LEASE
THIS LEASE (this "Lease") is entered into as of the ____ day of
_______________, 1998 (the "Commencement Date"), by and between [ICCMIC entity],
a_______________ (the "Landlord"), whose address for purposes of notice
hereunder is ______________, and [Ugly Duckling Car Sales, Inc.], an Arizona
corporation (the "Tenant"), whose address for purposes of notice hereunder is
Attn.: General Counsel, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇.
R E C I T A L S
This Lease is made with reference to the following facts and objectives:
Landlord is the owner of the following: (i) certain tract(s) or parcel(s)
of land located in , and more particularly described on the attached and
incorporated Exhibit "A" (the land described above, together with all rights,
interests, easements, rights of way and appurtenances related thereto, shall
hereinafter be referred to as the "Land"); and (ii) a building or buildings
located or to be located on the Land and all other structures and improvements
existing or to be constructed on the Land, together with all fixtures and
equipment therein owned by Landlord and used in the operation of the same
(collectively, the "Improvements"). The Land and Improvements are hereinafter
collectively referred to as the "Premises." No easement for light, air or view
is included with or appurtenant to the Premises.
Pursuant to all of the terms, conditions, covenants and provisions of this
Lease, Tenant desires to lease the Premises from Landlord, and Landlord desires
to lease the Premises to Tenant, for the rents and during the terms hereinafter
set forth.
Landlord acquired the Premises on the Commencement Date and for the period
of at least _________ years prior to the Commencement Date, Tenant owned,
occupied and operated the Premises.
Tenant has examined the title of the Premises, the physical condition of
the Premises, environmental studies and reports of the Premises, and the
economic feasibility of conducting its business in and from the Premises. Tenant
has determined that the same are satisfactory to Tenant, and Tenant accepts the
Premises on an "AS IS - WHERE IS" basis. TENANT ACKNOWLEDGES THAT LANDLORD
(WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND
WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES, INCLUDING ANY
WARRANTY OR REPRESENTATION AS TO ITS FITNESS FOR USE OR PURPOSE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE, AS TO THE QUALITY OF THE MATERIAL
OR WORKMANSHIP THEREIN, LATENT OR PATENT, AS TO LANDLORD'S TITLE THERETO, OR AS
TO VALUE, COMPLIANCE WITH SPECIFICATIONS, LOCATION, USE, CONDITION,
MERCHANTABILITY, QUALITY, DESCRIPTION, DURABILITY OR OPERATION, IT BEING AGREED
THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. Tenant acknowledges
that the Premises are of its selection and to its specifications, and that the
Premises have been inspected by Tenant and are satisfactory to it. In the event
of any defect or deficiency in the Premises of any nature, whether patent or
latent, Landlord shall not have any responsibility or liability with respect
thereto or for any incidental or consequential damages (including strict
liability in tort).
It is the parties' objective to provide for an absolute "bond equivalent"
net net net lease to Landlord; the Basic Rent (as hereinafter defined) payable
by Tenant hereunder shall be an absolute "bond equivalent" net net net return to
Landlord and Tenant shall pay all costs and expenses relating to the Premises
and Tenant's operations thereon. Landlord would not have entered into this Lease
if it did not meet the aforesaid criteria.
NOW, THEREFORE, IN CONSIDERATION of the aforesaid Recitals, and in
consideration of the Premises leased by Landlord to Tenant hereby, and in
consideration of the rents and covenants to be paid and performed by Tenant
hereunder, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties covenant and agree as
follows:
I. LEASE.
1.1. Demise of Premises. Landlord hereby demises the Premises to
Tenant, and Tenant hereby lets and accepts the Premises from Landlord, for
the term herein described.
1.2. Title and Condition. The Premises are demised and let "as is"
subject to all matters of record and all other title exceptions, including
but not limited to (a) the rights of any parties in possession and the
existing state of the title as of the commencement of the term of this
Lease, (b) any state of facts which an accurate survey or physical
inspection thereof might show, (c) all zoning regulations, restrictions,
rules and ordinances, building restrictions and other laws and regulations
now in effect or hereafter adopted by any governmental authority having
jurisdiction over the condition of any buildings, structures and other
improvements located thereon, all as of the commencement of the term of
this Lease, without representation or warranty by Landlord. Tenant
represents that it has examined the title to and the condition of the
Premises and has found the same to be satisfactory to it.
1.3. Use of Leased Premises.
(a) Tenant is currently operating the Premises for the purpose of
used car sales and activities incidental and related thereto (the
"Intended Use"). Tenant agrees to remain open for business and to
operate the Intended Use in all or substantially all of the Premises
during the Term. Tenant may occupy and use the Premises for no use
other than the Intended Use without Landlord's consent, which shall
not be unreasonably withheld conditioned or delayed. In no event,
however, shall the Premises be used for a use which would (i) have a
permanent and material adverse effect on the value of the Premises,
(ii) increase (when compared to use as the Intended Use) the
likelihood that Tenant, Landlord or Lender would incur liability under
any provisions of any Environmental Laws, or (iii) result in or give
rise to any material environmental deterioration or degradation of the
Premises. Tenant shall not create or suffer to exist any public or
private nuisance, hazardous or illegal condition or waste on or with
respect to the Premises. Tenant shall not use, occupy or permit any of
the Premises to be used or occupied, nor do or permit anything to be
done in or on any of the Premises, in a manner which would (A) make
void or voidable any insurance which Tenant is required hereunder to
maintain then in force with respect to any of the Premises, or (B)
affect the ability of Tenant to obtain any insurance which Tenant is
required to furnish hereunder, (C) impair Landlord's title to the
Premises, or in such manner as might reasonably make possible a claim
or claims of adverse usage or adverse possession by the public, as
such, or third Persons, or of implied dedication of the Premises or
any portion thereof, or (D) conflict with the terms or conditions of
any instrument or agreement between Landlord and Tenant. Nothing
contained in this Lease and no action by Landlord shall be construed
to mean that Landlord has granted to Tenant any authority to do any
act or make any agreement that may create any such third party or
public right, title, interest, lien, charge or other encumbrance upon
the estate of the Landlord in the Premises.
(b) Tenant shall not conduct its business operation in the
Premises unless and until (and only during such time as) all necessary
certificates of occupancy, permits, licenses and consents from any and
all appropriate governmental authorities have been obtained by Tenant
and are in full force and effect.
1.4. Quiet Enjoyment. For so long as no Event of Default (as
hereinafter defined) has occurred and is continuing hereunder, Landlord
warrants peaceful and quiet enjoyment of the Premises by Tenant against
acts of Landlord or anyone claiming through Landlord, provided that
Landlord and its agents may enter upon and examine the Premises at
reasonable times. Exercise by Landlord of its rights to come upon the
Premises as set forth in this Lease shall not constitute a violation of
this Section.
II. TERM.
2.1. Term. Subject to the terms and conditions hereof, Tenant shall
have and hold the Premises for a primary term (herein called the "Primary
Term") commencing on the Commencement Date and ending at midnight on
_______________, 2013, unless this Lease shall be sooner terminated or
extended. Tenant shall have the right and option to extend this Lease for
four (4) consecutive extended terms, of five (5) years each (herein,
collectively called the "Extended Terms" and individually, an "Extended
Term" and together with the Primary Term, sometimes hereinafter called the
"Term" "term of this Lease" or "term hereof"). If no Event of Default shall
exist at the time of exercise of such option, each Extended Term shall
commence on the day immediately succeeding the expiration date of the
Primary Term or the preceding Extended Term and shall end at midnight on
the day immediately preceding the fifth anniversary of the first day of
such Extended Term. Provided no Event of Default shall exist at the time of
exercise of such option, Tenant may exercise each said option to extend
this Lease for an Extended Term by giving written notice to that effect at
least six (6) months prior to the expiration of the then existing term. If
Tenant fails to exercise an option to extend the Term six (6) months or
more prior to the expiration of the then current Term, Tenant's option to
extend the Term shall not be terminated and this Lease shall not expire
unless Landlord delivers to Tenant written notice of Tenant's failure to
exercise its option to extend the Term of this Lease and Tenant then fails
to exercise the option within fifteen (15) days after receipt of the
written notice from Landlord. If Tenant does not exercise any such option
in a timely manner, then Landlord shall have the right during the remainder
of the Term of this Lease to advertise the availability of the Premises for
reletting and to erect upon the Premises signs appropriate for the purpose
of indicating such availability. The term "Lease Year" shall mean a
calendar year, except that the first partial "Lease Year" (the "First Lease
Year") shall commence on the "Commencement Date and expire on December 31,
1998.
III. BASIC RENT; ADDITIONAL RENT.
3.1. Basic Rent. Tenant covenants to pay to Landlord as and for the
rental of the Premises the amounts set forth below (which amounts, as
increased by the amounts provided for in Section 3.2 hereof, is together
called the "Basic Rent"):
(a) For and with respect to the First Lease Year the amount of $
___________, payable in equal monthly installments of
$____________ (but if the Commencement Date does not occur on the
first day of a calendar month, the installment for the period
from the Commencement Date to the end of the calendar month in
which the Commencement Date occurs shall be paid on the
Commencement Date and shall be prorated based on a thirty (30)
day month).
(b) For and with respect to the second Lease Year (i.e., calendar
year 1999), the amount of $ ___________, payable in equal monthly
installments of $____________ .
(c) Basic Rent shall be adjusted commencing with the first (1st) day
of the third Lease Year and as of the first (1st) day of each
Lease Year thereafter (each such date being referred to herein as
an "BR Adjustment Date" and each such Lease Year commencing with
the third Lease Year being referred to herein as a "BR Period").
Basic Rent for the first BR Period will be adjusted on the first
BR Adjustment Date by an amount calculated by multiplying the
Basic Rent then in effect by the percentage increase, if any, in
the "CPI", as defined below in this paragraph, from the month
immediately preceding the BR Adjustment Date over the CPI for the
month immediately preceding the second Lease Year. Basic Rent for
each subsequent BR Period will be adjusted on each subsequent BR
Adjustment Date by an amount calculated by multiplying the Basic
Rent then in effect, by the percentage increase, if any, in the
CPI from the last month of the BR Period then ending over the CPI
for the last month of the most recent prior BR Adjustment Date.
Notwithstanding the foregoing to the contrary, in no event shall
the percentage increase for any such Lease Year exceed four
percent (4%) or be less than two percent (2%). The "CPI" shall
mean (and charges subject to adjustment pursuant to the CPI under
this Lease shall mean adjustment pursuant to changes in) the
"Consumer Price Index For All Urban Consumers (1982-84=100),
published by the Bureau of Labor Statistics of the U.S.
Department of Labor. If no CPI is published for the month for
which CPI is to be utilized pursuant to this Lease, the most
recent prior month shall be utilized. In the event the CPI is not
published by the Bureau of Labor Statistics or another
governmental agency at any time during the Term, the most
comparable statistics on the purchasing power of the consumer
dollar as published by a responsible financial authority and as
selected by Landlord shall be used for making such computation.
(d) If an option to extend the Term is exercised, for and with
respect to the applicable Extended Term, at the rate equal to
ninety-five percent (95%) of fair market rental value, but in no
event less than the Basic Rent payable in the last year of the
prior portion of the Term ("Extended Term Basic Rent"). Fair
market rental value will be determined as of the first day of the
applicable Extended Term but at the time and on the basis set
forth in Section 11.3 hereof.
Tenant unconditionally and irrevocably agrees to make the Basic Rent
payments directly to Landlord or Landlord's designee and to pay the same on
the first day of each month, commencing on the Commencement Date. After any
Event of Default, Landlord shall have the right to require that such
payments be made in immediately available funds.
