
such Property, or otherwise to cease occupancy of
its premises or such Property.
7.16.8 Except as set forth on Schedule 2.1, the Seller is
------------
the landlord under the Leases.
7.17 Service Contracts; Management Contracts. Schedule 7.17 is a list
--------------------------------------- -------------
of all contracts affecting or pertaining to the Properties or the business
conducted on the Properties that have a monetary obligation of at least $50,000
per year and are not cancellable without penalty by Sellers, or an Affiliate or
Tenant of Seller, upon notice of one year or less, including all employment,
union, purchase, service and maintenance agreements, leasing agreements, listing
agreements, equipment leases and any other agreements, contracts, licenses and
permits affecting or pertaining to the Properties or any part thereof (the
"Service Contracts"), and of all management contracts relating to the Properties
(the "Management Contracts"). No Seller is a party to any licenses or leases of
personal property or any other contracts or agreements, written or oral, of any
kind or character, relating to the management, operation, maintenance or repair
of any Property, or otherwise, except for the Leases, the Service Contracts and
the Management Contracts. The Sellers have performed all obligations required to
be performed by them and are not in default under any of the Service Contracts.
Each of the Service Contracts is in full force and effect and constitutes the
legal, valid and binding obligation of the respective parties thereto,
enforceable in accordance with its terms, and has not been modified, amended or
extended. Each of the Management Contracts is in full force and effect and
constitutes the legal, valid and binding obligation of the respective parties
thereto, enforceable in accordance with its terms, and has not been modified,
amended or extended.
7.18 Permits. All permits, licenses, inspections and other approvals
-------
from all applicable governmental authorities having jurisdiction over each
Seller and Property that are necessary in connection with the operation of the
use, ownership and operation of each Property as it is currently used, have been
obtained and are in full force and effect.
7.19 Other Liabilities. Schedule 7.19 hereto is a true, complete and
----------------- -------------
accurate description of all debts, liabilities and obligations of the Seller
relating to each of the Properties, but not including any Mortgage Debt. Other
than the Mortgage Debt, there are no debts, liabilities or obligations (whether
known or unknown, disputed or undisputed, fixed, contingent or
-27-
otherwise) associated with or relating to any of the Properties, or secured by
any of the Properties, other than those specified and described on Schedule 7.19
-------------
hereto.
7.20 Tax Matters. The Sellers have relied solely on their own counsel
-----------
for advice on any and all federal, state and local tax matters relating to this
Agreement and the transactions contemplated herein and have not relied on any
advice or representations of the Company, the Partnership, or their counsel with
respect to any federal, state and local tax matters relating to this Agreement
or the transactions contemplated herein.
7.21 Taxes. The Sellers have filed all federal, state and local tax
-----
returns required to be filed by the Sellers. With respect to any periods prior
to the Closing Date, each Seller (i) has no knowledge of any unpaid taxes that
would create a lien on any Property, and (ii) has paid in full all taxes and
assessments payable or is diligently pursing with the appropriate authority any
dispute such Seller has regarding any unpaid taxes or assessments as of the
Closing Date.
7.22 Special Filings. No Seller is required to submit any notice,
---------------
report or other filing to any governmental or regulatory authority in connection
with the execution, delivery or performance of this Agreement or any document or
instrument executed and delivered in connection herewith or the consummation of
the transactions contemplated hereby other than the filing of the tax returns
required by the terms of this Agreement; and no consent, approval or
authorization of any governmental or regulatory authority is required to be
obtained by any Seller in connection with the execution, delivery or performance
of this Agreement or the consummation of the transactions contemplated hereby.
7.23 Books and Records. The books and records of each Seller with
-----------------
respect to each Property, all of which have been or will be made available to
the Company and the Partnership, are, and will be at all times until Closing,
complete and correct in all material respects. All of such books and records
shall be delivered to the Company prior to the Closing.
7.24 No Brokers. No Seller has dealt with any agent, broker or other
----------
person acting pursuant to express or implied authority of any Seller (each a
"Broker"), and no person or entity is entitled to a commission or finder's fee
in connection with the sale and purchase described by this Agreement or will be
entitled to make any claim against the Company, or the Partnership for a
commission or finder's fee by reason of any Seller having engaged such Broker.
7.25 All Material Information. With respect to all information,
------------------------
statements, representations and warranties made herein, any agreements or
documents contemplated hereby, any schedules or exhibits hereto, and any
certificates or instruments delivered in connection herewith, the Sellers hereby
represent and warrant that no information, statement, representation or warranty
herein or therein contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances in which made, not misleading; or
necessary in order to provide the Partnership or the Company with true, accurate
and complete information. No Seller has knowledge or information of any facts,
-28-
circumstances or conditions which do or could (whether by the passage of time or
the giving of notice or both) materially and adversely affect any Property or
the operation of the business conducted thereon.
7.26 Survival of Warranties, Representations and Covenants. The
---------------------- -----------------------------
representations, warranties and covenants of Sellers made in this Agreement
shall survive the Closing and consummation of the transactions contemplated
hereby for a period of twenty-four (24) months from the date of this Agreement,
except that in the case of any claim arising out of the representantions or
warranties herein relating to Section 7.13 (Environmental Matters) and Section
7.21 (Taxes) they shall survive the closing in each case until the expiration of
the applicable statute of limitations. Nevertheless, so long as the Partnership
or the Company provides the Seller with written notice of any breach, violation
or right to indemnification thereunder with the period ending twenty-four (24)
months after the date of this Agreement the representations, warranties and
covenants of the Seller relating to such notice shall remain in full force and
effect as to the matters covered in such notice. After Closing, neither the
Company nor the Partnership shall prosecute any claim against any Seller for a
breach of the foregoing representations and warranties if the Company or the
Partnership obtained knowledge of such breach prior to Closing. The foregoing
representations and warranties shall not be affected by any investigation or
verification made by or on behalf of the Company or the Partnership.
VIII. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PARTNERSHIP
-----------------------------------------------------------------
The Partnership and the Company, jointly and severally, represent and
warrant to the Seller that the following are true, complete and correct as of
the date of this Agreement and as of the Closing:
8.1 Organization, Good Standing and Qualification. Each of the
---------------------------------------------
Company and the Partnership (i) is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(ii) has all requisite power and authority to carry on its business and own or
lease and operate its assets and properties in the manner in which it is being
conducted and owned or leased and operated, as the case may be, and (ii) is duly
qualified to transact business and is in good standing in all jurisdictions
where its ownership, lease or operation of its properties or assets or the
conduct of its business requires such qualification.
8.2 Authorization. The execution and delivery of this Agreement and
--------------
all agreements, documents and instruments contemplated hereby and the
performance of all transactions contemplated herein or therein, have been duly
and validly authorized by all requisite action by the Company and its board of
trustees; and by all requisite action of the Partnership. This Agreement and the
agreements, documents and instruments executed and delivered in connection
herewith constitute the legal, valid and binding obligation of each of the
Company and the Partnership, enforceable in accordance with their respective
terms, subject to applicable bankruptcy,
-29-
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and except to the
extent that rights to indemnification and sale and purchase under or
contemplated by this Agreement or such other agreements may be limited by
federal or state securities laws or public policy relating thereto. To the
knowledge of the Partnership, the Partnership is not required to obtain any
consent, authorization, approval or waiver from any governmental agency or
authority or from any third party in connection with the execution and delivery
of, and the performance of the obligations to be performed under, this Agreement
and the documents and instruments executed and delivered in connection herewith,
or if any of the foregoing is required, it has been obtained.
8.3 No Violation. The execution and delivery of this Agreement and
-------------
the agreements, documents and instruments executed and delivered in connection
herewith, the consummation of the transactions hereby or thereby, and the
operation of any Property shall not: (i) conflict with, violate, or result in a
breach of, the terms, conditions or provisions of, or constitute a default
under, any agreement, contract, Mortgage, deed, lease, license, franchise or
instrument to which the Company or the Partnership is a party or is subject;
(ii) constitute a violation of any applicable code, resolution, law, statute,
regulation, ordinance, rule, judgment, decree or order to the Company or the
Partnership; or (iii) violate any provision of the organizational documents of
the Company or the Partnership.
8.4 Tax Status. As of the Closing, the Partnership will be qualified
----------
as a partnership for Federal income tax purposes, and the Company will be
qualified as a real estate investment trust organized under the laws of the
State of Maryland.
8.5 No Litigation. Neither the Partnership nor the Company is
-------------
involved in any pending or, to its knowledge, threatened litigation that would
materially or adversely effect its operations or financial condition or the
ability to perform under this Agreement or the Partnership Agreement.
8.6 No Brokers. Neither the Partnership nor the Company has dealt
----------
with any agent, broker or other person acting pursuant to express or implied
authority of either such party, and no person or entity is entitled to a
commission or finder's fee in connection with the transactions contemplated by
this Agreement or will be entitled to make any claim against any Seller for a
commission or finder's fee by reason of the Company or the Partnership having
engaged him/her/it.
8.7 Survival. The representations and warranties of the Company and
--------
the Partnership made in this Section 8 shall survive the Closing and
consummation of the transactions contemplated hereby, for a period of twenty-
four (24) months from the date of this Agreement. Nevertheless, so long as the
Seller provides the Partnership or the Company with written notice of any
breach, violation or right to indemnification thereunder within the period
ending twenty-four (24) months after the date of this Agreement the
representations, warranties and covenants of the
-30-
Partnership or the Company relating to such notice shall remain in full force
and effect as to the matters covered in such notice. After Closing, the Seller
shall not prosecute any claim against the Company or the Partnership for a
breach of the foregoing representations and warranties if the Seller obtained
knowledge of such breach prior to Closing.
IX. COVENANTS
---------
9.1 Covenants of the Company and the Partnership. Each of the
--------------------------------------------
Company and the Partnership hereby covenants as follows:
9.1.1 If this Agreement is terminated for any reason,
(a) the Partnership and the Company shall promptly
return to Sellers all materials furnished by
Sellers to the Partnership and the Company
pursuant to this Agreement, and (b) the
Partnership and the Company shall promptly restore
the Properties to substantially the same condition
in which they existed immediately before any
physical tests conducted by or on behalf of the
Partnership and the Company pursuant to the
purposes of this Agreement.
9.1.2 Prior to the Closing Date, except as may be
required to be disclosed by law (including federal
and state securities laws, and the rules and
regulations thereunder), regulation or legal
process, or unless otherwise consented to in
writing by the Sellers, which consent shall not be
unreasonably withheld, the Partnership and the
Company shall keep all information learned by the
Partnership and the Company in connection with the
Properties or any operation thereof confidential.
9.1.3 In connection with inspection of the Properties,
the Partnership and the Company shall not
unreasonably interfere with any Prior Occupants or
any Seller's business operations.
9.1.4 [Intentionally Omitted]
9.1.5 [Intentionally Omitted]
-31-
9.1.6 The parties acknowledge and agree that the Sellers
and their affiliates are required under this
Agreement and the Company Leases to provide to the
Company certain confidential financial information
(the "Confidential Information") with respect to
the business conducted on the Leased Properties.
The Company agrees to use the Confidential
Information solely for the purposes of monitoring
compliance with the terms of this Agreement and
the Company Leases, and the Confidential
Information shall be disclosed only to those of
the Company's employees, advisors and consultants
to whom it is necessary for such purposes.
Moreover, the Company will use its best efforts to
implement policies and procedures at the Board of
Trustees level so as to minimize the disclosure of
Confidential Information to Trustees having
interest in businesses that compete with the
Sellers and their affiliates.
9.1.7 Between the date of this Agreement and the Closing
Date, the Partnership and the Company will use
their best efforts to cause the conditions in this
Agreement to be satisfied.
9.2 Covenants of the Sellers. The Sellers hereby
------------------------
covenant and agree as follows:
9.2.1 If this Agreement is terminated as to all
Properties for any reason, the Sellers shall
promptly return to the Company or the Partnership,
as the case may be, all materials furnished by the
Company or the Partnership, to such Sellers
pursuant to this Agreement.
9.2.2 Each Seller shall keep all information relating to
the Partnership or the Company or any operation
thereof confidential; except that each Seller
shall not be required to keep confidential any
information (i) learned from public sources or
other third parties not bound to keep such
information about the Company or Partnership
confidential or (ii) that
-32-
becomes public through no disclosure of any
Seller, its partners, employees, agents or
representatives.
9.2.3 In the event that facts or circumstances are
discovered or develop that could form the basis of
an Environmental Claim with respect to a specific
Property or Properties, the Seller(s) of such
Property or Properties shall take all actions
necessary to fully address such circumstances,
including, without limitation, providing notice to
appropriate governmental authorities; conducting
environmental studies, sampling and testing
procedures; taking remedial action; and modifying
operations or physical facilities to otherwise
eliminate potential liability and ensure full
compliance with the Environmental Laws. Without
limiting the foregoing, each Seller shall ensure
that it has identified any underground storage
tanks ("USTs") used in conjunction with its
operations and that all registration,
investigation, remedial action and technical
upgrade requirements have been complied with fully
in respect of each such UST.
9.2.4 Between the date of this Agreement and the Closing
Date, Sellers shall use their best efforts to
cause the conditions in this Agreement to be
satisfied.
9.3 No Claim Against Property. Each Seller hereby represents,
-------------------------
warrants, covenants and agrees that, as of the Closing Date, each Seller: (i)
will have no claim of any kind or nature against any Property by reason of the
execution of this Agreement; (ii) hereby waives, releases and discharges any
claim it has or may have; and (iii) shall not make any claim or bring any action
against any Property or the Company or the Partnership for or in respect
thereof. Notwithstanding Section 7.26, this representation, warranty, covenant
and agreement shall survive the closing of the transactions contemplated hereby
and shall continue in effect.
X. DUE DILIGENCE PERIOD
--------------------
10.1 Due Diligence Period. The period ending at the close of the
--------------------
first business day after the date that is thirty (30) days from the date hereof
is referred to herein as the "Due Diligence Period." Notwithstanding the
foregoing, the Due Diligence Period (for purposes of the Title Commitments, UCC
Searches and Surveys) shall not end earlier than fifteen (15) business days
after Partnership receives the last of the Title Commitments, UCC Searches and
Surveys.
