EXHIBIT 10.36
LEASE AGREEMENT
BY AND BETWEEN
CAR CHAUNCEY L.L.C.
(AS LANDLORD)
AND
UAG REALTY, LLC
(AS TENANT)
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..............................................1
ARTICLE II PREMISES.................................................2
ARTICLE III LEASE TERM...............................................3
ARTICLE IV BASE RENT................................................3
ARTICLE V NET LEASE; IMPOSITIONS; UTILITIES AND SERVICES...........4
ARTICLE VI ACCEPTANCE/USE OF PREMISES...............................5
ARTICLE VII ASSIGNMENT AND SUBLETTING................................9
ARTICLE VIII MAINTENANCE AND REPAIRS.................................10
ARTICLE IX ALTERATIONS.............................................11
ARTICLE X REPRESENTATIONS, WARRANTIES AND COVENANTS OF TENANT.....14
ARTICLE XI GUARANTY................................................17
ARTICLE XII [INTENTIONALLY OMITTED].................................17
ARTICLE XIII INSPECTION..............................................17
ARTICLE XIV INSURANCE...............................................17
ARTICLE XV LIABILITY AND INDEMNIFICATION...........................19
ARTICLE XVI DAMAGE OR DESTRUCTION; RESTORATION OBLIGATIONS..........21
ARTICLE XVII CONDEMNATION ...........................................21
ARTICLE XVIII DEFAULT.................................................23
ARTICLE XIX BANKRUPTCY..............................................26
ARTICLE XX SUBORDINATION...........................................27
ARTICLE XXI END OF LEASE TERM; HOLDING OVER.........................29
ARTICLE XXII QUIET ENJOYMENT.........................................30
ARTICLE XXIII OPTIONS TO EXTEND LEASE TERM............................30
ARTICLE XXIV FIRST RIGHT TO NEGOTIATE................................31
ARTICLE XXV GENERAL PROVISIONS......................................32
ARTICLE XXVI REIT REPRESENTATIONS, WARRANTIES AND COVENANTS..........36
EXHIBIT A - Legal Description of Premises
EXHIBIT B - Form of Certificate Confirming Lease Commencement Date
EXHIBIT C - Base Rent
EXHIBIT D - Construction Documents
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GLOSSARY
TERM SECTION
---- -------
Affiliate.................................................................. 1.1
Additional Rent.............................................................4.3
Adjusted Debt to Normalized EBITDA Ratio..................................10(c)
Aggregate Rent Obligations............................................... 10(b)
Alterations................................................................ 9.1
Assign and Assignment...................................................... 7.1
Audited Annual Statements................................................ 10(d)
Awards.....................................................................16.3
Bankruptcy Code........................................................... 18.1
Base Rent.................................................................. 1.2
Business Day............................................................. 23.23
Case...................................................................... 18.2
Change in Control...........................................................1.3
Company....................................................................24.1
Code.......................................................................24.2
CPI........................................................................ 4.2
Default Rate.............................................................. 18.6
Effective Date......................................................... Recital
Environmental Default................................................... 6.3(b)
Environmental Law....................................................... 6.3(a)
Event of Insolvency....................................................... 18.1
Event of Default.......................................................... 17.1
Extra Rent................................................................ 17.2
First Renewal Term........................................................ 22.1
Fair Market Rent.......................................................... 22.2
Franchise Agreements..................................................... 10(f)
GAAP..................................................................... 10(d)
Guarantor.................................................................. 1.6
Guaranty.................................................................. 11.1
Hazardous Materials..................................................... 6.3(a)
Impositions............................................................... 5.3
Insolvency Laws........................................................... 18.1
Internal Statements...................................................... 10(d)
Invitees................................................................... 8.1
Landlord............................................................... Recital
Landlord's Income Taxes.................................................... 5.3
Landlord Notice Address.................................................... 1.7
Late Charge................................................................ 4.5
Laws....................................................................... 6.2
Lease.................................................................. Recital
Lease Commencement Date.................................................... 1.8
Lease Term................................................................. 1.9
Lease Year................................................................ 1.10
Lender.................................................................... 1.11
Managing Member........................................................... 19.1
Mortgage.................................................................. 1.12
Partial Taking............................................................ 16.2
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Premises..................................................................1.13
Purchase Agreement.........................................................1.8
Purchase Price............................................................1.14
Base Rent Adjustment Date.................................................1.15
REIT......................................................................24.1
Renewal Notice............................................................22.1
Renewal Options...........................................................1.16
Renewal Terms............................................................ 22.1
Rent Coverage Ratio..................................................... 10(b)
Second Renewal Term.......................................................22.1
Sublet and Sublease....................................................... 7.1
Tenant.................................................................Recital
Tenant Notice Address.................................................... 1.17
Tenant Parties...........................................................23.15
Termination Taking........................................................16.1
Total Taking..............................................................16.1
Trustee.................................................................. 18.2
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LEASE AGREEMENT
THIS LEASE AGREEMENT (this "LEASE") is dated as of the 11th day of
September, 2002 ("EFFECTIVE DATE"), by and between CAR CHAUNCEY L.L.C., a
Delaware limited liability company ("LANDLORD"), and UAG REALTY, LLC, a Delaware
limited liability company ("TENANT").
ARTICLE I
DEFINITIONS
The terms below shall have the following definitions when used herein:
1.1 Affiliate. Any person or entity that (a) directly or indirectly
controls, is controlled by, or is under common control with, Landlord or Tenant,
as applicable or (b) 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 an entity or equity securities or other equity
interests representing at least five percent (5%) of the outstanding equity
securities or interests in any entity.
1.2 Base Rent. The Base Rent as determined in accordance with Article
IV below, and as escalated in accordance with Section 4.2 below.
1.3 Change in Control. Any event resulting in a dissolution of Tenant
or Guarantor; or any transaction, or series of transactions, pursuant to which
all or substantially all of the assets of Guarantor are sold.
1.4 [Intentionally Omitted].
1.5 [Intentionally Omitted].
1.6 Guarantor. United Auto Group, Inc., a Delaware corporation, and
from time to time, affiliated subtenants.
1.7 Landlord Notice Address. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Fax: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Portfolio Manager, with a copy
to Winston & ▇▇▇▇▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇.
1.8 Lease Commencement Date. The date on which Landlord funds the
purchase price for the Premises at the closing, pursuant to that certain
Purchase Agreement (the "PURCHASE AGREEMENT") of even date herewith by and
between Landlord or its Affiliate, as purchaser, and Tenant or its Affiliate as
seller.
1.9 Lease Term. Fifteen (15) years. The Lease Term shall also include
any properly exercised renewal terms as described in Article XXIII below.
1.10 Lease Year. A period of twelve (12) consecutive months commencing
on the first day of the month in which the Lease Commencement Date occurs, and
each successive twelve (12) month period thereafter.
1.11 Lender. Any holder of any Mortgage.
1.12 Mortgage. All mortgages, deeds of trust, ground leases, or other
security instruments that may now or hereafter encumber the Premises.
1.13 Premises. Each piece or parcel of land located in North
Scottsdale, Maricopa County, Arizona, and in Phoenix, Arizona, described on
Exhibit A attached hereto and made a part hereof, together with all
improvements, fixtures and other items of real property now or hereafter located
thereupon and all appurtenances, rights, privileges, easements and other
property interests existing thereon and benefiting, belonging or pertaining
thereto, subject, however, to all liens, encumbrances, restrictions, agreements,
and other matters of record.
1.14 Purchase Price. $100,000,000.
1.15 Base Rent Adjustment Dates. The first day of the sixth (6th) Lease
Year, the eleventh (11th) Lease Year, the sixteenth (16th) Lease Year, the
twenty-first (21st) Lease Year, the twenty-sixth (26th) Lease Year, the
thirty-first (31st) Lease Year, the thirty-sixth (36th) Lease Year, the
forty-first (41st) Lease Year, the forty-sixth (46th) Lease Year and the
fifty-first (51st) Lease Year.
1.16 Renewal Options. Four (4) options for ten (10) years each, as more
particularly described in Article XXIII below.
1.17 Tenant Notice Address. c/o United Auto Group, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Fax: ▇▇▇-▇▇▇-▇▇▇▇.
ARTICLE II
PREMISES
2.1 Lease of Premises. Tenant leases the Premises from Landlord for the
Lease Term and upon the conditions and covenants set forth in this Lease.
2.2 Contingency. Notwithstanding anything to the contrary contained in
this Lease, in the event this Lease is executed prior to the conveyance of the
Premises to Landlord, the parties acknowledge that the effectiveness of this
Lease is contingent upon such conveyance and, in the event such conveyance fails
to occur, this Lease shall be void and without force or effect.
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ARTICLE III
LEASE TERM
All of the provisions of this Lease shall be in full force and effect
from and after the Effective Date, subject to Section 2.2 above. The term of
this Lease shall commence on the Lease Commencement Date and continue for the
Lease Term. Landlord may provide Tenant with a certificate in the form of
Exhibit B attached hereto confirming the Lease Commencement Date.
ARTICLE IV
BASE RENT
4.1 Base Rent. The Base Rent shall be determined in accordance with the
provisions of Exhibit C attached hereto.
4.2 Base Rent Escalation. The Base Rent shall escalate in accordance
with the provisions of Exhibit C attached hereto.
4.3 Additional Rent. Except as otherwise provided in this Lease, any
additional rent or other sum owed by Tenant to Landlord under this Lease (other
than Base Rent), and any cost, expense, damage or liability incurred by Landlord
for which Tenant is liable, shall be considered "ADDITIONAL RENT", and shall be
paid by Tenant no later than ten (10) days after the date Landlord notifies
Tenant of the amount thereof.
4.4 Payment of Base Rent and Other Sums Due. All sums payable by Tenant
under this Lease, including but not limited to Base Rent, Additional Rent or
otherwise, shall be paid to Landlord in legal tender of the United States,
without setoff, deduction or demand, by direct deposit wire transfer of
immediately available funds to the following bank account, or to such other
party or address as Landlord may designate in writing:
Bank of America
ABA# ▇▇▇▇▇▇▇▇▇
For credit to Capital Automotive L.P., Operating
Account # 004112955706
Landlord's acceptance of Base Rent or Additional Rent after it shall have become
due and payable shall not excuse a delay upon any subsequent occasion or
constitute a waiver of any of Landlord's rights hereunder.
4.5 Late Payment. If any amount of Base Rent or Additional Rent is not
received by Landlord within five (5) days after the date such payment is due
(without regard to any grace period specified in Section 17.1), then in addition
to paying the amount then due, Tenant shall pay to Landlord, without notice or
demand, a late charge ("LATE CHARGE") equal to five percent (5%) of such
payment. In addition, such payment and such Late Charge shall bear interest at
the Default Rate from the date such payment or Late Charge, respectively, became
due to the date of payment thereof by Tenant; provided, however, that nothing
contained herein shall be construed as permitting Landlord to charge or receive
interest in excess of the maximum rate then allowed
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by law. Payment of such Late Charge will not excuse the untimely payment of Base
Rent. Any Late Charge shall constitute Additional Rent.
ARTICLE V
NET LEASE; IMPOSITIONS; UTILITIES AND SERVICES
5.1 Net Lease. Notwithstanding anything to the contrary contained
herein, this Lease shall be an absolute net lease, so that this Lease shall
yield all Base Rent payable hereunder as an absolutely net return to Landlord.
Accordingly, with the sole exception of Landlord's Income Taxes, Tenant shall
pay all taxes, insurance, ground rents, easement charges, association fees, and
other costs, expenses and obligations of every kind and nature whatsoever
relating to the Premises, including without limitation, costs with respect to
the ownership and operation thereof, which accrue prior to the expiration of the
Lease Term, and any and all fees or costs incurred by Landlord or Tenant in
connection with the annexation of the Premises by the City of Phoenix. Tenant's
obligation to pay all amounts described in this Section 5.1 shall survive the
expiration or earlier termination of the Lease Term.
5.2 Payment of Impositions. On or before the Lease Commencement Date,
Tenant shall notify the appropriate taxing authorities to deliver directly to
Tenant all statements and invoices for Impositions, effective as of the Lease
Commencement Date. Tenant shall pay all Impositions at least fifteen (15) days
prior to the date they become due. As soon as practicable after the payment
thereof, but in no event less than fifteen (15) days prior to the date they
become due, Tenant shall deliver to Landlord written evidence of each such
payment. To the extent that any such Impositions are imposed upon Landlord, at
Landlord's option, Tenant shall either pay such Impositions directly to the
taxing authority or reimburse Landlord for such Impositions. If the Lease Term
expires on a day other than the last day of a calendar year, then Tenant's
liability for Impositions for such calendar year shall be apportioned by
multiplying the amount of Impositions for the full calendar year by a fraction,
the numerator of which is the number of days during such calendar year falling
within the Lease Term, and the denominator of which is three hundred sixty-five
(365).
5.3 Definition of Impositions. The term "IMPOSITIONS" shall mean,
collectively, taxes, including without limitation, any present or future real
estate taxes, all taxes or other impositions that are in the nature of or in
substitution for real estate taxes, vault and/or public space rentals, business
district or arena taxes, business or occupation, single business, transaction,
privilege, franchise, capital stock, excise, or profits taxes, as well as
special user fees, license fees, permits, improvement bonds, levies, improvement
district charges, governmental charges, rates, and assessments, general,
special, ordinary or extraordinary, foreseen and unforeseen, that are imposed
upon Landlord, rent, Tenant or the Premises, fixtures, machinery, equipment or
systems used in connection with the Premises or the business being operated on
the Premises, including without limitation, taxes in the nature of a sales, use,
gross receipts or other tax or levy on the rents payable by Tenant including,
without limitation, the taxes imposed by A.R.S. sec. 42-5069 and State of
Arizona Model City Tax Code Section 445. Impositions shall not include any
federal, state, or local tax imposed on Landlord that is based upon Landlord's
net income ("LANDLORD'S INCOME TAXES"), except to the extent levied expressly in
lieu of a tax described in the first sentence of this Section 5.3.