3.2. Additional Rent. Tenant shall pay and discharge before the
imposition of any fine, lien, interest or penalty may be added thereto for
late payment thereof, as Additional Rent, all other amounts and obligations
which Tenant assumes or agrees to pay or discharge pursuant to this Lease,
together with every fine, penalty, interest and cost which may be added by
the party to whom such payment is due for nonpayment or late payment
thereof. In the event of any failure by Tenant to pay or discharge any of
the foregoing, Landlord shall have all rights, powers and remedies provided
herein, by law or otherwise, in the event of nonpayment of Basic Rent.
3.3. Late Charge. If any installment of Basic Rent is not paid within
five (5) days after notice that the same is due and not paid, Tenant shall
pay to Landlord or Lender, as the case may be, on demand, as Additional
Rent, a late charge equal to three percent (3%) (the "Late Charge") on such
overdue installment of Basic Rent. Such payment shall be in addition to,
and not in lieu of, the interest payable pursuant to Section 11.17.
3.4. True Lease. Landlord and Tenant agree that this Lease is a true
lease and does not represent a financing arrangement. Each party shall
reflect the transactions represented by this Lease in all applicable books,
records and reports (including, without limitation, income tax filings) in
a manner consistent with "true lease" treatment rather than "financing"
treatment.
3.5. Net Lease; Non-Terminability.
(a) This is an absolutely net lease to Landlord. It is the intent of
the parties hereto that the Basic Rent payable under this Lease
shall be an absolutely net return to Landlord and that Tenant
shall pay all costs and expenses relating to the Premises and
operations carried on therein, including but not limited to costs
and expenses relating to any period prior to the Commencement
Date. Any amount or obligation herein relating to the Premises
which is not expressly declared to be that of Landlord shall be
deemed to be an obligation of Tenant to be timely performed by
Tenant at Tenant's expense. Basic Rent, Additional Rent and all
other sums payable hereunder by Tenant, shall be paid without
notice, demand, set-off, counterclaim, abatement, suspension,
deduction or defense.
(b) This Lease shall not terminate nor shall Tenant have any right to
terminate this Lease, nor shall Tenant be entitled to any
abatement or reduction of rent hereunder, nor shall the
obligations of Tenant under this Lease be affected by reason of:
(i) any damage to or destruction of all or any part of the
Premises from whatever cause; (ii) the taking in whole or in part
of the Premises or any portion thereof by condemnation,
requisition or otherwise except as provided in Article VII; (iii)
the prohibition, limitation or restriction of Tenant's use of all
or any part of the Premises, or any interference with such use;
(iv) any eviction by paramount title or otherwise; (v) Tenant's
acquisition or ownership of all or any of the Premises otherwise
than as expressly provided herein; (vi) any default on the part
of Landlord under this Lease, or under any other agreement to
which Landlord and Tenant may be parties; (vii) any abandonment
of the Premises by Tenant or (viii) any other cause whether
similar or dissimilar to the foregoing, any present or future law
to the contrary notwithstanding. It is the intention of the
parties hereto that the obligations of Tenant hereunder shall be
separate and independent covenants and agreements, that the Basic
Rent, the Additional Rent and all other sums payable by Tenant
hereunder shall continue to be payable in all events and that the
obligations of Tenant hereunder shall continue unaffected, unless
the requirement to pay or perform the same shall have been
terminated pursuant to Articles VII or XI (Section 11.18) of this
Lease.
(c) Tenant agrees that it will remain obligated under this Lease in
accordance with its terms, and it will not take any action to
terminate, rescind or avoid this Lease because of: (i) any
readjustment, liquidation, dissolution, or winding-up or other
proceeding affecting Landlord or its successors-in-interest or
(ii) any action with respect to this Lease which may be taken by
any trustee or receiver of Landlord or its successors-in-interest
or by any court in any such proceeding.
(d) To the extent permitted by applicable law, Tenant waives all
rights which may now or hereafter be conferred by law (i) to
quit, terminate or surrender this Lease or the Premises or any
part thereof, or (ii) to any abatement, suspension, deferment or
reduction of the Basic Rent, Additional Rent or any other sums
payable under this Lease.
IV. PAYMENT OF IMPOSITIONS, TAXES AND ASSESSMENTS; COMPLIANCE WITH
LAW;ENVIRONMENTAL MATTERS.
4.1. Payment of Impositions. Tenant shall pay or discharge all
Impositions (as hereinafter defined) when due, including but not limited to
Impositions relating to any period prior to the Commencement Date.
Notwithstanding the foregoing provision of this Section 4.1, Tenant shall
not be required to pay any franchise, corporate, estate, inheritance,
succession, transfer (other than transfer taxes, recording fees, or similar
charges payable in connection with a conveyance hereunder to Tenant),
income or excess profits taxes of Landlord hereunder. Tenant agrees to
furnish to Landlord and Lender, evidence of the payment of the taxes
described in Section 11.12(a)(i) within thirty (30) days after payment
thereof. Tenant agrees to furnish evidence of payment of other Impositions
with fifteen (15) days of Landlord's request therefor. In the event that
any Imposition levied or assessed against the Premises becomes due and
payable during the term hereof and may be legally paid in installments,
Tenant shall have the option to pay such Imposition in installments. In
such event, Tenant shall be liable only for those installments which become
due and payable during the term hereof or which were due and payable prior
to the term hereof.
4.2. Compliance with Laws. Tenant shall, at its expense, comply with
and shall cause the Premises to comply with all governmental statutes,
laws, rules, orders, regulations and ordinances, including without
limitation, the Americans with Disabilities Act of 1990, as the same may be
amended from time to time, all fire regulations, occupational health and
safety laws, applicable point of sale laws, building codes, Environmental
Laws, zoning and land use laws and regulations, and any other law the
failure to comply with which at any time would materially affect Landlord
or the Premises or any part thereof, or the use thereof, including those
which require the making of any structural, unforeseen or extraordinary
changes, whether or not any of the same involve a change of policy on the
part of the body enacting the same. Tenant shall, at its expense, comply
with all changes required in order to obtain the Required Insurance (as
hereinafter defined), and with the provisions of all contracts, agreements,
instruments and restrictions existing at the commencement of this Lease or
thereafter suffered or permitted by Tenant affecting the Premises or any
part thereof or the ownership, occupancy or use thereof.
4.3. Permitted Contests. Provided that Tenant shall have complied
with, and shall continue to comply with, its obligations under Section 4.2,
Tenant may contest, in good faith and at its expense and in accordance with
all laws and governmental requirements, the existence, the amount or the
validity of the requirements imposed pursuant to Section 4.2, or the extent
of its liability therefor, by appropriate proceedings. At least thirty (30)
days prior to any such contest, and as a condition thereto, Tenant shall
notify Landlord as to the proposed contest in reasonable detail, and
Landlord shall have the right to require Tenant to post security in amount
and form reasonably required by Landlord. No such contest or proceedings
shall in any way eliminate or otherwise interfere with Tenant's obligation
to make timely payments of Basic Rent and Additional Rent under this Lease.
Tenant further agrees that each such contest shall be promptly prosecuted
to a final conclusion. Tenant shall pay, indemnify and save Landlord
harmless against, any and all losses, judgments, decrees and costs
(including all attorneys' fees, appearance costs and expenses) incurred by
Landlord during the Lease Term in connection with any such contest and
shall, promptly after the final settlement, compromise or determination of
such contest, fully pay and discharge the amounts which shall be levied,
assessed, charged or imposed or be determined to be payable therein or in
connection therewith, together with all penalties, fines, interests, costs
and expenses thereof or in connection therewith, and perform all acts, the
performance of which shall be ordered or decreed as a result thereof. No
such contest shall subject Landlord to the risk of any criminal liability
or shall subject the Premises to the risk of foreclosure.
4.4. Hazardous Materials. Tenant shall:
(a) not cause, or permit any Hazardous Material (as defined below) to
exist on or discharge from the Premises (except for items sold or
used in the ordinary course of Tenant's business and for which
any required licenses and permits are issued and in any event in
accordance with Environmental Laws), and shall promptly: (i) pay
any claim against Tenant, Landlord, Lender or the Premises; (ii)
remove any charge or lien upon any of the Premises; and (iii)
defend, indemnify and hold Landlord and Lender harmless from any
and all claims, expenses, liability, loss or damage (including
reasonable attorneys' fees) resulting from any Hazardous Material
that at any time exists on or is discharged from the Premises
except to the extent it is the direct result of the actual gross
negligence or willful misconduct of Landlord;
(b) not cause or permit any Hazardous Material to exist on or
discharge from any property owned or used by Tenant which would
result in any charge or lien upon the Premises and shall
promptly: (i) pay any claim against Tenant, Landlord, Lender or
the Premises; (ii) remove any charge or lien upon the Premises;
and (iii) defend, indemnify and hold Landlord and Lender harmless
from any and all claims, expenses, liability, loss or damage
(including reasonable attorneys' fees) resulting from the
existence or discharge of any such Hazardous Material except to
the extent it is the direct result of the actual gross negligence
or willful misconduct of Landlord;
(c) notify Landlord and Lender within ten (10) days after Tenant
first has knowledge of any of the following:
(i) that Hazardous Material exists on or has been discharged
from or onto the Premises (whether originating thereon or
migrating to the Premises from other property);
(ii) that Tenant is subject to investigation by any governmental
authority evaluating whether any remedial action is needed
to respond to the release or threatened release of any
Hazardous Material into the environment from the Premises;
(iii)notice or claim to the effect that Tenant is or may be
liable to any person as a result of the release or
threatened release of any Hazardous Material into the
environment from the Premises;
(iv) notice that the Premises are subject to an environmental
lien;
(v) notice of violation to Tenant or awareness by Tenant of a
condition which might reasonably result in a notice of
violation of any applicable Environmental Law.
(d) comply, and cause the Premises to comply, with all statutes,
laws, ordinances, rules and regulations of all local, state or
federal authorities having authority over the Premises or any
portion thereof or their use, including without limitation,
relative to any Hazardous Material, petroleum products, asbestos
containing materials or PCB's.
(e) "Hazardous Material" means any hazardous or toxic material,
substance or waste which is defined by those or similar terms or
is regulated as such under any Environmental Laws. "Environmental
Laws" means any statute, law, ordinance, rule or regulation of
any local, county, state or federal authority having jurisdiction
over the Property or any portion thereof or its use as the same
may be amended from time to time, including but not limited to:
(i) the Federal Water Pollution Control Act (33 U.S.C. Section
1317) as amended; (ii) the Federal Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.) as amended; (iii)
the Comprehensive Environmental Response Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) as amended; (iv)
the Toxic Substance Control Act (15 U.S.C. Section 2601) as
amended; and (v) the Clean Air Act (42 U.S.C. Section 7401) as
amended.
(f) The Tenant's obligations and liabilities under this Section 4.4
shall survive the expiration or termination of this Lease and
shall include, without limitation, matters arising prior to the
Commencement Date.
[Note: Additional covenants, etc. may be required to deal with
recommendations included in, or issues raised by, the environmental audits.]