-33-
10.2 Access to Properties and Materials. During the Due Diligence
----------------------------------
Period and upon twenty-four (24) hours prior notice, the Company and the
Partnership and their agents, engineers, surveyors, appraisers, auditors,
counsel and other representatives shall have the right to enter upon the
Properties to inspect, examine, survey, obtain engineering inspections and
environmental studies, appraise, and otherwise do that which, in the opinion of
the Partnership and the Company, is necessary to determine the boundaries,
acreage and condition of the Properties and to determine the suitability of the
Properties for the uses intended by the Partnership (including, without
limitation, inspect, review and copy any and all documents in the possession or
control of Sellers, or their respective agents, contractors or employees, and
which pertain to the construction, ownership, title, use, occupancy or operation
of the Properties or any part thereof). During the Due Diligence Period, the
Sellers, at their expense and at such times as will not unreasonably interfere
with the business being conducted on the Property or hinder the Partnership's
due diligence review, shall make available to the Company and the Partnership
copies or originals of all of their respective books, files and records relating
in any way to the Properties, complete copies (or originals when requested) of
all title information and title insurance policies, easements, leases, brokerage
agreements, licenses, permits, surveys, zoning information, environmental
reports, structural reports, violation or default notices, contracts, tax bills
and assessments, information regarding pending or threatened claims, suits or
proceedings, and all consents and other documents required to be obtained for
the completion of the transactions contemplated hereunder.
10.3 Adjustment Following Due Diligence. If the Company or
----------------------------------
Partnership reasonably determines that one or more representations or warranties
or any information included on any Schedule relating to any Property is
--------
incomplete or inaccurate in any material respect (the "Non-Conforming
Property"), the Company shall have the option to: (a) proceed with the
transactions contemplated hereby, (b) declare this Agreement null and void in
which case no party shall have any rights or obligations under this Agreement,
or (c) terminate this Agreement with respect to such Non-Conforming Property and
proceed with the transactions hereby with respect to the other Properties, in
which case the Aggregate Purchase Price shall be reduced by the Purchase Price
of such Non-Conforming Property.
XI. DEFAULTS AND REMEDIES
---------------------
11.1 Indemnification by Sellers. The Sellers, jointly and severally
--------------------------
(each, for purposes of Sections 11.1 and 11.2, a "Seller Indemnifying Party"),
shall indemnify, defend and hold harmless the Partnership, the Company and their
respective shareholders, partners, trustees, officers, agents, representatives,
employees, Affiliates, successors and assigns (collectively, for purposes of
this paragraph, the "Company Indemnified Parties") from and against any and all
losses, damages, claims, liabilities, actions, suits, proceedings and costs and
expenses of investigation or defense thereof, including attorneys' fees payable
as incurred, arising out of or relating to any (a) misrepresentation or breach
of warranty by any Seller or nonfulfillment of any covenant or agreement to be
performed or complied with by such Seller under this Agreement and any
-34-
agreement, document, instrument, certificate, schedule or exhibit contemplated
hereby; (b) untrue or incomplete statement of a material fact contained in any
statement or information provided by any Seller or based on any omission to
state therein a material fact required to be stated therein or other information
necessary to make the statements therein not misleading; (c) any debts,
liabilities or obligations (whether known or unknown, disputed or undisputed,
fixed, contingent or otherwise) associated with or relating to any of the
Sellers, their officers, directors, partners, trustees or Affiliates or the
Properties, or secured by any of the Sellers, or by any of the Properties,
except those specified on Schedule 7.19 hereto, including any obligations under
-------------
any of the Leases, Service Contracts and Management Contracts, to the extent any
such obligation was to be performed prior to the Closing Date, or was to be
performed after the Closing Date as a result of a breach or default under any of
the Leases or Service Contracts by any Seller or its Affiliates prior to the
Closing Date; (d) any action taken, or any failure to act, by any Seller in
connection with this transaction and the transactions contemplated herein
constituting a breach of this Agreement or any agreement, document or instrument
contemplated hereby or a breach of a duty owed to any person, including, without
limitation, any action taken to redeem or otherwise liquidate the interest of
certain holders in anticipation of the transactions contemplated herein, to the
extent such action or failure to act results in a violation (or alleged
violation) of applicable laws or of the fiduciary duties owed to such holders;
(e) pollution or threat to human health or the environment, or any Environmental
Claim against any person or entity whose liability for such Environmental Claim
any Seller has assumed or retained either contractually or by operation of law,
that is related in any way to any of the Properties, including, without
limitation, all on-site and off-site activities relating to any of the
Properties involving Substances of Concern, and that occurred, existed, arises
out of conditions or circumstances that occurred or existed, or was caused, in
whole or in part, on or before the Closing Date, whether or not the pollution or
threat to human health or the environment, or the existence of any Environmental
Claim, is known to any Seller; (f) regardless of whether it arises as a breach
of any representation or warranty, any debts, liabilities or obligations of any
Seller (whether known or unknown, disputed or undisputed, fixed, contingent or
otherwise) of, associated with or relating to any asset or property other than
the Properties, except those specified on Schedule 7.19 hereto; and (g) any and
-------------
all damages and expenses incident to any of the foregoing or to the enforcement
of this Section 11.1. Subject to Section 11.2.3 and notwithstanding any other
provision of this Agreement, neither the general partners nor the limited
partners of the ▇▇▇▇▇▇ Family Limited Partnership shall have any liability under
this Agreement beyond their [capital] interests in Seller.
11.2 Remedies.
--------
11.2.1 [Intentionally Omitted]
11.2.2 Each Seller Indemnifying Party shall be fully
responsible and jointly and severally liable for
any of the following and any and all losses,
damages, claims, liabilities, actions, suits,
proceedings and costs and expenses of defense
thereof, including attorneys' fees payable as
incurred, arising out of or
-35-
relating to: (a) each representation and warranty
made by each Seller hereunder relating to or
associated with title such Seller's interest in
any Property and such Seller's ability to convey
such Seller's interest as contemplated by this
Agreement; (b) regardless of whether it arises as
a breach of any representation or warranty, any
debts, liabilities or obligations (whether known
or unknown, disputed or undisputed, fixed,
contingent or otherwise) of, associated with or
relating to any of the Sellers, or the Properties,
or secured by any of the Sellers or by any of the
Properties, except those specified on Schedule
--------
7.19 hereto, and (c) regardless of whether it
----
arises as a breach of any representation or
warranty, any debts, liabilities or obligations of
the Sellers (whether known or unknown, disputed or
undisputed, fixed, contingent or otherwise) of,
associated with or relating to any other asset or
property other than the Properties, except those
specified on Schedule 7.19 hereto.
-------------
11.2.3 Each Seller hereby represents, warrants, covenants
and agrees that it presently has, a tangible net
worth (such term meaning net worth exclusive of
the value (if any) of goodwill, going concern
value and similar assets, but inclusive of the
value of shares of stock, interests in
partnerships and other business enterprises and
similar assets) of not less than the Aggregate
Purchase Price, minus all Mortgage Debt for all
Properties being acquired by the Partnership
pursuant to this Agreement; and each Seller, on
behalf of itself and its successors, further
covenants that it shall maintain a tangible net
worth of no less than two million dollars
($2,000,000) (U.S.) for a period of no less than
two (2) years following the Closing of the
transactions contemplated herein; and ▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, jointly and
severally covenant that they shall personally
cause the Sellers and their successors to maintain
a tangible net worth of no less than two million
dollars ($2,000,000) (U.S.) for a period of no
less than two (2) years following the Closing of
the transactions contemplated herein, and shall
(to the
-36-
extent of two million dollars ($2,000,000) (U.S.))
jointly and severally indemnify the Company and
the Partnership (according to Section 11.1 hereto)
for any and all breaches of the Sellers'
representations, warranties and covenants
hereunder for such two (2) year period if (i) the
Sellers and/or their successors fail to maintain
such tangible net worth or (ii) the Sellers and/or
their successors file for bankruptcy (voluntarily
or involuntarily), make an assignment for the
benefit of creditors, or otherwise become
insolvent; provided that, with respect only to the
joint and several indemnity of ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the combined recovery from
▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the
Sellers shall not exceed two million dollars
($2,000,000 ) (U.S.). The covenants contained in
this Section 11.2.3 shall survive the Closing of
the transactions contemplated by this Agreement.
11.3 Indemnification by the Company and the Partnership. The Company
--------------------------------------------------
and the Partnership (each, for purposes of this Section 11.3, a "Company
Indemnifying Party") shall indemnify, defend and hold harmless each Seller and
their respective shareholders, partners, directors, officers, partners, agents,
employees, Affiliates, successors and assigns (collectively, for purposes of
this paragraph, "Seller Indemnified Parties") from and against any and all
losses, damages, claims, liabilities, actions, suits, proceeds and costs and
expenses of defense therefore, including attorneys' fees payable as incurred,
arising out of or relating to any (a) misrepresentation or breach of warranty by
such Company Indemnifying Party or nonfulfillment of any covenant or agreement
to be performed or complied with by such Company Indemnifying Party under this
Agreement; (b) untrue or incomplete statement (or allegation by a third party of
an untrue or incomplete statement) of a material fact contained in any statement
or information provided by such Company Indemnifying Party or based on any
omission (or allegation by a third party of an untrue or incomplete statement)
to state therein a material fact required to be stated therein or other
information necessary to make the statements therein not misleading, to the
extent such alleged untrue or incomplete statement or omission was made with the
Company's or the Partnership's knowledge that the statement was untrue or
incomplete or omitted to state a material fact; (c) any debts, liabilities or
obligations (whether known or unknown, disputed or undisputed, fixed, contingent
or otherwise) specified on Schedule 7.19 hereto or arising and incurred after
-------------
the Closing Date (other than as a result of a breach by any Seller of any
representation, warranty, covenant or agreement hereunder), including the
obligations under any Service Contracts that survive the Closing Date, to the
extent any such obligation is to be performed after the Closing Date, except to
the extent any such obligation is to be performed after the Closing Date as a
result of a breach or default under
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any of the Leases or Service Contracts by the Seller prior to the Closing Date;
and (d) any and all damages and expenses incident to any of the foregoing or to
the enforcement of this Section 11.3.
11.4 Indemnification Procedures. All claims for indemnification under
--------------------------
this Article 11 shall be asserted and resolved as follows:
11.4.1 In the event that any Seller Indemnified Party or
Company Indemnified Party (the "Indemnified
Party") has a Claim against any Seller
Indemnifying Party or Company Indemnifying Party
obligated to provide indemnification pursuant to
Sections 11.1 or 11.2 hereof, on the one hand, or
Section 11.3 hereof, on the other hand (the
"Indemnifying Party"), which does not involve a
claim being asserted against or sought to be
collected by a third party, the Indemnified Party
shall with reasonable promptness send a written
notice (the "Claim Notice") with respect to such
claim to the Indemnifying Party. If the
Indemnifying Party does not notify the Indemnified
Party within the fifteen days thereafter (the
"Notice Period") that the Indemnifying Party
disputes such claim, the amount of such claim
shall be deemed a liability of the Indemnifying
Party hereunder. In case an objection is made in
writing in accordance with this Section 11.4.1,
the Indemnified Party shall have thirty (30) days
to respond in a written statement to the
objection. If after such thirty (30) day period
there remains a dispute as to any claims, the
parties shall attempt in good faith for sixty (60)
days to agree upon the rights of the respective
parties with respect to each of such claims. If
the parties should so agree, a memorandum setting
forth such agreement shall be prepared and signed
by both parties.
11.4.2 In the event that any claim for which the
Indemnifying Party would be liable to an
Indemnified Party hereunder is asserted, or any
action or proceeding commenced, against an
Indemnified Party by a third party, the
Indemnified Party shall with reasonable promptness
notify the Indemnifying Party of such claim,
specifying the nature of such claim and the amount
or the
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estimated amount thereof to the extent then
feasible (which estimate shall not be conclusive
of the final amount of such Claim) (the "Third
Party Claim Notice"). The Indemnifying Party shall
have 30 days from the receipt of the Claim Notice
(the "Third Party Notice Period") to notify the
Indemnified Party (a) whether or not such party
disputes the liability to the Indemnified Party
hereunder with respect to such claim and (b) if
such party does not dispute such liability,
whether or not the Indemnifying Party desires, at
the sole cost and expense of the Indemnifying
Party, to defend against such claim, provided that
such party is hereby authorized (but not
obligated) prior to and during the Third Party
Notice Period to file any motion, answer or other
pleading and to take any other action which the
Indemnifying Party shall deem necessary or
appropriate to protect the Indemnifying Party's
interests. In the event that the Indemnifying
Party notifies the Indemnified Party within the
Third Party Notice Period that the Indemnifying
Party does not dispute the Indemnifying Party's
obligation to indemnify hereunder and desires to
defend the Indemnified Party against such claim,
except as hereinafter provided, such party shall
have the right to defend by appropriate
proceedings. No non-monetary settlement of any
such matter shall be entered into without the
written consent of the Indemnified Party, which
consent shall not be unreasonably withheld;
provided that, unless the Indemnified Party
otherwise agrees in writing, such party may not
settle any matter (in whole or in part) unless
such settlement includes a complete and
unconditional release of the Indemnified Party. If
the Indemnified Party desires to participate in,
but not control, any such defense or settlement
the Indemnified Party may do so at its sole cost
and expense. If the Indemnifying Party elects not
to defend the Indemnified Party against such
claim, whether by failure of such party to give
the Indemnified Party timely notice as provided
above or otherwise, then the Indemnified Party,
without
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waiving any rights against such party, may settle
or defend against any such claim in the
Indemnified Party's sole discretion and the
Indemnified Party shall be entitled to recover
from the Indemnifying Party the amount of any
settlement or judgment to the extent the
Indemnified Party is entitled to indemnification
and, on an ongoing basis, all indemnifiable costs
and expenses of the Indemnified Party with respect
thereto, including interest from the date such
costs and expenses were incurred.
11.4.3 If at any time, in the reasonable opinion of the
Indemnified Party, notice of which shall be given
in writing to the Indemnifying Party, any such
claim seeks material prospective or other relief
which could have a materially adverse effect on
the assets, liabilities, financial condition,
results of operations or business prospects of any
Indemnified Party or in the reasonable opinion of
counsel for the Indemnified Party a conflict
exists, the Indemnified Party shall have the right
to control or assume (as the case may be) the
defense of any such claim and the amount of any
judgment or settlement and the reasonable costs
and expenses of defense shall be included as part
of the indemnification obligations of the
Indemnifying Party hereunder. If the Indemnified
Party should elect to exercise such right, the
Indemnifying Party shall have the right to
participate in, but not control, the defense of
such claim or demand at the sole cost and expense
of the Indemnifying Party.