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5.4 Contest of Impositions. Tenant, at its sole expense, upon at least
ten (10) days prior written notice to Landlord but without Landlord's consent,
and using legal counsel reasonably acceptable to Landlord, shall have the right
to contest the amount or validity of any Imposition by diligently conducting in
good faith an appropriate legal or administrative proceeding, provided that the
following conditions are met: (i) the Impositions are paid or the postponement
of payment of Impositions, without penalty, as part of such proceeding is
permitted by applicable law, (ii) the Premises shall not, by reason of such
postponement of payment, or the initiation of such proceeding, be subject to
forfeiture, sale, or loss, (iii) such proceedings shall not impact or interfere
with the use or occupancy of the Premises, (iv) such proceedings shall not
affect or interfere with Tenant's continued payment of Base Rent or Additional
Rent; and (v) pursuing the contest of Impositions shall not in any way expose
Landlord to any criminal or civil liability, penalty or sanction. Tenant further
agrees that each such contest shall be promptly and diligently prosecuted to a
final conclusion, and Tenant shall pay all judgments, decrees and costs
(including any costs incurred by Landlord) in connection with any such contest
and shall, promptly after the final determination of such contest, fully pay and
discharge the amounts which shall be levied. Tenant shall be entitled to any
refund received with respect to Impositions paid by Tenant.
5.5 Assessments on Tenant's Business and Personalty. Tenant shall pay
before delinquency any business, rent, sales, franchise or other taxes or fees
that are now or hereafter levied, assessed or imposed upon Tenant's use,
operation, or occupancy of the Premises, the conduct of Tenant's business at the
Premises, or Tenant's equipment, fixtures, furnishings, inventory or personal
property. If any such tax or fee is enacted or altered so that such tax or fee
is levied against Landlord or so that Landlord is responsible for collection or
payment thereof, then Tenant shall pay to Landlord as Additional Rent the amount
of such tax or fee.
5.6 Utilities and Services. Tenant, at its own expense and risk, shall
arrange with the appropriate utility companies and service providers for the
provision to the Premises of water, sewer, trash collection, electricity, gas,
telephone, window washing, landscaping, snow removal, and all other utilities
and services desired by Tenant. On or before the Lease Commencement Date, Tenant
shall notify the appropriate utility and service providers to deliver directly
to Tenant all statements and invoices for the amounts for which Tenant is
responsible pursuant to this Section 5.6, effective as of the Lease Commencement
Date. Tenant shall pay directly to the appropriate utility companies and service
providers all charges for all utilities consumed in and services performed for
the Premises, as and when such charges become due and payable. To the extent the
invoices for any such utilities and services are received by Landlord, at
Landlord's option, Tenant shall either pay the charge for such utilities and
services directly to the utility or service provider or reimburse Landlord for
such charges.
ARTICLE VI
ACCEPTANCE/USE OF PREMISES
6.1 Acceptance of Premises In As-Is Condition. TENANT ACKNOWLEDGES THAT
IT IS COMPLETELY FAMILIAR WITH THE PREMISES AND LEGALLY PERMISSIBLE USES
THEREON. ACCORDINGLY, TENANT ACCEPTS POSSESSION OF THE PREMISES IN ITS "AS IS"
CONDITION AS OF THE LEASE COMMENCEMENT
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DATE. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PREMISES, EITHER AS TO ITS FITNESS FOR USE, ITS DESIGN OR
CONDITION, OR ANY PARTICULAR USE OR PURPOSE TO WHICH THE PREMISES MAY BE FIT, OR
OTHERWISE, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, OR THE
EXISTENCE OF ANY DEFECTS, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS
ARE BORNE BY TENANT.
6.2 Use of Premises. Tenant shall use and occupy the Premises (i) only
for the purposes for which the Premises is being used as of the Effective Date
and/or for any other franchised retail motor vehicle sales or related purposes,
(ii) for any retail use in accordance with applicable zoning and in accordance
with the Declaration (as defined below), and (iii) for no other purpose. Tenant
shall not use or occupy the Premises for any unlawful purpose, or in any manner
that will violate the certificate(s) of occupancy for the Premises or that will
constitute waste or nuisance. Tenant shall, at Tenant's expense, comply with all
present and future laws (including, without limitation, the Americans with
Disabilities Act), ordinances (including without limitation, zoning ordinances
and land use requirements), regulations, orders, recommendations, decisions, and
decrees now or hereafter promulgated (including, without limitation, those made
by any public or private agency), as any of the same may be amended from time to
time (collectively, "LAWS") concerning Tenant, the use, occupancy and condition
of the Premises and the business being conducted thereon, and all machinery,
equipment, furnishings, fixtures and improvements on or used in connection with
the Premises. If any such Law requires an occupancy or use permit or license for
the Premises or the operation of the business conducted therein, then Tenant
shall obtain and keep current such permit or license at Tenant's expense. Tenant
shall deliver to Landlord, promptly upon request, all licenses, permits and
other certificates evidencing compliance of Tenant and the Premises with Laws.
If any such Law requires any modification to the Premises, Tenant shall perform
such alterations, at its sole cost and expense, in accordance with the terms and
conditions of Article IX below. Use of the Premises is subject to all covenants,
conditions, easements and restrictions of record, including but not limited to
that certain Declaration of Conditions, Covenants, Restrictions and Repurchase
Rights effective as of December 5, 2000 and recorded in the Official Records of
the Maricopa County Recorder's Office as document number 2000-0933327 (the
"DECLARATION"), and Tenant shall comply fully with all of the same. Tenant shall
indemnify Landlord from all losses suffered as a result of any default or
failure to comply with the Declaration including, without limitation, a
repurchase of the Premises pursuant to the Declaration. Such losses shall
include, but not be limited to, the amount, if any, by which (a) the aggregate
of (i) the price Landlord paid for the Premises plus all out of pocket expenses
incurred by Landlord in connection with the acquisition and financing of the
Premises, (ii) all expenses incurred by Landlord in connection with such
repurchase, including any prepayment fees or expenses for any loan securing the
Premises, and (iii) a lease termination fee of $500,000, exceeds (b) the net
proceeds paid to Landlord in connection with a repurchase of the Premises.
Tenant shall continuously, diligently and actively conduct its business in the
Premises in a first-class and reputable manner. Tenant shall not amend, modify
or terminate that certain Development and Escrow Agreement dated December 5,
2000 by and between UAG West, Inc., predecessor in interest to Tenant, and
WestRanch Partners, L.L.C. (the "DEVELOPMENT AGREEMENT"), absent Landlord
consent. Furthermore, with respect to the Development Agreement, Tenant shall
(i) not waive any of Tenant's rights or remedies, (ii) shall require full and
complete compliance with the terms and conditions thereof
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by WestRanch, and (iii) shall diligently pursue enforcement of any and all
rights and remedies of Tenant thereunder.
6.3 Hazardous Materials.
(a) Tenant shall not cause or permit any Hazardous Materials (as
hereinafter defined) to be generated, used, released, stored or disposed of in
or about the Premises, provided that Tenant may use, store and dispose of
reasonable quantities of Hazardous Materials commonly used in motor vehicle
retail or related business operations as may be reasonably necessary for Tenant
to conduct such operations, provided such Hazardous Materials are used, stored
and disposed of in accordance with all Environmental Laws (as hereinafter
defined) and commercially reasonable standards prevailing in the motor vehicle
retail and related industries. At the expiration or earlier termination of this
Lease, Tenant shall surrender the Premises to Landlord free of Hazardous
Materials and in compliance with all Environmental Laws, without regard to
whether any Hazardous Materials or violations of Environmental Laws existed at
the Premises as of the Lease Commencement Date. "HAZARDOUS MATERIALS" means (i)
asbestos and any asbestos containing material, (ii) any substance that is then
defined or listed in, or otherwise classified pursuant to, any Environmental Law
or any other applicable Law as a "hazardous substance," "hazardous material,"
"hazardous waste," "infectious waste," "toxic substance," "toxic pollutant" or
any other formulation intended to define, list, or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or Toxicity Characteristic
Leaching Procedure (TCLP) toxicity, and (iii) any petroleum product, cleaning
solvents, polychlorinated biphenyls, urea formaldehyde, radon gas, radioactive
material (including any source, special nuclear, or by-product material),
medical waste, chlorofluorocarbon, lead or lead-based product, and any other
substance whose presence could be detrimental to the Premises or hazardous to
health or the environment. "ENVIRONMENTAL LAW" means any present and future
Laws, permits and other requirements or guidelines of governmental authorities
applicable to the Premises and relating to the environment and environmental
conditions, industrial hygiene, public health or safety, or to any Hazardous
Material (including, without limitation, CERCLA, 42 ▇.▇.▇.▇▇. 9601 et seq., the
Resource Conservation and Recovery Act of 1976, 42 U.S.C.ss.6901 et seq., the
Hazardous Materials Transportation Act, 49 ▇.▇.▇.▇▇. 1801 et seq., the Federal
Water Pollution Control Act, 33 U.S.C.ss.1251 et seq., the Clean Air Act, 33
U.S.C.ss.7401 et seq., the Toxic Substances Control Act, 15 ▇.▇.▇.▇▇. 2601 et
seq., the Safe Drinking Water Act, 42 U.S.C.ss.300f et seq., the Emergency
Planning and Community Right-To-Know Act, 42 U.S.C.ss.1101 et seq., the
Occupational Safety and Health Act, 29 U.S.C.ss.651 et seq., and any so-called
"Super Fund" or "Super Lien" law, any Law requiring the filing of reports and
notices relating to Hazardous Materials, environmental laws administered by the
Environmental Protection Agency, and any similar state and local Laws.
(b) Tenant shall give Landlord immediate verbal notice, and follow-up
within seventy-two hours with a written notice, of any actual or threatened
Environmental Default or event which if not cured as required below, would
constitute an Environmental Default. An "ENVIRONMENTAL DEFAULT" means any of the
following: a violation of an Environmental Law; a release, spill, discharge or
detection of a Hazardous Material on or from the Premises (regardless of whether
or not a reporting requirement exists) or an environmental condition requiring
responsive action, provided however, that the occurrence of any of the foregoing
events on or
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from the Premises not posing a risk to human health, safety or welfare or the
Premises shall not constitute an Environmental Default if such occurrence has
been cured within thirty (30) days of the date of the occurrence, or if such
event cannot be cured within such period of thirty (30) days, for such longer
time as reasonably necessary if Borrower has commenced to cure such event within
said period of thirty (30) days and is actively, diligently and in good faith
proceeding with continuity to remedy such event, but in no event shall such cure
period be longer than one hundred twenty (120) days, or such longer period as
agreed to by Landlord in writing. Landlord shall have the right to monitor any
actions taken by Tenant in connection with the foregoing. Upon any Environmental
Default, in addition to all other rights available to Landlord under this Lease,
at law or in equity, Landlord shall have the right but not the obligation, at
its option, (i) to require Tenant, at Tenant's sole cost and expense, to cure
such Environmental Default, in accordance with all Environmental Laws, and to
the satisfaction of Landlord, in which event Landlord shall have the right to
supervise and approve any actions taken by Tenant to address the Environmental
Default, or (ii) to perform, at Tenant's sole cost and expense, any lawful
action necessary to address the same, in which event Tenant shall pay the costs
thereof to Landlord as Additional Rent.
(c) Landlord, at its expense except as otherwise provided below, shall
have the right, but not the obligation, to conduct periodic audits of the
Premises (including without limitation, the air, soil, surface water and
groundwater at or near the Premises) and Tenant's compliance with Environmental
Laws with respect thereto, upon reasonable advance notice to Tenant, taking care
to avoid causing unreasonable disruption of the operations at, or damage to, the
Premises. If Landlord reasonably determines that remediation or removal,
alterations, improvements or replacements of equipment on the Premises are
necessary in connection with any such compliance with all Environmental Laws,
Landlord shall have the right to require Tenant to pay the cost of the audit,
and the right, but not the obligation, (i) to require Tenant, at Tenant's
expense, to perform the same or (ii) to perform the same, at Tenant's sole cost
and expense, in which event Tenant shall pay the costs thereof to Landlord as
Additional Rent. If any Lender or governmental agency shall require testing at
or near the Premises and Landlord incurs expenses in complying with such
requirement, then Tenant shall pay to Landlord the reasonable costs therefor as
Additional Rent.
(d) As a material consideration for Landlord's willingness to enter
into this Lease, Tenant hereby waives, and releases Landlord and its Affiliates,
partners, officers, directors, members, trustees, employees, agents and Lenders
from any and all claims for damage, injury or loss (including without
limitation, claims for the interruption of or loss to business) which relate to
any Environmental Default, whether occurring prior or subsequent to the Lease
Commencement Date. Promptly upon request, Tenant and Guarantor shall execute
from time to time affidavits, representations and similar documents concerning
Tenant's best knowledge and belief regarding the presence of Hazardous Materials
at the Premises.
(e) Tenant's obligations pursuant to this Section 6.3 shall survive the
expiration or earlier termination of this Lease. If any required actions by
Tenant pursuant to this Section 6.3 continue beyond the expiration or earlier
termination of this Lease, Tenant shall pay to Landlord an amount equal to the
Base Rent and Additional Rent that would have been payable under this Lease for
the period of such required actions in the absence of the expiration or earlier
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termination of this Lease, to the extent that Landlord cannot relet the
Premises, or a portion thereof, at a then market rental rate.