V. MAINTENANCE AND REPAIR; ALTERATIONS.
5.1. Maintenance and Repair. Tenant acknowledges that it has received
the Premises in good condition, repair and appearance. Tenant agrees that,
at its expense, it will keep and maintain the Premises, including any
altered, rebuilt, additional or substituted buildings, structures and other
improvements thereto, in good condition and repair. It will make promptly,
all structural and nonstructural, foreseen and unforeseen, ordinary and
extraordinary changes and repairs or replacements of every kind which may
be required to be made to keep and maintain the Premises in such good
condition, repair and appearance and it will keep the Premises orderly and
free and clear of rubbish. Tenant covenants not to install any underground
storage tanks on the Premises. [Note: depending on the results of the
environmental audits, we may need to include language regarding remediation
of any existing tanks.] Tenant agrees that its obligation to maintain and
repair the Premises as set forth in this Section 5.1 benefit both Landlord
and Tenant, are the sole responsibility of Tenant, and may not be
delegated. Tenant further covenants to perform or observe all terms,
covenants or conditions of any reciprocal easement or maintenance agreement
to which it may at any time be a party or to which the Premises are
currently subject. Tenant shall, at its expense, use its best efforts to
enforce compliance with any reciprocal easement or maintenance agreement
benefiting the Premises by any other person subject to such agreement.
Landlord shall not be required to maintain, repair or rebuild, or to make
any Alterations of any nature to the Premises, or any part thereof, whether
ordinary or extraordinary, structural or nonstructural, foreseen or not
foreseen, or to maintain the Premises or any part thereof in any way.
Tenant hereby expressly waives the right to make repairs at the expense of
Landlord which may be provided for in any law in effect at the time of the
commencement of the term of this Lease or which may thereafter be enacted.
If Tenant shall abandon the Premises, it shall give Landlord and Lender
immediate notice thereof. The obligations of the Tenant to pay Basic Rent
and Additional Rent shall not be eliminated, reduced, suspended, or
otherwise impaired by reason of such abandonment of the Premises. In the
event that the Premises shall violate any law and as a result of such
violation an enforcement action is threatened or commenced against Tenant
or with respect to the Premises, then Tenant shall either (i) obtain valid
and effective waivers or settlements of all claims, liabilities and damages
resulting from each such violation, whether the same shall affect Landlord,
Tenant or both, or (ii) take such action as shall be necessary to remove
such violation, including, if necessary, making any necessary repairs or
replacements, structural or otherwise.
5.2. Engineering Report. Beginning the Sixth Lease Year, and every
five (5) years thereafter, Tenant shall provide Landlord, upon Landlord's
written request, with an engineering study of the Premises ("Engineering
Report") addressed to Landlord, in form, content and scope reasonably
acceptable to Landlord, prepared by a qualified engineering firm. The
Engineering Report shall include, without limitation, a study or analysis
of (a) all structural components of the Premises, (b) all mechanical,
electrical, plumbing, HVAC, sprinkler, fire suppression, elevators, and
other building systems and equipment designated by Landlord, and (c) the
roof of all buildings.
5.3. Encroachments. If any Improvements situated on the Premises at
any time during the Term of this Lease shall encroach upon any property,
street or right-of-way adjoining or adjacent to the Premises, or shall
violate the agreements or conditions contained in any restrictive covenant
affecting the Premises or any part thereof, or shall impair the rights of
others under or hinder or obstruct any easement or right-of-way to which
the Premises are subject, then, promptly after the written request of
Landlord or any person affected by any such encroachment, violation,
impairment, hindrance or obstruction, Tenant shall, at its expense, either
(i) obtain effective waivers, or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation, impairment,
hindrance or obstruction whether the same shall affect Landlord, Tenant or
both, or (ii) make such changes in the improvements on the Premises and
take such other action as shall be necessary to remove such encroachments,
hindrances or obstructions and to end such violations or impairments,
including, if necessary, the alteration or removal of any improvement on
the Premises. Any such alteration or removal shall be made in conformity
with the requirements of Section 5.4 hereof to the same extent as if such
alteration or removal were an Alteration under the provisions of Section
5.4.
5.4. Alterations.
(a) Tenant may, at its expense, make additions to and alterations of
the Improvements to the Premises and make substitutions and
replacements thereto (sometimes hereinafter collectively referred
to as "Alterations"), provided that: (i) Landlord approves, which
approval shall not be unreasonably withheld, conditioned or
delayed, any Alterations to the Premises before such alterations
are commenced, after having received from Tenant a complete set
of plans and specifications for the proposed work, (ii) in
Landlord's reasonable judgment, the market value of the Premises
and the Intended Use shall not thereby be reduced or impaired and
the appearance of the Property will not be adversely affected;
(iii) the Alterations are architecturally consistent with
existing Improvements; (iv) the Alterations shall be performed in
a good and workmanlike manner; (v) such work shall not violate
any term of any restriction to which the Premises are subject or
the requirements of any insurance policy required to be
maintained by Tenant hereunder, and shall be expeditiously
completed in compliance with all laws, ordinances, rules,
regulations and requirements applicable thereto, including
without limitation, the Americans with Disabilities Act of 1990
and all regulations issued thereunder, as the same may be amended
from time to time; and (vi) no Improvements shall be demolished
unless Tenant shall have first furnished Landlord with such
surety bonds or other security acceptable to Landlord as shall be
necessary to assure rebuilding of such Improvements. Tenant shall
promptly pay all costs and expenses of each such Alteration,
discharge all liens arising therefrom and procure and pay for all
permits and licenses required in connection therewith. All such
Alterations shall be and remain part of the realty and the
property of Landlord and shall be subject to this Lease. Tenant
may place upon the Premises any inventory, trade fixtures,
machinery or equipment belonging to Tenant or third parties and
may remove the same at any time during the Term. Tenant shall
repair any damage to the Premises or any portion thereof
(including all Improvements thereon) caused by such removal.
5.5. No Liens. Tenant will not, directly or indirectly, create or
permit to be created or to remain, and shall within thirty (30) days of
filing of any, mechanics, contractors or other liens, discharge or bond, at
its expense, any liens with respect to, the Premises or any part thereof or
Tenant's interest therein or the Basic Rent, Additional Rent or other sums
payable by Tenant under this Lease, other than the lien for real estate
taxes which are not yet due and payable. Nothing contained in this Lease
shall be construed as constituting the consent or request, expressed or
implied, by Landlord to the performance of any labor or services or of the
furnishing of any materials for any Alterations, repair or demolition of or
to the Premises or any part thereof by any contractor, subcontractor,
laborer, materialman or vendor. Notice is hereby given that Landlord will
not be liable for any labor, services or materials furnished or to be
furnished to Tenant, or to anyone holding the Premises or any part thereof,
and that no mechanic's or other liens for any such labor services or
materials shall attach to or affect the interest of Landlord in and to the
Premises.
VI. INSURANCE; INDEMNIFICATION.
6.1. Insurance. Tenant shall maintain, or cause to be maintained, at
its sole expense, the following insurance on the Premises (herein called
the "Required Insurance"):
(a) Insurance against loss or damage to the Improvements (the
"Improvements Insurance") under a fire and broad form of all risk
extended coverage insurance policy (which shall include flood
insurance if the Premises is located within a flood hazard area,
and earthquake insurance) together with an agreed value
endorsement. Such insurance shall be in amounts sufficient to
prevent Landlord or Tenant from becoming a co-insurer under the
applicable policies, and not less than the full replacement cost
of the Improvements (excluding footings and foundations and other
parts of the Improvements which are not insurable) as reasonably
determined from time to time by Landlord but not more frequently
than once in any 12-month period. Such insurance policies may
contain reasonable exclusions and deductible amounts as are
common to properties similar to the Premises.
(b) General public liability insurance for the benefit of Landlord,
Tenant and Lender against claims for damages to person or
property occurring on, in or about the Premises and the adjoining
streets, sidewalks, gutters, curbs, passageways and other areas
adjacent thereto, if any, with a combined single limit of at
least Five Million Dollars ($5,000,000.00) for personal injury
and property damage, such insurance to include full coverage of
the indemnity set forth in Section 6.10. Policies for such
insurance shall be for the mutual benefit of Landlord, Tenant and
Lender, as their respective interests may appear.
(c) Workers' compensation insurance to the extent necessary to
protect Landlord, Tenant and the Premises against workers'
compensation claims, covering all persons employed in connection
with any work done on or about the Premises with respect to which
claims for death or bodily injury could be asserted against
Landlord, Tenant or the Premises. Such policy of workers'
compensation insurance shall comply with all of the requirements
of applicable state law.
(d) At any time when any portion of the Premises are being
constructed, altered or replaced, builder's risk insurance (in
completed value non-reporting form) in an amount no less than the
actual replacement value of the Improvements, exclusive of
foundations and excavations.
6.2. Permitted Insurers. The Required Insurance shall be written by
companies of recognized financial standing authorized to do insurance
business in the state in which the Premises are located and have Bests
ratings of A X or better. The Required Insurance shall name as the insured
parties thereunder Landlord and Tenant, as their interests may appear, and
Lender as an additional insured under a standard "mortgagee" endorsement or
its equivalent satisfactory to Landlord. Landlord shall not be required to
prosecute any claim against, or to contest any settlement proposed by, an
insurer. Tenant may, at its expense, prosecute any such claim or contest
any such settlement in the name of Landlord, Tenant or both with the
consent of Landlord, and Landlord will join therein at Tenant's written
request upon the receipt by Landlord of an indemnity from Tenant against
all costs, liabilities and expenses in connection therewith.
6.3. Insurance Claims. Insurance claims by reason of damage to or
destruction of any portion of the Premises shall be primarily adjusted by
Tenant, but both Landlord and Lender shall have the right to join with
Tenant in adjusting any such loss and approve any adjustment proposed by
Tenant.
6.4. Insured Parties. Any loss under any such policy shall be made
payable to Landlord (or, if Landlord so elects, to Lender), subject to the
requirements of Section 6.9. Every policy of Required Insurance shall
contain an agreement that the insurer will not cancel such policy except
after thirty (30) days' written notice to Landlord and Lender and that any
loss otherwise payable thereunder shall be payable notwithstanding any act
or negligence of Landlord, Tenant or Lender which might, absent such
agreement, result in a forfeiture of all or a part of such insurance
payment and notwithstanding (i) any foreclosure or other action taken by a
creditor pursuant to any provision of any Mortgage or other Loan Document
upon the happening of a default or Event of Default thereunder or (ii) any
change in ownership of the Premises.
6.5. Delivery of Policies. Tenant shall deliver to Landlord promptly
after the delivery of this Lease, the original or duplicate policies or
Accord-27 form certificates of insurers, satisfactory to Lender, evidencing
all of the Required Insurance. Tenant shall, prior to the expiration of any
such policy, deliver to Landlord another original or duplicate of such
policy or certificates evidencing the renewal of any such policy. If Tenant
fails to maintain or renew any Required Insurance, or to pay the premium
therefor, or to deliver such certificate, then Landlord, at its option, but
without obligation to do so, procure such insurance. Any sums so expended
by Landlord shall be Additional Rent hereunder and shall be repaid by
Tenant within five (5) days after notice to Tenant of such expenditure and
the amount thereof. together with interest thereon at the Interest Rate.
6.6. No Double Coverage. Tenant shall not obtain or carry separate
insurance covering the same risks as any Required Insurance unless Tenant,
Landlord and Lender are included therein as named insured, with loss
payable as provided in this Lease and the policy contains a first mortgagee
endorsement in favor of the Lender. Tenant shall immediately notify
Landlord whenever any such separate insurance is obtained and shall deliver
to Landlord the policies or certificates evidencing the same. Any insurance
which Landlord may elect to carry shall be excess and not primary coverage.
6.7. Blanket Insurance. Anything contained in this Article VI to the
contrary notwithstanding, all Required Insurance may be carried under a
"blanket" or "umbrella" policy or policies covering other property or
liabilities of Tenant, provided that such policies otherwise comply with
the provisions of this Lease and specify the coverage and amounts thereof
with respect to the Premises.