11.4.4 Nothing herein shall be deemed to prevent the
Indemnified Party from making a claim, and an
Indemnified Party may make a claim hereunder, for
potential or contingent claims or demands provided
the Claim Notice or Third Party Claim Notice, as
the case may be, sets forth the specific basis for
any such potential or contingent claim or demand
to the extent then feasible and the Indemnified
Party has reasonable grounds to believe that such
a claim or demand may be made.
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11.4.5 The Indemnified Party's failure to give reasonably
prompt notice as required by this Section 11.4 of
any actual, threatened or possible claim, demand,
action or proceeding which may give rise to a right
of indemnification hereunder shall not relieve the
Indemnifying Party of any liability which the
Indemnifying Party may have to the Indemnified
Party unless the failure to give such notice
materially and adversely prejudiced the
Indemnifying Party or increases the amount of
indemnification which the Indemnifying Party is
obligated to pay hereunder. In any such event, the
amount of indemnification which the Indemnified
Party will be entitled to receive hereunder shall
be reduced to an amount which the Indemnified Party
would have been entitled to receive had such notice
been timely.
XII. MISCELLANEOUS
-------------
12.1 Assignment. Neither this Agreement nor any interest
----------
hereunder may be assigned or transferred by any Seller without the prior written
consent of the Company or the Partnership. As of the Closing Date, the Company
or the Partnership may assign, transfer or demise any or all of its interest in
any Property to any Affiliate (the "Permitted Transferees") without the prior
consent of the Sellers.
12.2 Entire Agreement. Any prior agreement or understanding
----------------
among the parties concerning the subject matter hereof is hereby superseded.
This Agreement constitutes the entire agreement among the parties with respect
to the subject matter hereof and the transactions contemplated herein and shall
not be modified or amended except in a written document signed by all of the
parties hereto.
12.3 Notices. All notices or other communications required or
-------
permitted under this Agreement shall be in writing and delivered personally or
by registered or certified mail, return receipt requested, postage prepaid, or
by a nationally recognized overnight courier (such as Federal Express) with
receipted delivery. Notices to the parties shall be addressed as follows:
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If to the Sellers:
▇▇▇▇▇▇ Family Limited Partnership
c/o Good News Salisbury, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
with a copy to:
Webb, Burnett, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to the Partnership or to the Company:
Capital Automotive REIT
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Executive Officer
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
All notices given in accordance with the terms hereof shall be deemed
effective (a) if delivered in person or by overnight courier, on the business
day it is delivered, and (b if sent by registered or certified mail, three (3)
business days after deposit with the U.S. mail. Any party hereto may change its
address by written notice to all parties hereto sent in accordance with the
terms of this Section and any such Notice of change of address shall be
effective five (5) days after delivery.
12.4 Governing Law. This Agreement shall be governed and
-------------
interpreted in accordance with the laws of the Commonwealth of Virginia without
regard to its principles of conflicts of laws, and any action brought under or
arising out of this Agreement or the matters relating hereto shall be submitted
to the jurisdiction of the United States District Court for the Eastern District
of Virginia. Each party acknowledges and agrees to such jurisdiction.
-42-
12.5 Litigation Costs. If there is any legal action or
----------------
proceeding between the parties hereto arising from or based upon this Agreement,
the unsuccessful party to such action or proceeding shall pay to the prevailing
party all litigation costs and expenses, including reasonable attorneys' fees,
incurred by such prevailing party in such action or proceeding and in any appeal
in connection therewith, and if such prevailing party recovers a judgment in any
such action, proceeding or appeal, such costs, expenses and attorneys' fees
shall be included in as part of such judgment.
12.6 Counterparts. This Agreement may be executed in any number
------------
of identical counterparts, any or all of which may contain the signatures of
fewer than all of the parties but all of which shall be taken together as a
single instrument.
12.7 Offer and Acceptance. This Agreement constitutes an offer
--------------------
by the Company and the Partnership which must be accepted, by delivery to the
Company of a duly signed and completed signature page hereof, by all of the
Sellers within five (5) days after the date this Agreement is signed by the
Company and the Partnership. If, within such time period, less than all of the
persons owning any interest in a Seller shall have signed this Agreement, then
the Seller and the Property owned by such Seller shall, at the sole option of
the Company, be excluded from the sale and purchase hereunder, this Agreement
shall remain in full force and effect as to the other Sellers and Properties,
and an appropriate adjustment shall be made with respect to the relevant
Property, in which case the Aggregate Purchase Price shall be reduced by the
Purchase Price of such Property as provided in this Agreement; if after the
expiration of such time period all of the Sellers execute this Agreement, the
Company, at its sole option, may elect to re-include, or may continue to
exclude, any such Seller and Property.
-43-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal, with the intention that it be a sea ed instrument, as of the date
set forth above.
WITNESS CAPITAL AUTOMOTIVE REIT
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
Name: ▇▇▇▇▇ ▇. ▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Chief Title: President and Chief
Financial Officer Executive Officer
CAPITAL AUTOMOTIVE L.P.
WITNESS By: Capital Automotive REIT, as
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
Name: ▇▇▇▇▇ ▇. ▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Chief Title: President and Chief
Financial Officer Executive Officer
WITNESS SELLER: ▇▇▇▇▇▇ FAMILY LIMITED
PARTNERSHIP, a Maryland limited
partnership
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. (SEAL)
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Counsel Title: General Partner
Address:2013 ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone #: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile #: 410-749-3195
Social Security # or TIN: ▇▇-▇▇▇▇▇▇▇
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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WITNESS SELLER: ▇▇▇▇▇▇ FAMILY LIMITED
PARTNERSHIP, a Maryland
limited partnership
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (SEAL)
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Counsel Title: General Partner
Address:2013 ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone #: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile #: 410-749-3195
Social Security # or TIN: ▇▇-▇▇▇▇▇▇▇
SIGNING INDIVIDUALLY AS TO SECTION 11.2.3
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Name: ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-45-
EXHIBIT 2.4(A)
(FORM OF GOOD NEWS LEASE AGREEMENT)
LEASE AGREEMENT
---------------
BETWEEN
-------
CAPITAL AUTOMOTIVE L.P., LANDLORD
---------------------------------
AND
---
GOOD NEWS SALISBURY, INC., TENANT
---------------------------------
DATED: JANUARY 10, 1998
-46-
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.......................................... 12
4.08 Mortgages...................................................... 13
4.09 Other Insurance Requirements................................... 13
ARTICLE V
INDEMNITY; SUBSTANCES OF CONCERN......................................... 13
5.01 Tenant's Indemnification....................................... 13
5.02 Substances of Concern.......................................... 14
5.03 Audits......................................................... 16
5.04 Landlord's Option Re: Compliance............................... 17
5.05 Environmental Indemnification.................................. 17
5.06 Tenant's Cleanup Obligation.................................... 17
5.07 Existing Environmental Conditions.............................. 18
5.08 Survival of Tenant's Obligations............................... 18
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES........................................... 18
6.01 Use of Leased Properties....................................... 18
6.02 Acceptance of Leased Properties................................ 19
6.03 Conditions of Use and Occupancy................................ 19
6.04 Financial Statements and Other Information..................... 19
ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS...................... 20
7.01 Maintenance.................................................... 20
7.02 Compliance with Laws........................................... 20
7.03 Required Alterations........................................... 21
7.04 Mechanics' Liens............................................... 21
7.05 Replacements of Fixtures....................................... 21
7.06 Encroachments; Restrictions.................................... 22
ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTIES............................... 22
8.01 Tenant's Right to Construct.................................... 22
8.02 Scope of Right................................................. 23
8.03 Cooperation of Landlord........................................ 23
8.04 Commencement of Construction................................... 23
8.05 Rights in Tenant Improvements.................................. 24
8.06 Personal Property.............................................. 25
8.07 Requirements for the Tenant's Personal Property................ 25
8.08 Financings of Capital Additions to a Leased Property........... 26
ARTICLE IX
DEFAULTS AND REMEDIES.................................................... 27
9.01 Events of Default.............................................. 27
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9.02 Remedies....................................................... 29
9.03 Right of Set-Off............................................... 32
9.04 Performance of Tenant's Covenants.............................. 32
9.05 Late Charge.................................................... 32
9.06 Litigation; Attorneys' Fees.................................... 32
9.07 Remedies Cumulative............................................ 33
9.08 Escrows and Application of Payments............................ 33
9.09 Power of Attorney.............................................. 33
ARTICLE X
DAMAGE AND DESTRUCTION................................................... 34
10.01 General........................................................ 34
10.02 Landlord's Inspection.......................................... 35
10.03 Landlord's Costs............................................... 35
10.04 Rent Abatement................................................. 35
10.05 [Intentionally Omitted]........................................ 35
10.06 Damage Near End of Term........................................ 36
10.07 Risk of Loss................................................... 36
ARTICLE XI
CONDEMNATION............................................................. 36
11.01 Total Taking................................................... 36
11.02 Partial Taking................................................. 36
11.03 Restoration.................................................... 37
11.04 Landlord's Inspection.......................................... 37
11.05 Award Distribution............................................. 37
11.06 Temporary Taking............................................... 38
ARTICLE XII
ADDITIONAL REPRESENTATIONS, WARRANTIES AND FINANCIAL COVENANTS........... 38
12.01 Organization and Qualification................................. 38
12.02 Material Agreements............................................ 39
12.03 Changes in Condition........................................... 40
12.04 Franchises, Licenses, etc...................................... 40
12.05 Litigation..................................................... 40
12.06 Authorization and Enforceability............................... 40
12.07 No Legal Obstacle to Lease..................................... 41
12.08 Certain Business Representations............................... 41
12.09 Certain Financial Covenants.................................... 42
12.10 Cash Flow Coverage Ratio Covenant.............................. 42
12.11 Disclosure..................................................... 43
12.12 Covenant Not to Acquire........................................ 43
-iii-
ARTICLE XIII
ASSIGNMENT AND SUBLETTING; ATTORNMENT.................................... 43
13.01 Prohibition Against Subletting and Assignment.................. 43
13.02 Changes of Control............................................. 44
13.03 Operating/Service Agreements................................... 44
13.04 Assignment..................................................... 45
13.05 REIT Limitations............................................... 45
13.06 Attornment..................................................... 46
13.07 Severance and Spin-Off......................................... 47
ARTICLE XIV
ARBITRATION.............................................................. 47
14.01 Controversies.................................................. 47
14.02 Appointment of Arbitrators..................................... 47
14.03 Arbitration Procedure.......................................... 48
14.04 Expenses....................................................... 48
14.05 Enforcement of the Arbitration Award........................... 48
ARTICLE XV
QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT, ESTOPPEL CERTIFICATES........ 48
15.01 Quiet Enjoyment................................................ 48
15.02 Landlord Mortgages; Subordination.............................. 48
15.03 Attornment..................................................... 49
15.04 Estoppel Certificates.......................................... 49
15.05 Waiver of Landlord's Lien...................................... 50
ARTICLE XVI
RIGHT OF FIRST OFFER..................................................... 51
16.01 Right of First Offer During Lease Term or Extension Term....... 51
16.02 Right to Purchase at End of an Extension Term.................. 52
ARTICLE XVII
MISCELLANEOUS............................................................ 53
17.01 Notices........................................................ 53
17.02 Advertisement of a Leased Property............................. 54
17.03 Landlord's Access.............................................. 54
17.04 Entire Agreement............................................... 54
17.05 Severability................................................... 55
17.06 Captions and Headings.......................................... 55
17.07 Governing Law.................................................. 55
-iv-
17.08 Memorandum of Lease or Certain Rights Under the Lease.......... 55
17.09 Waiver......................................................... 55
17.10 Assignment; Binding Effect..................................... 55
17.11 Consents and Approvals......................................... 55
17.12 Single Property................................................ 56
17.13 Modification................................................... 56
17.14 Incorporation by Reference..................................... 56
17.15 No Merger...................................................... 56
17.16 Force Majeure.................................................. 56
17.17 Laches......................................................... 56
17.18 Waiver of Jury Trial........................................... 56
17.19 Permitted Contests............................................. 57
17.20 Construction of Lease.......................................... 57
17.21 Counterparts................................................... 58
17.22 Relationship of Landlord and Tenant............................ 58
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SCHEDULES
A Leased Properties and Initial Base Rent
B Permitted Liens
12.02 Material Agreements
12.03 Changes in Condition
EXHIBITS
2.02 Payment Account Information
2.04 Base Annual Rent Adjustment
5.07 Environmental Reports
15.02 Form of Subordination and Non-Disturbance
Agreement
-vi-
LEASE AGREEMENT
This Lease Agreement ("Lease") dated as of the 10th day of January,
1998 by and between CAPITAL AUTOMOTIVE L.P., a Delaware limited partnership
("Landlord"), having its principal office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and Good News Salisbury, Inc., a Maryland 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
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therein, together with any additional parcels of real estate and
improvements thereon subsequently designated as a Leased
Property by the parties pursuant to a Lease Supplement as
provided for herein, together with all rights, titles,
appurtenant interests, covenants, licenses, privileges and
benefits thereto belonging, and any easements, rights-of-way,
rights of ingress or egress or other interests in, on, or to any
land, highway, street, road or avenue, open or proposed, in, on,
across, in
front of, abutting or adjoining such real property including,
without limitation, any strips and gores adjacent to or lying
between such real estate and any adjacent real estate (the
"Land");
(b) All buildings, improvements, structures and Fixtures (as
hereinafter defined) now located or to be located or to be
constructed on the Land, including, without limitation,
sidewalks, landscaping, parking lots and structures, roads,
drainage and all above ground and underground utility structures
and conduits (on-site or off-site), equipment systems and other
so-called "infrastructure" improvements (the "Improvements");
(c) All equipment, machinery, fixtures, and other items of real
and/or personal property, including all components thereof,
located in, on or used in connection with, and permanently
affixed to or incorporated into, the Improvements, including,
without limitation, all furnaces, boilers, heaters, electrical
equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control,
waste disposal, air-cooling and air-conditioning systems and
apparatus, sprinkler systems and fire and theft protection
equipment, and similar systems, all of which, to the greatest
extent permitted by law, are hereby deemed to constitute real
estate, together with all replacements, modifications,
alterations and additions thereto (collectively the "Fixtures");
and
(d) All easements, rights and appurtenances relating to the Land and
the Improvements.
SUBJECT, HOWEVER, to the liens, encumbrances, restrictions,
agreements, and other title matters listed or specifically referred to in
Schedule B ("Permitted Exceptions").