ARTICLE VII
ASSIGNMENT AND SUBLETTING
7.1 Landlord's Consent Required. Subject to all terms and conditions of
this Article VII, Tenant may assign, transfer, mortgage, or otherwise encumber
all of Tenant's interest in the Lease or in the Premises (collectively, "ASSIGN"
or "ASSIGNMENT") or sublet all or any part of Tenant's interest in the Lease or
in the Premises ("SUBLET" or "SUBLEASE"), without Landlord's prior written
consent, provided that (i) Guarantor maintains its guaranty obligations, (ii)
each Tenant affiliated subtenant under a Sublease executes a guaranty agreement
in form and content satisfactory to Landlord, guaranteeing the obligations of
Tenant under the Lease, (iii) each Sublease requires any non-affiliated
subtenant to deliver to Landlord the financial information required of
subtenants by Article X(d) below, and (iv) the Sublease complies with the
Declaration, including but not limited to Section 5.5 thereof. If at any time
during the Lease Term Tenant desires to Assign its entire interest or Sublease
all or part of this Lease or the Premises, then Tenant shall give not less than
thirty (30) days prior written notice to Landlord containing the following
information: the identity of the proposed assignee or subtenant and a
description of its business; the terms of the proposed Assignment or Sublease;
the commencement date of the proposed Assignment or Sublease; the area proposed
to be Assigned or Sublet; and financial statements for the prior five (5) years
of such proposed assignee or subtenant. Notwithstanding the first sentence of
this Section 7.1, Landlord consent shall be required for any Assignment of all
of Tenant's interest in the Lease pursuant to which the Guarantor is to be
released from its guaranty obligations. Provided that no Event of Default
exists, Landlord shall not unreasonably withhold its consent to any such
proposed Assignment of all of Tenant's interest in the Lease provided that
Landlord determines, in its sole and absolute discretion:
(a) the franchisor, with respect to the business being
conducted at the Premises, or a new franchisor reasonably acceptable to
Landlord, has approved the proposed assignee, if applicable;
(b) the use of the Premises pursuant to such Assignment is in
compliance with Article VI hereof;
(c) the financial condition of the proposed assignee is at
least as good as that of the original Tenant and Guarantor, taken as a whole,
under this Lease as of the Effective Date;
(d) the reputation and experience of the proposed assignee is
satisfactory to Landlord;
(e) such Assignment does not violate the terms of any
Mortgage, and if required, any Lender whose consent is required has consented to
the proposed Assignment; and
(f) all documentation is approved by Landlord.
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7.2 Additional Terms and Conditions. Neither Landlord's consent to any
Assignment nor Landlord's collection or acceptance of rent from any assignee or
subtenant, shall be construed as (i) waiving or releasing Tenant from any of its
liabilities or obligations under this Lease as a principal, (ii) waiving or
releasing Guarantor from its obligations as a guarantor or surety, or (iii) as
relieving Tenant or any assignee from the obligation of obtaining Landlord's
prior written consent to any subsequent Assignment. As security for this Lease,
Tenant hereby assigns to Landlord the rent due from any assignee or subtenant of
Tenant. For any period during which there exists an Event of Default hereunder,
Tenant hereby authorizes each such assignee or subtenant to pay said rent
directly to Landlord upon receipt of notice from Landlord specifying same.
Landlord's collection of such rent shall not be construed as an acceptance of
such assignee or subtenant as a tenant.
7.3 Landlord's Expenses. Tenant shall pay all of Landlord's reasonable
out-of-pocket costs and expenses incurred in connection with Landlord's review
and administration of each proposed Assignment, including without limitation
attorneys', accountants', and other consultants' fees. In addition, if Landlord
approves an Assignment of the entire Premises, Tenant shall pay a fee to
Landlord (in part to defray internal costs and expenses) in an amount equal to
one-half of one percent (0.5%) of the consideration paid by Landlord to acquire
the Premises.
7.4 Effect on Event of Default. Landlord's written consent to any
Assignment shall not constitute a representation that no default then exists
under this Lease of the obligations to be performed by Tenant, nor shall such
consent be deemed a waiver of any then existing default. Neither a delay in the
approval or disapproval of such Assignment, nor the acceptance of rent, shall
constitute a waiver or estoppel of Landlord's right to exercise its remedies for
the breach of any of the terms or conditions of this Lease.
7.5 Continuation of Restrictions and Obligations. All restrictions and
obligations imposed pursuant to this Lease on Tenant shall be deemed to extend
to any subtenant, assignee, licensee, concessionaire or other occupant or
transferee, and Tenant shall cause such person or entity to comply with such
restrictions and obligations. Any assignee shall be deemed to have assumed all
such obligations as if such assignee had originally executed this Lease and at
Landlord's request shall execute promptly a document confirming such assumption.
Each Sublease is subject to the condition that if the Lease is terminated or
Landlord succeeds to Tenant's interest in the Premises by voluntary surrender or
otherwise, at Landlord's option, the Sublease shall terminate, or not terminate,
as a matter of law and, if not terminated, the subtenant shall be bound to
Landlord for the balance of the term of such Sublease and shall attorn to and
recognize Landlord as its landlord under the then executory terms of such
Sublease.
ARTICLE VIII
MAINTENANCE AND REPAIRS
8.1 Tenant to Maintain and Repair. Tenant, at Tenant's sole cost and
expense, shall promptly make all repairs, perform all maintenance, and make all
replacements in and to the Premises (including without limitation, all interior
and exterior, roofing, structural, non-structural and systems maintenance,
repairs and replacements) that are necessary or desirable to keep the
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Premises in first class condition and repair, in a clean, safe and tenantable
condition, and otherwise in accordance with all Laws and the requirements of
this Lease, including without limitation, repairs required as a result of any
act or omission of any invitee, agent, employee, Affiliate, subtenant, assignee,
contractor, client, family member, licensee, customer or visitor of Tenant
(collectively, "INVITEES"). Tenant shall maintain all improvements, fixtures and
personal property (including all equipment) located in, or serving, the Premises
in clean, safe and sanitary condition, shall take good care thereof and make all
required repairs and replacements thereto. Tenant shall maintain all drives,
sidewalks, parking areas and lawns on the Premises in a clean condition, free of
accumulations of dirt, trash, snow and ice. Tenant shall suffer no waste or
injury to any part of the Premises. Notwithstanding anything to the contrary
contained herein, Landlord shall have the right, but not the obligation, to make
any repair and to charge Tenant as Additional Rent for all costs and expenses
incurred in connection therewith.
8.2 No Obligation to Repair by Landlord. Tenant shall give Landlord
prompt written notice of any defects or damage to the structure of, or fixtures
in, any improvements located in the Premises the cost of which to repair, on an
individual basis or in the aggregate, will exceed $250,000. Notwithstanding
anything to the contrary contained herein, Landlord shall have the right, but
not the obligation, to perform Tenant's obligations hereunder and to charge
Tenant as Additional Rent for all costs and expenses incurred in connection
therewith.
8.3 Fixtures. Tenant shall not remove from the Premises any fixtures
unless replaced with similar fixtures of equal or greater quality and value.
Each such fixture shall become the property of Landlord upon installing the same
at the Premises. Tenant may not grant any lien or security interest in any
fixture. For purposes of this Section 8.3, the vehicle lifts located in the
service areas shall not be considered fixtures and may be removed by Tenant
provided Tenant repairs any and all damage caused to the Premises by the removal
thereof.
ARTICLE IX
ALTERATIONS
9.1 Consent Required for Alterations. Landlord is under no obligation
to make any alterations, decorations, additions, improvements, demolitions or
other changes (collectively, "ALTERATIONS") in or to the Premises. Except in
connection with the original construction to be performed at the Premises
pursuant to section 9.3, Tenant shall not make or permit anyone to make any
Alterations in or to the Premises costing more than $1,000,000 without the prior
written consent of Landlord, which consent shall not be unreasonably withheld.
Landlord shall be deemed to have consented to Tenant's proposed Alterations
unless Landlord denies the request within fourteen (14) days of submission by
Tenant to Landlord of plans and other information reasonably requested by
Landlord to make a determination with respect thereto. All Alterations in or to
the Premises shall be made in a good, workmanlike and first-class manner, in
accordance with such reasonable terms and conditions as Landlord may impose. If
any lien (or a petition to establish such lien) is filed in connection with any
Alteration, Tenant shall discharge such lien (or petition) within twenty (20)
days thereafter, at Tenant's sole cost and expense, by the payment thereof or by
the filing of a bond acceptable to Landlord. If Landlord gives its consent to
the making of any Alteration, such consent shall not be deemed to be an
agreement or consent by Landlord to subject its interest in the Premises to any
liens that may be filed in
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connection therewith. Promptly after the completion of an Alteration, Tenant at
its expense shall deliver to Landlord one (1) set of accurate as-built drawings
showing such Alteration in place.
9.2 Removal of Alterations. Except as otherwise expressly provided
pursuant to Section 9.1 above, if any Alterations are made without the prior
written consent of Landlord, Landlord shall have the right, in addition to all
other remedies, at Tenant's expense to remove and correct such Alterations and
restore the Premises to its condition immediately prior thereto, or to require
Tenant to do the same. All Alterations to the Premises during the Lease Term
shall be the property of Landlord and shall remain upon and be surrendered with
the Premises as a part thereof at the expiration or earlier termination of the
Lease Term; provided, however, that Tenant shall remove all Alterations and
other items in the Premises that Landlord designates in writing for removal, and
repair any damage caused by such removal. Notwithstanding anything to the
contrary contained herein, Tenant shall have the right to claim, during the
Lease Term, all federal and state income tax benefits associated with
Alterations to the Premises performed at Tenant's sole cost and expense during
the Lease Term, if and to the extent permitted under applicable Laws; provided,
however, that in no event shall Landlord have any liability to Tenant whatsoever
in connection with any inability by Tenant to obtain any such benefits.
9.3 Construction. Tenant has constructed or shall complete construction
of certain capital improvements to the Premises in accordance with the Drawings
and Specifications (defined below), the Construction Documents and the
provisions of this Section 9.3 (the "PROJECT"). Completion of the Project shall
be achieved no later than four (4) months after the Lease Commencement Date,
subject to extension upon mutual agreement between Landlord and Tenant and the
occurrence of events which constitute force majeure. Tenant hereby represents
and warrants as follows:
(a) Exhibit D attached hereto sets forth a true and complete
list of all contracts and agreements Tenant has entered into in connection with
the Project (the "CONSTRUCTION DOCUMENTS"). Each of the Construction Documents
is in full force and effect and constitutes the legal valid obligation of the
respective parties thereto, enforceable in accordance with its terms and has not
been modified, amended or extended.
(b) As of the Lease Commencement Date, Tenant has performed or
paid all obligations required to be performed or paid by it under each of the
Construction Documents and is not in default of any of its obligations under any
of the Construction Documents.
(c) Tenant has obtained or will obtain all building permits,
licenses and such other permits and bonds required in connection with the
construction of the Project and will not permit any lien, security interest or
other encumbrance to be maintained upon the Premises without Landlord's prior
written consent. If any liens are filed, Tenant shall cause the same to be
discharged or bonded over in accordance with Section 9.1 hereof.
(d) The Project shall be constructed in accordance with the
Drawings and Specifications for the Project, including modifications thereof
reasonably approved by Landlord, delivered to and approved by Landlord in
writing (the "DRAWINGS AND SPECIFICATIONS"), and the Construction Documents. The
Project, both during construction and at the time of completion, shall
substantially comply with all requirements of all applicable laws, ordinances,
regulations
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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 the Premises or improvements. For
purposes of this Section 9.3, "substantially" means that Tenant shall not be
permitted to engage in even de minimis non-compliance with applicable laws,
ordinance, regulations and orders if such de minimis non-compliance could result
in any governmental, administrative or other authority executing any penalty,
fine, remedy or other disciplinary action against Tenant or Tenant's business.
Tenant agrees that it will furnish from time to time such satisfactory evidence
with respect thereto as may be required by Landlord.
(e) In addition to the insurance requirements of this Lease,
Tenant shall provide and maintain at all times during the construction of the
Project (and, upon Landlord's request, shall furnish Landlord with proof of
payment therefore): (i) builder's risk insurance; (ii) comprehensive general
liability insurance; and (iii) worker's compensation insurance, each upon
commercially reasonable terms and in an amount at least equal to the amount
required by law or commercially reasonable in the jurisdiction of the Premises.
(f) Tenant has provided or will provide to Landlord a sworn
construction statement from the General Contractor duly executed and in form and
substance acceptable to Landlord showing all contractors having contracts or
subcontracts for specific portions of the work on the Project and the amounts
due or to become due each such Contractor, including all costs and expenses of
any kind incurred and to be incurred in constructing the Project.
(g) Upon completion of the Project, Tenant shall provide to
Landlord:
(i) a final, as-built ALTA survey, or surveys, in
form and substance satisfactory to Landlord, updated to show the completion of
the improvements on the Premises and satisfying Landlord's survey requirements
as set forth in the Purchase Agreement;
(ii) an updated zoning report from a zoning
consultant acceptable to Landlord, confirming that the Premises, as completed,
is in all respects in compliance with all applicable planning, zoning and
building codes and restrictions and all planned unit development, subdivision,
parking and setback requirements, without special variance or exception, and
that the Premises may be used by right as an automobile dealership or
dealerships;
(iii) evidence satisfactory to Landlord that all work
requiring inspection by municipal, county or other governmental authorities
having jurisdiction has been duly inspected and approved by such authorities and
by the rating or inspection organization, bureau, corporation or office having
jurisdiction, and that certificates of occupancy and all requisite approvals
have been properly issued with respect thereto (with copies thereof delivered to
Landlord);
(iv) an AIA certification from the architect on the
Project stating that all work has been completed; and
(v) a final lien waiver from the general contractor.
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ARTICLE X
REPRESENTATIONS, WARRANTIES AND COVENANTS OF TENANT
Tenant hereby represents, warrants and covenants to Landlord as
follows:
(a) Change in Condition. All financial statements and other
information for Tenant and Guarantor previously delivered to Landlord are true
and correct in all material respects. There has been no material adverse change,
nor is there any fact, event or circumstance that could reasonably be expected
to result in a material adverse change, in the financial condition of Tenant,
Guarantor or the business being conducted at the Premises since the date of the
most recent financial statements delivered to Landlord. Neither Tenant nor
Guarantor has entered into any material transaction outside the ordinary course
of its business operations as reflected in such financial statement. No
proceeding at law or in equity or before any administrative agency or arbitrator
or similar forum is pending or, to the knowledge of Tenant, threatened, against
Tenant or Guarantor.
(b) Rent Coverage Ratio. During the Lease Term, Guarantor
shall maintain a Rent Coverage Ratio of no less than 1.5 to 1.0. "RENT COVERAGE
RATIO" shall mean, for all Guarantors on a combined basis, the ratio of (i) all
pre-tax income, plus (A) all rent expenses under all leases for any real
property and improvements ("AGGREGATE RENT OBLIGATIONS"), plus (B) depreciation
and amortization, plus (C) interest on mortgage debt, plus (D) the annual LIFO
adjustment; to (ii) the Aggregate Rent Obligations plus principal and interest
payments on mortgage debt. The Rent Coverage Ratio shall be calculated each
fiscal quarter for the trailing twelve (12) month period on the basis of the
information reported in the Internal Statements and Audited Annual Statements,
as applicable.