6.8. Damages for Tenant's Failure to Properly Insure. Landlord or
Lender shall not be limited in the proof of any damages which Landlord or
Lender may claim against Tenant arising out of or by reason of Tenant's
failure to provide and keep in force insurance, as provided above, to the
amount of the insurance premium or premiums not paid or incurred by Tenant
and which would have been payable under such insurance; but Landlord and
Lender shall also be entitled to recover as damages for such breach, the
uninsured amount of any loss, to the extent of any deficiency in the
Required Insurance and damages, costs and expenses of suit suffered or
incurred by reason of or damage to, or destruction of, the Premises,
occurring during any period when Tenant shall have failed to provide the
Required Insurance. Tenant shall indemnify, defend and hold harmless
Landlord and Lender for any liability incurred by Landlord or Lender
arising out of any deductibles for Required Insurance.
6.9. Casualty. If all or any part of the Premises shall be damaged or
destroyed by casualty which is insured or required to be insured under this
Lease, or by any other casualty if the cost to repair such other casualty
does not exceed twenty percent (20%) of the total replacement cost of the
Improvements, Tenant shall promptly notify the Landlord thereof, and shall,
with reasonable promptness and diligence, rebuild, replace and repair any
damage or destruction to the Premises, at its expense, in conformity with
the requirements of Section 5.4(a) hereof, in such manner as to restore the
same to the same or better condition as existed prior to such casualty,
using materials of the same or better grade than that of the materials
being replaced, and there shall be no abatement of Basic Rent or Additional
Rent. Proceeds of casualty insurance of $100,000.00 or less shall be paid
to Tenant. Proceeds in excess of $100,000.00 shall be held by Landlord or a
proceeds trustee (which may be Lender, an escrow or title company, or a
bank or trust company designated by Landlord) and paid to Tenant, but only
against certificates of Tenant, appropriate lien waivers and such other
information reasonably required by Landlord or the proceeds trustee
delivered to Landlord from time to time, but not more frequently than once
per calendar month, as such work or repair progresses. Each such
certificate shall describe the work or repair for which Tenant is
requesting payment and the cost incurred by Tenant in connection therewith
and stating that Tenant has not theretofore received payment for such work
and has sufficient funds remaining to complete the work free of liens or
claims. Any proceeds remaining after Tenant has repaired the Premises shall
be delivered to Tenant No payment shall be made to Tenant if there exists
any Event of Default under this Lease. If Tenant is not required to restore
after a casualty, this Lease shall nevertheless remain in full force and
effect, with no abatement of Basic Rent or Additional Rent, except that
Landlord shall have the right to terminate this Lease by notice to Tenant
if Tenant does not agree to restore within sixty (60) days after the
casualty, or if Tenant agrees to restore but does not diligently proceed to
do so.
6.10. Indemnification.
(a) Tenant agrees to pay, and to protect, defend, indemnify and save
harmless Landlord, Lender and their agents from and against any
and all actual liabilities, losses, damages, costs, expenses
(including all reasonable attorneys' fees and expenses of
Landlord but excluding lost profits and all other indirect or
consequential damages), causes of action, suits, claims, demands
or judgments of any nature whatsoever (i) arising from any injury
to, or the death of, any person or damage to property (including
property of employees and invitees of Tenant) on the Premises or
upon adjoining sidewalks, streets or ways, to the extent not
occasioned by the actual gross negligence or willful misconduct
of Landlord, (ii) arising from the use, non-use, condition,
maintenance, repair or occupation of the Premises or any part
thereof or adjoining sidewalks, streets or ways, to the extent
not occasioned by the actual gross negligence or willful
misconduct of Landlord, (iii) arising from violation by Tenant of
any agreement or condition of this Lease or any sublease
(including without limitation the failure to pay Impositions), or
any contract or agreement to which Tenant is a party, or any
restriction, law, ordinance or regulation (including without
limitation, the Americans With Disabilities Act of 1990 and all
regulations issued thereunder) affecting the Premises or any part
thereof or the ownership, occupancy or use thereof, to the extent
not occasioned by the actual gross negligence or willful
misconduct of Landlord; or (iv) arising out of any permitted
contest referred to in Section 4.3 (collectively, "Indemnified
Matters"). Without limiting the generality of the foregoing, the
Indemnified Matters shall include matters arising prior to the
Commencement Date. If Landlord, Lender or any agent of Landlord
or Lender shall be made a party to any such litigation commenced
against Tenant, and if Tenant, at its expense, shall fail to
provide Landlord, Lender or their agents with counsel (upon
Landlord's request) reasonably approved by Landlord, Tenant shall
pay all costs and attorneys' fees and expenses incurred or paid
by Landlord, Lender or their agents in connection with such
litigation. Tenant's obligations and liabilities under this
Section 6.10 shall survive the expiration of this Lease. Tenant
waives all claims against Landlord arising from any liability
described in this Section 6.10 (a), except to the extent caused
by the actual gross negligence or willful misconduct of Landlord.
The waiver and indemnity provisions in this paragraph are
intended to exculpate and indemnify Landlord (i) from and against
the direct consequences of its own negligence or fault when
Landlord is solely negligent or contributorily, partially,
jointly, comparatively or concurrently negligent with Tenant or
any other person (but is not grossly negligent and has not
committed willful misconduct) and (ii) from and against any
liability of Landlord based on any applicable doctrine of strict
liability unless resulting from the gross negligence or willful
misconduct of Landlord.
(b) Should any claim be made against Landlord by a person not a party
to this Lease with respect to any Indemnified Matter, Landlord
shall promptly give Tenant written notice of any such claim, and
Tenant shall thereafter defend or settle any such claim, at its
sole expense, on its own behalf and with counsel of its
selection; provided, however, that Tenant's counsel shall be
competent counsel experienced in the type of litigation or claim
at issue and shall be acceptable to Landlord, acting reasonably.
Upon Tenant's assumption of the defense of any claim against
Landlord pursuant to Tenant's indemnity, Landlord shall have the
right to participate in the defense or settlement of the claim
with counsel retained and paid by it and Tenant shall cause the
attorneys retained by it to consult and cooperate fully with
counsel for Landlord. In such defense or settlement of any
claims, Landlord shall provide Tenant with originals or copies of
all relevant documents and shall cooperate with and assist
Tenant, at no expense to Landlord. Notwithstanding any provision
of this Section 6.10 to the contrary, Tenant shall not enter into
any settlement or agreement in connection with any Indemnified
Matters binding upon or adversely affecting either Landlord or
Lender, or admit any liability or fact in controversy binding
upon or adversely affecting either Landlord or Lender, without
the prior written consent of Landlord or Lender, as the case may
be, in such party's sole discretion.
(c) Landlord agrees to pay, and to protect, defend, indemnify and
save harmless Tenant and its agents from and against any and all
liabilities, losses, damages (actual and consequential), costs,
expenses (including all reasonable attorneys' fees and expenses
of Tenant), causes of action, suits, claims, demands or judgments
of any nature whatsoever arising from the actual gross negligence
or willful misconduct of Landlord in connection with the
Premises.
VII. CONDEMNATION.
7.1. Assignment of Award. Subject to the rights of Tenant set forth in
this Article VII, Tenant hereby irrevocably assigns to Landlord any award
or payment to which Tenant may be or become entitled with respect to
Complete, Partial or Temporary Taking of the Premises or any part thereof,
by condemnation or other eminent domain proceedings pursuant to any law,
general or special, by any governmental authority, whether the same shall
be paid or payable in respect of Tenant's leasehold interest hereunder or
otherwise. Notwithstanding the foregoing, Tenant may recover the value of
its personal property at the Premises, if taken, so long as the amount of
the Net Award received by Landlord is at least equal to the higher of (a)
the net book value of the Premises as reflected on Landlord's financial
statements, or (b) the fair market value of the Premises, on the date of
the Complete, Partial or Temporary Taking. Landlord and Lender shall be
entitled to participate in any such proceeding.
7.2. Definitions for Article VII.
(a) "Complete Taking" shall mean the occurrence of any actual or
threatened condemnation or other eminent domain proceeding
pursuant to any general or special law, or any agreement with an
authority having the power of eminent domain, which results in
the taking or conveyance of (i) the entire Premises or (ii) such
a significant portion of the Premises that, in the good faith
judgment of either Tenant or Landlord, it is uneconomic to
rebuild or restore the remaining portion of the Premises for the
continued operation of the business.
(b) "Partial Taking" shall mean the occurrence of any taking of a
portion of the Premises by condemnation or other eminent domain
proceedings, or any agreement with an authority having the power
of eminent domain, which does not result in the taking or
conveyance of such a significant portion of the Premises that, in
the good faith judgment of either Tenant or Landlord, it is
uneconomic to rebuild or restore the remaining portion of the
Premises for the continued operation of the business.
(c) "Temporary Taking" shall mean the occurrence of a temporary
taking of the use or occupancy of the Premises or any part
thereof by any governmental authority.
(d) "Net Award" shall mean all amounts payable as a result of any
condemnation or other eminent domain proceeding and all amounts
payable pursuant to any agreement with any condemning authority
(which agreement shall be deemed to be a taking) which has been
made in settlement of or under threat of any condemnation or
other eminent domain proceeding affecting the Premises, less all
expenses incurred as a result thereof not otherwise paid by
Tenant and the collection of such amounts.
(e) "Purchase Offer" shall mean a purchase offer as described in this
Article VII.
7.3. Complete Taking.
Upon the occurrence of a Complete Taking Landlord or Tenant may elect
to terminate this Lease by delivering a notice of termination specifying a
Termination Date occurring not less than sixty (60) days after the delivery
of such notice, and this Lease shall continue in full force and effect
without abatement of rent until the Termination Date.
7.4. Partial Taking. Upon the occurrence of any Partial Taking, this
Lease shall continue in full effect without abatement or reduction of Basic
Rent, Additional Rent or other sums payable by Tenant. In the event
Landlord receives a Net Award in connection with any such Partial Taking
Landlord shall, provided there is no Event of Default hereunder, make the
Net Award available to Tenant, and Tenant shall, regardless of the adequacy
of the award, make repairs in accordance with the requirements of Section
5.4(a) hereof so that, thereafter, the Premises shall be, as nearly as
possible, in a condition as good as the condition thereof immediately prior
to such Taking, but, if such Net Award shall be in excess of One Hundred
Thousand Dollars ($100,000), the proceeds shall be held by Landlord or a
proceeds trustee (which may be Lender or Lender's designee, or a bank or
trust company designated by Landlord), and paid only upon delivery to
Landlord of (i) certificates of Tenant identifying the repair work for
which Tenant is requesting payment and the cost incurred by Tenant in
connection therewith and stating that Tenant has not theretofore received
payment for such work; (ii) appropriate lien waivers; and (iii) such other
information as may be reasonably required by the proceeds trustee. Any Net
Award remaining after such repairs have been made shall be delivered to
Tenant if no Event of Default exists; otherwise, the excess shall be paid
to Landlord.
7.5. Temporary Taking. Upon the occurrence of any Temporary Taking,
Tenant shall, promptly after any such Temporary Taking ceases, at its
expense, repair any damage caused thereby in conformity with the
requirements of Section 5.4(a) hereof so that, thereafter, the Premises
shall be, as nearly as possible, in a condition as good as the condition
thereof immediately prior to such Temporary Taking. In the event of such
Temporary Taking, Tenant shall be entitled to receive the entire Net Award
payable by reason of such Temporary Taking, less any costs incurred by the
Landlord in connection therewith. If the cost of any repairs required to be
made by Tenant pursuant to this Section 7.5 shall exceed the amount of the
Net Award, the deficiency shall be paid by Tenant. No payments shall be
made to Tenant pursuant to this Section 7.5, if any Event of Default shall
exist under this Lease. No Basic Rent or Additional Rent shall ▇▇▇▇▇
through the duration of such Temporary Taking.