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The Leased Properties shall however exclude all furniture, equipment,
inventory and items of moveable personal property attached to the Land or
Improvements that relate to the business being conducted on the Leased Property
which items may readily be removed without material damage to the Land and
Improvements whether or not such items might legally be considered to be
"fixtures" (all of which are owned by Tenant and shall hereinafter be defined as
the "Excluded Personal Property").
1.02 Contingent Upon Acquisition of the Leased Property. In the 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
----
fixed term of One Hundred and Twenty (120) months commencing on the Commencement
Date. The initial term
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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 for the Second Extension Term (as defined hereafter) and shall be subject
to Base Annual Rent Adjustments as set forth in Section 2.04.
1.04 Holding Over. Should Tenant, without the express consent of
------------
Landlord, continue to hold and occupy any Leased Property after the expiration
or earlier termination of the Term or any Extension Term, as the case may be,
such holding over beyond the Term and the acceptance or collection of Rent (as
defined hereinafter) by Landlord shall operate and be construed as creating a
tenancy from month-to-month and not for any other term whatsoever. During any
such holdover period Tenant shall pay to Landlord for each month (or portion
thereof) Tenant remains in such Leased Property, in lieu of the Base Annual Rent
(as defined hereafter) for such Leased Property, an amount equal to the sum of
one-twelfth (1/12) of (i) one hundred 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.
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.
---------------------------
(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.
--------------------------------------------------------------
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 (if compatible with Tenant's business practices), 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 Landlord, modify,
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surrender or terminate this Lease as to any Leased Property, nor seek nor be
entitled to any abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent as to any Leased Property for any reason whatsoever. Except as
specifically provided herein, the obligations of Landlord and Tenant shall not
be affected by reason of: (a) the lawful or unlawful prohibition of, or
restriction upon, Tenant's use of any Leased Property, or any part thereof, the
interference with such use by any person, corporation, partnership or other
entity, or by reason of eviction by paramount title; (b) any claim which Tenant
has or might have against Landlord or by reason of any default or breach of any
warranty by Landlord under this Lease or any other agreement between Landlord
and Tenant, or to which Landlord and Tenant are parties; (c) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceeding affecting Landlord or any assignee or transferee
of Landlord; (d) any damage to, or destruction of, any Leased Property or any
portion thereof for whatever cause, or any taking of the Leased Property or any
portion thereof; or (e) any other cause, whether similar or dissimilar to any of
the foregoing, other than a discharge of Tenant from any such obligations as a
matter of law. Except as otherwise specifically provided herein, and to the
maximum extent permitted by law, Tenant hereby specifically waives all rights,
including but not limited to any rights under any statute relating to rights of
tenants in the jurisdictions where the Leased Properties are located, which may
now be conferred upon it by law, relating to: (a) the modification, surrender
or termination of this Lease, or the quitting or surrender of any Leased
Property or any portion thereof; (b) any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Tenant hereunder; or (c) any
rights of redemption. As to each Leased Property, the obligations of Landlord
and Tenant hereunder shall be separate and the Rent and all other sums shall
continue to be payable in all events unless the obligations to pay the same
shall be terminated pursuant to the express provisions of this Lease or by
termination of this Lease other than by reason of an Event of Default.
ARTICLE III
IMPOSITIONS AND UTILITIES
3.01 Payment of Impositions. Subject to the adjustments set forth
----------------------
herein, Tenant shall pay, in the manner set forth in Section 3.04, as Additional
Rent, to the Landlord an amount equal to the amount necessary to pay all
Impositions (as hereinafter defined) that may be levied or become a lien on any
Leased Property or any part thereof at any time (whether prior to or during the
Term), without regard to prior ownership of said Leased Property, before the
same becomes delinquent. Tenant's obligation to pay such Impositions shall be
deemed absolutely fixed upon the date such Impositions become a lien upon any
Leased Property or any part thereof. Tenant, at its expense, shall prepare and
file all tax returns and reports in respect of any Imposition as may be required
by governmental authorities, provided, however, that Tenant shall provide to
Landlord copies of all filings of such tax returns or reports in respect of any
real or personal property owned by Landlord. Tenant shall be entitled to any
refund due in respect of such Impositions from any taxing authority if no Event
of Default shall have occurred hereunder and be continuing. Any refunds in
respect of such Impositions retained by Landlord due to an Event of Default
shall be applied as provided in Section 9.08. Landlord and Tenant shall, upon
request of the other, provide
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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 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
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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 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.
-8-
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 or gross
negligence of the Landlord.
3.06 Liens. Subject to Section 17.19 relating to contests, Tenant
-----
shall not directly or indirectly create or allow to remain, and will promptly
discharge at its expense, any lien, encumbrance, attachment, title retention
agreement or claim upon any Leased Property or any attachment, levy, claim or
encumbrance in respect of any Rent provided under this Lease, not including,
however: (a) this Lease; (b) utility easements and road rights-of-way in the
customary form (i) provided the same do not adversely affect the intended use of
the Leased Properties (including the Improvements) and do not create a material
adverse effect on the value of the Leased Properties or (ii) which result solely
from the action or inaction of Landlord; (c) zoning and building laws or
ordinances, provided they do not prohibit the use of the Leased Properties for
the Business and so long as the Leased Properties are in compliance with same;
(d) such encumbrances as are subsequently consented to in writing by Landlord,
but excluding liens in respect of Impositions required to be paid under Section
3.01; (e) liens for Impositions so long as (i) the same are not yet payable or
are payable without the addition of any fine or penalty or (ii) such liens are
being contested as permitted under Section 17.19; and (f) other encumbrances,
easements, rights of way or liens (i) provided the same do not adversely affect
the intended use of the Leased Properties (including the Improvements) and do
not create a material adverse effect on the value of the Leased properties, or
(ii) which result solely from the action or inaction of Landlord.
ARTICLE IV
INSURANCE
4.01 Insurance. Tenant shall, at Tenant's expense, keep the
---------
Improvements, Fixtures, and other components of each Leased Property insured
against the following risks:
(a) Loss or damage by fire with extended coverage (including
windstorm and subsidence), vandalism and malicious
mischief, sprinkler leakage and all other physical loss
perils commonly covered by "All Risk" insurance in an
amount not less than one hundred percent (100%) of the
then full replacement cost thereof (as hereinafter
defined). Such policy shall include an agreed amount
endorsement if available at a reasonable cost. Such policy
shall also include endorsements for
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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 ($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
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Tenant operates the Businesses conducted on or about each
Leased Property.
(i) upon Landlord's request, earthquake insurance in an amount
not less than the full insurable value of each Leased
Property.
(j) During the period when any addition, alteration,
construction, installation or demolition is being made or
performed to any part of the Leased Property, contingent
liability, public liability, completed value, builder's
risk (non-reporting form) workers' compensation and other
insurance as is deemed prudent by Landlord.
4.02 Insurance Limits. Deductible provisions for the insurance
----------------
required under Section 4.01(a) shall not exceed Twenty-Five Thousand Dollars
($25,000) per location per occurrence and One Hundred Thousand Dollars
($100,000) aggregate per occurrence; under clause(d), Twenty-Five Thousand
Dollars ($25,000) per occurrence, except that if federal flood insurance is
available then such deductible shall not be greater than the lowest deductible
available with respect to such federal flood insurance; under clause (g),
Twenty-Five Thousand Dollars ($25,000) per occurrence; under clause (h), Twenty-
Five Thousand Dollars ($25,000) per occurrence; and under clause (j), Twenty-
Five Thousand Dollars ($25,000) per occurrence.
4.03 Insurance Requirements. The following provisions shall apply
----------------------
to all insurance coverages required hereunder:
(a) The carriers of all policies shall have a Best's Rating of
"A-" or better and a Best's Financial Category of XII or
larger and shall be authorized to do insurance business in
the jurisdiction in which the Leased Property is located.
(b) Tenant shall be the "named insured" and Landlord and any
mortgagee of Landlord shall be an "additional named
insured" on each policy.
(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.
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(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 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
-12-
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 or agreement to which
Tenant is a party, instrument, statute, law, rule or regulation relating to the
use of the Leased Property and the operations of any Business or other
activities thereon, including noncancellable written notice to mortgagee.
ARTICLE V
INDEMNITY; SUBSTANCES OF CONCERN
5.01 Tenant's Indemnification. Subject to Section 4.07, Tenant
------------------------
hereby agrees to indemnify and hold harmless Landlord, its agents, and employees
from and against any and all demands, claims, causes of action, fines,
penalties, damages (including punitive and consequential damages), losses,
liabilities (including strict liability), judgments, costs and expenses
(including, without limitation, attorneys' fees, court costs, and the costs set
forth in Section 9.06) (the "Claims") incurred in connection with or arising
from: (a) the use, condition, operation or occupancy of the Leased Properties
during the Term of the Lease; (b) any activity, work, or thing done, or
permitted or suffered by Tenant in, on or about the Leased Properties; (c) any
acts, omissions, or negligence of Tenant or any person claiming under Tenant, or
the contractors, agents, employees, invitees, or visitors of Tenant or any such
person; (d) any breach, violation, or nonperformance by Tenant or any person
claiming under Tenant or the employees, agents, contractors, invitees, or
visitors of Tenant
-13-
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 during the Term of the Lease; (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 during the Term of the Lease;
(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 during the
Term of the Lease as set forth in Section 5.05, and (h) any brokers' or agents'
fees and commissions attributable to Tenant; except as may be caused by the
negligence or wilful misconduct of Landlord. 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, contaminants, wastes, toxic
substances, radioactive materials or genetically
modified organisms, which are, have been or become
regulated by any federal, state or local government
authority including, without limitation, (1)
petroleum or any fraction thereof, (2) asbestos, (3)
any substance or material defined as a "hazardous
substance" pursuant to (S) 101 of the Comprehensive
Environmental Response Compensation and Liability Act
(42 U.S.C. (S) 9601), or (4) any substance or
material defined as a "hazardous chemical" pursuant
to the federal Hazard Communication Standard (29
C.F.R. (S) 1910.1200).
(ii) "Environmental Laws" means all federal, state, local,
and foreign laws and regulations relating to
pollution or protection
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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 noise
or odors which could make any of the Leased Properties or
the Tenant subject to a civil nuisance lawsuit or to
disciplinary action of any kind under any nuisance laws,
ordinances or regulations; or make, allow or suffer any
waste whatsoever to any Leased Property. Landlord may
inspect each Leased Property from time to time, and Tenant
will cooperate with such inspections.
(c) Notwithstanding the foregoing, Tenant anticipates using,
storing and disposing of certain Substances of Concern in
connection with operation of its Business. Such Substances
of Concern include, but are not limited to, the following:
motor oil, waste motor oil and filters, transmission
fluid, antifreeze, refrigerants, waste paint and lacquer
thinner, batteries, solvents, lubricants, degreasing
agents, gasoline and diesel fuels. Tenant shall ascertain
and comply fully with all applicable Environmental Laws
and environmental standards and requirements set by
federal, state or local laws, rules, regulations or
governmental directives related to the Leased Properties
or Tenant's use or occupancy of the Leased Property
("Environmental Standards"), including but not limited to
any laws or standards (a) regulating the use, storage,
generation or disposal of Substances of Concern, (b)
regulating the monitoring or use of any underground or
aboveground storage tanks at the Leased Properties, or (c)
establishing any permitting, notification or reporting
requirements.
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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 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
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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 to comply with applicable environmental laws and
regulations, 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, 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
-17-
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 (which shall mean
Phase I, Phase II and consultants' 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").
In the event that Landlord is ordered by a governmental agency,
or reasonably 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
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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.
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
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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 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, provided that Landlord
give Tenant no less than two (2) business days prior notice and such inspection
shall not unreasonably interefere with Business of Tenant.
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
-20-
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
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
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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
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
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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;
(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
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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;
(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.
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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:
(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.
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(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
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
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provided by Landlord shall be made in accordance with, and subject to, a written
Addendum to this Lease.
ARTICLE IX
DEFAULTS AND REMEDIES
9.01 Events of Default. The occurrence of any one or more of the
-----------------
following shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of Rent, or
any other monetary obligation payable by Tenant to
Landlord hereunder, within ten (10) days after the due
date thereof and after written notice thereof and an
opportunity to cure within a ten (10) day period after
such notice is given to Tenant by Landlord. In the event
of Tenant's failure to make timely payment of such
obligations two (2) times during any twelve (12) month
period, each subsequent such failure within the twelve
(12) months immediately following such second failure
shall immediately constitute an Event of Default, and
Landlord shall not be required to provide notice thereof,
nor shall Tenant have any further opportunity to cure such
failure;
(b) Tenant fails to observe and perform any covenant (other
than the covenant in respect of insurance set forth in
Article IV), condition or agreement hereunder to be
performed by Tenant (except those described in Section
9.01(a) of this Lease) and such failure continues for a
period of 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
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mature; (v) consents to the appointment of a receiver of
itself or of the whole or any substantial part of its
property; or (vi) files a petition or answer seeking
reorganization or arrangement under the federal bankruptcy
laws or any other applicable law or statute of the United
States of America or any state thereof;
(d) If Tenant, on insolvency proceedings or on a petition in
bankruptcy filed against it, is adjudicated as bankrupt or
a court of competent jurisdiction enters an order or
decree appointing, without the consent of Tenant, a
receiver of Tenant of the whole or substantially all of
its property, or approving a petition filed against it
seeking reorganization or arrangement of Tenant under the
federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state
thereof, and such judgment, order or decree is not
vacated, dismissed or set aside within sixty (60) days
from the date of the entry thereof;
(e) If the estate or interest of Tenant in a Leased Property
or any part thereof is levied upon or attached in any
proceeding and the same is not vacated or discharged
within fifteen (15) days after commencement thereof
(unless Tenant is contesting such lien or attachment in
accordance with this Lease) or if such estate or interest
of Tenant is assigned, conveyed or involuntarily
transferred in violation of this Lease;
(f) Any representation, warranty or covenant made by Tenant on
behalf of itself or an Affiliate in this Lease or in any
certificate, demand or request made pursuant hereto proves
to be incorrect, in any material respect, as of the date
of issuance or making thereof;
(g) Conviction of Tenant or an Affiliate of a crime or offense
constituting a felony in the jurisdiction in which
committed or under federal law which conviction results in
the termination of the franchise or the license pursuant
to which Tenant or an Affiliate of Tenant conducts
business on or from the Leased Property.