(c) Adjusted Debt to Normalized EBITDA Ratio. During the Lease
Term, Guarantor shall have maintained an Adjusted Debt to Normalized EBITDA
Ratio of no greater than 6.0 to 1.0. "ADJUSTED DEBT TO NORMALIZED EBITDA Ratio"
shall mean the ratio of (i) Guarantor's current outstanding indebtedness under
credit facilities, subordinated debt obligations and other interest bearing debt
instruments excluding floorplan debt, to (ii) the net income of Guarantor,
determined on a consolidated basis for the trailing twelve (12) month period in
accordance with GAAP, plus, without duplication and to the extent reflected as a
charge in the statement of such net income of Guarantor for such period, the sum
of (a) income tax expense, (b) non-floorplan related interest expense,
amortization or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with indebtedness,
(c) depreciation and amortization expense, (d) amortization of intangibles
(including, but not limited to, goodwill) and organization costs and (e) any
extraordinary, unusual or non-recurring expenses or losses. The Adjusted Debt to
Normalized EBITDA Ratio shall be calculated each fiscal quarter based on the
Quarterly Statements and Annual Statements delivered to Landlord pursuant to
Article X(d) below.
(d) Financial Statements and Certifications. Tenant shall
provide Landlord and any Lender, at the times set forth herein (or more often as
may be reasonably requested by Landlord), the following information during the
Lease Term: (A) within fifteen (15) days after the end of each fiscal quarter
(including year end) (except for Guarantor prepared information which must be
delivered within forty five (45) days): (i) fiscal year-to-date financial
statements
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of Tenant, Guarantor and any affiliated subtenant prepared in accordance with
generally accepted accounting principles ("GAAP"), except as disclosed therein
(the "INTERNAL STATEMENTS"), (ii) a written calculation based upon the Internal
Statements of the Rent Coverage Ratio for such fiscal year-to-date period,
certified by Guarantor's chief financial officer, and (iii) a written
calculation based upon the Internal Statements of the Adjusted Debt to
Normalized EBITDA Ratio, certified by Guarantor's chief financial officer; (B)
within ninety (90) days after the end of each fiscal year of Tenant, Guarantor
and any affiliated subtenant: (i) annual financial statements prepared in
accordance with GAAP and audited by an independent certified public accountant
and presented on an individual or consolidated basis (the "AUDITED ANNUAL
STATEMENTS"), (ii) a written calculation based upon the Audited Annual
Statements of the Rent Coverage Ratio for such fiscal year period, certified by
Guarantor's chief financial officer, and (iii) a written calculation based upon
the Audited Annual Statements of the Adjusted Debt to Normalized EBITDA Ratio,
certified by Guarantor's chief financial officer; (C) within ten (10) days after
request, all evidence reasonably requested supporting the Rent Coverage Ratio
and Adjusted Debt to Normalized EBITDA Ratio calculations delivered to Landlord;
and (D) such additional financial information as Landlord shall reasonably
request (including any financial information required by any governmental
agency, including the Securities and Exchange Commission). Notwithstanding the
foregoing, Tenant and affiliated subtenants shall not be required to submit
financial information to Landlord as required above if Tenant or such affiliated
subtenant is one hundred percent (100%) owned by Guarantor and Tenant's or such
affiliated subtenant's financial statements are consolidated into Guarantor's
financial statements.
(e) Litigation. Within thirty (30) days after Tenant has
knowledge of (a) any litigation, threatened condemnation, or other proceeding
related to or arising out of this Lease or the Premises, or (b) any litigation
or other proceeding against (i) Tenant, or an affiliated subtenant of Tenant, in
which claims are asserted in an amount in excess of $5,000,000, or (ii) United
Auto Group, Inc., in which claims are asserted in an amount in excess of
$10,000,000, Tenant shall give written notice thereof to Landlord, and a copy of
any documents pertaining to such proceeding. If and to the extent Landlord
reasonably determines that such proceeding may adversely affect the Premises or
this Lease, Landlord may, after notice to Tenant, undertake an investigation or
otherwise become involved in the proceeding and Tenant shall pay all of
Landlord's reasonable costs and expenses related thereto, including but not
limited to reasonable attorneys' fees, that are incurred by Landlord, as
Additional Rent. (f) Franchise Agreements. Tenant has already or shall provide
to Landlord, within ten (10) days after execution or receipt thereof, as
applicable, true and complete copies of all franchise, personal sales and
service, dealer term sales and service, public ownership agreements and other
operating agreements (including without limitation, any buy-sell agreements or
similar agreements affecting the control of the business being operated at or
from the Premises) (collectively, "FRANCHISE AGREEMENTS") pursuant to which the
business is being operated at or from the Premises (excluding portions thereof
the disclosure of which would violate confidentiality agreements to which
subtenants or Tenant is bound). All such Franchise Agreements are valid, and in
full force and effect, and Tenant and any Affiliate operating the business being
conducted at or from the Premises are in compliance in all material respects
with such Franchise Agreements. Tenant has no knowledge of actual or threatened
termination or non-renewal of any Franchise Agreements, and has no knowledge
that any of the dealerships operated on the Premises do not meet manufacturers'
standards, or other franchise standards
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specified in the Franchise Agreements. Within ten (10) business days of receipt,
Tenant shall provide to Landlord any new Franchise Agreements and all
modifications, supplements or other amendments to, and notices of breach or
default under, any Franchise Agreements, whether now existing, or hereafter
entered into. Tenant shall continuously operate at least 50% of the Premises as
franchised new automobile dealerships. Landlord acknowledges that the Franchise
Agreements relating to the Premises in effect as of the Effective Date and
previously received by Landlord are deemed approved by Landlord.
(g) Authorization. Tenant and the person executing and
delivering this Lease on Tenant's behalf each represents and warrants that such
person is duly authorized to so act; that Tenant is duly organized, is qualified
to do business in the jurisdiction in which the Premises is located, is in good
standing under the Laws of the state of its organization and the Laws of the
jurisdiction in which the Premises is located, and has the power and authority
to enter into this Lease and to conduct its business in the manner being
conducted; and that all action required to authorize Tenant and such person to
enter into this Lease and to conduct its business in the manner being conducted
has been duly taken.
(h) 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 in which it was made.
(i) Breach of Financial Covenants. The Rent Coverage Ratio
required by Article X(b) above and the Adjusted Debt to Normalized EBITDA Ratio
required by Article X(c) above are collectively referred to herein as the
"FINANCIAL COVENANTS". The Financial Covenants are tested quarterly in
accordance with Article X(b) and Article X(c) above (each a "TEST DATE"). If at
any time Guarantor fails to comply with the Financial Covenants (the "INITIAL
FAILURE"), Guarantor shall either achieve compliance on one of the two
consecutive Test Dates immediately following such failure or deliver to Landlord
an irrevocable and unconditional letter of credit issued by a financial
institution reasonably acceptable to Landlord in an amount equal to six months
Base Rent (in effect at that time), in form and content satisfactory to Landlord
in Landlord's sole and absolute discretion. If an Initial Failure remains
uncured after the third and fourth Test Dates immediately following the Initial
Failure, Guarantor shall deliver to Landlord an additional irrevocable and
unconditional letter of credit issued by a financial institution reasonably
acceptable to Landlord in an amount equal to six months Base Rent (in effect at
that time), in form and content satisfactory to Landlord in Landlord's sole and
absolute discretion. The letter(s) of credit shall be held by Landlord as
additional security for the faithful performance by Tenant and Guarantor of all
covenants, conditions and agreements of this Lease and any guaranty agreement.
If there shall be any Event of Default under this Lease or any guaranty by
Tenant or Guarantor, then Landlord shall have the right, but shall not be
obligated, to draw on the letter(s) of credit and use, apply or retain as a
security deposit all or any portion of the proceeds for the payment of any (a)
Base Rent, Additional Rent or any other sum as to which Tenant is in default, or
(b) amount Landlord may spend or become obligated to spend, or for the
compensation of Landlord for any losses incurred, by reason of Tenant's default.
Provided no Event of Default has occurred and is outstanding, the letter(s) of
credit and any unused letter of credit proceeds shall be released by Landlord if
Guarantor maintains compliance with the Financial Covenants for two consecutive
Test Dates.
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ARTICLE XI
GUARANTY
Tenant shall cause the Guarantor to execute and deliver to Landlord,
and maintain during the Lease Term, a guaranty of this Lease on a form
acceptable to Landlord (the "GUARANTY").
ARTICLE XII
[INTENTIONALLY OMITTED]
ARTICLE XIII
INSPECTION
Upon reasonable advance notice, Tenant shall permit Landlord, any
Lender and their agents and representatives, to enter the Premises, at
Landlord's expense, without charge therefor and without diminution of the rent
payable by Tenant in order to examine, inspect or protect the Premises, or to
exhibit the same to brokers, prospective tenants, Lenders, purchasers and
others. Landlord shall endeavor to minimize disruption to Tenant's normal
business operations in the Premises in connection with any such entry.
ARTICLE XIV
INSURANCE
14.1 Types and Amounts of Insurance Coverage. Throughout the Lease
Term, Tenant shall obtain and maintain the following types and amounts of
insurance:
(a) Commercial General Liability
A) Coverage: (1) Occurrence Form; (2) Contractual
Liability - insuring the obligations assumed by the Tenant under this Lease,
including the indemnity obligations set forth in this Lease; (3) Premises and
Operations Coverage; (4) Broad Form Property Damage Coverage; (5) Personal
Injury Liability; and (6) Independent Contractors Coverage.
B) Limits: Commercial general liability insurance
shall be in minimum amounts of not less than the greater of (x) $50,000,000
combined single limit per occurrence with a $50,000,000 general aggregate and
(y) the minimum amounts required under the Franchise Agreements.
(b) All Risk Property, Boiler & Machinery and Business
Interruption Coverage.
A) Coverage: (1) All Risks of Direct Physical Loss,
including full coverage for flood and, upon Landlord's request, full coverage
for earthquake insurance; (2) Demolition and increased cost of construction; (3)
Replacement Cost; (4) EDP equipment coverage; and (5) Business Interruption
Coverage and Extra Expenses.
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B) Limits: Property and Boiler & Machinery Insurance
shall be on a replacement cost basis, in an amount not less than that required
to replace the real and personal property and improvements installed on or about
the Premises, all alterations and other contents of the Premises (including
without limitation, Tenant's trade fixtures, decorations, furnishing, equipment
and personal property). Business Interruption Coverage and Extra Expense shall
be in minimum amounts not less than the Base Rent, Impositions and all other
Additional Rent payable under this Lease during any Lease Year.
(c) Comprehensive Automobile Liability, Garage Liability,
Garage Keepers Legal Liability and Dealers Physical Damage
A) Coverage: (1) Comprehensive Automobile Liability
for all owned, non-owned and hired vehicles; (2) Garage Liability; (3) Garage
keepers Legal Liability; and (3) Dealers Physical Damage, Floor Plan &
Automobile Inventory.
B) Limits: (1) Automobile and Garage Liability
insurance shall be in minimum amounts not less than $1,000,000 for each
accident; (2) Garage Keepers Legal Liability insurance shall be in minimum
amounts not less than the full replacement value of all vehicles in the Tenant's
care, custody and control; (3) Dealers Physical Damage insurance shall be in
minimum amounts not less than the full replacement value of all vehicles in the
Tenant's Floor Plan and Automobile Inventory; (4) Automobile Dealers Errors &
Omissions, $1,000,000; (5) Insurance Agents Errors & Omissions, $1,000,000; (6)
Federal Odometer Statutes Errors & Omissions, $1,000,000; (7) Title, Truth In
Lending, Truth In Leasing Errors & Omissions, $1,000,000.
(d) Workers Compensation and Employers Liability
A) Coverage: (1) All States Endorsement; (2)
Employers Liability for Monopolistic States; and (3) Executive Officers,
partners & sole proprietors included.
B) Limits: Coverage A - Statutory; Coverage B
(Employers Liability) $1,000,000 each accident, $1,000,000 disease - policy
limit, $1,000,000 disease - each employee.
14.2 Requirements of Insurance Coverage. All the insurance policies
specified above shall meet the following requirements: (i) be issued by a
company that is licensed to do business in the jurisdiction in which the
Premises is located, that has been approved in advance by Landlord and that has
a rating equal to or exceeding A-:XII from Best's Insurance Guide; (ii) name
Capital Automotive REIT, Landlord, all Affiliates of Landlord, and all Lenders
as additional insureds and/or loss payees (as applicable), and specify that all
property loss adjustment and casualty losses reserved in excess of $100,000
shall require the written consent of Landlord, Tenant, and Lender, if
applicable; (iii) contain an endorsement that such policy shall remain in full
force and effect notwithstanding that the insured may have waived its right of
action against any party prior to the occurrence of a loss (Tenant hereby
waiving its right of action and recovery against and releasing Landlord and its
employees and agents from any and all liabilities, claims and losses for which
they may otherwise be liable to the extent Tenant is covered by insurance
carried or required to be carried under this Lease); (iv) provide that the
-18-
insurer thereunder waives all right of recovery by way of subrogation against
Landlord, its partners, agents, employees, and representatives, in connection
with any loss or damage covered by such policy; (v) be reasonably acceptable in
form and content to Landlord; (vi) be primary over any other valid and
collectible insurance and non-contributory; (vii) contain an endorsement for
cross liability and severability of interests; (viii) contain an endorsement
prohibiting cancellation, failure to renew, reduction of amount of insurance or
change in coverage without the insurer first giving Landlord and each Lender
thirty (30) days' prior written notice (by certified or registered mail, return
receipt requested) of such proposed action; and (ix) contain a deductible amount
less than or equal to $5,000, except as otherwise approved in writing by
Landlord.