VIII. ASSIGNMENT AND SUBLETTING.
8.1. Power to Assign and Sublet. With Landlord's prior written
consent, which shall not be unreasonably withheld, conditioned or delayed,
Tenant may sublet all of the Premises and may assign all its rights and
interests under this Lease (provided that each such sublease or assignment
shall expressly be made subject to all of the provisions, including the use
provisions of Section 1.3 of this Lease). Tenant shall, within ten (10)
days after the execution and delivery of any such assignment or the
sublease of all of the Premises, deliver a conformed copy thereof to
Landlord.
8.2. Assumption by Assignee; Tenant Remains Liable. If Tenant assigns
its rights and interests under this Lease, the assignee under such
assignment shall expressly assume all the obligations of Tenant hereunder
in an instrument delivered to Landlord at the time of such assignment. No
assignment or sublease made as permitted by this Article VIII shall affect
or reduce any of the obligations of Tenant hereunder or the obligations of
any guarantor of Tenant, and all such obligations shall continue in full
force and effect as obligations of a principal and not as obligations of a
guarantor or surety, to the same extent as though no assignment or
subletting had been made, provided that performance by any such assignee or
sublessee of any of the obligations of Tenant under this Lease shall be
deemed to be performance by Tenant. No sublease or assignment made as
permitted by this Article VIII shall impose any obligations on Landlord or
otherwise affect any of the rights of Landlord under this Lease. Tenant
hereby grants a security interest to Landlord in all subleases and all
rents, issues and profits derived and to be derived therefrom, to secure
performance of Tenant's obligations under this Lease. Landlord hereby
grants to Tenant a license to collect all rents payable under any sublease
(up to one month in advance), but upon any Event of Default, Landlord may
in its sole discretion revoke such license and collect the rents directly
from any sublessee and retain the same.
8.3. Other Transfers Void. Neither this Lease nor the Term hereby
demised shall be mortgaged by Tenant, nor shall Tenant mortgage or pledge
the interest of Tenant in and to any sublease of the Premises or the
rentals payable thereunder. Any mortgage, pledge, sublease or assignment
made in violation of this Article VIII shall be void.
IX. FINANCIAL INFORMATION.
9.1. Financial Statements. Tenant will furnish to Landlord and Lender
(i) Tenant's annual audited financial statements within ninety (90) days
after the end of Tenant's fiscal year, and (ii) Tenant's unaudited
quarterly financial statements within forty-five (45) days after the end of
each quarter.
X. DEFAULT.
10.1. Events of Default. Any of the following occurrences or acts
shall constitute an event of default (herein called an "Event of Default")
under this Lease:
(a) If Tenant, at any time during the continuance of this Lease (and
regardless of the pendency of any bankruptcy, reorganization,
receivership, insolvency or other proceedings at law, in equity,
or before any administrative tribunal, which have or might have
the effect of preventing Tenant from complying with the terms of
this Lease), shall (i) fail to make any payment when due of Basic
Rent, Additional Rent or other sum herein required to be paid by
Tenant hereunder for ten (10) days after written notice of such
failure; (ii) fail to continuously operate the Premises for the
Intended Use in accordance with the terms and conditions of
Section 1.3 of this Lease for thirty (30) days after written
notice of such failure; or (iii) fail to observe or perform any
other provision hereof for thirty (30) days after written notice
of such failure to observe or perform; or
(b) If any representation or warranty of Tenant hereunder or set
forth in any notice, certificate, demand, request or other
instrument delivered pursuant to, or in connection with this
Lease or in connection with the acquisition of the Premises by
Landlord, shall either prove to be false or misleading in any
material respect as of the time when the same shall have been
made and Landlord actually suffers damages as a proximate cause
thereof which are not paid by Tenant; or
(c) If Tenant shall file a petition commencing a voluntary case under
the Federal Bankruptcy Code or any federal or state law (as now
or hereafter in effect) relating bankruptcy, insolvency,
reorganization, winding-up or adjustment of debts (hereinafter
collectively called "Bankruptcy Law") or if Tenant shall: (i)
apply for or consent to the appointment of, or the taking of
possession by, any receiver, custodian, trustee, United States
Trustee or liquidator (or other similar official) of the Premises
or any part thereof or of any substantial portion of Tenant's
property; or (ii) generally not pay its debts as they become due,
or admit in writing its inability to pay its debts generally as
they become due; or (iii) make a general assignment for the
benefit of its creditors; or (iv) file a petition commencing a
voluntary case under or seeking to take advantage of any
Bankruptcy Law; or (v) fail to controvert in timely and
appropriate manner, or in writing acquiesce to, any petition
commencing an involuntary case against Tenant or otherwise filed
against Tenant pursuant to any Bankruptcy Law; or (vi) take any
action in furtherance of any of the foregoing; or
(d) If an order for relief against Tenant shall be entered in any
involuntary case under the Federal Bankruptcy Code or any similar
order against Tenant shall be entered pursuant to any other
Bankruptcy Law, or if a petition commencing an involuntary case
against Tenant or proposing the reorganization of Tenant under
any Bankruptcy Law shall be filed and not be discharged or denied
within ninety (90)) days after such filing, or if a proceeding or
case shall be commenced in any court of competent jurisdiction
seeking: (i) the liquidation, reorganization, dissolution,
winding-up or adjustment of debts of Tenant; or (ii) the
appointment of a receiver, custodian, trustee, United States
Trustee or liquidator (or any similar official) of the Premises
or any part thereof or of Tenant or of any substantial portion of
Tenant's property; (iii) the attachment of the Premises or any
portion thereof, or (iv) any similar relief as to Tenant pursuant
to any Bankruptcy Law, and any such proceeding or case shall
continue undismissed for ninety (90) days after such relief is
granted; or
(e) If the Premises shall be left both unattended and without
maintenance as provided herein, for a period of thirty (30)
consecutive days or more; or
(f) If there occurs an "Event of Default" (as defined therein) under
any of the leases listed on Exhibit "C" and the Event of Default
is not cured within the applicable cure period and as a result
thereof Landlord either terminates the other lease or recovers
possession of the premises leased pursuant to the other lease.
10.2. Landlord's Remedies.
(a) In the event of an Event of Default and Tenant's failure to cure
the Event of Default within the applicable cure period, Landlord
shall have the right at its election to give Tenant ten (10)
days' written notice of Landlord's intention to terminate the
term of this Lease on a date specified in such notice. Thereupon,
the term of this Lease and the estate hereby granted shall
terminate on such date as completely and with the same effect as
if such date were the date fixed herein for the expiration of the
term of this Lease, and all rights of Tenant hereunder shall
terminate, but Tenant shall remain liable as provided herein.
(b) In the event of an Event of Default and Tenant's failure to cure
the Event of Default within the applicable cure period, Landlord
shall have the immediate right, whether or not the term of this
Lease shall have been terminated pursuant to Section 10.2(a), to
(i) re-enter and repossess the Premises or any part thereof by
force, summary proceedings, ejection or otherwise, and (ii)
remove all persons and property therefrom, Tenant hereby
expressly waiving any and all notices to quit, cure or vacate
provided by current or any future law. Landlord shall be under no
liability by reason of any such re-entry, repossession or
removal. No such re-entry or taking of possession of the Premises
by Landlord shall be construed as an election on Landlord's part
to terminate the term of this Lease unless a written notice of
such intention to be given to Tenant pursuant to Section 10.2(a).
(c) At any time or from time to time after the repossession of the
Premises or any part thereof pursuant to Section 10.2(b), whether
or not the term of this Lease shall have been terminated pursuant
to Section 10.2(a), Landlord may (but shall be under no
obligation to) relet the Premises or any part thereof for the
account of Tenant, in the name of Tenant or Landlord or
otherwise, without notice to Tenant, for such term or terms
(which may be greater or less than the period which would
otherwise have constituted the balance of the term of this Lease)
and on such reasonable conditions (which may include concessions
or free rent) and for such uses as Landlord may reasonably
determine, and Landlord may collect and receive any rents payable
by reason of such reletting. Landlord shall not be responsible or
liable for any failure to relet the Premises or any part thereof
or for any failure to collect any rent due upon any such
reletting.
(d) No termination of the term of this Lease pursuant to Section
10.2(a), by operation of law or otherwise, and no repossession of
the Premises or any part thereof pursuant to Section 10.2(b) or
otherwise, and no reletting of the Premises or any part thereof
pursuant to Section 10.2(c), shall relieve Tenant of its
liabilities and obligations hereunder, all of which shall survive
such expiration, termination, repossession or reletting.
(e) In the event of any such termination or repossession, Tenant will
pay to Landlord the Basic Rent, Additional Rent and other sums
required to be paid by Tenant to and including the date of such
termination or repossession (together with interest at the
Interest Rate on past due amounts); and, thereafter, Tenant
shall, until the end of what would have been the term of this
Lease in the absence of such termination or repossession, and
whether or not the Premises or any part thereof shall have been
relet, be liable to Landlord for, and shall pay to Landlord, as
liquidated and agreed current damages: (i) the Basic Rent,
Additional Rent and other sums which would be payable under this
Lease by Tenant in the absence of such termination or
repossession, less (ii) the net proceeds, if any, of any
reletting effected for the account of Tenant pursuant to Section
10.2(c), after deducting from such proceeds all of Landlord's
reasonable out-of-pocket expenses incurred in connection with
such reletting (including, without limitation, all repossession
costs, brokerage commissions, legal expenses, attorneys' fees,
employees' expenses, and expenses of preparation for such
reletting). Tenant will pay such current damages on the days on
which the Basic Rent would have been payable under this Lease in
the absence of such termination or repossession, and Landlord
shall be entitled to recover the same from Tenant on each such
day.
(f) At any time after such termination or repossession by reason of
the occurrence of any Event of Default, whether or not Landlord
shall have collected any current damages pursuant to Section
10.2(e), Landlord shall be entitled to recover from Tenant, and
Tenant will pay to Landlord on demand, as and for liquidated and
agreed final damages for Tenant's default and in lieu of all
current damages beyond the date of such demand (it being agreed
that it would be impracticable or extremely difficult to fix the
actual damages), an amount equal to the present value of all rent
payable under the Lease beyond the date of such demand over the
then present value of the then fair market rental for the
Premises, at the date of such demand for what would be the
unexpired term of the Lease, which present value shall in each
case be determined by the application of a discount factor of ten
percent (10%) per annum. If any law, [including without
limitation, California Civil Code Section 1951.2 or its
successor,] shall be construed to limit the amount of such
liquidated final damages to less than the amount above agreed
upon, Landlord shall be entitled to the maximum amount allowable
under such statute or rule of law.
(g) Notwithstanding anything to the contrary stated herein, if an
Event of Default shall have happened and be continuing, whether
or not Tenant shall have abandoned the Premises, Landlord may
elect to continue this Lease in effect for so long as the
Landlord does not terminate Tenant's right to possession of the
Premises and Landlord may enforce all of its rights and remedies
hereunder including, without limitation, the right to recover all
Basic Rent, Additional Rent and other sums payable hereunder as
the same become due. [In connection therewith, Landlord shall
have all of its rights under California Civil Code Section 1951.4
or its successor.]