(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
-28-
amended franchises or licenses for operation of motor
vehicle retail or motor vehicle related businesses at such
Leased Property satisfactory to Landlord in its discretion
applying commercially reasonable standards;
(i) Default under any franchise or license pursuant to which
Tenant or an Affiliate conducts business at a Leased
Property, if in the Landlord's judgment such default in
light of commercially reasonable standards and industry
practice would have a material adverse effect on the
Leased Property;
(j) A final, non-appealable judgment or judgments for the
payment of money not fully covered (excluding deductibles)
by insurance is rendered against Tenant and the same
remains undischarged, unvacated, unbonded, unappealed or
unstayed for a period of thirty (30) consecutive days;
except for de minimus judgments of not greater than $2,000
dollars per judgment or $15,000 in the aggregate, which
shall not constitute an Event of Default unless the same
remain undischarged, unvacated, unbonded, unappealed or
unstayed for a period of thirty (30) consecutive days and
thereafter are not cured by Tenant within three (3)
business days notice from Landlord;
(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
-29-
subject Leased Property to others. If this Lease is
terminated pursuant to the provisions of this subparagraph
(a) with respect to one or more, but less than all, of the
Leased Properties identified on Schedule A hereto, Tenant
----------
will remain liable to Landlord for the Rent for all of the
Leased Properties identified on Schedule A and other sums
----------
then due and for the balance of the Term as if the Lease
had not been terminated with respect to the subject Leased
Property, less the net proceeds, if any, of any re-letting
of the subject Leased Property by Landlord subsequent to
such termination, after deducting all Landlord's expenses
in connection with such re-letting, including without
limitation, the expenses set forth in Section 9.02(b)(ii)
below. Notwithstanding the termination of this Lease with
respect to a subject Leased Property, Tenant shall pay to
Landlord all amounts due as Rent, and such other amounts
then due, under this Lease on the days that such Rent and
such other amounts become due and payable as required by
this Lease.
(b) Without demand or notice, Landlord may re-enter and take
possession of the subject Leased Property or any part
thereof; and repossess such Leased Property as of
Landlord's former estate; and expel Tenant and those
claiming through or under Tenant from such Leased
Property; and, remove the effects of both or either,
without being deemed guilty of any manner of trespass and
without prejudice to any remedies for arrears of Rent or
preceding breach of covenants or conditions. If Landlord
elects to re-enter, as provided in this paragraph (b) or
if Landlord takes possession of such Leased Property
pursuant to legal proceedings or pursuant to any notice
provided by law, Landlord may, from time to time, without
terminating any portion of this Lease, re-let such Leased
Property or any part of such Leased Property, either alone
or in conjunction with other portions of the Improvements
of which such Leased Property are a part, in Landlord's
name but for the account of Tenant, for such term or terms
(which may be greater or less than the period which would
otherwise have constituted the balance of the Term of this
Lease) and on such terms and conditions (which may include
concessions of free rent, and the alteration and repair of
such Leased Property) as Landlord, in its 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
-30-
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
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
-31-
shall remain liable for any contingent or unliquidated
obligations or sums owing at the time of such
repossession.
(e) Landlord may take whatever action at law or in equity as
may appear necessary or desirable to collect the Rent and
other amounts payable hereunder with respect to the
subject Leased Property then due and thereafter to become
due, or to enforce performance and observance of any
obligations, agreements or covenants of Tenant under this
Lease.
9.03 Right of Set-Off. Landlord may, and is hereby authorized by
----------------
Tenant, at any time and from time to time, after advance notice to Tenant, to
set-off and apply any and all sums held by Landlord in respect of a Leased
Property, including all sums held in any escrow for Impositions, any
indebtedness of Landlord to Tenant, and any claims by Tenant against Landlord,
against any obligations of Tenant under this Lease in respect of such Leased
Property and against any claims by Landlord against Tenant, whether or not
Landlord has exercised any other remedies hereunder. Landlord shall set-off and
apply such sums first, to delinquent real estate taxes, unless such taxes are
being protested in good faith and no lien has attached to any Leased Property
with respect thereto, second, to currently due and owing real estate taxes, and
next, to other Tenant's obligations in the order which Landlord may determine.
The rights of Landlord under this Section are in addition to any other rights
and remedies Landlord may have against Tenant.
9.04 Performance of Tenant's Covenants. Landlord may, without
---------------------------------
waiving or releasing any obligation of Tenant, and without waiving or releasing
any obligation or default, perform any obligation of Tenant which Tenant has
failed to 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,
except that in the case of the first late payment within any twelve month period
the Tenant shall have three (3) business days after notice to cure without
incurring a late charge. 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
-32-
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 reasonably determines that Tenant has failed to give adequate
cooperation or information with respect to any such litigation, investigation,
receivership, administrative, bankruptcy, insolvency or other similar
proceeding, Landlord may, after notice to Tenant, undertake such investigation
or proceeding and Tenant shall pay all reasonable costs and expenses (the
"Costs") related thereto that are incurred by Landlord, whether or not Landlord
has received notice from Tenant of such investigation or proceeding, and whether
or not an Event of Default has actually occurred or has been declared and
thereafter cured, which Costs shall include, without limitation: (a) the
reasonable fees, expenses, and costs of any litigation, investigation,
receivership, administrative, bankruptcy, insolvency or other similar proceding;
(b) reasonable attorney, paralegal, consulting and witness fees and
disbursements; and (c) the reasonable expenses, including, without limitation,
lodging, meals, and transportation, of Landlord and its employees, agents,
attorneys, and witnesses in investigating or preparing for litigation,
administrative, bankruptcy, insolvency or other similar proceedings and
attendance at hearings, depositions, and trials in connection therewith. Within
ten (10) days of Landlord's presentation of an invoice of Costs incurred by
Landlord pursuant to the preceding sentence or otherwise reasonably 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.
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9.09 Power of Attorney. Tenant hereby irrevocably and
-----------------
unconditionally appoints Landlord, or Landlord's authorized officer, agent,
employee or designee, as Tenant's true and lawful attorney-in-fact, to act,
after an Event of Default, for Tenant in Tenant's name, place, and stead, and
for Tenant's and Landlord's use and benefit, to execute, deliver and file all
applications and any and all other necessary documents or things, to effect a
transfer, reinstatement, renewal and/or extension of any and all licenses and
other governmental authorizations issued to Tenant in connection with Tenant's
operation of the Leased Properties, and to do any and all other acts incidental
to any of the foregoing. Tenant irrevocably and unconditionally grants to
Landlord as its attorney-in-fact full power and authority to do and perform,
after an Event of Default, every act necessary and proper to be done in the
exercise of any of the foregoing powers as fully as Tenant might or could do if
personally present or acting, with full power of substitution, hereby ratifying
and confirming all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and is
irrevocable prior to the full performance of Tenant's obligations hereunder.
ARTICLE X
DAMAGE AND DESTRUCTION
10.01 General. Tenant shall notify Landlord if any Leased Property is
-------
damaged or destroyed by reason of fire or any other cause. Tenant shall promptly
repair, rebuild, or restore such Leased Property, at Tenant's expense, so as to
make such Leased Property at least equal in value to such Leased Property
existing immediately prior to such occurrence and as nearly similar to it in
character as is practicable and reasonable. Before beginning such repairs or
rebuilding, or executing any contracts in connection with such repairs or
rebuilding, Tenant will submit for Landlord's approval, which approval Landlord
will not unreasonably withhold or delay, complete and detailed plans and
specifications for such repairs or rebuilding. Promptly after receiving
Landlord's approval of the plans and specifications, Tenant will begin such
repairs 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
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equivalent) for the portion of such Leased Property being repaired or rebuilt.
Upon the completion of rebuilding or repairing and the furnishing of such proof,
the balance of the net proceeds of such insurance payable to Tenant on account
of such repairs or rebuilding will be paid to Tenant. Tenant will obtain and
deliver to Landlord a temporary or final certificate of occupancy before such
Leased Property is reoccupied for any purpose. Tenant shall complete such
repairs or rebuilding free and clear of mechanic's or other liens, and in
accordance with the building codes and all applicable laws, ordinances,
regulations, or orders of any state, municipal, or other public authority
affecting the repairs or rebuilding, and also in accordance with all
requirements of the insurance rating organization, or similar body. Any
remaining proceeds of insurance after such restoration will be Tenant's
property.
10.02 Landlord's Inspection. During the progress of such repairs or
---------------------
rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the subject Leased Property and will be furnished, if required by them,
with copies of all plans, shop drawings, and specifications relating to such
repairs or rebuilding. Tenant will keep all plans, shop drawings, and
specifications available, and Landlord and its architects and engineers may
examine them at all reasonable times. If, during such repairs or rebuilding,
Landlord and its architects and engineers determine that the repairs or
rebuilding are not being done in accordance with the approved plans and
specifications, Landlord will give prompt notice in writing to Tenant,
specifying in detail the particular deficiency, omission, or other respect in
which Landlord claims such repairs or rebuilding do not accord with the approved
plans and specifications. Upon the receipt of any such notice, Tenant will
cause corrections to be made to any deficiencies, omissions, or such other
respect. Tenant's obligations to supply insurance, according to Article IV,
will be applicable to any repairs or rebuilding under this Section 10.02.
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
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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 [Intentionally Omitted]
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.
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
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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 make available such Landlord Award
to accomplish all necessary restoration to the Leased Property, and any excess
after such application shall be retained by Landlord. If there is a partial
taking of any Leased Property and this Lease remains in full force and effect
pursuant to Section 11.02, Tenant shall retain the amount of any Tenant Award
(as hereafter defined) received by Tenant, Tenant shall apply such Tenant Award
to accomplish all necessary restoration of Tenant's property, and any excess
after such application shall be retained by Tenant. Notwithstanding anything in
this Section to the contrary, in the event that there is a partial taking of any
Leased Property and this Lease remains in full force and effect pursuant to
Section 11.02, and there is a single Award with respect to such partial taking,
then the Landlord and Tenant shall use their good faith efforts to determine the
proper apportionment of such Award (as hereafter defined) to restoration of
Landlord's and Tenant's respective properties. In the event that the parties are
unable to agree on such apportionment within thirty (30) days, the parties shall
submit to arbitration of an apportionment subject to the arbitration provisions
set forth in Article XIV.
11.04 Landlord's Inspection. During the progress of such restoration,
---------------------
Landlord and its architects and engineers may, from time to time, inspect the
subject Leased Property and will be furnished, if required by them, with copies
of all plans, shop drawings, and specifications relating to such restoration.
Tenant will keep all plans, shop drawings, and specifications available, and
Landlord and its architects and engineers may examine them at all reasonable
times. If, during such restoration, Landlord and its architects and engineers
determine that the restoration is not being done in accordance with the approved
plans and specifications, Landlord will give prompt notice in writing to Tenant,
specifying in detail the particular deficiency, omission, or other respect in
which Landlord claims such restoration does not accord with the approved plans
and specifications. Upon the receipt of any such notice, Tenant will cause
corrections to be made to any deficiencies, omissions, or such other respect.
Tenant's obligations to supply insurance, according to Article IV, will be
applicable to any restoration under this Section.
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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.
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 Maryland corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation or organization and the State of Maryland, 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, 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
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manner in which they are owned, leased or conducted or proposed
to be owned, leased or conducted, except where the failure to
be so organized, qualified and in good standing or to have such
authority, qualification or licensing could not result in a
Material Adverse Change. Complete and correct copies of
Tenant's Charter, as in effect on the date hereof, and Tenant's
by-laws, also as in effect on the date hereof, have been
delivered to Landlord.
(b) Each Affiliate that conducts operations or business on or from
any Leased Property, whether now or at any time in the future,
is duly organized, validly existing and in good standing under
the laws of its organization, with all power and authority,
corporate or otherwise, necessary to own and lease its assets
and properties, and conduct its business, as it is now being
conducted or proposed to be conducted. Each Affiliate is duly
qualified as a foreign corporation or other entity, as the case
may be, to do business and own and lease its assets and
properties, and is in good standing, in each jurisdiction where
the character of its assets and properties owned or held under
lease or the nature of its activities or business makes such
qualification necessary or advisable, and is duly qualified and
licensed under all laws, regulations, ordinances or orders or
public or governmental authorities or otherwise to carry on its
business and own or lease its assets and properties in the
places and in the manner in which they are owned, leased or is
conducted or proposed to be owned, leased or conducted, except
where the failure to be so organized, qualified and in good
standing or to have such authority, qualification or licensing
could not result in a Material Adverse Change.
"Material Adverse Change" since a particular specified date, or a date
which may be specified from the circumstances existing immediately prior to the
happening of a specified event or occurrence, or, if no date or event is
specified, with reference to the most recent Annual Financial Statements
delivered pursuant to this Lease, means a material adverse change in the
Business, assets, properties, franchises, financial condition or income of
Tenant or the operations, business, assets, properties, franchises, financial
condition, income or prospects of any Affiliate, whether or not such event or
occurrence is an Event of Default. 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.
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A "Person" shall mean and include natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts, Indian tribes or other organizations, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
12.02 Material Agreements. Schedule 12.02 is a complete list of all
------------------- --------------
agreements to which Tenant is a party that are material to the ownership and use
of the Leased Property or the operation of Tenant's Business, and Tenant will
make available to Landlord a copy of each of these agreements (including all
exhibits, schedules and amendments thereto).
12.03 Changes in Condition. Since the date of the latest Annual
---------------------
Financial Statements, no Material Adverse Change has occurred between such date
and the date hereof, and neither Tenant nor any Affiliate has entered into any
material transaction outside the ordinary course of its or their operations or
business, including the Business, except as set forth in Schedule 12.03 and the
--------------
matters contemplated by this Lease.
12.04 Franchises, Licenses, etc. Tenant and its subsidiaries own, or
--------------------------
have sufficient interests in, all franchises, trademarks, trademark rights,
trade names, trade name rights, copyrights, licenses, permits, authorizations
and other rights as are necessary for the conduct of Tenant's Business and its
subsidiaries' businesses as now conducted or proposed to be conducted by Tenant
or any Affiliate, as well as rights under any agreement under which Tenant or
its subsidiaries has access to confidential information used by Tenant or its
subsidiaries in Tenants' Business or the businesses of its subsidiaries, as the
case may be (collectively, the "Intellectual Property"). All Intellectual
Property is in full force and effect in all material respects, and Tenant and
its subsidiaries are in substantial compliance with the foregoing without any
conflict with the valid rights of others, which has resulted, or could be
reasonably likely to result in any Material Adverse Change. Neither Tenant nor
any Affiliate has violated, or received any communication that by conducting its
Business or any Affiliate's businesses, it or any Affiliate would violate any
franchises, licenses, patents, trademarks, service marks, trade names,
copyrights, trade secrets, proprietary rights or processes of any other Person
(as hereafter defined) nor is Tenant or any Affiliate aware of any such
violations. No event has occurred which permits, or after notice or lapse of
time or both would permit, the revocation or termination of any such license,
franchise or other right or affect the rights of Tenant or any Affiliate so as
to result in or reasonably be likely to result in any Material Adverse Change.