14.3 Other Provisions. Landlord reserves the right from time to time to
require Tenant to obtain higher minimum amounts or different types of insurance
provided it is customary for owners or tenants of comparable properties in the
vicinity of the Premises to carry insurance of such higher minimum amounts or of
such different types. Tenant shall deliver to Landlord, concurrently with
Tenant's execution of this Lease and at least annually thereafter, (i)
certificates (including ▇▇▇▇▇ Form 27) evidencing that all such insurance
coverage required pursuant to this Article is in full force and effect, and (ii)
receipts evidencing payment therefor (and, upon request, copies of all required
insurance policies, including endorsements and declarations). Tenant shall give
Landlord immediate notice in case of fire, theft or accident reserved in excess
of $100,000 in the Premises. Neither the issuance of any insurance policy
required under this Lease nor the minimum limits specified herein shall be
deemed to limit or restrict in any way Tenant's liability arising under or out
of this Lease. Landlord makes no representation that the limits or forms of
coverage of insurance specified in this Article XIV are adequate to cover
Tenant's property or obligations under this Lease. Tenant shall have the right
to maintain the insurance coverages set forth in this Article under a blanket
insurance policy covering other premises owned or operated by Tenant, provided
that (x) the Premises is covered independently by such blanket insurance policy
to the full extent required by this Article, and (y) such coverage for the
Premises shall not be diminished for any reason whatsoever (including without
limitation a claim made with respect to any other premises) during the Lease
Term.
14.4 Waiver of Subrogation. Tenant hereby releases and relieves
Landlord, and waives its entire right of recovery against Landlord, for direct
or consequential loss or damage arising out of or related to any accident
covered by property insurance carried by Landlord, its Affiliates, agents,
employees, contractors and/or invitees, whether or not due to the negligence of
Landlord, its Affiliates, agents, employees, contractors and/or invitees.
ARTICLE XV
LIABILITY AND INDEMNIFICATION
15.1 No Liability of Landlord. Landlord, its Affiliates, partners,
officers, directors, members, trustees, employees, agents and Lenders shall have
no liability for and shall not assume any liability or responsibility with
respect to the conduct or operation of the business to be conducted on the
Premises and shall have no liability for any claim of loss of business or
interruption of operations, or any consequential damages or indirect losses
whatsoever. Any motor vehicles, parts, goods, furnishings, fixtures, property or
personal effects placed or stored in
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or about the Premises shall be at the sole risk of Tenant, and Landlord, its
Affiliates, employees and agents shall not be responsible or liable for such
property.
15.2 Indemnification of Landlord by Tenant. Tenant shall indemnify,
defend upon request and hold Landlord, its Affiliates, partners, officers,
directors, members, trustees, employees, agents and Lenders harmless from and
against, all demands, causes of action, judgments, costs, damages (including
punitive and consequential damages), claims, liabilities, expenses (including
attorneys' fees, disbursements and actual costs), losses, penalties and court
costs suffered by or claimed against any of them (whether arising from events
prior or subsequent to the Effective Date), directly or indirectly, except for
liability arising from Landlord's gross negligence or willful misconduct, based
on or arising out of, in whole or in part: (a) the use, condition, operation,
maintenance, repair, alteration, and occupancy of the Premises or the business
conducted therein or therefrom, (b) any act, omission, negligence or willful
misconduct of Tenant, its Affiliates or Invitees, (c) contamination of the
Premises or the ground waters thereof, any discharge of toxic or hazardous
sewage or waste materials from the Premises into any septic facility or sewer
system, any Environmental Law or release or existence of Hazardous Materials on
the Premises (irrespective of whether there has occurred a violation thereof)
relating to the Premises, including without limitation, any loss of value to the
Premises in connection therewith, (d) any breach, violation or nonperformance by
Tenant or any person claiming under Tenant or Invitees of any of the terms,
provisions, representations, warranties, covenants or conditions of this Lease
on Tenant's part to be performed, including without limitation, the failure to
comply with Laws, (e) easements or other agreements entered into by Landlord at
the request of Tenant following the Effective Date, and (f) any accident,
injury, death or damage to the person, property or business of Tenant or
Invitees, or any other person that shall happen at, in, upon, or arising out of
the Premises, however occurring. Landlord need not have first paid any such
claim to be so indemnified and held harmless by Tenant. Tenant, upon written
notice from Landlord, shall defend any claim against Landlord at Tenant's sole
expense, using legal counsel satisfactory to Landlord and Landlord shall
cooperate with Tenant in such defense. Tenant's indemnity obligations under this
Section 15.2 and elsewhere in this Lease arising prior to the termination of
this Lease shall survive such termination.
15.3 No Liability Accruing Subsequent to Transfer. No landlord
hereunder shall be liable for any obligation or liability based on or arising
out of any event or condition occurring during the period that such landlord was
not the owner of the Premises. Within five (5) business days after request,
Tenant shall attorn to any new landlord and execute, acknowledge and deliver any
document submitted to Tenant confirming such attornment, provided that the new
landlord recognizes Tenant and the terms of the Lease.
15.4 Tenant's Remedies. Tenant shall not have the right to set off,
recoup, ▇▇▇▇▇ or deduct any amount allegedly owed to Tenant pursuant to any
claim against Landlord from any Base Rent or other sum payable to Landlord.
Tenant's sole remedy for recovering upon such claim shall be to institute an
independent action against Landlord, which action shall not be consolidated with
any action of Landlord.
15.5 Landlord's Liability Limited to Landlord's Interest. If Tenant or
Invitees are awarded a money judgment against Landlord, then recourse for
satisfaction of such judgment shall be limited to execution against Landlord's
estate and interest in the Premises. No other
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asset of Landlord, any partner, director, member, officer or trustee of Landlord
or any other person or entity shall be available to satisfy or be subject to
such judgment, nor shall any such individual or other person or entity be held
to have personal liability for satisfaction of any claim or judgment against
Landlord or any such individual.
ARTICLE XVI
DAMAGE OR DESTRUCTION; RESTORATION OBLIGATIONS
If the improvements located on the Premises are totally or partially
damaged or destroyed, whether due to casualty, Partial Taking or otherwise, then
promptly after such damage or destruction, Tenant shall repair, rebuild or
restore all damaged improvements on or about the Premises so as to make the
Premises at least equal in value to the Premises existing immediately prior to
such damage or destruction. All such repair, rebuilding or restoration shall be
at Tenant's expense; provided, however that, to the extent necessary to effect
such repair, rebuilding or restoration, Landlord will make available to Tenant
the net proceeds of any fire or other casualty insurance paid to Landlord or the
net proceeds of any award from a Partial Taking after deduction of any costs
incurred in connection with the collection thereof, including reasonable
attorneys' fees. Payment to Tenant of such net proceeds shall be made in
accordance with reasonable procedures customarily required in connection with
construction loans. Tenant shall deliver to Landlord for Landlord's approval the
plans and specifications, as well as a schedule setting forth the estimated
monthly draws for such work. Upon Landlord's approval thereof, Tenant will begin
such repairs, rebuilding or restoration and will prosecute the same to
completion with diligence and in accordance with the terms and conditions
contained in Article IX of this Lease. Landlord and its architects and engineers
shall have the right, at Tenant's expense, to inspect the Premises from time to
time during such repair, rebuilding and restoration. In no event, however, shall
Landlord have any liability whatsoever for any defects in the design or
construction, or the compliance of the plans and specifications with Laws. In no
event shall any damage or destruction allow Tenant to ▇▇▇▇▇ the payment of Base
Rent or Additional Rent or terminate this Lease, except as provided in Section
17.5 of this Lease. Notwithstanding the foregoing, Tenant may terminate this
Lease during the final twenty-four (24) months of the Lease Term if the Premises
are damaged to the extent that such Tenant's business is materially impacted
provided that: (1) Tenant has not exercised the Renewal Option for the next
Renewal Term; (2) no Event of Default has occurred and is continuing; (3) an
amount equal to the cost to restore the Premises to the condition in which it
existed prior to such damage, less insurance proceeds received by Landlord, is
paid by Tenant to Landlord.
ARTICLE XVII
CONDEMNATION
17.1 Total Taking. If the entire Premises or occupancy thereof shall be
permanently taken or condemned by any governmental or quasi-governmental
authority for any public or quasi-public use or purpose or sold under threat of
such a taking or condemnation (a "TOTAL TAKING"), then this Lease shall
terminate on the date that title to the Premises vests in such authority, and
Base Rent shall be apportioned as of such date. If less than the entire Premises
or occupancy thereof is permanently condemned, but such partial condemnation,
even after
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restoration, would in Landlord's reasonable judgment be substantially and
materially adverse to the business operations of Tenant as being conducted at or
from the Premises as of the Lease Commencement Date, then Tenant shall have the
right to elect to terminate this Lease upon written notice thereof to Landlord
within ten (10) business days after Tenant receives notice of such taking
(together with a Total Taking, a "TERMINATION TAKING"). This Lease shall
terminate on the date that title to the Premises vests in such authority, and
Base Rent shall be apportioned as of such date. A condemnation shall be deemed
to be permanent if lasting for a period in excess of twelve (12) consecutive
calendar months.
17.2 Partial Taking. If less than the entire Premises or occupancy
thereof is permanently condemned and such partial condemnation would not, even
after restoration, in Landlord's reasonable judgment be substantially and
materially adverse to the business operations of Tenant as being conducted at or
from the Premises as of the Lease Commencement Date (a "PARTIAL TAKING"), then
this Lease shall remain in full force and effect, there shall be no abatement of
Base Rent or Additional Rent except for an adjustment to Base Rent as provided
in Section 17.5 and Tenant shall comply with the provisions of Article XVI of
this Lease.
17.3 Temporary Taking. If all or any portion of the Premises is
condemned for a period of twelve (12) consecutive calendar months or less, the
Lease shall remain in full force and effect and there shall be no abatement of
Base Rent or Additional Rent notwithstanding such condemnation. The amount of
any award, damages and other compensation (the "AWARDS") paid on account of a
temporary taking, net of Landlord's reasonable expenses in obtaining the same,
for such temporary taking allocable to the Lease Term, shall be paid to Tenant.
17.4 Awards. In the event of a Termination Taking or Partial Taking,
all Awards shall belong to Landlord, and Tenant assigns to Landlord all rights
to such Awards. Tenant shall not make any claim against Landlord or such
authority for any portion of such Awards attributable to damage to the Premises,
value of the unexpired portion of the Lease Term or any renewal thereof, loss of
profits or goodwill, leasehold improvements, consequential damages to the
Premises not taken, or severance damages. Nothing contained herein, however,
shall prevent Tenant from pursuing a separate claim against the authority for
relocation expenses and for the value of furnishings, equipment and trade
fixtures installed in the Premises at Tenant's expense following the Lease
Commencement Date and which Tenant is entitled, pursuant to this Lease, to
remove at the expiration or earlier termination of the Lease Term, provided that
such claim shall in no way diminish the Awards payable to or recoverable by
Landlord in connection with such taking.
17.5 Partial Taking Base Rent Abatement. In the event of a Partial
Taking in excess of five percent (5%) of (i) the buildings or portion of the
land area of the Premises which is paved or (ii) the fair market value of the
Premises, this Lease shall remain unaffected by such taking except that,
following Landlord's receipt of the Award and Tenant's completion of the
restoration in accordance with Article XVI hereof, the Base Rent shall be
reduced by an amount equal to the amount of the net Awards received by Landlord
divided by 10.81. Until the new Base Rent or Monthly Base Rent, as applicable,
shall be determined and agreed upon in writing, Tenant shall continue to pay
Base Rent or Monthly Base Rent in accordance with the original terms of this
Lease and upon such determination, an appropriate adjustment shall be made and
Tenant shall receive credit for any overpayment.
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ARTICLE XVIII
DEFAULT
18.1 Events of Default. Each of the following shall constitute an
"EVENT OF DEFAULT": (a) Tenant's failure to make when due any payment of the
Base Rent, Additional Rent or other sum; provided, however, that with respect to
the first (1st) such failure in any twelve (12) month period only, no Event of
Default shall be deemed to have occurred unless such failure continues for a
period of five (5) days after Landlord provides written notice thereof to
Tenant; (b) Tenant's failure to perform or observe any non-monetary covenant or
obligation of Tenant imposed by this Lease not otherwise specifically described
in this Section 18.1, which failure continues for thirty (30) days after
Landlord provides written notice thereof to Tenant; provided, however, that such
cure period shall not be applicable if, in Landlord's sole and absolute
discretion, such failure raises a life/safety issue with respect to the Premises
or its occupants or visitors, including but not limited to, a threat of personal
injury or continuing physical injury to the Premises; (c) Tenant's abandonment
of or failure to occupy continuously the Premises; (d) an Event of Insolvency as
specified in Article XIX; (e) any Environmental Default as specified in Section
6.3; (f) any Assignment (requiring consent) not consented to by Landlord in
writing pursuant to Article VII, or a Change in Control without the prior
written consent of Landlord; (g) any representation, warranty or certification
made by Tenant is incorrect in any material respect when made; (h) at any time
less than 50% of the Premises is being utilized as franchised new automobile
dealerships; (i) a final, non-appealable judgment for the payment of money in
excess of ten million dollars ($10,000,000) not fully covered by insurance is
rendered against Guarantor, and the same has not been paid, discharged, vacated,
bonded, or stayed within thirty (30) days after rendering of the same; (j) any
failure to maintain the insurance required pursuant to Article XIV above; (k)
[intentionally omitted]; and (l) any breach of Guarantor's obligation to post a
letter of credit required by Article X(i) above.
18.2 Landlord's Remedies. Following an Event of Default, the provisions
of this Section 18.2 shall apply. Landlord shall have the right, at its sole
option, to terminate this Lease. In addition, with or without terminating this
Lease, Landlord may re-enter, terminate Tenant's right of possession and take
possession of the Premises. The provisions of this Article shall operate as a
notice to quit, and Tenant hereby waives any other notice to quit or notice of
Landlord's intention to re-enter the Premises or terminate this Lease. If
necessary, Landlord may proceed to recover possession of the Premises under
applicable Laws, or by such other proceedings, including re-entry and
possession, as may be applicable. If Landlord elects to terminate this Lease
and/or elects to terminate Tenant's right of possession, everything contained in
this Lease on the part of Landlord to be done and performed shall cease without
prejudice, however, to Tenant's liability for all Base Rent, Additional Rent and
other sums specified herein. Whether or not this Lease and/or Tenant's right of
possession is terminated, Landlord shall have the right, at its sole option, to
terminate any right of renewal, expansion, first offer or refusal and any right
to purchase the Premises contained in this Lease and to grant or withhold any
consent or approval pursuant to this Lease in its sole and absolute discretion.