10.3. Additional Rights of Landlord. No right or remedy herein
conferred upon or reserved to Landlord is intended to be exclusive of any
other right or remedy, and each and every right and remedy shall be
cumulative and in addition to any other right or remedy given hereunder or
now or hereafter existing at law or in equity or by statute. The failure of
Landlord to insist at any time upon the strict performance of any covenant
or agreement or to exercise any option, right, power or remedy contained in
this Lease shall not be construed as waiver or a relinquishment thereof for
the future. A receipt by Landlord of any Basic Rent, any Additional Rent or
any other sum payable hereunder with knowledge of the breach of any
covenant or agreement contained in this Lease shall not be deemed a waiver
of such breach, and no waiver by Landlord of any provision of this Lease
shall be deemed to have been made unless expressed in writing and signed by
Landlord. In addition to other remedies provided in this Lease, Landlord
shall be entitled, to the extent permitted by applicable law, to injunctive
relief in case of the violation, or attempted or threatened violation, of
any of the covenants, agreements, conditions or provisions of this Lease,
or to a decree compelling performance of any of the covenants, agreements,
conditions or provisions of this Lease, including but not limited to the
provisions of this Lease setting forth Tenant's operating covenant, or to
any other remedy allowed to Landlord at law or in equity.
10.4. Waivers by Tenant. To the extent permitted by applicable law,
Tenant hereby waives and surrenders for itself and all those claiming under
it, including creditors of all kinds, (i) any right or privilege which it
or any of them may have under any present or future construction, statute
or rule of law to redeem the Premises or to have a continuance of this
Lease for the term hereby demised after termination of Tenant's right of
occupancy by order or judgment of any court or by any legal process or
writ, or under the terms of this Lease or after the termination of the term
of this Lease as herein provided, and (ii) the benefits of any present or
future constitution, statute or rule of law which exempts property from
liability for debt or for distress for rent.
10.5. Attorneys' Fees. In the event of an Event of Default and
Tenant's failure to cure the Event of Default within the applicable cure
period, if an action shall be brought by Landlord for the enforcement of
any right set forth herein in connection with, and subject to, the
indemnification provisions contained in Section 6.10 hereof, Tenant shall
be liable for all of the reasonable out-of-pocket expenses incurred by
Landlord in connection therewith, including without limitation, attorneys'
fees. However, should Tenant prevail in an action for violation of quiet
enjoyment under this Lease, then and only in such event shall Landlord be
liable for reasonable out-of-pocket expenses incurred by Tenant in
connection therewith, including attorneys' fees.
XI. MISCELLANEOUS.
11.1. Notices, Demands and Other Instruments. All notices, demands,
requests, consents, approvals and other instruments required or permitted
to be given pursuant to the terms of this Lease shall be in writing and
shall be deemed to have been properly given if (a) with respect to Tenant,
sent by registered or certified mail with a return receipt requested,
postage prepaid, or sent by facsimile, nationally recognized overnight
express carrier or delivered by hand, in each case addressed to Tenant at
its notice address first above set forth, and (b) with respect to Landlord,
sent by registered or certified mail with a return receipt request, postage
prepaid, or sent by facsimile, nationally recognized overnight express
courier or delivered by hand in each case, addressed to the Landlord at its
address first above set forth along with a copy to the Lender (if Tenant
shall have been given Lender's address). Landlord and Tenant shall each
have the right from time to time to specify as its address for purposes of
this Lease any other address in the United States of America upon giving
fifteen (15) days written notice thereof, similarly given, to the other
party. Notices shall be deemed communicated upon the earlier of receipt, or
seventy-two (72) hours from the time of mailing if mailed as provided in
this Section 11.1.
11.2. Estoppel Certificates and Consents.
(a) Tenant will, from time to time, upon not less than twenty (20)
days prior written request by Landlord or by Lender, execute,
acknowledge and deliver a certificate certifying: (i) that this
Lease is unmodified and in full effect (or setting forth any
modifications along with the statement that this Lease as
modified is in full effect ); (ii) that the Basic Rent and
Additional Rent payable and the dates to which the Basic Rent,
Additional Rent and other sums payable hereunder have been paid;
(iii) that to the best knowledge of Tenant, Landlord is not in
any default of the Lease; (iv) the commencement and expiration
dates of the Lease; (v) the amount of any security or other
deposits; (vi) that either Tenant is in possession of the
Premises or who is in possession; (vii) any concessions or other
rights that Tenant (including first refusal, option or other
occupancy claims) or Landlord may have; and (viii) such other
matters as may reasonably be required by the requesting party.
Any such certificate may be relied upon by any Lender,
prospective purchaser, or prospective Lender of the Premises.
Tenant further agrees to reasonably cooperate with Lender and its
affiliates in the preparation of disclosure documents which may
be issued in connection with a secondary market transaction
involving a sale or securitization of its loan.
(b) From time to time during the term of this Lease, Landlord expects
to secure financing of its interest in the Premises by assigning
Landlord's interest in this Lease and the sums payable hereunder.
In the event of any such assignment to the Lender, Tenant will,
upon not less than twenty (20) days prior written request by
Landlord, execute, acknowledge and deliver to Landlord a consent
clearly indicating (i) that Tenant is to make Basic Rent payments
or portions thereof directly to Lender if required by Lender, and
(ii) consent to such assignment addressed to such Lender in a
form satisfactory to Lender; and Tenant will produce, at Tenant's
expense, such certificates and other documents as may be
reasonably requested by the Lender. Tenant acknowledges that, by
execution hereof, it has agreed to make payments of Basic Rent or
portions thereof directly to Lender, without further notice or
direction if required by Lender, and Landlord consents to said
payments by Tenant to Landlord.
11.3. Determination of Fair Market Rental Value. Fair market rental
value for purposes of setting Extended Term Basic Rent shall be determined
by an appraisal, which shall be performed by an appraiser selected by
Landlord within thirty (30) days after notice to Landlord of Tenant's
exercise of the option for the applicable Extended Term and paid one half
by Tenant and one half by Landlord. Any appraiser selected by Landlord
shall have qualifications that include a minimum of five (5) years of
experience in the appraisal of commercial real estate in the State in which
the Premises are located. Such appraiser shall be disinterested, and shall
be a member of a nationally recognized appraisal association. Further, any
such appraiser shall comply with any licensing law then in effect for
appraisers authorized to perform general appraisals within such State. If
there are then any existing Federal laws governing appraisers, said
appraiser shall be in compliance with the then applicable Federal laws for
appraisers performing appraisals of commercial real estate. In the event
that Tenant disputes the appraised fair market rental value determined by
an appraiser (hereinafter the "First Appraiser"), who performed an
appraisal pursuant to this Section 11.3, it shall so notify Landlord within
fifteen (15) days after receipt of such written determination by the First
Appraiser, and the disagreement shall be resolved as follows:
(a) Within five (5) days after the service of such notice by Tenant
to Landlord, Tenant shall designate a second appraiser (the
"Second Appraiser"), who shall appraise the fair market rental
value of the Premises. This Second Appraiser shall render its
opinion of the fair market rental value no later than thirty (30)
days after the service of notice by Tenant stated above. In the
event that the higher of the two appraised fair market rental
values rendered herein is not more than ten percent (10%) greater
than the lower of the two appraised fair market rental values,
then the mean between the two appraised values shall be utilized
to fix the appraised fair market rental value.
(b) In the event that the higher of the two appraised fair rental
values is more than ten percent (10%) higher than the lower of
the two appraised fair market rental values, then the First
Appraiser and the Second Appraiser will meet within fifteen (15)
days after receipt and acceptance of the Second Appraisal by
Tenant, to attempt to agree upon the appraised fair market rental
value. If the First Appraiser and Second Appraiser do not agree
upon the appraised fair rental value after such meeting, then
they shall appoint a third appraiser (the "Third Appraiser").
(c) If the First and Second Appraiser shall be unable to agree upon
the appointment of the Third Appraiser within fifteen (15) days
after receipt and acceptance of the Second Appraisal by Tenant,
then the Third Appraiser shall be selected by the Tenant and
Landlord themselves. If Tenant and Landlord cannot agree on the
third appraiser, within a further period of five (5) days, then
either, on behalf of both, may apply to the United States
District Court for the District of where the Premises are
located, for the selection of the Third Appraiser. The fees and
costs of the Second Appraiser will be borne by Tenant, and the
fees and costs of the Third Appraiser, will be divided equally
between Tenant and Landlord. The cost of application to the
United States District Court shall be divided equally between
Tenant and Landlord. In the event of the failure, refusal or
inability of any appraiser to act, a new appraiser shall be
appointed in its stead, which appointment shall be made in the
same manner as provided herein; e.g., if the Second Appraiser
must be replaced, then Tenant will have the right to designate
its replacement. In the event that a Third Appraiser is selected
in the manner aforesaid, it shall perform an appraisal of the
fair market rental value of the Premises in accordance with the
terms of this Section 11.3 within thirty (30) days after its
appointment. In the event that the appraised fair market rental
value rendered by the Third Appraiser is higher than the lower
appraised fair market rental value, but lower than the higher
appraised fair market rental value, as rendered by the First
Appraiser and the Second Appraiser, then the appraised fair
market rental value rendered by the Third Appraiser shall become
the appraised value. In the event that the appraised value
rendered by the Third Appraiser is lower than the lower appraised
value or higher than the higher appraised fair rental value, as
rendered by the First Appraiser and Second Appraiser, than an
Appraisal Panel shall be convened.
The "Appraisal Panel," consisting of the First, Second and Third
Appraiser, shall convene within fifteen (15) days after
submission of a written appraisal to Landlord and Tenant by the
Third Appraiser (which Third Appraisal does not resolve the
appraised fair market value question in accordance with this
Section 11.3). The purpose of the formation of the Appraisal
Panel will be to attempt to reach a decision by two members of
the Appraisal Panel on the appraised fair rental value. A
decision joined in by any two of the appraisers of the Appraisal
Panel shall be the decision of the Appraisal Panel, and shall be
binding upon the parties hereto following written notice thereof,
which notice shall state the appraised fair rental value of the
Premises. If no two members of the Appraisal Panel can concur in
a decision of the appraised fair rental value within fifteen (15)
days after the submission of the appraisal by the Third Appraiser
to the parties, then the parties shall go to a neutral mediator
for mediation. If the parties are unable to agree upon a fair
rental value through mediation, the matter will be submitted to
binding arbitration under the rules of the American Arbitration
Association.
(d) Each appraiser shall be instructed to assume that the provisions
of this Lease (excluding the Basic Rent provision) would govern
for a five (5) year term, that the Premises may be used for any
lawful commercial use (regardless of their actual use), and that,
as set forth in the Recitals to this Lease, the Premises being
leased (and the fair market rent applicable thereto) includes the
Land and the Improvements.
11.4. No Merger. There shall be no merger of this Lease or the
leasehold estate hereby created with the fee estate in the Premises or any
part thereof by reason of the same person acquiring or holding, directly or
indirectly, this Lease or the leasehold estate hereby created or any
interest in this Lease or in such leasehold estate as well as the fee
estate in the Premises or any portion thereof.
11.5. Surrender. Upon the termination of this Lease, Tenant shall
peaceably surrender the Premises to Landlord in the same condition in which
they were received from Landlord at the commencement of this Lease, except
as altered as permitted or required by this Lease and except for normal
wear and tear. Tenant shall remove from the Premises prior to or within a
reasonable time after such termination (not to exceed thirty (30) days) all
its personal property that is capable of removal without causing damage to
the Premises, and, at Tenant's expense, shall at such times of removal,
repair any damage caused by such removal. Property not so removed shall
become the property of Landlord. Landlord may thereafter cause such
property to be removed and disposition of and the cost of repairing any
damage caused by such removal shall be borne by Tenant. Any holding over by
Tenant of the Premises after the expiration or earlier termination of the
term of this Lease or any extensions thereof, with the consent of Landlord,
shall operate and be construed as a tenancy from month to month only, at
one hundred ten (110%) of the Basic Rent reserved herein and upon the same
terms and conditions as contained in this Lease. Notwithstanding the
foregoing, any holding over without Landlord's consent shall entitle
Landlord, in addition to collecting Basic Rent at a rate of one hundred ten
percent (110%) thereof, to exercise all rights and remedies provided by law
or in equity.