There is no litigation or other proceeding or dispute or, to the knowledge of
Tenant or any Affiliate, threat thereof with respect to the validity or, where
applicable, the extension or renewal, of any of the foregoing which has
resulted, or could result, in any Material Adverse Change.
12.05 Litigation. No litigation, at law or in equity, or any
-----------
proceeding before any court, board or other governmental or administrative
agency or any arbitrator or other forum of alternative dispute resolution is
pending or, to the knowledge of Tenant or any Affiliate, threatened which
involves any risk of any final judgment, order or liability which, after giving
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
-40-
hereunder. No judgment, decree or order of any court, board or other
governmental or administrative agency or any arbitrator has been issued against
or binds Tenant or any Affiliate, which has resulted, or could result, in any
Material Adverse Change.
12.06 Authorization and Enforceability. Tenant has taken all
---------------------------------
corporate or other action required to execute, deliver and perform this Lease.
This Lease constitutes the legal, valid and binding obligation of Tenant and is
enforceable against Tenant in accordance with its terms.
12.07 No Legal Obstacle to Lease. Neither the execution and delivery
---------------------------
of this Lease nor the performance of any obligation hereunder has constituted or
resulted in or will constitute or result in:
(a) any breach, violation of, conflict with, default under or
termination of any agreement, contract, mortgage,
instrument, deed or lease to which Tenant or any Affiliate
is a party or by which it or they are bound;
(b) the violation of or conflict with any law, statute,
ordinance, judgment, decree, order, rule or regulation
applicable to Tenant, any Affiliate, any Improvements or
any Leased Property; or
(c) any violation of or conflict with Tenant's or any
Affiliate's Charter or By-Laws or other organizational
documents, as the case may be.
No approval, authorization or other action by, or declaration to or
filing with, any governmental or administrative authority or any other Person is
required to be obtained or made by Tenant in connection with the execution,
delivery and performance of this Lease.
12.08 Certain Business Representations:
--------------------------------
(a) Labor Relations. No dispute or controversy between Tenant
---------------
or any Affiliate and its or their employees has resulted
in, or is reasonably likely to result in, any Material
Adverse Change, and neither Tenant nor any Affiliate
anticipates that its relationships with its unions or
employees will result, or are reasonably likely to result,
in any Material Adverse Change. Tenant and each Affiliate
is in compliance in all material respects with all federal
and state laws relating to employees and labor relations,
including, but not limited to, laws relating to health and
safety in the workplace, non-discrimination in employment
and the payment of wages.
(b) Antitrust. Tenant and each Affiliate is in compliance in
----------
all material respects with all federal and state antitrust
laws relating to Tenant's
-41-
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.
(e) Benefit Liabilities. Neither Tenant nor any ERISA
Affiliate maintains, contributes to, or is obligated to
contribute to, nor has Tenant or any ERISA Affiliate
maintained, contributed to, been obligated to contribute
to, or had any direct, indirect, or contingent liability
with respect to, any Title IV Plan (as hereafter defined).
Each Tenant Benefit Plan has been maintained in compliance
with its terms and with applicable laws (including
specifically the Code and the Employee Retirement Income
Security Act of 1974 ("ERISA"). "Tenant Benefit Plan"
means any plan, fund, or other similar program described
in Section 3(2) of ERISA and established or maintained or
with respect to which Tenant and/or any ERISA Affiliate
has an obligation to contribute for the benefit of its
employees (or for which Tenant could be directly or
contingently liable). "Title IV Plan" means an "employee
benefit plan" (as defined in Section 3(3) of ERISA) that
is subject to Title IV of ERISA and is or has been
established or maintained, by Tenant or any ERISA
Affiliate, or to which contributions are, have been, or
should have been made. "ERISA Affiliate" means any trade
or business, whether or not incorporated, that, together
with Tenant, is or has been under common control, within
the meaning of Section 414(b), (c), (m), or (o) of the
Code or Section 4001 of ERISA.
12.09 Certain Financial Covenants. Tenant or an Affiliate, as
----------------------------
applicable, is in compliance in all material respects with all financial
covenants required to be maintained pursuant to any franchise or other agreement
pursuant to which Tenant or such Affiliate operates its business, except in such
respects as shall not result in any franchisor under any franchise or operating
-42-
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.
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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
reasonable 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
(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.
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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 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.
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(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
reasonable 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
hereof shall be voidable at Landlord's option.
13.05 REIT Limitations.
----------------
(a) Anything contained herein to the contrary notwithstanding,
Tenant shall not: (a) sublet or assign a Leased Property
or this Lease on any basis such that the rental or other
amounts to be paid by the sublessee or assignee thereunder
would be based, in whole or in part, on the income or
profits derived by the business activities of the
sublessee or assignee; (b) sublet or assign a Leased
Property or this Lease to any Person that, under Section
856(d)(2)(B) of the Internal Revenue Code of 1986, as
amended (the "Code"), Landlord or its general partner
owns, directly or indirectly (by applying constructive
ownership rules set forth in Section 856(d) (5) of the
Code, a ten percent (10%) or greater interest; or (c)
sublet or assign a Leased Property or this Lease in any
other manner or otherwise derive any income which could
cause any portion of the amounts received by Landlord
pursuant hereto or any sublease to fail to qualify as
"rents from real property" within the meaning of Section
856(d) of the Code, or which could cause any other income
received by Landlord to fail to qualify as income
described in Section 856(c) (2) of the Code. The
requirements of this Section 13.05 shall likewise apply to
any further subleasing by any subtenant.
(b) Tenant acknowledges that Capital Automotive REIT, a
Maryland real estate investment trust and the general
partner of Landlord (the "Company"), intends to elect to
be taxed as a real estate investment trust (a "REIT")
under the Code. Tenant shall not do anything which would
adversely affect the Company's status as a REIT. Tenant
hereby agrees to modifications of this Lease which do not
materially
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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 credited against the amounts owing by Tenant hereunder with respect
to such Leased Property.
13.07 Severance and Spin-Off. During the Term or any Extension Term
----------------------
of this Lease and 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"), with the consent of
Landlord (which consent shall not be unreasonably withheld), to sever and spin-
off from this Lease (which shall mean that Tenant shall no longer have any
obligation under this Lease with respect to the Spin-Off Property) one or more
of the Leased Properties (each a "Spin-Off Property") to a new tenant ("New
Tenant") upon the following conditions: (a) Tenant shall assign the automobile
franchise being conducted on the Spin-Off Property to the New Tenant and shall
obtain all necessary approvals from third parties to accomplish such assignment;
(b) Tenant shall include in the agreement by which the assignment of the
automobile franchise is to be accomplished the requirement that the New Tenant
shall take the assignment subject to this Lease (c) the New Tenant shall agree
to be bound by the terms and conditions of this Lease (and assume all of the
obligations hereof) and shall execute a counterpart to this Lease in all
respects identical to this Lease that applies to the Spin-Off Property; and (d)
if Tenant desires to exercise the Spin-Off Right with respect to less than all
parcels of a Leased Property, then such spin-off shall be subject to compliance
with the requirements of Section 13.08.
13.08 Assignment of Non-Subdivided Parcels. 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.
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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.
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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 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
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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
-------------------------
waive its Landlord's lien and any other rights that it may have with respect to
property or assets representing the security or collateral under Tenant's
"floor-plan" or similar financing arrangements, during the Term or any Extension
Term. Landlord shall, upon request by any such lender, execute an
acknowledgment of such waiver.
[remainder of this page left intentionally blank]
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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.
(d) If no sale is effected by Landlord within the period
specified in subsection (c) above, then if Landlord
thereafter desires to sell the
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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 ▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇. 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 either Extension Term of this Lease. The Option to
Purchase shall not be granted if Tenant does not extend
the Term of this Lease pursuant to Section 1.03 or if
on the Option Exercise Date (as hereafter defined) an
Event of Default with respect to any Leased Property
exists and has not been cured. The Tenant shall notify
Landlord in writing of its intent to exercise this
Option to Purchase, thirty (30) days prior to the end
of an Extension Term of this Lease (the "Option
Exercise Date").
(b) The consideration to be paid for the Leased Properties
upon exercise of the Option to Purchase (the "Property
Consideration") shall be the Appraised Value (as
hereafter defined) determined by (1) an independent
appraiser, who is a member of the Appraisal Institute,
and will be selected by Landlord, (the "Landlord MAI
Appraiser"), (2) a second appraiser, who is a member of
the Appraisal Institute, and will be selected by the
Tenant (the "Tenant MAI Appraiser"), and (3) a third
MAI Appraiser selected by agreement of the Landlord MAI
Appraiser and the Tenant MAI Appraiser (the "Third MAI
Appraiser") (each an "Appraiser" and, collectively, the
"Appraisers"). Landlord and Tenant shall, as promptly
as possible, but in no event later than ten (10) days
following the Option Exercise Date, select its
respective Appraiser. The Third MAI Appraiser shall be
selected no later than five (5) days after the
selection of the other Appraisers. The costs of the
Appraisers' appraisals shall be shared equally by the
parties. As promptly as possible but in no event later
than fifteen (15) days after selection of the Third
Appraiser, each Appraiser shall deliver his or her
written report of the Appraisers' determination of the
fair market value of the Leased Property, which
determination shall be based, for each Leased Property,
upon the highest and best use of such Leased Property,
taking into consideration the location of such Leased
Property and other properties comparable thereto. The
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"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:
Good News Salisbury, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
With a copy to:
Webb, Burnett, Jackson, Cornbrooks, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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If to Landlord:
Capital Automotive L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Executive Officer
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.
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.
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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),
13.01 and 13.07, there shall be a presumption that each such decision and any
conditions thereon by Landlord was in fact reasonable, and Tenant shall have the
burden of proof in any attempt to rebut that presumption. With respect to
Sections 8.07(d), 13.01 and 13.07, there shall be a presumption that each such
decision and any conditions thereon by Landlord was in fact unreasonable, and
Landlord shall have the burden of proof in any attempt to rebut that
presumption.
-55-
17.12 Single Property. Throughout the form of this Lease there are
---------------
references to "Leased Properties." If, in fact, there is only one Leased
Property being leased hereunder, all such references shall, without further
action, be deemed amended to refer solely to such Leased Property and all
provisions relating to Leased Properties, including remedies applicable to only
one Leased Property, shall likewise be amended to the extent necessary, but only
to the extent necessary, to give effect to the fact that there is only one
Leased Property.
17.13 Modification. This Lease may only be modified by a writing
------------
signed by both Landlord and Tenant.
17.14 Incorporation by Reference. All schedules and exhibits
---------------------------
referred to in this Lease are incorporated herein by reference.
17.15 No Merger. As to each Leased Property, the surrender of this
---------
Lease by Tenant or the cancellation of this Lease by agreement of Tenant and
Landlord or the termination of this Lease on account of Tenant's default will
not work a merger, and will, at Landlord's option, terminate any subleases or
operate as an assignment to Landlord of any subleases. Landlord's option under
this paragraph will be exercised by notice to Tenant and all known subtenants of
such Leased Property.
17.16 Force Majeure. Landlord, its agents and employees, will not
-------------
be liable for any loss, injury, death, or damage (including consequential
damages) to persons, property, or Tenant's Business occasioned by theft, act of
God, public enemy, injunction, riot, strike, insurrection, war, court order,
requisition, order of governmental body or authority, fire, explosion, falling
objects, steam, water, rain or snow, leak or flow of water (including water from
the elevator system), rain or snow from any Leased Property or into any Leased
Property or from the roof, street, subsurface or from any other place, or by
dampness or from the breakage, leakage, obstruction, or other defects of the
pipes, sprinklers, wires, appliances, plumbing, air conditioning, or lighting
fixtures of any Leased Property, or from construction, repair, or alteration of
any Leased Property or from any acts or omissions of any other occupant or
visitor of any Leased Property, or from the release, emission, discharge,
presence or disposal of any hazardous substance or material on or from any
Leased Property, or from any other cause beyond Landlord's control.
17.17 Laches. No delay or omission by either party hereto to
-------
exercise any right or power accruing upon any noncompliance or default by the
other party with respect to any of the terms hereof shall impair any such right
or power or be construed to be a waiver thereof.
17.18 Waiver of Jury Trial. To the extent that there is any claim by
--------------------
one party against the other that is not to be settled by arbitration as provided
in Article XIV hereof, Landlord and Tenant waive trial by jury in any action,
proceeding or counterclaim brought by either of them against the other on all
matters arising out of this Lease or the use and occupancy of any Leased
Property (except claims for personal injury or property damage). If Landlord
commences any
-56-
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.
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. This lease is intended to
function as a master lease of severals
-57-
Leased Properies, and, as the circumstances require, the singular shall mean the
plural and the plural shall mean the singular.
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.