Tenant hereby acknowledges the special use of the Premises for the conduct of
business by franchised dealers of motor vehicles and agrees that the ability of
Landlord to relet the same to other dealers of motor vehicles under a franchise
agreement satisfactory to Landlord is extremely uncertain and would be likely to
require a substantial amount of time. Whether or not this Lease and/or
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Tenant's right of possession is terminated or any suit is instituted, Tenant
shall be liable for any Base Rent, Additional Rent, damages or other sum which
may be due or sustained prior to such default, and for all costs, fees and
expenses (including, but not limited to, attorneys' fees and costs, brokerage
fees, expenses incurred in enforcing any of Tenant's obligations under the Lease
or in placing the Premises in first-class rentable condition, advertising
expenses, and any concessions or allowances granted by Landlord) incurred by
Landlord in pursuit of its remedies hereunder and/or in recovering possession of
the Premises and renting the Premises to others from time to time plus other
actual or consequential damages suffered or incurred by Landlord on account of
Tenant's default (including, but not limited to, late fees or other charges
incurred by Landlord under any Mortgage). Tenant also shall be liable for
additional damages which at Landlord's election shall be either one or a
combination of the following: (a) an amount equal to the Base Rent and
Additional Rent due or which would have become due from the date of Tenant's
default through the remainder of the Lease Term, less the amount of rental, if
any, which Landlord receives during such period from others to whom the Premises
may be rented (other than any Additional Rent received by Landlord as a result
of any failure of such other person to perform any of its obligations to
Landlord), which amount shall be computed and payable in monthly installments,
in advance, on the first day of each calendar month following Tenant's default
and continuing until the date on which the Lease Term would have expired but for
Tenant's default, it being understood that separate suits may be brought from
time to time to collect any such damages for any month(s) (and any such separate
suit shall not in any manner prejudice the right of Landlord to collect any
damages for any subsequent month(s)), or Landlord may defer initiating any such
suit until after the expiration of the Lease Term (in which event such deferral
shall not be construed as a waiver of Landlord's rights as set forth herein and
Landlord's cause of action shall be deemed not to have accrued until the
expiration of the Lease Term), and it being further understood that if Landlord
elects to bring suits from time to time prior to reletting the Premises,
Landlord shall be entitled to its full damages through the date of the award of
damages without regard to any Base Rent, Additional Rent or other sums that are
or may be projected to be received by Landlord upon reletting of the Premises;
or (b) an amount equal to the present value of the sum of (i) the amount by
which (A) all Base Rent, Additional Rent and other sums due or which would be
due and payable under this Lease as of the date of Tenant's default through the
end of the scheduled Lease Term exceeds (B) the fair market rental value of the
Premises over the same Period as determined by Landlord, plus (ii) all expenses
(including broker and attorneys' fees) and value of all vacancy periods
projected by Landlord to be incurred in connection with the reletting of the
Premises. The present value shall be calculated using a discount factor equal to
the yield of the United States Treasury Note or ▇▇▇▇, as appropriate, having a
maturity period approximately commensurate to the remainder of the Lease Term,
and such resulting amount shall be payable to Landlord in a lump sum on demand,
it being understood that upon payment of such liquidated and agreed final
damages, Tenant shall be released from further liability for payment of Base
Rent under this Lease with respect to the period after the date of such payment.
Landlord's determination as to the fair market value and projected vacancy
period shall be presumptively correct and Tenant shall have the burden of
proving otherwise by clear and convincing evidence. Landlord may bring suit to
collect any such damages at any time after an Event of Default shall have
occurred. In the event Landlord relets the Premises for a term extending beyond
the scheduled expiration of the Lease Term, it is understood that Tenant will
not be entitled to apply any base rent, additional rent or other sums generated
or projected to be generated in the period extending beyond the scheduled
expiration
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of the Lease Term (collectively, the "EXTRA RENT") against Landlord's damages.
Similarly in proving the amount that would be received by Landlord upon a
reletting of the Premises as set forth in clause (b)(ii) above, Tenant shall not
take into account the Extra Rent. The provisions contained in this Section shall
be in addition to, and shall not prevent the enforcement of, any claim Landlord
may have against Tenant for anticipatory breach of this Lease. Nothing herein
shall be construed to affect or prejudice Landlord's right to prove, and claim
in full, unpaid Base Rent and Additional Rent accrued prior to termination of
this Lease. If Landlord is entitled, or Tenant is required, pursuant to any
provision hereof to take any action upon the termination of the Lease Term, then
Landlord shall be entitled, and Tenant shall be required, to take such action
also upon the termination of Tenant's right of possession.
18.3 Tenant Waiver. Tenant hereby expressly waives, for itself and all
persons claiming by, through or under it, any right of redemption, re-entry or
restoration of the operation of this Lease under any present or future Law,
including without limitation any such right which Tenant would otherwise have in
case Tenant shall be dispossessed for any cause, or in case Landlord shall
obtain possession of the Premises as herein provided.
18.4 Landlord's Rights Cumulative. All rights and remedies of Landlord
set forth in this Lease are cumulative and in addition to all other rights and
remedies available to Landlord at law or in equity, including those available as
a result of any anticipatory breach of this Lease. The exercise by Landlord of
any such right or remedy shall not prevent the concurrent or subsequent exercise
of any other right or remedy. No delay or failure by Landlord to exercise or
enforce any of Landlord's rights or remedies or Tenant's obligations shall
constitute a waiver of any such rights, remedies or obligations. Landlord shall
not be deemed to have waived any default by Tenant unless such waiver expressly
is set forth in a written instrument signed by Landlord. If Landlord waives in
writing any default by Tenant, such waiver shall not be construed as a waiver of
any covenant, condition or agreement set forth in this Lease except as to the
specific circumstances described in such written waiver.
18.5 Accord and Satisfaction. If Landlord shall institute proceedings
against Tenant and a compromise or settlement thereof shall be made, then the
same shall not constitute a waiver of the same or of any other covenant,
condition or agreement set forth herein, nor of any of Landlord's rights
hereunder. Neither the payment by Tenant of a lesser amount than the monthly
installment of Base Rent, Additional Rent or of any sums due hereunder nor any
endorsement or statement on any check or letter accompanying a check for payment
of rent or other sums payable hereunder shall be deemed an accord and
satisfaction. Landlord may accept the same without prejudice to Landlord's right
to recover the balance of such rent or other sums or to pursue any other remedy.
Notwithstanding any request or designation by Tenant, Landlord may apply any
payment received from Tenant to any payment then due. No re-entry by Landlord,
and no acceptance by Landlord of keys from Tenant, shall be considered an
acceptance of a surrender of this Lease.
18.6 Default Rate. If Tenant fails to make any payment to any third
party or to do any act to be made or done by Tenant pursuant to the Lease, then
Landlord may, but shall not be required to, make such payment or do such act.
The taking of such action by Landlord shall not be considered a cure of such
default by Tenant or prevent Landlord from pursuing any remedy it is otherwise
entitled to in connection with such default. If Landlord elects to make such
payment
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or do such act, then all expenses incurred by Landlord, plus interest thereon at
a rate (the "DEFAULT RATE") equal to the lesser of (a) the greater of (i)
eighteen percent (18%) per annum or (ii) the rate per annum which is five (5)
whole percentage points higher than the prime rate published in the Money Rates
section of the Wall Street Journal, or (b) the highest lawful rate per annum,
from the date incurred by Landlord to the date of payment thereof by Tenant,
shall constitute Additional Rent due hereunder.
18.7 Joint and Several Liability. If more than one person or entity
shall constitute Tenant, then the liability of each such person or entity shall
be joint and several. If Tenant is a general partnership or other entity the
partners or members of which are subject to personal liability, then the
liability of each such partner or member shall be joint and several. No waiver,
release or modification of the obligations of any such person or entity shall
affect the obligations of any other such person or entity.
ARTICLE XIX
BANKRUPTCY
19.1 Events of Bankruptcy. An "Event of Insolvency" is the occurrence
with respect to any of Tenant, Guarantor or the managing member of Tenant
("MANAGING MEMBER") any of the following: (a) becoming insolvent, as that term
is defined in Title 11 of the United States Code (the "BANKRUPTCY CODE") or
under the insolvency laws of any state (the "INSOLVENCY LAWS"); (b) the earlier
to occur of either (i) the filing of a petition for the appointment of a
receiver or custodian or (ii) the appointment of a receiver or custodian for any
property of such entity or person, or (iii) the institution of a foreclosure,
replevin or attachment action upon any property of such entity or person; (c)
filing of a voluntary petition under the provisions of the Bankruptcy Code or
Insolvency Laws or the admission in writing of its or his inability to pay debts
generally as they become due; (d) filing of an involuntary petition against such
entity or person as the alleged debtor under the Bankruptcy Code or Insolvency
Laws which either (i) is not dismissed within thirty (30) days after filing, or
(ii) results in the issuance of an order for relief against the alleged debtor;
(e) making or consenting to an assignment for the benefit of creditors or a
composition of creditors; or (f) submitting (either before or after execution
hereof) to Landlord any financial statement containing any material inaccuracy
or omission.
19.2 Remedies. Upon an Event of Insolvency, Landlord shall have all
rights and remedies available pursuant to Article XVIII; provided, however, that
while a case (the "CASE") in which Tenant is the alleged debtor under the
Bankruptcy Code is pending, Landlord's right to terminate this Lease shall be
subject, to the extent required by the Bankruptcy Code, to any rights of Tenant
or its trustee in bankruptcy (collectively, "TRUSTEE") to assume or assume and
assign this Lease pursuant to the Bankruptcy Code. After the commencement of a
Case: (i) Trustee shall perform all post-petition obligations of Tenant under
this Lease; and (ii) if Landlord is entitled to damages (including, without
limitation, unpaid rent) pursuant to the terms of this Lease, then all such
damages shall be entitled to administrative expense priority pursuant to the
Bankruptcy Code. Any person or entity to which this Lease is assigned pursuant
to the Bankruptcy Code shall be deemed without further act or deed to have
assumed all of the obligations arising under this Lease, and any such assignee
shall upon request execute and deliver to Landlord an instrument confirming such
assumption. Trustee shall not have the right
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to assume or assign this Lease unless Trustee promptly (a) cures all defaults
under this Lease, (b) compensates Landlord for damages incurred as a result of
such defaults, (c) provides adequate assurance of future performance on the part
of Trustee as debtor in possession or Trustee's assignee, and (d) complies with
all other requirements of the Bankruptcy Code. If Trustee fails to assume or
assume and assign this Lease in accordance with the requirements of the
Bankruptcy Code within sixty (60) days after the initiation of the Case, then
Trustee shall be deemed to have rejected this Lease. If this Lease is rejected
or deemed rejected, then Landlord shall have all rights and remedies available
to it pursuant to Article XVIII. Landlord and Tenant acknowledge and agree that
adequate assurance of future performance shall require, among other things, that
the following minimum criteria (which Landlord and Tenant agree are commercially
reasonable) be met: (1) Tenant's gross receipts in the ordinary course of
business during the thirty (30) days preceding the Case must be greater than ten
(10) times the next monthly installment of Base Rent and Additional Rent due;
(2) both the average and median of Tenant's monthly gross receipts in the
ordinary course of business during the seven (7) months preceding the Case must
be greater than the next monthly installment of Base Rent and Additional Rent
due; (3) Trustee must pay its estimated pro-rata share of the cost of all
services performed or provided by Landlord (whether directly or through agents
or contractors and whether or not previously included as part of Base Rent) in
advance of the performance or provision of such services; (4) Trustee must agree
that Tenant's business shall be conducted in a first-class manner, and that no
liquidating sale, auction or other non-first-class business operation shall be
conducted in the Premises; (5) Trustee must agree that the use of the Premises
as stated in this Lease shall remain unchanged and that no prohibited use shall
be permitted; (6) Trustee must pay at the time the next monthly installment of
Base Rent is due, in addition to such installment, an amount equal to the
monthly installments of Base Rent, and Additional Rent due for the next six (6)
months thereafter, such amount to be held as a security deposit; (7) Trustee
must agree to pay, at any time Landlord draws on such security deposit, the
amount necessary to restore such security deposit to its original amount; (8)
Trustee must comply with all duties and obligations of Tenant under this Lease;
(9) the financial condition and operating performance of the proposed assignee
and its guarantors, if any, shall be similar to the financial condition and
operating performance of the Tenant and Guarantor as of the Effective Date; and
(10) all assurances of future performance specified in the Bankruptcy Code must
be provided.
ARTICLE XX
SUBORDINATION
20.1 Subordination and Non-Disturbance. This Lease is subject and
subordinate to the lien, provisions, operation and effect of any Mortgage, to
all funds and indebtedness intended to be secured thereby, and to all renewals,
extensions, modifications, recastings or refinancings thereof. A Lender holding
a Mortgage to which this Lease is subordinate shall have the right (subject to
any required approval of the holder of any superior Mortgage) at any time to
declare this Lease to be superior to the lien, provisions, operation and effect
of such Mortgage and Tenant shall execute, acknowledge and deliver all documents
required by such Lender in confirmation thereof. At the request of Tenant in
each instance, Landlord shall obtain for Tenant a non-disturbance agreement
providing for the continuation of this Lease in the event of any such transfer
of the Premises (subject to the terms and conditions contained therein), on the
standard form of each Lender. Within five (5) business days after Landlord's
request, Tenant shall
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execute documents required by Lender confirming the foregoing subordination. If
Tenant does not execute the requested documents within such period, Tenant
irrevocably appoints Landlord as Tenant's attorney-in-fact to execute any such
document for Tenant.
20.2 Attornment. Tenant waives the provisions of any statute or rule of
law now or hereafter in effect which may give or purport to give Tenant any
right to terminate or otherwise adversely affect this Lease and Tenant's
obligations hereunder in the event any foreclosure proceeding is prosecuted or
completed or in the event the Premises or Landlord's interest therein is
transferred by foreclosure, by deed in lieu of foreclosure or otherwise. If this
Lease is not extinguished upon any such transfer or by the transferee following
such transfer, then, within five days of a written request of such transferee,
Tenant shall attorn to such transferee and shall recognize such transferee as
the landlord under this Lease. Tenant agrees that upon any such attornment,
provided the transferee is not an Affiliate of Landlord, such transferee shall
not be (a) bound by any payment of the Base Rent or Additional Rent more than
one (1) month in advance, except prepayments in the nature of security for the
performance by Tenant of its obligations under this Lease, but only to the
extent such prepayments have been delivered to such transferee, (b) bound by any
amendment of this Lease made without the written consent of any Lender existing
as of the date of such amendment, (c) liable for damages for any breach, act or
omission of any prior landlord, or (d) subject to any offsets or defenses which
Tenant might have against any prior landlord; provided, however, that after
succeeding to Landlord's interest under this Lease, such transferee shall agree
to perform in accordance with the terms of this Lease all obligations of
Landlord arising after the date of transfer. Within five (5) days of a written
request of such transferee, Tenant shall execute, acknowledge and deliver any
reasonable document submitted to Tenant confirming such attornment.
20.3 Lender Required Modifications. If any prospective or current
Lender requires that modifications to this Lease be obtained, and provided that
such modifications (a) are reasonable, (b) do not adversely affect in a material
manner Tenant's use of the Premises as herein permitted, (c) do not increase the
Base Rent and other sums to be paid by Tenant, and (d) do not materially affect
Tenant's obligations hereunder, then Landlord may submit to Tenant an amendment
to this Lease incorporating such required modifications, and Tenant shall
execute, acknowledge and deliver such amendment to Landlord within five (5) days
after Tenant's receipt thereof.
20.4 Lender Cure Rights. If (a) the Premises are at any time subject to
a Mortgage, (b) this Lease and rent payable hereunder is assigned to the Lender,
and (c) the Tenant is given notice of such assignment, including the name and
address of the assignee, then, in that event, Tenant shall not terminate this
Lease or make any abatement in the rent payable hereunder for any default on the
part of the Landlord without first giving notice, in the manner provided
elsewhere in this Lease for the giving of notices, to the Lender, specifying the
default in reasonable detail, and affording such Lender a reasonable opportunity
to make performance, at its election, for and on behalf of the Landlord, except
that (i) such Lender shall have at least thirty (30) days to cure the default;
(ii) if such default cannot be cured with reasonable diligence and continuity
within thirty (30) days, such Lender shall have any additional time as may be
reasonably necessary to cure the default with reasonable diligence and
continuity; and (iii) if the default cannot reasonably be cured without such
Lender having obtained possession of the Premises, such Lender shall have such
additional time as may be reasonably necessary under the
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circumstances to obtain possession of the Premises and thereafter to cure the
default with reasonable diligence and continuity. If more than one such Lender
makes a written request to Landlord to cure the default, the Lender making the
request whose lien is the most senior shall have such right.
ARTICLE XXI
END OF LEASE TERM; HOLDING OVER
21.1 Condition of Premises. At the expiration or earlier termination of
this Lease or Tenant's right of possession, Tenant shall: (a) surrender
possession of the Premises in first class condition and good repair and free of
debris, subject to normal wear and tear provided that Tenant has fully complied
with its obligations in Article VIII of this Lease, (b) ensure that all signs,
furnishings, furniture, and personal property have been removed from the
Premises, (c) ensure that any damage caused by such removal has been repaired in
a good and workmanlike manner, and (d) deliver to Landlord all keys and security
cards to the Premises and the improvements thereon, whether such keys were
furnished by Landlord or otherwise procured by Tenant, and shall inform Landlord
of the combination of each lock, safe and vault, if any, in the Premises.
21.2 Abandoned Property. If Tenant shall fail to remove any items from
the Premises as specified above, then Landlord may retain the same or remove
them at Tenant's expense, and Tenant shall reimburse Landlord's reasonable
expenses therefore upon demand. All property removed from the Premises by
Landlord may be handled, discarded or stored by Landlord at Tenant's expense,
and Landlord shall in no event be responsible for the value, preservation or
safekeeping for such property. All such property shall at Landlord's option be
conclusively deemed to have been conveyed by Tenant to Landlord as if by ▇▇▇▇ of
sale without payment by Landlord.
21.3 [Intentionally Omitted.]
21.4 Hold Over. If Tenant (or anyone claiming through Tenant) does not
immediately surrender the Premises or any portion thereof upon the expiration or
earlier termination of the Lease Term, then the Base Rent payable by Tenant
hereunder shall be increased to equal one hundred fifty percent (150%) of the
Base Rent, Additional Rent and other sums that would have been payable pursuant
to the provisions of this Lease if the Lease Term had continued during such
holdover period. Such rent shall be computed by Landlord and paid by Tenant on
the first day of each calendar month thereafter until the Premises have been
vacated. Notwithstanding any other provision of this Lease, Landlord's
acceptance of such rent shall not in any manner adversely affect Landlord's
other rights and remedies, including Landlord's right to evict Tenant and to
recover all damages. Any such holdover shall be deemed to be a
tenancy-at-sufferance and not a tenancy-at-will or tenancy from month-to-month.
In no event shall any holdover be deemed a permitted extension or renewal of the
Lease Term, and nothing contained herein shall be construed to constitute
Landlord's consent to any holdover or to give Tenant any right with respect
thereto.
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ARTICLE XXII
QUIET ENJOYMENT
Landlord covenants that it has the right to enter into this Lease, and
that if Tenant shall perform timely all of its obligations hereunder, then,
subject to the provisions of this Lease, Tenant shall during the Lease Term
peaceably and quietly occupy and enjoy the full possession of the Premises
without hindrance by Landlord or any party claiming through or under Landlord.
ARTICLE XXIII
OPTIONS TO EXTEND LEASE TERM
23.1 Renewal Rights. Landlord hereby grants to Tenant the conditional
right, exercisable at Tenant's option, to renew the term of this Lease for four
(4) successive terms of ten (10) years each. If exercised, and if the conditions
applicable thereto have been satisfied, the first renewal term of this Lease
(the "FIRST RENEWAL Term") shall commence immediately following the end of the
initial Lease Term provided in Section 1.9 of this Lease, the second renewal
term of this Lease (the "SECOND RENEWAL TERM") shall commence immediately
following the end of the First Renewal Term, the third renewal term (the "THIRD
RENEWAL TERM") shall commence immediately following the termination of the
Second Renewal Term, and fourth renewal term (the "FOURTH RENEWAL TERM") shall
commence immediately following termination of the Third Renewal Term.
(Collectively the First, Second, Third and Fourth Renewal Terms shall be
referred to herein as the "RENEWAL TERMS".) The rights of renewal herein granted
to Tenant are personal to Tenant (and may not be exercised by any assignee of
Tenant) and shall be subject to, and shall be exercised in accordance with, the
following terms and conditions:
(a) Tenant shall exercise its right of renewal with respect to
a Renewal Term by giving Landlord irrevocable written notice (the "RENEWAL
NOTICE") thereof not later than fifteen (15) months prior to the expiration of
the then-current term of this Lease.
(b) All terms and conditions of this Lease, including without
limitation, all provisions governing the payment of Additional Rent, shall
remain in full force and effect during the Renewal Terms, except that commencing
on the first day of the Third Renewal Term, the Base Rent shall be adjusted to
equal the Fair Market Rent, as determined in accordance with the appraisal
method set forth in Section 23.2 below.
(c) The Base Rent, as adjusted at the commencement of the
Third Renewal Term, shall continue to escalate on each Base Rent Adjustment Date
by an amount equal to the product of (a) the Base Rent in effect immediately
prior to such Base Rent Adjustment Date, multiplied by (b) the percentage
increase between the CPI in effect for the month preceding the previous Base
Rent Adjustment Date and the CPI in effect for the month preceding the then
current Base Rent Adjustment Date. Such adjusted Base Rent shall continue in
effect as the Base Rent until the next Base Rent Adjustment Date.
Notwithstanding the foregoing, in no event shall the Base Rent, as so escalated,
for any Lease Year be less than one hundred percent (100%) nor more than one
hundred fifteen percent (115%) of the escalated Base Rent in effect for the
immediately preceding Lease Year.
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(d) If there exists an Event of Default under this Lease on
the date Tenant sends a Renewal Notice or any time thereafter until a Renewal
Term is to commence, at Landlord's election, such Renewal Term shall not
commence.
(e) If Tenant's right of renewal with respect to a Renewal
Term lapses for any reason (including without limitation, Tenant's failure to
timely provide a renewal notice), then Tenant's right of renewal with respect to
any subsequent Renewal Term shall similarly lapse and be of no further force or
effect.
23.2 Fair Market Rent. For purposes of this Lease, the Fair Market Rent
shall be determined by three (3) independent appraisers who are members of the
Appraisal Institute and are recognized as knowledgeable and reputable in the
field. Landlord shall select one, Tenant shall select one, and the appraisers
selected by Landlord and Tenant shall select the third. Landlord and Tenant each
shall select its appraiser within thirty (30) days after Landlord's receipt of
Tenant's notice exercising its option to extend the Lease Term, and the third
appraiser shall be selected within five (5) days after Landlord's and Tenant's
selections. Landlord and Tenant each shall be responsible for the fees of its
appraiser, and Landlord and Tenant shall share equally the fees of the third
appraiser. Each appraiser, within fifteen (15) days after selection of the third
(3rd) appraiser, shall deliver to Landlord its written report setting forth the
fair market rent for the Premises, which determination shall be based upon the
use of the Premises as a retail automobile establishment, taking into
consideration the location of the Premises and other properties comparable
thereto, and shall assume that such Fair Market Rent shall continue to escalate
annually in accordance with Section 4.2 of this Lease. The "FAIR MARKET RENT"
shall mean the arithmetic mean of the two (2) fair market rent determinations
that are closest in value. In the event the values of (a) the difference between
the highest appraised rent and the next lower appraised rent, and (b) the
difference between the lowest appraised rent and the next higher appraised rent,
are equal, then the Fair Market Rent shall be the arithmetic mean of the fair
market rent determinations of all of the appraisers.
ARTICLE XXIV
FIRST RIGHT TO NEGOTIATE
In the event that Landlord, in its sole and absolute discretion, elects
to sell the Premises during the Lease Term (it being agreed that the sale or
transfer of the Premises to an Affiliate of Landlord shall not trigger Tenant's
rights pursuant to this Article XXIV), then Tenant shall have a first right to
negotiate with Landlord for the purchase of the Premises on the following terms
and conditions: Landlord shall notify Tenant in writing that Landlord intends to
sell the Premises ("Sale Notice"). If Tenant is interested in purchasing the
Premises, Tenant shall provide Landlord with written notice of its interest
within ten (10) business days following receipt of the Sale Notice. If Tenant
delivers such notice within such ten (10) business day period, then, for a
period of thirty (30) days, Tenant shall have the right to negotiate with
Landlord regarding the terms and conditions of such sale (the "Negotiating
Period") (it being agreed that this short time frame is acceptable since Tenant
or an Affiliate of Tenant has been in possession of the Premises, and there
shall be no due diligence or study period provided for in any agreement between
Landlord and Tenant for the sale of the Premises). The parties shall negotiate
during the Negotiating Period in good faith the price and other terms of a sale.
If,
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during the Negotiating Period, the parties are unable to agree, for any reason
whatsoever, on such terms and conditions, and execute a written purchase
agreement, or if Tenant did not timely respond to the Sale Notice, Tenant's
right to negotiate for the purchase of the Premises shall lapse and be of no
further force or effect for a period of twelve (12) months commencing on the
expiration of the Negotiating Period, and during such period Landlord may offer
or sell all or part of the Premises to a third party on any terms without
triggering Tenant's rights under this Article. If the Landlord does not sell the
Premises within such twelve (12) month period, then Tenant shall have the first
right to negotiate set forth herein with respect to a subsequent Landlord
election to sell the Premises during the Lease Term. Tenant's rights pursuant to
this Article XXIV shall (i) lapse and be of no further force or effect upon a
sale of the Premises or the occurrence of an Event of Default, and (ii) be
exercised only by Tenant, and may not be exercised by any other transferee,
assignee or subtenant of Tenant.
ARTICLE XXV
GENERAL PROVISIONS
25.1 Relationship Between Landlord and Tenant. Nothing contained in
this Lease shall be construed as creating any relationship between Landlord and
Tenant other than that of landlord and tenant. Tenant shall not do or permit to
be done anything in connection with Tenant's business or advertising that in the
reasonable judgment of Landlord may reflect unfavorably on Landlord or the
Premises or confuse or mislead the public as to any apparent connection or
relationship between Landlord, the Premises and Tenant.
25.2 Brokers. Landlord and Tenant each warrants to the other that in
connection with this Lease it has not employed or dealt with any third party
broker, agent or finder. Landlord shall indemnify and hold Tenant harmless from
and against any claim for brokerage or other commissions asserted by any broker,
agent or finder employed by Landlord or with whom Landlord has dealt. Tenant
shall indemnify and hold Landlord harmless from and against any claim for
brokerage or other commissions asserted by any broker, agent or finder employed
by Tenant or with whom Tenant has dealt.
25.3 Estoppel. At any time and from time to time, upon not less than
five (5) days' prior written notice, Tenant and each subtenant, assignee,
licensee or concessionaire or occupant of Tenant shall execute, acknowledge and
deliver to Landlord and/or any other person or entity designated by Landlord, a
written statement certifying: (a) that this Lease and certain designated
Franchise Agreements, each are unmodified and in full force and effect (or if
there have been modifications, that this Lease or Franchise Agreement(s), as
applicable, is/are in full force and effect as modified and stating the
modifications); (b) the dates to which the Base Rent and any other charges have
been paid; (c) whether or not Landlord is in default in the performance of any
obligation, and if so, specifying the nature of such default; (d) the address to
which notices to Tenant are to be sent; (e) that this Lease is subject and
subordinate to all Mortgages encumbering the Premises; (f) that Tenant has
accepted the Premises; and (g) such other matters as Landlord may reasonably
request. Any such statement may be relied upon by any owner of the Premises, any
prospective purchaser of the Premises, any Lender or prospective Lender or any
other person or entity. Tenant acknowledges that time is of the essence to the
delivery of such statements and that Tenant's failure to deliver timely such
statements may cause substantial damages resulting
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from, for example, delays in obtaining financing secured by the Premises. Tenant
shall be liable for all such damages. If any such statement is not delivered
timely by Tenant, Tenant irrevocably appoints Landlord as Tenant's
attorney-in-fact to execute such estoppel certificate on Tenant's behalf.
25.4 Arbitration.
(a) Notwithstanding anything to the contrary contained in this
Lease, except with respect to the payment of Base Rent and Additional Rent
hereunder, in the event a controversy arises between the parties as to any of
the requirements of this Lease, 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 shall be determined
by arbitration as hereafter provided in this Section 25.4.
(b) 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.
(c) 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 applicable
rules shall be those in effect at the time for the resolution of commercial
disputes promulgated by the American Arbitration Association. 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.
25.5 Notices. All notices or other communications required under this
Lease shall be in writing and shall be deemed duly given and received when
delivered in person (with receipt therefor), on the date sent if sent by
facsimile with a copy sent by one of the other methods of delivery described in
this Section, on the next business day after deposit with a recognized overnight
delivery service if sent by overnight delivery, or on the fourth day after being
sent by certified or registered mail, return receipt requested, postage prepaid,
to the following addresses: (a) if to Landlord, at the Landlord Notice Address
specified in Article I, (b) if to Tenant, at the Tenant Notice Address specified
in Article I. Either party may change its address for the giving of notices by
notice given in accordance with this Section. If Landlord or any Lender notifies
Tenant that a copy of any notice to Landlord shall be sent to such Lender at a
specified address, then Tenant shall send (in the manner specified in this
Section and at the same time such notice is sent to Landlord) a copy of each
such notice to such Lender, and no such notice shall be
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considered duly sent unless such copy is so sent to such Lender. Any cure of
Landlord's default by such Lender shall be treated as performance by Landlord.
25.6 Validity. Each provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law. If any provision of this
Lease or the application thereof to any person or circumstance shall to any
extent be invalid or unenforceable, then such provision shall be deemed to be
replaced by the valid and enforceable provision most substantively similar to
such invalid or unenforceable provision, and the remainder of this Lease and the
application of such provision to persons or circumstances other than those as to
which it is invalid or unenforceable shall not be affected thereby. Nothing
contained in this Lease shall be construed as permitting Landlord to charge or
receive interest in excess of the maximum rate allowed by law
25.7 Pronouns. Feminine, masculine or neuter pronouns shall be
substituted for those of another form, and the plural or singular shall be
substituted for the other number, in any place in which the context may require
such substitution.
25.8 Successors and Assigns. The provisions of this Lease shall be
binding upon and inure to the benefit of the parties and each of their
respective representatives, successors and assigns, subject to the provisions
herein restricting Assignment or Sublet.
25.9 Entire Agreement. This Lease contains and embodies the entire
agreement of the parties hereto with regard to the subject matter hereof and
supersedes all prior agreements, negotiations, letters of intent, proposals,
representations, warranties, understandings, suggestions and discussions,
whether written or oral, between the parties hereto. Any representation,
inducement, warranty, understanding or agreement that is not expressly set forth
in this Lease shall be of no force or effect. This Lease may be modified or
changed in any manner only by an instrument signed by both parties. This Lease
includes and incorporates all Exhibits attached hereto
25.10 Governing Law. This Lease shall be governed by the Laws of the
jurisdiction in which the Premises are located. There shall be no presumption
that this Lease be construed more strictly against the party who itself or
though its agent prepared it, it being agreed that all parties hereto have
participated in the preparation of this Lease and that each party had the
opportunity to consult legal counsel before the execution of this Lease
25.11 Headings. Headings are used for convenience and shall not be
considered when construing this Lease.
25.12 Execution and Delivery. The submission of an unsigned copy of
this document to Tenant shall not constitute an offer or option to lease the
Premises. This Lease shall become effective and binding only upon execution and
delivery by both Landlord and Tenant.
25.13 Time of Essence. Time is of the essence with respect to each of
Landlord's and Tenant's obligations hereunder.
25.14 Counterparts. This Lease may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
together constitute one and the same document. Faxed signatures shall have the
same binding effect as original signatures.
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25.15 Waiver of Jury Trial. TENANT, GUARANTOR AND ALL MANAGING MEMBERS
(INDIVIDUALLY AND COLLECTIVELY, THE "TENANT PARTIES") AND LANDLORD EACH WAIVES
TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT IN
CONNECTION WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
LEASE, THE RELATIONSHIP OF THE TENANT PARTIES AND LANDLORD, TENANT PARTIES' USE
OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE. THE TENANT
PARTIES CONSENT TO SERVICE OF PROCESS AND ANY PLEADING RELATING TO ANY SUCH
ACTION UPON CT CORPORATION; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL BE
CONSTRUED AS REQUIRING SUCH SERVICE AT THE PREMISES. EACH OF THE TENANT PARTIES
AND LANDLORD WAIVES ANY OBJECTION TO THE VENUE OF ANY ACTION FILED IN ANY COURT
SITUATED IN THE COMMONWEALTH OF VIRGINIA OR IN THE JURISDICTION IN WHICH THE
PREMISES IS LOCATED, AND WAIVES ANY RIGHT, CLAIM OR POWER, UNDER THE DOCTRINE OF
FORUM NON CONVENIENS OR OTHERWISE, TO TRANSFER ANY SUCH ACTION TO ANY OTHER
COURT.
25.16 Survival of Obligations. Tenant's liabilities and obligations
with respect to the period prior to the expiration or earlier termination of the
Lease Term shall survive such expiration or earlier termination.
25.17 No Representations. Landlord's review, approval and consent
powers (including the right to review plans and specifications) are for its
benefit only. Such review, approval or consent (or conditions imposed in
connection therewith) shall be deemed not to constitute a representation
concerning legality, safety or any other matter.
25.18 Landlord Review. Tenant shall pay all reasonable costs, including
reasonable attorneys' fees, incurred by Landlord in connection with Landlord's
review and administration of requests for any easements, lien waivers or
subordinations, signage, assessment appeals, zoning matters, licenses, permits,
encumbrances or other matters related to Tenant or the Premises.
25.19 Organization and Authorization. Landlord and the person executing
and delivering this Lease on Landlord's behalf each represents and warrants that
such person is duly authorized to so act; that Landlord is duly organized, is
qualified to do business in the jurisdiction in which the Premises are located,
is in good standing under the Laws of the state of its organization and the Laws
of the jurisdiction in which the Premises are located, and has the power and
authority to enter into this Lease; and that all action required to authorize
Landlord and such person to enter into this Lease has been duly taken.
25.20 Prevailing Party and Attorney Fees. In the event of any legal
proceeding brought by either party against the other under this Lease, the
prevailing party shall be entitled to recover all reasonable costs and expenses
incurred in connection with such proceeding, including reasonable attorneys'
fees, disbursements and actual costs. As used in this Lease, attorney's fees
shall include an hourly amount for time incurred by in-house attorneys (with the
rate to be equal to 75% of the rate for Landlord's comparably experienced
outside counsel.)
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25.21 Attorney-In-Fact. 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 necessary
documents, 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 Premises, and to do any and all other
acts incidental to any of the foregoing, as fully as Tenant might or could do if
personally present or acting, with full power of substitution. Tenant hereby
ratifies and confirms 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.
25.22 Local Law Requirements. For purposes of applicable law, this
Lease is and shall be deemed a deed of lease.
25.23 Business Day. If the date upon which any obligation or payment is
due occurs on a day that is not a business day, then such time period shall
automatically be extended to the next business day. A "BUSINESS DAY" shall mean
Monday through Friday, excepting Federal holidays.
ARTICLE XXVI
REIT REPRESENTATIONS, WARRANTIES AND COVENANTS
26.1 REIT Status. Tenant acknowledges that Capital Automotive REIT, a
Maryland real estate investment trust (the "COMPANY"), an Affiliate of Landlord,
elects to be taxed as a real estate investment trust (a "REIT") under the Code.
Tenant shall not take or omit to take any action, or permit any status to exist
at the Premises, which would adversely affect the Company's status as a REIT.
Tenant hereby agrees to modifications of this Lease that do not materially
adversely affect Tenant's rights and liabilities hereunder if such modifications
are required to retain or clarify the Company's status as a REIT.
26.2 Sublease and Assignment Restrictions. Notwithstanding anything
contained herein to the contrary and without limiting the generality of Section
26.1 above, Tenant shall not: (a) Sublet all or part of the Premises or Assign
this Lease on any basis such that the rental or other amounts to be paid by the
subtenant or assignee thereunder would be based, in whole or in part, on the
income or profits derived by the business activities of the subtenant or
assignee; (b) Sublet all or part of the Premises or Assign this Lease to any
person or entity in which, under Section 856(d)(2)(B) of the Internal Revenue
Code of 1986, as amended (the "CODE"), the Company or any Affiliate of the
Company 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 all or part of the Premises or Assign 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 26.2 shall likewise apply to any further subleasing by any subtenant.
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All references herein to Section 856 of the Code also shall refer to any
amendments thereof or successor provisions thereto.
26.3 Personal Property. This is a lease of real property, improvements,
and fixtures. No personal property is leased hereunder.
26.4 Interests in REIT. Without limiting the generality of Section 26.1
above, Tenant covenants and agrees that, during the Lease Term, Tenant and its
controlling shareholders and its or their Affiliates will not acquire, directly
or indirectly, more than a nine and nine-tenths percent (9.90%) interest in the
Company , within the meaning of Section 856(d)(2)(B) of the Code, and any
amendments thereof or successor provisions thereto. Tenant covenants and agrees
that it will divest itself or cause such others to divest themselves of such
shares of the Company as may be necessary to satisfy the limitations of this
Section.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal as of the day and year first above written.
WITNESS/ATTEST: LANDLORD:
CAR CHAUNCEY L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
BY: CAPITAL AUTOMOTIVE L.P.,
A DELAWARE LIMITED PARTNERSHIP
BY: CAPITAL AUTOMOTIVE REIT,
A MARYLAND REAL ESTATE
INVESTMENT TRUST,
ITS GENERAL PARTNER
BY: BY: [SEAL]
------------------------------- --------------------
NAME: NAME:
----------------------------- ------------------------
TITLE: TITLE:
---------------------------- -----------------------
TENANT:
UAG REALTY, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
BY: BY: [SEAL]
------------------------------- --------------------------
NAME: NAME:
----------------------------- -------------------------------
TITLE: TITLE:
---------------------------- ------------------------------
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EXHIBIT A
LEGAL DESCRIPTION OF PREMISES
[TO BE ATTACHED]
A-1
EXHIBIT B
FORM OF CERTIFICATE CONFIRMING LEASE COMMENCEMENT DATE
This Certificate is being provided to Tenant pursuant to the terms of
that certain Lease Agreement dated as of __________, by and between [CAR
Entity], as Landlord, and _______________________, as Tenant (the "LEASE"). This
Certificate shall confirm that the Lease Commencement Date is __________, and
accordingly, the initial term of the Lease shall expire on __________, 20___,
unless earlier terminated or extended pursuant to the terms of the Lease.
CAR CHAUNCEY L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
BY: CAPITAL AUTOMOTIVE L.P.,
A DELAWARE LIMITED PARTNERSHIP
BY: CAPITAL AUTOMOTIVE REIT,
A MARYLAND REAL ESTATE INVESTMENT
TRUST, ITS GENERAL PARTNER
BY: [SEAL]
----------------------
NAME:
---------------------------
TITLE:
--------------------------
B-1
EXHIBIT C
Base Rent. From and after the Lease Commencement Date, Tenant shall pay the Base
Rent in equal monthly installments on the first day of each month during each
Lease Year. If the Lease Commencement Date is not the first day of a month, then
the Base Rent from the Lease Commencement Date until the first day of the
following month shall be prorated on a per diem basis at the rate of
one-thirtieth (1/30th) of the monthly installment of the Base Rent payable
during the first Lease Year, and Tenant shall pay such prorated installment of
the Base Rent on the Lease Commencement Date. "BASE RENT" shall be
$9,250,000.00. The Base Rent shall escalate in accordance with the terms of
Section 4.2 hereof.
Base Rent Escalation. On each Base Rent Adjustment Date during the Lease Term,
the Base Rent then in effect shall be increased by an amount equal to the
product of (a) the Base Rent in effect immediately prior to such Base Rent
Adjustment Date, multiplied by (b) the percentage increase between the CPI in
effect for the month preceding the previous Base Rent Adjustment Date (or, with
respect to the first scheduled adjustment, the month preceding the Lease
Commencement Date) and the CPI in effect for the month preceding the then
current Base Rent Adjustment Date. Such adjusted Base Rent shall continue in
effect as the Base Rent until the next Base Rent Adjustment Date.
Notwithstanding the foregoing, in no event shall the Base Rent, as so escalated,
for any Lease Year be less than one hundred percent (100%) nor more than one
hundred fifteen percent (115%) of the escalated Base Rent in effect for the
immediately preceding Lease Year. As used in this Lease, the term "CPI" means
the Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, all
items (1982-84), as published by the United States Department of Labor, Bureau
of Labor Statistics. If the CPI is changed so that a base year other than
1982-84 is used, then the CPI shall be adjusted in accordance with the
conversion factor published by the Bureau of Labor Statistics. If the CPI is
discontinued or revised, the CPI used for purposes of this Lease shall be
adjusted or replaced by Landlord with an index or measure reasonably calculated
by Landlord to measure the change in the cost of living in a manner consistent
with the CPI.
EXHIBIT D
CONSTRUCTION DOCUMENTS
That certain Standard Form of Agreement Between Owner and
Design/Builder dated February __, 2001 by and between UAG Realty, L.L.C., a
Delaware limited liability company, and ▇▇▇▇▇▇▇ Construction Company, a
California company, as amended by that certain Amendment One of Agreement
Between Owner and Design/Builder dated April __, 2001.