11.6. Separability. Each and every covenant and agreement contained in
this Lease is separate and independent, and the breach of any thereof by
Landlord other than the covenant of quiet enjoyment in Section 1.4, shall
not discharge or relieve Tenant from any obligation hereunder. If any term
or provision of this Lease or the application thereof to any person or
circumstances or at any time to any extent be invalid and unenforceable,
the remainder of this Lease, or the application of such term or provision
to persons or circumstances or at any time other than those to which it is
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to the extent
permitted by law.
11.7. Merger, Consolidation or Sale of Assets. It shall be a condition
precedent to the merger of Tenant into another corporation, to the
consolidation of Tenant with one or more other corporations and to the sale
or other disposition of all or substantially all the assets of Tenant to
one or more other entities that the surviving entity or transferee of
assets, as the case may be, shall deliver to Landlord and to Lender an
acknowledged instrument in recordable form assuming all obligations,
covenants and responsibilities of Tenant hereunder and under any instrument
executed by Tenant consenting to the assignment of Landlord's interest in
this Lease to the Lender as security for indebtedness. Tenant covenants
that it will not merge or consolidate or sell or otherwise dispose of all
or substantially all of its assets unless such an instrument shall have
been so delivered and unless the entity with which it intends to merge,
consolidate, sell or otherwise transfer its assets to has a credit rating
at least equal to Tenant's then current credit rating.
11.8. Savings Clause. No provision contained in this Lease which
purports to obligate Tenant to pay any amount of interest or any fees,
costs or expenses which are in excess of the maximum permitted by
applicable law, shall be effective to the extent that it calls for payment
of any interest or other sums in excess of such maximum.
11.9. Binding Effect; Limitation of Liability. All of the covenants,
conditions and obligations contained in this Lease shall be binding upon
and inure to the benefit of the respective successors and assigns of
Landlord and Tenant to the same extent as if each successor and assign were
in each case named, except that a successor and assign of Landlord shall
only be bound as to covenants, conditions and obligations arising after the
transfer. Notwithstanding anything to the contrary set forth in this Lease,
if Landlord shall fail to perform any covenant, term or condition of this
Lease upon Landlord's part to be performed, and if as a consequence of such
default Tenant shall recover a judgment against Landlord, such judgment
shall be satisfied only out of the proceeds of sale received upon execution
of such judgment and levy thereon against the right, title and interest of
Landlord in the Premises, and Landlord shall not be personally liable
therefor, provided Landlord then owns the Premises and such limitation of
liability shall not apply if Landlord does not then own the Premises.
11.10. Table of Contents and Headings. The table of contents and
headings used in this Lease are for convenience of reference only and shall
not to any extent have the effect of modifying, amending or changing the
provisions of this Lease.
11.11. Governing Law. This Lease shall be governed by and interpreted
under the laws of the state in which the Premises is located, but not
including such state's conflict of laws rules.
11.12. Certain Definitions.
(a) The term "Imposition" means:
(i) All real estate taxes imposed by governmental authorities of
any kind;
(ii) All other taxes and any payments in lieu thereof,
assessments (including assessments for benefits from public
works or improvements, whether or not begun or completed
prior to the commencement of the term of this Lease and
whether or not to be completed within said term), levies,
fees, water and sewer rents and charges, and all other
governmental charges of every kind, general and special,
ordinary and extraordinary, whether or not the same shall
have been within the express contemplation of the parties
hereto, together with any interest and penalties thereon,
which are, , imposed or levied upon or assessed against: (A)
the Premises or any part thereof; (B) any Basic Rent, any
Additional Rent reserved or payable hereunder; and/or (C)
this Lease or the leasehold estate created hereby or which
arise in respect of the operation, possession, occupancy or
use of the Premises, to the extent payable during the Lease
Term.
(iii)Any gross receipts or similar taxes imposed or levied upon,
assessed against or measured by the Basic Rent, Additional
Rent or any other sums payable by Tenant hereunder or levied
upon or assessed against the Premises to the extent payable
during the Lease Term;
(iv) All sales and use taxes which may be levied or assessed
against or payable by Landlord and Tenant on account of the
acquisition, leasing or use of the Premises or any portion
thereof including but not limited to any taxes levied on the
rental payable hereunder to the extent payable during the
Lease Term; and
(v) All charges for water, gas, light, heat, telephone,
electricity, power and other utilities and communications
services rendered or used on or about the Premises during
the Lease Term.
(b) The term "Landlord" means the owner, for the time being, of the
rights of the lessor under this Lease, and its successors and
assigns, and upon any assignment or transfer of such rights,
except an assignment or transfer made as security for an
obligation, the assignor or transferor shall be relieved of all
future duties and obligations under this Lease, provided the
assignee or transferee assumes in writing in recordable form all
such future duties and obligations of Landlord and such written
assumption is delivered to Tenant.
(c) The term "Lease" means this Lease as amended and modified from
time to time together with any memorandum or short form of lease
entered into for the purpose of recording.
(d) The term "Lender" means the holder of a mortgage or deed of trust
("Mortgage") or other security agreement encumbering Landlord's
interest in the Premises and its successors and assigns. The
documents, including but not limited to the Mortgage, evidencing
and securing any loan encumbering Landlord's interest in the
Premises are herein called "Loan Documents".
(e) The term "Tenant's Certificate" means a written certificate
signed by the Chairman of the Board, the Chief Executive Officer,
the President, any Vice President or the Secretary of Tenant.
(f) The term "Termination Date" means the date on which this Lease
terminates in accordance with its terms, and shall be any
business day and not a Saturday, Sunday or legal holiday.
11.13. Exhibits. The exhibits to this Lease are hereby incorporated by
reference herein and made a part hereof. The Guaranty attached hereto as
Exhibit B is being executed and delivered on the Commencement Date, and
such execution and delivery, at the election of Landlord, shall be a
condition to the effectiveness of this Lease.
11.14. Integration. This Lease, the exhibits hereto and the
memorandum, if any, hereof, constitute the entire agreement between the
parties hereto with regard to the subject matter hereof, and supersede any
prior understandings, agreements or negotiations. This Lease may not be
amended or modified except by a writing executed by Tenant and Landlord,
with the consent of any Lender.
11.15. Lease Memorandum. Each of Landlord and Tenant shall execute,
acknowledge and deliver to the other a written memorandum of this Lease
("Memorandum") to be recorded in the appropriate land records of the
jurisdiction in which the Premises is located, in order to give public
notice and protect the validity of this Lease. In the event of any
discrepancy between the provisions of the recorded Memorandum and the
provisions of this Lease, the provisions of this Lease shall prevail.
11.16. Subordination to Landlord Financing.
(a) (i) Subject to the provisions of Section 11.16(a)(ii) below,
Tenant agrees that this Lease shall at all times be subject
and subordinate to the lien of any Mortgage, provided the
original principal amount of the Mortgage does not exceed
90% of the fair market value of the Premises at the time of
origination of the Mortgage and Tenant agrees, upon demand,
without cost, to execute instruments as may be reasonably
required to further effectuate or confirm such
subordination.
(ii) Tenant's agreement to subordinate set forth in Section
11.16(a)(ii) above is conditioned upon the Lender agreeing
that: Tenant's tenancy and Tenant's rights under this Lease
shall not be disturbed, terminated or otherwise adversely
affected, nor shall this Lease be affected, by any default
under any Mortgage, and in the event of a foreclosure or
other enforcement of any Mortgage, or sale in lieu thereof,
the purchaser at such foreclosure sale shall be bound to
Tenant for the Term of this Lease, the rights of Tenant
under this Lease shall expressly survive, and this Lease
shall in all respects continue in full force and effect so
long as no Event of Default has occurred and is continuing;
provided, however, that such purchaser shall not:
(A) be liable for any prior act or omission of Landlord;
(B) be subject to any defense, counterclaim, set-off or
offset which Tenant may then have against Landlord;
(C) be bound by any payment of rent that Tenant may have
made to Landlord more than thirty (30) days before the
date such rent was first due and payable under this
Lease with respect to any period after the date of
attornment other than, and only to the extent that,
this Lease expressly required such a prepayment;
(D) be bound by any obligation to make any payment to
Tenant which was required to be made prior to the time
such successor landlord succeeded to Landlord's
interest;
(E) be bound by any obligation to perform any work or to
make improvements to the Premises; or
(b) Notwithstanding the provisions of Section 11.16(a), the holder of
any Mortgage to which this Lease is subject and subordinate shall
have the right, at its sole option, at any time, to subordinate
and subject the Mortgage, in whole or in part, to this Lease by
recording a unilateral declaration to such effect.
(c) At any time prior to the expiration of the Term, Tenant agrees,
at the election and upon demand of any owner of the Leased
Premises, or of a Lender who has granted non-disturbance to
Tenant pursuant to Section 11.16(a) above, to attorn, from time
to time, to any such owner or lender, upon the terms and
conditions of this Lease, for the remainder of the Term. The
provisions of this Section 11.16(c) shall inure to the benefit of
any such owner or Lender, shall apply notwithstanding that, as a
matter of law, this Lease may terminate upon the foreclosure of
the Mortgage, shall be self-operative upon any such demand, and
no further instrument shall be required to give effect to said
provisions.
(d) Each of Tenant, Landlord and Lender, however, upon written demand
of the other, hereby agrees to execute, from time to time,
instruments in confirmation of the foregoing provisions of
Sections 11.16(a) and 11.16(c), in the form customarily used by
such Lender to the extent consistent with the requirements of
such Sections, acknowledging such subordination, non-disturbance
and attornment as are provided in such Sections and setting forth
the terms and conditions of its tenancy.
11.17 Waiver of Statutory Liens.Landlord hereby forever waives and
releases any and all liens, security interests and rights of Landlord
created, granted or imposed by statute, law or regulation ("Statutory
Liens") on, in or to any tangible personal property of Tenant located at
any time at the Premises (the "Tenant Personalty"). Landlord acknowledges
and agrees that Tenant may convey the Tenant Personalty, including granting
security interests in the Tenant Personalty, from time to time free and
clear of all Statutory Liens. Landlord and Lender shall, upon written
demand of Tenant from time to time, execute and deliver to Tenant such
documents as may reasonably be required to evidence and confirm Landlord's
waiver of the Statutory Liens.
11.18 Interest Rate. Any amount due from either party to the other
under this Lease which is not paid within ten (10) days after written
notice that such amount was not received when due (including, without
limitation, amounts due as reimbursement for costs incurred in performing
obligations of such party hereunder upon its failure to so perform) shall
bear interest at the prime rate of Bank of America NA ("Interest Rate")
from the date due until paid, unless otherwise specifically provided
herein, but the payment of such interest shall not excuse or cure any
default by Tenant under this Lease.
11.19. Right of First Offer and First Refusal. [Provision to be
inserted if not in a separate document.]
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first above set forth.