{remainder of this page left intentionally blank}
-58-
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.
a Delaware limited partnership
By: Capital Automotive REIT,
a Maryland real estate investment trust,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
GOOD NEWS SALISBURY, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Name: ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: President
-59-
SCHEDULE A (PAGE 1 OF 2)
Seller-Defined Reference
-----------------------------------------
Property
Number
--------
Name
---------------------------
Street Address Tax Account #
---------------------------
Tax Map, Grip, Parcel, Lots
---------------------------
1 Oldsmobile/Cadillac/
GMC sales center ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-029953
TM 29, ▇ ▇▇, ▇ ▇▇, ▇▇▇▇ ▇-▇
▇ ▇▇▇▇/▇▇▇/▇▇▇ lots ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-080525
TM 29, ▇ ▇▇, ▇ ▇▇, ▇▇▇▇ ▇▇-▇▇
▇ ▇▇▇▇/▇▇▇/▇▇▇ lots ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-080517
TM 29, ▇ ▇▇, ▇ ▇▇, ▇▇▇ ▇▇
▇ ▇▇▇▇/▇▇▇/▇▇▇ lots ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-080533
TM 29, G 23, P 13, Lot 29
5 Honda ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-807783
TM 29, ▇ ▇▇, ▇ ▇▇▇ ▇▇▇-▇
6 Toyota/Mercedes/A ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-074835
TM 29, ▇ ▇▇, ▇ ▇▇▇ ▇▇▇-▇
7 Toyota/Mercedes I ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-074843
TM 29, G 23, P 267
8 Toyota/▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-067642
TM 29, G 23, P 404
9 Mazda-Hyundai ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 09-025828
TM 29, G 22, P 385
10 Nissan ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 09-018441
TM 29, G 23, P 386
11 Used Car Sales Center I ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-062721
TM 29, G 23, P 13, Lots 7-8
12 Used Car Sales Center II ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-062748
TM 29, G 23, P 13, Lots 24-25
13 Body Shop - I ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 09-025901
TM 29, G 22, P 385
14 Body Shop - II ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
-▇▇-
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 09-070443
TM 29, ▇ ▇▇, ▇ ▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇ A (PAGE 2 OF 2)
Base
Annual
Rent
Amount
------
469,920
=======
NOTE: In the event the Base Annual Rent must be adjusted pursuant to this Lease
----
because of its termination as to a Property, the parties shall attempt in
good faith to agree upon the adjustment. If after thirty (30) days they
are unable to agree upon such adjustment, it shall be determined by
valuing the terminated Property and all of the Properties pursuant to the
provisions of Section 16.02(b) and pro rating the Base Annual Rent in
proportion to such values. In the event the termination is pursuant to
Section 13.07, Tenant shall pay all of the costs of appraisals.
-62-
SCHEDULE A (PAGE 1 OF 2)
Seller-Defined Reference
--------------------------------------------------
Property
Number
--------
Name
------------------------
Street Address Tax Account #
---------------------------
Tax Map, Grip, Parcel, Lots
---------------------------
1 Oldsmobile/Cadillac/
GMC sales center ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-029953
TM 29, ▇ ▇▇, ▇ ▇▇, ▇▇▇▇ ▇-▇
▇ ▇▇▇▇/▇▇▇/▇▇▇ lots ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-080525
TM 29, ▇ ▇▇, ▇ ▇▇, ▇▇▇▇ ▇▇-▇▇
▇ ▇▇▇▇/▇▇▇/▇▇▇ lots ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-080517
TM 29, ▇ ▇▇, ▇ ▇▇, ▇▇▇ ▇▇
▇ ▇▇▇▇/▇▇▇/▇▇▇ lots ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-080533
TM 29, G 23, P 13, Lot 29
5 Honda ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-807783
TM 29, ▇ ▇▇, ▇ ▇▇▇ ▇▇▇-▇
6 Toyota/Mercedes/A ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-074835
TM 29, ▇ ▇▇, ▇ ▇▇▇ ▇▇▇-▇
7 Toyota/Mercedes I ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-074843
TM 29, G 23, P 267
8 Toyota/▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-067642
TM 29, G 23, P 404
9 Mazda-Hyundai ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 09-025828
TM 29, G 22, P 385
10 Nissan ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 09-018441
TM 29, G 23, P 386
11 Used Car Sales Center I ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-062721
TM 29, G 23, P 13, Lots 7-8
12 Used Car Sales Center II ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 05-062748
TM 29, G 23, P 13, Lots 24-25
13 Body Shop - I ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 09-025901
TM 29, G 22, P 385
14 Body Shop - II ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
-▇▇-
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 09-070443
TM 29, ▇ ▇▇, ▇ ▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇ A (PAGE 2 OF 2)
Base
Annual
Rent
Amount
------
469,920
=======
NOTE: In the event the Base Annual Rent must be adjusted pursuant to this Lease
----
because of its termination as to a Property, the parties shall attempt in
good faith to agree upon the adjustment. If after thirty (30) days they
are unable to agree upon such adjustment, it shall be determined by
valuing the terminated Property and all of the Properties pursuant to the
provisions of Section 16.02(b) and pro rating the Base Annual Rent in
proportion to such values. In the event the termination is pursuant to
Section 13.07, Tenant shall pay all of the costs of appraisals.
-65-
SCHEDULE A
Seller-Defined Reference
----------------------------------------
Property Tax Account #
Number Name Street Address Tax Map, Grid, Parcel, Lots
-------- ---------- ------------------- ---------------------------
P1 Pontiac-Buick ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇-▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ TM 29, ▇ ▇▇, ▇ ▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇ ▇
[ Scheduled Exceptions as agreed upon in Real Property Purchase Agreement ]
-67-
SCHEDULE B
[ Scheduled Exceptions as agreed upon in Real Property Purchase Agreement ]
-68-
SCHEDULE 12.02
1. Computer services and maintenance contract with ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ (approx.
$120,000 per year).
2. Buy-out agreement of former Good News Salisbury, Inc. shareholder (approx.
$300,000 left to pay).
-69-
SCHEDULE 12.03
1. Agreement letter from ▇▇▇▇▇ Builders, Inc. dated July 14, 1997 for
renovations to the Toyota/Mercedes facility.
-70-
EXHIBIT 5.07
1. Phase I and II report on Leased Properties 6, 7, and 8 (Toyota/Mercedes)
prepared by ▇▇▇▇ ▇▇▇▇▇ & Associates dated January 24, 1997.
2. Phase I and II report on Leased Properties 9 and 14 (Mazda-Hyundai and Body
Shop I) prepared by ▇▇▇▇ ▇▇▇▇▇ & Associates dated January 19, 1995.
-71-
SCHEDULE B
[ Scheduled Exceptions as agreed upon in Real Property Purchase Agreement ]
SCHEDULE 12.02
1. Computer services and maintenance contract with ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ (approx.
$120,000 per year).
2. Buy-out agreement of former Good News Salisbury, Inc. shareholder (approx.
$300,000 left to pay).
SCHEDULE 12.03
1. Agreement letter from ▇▇▇▇▇ Builders, Inc. dated July 14, 1997 for
renovations to the Toyota/Mercedes facility.
EXHIBIT 5.07
1. Phase I and II report on Leased Properties 6, 7, and 8 (Toyota/Mercedes)
prepared by ▇▇▇▇ ▇▇▇▇▇ & Associates dated January 24, 1997.
2. Phase I and II report on Leased Properties 9 and 14 (Mazda-Hyundai and Body
Shop I) prepared by ▇▇▇▇ ▇▇▇▇▇ & Associates dated January 19, 1995.
EXHIBIT 2.02
------------
PAYMENT ACCOUNT INFORMATION
Wiring instructions for the Landlord's operating account are as follows:
FIRST UNION NATIONAL BANK OF VIRGINIA
CHARLOTTE, NC
ABA# ▇▇▇▇▇▇▇▇▇
For Credit to: CAPITAL AUTOMOTIVE REIT, Operating Account
Account # 2050000478240
EXHIBIT 2.04
------------
BASE ANNUAL RENT ADJUSTMENT
The Base Annual Rent shall be increased, effective as of the commencement
of the second Lease Year and as of each subsequent Lease Year by an amount equal
to the Initial Base Rent multiplied by one hundred percent (100%) of the change
in the Index during the immediately preceding one (1) year period; provided,
however, that, in the event that the above-calculated adjustment is greater than
two percent (2%), such adjustment shall be equal to two percent (2%).
EXHIBIT 15.02
-------------
SUBORDINATION AND NON-DISTURBANCE AGREEMENT
-------------------------------------------
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:
-----------
WHEREAS, Landlord and Tenant have entered into a certain Lease, dated
___________________ , which lease and all amendments, modifications,
assignments, subleases and other agreements related thereto are attached hereto
as Exhibit A and incorporated herein by this reference (collectively, the
---------
"Lease"), which Lease relates to the premises described therein (the
"Premises"), and
WHEREAS, Lender has made or has committed to make a first mortgage loan to
Landlord in the principal amount not to exceed $_________ (the "Loan"), the Loan
being secured by a mortgage, deed of trust or security deed (collectively, the
"Mortgage") and an assignment(s) of leases and rents from Landlord to Lender
covering the Premises; and
WHEREAS, Tenant has agreed that the Lease shall be subject and subordinate
to the Mortgage held by Lender, provided Tenant is assured of continued
occupancy of the Premises under the terms of the Lease;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the sum of Ten Dollars ($10.00) and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
and notwithstanding anything in the Lease to the contrary, it is hereby agreed
as follows:
1. SUBORDINATION OF LEASE. Lender, Tenant and Landlord do hereby
----------------------
covenant and agree that the Lease with all rights, options, liens and charges
created thereby, is and shall continue to be subject and subordinate in all
respects to the Mortgage and to any renewals, modifications, consolidations,
replacements and extensions thereof and to all advancements made thereunder.
2. NONDISTURBANCE OF TENANT. Lender does hereby agree with Tenant that,
------------------------
in the event Lender becomes the owner of the Premises by foreclosure, conveyance
in lieu of foreclosure or otherwise, so long as Tenant complies with and
performs its obligations under the Lease, (a) Lender will take no action which
will interfere with or disturb Tenant's possession or use of the Premises or
other rights under the Lease, and (b) the Premises shall be subject to the Lease
and Lender shall recognize Tenant as the tenant of the Premises for the
remainder of the terms of the Lease in accordance with the provisions thereof,
provided, however, that Lender shall not be subject
to any offsets or defenses which Tenant might have against any prior landlord
except those which arose under the provisions of the Lease out of such
landlord's default and 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
--------------------
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.
(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
-2-
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. 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:
Basic Rent - $________
-3-
Payment of the above amount was timely made for the months of ______,
___and _____, ____, and the next payment of the above amount will be due on
________, ____. In addition to the above amount, certain additional sums are
due to Landlord from Tenant under the Lease, all as specifically set forth in
the Lease.
(d) Tenant has paid a security deposit under the Lease.
(e) To Tenant's knowledge there are no defaults by Landlord under the
Lease and there are no existing circumstances which, with the passage of time,
or notice, or both, would give rise to a default under the Lease.
(f) Tenant has accepted and is occupying the Premises, and Landlord has no
unperformed obligation under the Lease to construct any improvements for the
Tenant related to the Premises.
(g) Tenant has no charge, lien, claim of set-off or defense against rents
or other charges
due or to become due under the Lease or otherwise under any of the terms,
conditions, or
covenants contained therein.
(h) Tenant has received no notice from any insurance company of any
defects or inadequacies in the Premises or in any part thereof which would
adversely affect the insurability of the Premises.
(i) Except as provided in the Lease, Tenant does not have any right or
option to purchase the Premises.
(j) Except as provided in the Lease, Tenant does not have any rights or
options to renew the Lease or to lease additional space in any building owned by
the Landlord.
10. TENANT COVENANTS.
----------------
(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 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
-4-
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,
-------
any and all notices, elections, approvals, consents, demands, requests and
responses thereto ("Communications") permitted or required to be given under
this Agreement shall be in writing, signed by or on behalf of the party giving
the same, and shall be deemed to have been properly given and shall be effective
upon the earlier of receipt thereof or three (3) days after deposit thereof in
the United States mail, postage prepaid, certified with return receipt
requested, to the other party at the address of such other party set forth
hereinbelow or at such other address within the continental United States as
such other party may designate by notice specifically designated as a notice of
change of address and given in accordance herewith; provided, however, that the
time period in which a response to any Communication must be given shall
commence on the date of receipt thereof, and provided further that no notice of
change of address shall be effective with respect to Communications sent prior
to the time of receipt of such change. Receipt of Communications hereunder
shall occur upon actual delivery (whether by mail, facsimile transmission,
messenger, courier service, or otherwise) to an individual party or to an
officer, member, or general or limited partner of a party or to any agent or
employee of such party at the address of such party set forth hereinbelow,
subject to change as provided hereinabove. An attempted delivery in accordance
with the foregoing, acceptance of which is refused or rejected, shall be deemed
to be and shall constitute receipt; and an attempted delivery in accordance with
the foregoing by mail, messenger, or courier service (whichever is chosen by the
sender) which is not completed because of changed address of which no notice was
received by the sender in accordance with this provision prior to the sending of
the Communication shall also be deemed to be and constitute receipt. Any
Communication, if given to Lender, must be addressed as follows, subject to
change as provided hereinabove:
_________________________________
_________________________________
and, if given to Tenant, must be addressed as follows, subject to change as
provided hereinabove:
-5-
___________________________
___________________________
___________________________
and, if given to Landlord, must be addressed as follows, subject to change as
provided hereinabove:
Capital Automotive, L.P.
___________________________
___________________________
12. MISCELLANEOUS. This Agreement shall be binding upon and inure to the
-------------
benefit of the parties hereto and their respective heirs, legal representatives,
successors, successors-in-title and assigns. When used herein, the term
"Landlord" or "landlord" refers to Landlord and to any successor to the interest
of Landlord under the Lease.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-6-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above written.
LENDER:
Signed, sealed and delivered
in the presence of: By:
Title:
_____________________________ _______________________
Witness (CORPORATE SEAL)
TENANT:
Signed, sealed and delivered
in the presence of: By:
Title:
_____________________________ _______________________
Witness (CORPORATE SEAL)
LANDLORD:
Signed, sealed and delivered
in the presence of: By:
Title:
_____________________________ _______________________
Witness (PARTNERSHIP SEAL)
-7-
EXHIBIT A
Lease Dated __________ from ________________ to _______________ with Exhibit A
attached, all in the form attached hereto as Attachment to Exhibit A.
------------------------
-8-
County of ___________________:
SS:
State of _____________________:
This is to certify that on this ____ day of ________, 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:
-9-
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:
-10-
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:
-11-
CAPITAL AUTOMOTIVE REIT
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
January 10, 1998
Good News Salisbury, Inc.
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇:
We hereby agree that the escrow of Impositions pursuant to Section
3.04 of the Lease Agreement is irrevocably waived.
We hereby further agree that the joint and several indemnity to be
provided by ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in Section 11.2.3(ii) under
each of the Real Property Purchase Agreements shall not exceed, in the aggregate
under both Agreements together, $2,000,000, less the amounts, if any, paid by
the Sellers that counts against the obligation of ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ under Section 11.2.3 of both Agreements together.
We acknowledge that you would not enter into the Real Property
Purchase Agreement if we had not agreed to the waiver of the escrow of
Impositions and the agreement to aggregate the joint and several indemnity set
forth above. The waiver pursuant to this letter shall be binding upon us and our
successors and assigns.
Capital Automotive L.P.
By: Capital Automotive REIT,
its General Partner
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
President and Chief Executive Officer
-12-
EXHIBIT 5.2.1(M)
Capital Automotive REIT
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and
Chief Executive Officer
RE: Purchase Agreement ("Agreement") made as of __________ __, 1998
between _____________________, ____________________ and
___________________ (individually a "Seller" and collectively the
"Sellers"), Capital Automotive REIT, on its own behalf and as sole
general partner of Capital Automotive L.P. (the "Landlord")
Ladies and Gentlemen:
We have acted as special counsel to the Sellers, in connection with the entering
into of the Agreement. You have asked for our opinion concerning certain
matters relating to the Agreement.
We have examined the original (or photostatic copies) of the executed
counterparts of the Agreement.
We have also examined the following organizational documents related to the
Sellers (the "Organizational Documents"):
(i) The certificate of incorporation or certificate of limited
partnership, as the case may be, of each of the corporate or
partnership Sellers, certified by the Secretary of State of ________
on _______________;
(ii) The bylaws or limited partnership agreement, as the case may be, of
each of the corporate or partnership Sellers, certified to be true and
correct by an authorized signing officer of each of the corporate or
partnership Sellers as of ________________;
(iii) Certificates from the Secretary of State of the States of _______,
_________ and __________ indicating that each of the REIT, partnership
and Sellers is in good standing in the State of its organization or
formation; and
-13-
(iv) A certified copy of resolutions adopted by the unanimous written
consent of the board of directors of each of the corporate Sellers or
the board of directors of the general partner of each of the
partnership Sellers authorizing the execution and delivery by each of
the corporate or partnership Sellers of the Agreement.
The opinions in paragraphs 1 and 7 below are based solely on our review of the
Organizational Documents.
In reaching the opinions set forth below, we have assumed that (i) each entity
that is a party to the Agreement (other than one of the Sellers) is a duly
organized or duly formed entity and is validly existing and in good standing,
(ii) each party to the Agreements (other than one of the Sellers) has duly and
validly executed and delivered each instrument, document and agreement to which
it is a signatory and that its obligations are its legal, valid and binding
obligations, enforceable in accordance with their respective terms, (iii) each
person executing any instrument, document or agreement on behalf of any party
(other than one of the Sellers) is duly authorized to do so, and (iv) each
natural person executing any instrument, document or agreement referred to in
this letter is legally competent to do so.
In our examination of Agreement for purposes of this letter, we have assumed
that (i) all signatures on the Agreement submitted to us for examination are
genuine, (ii) any original Agreement submitted to us for examination is
authentic, and (iii) all copies of the Agreement submitted to us for examination
conform to the original.
The opinions expressed in this letter concern only the effect of the laws of the
States of _______, _______ and _______ it being understood, however, that we are
not admitted to practice law in such States. We express no opinion on the
applicability of the law of any other jurisdiction. We assume no obligation to
supplement or modify this opinion if any applicable law changes in any manner.
Based on, and in reliance upon, the foregoing, and subject to the qualifications
stated herein, it is our opinion that:
1. Each of the Sellers is a corporation or limited partnership duly
organized or formed, validly existing and in good standing under the laws of the
State of its organization or formation.
2. Each of the corporate Sellers has the requisite corporate power
to execute and deliver, and to perform its obligations under, the Agreement.
3. The general partner of each of the partnership Sellers has the
requisite corporate power and authority to own its properties and carry on its
business and to execute and deliver, and to perform its obligations under, the
Agreement, and to execute and deliver on behalf of such partnership Seller, and
to bind such partnership Seller to, the Agreement.
-14-
4. The execution and delivery by each corporate Seller of the
Agreement have been duly authorized by all necessary corporate actions of such
Seller.
5. The execution, delivery and performance of the Agreement by the
general partner of each partnership Seller on behalf of such partnership Seller
have been duly authorized by all necessary corporate actions, and the
individuals executing the Agreement on behalf of such general partner have been
duly authorized to do so.
6. The execution, delivery, and performance by each corporate Seller
of the Agreement will not violate the charter or bylaws of such Seller.
7. The execution and delivery by the general partner of each
partnership Seller, and such general partner's performance of its obligations
under, the Agreement on behalf of each partnership Seller will not violate such
partnership Seller's Organizational Documents.
8. The Agreement has been duly executed and delivered by each Seller
and is the legal, valid and binding obligation of each Seller, enforceable
against each Seller in accordance with its terms.
The opinions set forth above are subject to the following
qualifications:
(a) The validity, binding nature and enforceability of the Agreement
may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws or equitable principles relating to or affecting the
rights of creditors or other obligees generally.
(b) The validity, binding nature and enforceability of the Agreement
may be limited by applicable principles of equity, whether such principles are
applied by a court of equity or a court of law, and we express no opinion on
whether a court would grant specific performance, injunctive relief or any other
equitable remedy.
(c) A court could refuse to enforce the Landlord's remedies under the
Agreement by reason of (i) a waiver by the Landlord, (ii) unconscionable conduct
by the Landlord, (iii) the exercise of remedies by the Landlord without
providing adequate notice to one of the Sellers or its default and a reasonable
opportunity to cure the default, (iv) the court's determination that one of the
Contributors is entitled to an opportunity to be heard by the court before the
Landlord is entitled to exercise any remedies, (v) the court's determination
that a remedy is a penalty or is unconscionable, (vi) the court's determination
that the Landlord is seeking to exercise remedies with respect to a breach that
is immaterial or that does not adversely affect the Landlord or the Landlord's
security, (vii) defenses arising from the Landlord's failure to act in
accordance with the terms and conditions of the Agreement, (viii) defenses
arising as a consequence of the passage of time (e.g., laches or statutes of
limitation), (ix) defenses arising as a result of the Landlord's failure to act
in a commercially reasonable manner or in good faith, or (x) public policy
considerations.
-15-
(d) We express no opinion with respect to any of the following
provisions if they are contained in the Agreement: (i) any provisions under
which any of the Sellers waives any of their legal or equitable rights except to
the extent the waived rights are expressly waivable pursuant to a statute or
constitutional provision, (ii) any provisions entitling the Landlord to obtain
reimbursement for attorneys' fees and other costs incurred by the Landlord,
(iii) any severability provision, (iv) any provision to the effect that rights
or remedies are not exclusive, that every right or remedy is cumulative and may
be exercised in addition to or with any other right or remedy or that the
election of a particular remedy does not preclude recourse to one or more other
remedies, (v) any provision which purports to affect jurisdiction or venue of
any specified court or courts, or which purports to establish evidentiary
standards, or (vi) any provision that purports to grant the Landlord relief from
any provisions of the Bankruptcy Code.
The opinions expressed in this letter are solely for the use of the parties to
whom this letter is addressed (or the successors or assigns of the Landlord
under the Agreement). These opinions may not be relied on by any other persons,
may not be quoted in whole or in part, and may not be filed with any
governmental agency, in each case without our express prior written approval.
The opinions expressed in this letter are limited to the matters set forth in
this opinion, and no other opinions should be inferred beyond the matters
expressly stated.
Very truly yours,
-16-
EXHIBIT 5.2.1(M)
----------------
OPINION OF SELLER'S COUNSEL TO BE DELIVERED AT CLOSING
I. The Sellers are duly organized or formed, validly existing and
in good standing under the laws of their respective State's of organization or
formation.
II. Each of the Sellers has the requisite corporate, partnership or
other entity power and authority to execute and deliver, and to perform its
obligations under the Agreement and to carry on its business.
III. The execution and delivery by each of the Sellers has been duly
authorized by all necessary corporate, partnership or other entity actions and
the persons executing the Agreement have been duly authorized to do so.
IV. The execution, delivery and performance by the Company will not
violate the charter, organizational documents, bylaws, operating agreements or
partnership agreements of any of the Sellers.
V. The Agreement has been duly executed and delivered by each of
the Sellers in compliance with the laws of the State of Texas, and is the legal,
valid and binding obligation of each, enforceable against each in accordance
with its terms, except that enforcement may be limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium, or similar laws, or by
equitable principles, relating to or limiting the rights of creditors generally.
VI. To the undersigned's knowledge, without investigation, the
execution and delivery of the Agreement will not breach or otherwise violate the
provisions of or cause an event of default under any agreement, contract,
mortgage or other binding commitment or existing obligation of any of the
Sellers and will not breach or otherwise violate any permit, license, court
judgment, decree or order of any Court or any law, rule or regulation of any
governmental body to which any of Sellers are subject to or bound.
VII. To the undersigned's knowledge, without investigation, there
are no actions, suits or proceedings pending or threatened against any of the
Sellers or the Properties that affect the Properties or would materially affect
the Sellers ability to perform under the Agreement or which seeks to affect the
enforceability of the Agreement.
VIII. To the undersigned's knowledge, without investigation, no
Seller is in default or has received any notice of default with respect to any
judgment, order, writ, injunction or decree or any lease, contract, agreement,
commitment, instrument or obligation to which it is a party or by which the
Property is bound or may be subject that affects the Property or could
materially affect any Seller's ability to perform its obligations under the
Agreement.
-17-
IX. To the undersigned's knowledge, all consents, approvals, or
authorization required by any third party or governmental authority in
connection with the Sellers' obligations under the Agreement have been properly
obtained and Sellers have complied with all applicable provisions of law
requiring any filing, registration or qualification with any governmental
authority in connection with the execution and delivery of the deeds to the
Properties.
SCHEDULE 1.2 (PAGE 1 OF 3)
Seller-Defined Reference
----------------------------------------
Property Tax Account #
Number Name Street Address Tax Map, Grip, Parcel, Lots
------ --------------- ----------------------- ---------------------------
P1 Pontiac-Buick ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇-▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ TM ▇▇, ▇ ▇▇, ▇ ▇▇▇
-▇-
▇▇▇▇▇▇▇▇ 1.2 (PAGE 2 OF 3)
Initial
Base
Annual Capital- Purchase
Rent ization Price for
Amount Rate Property
------- -------- ---------
154,080 11.50% 1,339,826
------- ---------
154,080 1,339,826
======= =========
-3-
SCHEDULE 1.2 (PAGE 3 OF 3)
Principal
Properties Encumbered Balance
---------------------------------
Outstanding
Number Name Lender @ 12-31-97
------ --------- -------------- ----------
P1 Pontiac-Buick First National Bank
of Maryland
$330,355.01
______ ____________
330,355.01
===========
-4-
SCHEDULE 2.1
Property
Numbers Present Manage?
of Leased Annual Lease Maintain?
Tenant Name & Address Properties Rent Term Occupy?
--------------------- ---------- -------- -------- ---------
The Price Organization & P1 154,080 15 years Occupy
Price Buick-Pontiac, Inc. ending
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
______
154,080
=======
-5-
SCHEDULE 7.4
Seller's Liabilities and Agreements
-----------------------------------------------------------
1. Unsecured payable to Good News Salisbury, Inc. for
leasehold improvements constructed on some of the
Properties by Good News Salisbury, Inc.
201,003
=======
2. Lease with Price Organization dated December 10,
1991
NOTE: This listing of contracts, agreements, liabilities, claims and
----
obligations of the Seller omits the secured debt shown in Schedule
1.2, which is contemplated to be paid off at Closing.
-6-
SCHEDULE 7.8
[None]
-7-
SCHEDULE 7.11
Statement: Seller represents that all Properties are zoned C-2, which permits
---------
use of the Properties for the operation of vehicle dealerships and related
operations as they are currently used.
Seller-Defined Reference
-------------------------------------
Property Tax Account # Zoning
Number Name Street Address Tax Map, Grip, Parcel, Lots Classification
---------- ------------- ----------------------- --------------------------- --------------
P1 Pontiac-Buick ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇. 09-014985 C-2
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ TM 29, ▇ ▇▇, ▇ ▇▇▇
-▇-
▇▇▇▇▇▇▇▇ 7.13.4
[None]
-9-
SCHEDULE 7.13.5(A)
To the best of the Seller's knowledge, the Seller has not treated, disposed of,
or arranged for the disposal of hazardous wastes or materials on or from the
Properties.
To the best of the Seller's knowledge, Good News Salisbury, Inc. and its
affiliates, as former tenants of the Seller, have not treated or disposed of
hazardous wastes or materials on the Properties. Using third party vendors,
Good News Salisbury, Inc. and its affiliates have arranged for the disposal of
certain wastes and materials used in the ordinary course of business. Good News
Salisbury, Inc. is not certain as to how or where these third party vendors
disposed of these wastes and materials. At the request of the Company or
Partnership, vendor manifests documenting the removal of such wastes and
materials from the Properties shall be available for inspection by the Company
and/or Partnership. Good News Salisbury, Inc. and its affiliates stored certain
wastes and materials in both aboveground and underground storage tanks. All
underground storage tanks have subsequently been removed. All existing
aboveground storage tanks are listed in Schedule 7.13.5(b).
The Seller is unable to represent how the Price Organization treats or disposes
of its wastes.
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SCHEDULE 7.13.5(B)
Statement 1: To the best of the Seller's knowledge, all underground storage
-----------
tanks on the Properties have been removed.
To the best of the Seller's knowledge, the following is a listing of all above
ground storage tanks on the Properties.
Seller's
Property Tank Capacity
Numbers Name Ref. # Contents (in gallons)
---------- ------------- -------- ---------------- ------------
P1 Buick-Pontiac T16 10W-30 motor oil 500
T17 waste oil 275
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SCHEDULE 7.13.5(C)
The Seller is not aware of asbestos inside or a part of any buildings on the
Properties. The Seller has not conducted investigations designed to identify
the presence of asbestos.
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SCHEDULE 7.13.5(F)
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (# ▇▇▇▇▇▇▇▇[▇▇])
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SCHEDULE 7.14
All insurance is covered under a single policy (# 133660M) with Universal
Underwriters Insurance Company.
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SCHEDULE 7.17
1. Lease with Price Organization/Price Buick - Pontiac, Inc.
Note 1: The Seller is unable to make representations about the
------
agreements, contracts, licenses and permits of the Price Organization
and Price Buick-Pontiac, Inc.
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SCHEDULE 7.19
Outstanding
Balance as of
Seller's Liabilities other than Mortgages 12-31-97
------------------------------------------------------------------ --------
Unsecured payable to Good News Salisbury, Inc. for leasehold
improvements constructed on some of the Properties by Good News
Salisbury, Inc.
Principal 189,625
Accrued Interest 11,378
Deposit on Price Organization lease 16,000
--------
Total Seller Liabilities other than Mortgages 217,003
========
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