"LANDLORD"
__________________________
a ________________________
By:_______________________
Title:____________________
"TENANT"
[UGLY DUCKLING CAR SALES, INC.],
an Arizona corporation
By:_______________________
Title:____________________
By:_______________________
Title:____________________
GUARANTY
THIS GUARANTY, dated as of ________, 1998, (together with all amendments
and supplements hereto, referred to as this "Guaranty"), is from UGLY DUCKLING
CORPORATION, a corporation organized and existing under the laws of Delaware
(herein, together with its successors and assigns, including, without
limitation, any entity succeeding thereto by merger, consolidation or
acquisition of its assets substantially as an entirety, referred to as
"Guarantor"), to _______, a _________ (herein, together with its successors and
assigns, referred to as "Lessor").
WHEREAS, Ugly Duckling Car Sales, Inc., an Arizona corporation herein,
together with any entity succeeding thereto by merger, consolidation or
acquisition of its assets substantially as an entirety, referred to as
"Lessee"), a subsidiary [describe relationship] of Guarantor, leased from Lessor
and Lessor has leased to Lessee a certain parcel of real property together with
the building and improvements located thereon, and as described in Exhibit A
attached hereto (the "Premises") pursuant to a Lease dated as of even date
herewith, between Lessor and Lessee (the "Lease") (capitalized terms not defined
herein shall have the meanings given in the Lease); and
WHEREAS, the execution and delivery of this Guaranty by Guarantor is an
inducement to Lessor to enter into the Lease and Lessor has advised Guarantor
that it is not willing to enter into the Lease unless this Guaranty is executed
and delivered (the Lease and the other documents executed and delivered at or
prior to the closing by Lessee, other documents related to the Lease made by
Lessee to or with Lessor and all modifications and amendments to the foregoing,
made by Lessee to or with Lessor being, collectively, the "Lease Documents");
NOW, THEREFORE, in consideration of the premises, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Guarantor agrees with Lessor as follows:
1. Guarantor unconditionally and irrevocably guarantees (i) the payment and
performance by Lessee of all its obligations, covenants, agreements, terms and
conditions under the Lease Documents and (ii) the prompt payment of all sums
which may become payable by Lessee pursuant to any of the Lease Documents in
full when due in accordance with the provisions thereof. This Guaranty is
irrevocable, unconditional and absolute. If for any reason any sums shall not be
paid by Lessee promptly when due (after any notice required by the Lease
Documents and prior to the expiration of any applicable period of grace provided
for in the Lease Documents), or any such agreement, covenant, term or condition
is not performed or observed by Lessee in accordance with the Lease Documents,
Guarantor promptly, after notice thereof, will pay the same to the person
entitled thereto pursuant to the provisions of any such Lease Document and will
promptly perform and observe the same or cause the same promptly to be performed
or observed, in any case regardless of (a) any defenses or rights of setoff or
counterclaims which Lessee or Guarantor may have or assert, (b) whether Lessor
shall have taken any steps to enforce any rights against Lessee or any other
remedy thereunder as a result of the default of Lessee thereunder and (c) any
other condition, contingency, thing or matter whatsoever. Guarantor also agrees
to pay to Lessor such further reasonable and actual amounts as shall be
sufficient to cover the cost and expense actually incurred in collecting such
sums, or any part thereof, or of otherwise enforcing this Guaranty, including
without limitation, in any case, reasonable attorneys' fees and disbursements.
2. The obligations, covenants, agreements and duties of Guarantor under
this Guaranty shall in no way be affected or impaired by reason of the happening
from time to time of any of the following, although without notice to or the
further consent of Guarantor:
(a) the extension, in whole or in part, of the time for payment by
Lessee or Guarantor of any sums owing or payable under any of the Lease
Documents (provided, however, that if any such extension is expressly
granted by Lessor, then Guarantor shall be entitled to the benefit of such
extension);
(b) any assignment or reassignment of the Lease or subletting of the
Premises or any part thereof but only during the Lease Term and not any
Extended Term resulting from an assignee's exercise of an extension of the
Lease Term;
(c) the modification or amendment of any of the obligations of Lessee
under the Lease Documents, whether the same be in the form of a new
agreement or the modification or amendment of an existing Document (any of
the foregoing being a "Modification"), or of Guarantor under this Guaranty;
(d) the doing or the omission of any of the acts (including, without
limitation, the giving of any consent referred to therein) referred to in
the Lease Documents or this Guaranty;
(e) any failure, omission or delay on the part of Lessor to enforce,
assert or exercise any right, power or remedy conferred on or available to
Lessor in or by any of the Lease Documents or this Guaranty, or any action
on the part of Lessor granting indulgence or extension in any form
whatsoever (except to the extent, if any, that such indulgence shall have
been expressly granted by Lessor);
(f) the voluntary or involuntary liquidation, dissolution, sale of all
or substantially all of the assets, marshalling of assets and liabilities,
receivership, conservatorship, custodianship, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of, or other similar proceeding affecting
Lessee or Guarantor or any of their assets;
(g) the inability of Lessor or Lessee, respectively, to enforce any
provision of the Lease Documents or this Guaranty, for any reason;
(h) any change in the relationship between Lessee and Guarantor or any
termination of such relationship;
(i) the inability of Lessee to perform, or, to the extent permitted by
applicable law, the release of Lessee or Guarantor from the performance of
any obligation, agreement, covenant, term or condition of Lessee under any
of the Lease Documents by reason of any law, regulation or decree, now or
hereafter in effect; or
(j) any action or inaction by Lessor which results in any impairment
or destruction of any subrogation rights of Guarantor or any rights of
Guarantor to proceed against Lessee for reimbursement.
3. In the event of the rejection or disaffirmance of the Lease by Lessee or
Lessee's receiver pursuant to any law affecting creditor's rights, Guarantor
will, and does hereby (without the necessity of any further agreement or act)
assume all obligations and liabilities of Lessee under or arising out of the
Lease, to the same extent as if Guarantor had been originally named the lessee
under the Lease, and there had been no such rejection or disaffirmance;
Guarantor will confirm such assumption in writing at the request of Lessor, upon
or after such rejection or disaffirmance. Guarantor, upon such assumption, shall
have all rights of Lessee under the Lease and shall be entitled to a new lease
on all of the terms and conditions of the Lease with respect to the unexpired
portion of the Lease (to the extent permitted by law). Guarantor will execute
and deliver such documents as Lessor may from time to time reasonably require to
evidence such assumption, to confirm this Guaranty and to certify that Guarantor
is not in default hereunder.
4. Notice of acceptance of this Guaranty and notice of any obligations or
liabilities contracted or incurred by Lessee under any of the Lease Documents
are hereby waived by Guarantor.
5. This Guaranty shall be construed in accordance with the laws of the
state in which the Premises are located.
6. This Guaranty may not be modified or amended except by written agreement
duly executed by Guarantor with the consent in writing of Lessor and any Lender.
7. [Guarantor is a company required to file certain reports with the
Securities and Exchange Commission ("SEC"). Guarantor will deliver to Lessor
within 30 days of filing with the SEC (other than on a confidential basis) or
otherwise making public, copies of all financial statements, 8-K, 10-K and 10-Q
reports, and notices and proxy statements sent by Guarantor to its
stockholders.]
8. Guarantor waives any right it may have (a) to require Lessor to proceed
against Lessee or against any other party or (b) to require Lessor to pursue any
remedy within the power of the Lessor and Guarantor agrees that all of
Guarantor's obligations under this Guaranty are independent of the obligations
of Lessee under the Lease Documents or under any other instrument or agreement,
and that a separate action may be brought against Guarantor whether or not an
action is commenced against Lessee under any thereof.
9. All notices given pursuant to this Guaranty shall be in writing and
shall be validly given when sent by a courier or express service guaranteeing
overnight delivery and which will upon request provide a receipt of such
delivery or by certified letter return receipt requested, and all other notices
shall be validly given when addressed as set forth below. If this Guaranty
provides for a designated period after notice within which to perform any act,
such period shall commence on the date of receipt or refusal of such notice. If
this Guaranty requires the exercise of a right by notice on or before a certain
date or within a designated period, such right shall be deemed exercised on the
date of receipt or refusal of receipt of such notice pursuant to which such
right is exercised.
Notices shall be addressed as follows:
If to Lessor:
If to Guarantor: Ugly Duckling Corporation
Attention: General Counsel
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Lessor and Lessee each may from time to time specify, by giving 15 days' notice
to each other party, (i) any other address in the United States as its address
for purposes of this Guaranty and (ii) any other person or entity in the United
States that is to receive copies of notices, offers, consents and other
instruments hereunder.
10. Guarantor hereby consents to, and no further consent by Guarantor shall
be required for, (i) any assignment of rights of Lessor hereunder, in whole or
in part, either as collateral security for obligations of Lessor secured by a
lien on the Premises or in connection with the sale of the Premises or any
interest therein or (ii) any assignment of the rights of Lessor under the Lease.
Lessor will give notice to Guarantor of any such assignment, but a failure to do
so will not result in any liability on Lessor, affect in any manner the
enforceability of this Guaranty, the rights and remedies of Lessor hereunder or
the obligations of Guarantor hereunder.
11. In case any one or more of the provisions hereof or of the Lease
Documents shall be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof and this Guaranty shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
12. Guarantor shall not, directly or indirectly, without the express prior
written consent of Lessor, which may be withheld by Lessor in its sole and
absolute discretion, (i) merge into or consolidate with any other corporation,
partnership or any other entity ("Person") or permit any other Person to merge
into or consolidate with Guarantor; (ii) sell, lease, transfer, abandon or
otherwise dispose of all or substantially all of Guarantor's properties or
assets; or (iii) sell or offer for sale any shares of capital stock or any
securities convertible into, or any rights to acquire, shares of capital stock,
unless in each case, of each of (i), (ii) or (iii) above, Guarantor' s ability
to perform all of its obligations under this Guaranty (in Landlord's opinion)
will not be impaired after giving effect to such transaction. Within 10 days
following the merger of Guarantor into another corporation, or the consolidation
of Guarantor with one or more other corporations or the sale or other
disposition of all or substantially all the assets of Guarantor to one or more
other entities, the surviving entity or transferee of assets, as the case may
be, shall deliver to Lessor an acknowledged instrument in recordable form
assuming all obligations, covenants and responsibilities of Guarantor hereunder
and under this Guaranty.
13. Lessor will accept performance by Guarantor of any of the obligations
guaranteed under the Lease Documents as if such performance had been made by
Lessee; provided, however, that the foregoing shall not be deemed to be an
agreement by Lessor to allow access to the Premises in order to cure any
default, it being acknowledged that any such right of access shall be obtained
by Guarantor pursuant to a separate agreement with Lessee (and Lessor agrees to
recognize any such rights of access which are so granted, provided that Lessor
shall have received appropriate written notice thereof).
14. This Guaranty shall be binding upon, and inure to the benefit of and be
enforceable by, the Guarantor, the Lessor, the Lessee, any Lender, and their
respective successors and assigns.
15. Guarantor further agrees that, to the extent that the Lessee or
Guarantor makes a payment or payments to the Lessor, which payment or payments
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to the Lessee or the
Guarantor or their respective estate trustee, receiver or any other party under
any bankruptcy law, state or federal law, common law or equitable laws, then to
the extent of such payment or repayment, this Guaranty and the advances or part
thereof which have been paid, reduced or satisfied shall be reinstated and
continued in full force and effect as of the date such initial payment
reduction, or satisfaction occurred.
16. Guarantor shall have no rights (direct or indirect) of subrogation,
contribution, reimbursement, indemnification or other right of payment or
recovery from any person or entity (including, without limitation, the Lessee)
for any payments made by the Guarantor hereunder, and Guarantor hereby waives
and releases, absolutely and unconditionally, any such right of subrogation,
contribution, reimbursement, indemnification and other rights or recovery which
it may nor or hereafter acquire.
Ugly Duckling Corporation,
a Delaware corporation
By:
Title:
By:
Title: