Exhibit 10.36
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is dated as of the ____ day of June,
1999, by and between CAR LIT L.L.C., a Delaware limited liability company
("Landlord"), and LITHIA REAL ESTATE, INC., an Oregon corporation ("Tenant").
ARTICLE I
DEFINITIONS
1.1 Premises: that certain piece or parcel of land located in Medford,
Xxxxxxx County, Oregon, as more fully described on Exhibit A attached hereto and
made a part hereof, together with all improvements, fixtures and other items of
real property now or hereafter located thereupon and all appurtenances, rights,
privileges, easements and other property interests existing thereon and
benefiting, belonging or pertaining thereto, subject, however, to all liens,
encumbrances, restrictions, agreements, and other title matters of record.
1.2 Lease Term: one hundred forty-four (144) months.
1.3 Renewal Options: eight (8) options for five (5) years each, as more
particularly described in Article XXII below.
1.4 Lease Commencement Date: The date on which Landlord funds the purchase
price for the Premises at the closing, pursuant to that certain Purchase
Agreement (the "Purchase Agreement") dated as of December 17, 1998, by and
between Landlord (as assignee of Capital Automotive L.P.), as purchaser, and
Tenant or its Affiliate (as hereinafter defined) as seller).
1.5 Base Rent: as set forth below.
Lease Year Base Rent Per annum
lst-3rd Lease Years $521,463.00
4th and 5th Lease Years $534,500.00
6th-l2th Lease Years $542,322.00
13th-l7th Lease Years $568,395.00
18th-22nd Lease Years $599,683.00
23rd-27th Lease Years $636,185.00
28th-32nd Lease Years $677,902.00
33rd-37th Lease Years $724,834.00
38th-42nd Lease Years $776,980.00
43rd-47th Lease Years $834,341.00
48th-52nd Lease Years $896.917.00
1.6 [Intentionally omitted].
1.7 [Intentionally omitted].
1.8 Security Deposit Amount: Twenty-Eight Thousand Five Hundred Five
Dollars ($28,505.00).
1.9 Tenant Notice Address: c/o Lithia Motors, Inc., 000 Xxxx Xxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxx 00000, Attn: Xxxxx X. Xxxxx.
1.10 Landlord Notice Address: 0000 Xxxxxx Xxxx Xxxx, Xxxxx 000, XxXxxx,
Xxxxxxxx 00000, Attention: Portfolio Manager.
1.11 Guarantor(s): Lithia Motors, Inc.
ARTICLE II
PREMISES
2.1 Lease of Premises. Tenant leases the Premises from Landlord for the
term and upon the conditions and covenants set forth in this Lease.
2.2 Contingency. Notwithstanding anything to the contrary contained in
this Lease, in the event this Lease is executed prior to the conveyance of the
Premises to Landlord, the parties acknowledge that the effectiveness of this
Lease is contingent upon such conveyance and, in the event such conveyance fails
to occur, this Lease shall be void and without force and effect.
ARTICLE III
LEASE TERM
3.1 Lease Term. All of the provisions of this Lease shall be in full force
and effect from and after the date first above written, subject to Section 2.2
above. The Lease Term shall commence on the Lease Commencement Date specified in
Section 1.4 above. If the Lease Commencement Date is not the first day of a
month, then the Lease Term shall be the period set forth in Section 1 2 less the
portion of the month prior to the date on which the Lease Commencement Date
occurs. Landlord may provide Tenant with a certificate in the form of Exhibit B
attached hereto confirming the Lease Commencement Date. The Lease Term shall
also include any properly exercised renewal or extension of the term of this
Lease.
3.2 Lease Year. "Lease Year" shall mean a period of twelve (12)
consecutive months commencing on the Lease Commencement Date, and each
successive twelve (12) month period thereafter; provided, however, that if the
Lease Commencement Date is not the first day of a month, then the second Lease
Year shall commence on the first day of the month in which the first anniversary
of the Lease Commencement Date occurs.
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ARTICLE IV
BASE RENT
4.1 Base Rent. From and after the Lease Commencement Date, Tenant shall
pay the Base Rent in equal monthly installments in advance on the first day of
each month during each Lease Year. If the Lease Commencement Date is not the
first day of a month, then the Base Rent from the Lease Commencement Date until
the first day of the following month shall be prorated on a per diem basis at
the rate of one-thirtieth (1/30th) of the monthly installment of the Base Rent
payable during the first Lease Year, and Tenant shall pay such prorated
installment of the Base Rent on the Lease Commencement Date.
4.2 Base Rent Escalation. During the Lease Term, the Base Rent shall be
increased from time to time as set forth in Section 1.5.
4.3 Payment of Base Rent. All sums payable by Tenant under this Lease,
whether or not stated to be Base Rent, additional rent or otherwise, shall be
paid to Landlord in legal tender of the United States, without setoff, deduction
or demand, by direct deposit wire transfer of immediately available funds to the
following bank account, or to such other party or address as Landlord may
designate in writing:
NationsBank, Richmond, Virginia
ABA# 000000000
For credit to Capital Automotive L.P.,
Operating Account # 004112955706
Landlord's acceptance of rent after it shall have become due and payable shall
not excuse a delay upon any subsequent occasion or constitute a waiver of any of
Landlord's rights hereunder.
ARTICLE V
NET LEASE; IMPOSITIONS; UTILITIES AND SERVICES
5.1 Net Lease. Notwithstanding anything to the contrary contained herein,
this Lease shall be an absolute net lease, so that this Lease shall yield all
Base Rent payable hereunder as an absolutely net return to Landlord.
Accordingly, with the sole exception of Landlord's Income Taxes (as hereinafter
defined), Tenant shall pay all taxes, insurance and other costs, expenses and
obligations of every kind and nature whatsoever relating to the Premises,
including without limitation, costs with respect to the ownership and operation
thereof (including without limitation, the costs of performing obligations
imposed on the owner from time to time of the Premises pursuant to any deferred
improvement agreements or any easement containing a covenant to bear the
maintenance and repair costs incurred in connection with a drainage easement),
which accrue prior to the expiration of the Lease Term. Tenant's obligation to
pay all amounts described in this Section 5.1 shall survive the expiration or
earlier termination of the Lease Term.
5.2 Payment of Impositions. On or before the Lease Commencement Date,
Tenant shall notify the appropriate taxing authorities to deliver directly to
Tenant all statements and invoices for the Impositions, effective as of the
Lease Commencement Date. Tenant shall pay all Impositions (as hereinafter
defined) at least thirty (30) days prior to the date they become due;
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provided, however, that with respect to Impositions that are payable only after
the applicable governmental or quasi-governmental authority notifies Tenant of
the amount assessed, if Tenant is not notified of the amount of any such
Imposition on or before the date that is thirty-five (35) days prior to the date
on which such Impositions become due, then Tenant shall pay such Impositions
prior to the earlier of (a) five (5) days after the date on which Tenant
receives notice of the amount of the applicable Imposition and (b) the date on
which such Imposition is due. As soon as practicable after the payment thereof
but in no event more than ten (10) days after the date thereof, Tenant shall
deliver to Landlord evidence of each such payment. To the extent that any such
Impositions are imposed upon Landlord, at Landlord's option, Tenant shall either
pay such Impositions directly to the taxing authority or reimburse Landlord for
such Impositions. If the Lease Term expires on a day other than the first day or
the last day of a calendar year, then Tenant's liability for Impositions for
such calendar year shall be apportioned by multiplying the amount of the
Impositions for the full calendar year by a fraction, the numerator of which is
the number of days during such calendar year falling within the Lease Term, and
the denominator of which is three hundred sixty-five (365).
5.3 Definition of Impositions. The term "Impositions" shall mean all
present and future real estate taxes (and all taxes or other impositions that
are in the nature of or in substitution for real estate taxes), vault and/or
public space rentals, business district or arena taxes, special user fees,
governmental charges, rates, and assessments (including general and special
assessments, if any), ordinary and extraordinary, foreseen and unforeseen, which
are imposed upon Landlord or Tenant or assessed against the Premises, the
fixtures, machinery, equipment or systems used in connection with the Premises
or the business being operated on the Premises, including without limitation,
taxes in the nature of a sales, use, gross receipts or other tax or levy on the
rents payable by Tenant. Impositions shall not include any federal, state, or
local income tax imposed on Landlord ("Landlord's Income Taxes"), except to the
extent levied expressly in lieu of an imposition described in the first sentence
of this Section 5.3.
5.4 Contest of Impositions. Tenant, upon at least ten (10) days prior
written notice to Landlord but without Landlord's consent, may in good faith and
using counsel reasonably acceptable to Landlord, contest or review the
existence, amount or applicability of any Impositions by appropriate legal or
administrative proceedings, at Tenant's sole cost and expense; provided,
however, that such contests are accomplished in the manner expressly permitted
therefor in the jurisdiction in which the Premises is located, such that in no
event whatsoever shall the failure to pay the Imposition being contested impair
in any manner the Premises. Landlord, at no cost or expense to Landlord, shall
execute such documents as are necessary, in Landlord's reasonable discretion, in
connection with any such contest. Tenant shall be entitled to any refund
received with respect to Impositions paid by Tenant.
5.5 Utilities and Services. Tenant, at its own expense, shall arrange with
the appropriate utility companies and service providers for the provision to the
Premises of water, sewer, trash collection, electricity, gas, telephone, window
washing, landscaping, snow removal, and all other utilities and services desired
by Tenant ("Utilities and Services"). On or before the Lease Commencement Date,
Tenant shall notify the appropriate utility and service providers to deliver
directly to Tenant all statements and invoices for the amounts for which Tenant
is responsible pursuant to this Section 5.5, effective as of the Lease
Commencement Date. Tenant
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shall pay directly to the appropriate utility companies and service providers
all charges for all Utilities consumed in and Services performed for the
Premises, as and when such charges become due and payable. To the extent the
invoices for any such Utilities and Services are received by Landlord, at
Landlord's option, Tenant shall either pay the charge for such Utilities and
Services directly to the utility or service provider or reimburse Landlord for
such charges.
ARTICLE VI
USE OF PREMISES
6.1 Use of Premises. Tenant shall use and occupy the Premises only for the
purposes for which the Premises is being used as of the Lease Commencement Date
and for any other motor vehicle retail or related purposes, and for no other
purpose. Notwithstanding the foregoing, Tenant shall not use or occupy the
Premises for any unlawful purpose, or in any manner that will violate the
certificate of occupancy for the Premises or that will constitute waste or
nuisance. Tenant shall comply with all present and future laws (including,
without limitation, the Americans with Disabilities Act (the "ADA") and the
regulations promulgated thereunder, as the same may be amended from time to
time), ordinances (including without limitation, zoning ordinances and land use
requirements), regulations, orders and recommendations (including, without
limitation, those made by any public or private agency having authority over
insurance rates) (collectively, "Laws") concerning the use, occupancy and
condition of the Premises and the business being conducted thereon, and all
machinery, equipment, furnishings, fixtures and improvements on or used in
connection with the Premises, all of which shall be complied with in a timely
manner at Tenant's sole expense. If any such Law requires an occupancy or use
permit or license for the Premises or the operation of the business conducted
therein, then Tenant shall obtain and keep current such permit or license at
Tenant's expense. Tenant shall deliver to Landlord, promptly upon request, all
licenses, permits and other certificates evidencing compliance of Tenant and the
Premises with Laws. If any such Law requires any modification to the Premises.
Tenant shall perform such alterations, at its sole cost and expense, in
accordance with the terms and conditions of Article IX below. Use of the
Premises is subject to all covenants, conditions and restrictions of record.
Tenant shall continuously, diligently and actively conduct its business in the
Premises in a first-class and reputable manner.
6.2 Assessments on Tenant's Business and Personalty. Tenant shall pay
before delinquency any business, rent, sales, franchise or other taxes or fees
that are now or hereafter levied, assessed or imposed upon Tenant's use or
occupancy of the Premises, the conduct of Tenant's business at the Premises, or
Tenant's equipment, fixtures, furnishings, inventory or personal property. If
any such tax or fee is enacted or altered so that such tax or fee is levied
against Landlord or so that Landlord is responsible for collection or payment
thereof, then Tenant shall pay to Landlord as additional rent the amount of such
tax or fee.
6.3 Hazardous Materials.
(a) Tenant shall not cause or permit any Hazardous Materials (as
hereinafter defined) to be generated, used, released, stored or disposed of in
or about the Premises, provided that Tenant may use, store and dispose of
reasonable quantities of Hazardous Materials commonly used in motor vehicle
retail or related business operations as may be reasonably
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necessary for Tenant to conduct such operations, provided such Hazardous
Materials are used, stored and disposed of in accordance with all Environmental
Laws (as hereinafter defined) and commercially reasonable standards prevailing
in the motor vehicle retail and related industries. Tenant acknowledges that
Tenant or its Affiliate owned or leased the Premises immediately prior to the
Lease Commencement Date. Accordingly, at the expiration or earlier termination
of this Lease, Tenant shall surrender the Premises to Landlord in compliance
with all Environmental Laws, without regard to whether any violations of
Environmental Laws existed at the Premises as of the Lease Commencement Date.
"Hazardous Materials" means (i) asbestos and any asbestos containing material,
(ii) any substance that is then defined or listed in, or otherwise classified
pursuant to, any Environmental Law or any other applicable Law as a "hazardous
substance," "hazardous material," "hazardous waste," "infectious waste," "toxic
substance," "toxic pollutant" or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, or
Toxicity Characteristic Leaching Procedure (TCLP) toxicity, (iii) any petroleum
and drilling fluids, produced waters, and other wastes associated with the
exploration, development or production of crude oil, natural gas, or geothermal
resources, and (iv) any petroleum product, polychlorinated biphenyls, urea
formaldehyde, radon gas, radioactive material (including any source, special
nuclear, or byproduct material), medical waste, chlorofluorocarbon, lead or
lead-based product, and any other substance whose presence could be detrimental
to the Premises or hazardous to health or the environment. "Environmental Law"
means any present and future Law and any amendments (whether common law,
statute, rule, order, regulation or otherwise), permits and other requirements
or guidelines of governmental authorities applicable to the Premises and
relating to the environment and environmental conditions or to any Hazardous
Material (including, without limitation, CERCLA, 42 U.S C. ss. 9601 et seq., the
Resource Conservation and Recovery Act of 1976,42 U.S.C. ss. 6901 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 et seq., the Federal
Water Pollution Control Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 33
U.S.C. ss. 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et
seq., the Safe Drinking Water Act, 42 U.S.C. ss. 300fet seq., the Emergency
Planning and Community Right-To-Know Act, 42 U.S.C. ss. 1101 et seq., the
Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq., and any so-called
"Super Fund" or "Super Lien" law, any Law requiring the filing of reports and
notices relating to Hazardous Materials, environmental laws administered by the
Environmental Protection Agency, and any similar state and local Laws, all
amendments thereto and all regulations, orders, decisions, and decrees now or
hereafter promulgated thereunder concerning the environment, industrial hygiene
or public health or safety).
(b) Tenant shall give Landlord immediate verbal and follow-up
(within seventy-two (72) hours) written notice of any actual or threatened
Environmental Default (as hereinafter defined). Tenant shall cure such
Environmental Default in accordance with all Environmental Laws. An
"Environmental Default" means any of the following: a violation of an
Environmental Law; a release, spill or discharge of a Hazardous Material on or
from the Premises (regardless of whether or not a reporting requirement exists),
which release, spill or discharge is not permitted under this Section 6.3; an
environmental condition requiring responsive action, including without
limitation, an environmental condition at the Premises caused by a third party;
or an emergency environmental condition. Upon any Environmental Default, in
addition to all other rights available to Landlord under this Lease, at law or
in equity.
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Landlord shall have the right to require Tenant, at its sole cost and expense,
to address such Environmental Default, in which event Landlord shall have the
right to supervise and approve any actions taken by Tenant to address the
Environmental Default. In the event that Tenant falls promptly to commence and
thereafter diligently to pursue the compliance with such Environmental Laws,
then Landlord shall have the right, but not the obligation, to perform, at
Tenant's sole cost and expense, any lawful action necessary to address the same,
in which event Tenant shall pay the costs thereof to Landlord as additional
rent, within ten (10) days after written evidence thereof.
(c) Landlord shall have the right, but not the obligation, to
conduct, at its expense, periodic audits of the Premises (including without
limitation, the air, soil, surface water and groundwater at or near the
Premises) and Tenant's compliance with Environmental Laws with respect thereto.
If Landlord reasonably determines that alterations or improvements or
replacements of equipment on the Premises are necessary in connection with any
such Environmental Laws, Landlord shall have the right to require Tenant, at its
expense, to perform the same. In the event that Tenant fails promptly to
commence and thereafter diligently to pursue the compliance with such
Environmental Laws, then Landlord shall have the right, but not the obligation,
to perform the same, at Tenant's sole cost and expense, in which event Tenant
shall pay the costs thereof to Landlord as additional rent, within ten (10) days
after written evidence thereof. If any lender or governmental agency having
jurisdiction over Landlord, Tenant or the Premises shall require testing at or
near the Premises and Landlord incurs expenses in complying with such
requirement, then Tenant shall pay to Landlord the reasonable costs therefor as
additional rent, within ten (10) days after written evidence thereof.
(d) Tenant acknowledges that it or its Affiliate owned or leased and
operated the Premises immediately prior to the Lease Commencement Date.
Accordingly, as a material consideration for Landlord's willingness to enter
into this Lease. Tenant hereby waives, and releases Landlord and its Affiliates
from, any and all claims for damage, injury or loss (including without
limitation, claims for the interruption of or loss to business) which relate to
any Environmental Default, whether occurring prior or subsequent to the Lease
Commencement Date. Promptly upon request, Tenant shall execute from time to time
affidavits, representations and similar documents concerning Tenant's best
knowledge and belief regarding the presence of Hazardous Materials at the
Premises.
(e) Tenant's obligations pursuant to this Section 6.3 shall survive
the expiration or earlier termination of this Lease, but shall relate only to
violations of Environmental Laws occurring prior to the expiration or earlier
termination of this Lease, except to the extent caused by Tenant or anyone
acting through or under Tenant following such expiration or earlier termination.
If any required actions by Tenant pursuant to this Section 6.3 continue beyond
the expiration or earlier termination of this Lease and hinder Landlord's
ability to re-lease the same for the uses contemplated under this Lease, Tenant
shall pay to Landlord an amount equal to the Base Rent that would have been
payable under this Lease for the period of such required actions in the absence
of the expiration or earlier termination of this Lease.
ARTICLE VII
ASSIGNMENT AND SUBLEYFING
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7.1 Consent Required for Assignment or Subletting. Tenant shall not
assign, transfer or otherwise encumber (collectively, "assign") this Lease or
all or any of Tenant's rights hereunder or interest herein, or sublet or permit
anyone to use or occupy (collectively, "sublet") the Premises or any part
thereof, without obtaining the prior written consent of Landlord, which consent
may be withheld or granted in Landlord's sole and absolute discretion.
Notwithstanding the foregoing, provided that there has occurred no Event of
Default hereunder, Landlord shall not unreasonably withhold its consent to any
proposed assignment of this Lease or subletting of the Premises to a franchisee
under any franchise agreement approved by Landlord and in effect with respect to
the business being conducted at the Premises, provided that Landlord determines,
in its sole and absolute discretion, that (a) the use of the Premises pursuant
to such assignment or sublease is in compliance with Article VI hereof; (b)
Landlord is satisfied with the financial condition of the assignee under any
such assignment or the sublessee under any such sublease; (c) the initial Tenant
remains fully liable as a primary obligor for the payment of all rent and other
charges hereunder and for the performance of all its other obligations
hereunder; (d) such assignment or sublease does not violate the terms of any
Mortgage; and (e) such assignment or sublease is effected on a form approved by
Landlord. Notwithstanding the foregoing, provided that there has occurred no
Event of Default hereunder, Tenant may, upon thirty (30) days prior written
notice to Landlord, but without Landlord's consent, sublet the Premises to an
Affiliate of Tenant as described in clause (a) of Section 7.5 below, provided
that the initial Tenant remains fully liable as a primary obligor for the
payment of all rent and other charges hereunder and for the performance of all
its other obligations hereunder and the Guarantor executes and delivers to
Landlord an affirmation of its Guaranty in form satisfactory to Landlord. No
assignment or right of occupancy hereunder may be effectuated by operation of
law or otherwise without the prior written consent of Landlord. Any attempted
assignment, transfer or other encumbrance of this Lease or all or any of
Tenant's rights hereunder or interest herein, and any sublet or permission to
use or occupy the Premises or any part thereof not in accordance with this
Article VII shall be void and of no force or effect. Any assignment or
subletting, Landlord's consent thereto, or Landlord's collection or acceptance
of rent from any assignee or subtenant shall not be construed either as waiving
or releasing Tenant from any of its liabilities or obligations under this Lease
as a principal and not as a guarantor or surety, or as relieving Tenant or any
assignee or subtenant from the obligation of obtaining Landlord's prior written
consent to any subsequent assignment or subletting. As security for this Lease,
Tenant hereby assigns to Landlord the rent due from any assignee or subtenant of
Tenant. For any period during which there exists an Event of Default hereunder,
Tenant hereby authorizes each such assignee or subtenant to pay said rent
directly to Landlord upon receipt of notice from Landlord specifying same.
Landlord's collection of such rent shall not be construed as an acceptance of
such assignee or subtenant as a tenant. Notwithstanding anything to the contrary
contained herein, Tenant shall not mortgage. pledge, hypothecate or encumber
(collectively "mortgage") this Lease without Landlord's prior written consent,
which consent shall not be unreasonably withheld. Without limiting the
generality of the immediately preceding sentence, it is specifically agreed that
it shall be reasonable for Landlord to withhold its consent if such mortgage (I)
would (x) expand Landlord's obligations or liability under this Lease, or (y)
reduce Tenant's obligations or liability under this Lease, or (z) require the
consent of the holder of such mortgage to any cancellation, surrender, or
modification of this Lease or (II) would violate the terms of any Mortgage.
Tenant shall pay to Landlord as additional rent all reasonable expenses
(including attorneys' fees and accounting costs) incurred by
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Landlord in connection with Tenant's request for Landlord to give its consent to
any assignment, subletting or mortgage. Tenant shall notify Landlord prior to
engaging a real estate broker in connection with any proposed assignment or
sublease. Tenant shall deliver to Landlord a fully-executed copy of each
agreement evidencing a sublease or assignment or mortgage within ten (10) days
after Tenant's execution thereof.
7.2 Change in Control. If Tenant is a partnership, then any event (whether
voluntary, concurrent or related) resulting in a dissolution of Tenant, any
withdrawal or change (whether voluntary, involuntary or by operation of law) of
partners owning a controlling interest in Tenant (including each general
partner), or any structural or other change having the effect of limiting the
liability of the partners shall be deemed a voluntary assignment of this Lease
subject to the provisions of this Article. If Tenant is a corporation (or a
partnership with a corporate general partner), then any event (whether
voluntary, concurrent or related) resulting in a dissolution, merger,
consolidation or other reorganization of Tenant (or such corporate general
partner), or the sale or transfer or relinquishment of the interest of
shareholders who, as of the date of this Lease, own a controlling interest of
the capital stock of Tenant (or such corporate general partner), shall be deemed
a voluntary assignment of this Lease subject to the provisions of this Article;
provided, however, that the foregoing portion of this sentence shall not apply
to (a) the trading of stock in a corporation in the ordinary course through a
national or regional exchange or over-the-counter market, or (b) the transfer of
stock between or among any of the following: Xxxxxx xxXxxx, his wife, his
brothers and sisters, his brothers- and sisters-in-law, his children, his nieces
and nephews. his grandchildren, his grand-nieces and -nephews (collectively, the
"xxXxxx Family"), and charitable trusts, corporations, partnerships, trusts, and
other entities, the equitable ownership of which is entirely owned by members of
the xxXxxx Family. If Tenant is a limited liability company, then any
dissolution of Tenant or a withdrawal or change, whether voluntary, involuntary
or by operation of law, of members owning a controlling interest in Tenant shall
be deemed a voluntary assignment of this Lease. In addition, a transfer of all
or substantially all of the assets of Tenant, either by merger, consolidation,
or otherwise shall be deemed to be an assignment under this Article VII.
7.3 Notice to Landlord. If at any time during the Lease Term Tenant
desires to assign, sublet or mortgage all or part of this Lease or the Premises,
then in connection with Tenant's request to Landlord for Landlord's consent
thereto, Tenant shall give notice to Landlord in writing containing: the
identity of the proposed assignee, subtenant or other party and a description of
its business; the terms of the proposed assignment, subletting or other
transaction; the commencement date of the proposed assignment, subletting or
other transaction; the area proposed to be assigned, sublet or otherwise
encumbered; the most recent financial statement or other evidence of financial
responsibility of such proposed assignee, subtenant or other party; and a
certification executed by Tenant and such party stating whether or not any
premium or other consideration is being paid for the assignment, sublease or
other transaction.
7.4 Restrictions and Obligations Extend to Transferees. All restrictions
and obligations imposed pursuant to this Lease on Tenant shall be deemed to
extend to any subtenant, assignee, licensee, concessionaire or other occupant or
transferee, and Tenant shall cause such person or entity to comply with such
restrictions and obligations. Any assignee shall be deemed to have assumed
obligations as if such assignee had originally executed this Lease
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and at Landlord's request shall execute promptly a document confirming such
assumption. Each sublease is subject to the condition that if the Lease Term is
terminated or Landlord succeeds to Tenant's interest in the Premises by
voluntary surrender or otherwise, at Landlord's option, the sublease shall not
terminate as a matter of law and the subtenant shall be bound to Landlord for
the balance of the term of such sublease and shall attorn to and recognize
Landlord as its landlord under the then executory terms of such sublease.
7.5 Affiliate. For purposes of this Lease, the term "control" shall mean
the ownership of fifty percent (50%) or more of the stock or other voting
interest of the controlled entity. For purposes of this Lease, the term
"Affiliate" shall mean any person or entity that (a) directly or indirectly
controls, is controlled by, or is under common control with, Landlord or Tenant,
as applicable or (b) holds direct or indirect beneficial ownership (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of voting
securities or other voting interests representing at least five percent (5%) of
the outstanding voting power of an entity or equity securities or other equity
interests representing at least five percent (5%) of the outstanding equity
securities or interests in any entity.
ARTICLE VIII
MAINTENANCE AND REPAIRS
8.1 Tenant to Maintain and Repair. Tenant, at Tenant's sole cost and
expense, shall promptly make all repairs, perform all maintenance, and make all
replacements in and to the Premises (including without limitation, all interior
and exterior, structural, non-structural and systems maintenance, repairs and
replacements) that are necessary or desirable to keep the Premises in at least
as good a condition and repair as they were in on the Lease Commencement Date,
in a clean, safe and tenantable condition, and otherwise in accordance with all
Laws and the requirements of this Lease, including without limitation, repairs
required as a result of any act or omission of any invitee, agent, employee,
Affiliate, subtenant, assignee, contractor, client, family member, licensee,
customer or guest of Tenant (collectively, "Invitees"). Tenant shall maintain
all fixtures and personal property (including all equipment) located in, or
serving, the Premises in clean, safe and sanitary condition, shall take good
care thereof and make all required repairs and replacements thereto. Tenant
shall give Landlord prompt written notice of any defects or damage to the
structure of, or equipment or fixtures in, any improvements located in the
Premises. Tenant shall maintain all drives, sidewalks, parking areas and lawns
on the Premises in a clean condition, free of accumulations of dirt, trash, snow
and ice. Tenant shall suffer no waste or injury to any part of the Premises, and
shall, at the expiration or earlier termination of the Lease Term, surrender the
Premises in at least as good a condition and repair as they were in on the Lease
Commencement Date, ordinary wear and tear excepted. Notwithstanding anything to
the contrary contained herein, after the expiration of any applicable notice and
cure period set forth in Section 17.1(b), Landlord shall have the right, but not
the obligation, to make any repair and to charge Tenant as additional rent for
all costs and expenses incurred in connection therewith.
8.2 Fixtures. Tenant shall not remove from the Premises any fixtures
unless replaced with similar fixtures of equal or greater quality and value.
Each such fixture shall become the property of Landlord upon installing the same
at the Premises. Tenant may not grant any lien or
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security interest in and to such fixture replacements without the prior written
consent of Landlord, subject to the terms of Section 17.9 below with respect to
Tenant's equipment, machinery and other personalty.
ARTICLE IX
ALTERATIONS
9.1 As-Is Condition. TENANT ACKNOWLEDGES THAT IT OR ITS AFFILIATE OWNED OR
LEASED AND OPERATED THE PREMISES IMMEDIATELY PRIOR TO THE LEASE COMMENCEMENT
DATE. ACCORDINGLY, TENANT SHALL ACCEPT POSSESSION OF THE PREMISES IN ITS "AS IS"
CONDITION AS OF THE LEASE COMMENCEMENT DATE. LANDLORD MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES, EITHER AS TO
ITS FITNESS FOR USE, ITS DESIGN OR CONDITION, OR ANY PARTICULAR USE OR PURPOSE
TO WHICH THE PREMISES MAY BE FIT, OR OTHERWISE, OR AS TO QUALITY OF THE MATERIAL
OR WORKMANSHIP THEREIN, OR THE EXISTENCE OF ANY DEFECTS, LATENT OR PATENT, IT
BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. Landlord is under no
obligation to make any alterations, decorations, additions, improvements or
other changes (collectively, "Alterations") in or to the Premises.
9.2 Consent Required for Alterations. Tenant shall not make or permit
anyone to make any Alterations in or to the Premises, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, Tenant shall have the right, upon at least ten
(10) days prior written notice to Landlord but without Landlord's consent, to
perform any Alteration other than (a) Alterations that are capital in nature,
irrespective of the cost thereof (including without limitation, Alterations to
construct new buildings or structures on the Premises, or to repair, restore or
replace the improvements existing on the Premises as of the date of this Lease
in a manner other than that which constitutes ordinary and recurring
maintenance) and (b) Alterations that cost more than One Hundred Thousand
Dollars ($100,000.00). All Alterations in or to the Premises shall be made in a
good, workmanlike and first-class manner, in accordance with such commercially
reasonable terms and conditions as Landlord may impose. If any lien (or a
petition to establish such lien) is filed in connection with any Alteration,
such lien (or petition) shall be discharged by Tenant within ten (10) days
thereafter, at Tenant's sole cost and expense, by the payment thereof or by the
filing of a bond acceptable to Landlord. If Landlord gives its consent to the
making of any Alteration, such consent shall not be deemed to be an agreement or
consent by Landlord to subject its interest in the Premises to any liens which
may be filed in connection therewith. Promptly after the completion of an
Alteration, Tenant at its expense shall deliver to Landlord one (1) set of
accurate as-built drawings showing such Alteration in place.
9 3 Removal of Alterations. Except as otherwise expressly provided
pursuant to Section 9.2 above, if any Alterations are made without the prior
written consent of Landlord, then, after the expiration of any notice and cure
period applicable pursuant to Section 17.1(b), Landlord shall have the right, in
addition to all other remedies, at Tenants expense to remove and correct such
Alterations and restore the Premises to its condition immediately prior thereto,
or to
11
require Tenant to do the same. All Alterations to the Premises during the Lease
Term shall be the property of Landlord and shall remain upon and be surrendered
with the Premises as a part thereof at the expiration or earlier termination of
the Lease Term; provided, however, that (a) if there exists no Event of Default
under this Lease, then Tenant shall have the right to remove, prior to the
expiration or earlier termination of the Lease Term, all movable furniture,
furnishings and equipment installed in the Premises solely at the expense of
Tenant, and (b) Tenant shall remove all Alterations and other items in the
Premises that Landlord designates in writing for removal. Notwithstanding
anything to the contrary contained herein, Tenant shall have the right to claim,
during the Lease Term, all federal and state income tax benefits associated with
Alterations to the Premises performed at Tenant's sole cost and expense during
the Lease Term, if and to the extent permitted under applicable Laws; provided,
however, that in no event shall Landlord have any liability to Tenant whatsoever
in connection with any inability by Tenant to obtain any such benefits. Landlord
shall have the right at Tenant's expense to repair all damage and injury to the
Premises caused by any removal of such furniture, furnishings, equipment and
Alterations or to require Tenant to do the same; provided, however, that
Landlord shall not perform any such repair until after notice and the expiration
of the applicable cure period pursuant to Section 17.1(b), if and to the extent
that such cure period occurs prior to the expiration or earlier termination of
the Lease Term. If such furniture, furnishings and equipment are not removed by
Tenant prior to the expiration or earlier termination of the Lease Term, the
same shall at Landlord's option become the property of Landlord and shall be
surrendered with the Premises as a part thereof; provided, however, that
Landlord shall have the right at Tenant's expense to remove from the Premises
such furniture, furnishings and equipment and any Alteration which Landlord
designates in writing for removal or to require Tenant to do the same. If Tenant
fails to return the Premises to Landlord as required by this Section, then
Tenant shall pay to Landlord, as additional rent, all costs incurred by Landlord
in effecting such return.
ARTICLE X
REPRESENTATIONS, WARRANTIES AND COVENANTS OF TENANT
10.1 Representations, Warranties and Covenants of Tenant. Tenant hereby
represents, warrants and covenants to Landlord as follows:
(a) Operating Agreements. Tenant shall provide to Landlord, within
ten (10) days after execution or receipt thereof, as applicable, copies of all
franchise and other operating agreements (including without limitation, any
buy-sell agreements or similar agreements affecting the control of the business
being operated at or from the Premises) pursuant to which the business is being
operated at or from the Premises which are not in effect as of the date of this
Lease, and all modifications, supplements or other amendments to, and notices of
breach or default under, all such agreements, whether now existing, or hereafter
entered into. Tenant further covenants at all times during the Lease Term to
operate the business being conducted at or from the Premises in compliance with
such franchise or other operating agreements.
(b) Change in Financial Condition. No material adverse change has
occurred with respect to the financial condition of Tenant, any Affiliate of
Tenant operating the business being conducted at or from the Premises, or such
business since the date of the most recent Quarterly Statement or Annual
Statement (as hereinafter defined), as applicable, delivered to
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Landlord, and Tenant and any such Affiliate each has not entered into any
material transaction outside the ordinary course of its business operations
being conducted at the Premises.
(c) Proceedings. No proceeding at law or in equity or before any
administrative agency or arbitrator or similar forum is pending or, to the
knowledge of Tenant, threatened which could reasonably be expected to result in
a material adverse change in the financial condition of Tenant, any Affiliate of
Tenant operating the business being conducted at or from the Premises, or either
such party's ability to conduct its business at the Premises.
(d) Compliance with Financial Covenants of Operating Agreements.
Tenant and any Affiliate operating the business being conducted at or from the
Premises are in compliance in all material respects with all financial covenants
required to be maintained pursuant to all franchise and other agreements
pursuant to which Tenant or such Affiliate operates the business being conducted
at or from the Premises.
(e) Tenant and Guarantor Financial Statements. Tenant and each
Guarantor, if any, shall provide Landlord and any Mortgagee, at the times set
forth herein (or more often as may be reasonably requested by Landlord), the
following financial information during the Lease Term: (i) within forty-five
(45) days after the end of each fiscal quarter, Tenant- or Guarantor-prepared
year-to-date financial statements of Tenant and of each Guarantor, prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied (the "Quarterly Statements"); (ii) within ninety (90) days after the end
of each fiscal year of Tenant and each Guarantor, annual financial statements
prepared in accordance with GAAP, consistently applied, audited or reviewed by
an independent certified public accountant (the "Annual Statements"); and (iii)
such additional financial information as Landlord shall reasonably request.
Notwithstanding the foregoing provisions of this Section 10.1(e) to the
contrary, during any period that (I) Tenant is a wholly-owned subsidiary of
Guarantor, (II) financial statements and tax returns of Tenant, Guarantor, and
other wholly-owned subsidiaries of Guarantor are prepared on a consolidated
basis, and (III) such consolidated financial statements and tax returns do not
also aggregate financial data for any entities that are not wholly-owned by
Guarantor, then such financial statements and tax returns may be provided on
such a consolidated basis. Further notwithstanding anything to the contrary
contained herein, with respect to any period during the Lease Term in which
Tenant is, or is wholly owned by, a public company, Tenant shall be permitted to
satisfy the conditions contained in this Section 10.1(e) by delivering to
Landlord, at the times required herein, all such financial information as Tenant
(or such public company that wholly owns Tenant, as applicable) is required to
file with the United States Securities and Exchange Commission, and such
additional financial information as may be required by Landlord to obtain or
comply with the terms of any Mortgage; provided, however, that to the extent any
such financial information is of a confidential nature, Landlord agrees to enter
into confidentiality agreements with Tenant in forms reasonably acceptable to
Landlord.
(f) Cash Flow Coverage Ratio Certification. Tenant shall provide to
Landlord, within forty-five (45) days after the end of each fiscal quarter, a
written calculation, prepared by Tenant or a Guarantor and certified by Tenant's
and each Guarantor's chief financial officer, evidencing that Tenant, taken
together as a whole with all Guarantors, shall have
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maintained a Cash Flow Coverage Ratio, during the past four (4) calendar
quarters taken as a whole, of no less than 1.5 to 1.0, based on the Quarterly
Statements and Annual Statements delivered to Landlord pursuant to Section
10.1(e) above. For purposes of this Lease, "Cash Flow Coverage Ratio" shall mean
the quotient of (i) the sum of (with respect to Tenant and all Guarantors) all
net income (computed in accordance with GAAP, consistently applied) plus (A)
income taxes, (B) all rent payable under all leases for real property and
improvements to which Tenant or any Guarantor is a party ("Aggregate Rent
Obligations"), (C) depreciation and amortization, (D) owners' compensation and
bonuses in excess of the lesser of Five Hundred Thousand Dollars ($500,000) or
twenty-five one-hundredths of one percent (0.25%) of the revenue of Tenant and
all Guarantors, taken as a whole; (E) the annual LIFO adjustment; and (F) other
non-cash expenses, less recurring capital expenditures and principal payments
under long-term debt divided by (ii) the Aggregate Rent Obligations. Tenant and
each Guarantor shall provide to Landlord, within ten (10) days after request,
all evidence reasonably requested supporting the Cash Flow Coverage Ratio
calculations delivered to Landlord.
(g) Disclosure. This Lease does not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make any
statement contained herein not misleading in light of the circumstances in which
it was made. To Tenant's knowledge, there is no event, fact or occurrence that
has resulted, or in the future (so far as Tenant can reasonably foresee) could
result, in any material adverse change in the financial condition of Tenant or
its Affiliate operating the business being conducted at or from the Premises
from the most recent Quarterly Statements or Annual Statements, as applicable,
provided to Landlord.
(h) [Intentionally omitted].
(i) Material Litigation. Within ten (10) days after Tenant has
knowledge of any litigation or other proceeding related to or arising out of
this Lease or the Premises in which claims are asserted in an amount in excess
of Fifty Thousand Dollars ($50,000), that (a) may be instituted against Tenant
or its Affiliate or (b) may affect the title to or the interest of Landlord in
the Premises, Tenant shall give written notice thereof to Landlord. If and to
the extent Landlord reasonably determines that such proceeding may adversely
affect the Premises or this Lease, Landlord may, after notice to Tenant,
undertake such investigation or proceeding and Tenant shall pay all reasonable
costs and expenses related thereto that are incurred by Landlord, as additional
rent, within ten (10) days after delivery of written evidence thereof, whether
or not Landlord has received notice from Tenant of such investigation or
proceeding, and whether or not an Event of Default has occurred or has been
cured. Notwithstanding anything to the contrary contained herein, in the event
that Tenant provides written notice to Landlord requesting the right to
undertake such investigation and/or proceeding and specifying, in such detail as
Landlord shall reasonably require, the manner in which it will perform the same,
Landlord shall approve such request if Landlord determines, in its sole and
absolute discretion, that (I) the same will not adversely affect the Premises
and (II) the same will not violate the terms of any Mortgage and shall be in
accordance with all policies and procedures that Landlord and/or the holder of
any Mortgage may require; provided, however, that such approval may be revoked
by Landlord at any time if Landlord determines, in its sole and absolute
discretion, that Tenant is not proceeding with such investigation and/or
proceeding in accordance with the terms outlined to Landlord in its request for
approval or is not prosecuting the same to completion with due
14
diligence.
ARTICLE XI
SECURITY DEPOSIT; GUARANTY
11.1 Security Deposit. Simultaneously with Tenant's execution of this
Lease, Tenant shall deposit with Landlord the Security Deposit Amount (as
defined in Section 1.6) as a security deposit which shall be security for the
performance by Tenant of all of Tenant's obligations, covenants, conditions and
agreements under this Lease. Landlord shall not be required to maintain such
security deposit in a separate account. Except as may be required by law, Tenant
shall not be entitled to interest on the security deposit. Within approximately
sixty (60) days after the later of the expiration or earlier termination of the
Lease Term or Tenant's vacating the Premises, Landlord shall return such
security deposit to Tenant, less such portion thereof as Landlord shall have
appropriated to satisfy any of Tenant's obligations, or any default by Tenant,
under this Lease. If there shall be any default under this Lease by Tenant, then
Landlord shall have the right, but shall not be obligated, to use, apply or
retain all or any portion of the security deposit for the payment of any (a)
Base Rent, additional rent or any other sum as to which Tenant is in default, or
(b) amount Landlord may spend or become obligated to spend, or for the
compensation of Landlord for any losses incurred, by reason of Tenant's default
(including, but not limited to, any damage or deficiency arising in connection
with the reletting of the Premises). If any portion of the security deposit is
so used or applied, then within three (3) business days after Landlord gives
written notice to Tenant of such use or application, Tenant shall deposit with
Landlord cash in an amount sufficient to restore the security deposit to the
original Security Deposit Amount, and Tenant's failure to do so shall constitute
an Event of Default under this Lease.
11.2 Guaranty. As additional security for the faithful performance by
Tenant of all covenants, conditions and agreements of this Lease, each Guarantor
(as defined in Section 1.11 above) has executed and delivered to Landlord a
guaranty of lease (the "Guaranty") in the form attached to the Purchase
Agreement.
ARTICLE XII
INSPECTION
12.1 Inspection of Premises. At all times (after reasonable notice, except
in the event of emergency) Tenant shall permit Landlord, its agents and
representatives, and the holder of any Mortgage, to enter the Premises without
charge therefor and without diminution of the rent payable by Tenant in order to
examine, inspect or protect the Premises, or to exhibit the same to brokers,
prospective tenants (but only (a) after an Event of Default or (b) during the
last twelve (12) months of the then-current Lease Term), lenders, purchasers and
others. Landlord shall endeavor to minimize disruption to Tenant's normal
business operations in the Premises in connection with any such entry.
ARTICLE XIII
INSURANCE
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13.1 Insurance.
(a) Types and Amounts of Required Insurance Coverage. Throughout the
Lease Term, Tenant shall obtain and maintain (I) commercial general liability
insurance (written on an occurrence basis) including contractual liability
coverage insuring the obligations assumed by Tenant under this Lease (including
the indemnity obligations set forth in this Lease), premises and operations
coverage, broad form property damage coverage and independent contractors
coverage, and containing an endorsement for personal injury, (2) business
interruption insurance, (3) all-risk property insurance, including coverage for
flood and, upon Landlord's request, earthquake, (4) comprehensive automobile
liability insurance (covering automobiles owned or operated by Tenant), (5)
worker's compensation insurance, and (6) employer's liability insurance. Such
commercial general liability insurance shall be in minimum amounts typically
carried by prudent tenants engaged in similar operations, but in no event shall
be in an amount less than the greater of (x) Three Million Dollars ($3,000,000)
combined single limit per occurrence with a Five Million Dollar ($5,000,000)
annual aggregate and (y) the minimum amounts required under the franchise
agreement or other license pursuant to which Tenant or its Affiliate operates
the business at or from the Premises. Such business interruption insurance shall
be in minimum amounts typically carried by prudent tenants engaged in similar
operations, but in no event shall be in an amount less than the Base Rent,
Impositions and all other additional rent payable under this Lease during any
Lease Year. Such property insurance shall be in an amount not less than that
required to replace all of the improvements installed on or about the Premises
as of the Lease Commencement Date, all Alterations and all other contents of the
Premises (including, without limitation, Tenant's trade fixtures, decorations,
furnishings, equipment and personal property). Such automobile liability
insurance shall be in an amount not less than One Million Dollars ($1,000,000)
for each accident. Such worker's compensation insurance shall carry minimum
limits as defined by the law of the jurisdiction in which the Premises is
located (as the same may be amended from time to time). Such employer's
liability insurance shall be in an amount not less than One Million Dollars
($1,000,000) for each accident. Tenant shall have the right to maintain the
insurance coverages set forth in this Article under a blanket insurance policy
covering other premises owned or operated by Tenant, provided that (i) the
Premises is covered independently by such blanket insurance policy to the full
extent required by this Article, and (ii) such coverage for the Premises shall
not be diminished for any reason whatsoever (including without limitation a
claim made with respect to any other premises) during the Lease Term.
(b) Conditions of Insurance Coverage. All such insurance shall: (1)
be issued by a company that is licensed to do business in the jurisdiction in
which the Premises is located, that has been approved in advance by Landlord and
that has a rating equal to or exceeding A-:XII from Best's Insurance Guide; (2)
name Landlord and the holder of any Mortgage as additional insureds and/or loss
payees (as applicable), and all loss adjustment shall require the written
consent of Landlord and Tenant, and such Mortgagee, if applicable; (3) contain
an endorsement that such policy shall remain in full force and effect
notwithstanding that the insured may have waived its right of action against any
party prior to the occurrence of a loss (Tenant hereby waiving its right of
action and recovery against and releasing Landlord and its employees and agents
from any and all liabilities, claims and losses for which they may otherwise be
liable to the extent Tenant is covered by insurance carried or required to be
16
carried under this Lease); (4) provide that the insurer thereunder waives all
right of recovery by way of subrogation against Landlord, its partners, agents,
employees, and representatives, in connection with any loss or damage covered by
such policy; (5) be acceptable in form and content to Landlord; (6) be primary
and non-contributory; (7) contains an endorsement for cross liability and
severability of interests; and (8) contain an endorsement prohibiting
cancellation, failure to renew, reduction of amount of insurance or change in
coverage without the insurer first giving Landlord thirty (30) days' prior
written notice (by certified or registered mall, return receipt requested) of
such proposed action. No such policy shall contain any deductible provision
except as otherwise approved in writing by Landlord, which approval shall not be
unreasonably withheld. Landlord reserves the right from time to time to require
Tenant to obtain higher minimum amounts or different types of insurance if it
becomes customary for owners or tenants of comparable properties in the vicinity
of the Premises to carry insurance of such higher minimum amounts or of such
different types. Tenant shall deliver to Landlord, concurrently with Tenant's
execution of this Lease and at least annually thereafter, (A) a certificate of
all such insurance, (B) receipts evidencing payment therefor (and, upon request,
copies of all required insurance policies, including endorsements and
declarations), and (C) a certification from Tenant's insurance agent for the
benefit of Landlord confirming that Tenant is carrying all of the insurance
required pursuant to this Article, and that such coverage is in full force and
effect. Tenant shall give Landlord immediate notice in case of fire, theft or
accident in the Premises. Neither the issuance of any insurance policy required
under this Lease nor the minimum limits specified herein shall be deemed to
limit or restrict in any way Tenant's liability arising under or out of this
Lease.
ARTICLE XIV
LIABILITY OF LANDLORD
14.1 Release of Landlord. Landlord, its Affiliates, employees and agents
shall not be liable to Tenant, its Affiliates and Invitees or any other person
or entity for any damage (including indirect and consequential damage), injury,
loss or claim (including claims for the interruption of or loss to business)
based on or arising out of any cause whatsoever, including without limitation
the following: the violation of any Environmental Law or the use, storage or
disposal of any Hazardous Materials at, on or under the Premises (whether prior
or subsequent to the Lease Commencement Date); repair to any portion of the
Premises; interruption in the use of the Premises or any equipment therein; any
accident or damage resulting from any use or operation (by Landlord, Tenant or
any other person or entity) of elevators or heating, cooling, electrical,
sewerage or plumbing equipment or apparatus; termination of this Lease by reason
of damage to the Premises; any fire, robbery, theft, vandalism, mysterious
disappearance or any other casualty; actions of any other person or entity;
leakage in any part of the Premises from water, rain, ice or snow that may leak
into, or flow from, any part of the Premises, or from drains, pipes or plumbing
fixtures in the Premises; and, notwithstanding anything to the contrary
contained in Section 21.1 below, (a) the encroachment of improvements over,
under, into, or across the boundaries of the Premises, easements, setback
requirements, or utilities (including, without limitation, storm drains and
overhead power lines), or (b) the extinguishment of any easement benefiting (or
constituting a portion of) the Premises in connection with the foreclosure of
any mortgage or deed of trust superior to such easement. Any property placed by
Tenant, its Affiliates or Invitees in or about the Premises shall be at the sole
risk of Tenant, and Landlord
17
shall not in any manner be held responsible therefor. Notwithstanding the
foregoing provisions of this Section, Landlord shall not be released from
liability to Tenant for any physical injury to any natural person caused by
Landlord's willful misconduct or gross negligence; provided, however, that in no
event shall Landlord have any liability for any loss to Tenant's business or any
other indirect losses or consequential damages.
14.2 Indemnification of Landlord. Tenant shall reimburse Landlord, its
Affiliates, partners, officers, directors, members, trustees, employees, agents
and mortgagees (as additional rent) for, and shall indemnify, defend upon
request and hold them harmless from and against, all costs, damages (including
punitive and consequential damages), claims, liabilities, reasonable,
out-of-pocket expenses (including attorneys' fees, disbursements and actual
costs), losses, penalties and court costs suffered by or claimed against any of
them, directly or indirectly, based on or arising out of, in whole or in part,
(a) the use and occupancy of the Premises or the business conducted therein, (b)
any act or omission of Tenant or its Affiliates or Invitees, (c) any
Environmental Law (irrespective of whether there has occurred a violation
thereof) relating to the Premises, including without limitation, any loss of
value to the Premises in connection therewith, and (d) any breach of Tenant's
obligations under this Lease, including without limitation, the failure to
comply with Laws.
14.3 Liability Accruing Subsequent to Transfer. No landlord hereunder
shall be liable for any obligation or liability based on or arising out of any
event or condition occurring during the period that such landlord was not the
owner of the Premises or a landlord's interest therein. Within five (5) business
days after request, Tenant shall attorn to such transferee and execute,
acknowledge and deliver any document submitted to Tenant confirming such
attornment.
14.4 Tenant's Remedies. Tenant shall not have the right to set off,
recoup, xxxxx or deduct any amount allegedly owed to Tenant pursuant to any
claim against Landlord from any rent or other sum payable to Landlord. Tenant's
sole remedy for recovering upon such claim shall be to institute an independent
action against Landlord, which action shall not be consolidated with any action
of Landlord.
14.5 Landlord's Liability. If Tenant or its Affiliates or Invitees are
awarded a money judgment against Landlord, then recourse for satisfaction of
such judgment shall be limited to execution against Landlord's estate and
interest in the Premises. No other asset of Landlord, any partner, director,
member, officer or trustee of Landlord (each, an "officer") or any other person
or entity shall be available to satisfy or be subject to such judgment, nor
shall any officer or other person or entity be held to have personal liability
for satisfaction of any claim or judgment against Landlord or any officer.
ARTICLE XV
DAMAGE OR DESTRUCTION
15.1 Tenant's Restoration Obligations. If the improvements located on the
Premises are totally or partially damaged or destroyed, then promptly after such
damage or destruction, Tenant shall promptly repair, rebuild, or restore all
damaged improvements on or about the Premises, in accordance with the following,
so as to make the Premises at least equal in value to
18
the Premises existing immediately prior to such damage or destruction. All such
restoration shall be at Tenant's expense; provided, however, that Landlord will
make available to Tenant the net proceeds of any fire or other casualty
insurance paid to Landlord after deduction of any costs incurred in connection
with the collection thereof, including reasonable attorneys' fees. Payment to
Tenant of such net proceeds shall be made in accordance with reasonable
procedures customarily required in connection with construction loans. Tenant
shall deliver to Landlord for Landlord's approval (which shall be granted or
withheld in accordance with the standards set forth in Section 9.2 for
Landlord's consent to Alterations) the plans and specifications for such
restoration. Promptly after receiving Landlord's approval of such plans and
specifications, Tenant shall deliver to Landlord for Landlord's approval a
schedule setting forth the estimated monthly draws for such work. Upon
Landlord's approval thereof, Tenant will begin such repairs or restoration and
will prosecute the repairs and restoration to completion with diligence and in
accordance with the terms and conditions contained in Article IX of this Lease.
Landlord and its architects and engineers shall have the right to inspect the
Premises from time to time during such repair and restoration. In no event,
however, shall Landlord have any liability whatsoever for any defects in the
design or construction of the repairs and restoration, or the compliance of the
plans and specifications with Laws. In no event shall any damage or destruction
cause an abatement of any rent required to be paid by Tenant under this Lease,
nor permit any termination of this Lease.
ARTICLE XVI
CONDEMNATION
16.1 Permanent Taking. If the entire Premises, or the use or occupancy
thereof, shall be permanently taken or condemned by any governmental or
quasi-governmental authority for any public or quasi-public use or purpose or
sold under threat of such a taking or condemnation (collectively, "condemned")
so as to render Tenant unable to operate the business being conducted at or from
the Premises as of the Lease Commencement Date, as reasonably determined by
Landlord, then this Lease shall terminate on the day prior to the date title
thereto vests in such authority, and rent shall be apportioned as of such date.
If less than the entire Premises or occupancy thereof is permanently condemned,
but such partial condemnation renders Tenant unable to operate the business
being conducted at or from the Premises as of the Lease Commencement Date, as
reasonably determined by Landlord, then Tenant shall have the right to terminate
this Lease upon written notice thereof to Landlord within ten (10) business days
after Tenant receives notice of such taking, this Lease shall terminate on the
day prior to the date title thereto vests in the applicable authority, and rent
shall be apportioned as of such date. If less than the entire Premises or
occupancy thereof is permanently condemned and such partial condemnation does
not render Tenant unable to operate the business being conducted at or from the
Premises as of the Lease Commencement Date, as reasonably determined by
Landlord, then this Lease shall remain in full force and effect. Notwithstanding
anything to the contrary contained in this Article, if the condemnation is the
result of the failure of Tenant to maintain the Premises in the condition
required under this Lease, then upon such termination, Tenant shall pay to
Landlord as liquidated damages, an amount equal to the sum of all Base Rent,
additional rent and other sums which would have been payable under this Lease
through the remainder of the Lease Term in the absence of such termination. For
purposes of this Section, the Premises or portion thereof, as applicable, shall
be deemed to be permanently condemned if condemned for a
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period in excess of twenty-four (24) consecutive calendar months.
16.2 Temporary Taking. If all or any portion of the Premises is condemned
for a period of twenty-four (24) consecutive calendar months or less, all of the
terms and conditions of this Lease shall remain in full force and effect,
notwithstanding such condemnation. In such event, there shall be no abatement of
rent or other amounts payable under this Lease.
16.3 Awards. All awards, damages and other compensation paid on account of
condemnation shall belong to Landlord, and Tenant assigns to Landlord all rights
to such awards, damages and compensation. Tenant shall not make any claim
against Landlord or such authority for any portion of such award, damages or
compensation attributable to damage to the Premises, value of the unexpired
portion of the Lease Term, loss of profits or goodwill, leasehold improvements
or severance damages. Nothing contained herein, however, shall prevent Tenant
from pursuing a separate claim against the authority for relocation expenses and
for the value of furnishings, equipment and trade fixtures (a)(i) which were
installed in the Premises at Tenant's expense following the Lease Commencement
Date or (ii) that Tenant retained title to as of the Lease Commencement Date,
and (b) which Tenant is entitled pursuant to this Lease to remove at the
expiration or earlier termination of the Lease Term, provided that such claim
shall in no way diminish the award, damages or compensation payable to or
recoverable by Landlord in connection with such condemnation.
ARTICLE XVII
DEFAULT
17.1 Events of Default. Each of the following shall constitute an "Event
of Default": (a) Tenant's failure to make when due any payment of the Base Rent,
additional rent or other sum; provided, however, that with respect to the first
(1st) such failure in any twelve (12) month period only, no Event of Default
shall be deemed to have occurred unless such failure continues for a period of
five (5) business days after Landlord delivers written notice thereof to Tenant;
(b) Tenant's failure to perform or observe any covenant or condition of this
Lease not otherwise specifically described in this Section, which failure
continues for twenty (20) days after Landlord delivers written notice thereof to
Tenant, or, provided that if such failure cannot be cured within such twenty
(20) day period, and Tenant begins such cure promptly within such twenty (20)
day period and thereafter diligently pursues the same to completion, then Tenant
shall have such additional time, up to an additional forty (40) days, as is
necessary to effect such cure; provided, however, that no cure period whatsoever
shall be applicable if, in Landlord's sole and absolute discretion, (i) such
failure raises a life/safety issue with respect to the Premises or its occupants
or visitors, including but not limited to, a threat of personal injury or
continuing physical injury to the Premises, and/or (ii) with respect solely to
an Environmental Default (as specified in Section 6.3), such failure would
materially adversely affect Landlord and/or the Premises; (c) Tenant's
abandonment of or failure to occupy continuously the Premises; (d) an Event of
Bankruptcy as specified in Article XVIII; (e) Tenant's dissolution or
liquidation; (f) [intentionally omitted]; (g) any subletting, assignment,
transfer, mortgage or other encumbrance of the Premises or this Lease not
permitted by Article VII; (h) any representation, warranty or covenant made by
Tenant for itself or an Affiliate is incorrect in any material respect when
made; (i) any termination or relinquishment of any franchise or license pursuant
to which Tenant
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or an Affiliate conducts business at or from the Premises as of the date of this
Lease, unless Tenant or its Affiliate conducting business at or from the
Premises has entered into a new written franchise or license, as applicable, for
the operation of motor vehicle retail or related businesses at the Premises
within thirty (30) days after the termination or relinquishment of the previous
franchise or license, as applicable, which new franchise or license, as
applicable, shall have been approved in writing by Landlord in the exercise of
its commercially reasonable discretion; (j) a final, non-appealable judgment for
the payment of money not fully covered by insurance is rendered against Tenant
or any Affiliate conducting business at or from the Premises, and the same has
not been discharged, vacated, bonded, appealed or stayed within thirty (30) days
after rendering of the same; (k) any failure to maintain the insurance required
pursuant to Article XIII above, which failure continues for three (3) days after
Landlord delivers written notice thereof to Tenant; (1) any default by Tenant,
any Guarantor or any of Tenant's Affiliates under any other instrument entered
into with or for the benefit of Landlord or any of Landlord's Affiliates, which
default continues following any applicable notice and cure period provided in
such instrument; and (m) any breach of Tenant's covenant regarding the Case Flow
Coverage Ratio requirement described in Section 10.1(f) above; provided,
however, that no Event of Default shall be deemed to have occurred pursuant to
this Section 17.1(m) if, upon such breach, Tenant promptly commences and
thereafter diligently pursues the cure of the breach of the covenant.
17.2 Landlord's Remedies. If there shall be an Event of Default (even if
prior to the Lease Commencement Date), then the provisions of this Section shall
apply. Landlord shall have the right, at its sole option, to terminate this
Lease. In addition, with or without terminating this Lease, Landlord may
re-enter, terminate Tenant's right of possession and take possession of the
Premises. The provisions of this Article shall operate as a notice to quit, and
Tenant hereby waives any other notice to quit or notice of Landlord's intention
to re-enter the Premises or terminate this Lease. If necessary, Landlord may
proceed to recover possession of the Premises under applicable Laws, or by such
other proceedings, including re-entry and possession, as may be applicable. If
Landlord elects to terminate this Lease and/or elects to terminate Tenant's
right of possession, everything contained in this Lease on the part of Landlord
to be done and performed shall cease without prejudice, however, to Tenant's
liability for all Base Rent. additional rent and other sums specified herein.
Whether or not this Lease and/or Tenant's right of possession is terminated,
Landlord shall have the right, at its sole option, to terminate any right of
renewal, expansion, first offer or refusal and any right to purchase the
Premises contained in this Lease and to grant or withhold any consent or
approval pursuant to this Lease in its sole and absolute discretion. If there
exists an Event of Default under this Lease and Tenant has vacated the Premises,
then Landlord shall thereafter use reasonable efforts to relet the Premises;
provided, however, that Tenant hereby acknowledges the special use of the
Premises for the conduct of business by a franchised dealer of motor vehicles
and agrees that the ability of Landlord to relet the same to another dealer of
motor vehicles under a franchise agreement satisfactory to Landlord is extremely
uncertain and would be likely to require a substantial amount of time. Whether
or not this Lease and/or Tenant's right of possession is terminated or any suit
is instituted. Tenant shall be liable for any Base Rent, additional rent,
damages or other sum which may be due or sustained prior to such default, and
for all costs, fees and reasonable, out-of-pocket expenses (including, but not
limited to, attorneys' fees and costs, brokerage fees, expenses incurred in
enforcing any of Tenant's obligations under the Lease or in placing the Premises
in first-class rentable condition, advertising expenses, and any concessions or
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allowances granted by Landlord) incurred by Landlord in pursuit of its remedies
hereunder and/or in recovering possession of the Premises and renting the
Premises to others from time to time plus other actual or consequential damages
suffered or incurred by Landlord on account of Tenant's default (including, but
not limited to, late fees or other charges incurred by Landlord under any
Mortgage). Tenant also shall be liable for additional damages which at
Landlord's election shall be either one or a combination of the following: (a)
an amount equal to the Base Rent and additional rent due or which would have
become due from the date of Tenant's default through the remainder of the Lease
Term, less the amount of rental, if any, which Landlord receives during such
period from others to whom the Premises may be rented (other than any additional
rent received by Landlord as a result of any failure of such other person to
perform any of its obligations to Landlord), which amount shall be computed and
payable in monthly installments, in advance, on the first day of each calendar
month following Tenant's default and continuing until the date on which the
Lease Term would have expired but for Tenant's default, it being understood that
separate suits may be brought from time to time to collect any such damages for
any month(s) (and any such separate suit shall not in any manner prejudice the
right of Landlord to collect any damages for any subsequent month(s)), or
Landlord may defer initiating any such suit until after the expiration of the
Lease Term (in which event such deferral shall not be construed as a waiver of
Landlord's rights as set forth herein and Landlord's cause of action shall be
deemed not to have accrued until the expiration of the Lease Term), and it being
further understood that if Landlord elects to bring suits from time to time
prior to reletting the Premises, Landlord shall be entitled to its full damages
through the date of the award of damages without regard to any Base Rent,
additional rent or other sums that are or may be projected to be received by
Landlord upon reletting of the Premises; or (b) an amount equal to the sum of
(i) all Base Rent, additional rent and other sums due or which would be due and
payable under this Lease as of the date of Tenant's default through the end of
the scheduled Lease Term, plus (ii) all reasonable, out-of-pocket expenses
(including broker and attorneys' fees) and value of all vacancy periods
projected by Landlord to be incurred in connection with the reletting of the
Premises. Such amount shall be discounted using a discount factor equal to the
yield of the Treasury Note or Xxxx, as appropriate, having a maturity period
approximately commensurate to the remainder of the Term, and such resulting
amount shall be payable to Landlord in a lump sum on demand, it being understood
that upon payment of such liquidated and agreed final damages, Tenant shall be
released from further liability under this Lease with respect to the period
after the date of such payment. Landlord may bring suit to collect any such
damages at any time after an Event of Default shall have occurred. In the event
Landlord relets the Premises for a term extending beyond the scheduled
expiration of the Lease Term, it is understood that Tenant will not be entitled
to apply any base rent, additional rent or other sums generated or projected to
be generated in the period extending beyond the scheduled expiration of the
Lease Term (collectively, the "Extra Rent') against Landlord's damages.
Similarly in proving the amount that would be received by Landlord upon a
reletting of the Premises as set forth in clause (iii) above, Tenant shall not
take into account the Extra Rent. The provisions contained in this Section shall
be in addition to, and shall not prevent the enforcement of, any claim Landlord
may have against Tenant for anticipatory breach of this Lease. Nothing herein
shall be construed to affect or prejudice Landlord's right to prove, and claim
in full, unpaid rent accrued prior to termination of this Lease. If Landlord is
entitled, or Tenant is required, pursuant to any provision hereof to take any
action upon the termination of the Lease Term, then Landlord shall be entitled,
and Tenant shall be required, to take such action also upon the termination of
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Tenant's right of possession.
17.3 Tenant Waiver. Tenant hereby expressly waives, for itself and all
persons claiming by, through or under it, any right of redemption, re-entry or
restoration of the operation of this Lease under any present or future Law,
including without limitation any such right which Tenant would otherwise have in
case Tenant shall be dispossessed for any cause, or in case Landlord shall
obtain possession of the Premises as herein provided.
17.4 Landlord's Rights Cumulative. All rights and remedies of Landlord set
forth in this Lease are cumulative and in addition to all other rights and
remedies available to Landlord at law or in equity, including those available as
a result of any anticipatory breach of this Lease. The exercise by Landlord of
any such right or remedy shall not prevent the concurrent or subsequent exercise
of any other right or remedy. No delay or failure by Landlord to exercise or
enforce any of Landlord's rights or remedies or Tenant's obligations shall
constitute a waiver of any such rights, remedies or obligations. Landlord shall
not be deemed to have waived any default by Tenant unless such waiver expressly
is set forth in a written instrument signed by Landlord. If Landlord waives in
writing any default by Tenant, such waiver shall not be construed as a waiver of
any covenant, condition or agreement set forth in this Lease except as to the
specific circumstances described in such written waiver.
17.5 Accord and Satisfaction. If Landlord shall institute proceedings
against Tenant and a compromise or settlement thereof shall be made, then the
same shall not constitute a waiver of the same or of any other covenant,
condition or agreement set forth herein, nor of any of Landlord's rights
hereunder. Neither the payment by Tenant of a lesser amount than the monthly
installment of Base Rent, additional rent or of any sums due hereunder nor any
endorsement or statement on any check or letter accompanying a check for payment
of rent or other sums payable hereunder shall be deemed an accord and
satisfaction. Landlord may accept the same without prejudice to Landlord's right
to recover the balance of such rent or other sums or to pursue any other remedy.
Notwithstanding any request or designation by Tenant, Landlord may apply any
payment received from Tenant to any payment then due. No re-entry by Landlord,
and no acceptance by Landlord of keys from Tenant, shall be considered an
acceptance of a surrender of this Lease.
17.6 Default Rate. If Tenant fails to make any payment to any third party
or to do any act herein required to be made or done by Tenant, then, after the
expiration of the applicable notice and cure period (if any) set forth in
Section 17.1, Landlord may, but shall not be required to, make such payment or
do such act. The taking of such action by Landlord shall not be considered a
cure of such default by Tenant or prevent Landlord from pursuing any remedy it
is otherwise entitled to in connection with such default. If Landlord elects to
make such payment or do such act, then all reasonable, out-of-pocket expenses
incurred by Landlord, plus interest thereon at a rate (the "Default Rate") equal
to the lesser of (a) the greater of (i) eighteen percent (18%) per annum or (ii)
the rate per annum which is five (5) whole percentage points higher than the
prime rate published in the Money Rates section of the Wall Street Journal, or
(b) the highest lawful rate per annum, from the date incurred by Landlord to the
date of payment thereof by Tenant, shall constitute additional rent due
hereunder.
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17.7 Late Fee. If Tenant fails to make any payment of Base Rent,
additional rent or any other sum on or before the date that is five (5) days
after the date on which such payment is due and payable (without regard to any
grace period specified in Section 17.1), then Tenant shall pay to Landlord a
late charge of five percent (5%) of the amount of such payment. In addition,
such payment and such late fee shall bear interest at the Default Rate from the
date such payment or late fee, respectively, became due to the date of payment
thereof by Tenant; provided, however, that nothing contained herein shall be
construed as permitting Landlord to charge or receive interest in excess of the
maximum rate then allowed by law. Such late charge and interest shall constitute
additional rent due hereunder without any notice or demand.
17.8 Joint and Several Liability. If more than one natural person or
entity shall constitute Tenant, then the liability of each such person or entity
shall be joint and several. If Tenant is a general partnership or other entity
the partners or members of which are subject to personal liability, then the
liability of each such partner or member shall be joint and several. No waiver,
release or modification of the obligations of any such person or entity shall
affect the obligations of any other such person or entity.
17.9 Subordination of Landlord's Interest. Landlord will agree to
subordinate its interest in any of Tenant's equipment, machinery, or other
personalty to any lien or security interest then being granted to a bona fide
third party financial institution by Tenant in or to any of Tenant's equipment,
machinery, or other personalty as security for indebtedness secured for the sole
purpose of financing the purchase or leasing of such equipment, machinery, or
other personalty; provided that the secured party agrees in writing to provide
written notice of any defaults under such financing to Landlord, to provide
reasonable advance notice to Landlord prior to removing such collateral, and to
promptly repair any damage to the Premises that occurs if the secured party
removes its collateral.
ARTICLE XVIII
BANKRUPTCY
18.1 Events of Bankruptcy. An "Event of Bankruptcy" is the occurrence with
respect to any of Tenant, a Guarantor or any other person liable for Tenant's
obligations hereunder (including, without limitation, any general partner (or,
if Tenant is a limited liability company, any member of Tenant) of Tenant (a
"General Partner")) of any of the following: (a) such entity or person becoming
insolvent, as that term is defined in Title 11 of the United States Code (the
"Bankruptcy Code") or under the insolvency laws of any state (the "Insolvency
Laws"); (b) appointment of a receiver or custodian for any property of such
entity or person, or the institution of a foreclosure or attachment action upon
any property of such entity or person; (c) filing by such entity or person of a
voluntary petition under the provisions of the Bankruptcy Code or Insolvency
Laws; (d) filing of an involuntary petition against such entity or person as the
subject debtor under the Bankruptcy Code or Insolvency Laws, which either (1) is
not dismissed within thirty (30) days after filing, or (2)results in the
issuance of an order for relief against the debtor; or (e) such entity or person
making or consenting to an assignment for the benefit of creditors or a
composition of creditors; (f) such entity or person submitting (either before or
after execution hereof) to Landlord any financial statement containing any
material inaccuracy or omission; or (g) a decrease by fifty percent (50%) or
more of such entity's or person's net worth below the net
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worth of such entity or person as of the date hereof.
18.2 Remedies. Upon occurrence of an Event of Bankruptcy, Landlord shall
have all rights and remedies available pursuant to Article XVII; provided,
however, that while a case (the "Case") in which Tenant is the subject debtor
under the Bankruptcy Code is pending, Landlord's right to terminate this Lease
shall be subject, to the extent required by the Bankruptcy Code, to any rights
of Tenant or its trustee in bankruptcy (collectively, "Trustee") to assume or
assume and assign this Lease pursuant to the Bankruptcy Code. After the
commencement of a Case: (i) Trustee shall perform all post-petition obligations
of Tenant under this Lease; and (ii) if Landlord is entitled to damages
(including, without limitation, unpaid rent) pursuant to the terms of this
Lease, then all such damages shall be entitled to administrative expense
priority pursuant to the Bankruptcy Code. Any person or entity to which this
Lease is assigned pursuant to the Bankruptcy Code shall be deemed without
further act or deed to have assumed all of the obligations arising under this
Lease on and after the date of assignment, and any such assignee shall upon
request execute and deliver to Landlord an instrument confirming such
assumption. Trustee shall not have the right to assume or assume and assign this
Lease unless Trustee promptly (a) cures all defaults under this Lease, (b)
compensates Landlord for damages incurred as a result of such defaults, (c)
provides adequate assurance of future performance on the part of Trustee as
debtor in possession or Trustee's assignee, and (d) complies with all other
requirements of the Bankruptcy Code. If Trustee fails to assume or assume and
assign this Lease in accordance with the requirements of the Bankruptcy Code
within sixty (60) days after the initiation of the Case, then Trustee shall be
deemed to have rejected this Lease. If this Lease is rejected or deemed
rejected, then Landlord shall have all rights and remedies available to it
pursuant to Article XVII. Adequate assurance of future performance shall
require, among other things, that the following minimum criteria be met: (1)
Tenant's gross receipts in the ordinary course of business during the thirty
(30) days preceding the Case must be greater than ten (10) times the next
monthly installment of Base Rent and additional rent due; (2) both the average
and median of Tenant's monthly gross receipts in the ordinary course of business
during the seven (7) months preceding the Case must be greater than the next
monthly installment of Base Rent and additional rent due; (3) Trustee must pay
its estimated pro-rata share of the cost of all services performed or provided
by Landlord (whether directly or through agents or contractors and whether or
not previously included as part of Base Rent) in advance of the performance or
provision of such services; (4) Trustee must agree that Tenant's business shall
be conducted in a first-class manner, and that no liquidating sale, auction or
other non-first-class business operation shall be conducted in the Premises: (5)
Trustee must agree that the use of the Premises as stated in this Lease shall
remain unchanged and that no prohibited use shall be permitted; (6) Trustee must
pay at the time the next monthly installment of Base Rent is due, in addition to
such installment, an amount equal to the monthly installments of Base Rent, and
additional rent due for the next six (6) months thereafter, such amount to be
held as a security deposit; (7) Trustee must agree to pay, at any time Landlord
draws on such security deposit, the amount necessary to restore such security
deposit to its original amount; (8) Trustee must comply with all duties and
obligations of Tenant under this Lease; (9) financial condition and operating
performance of the proposed assignee and its guarantors, if any, shall be
similar to the financial condition and operating performance of the Tenant and
Guarantors as of the date of this Lease; and (10) all assurances of future
performance specified in the Bankruptcy Code must be provided.
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ARTICLE XIX
SUBORDINATION
19.1 Subordination. This Lease shall be subject and subordinate to the
lien, provisions. operation and effect of all mortgages, deeds of trust, ground
leases or other security instruments which may now or hereafter encumber the
Premises (collectively, "Mortgages"), to all funds and indebtedness intended to
be secured thereby, and to all renewals, extensions, modifications, recastings
or refinancings thereof, provided that Landlord obtains for Tenant a
non-disturbance agreement providing for the continuation of this Lease in the
event of any transfer of the Premises (subject to the terms and conditions
contained therein), on the standard form of the holder of any then-applicable
Mortgage. The holder of any Mortgage to which this Lease is subordinate shall
have the right (subject to any required approval of the holders of any superior
Mortgage) at any time to declare this Lease to be superior to the lien,
provisions, operation and effect of such Mortgage and Tenant shall execute,
acknowledge and deliver all documents required by such holder in confirmation
thereof. Tenant shall, within five (5) business days after Landlord's request,
execute any requisite or appropriate document confirming the foregoing
subordination.
19.2 Attornment and Non-Disturbance. Tenant waives the provisions of any
statute or rule of law now or hereafter in effect which may give or purport to
give Tenant any right to terminate or otherwise adversely affect this Lease and
Tenant's obligations hereunder in the event any foreclosure proceeding is
prosecuted or completed or in the event the Premises or Landlord's interest
therein is transferred by foreclosure, by deed in lieu of foreclosure or
otherwise. If this Lease is not extinguished upon any such transfer or by the
transferee following such transfer, then, at the request of such transferee,
Tenant shall attorn to such transferee and shall recognize such transferee as
the landlord under this Lease. Tenant agrees that upon any such attornment, such
transferee shall not be (a) bound by any payment of the Base Rent or additional
rent more than one (1) month in advance, except prepayments in the nature of
security for the performance by Tenant of its obligations under this Lease, but
only to the extent such prepayments have been delivered to such transferee, (b)
bound by any amendment of this Lease made without the written consent of the
holder of each Mortgage existing as of the date of such amendment, (c) liable
for damages for any breach, act or omission of any prior landlord, or (d)
subject to any offsets or defenses which Tenant might have against any prior
landlord; provided, however, that after succeeding to Landlord's interest under
this Lease, such transferee shall agree to perform in accordance with the terms
of this Lease all obligations of Landlord arising after the date of transfer.
Within five (5) days after the request of such transferee, Tenant shall execute,
acknowledge and deliver any requisite or appropriate document submitted to
Tenant confirming such attornment.
19.3 Lender Required Modifications. If any prospective or current holder
of a Mortgage requires that modifications to this Lease be obtained, and
provided that such modifications (a) are reasonable, (b) do not adversely affect
in a material manner Tenant's use of the Premises as herein permitted, and (c)
do not increase the rent and other sums to be paid by Tenant, then Landlord may
submit to Tenant an amendment to this Lease incorporating such required
modifications, and Tenant shall execute, acknowledge and deliver such amendment
to Landlord within five (5) days after Tenant's receipt thereof.
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19.4 Lender Cure Rights. If (a) the Premises are at any time subject to a
Mortgage, (b) this Lease and rent payable hereunder is assigned to the holder of
the Mortgage, and (c) the Tenant is given notice of such assignment, including
the name and address of the assignee, then, in that event, Tenant shall not
terminate this Lease or make any abatement in the rent payable hereunder for any
default on the part of the Landlord without first giving notice, in the manner
provided elsewhere in this Lease for the giving of notices, to the holder of
such Mortgage, specifying the default in reasonable detail, and affording such
holder a reasonable opportunity to make performance, at its election, for and on
behalf of the Landlord, except that (i) such holder shall have at least thirty
(30) days to cure the default; (ii) if such default cannot be cured with
reasonable diligence and continuity within thirty (30) days, such holder shall
have any additional time as may be reasonably necessary to cure the default with
reasonable diligence and continuity; and (iii) if the default cannot reasonably
be cured without such holder having obtained possession of the Premises, such
holder shall have such additional time as may be reasonably necessary under the
circumstances to obtain possession of the Premises and thereafter to cure the
default with reasonable diligence and continuity. If more than one such holder
makes a written request to Landlord to cure the default, the holder making the
request whose lien is the most senior shall have such right.
ARTICLE XX
HOLDING OVER
20.1 Hold Over. If Tenant (or anyone claiming through Tenant) does not
immediately surrender the Premises or any portion thereof upon the expiration or
earlier termination of the Lease Term, then Tenant shall automatically forfeit
all rights to the security deposit then being held by Landlord pursuant to this
Lease and the Base Rent payable by Tenant hereunder shall be increased to equal
two hundred percent (200%) of the Base Rent, additional rent and other sums that
would have been payable pursuant to the provisions of this Lease if the Lease
Term had continued during such holdover period. Such rent shall be computed by
Landlord and paid by Tenant on a monthly basis and shall be payable on the first
day of such holdover period and the first day of each calendar month thereafter
during such holdover period until the Premises have been vacated.
Notwithstanding any other provision of this Lease, Landlord's acceptance of such
rent shall not in any manner adversely affect Landlord's other rights and
remedies, including Landlord's right to evict Tenant and to recover all damages.
Any such holdover shall be deemed to be a tenancy-at-sufferance and not a
tenancy-at-will or tenancy from month-to-month. In no event shall any holdover
be deemed a permitted extension or renewal of the Lease Term, and nothing
contained herein shall be construed to constitute Landlord's consent to any
holdover or to give Tenant any right with respect thereto.
ARTICLE XXI
QUIET ENJOYMENT
21.1 Quiet Enjoyment. Landlord covenants that it has the right to enter
into this Lease, and that if Tenant shall perform timely all of its obligations
hereunder, then, subject to the provisions of this Lease, Tenant shall during
the Lease Term peaceably and quietly occupy and enjoy the full possession of the
Premises without hindrance by Landlord or any party claiming
27
through or under Landlord.
ARTICLE XXII
OPTIONS TO EXTEND LEASE TERM
22.1 Renewal Rights. Landlord hereby grants to Tenant the conditional
right, exercisable at Tenant's option. to renew the term of this Lease for eight
(8) successive terms of five (5) years each. If exercised, and if the conditions
applicable thereto have been satisfied, the first such renewal term shall
commence immediately following the end of the initial Lease Term provided in
Sections 1.2 and 3.1 of this Lease and the second renewal term, and each renewal
term thereafter, shall commence immediately following the end of the previous
renewal term. The rights of renewal herein granted to Tenant shall be subject
to, and shall be exercised in accordance with, the following terms and
conditions:
(a) Tenant shall exercise its right of renewal with respect to a
renewal term by giving Landlord written notice thereof not earlier than fifteen
(15) months nor later than twelve (12) months prior to the expiration of the
then-current term of this Lease. Notwithstanding the foregoing sentence to the
contrary, Tenant's failure to give Landlord, on or before the date that is
twelve (12) months prior to the expiration of the then-current term of this
Lease, written notice of Tenant's election not to exercise such right of renewal
shall conclusively be deemed to constitute timely and irrevocable exercise of
Tenant's right of renewal with respect to the applicable renewal period, without
any necessity for a written notice of Tenant's exercise of such right of
renewal. Notwithstanding the foregoing provisions of this Section 22.1(a) to the
contrary, if (i) during any such period Tenant gives Landlord actual (and not
deemed) written notice of Tenant's election to renew, and (ii) on or before the
date that is twelve (12) months prior to the expiration of the then-current term
of this Lease Tenant gives Landlord written notice of Tenant's election not to
renew, then the first notice received by Landlord shall govern, and any others
with respect to such renewal term shall be disregarded by Landlord.
(b) The Base Rent during each Renewal Term shall be the amounts set
forth therefor in Section 1.5 above for the applicable Lease Years within each
such Renewal Term. If there exists an Event of Default under this Lease on the
date Tenant sends a renewal notice or any time thereafter until a Renewal Term
is to commence, at Landlord's election, such Renewal Term shall not commence.
(c) If Tenant's right of renewal with respect to a Renewal Term
lapses for any reason (including without limitation, Tenant's failure to timely
provide a renewal notice), then Tenant's right of renewal with respect to any
subsequent Renewal Term shall similarly lapse and be of no further force or
effect.
(d) Tenant's rights of renewal under this Section may be exercised
only by Tenant and may not be exercised by any transferee, sublessee or assignee
of Tenant.
ARTICLE XXIII
GENERAL PROVISIONS
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23.1 Relationship Between Landlord and Tenant. Nothing contained in this
Lease shall be construed as creating any relationship between Landlord and
Tenant other than that of landlord and tenant. Tenant shall not do or permit to
be done anything in connection with Tenant's business or advertising which in
the reasonable judgment of Landlord may reflect unfavorably on Landlord or the
Premises or confuse or mislead the public as to any apparent connection or
relationship between Landlord, the Premises and Tenant.
23.2 Brokers. Landlord and Tenant each warrants to the other that in
connection with this Lease it has not employed or dealt with any third party
broker, agent or finder. Landlord shall indemnify and hold Tenant harmless from
and against any claim for brokerage or other commissions asserted by any broker,
agent or finder employed by Landlord or with whom Landlord has dealt. Tenant
shall indemnify and hold Landlord harmless from and against any claim for
brokerage or other commissions asserted by any broker, agent or finder employed
by Tenant or with whom Tenant has dealt.
23.3 Estoppel.
(a) At any time and from time to time, upon not less than five (5)
days' prior written notice, Tenant and each subtenant, assignee, licensee or
concessionaire or occupant of Tenant shall execute, acknowledge and deliver to
Landlord and/or any other person or entity designated by Landlord, a written
statement certifying: (a) that this Lease and that certain franchise agreement
by and between Lithia Dodge, L.L.C. (d/b/a Lithia Mazda), and Mazda Motor of
America, Inc., that certain franchise agreement by and between Lithia TLM, LLC
(d/b/a Lithia Lincoln Mercury), and Ford Motor Company dated June 1, 1997, and
that certain franchise agreement by and between Lithia TLM, LLC, successor in
interest to Lithia Motors, Inc. (d/b/a Lithia Toyota), and Toyota Motor Sales,
USA, Inc., dated as of February 15, 1996 (each, a "Franchise Agreement") each
are unmodified and in full force and effect (or if there have been
modifications, that this Lease or each Franchise Agreement, as applicable, is in
full force and effect as modified and stating the modifications); (b) the dates
to which the rent and any other charges have been paid; (c) whether or not
Landlord is in default in the performance of any obligation, and if so,
specifying the nature of such default; (d) the address to which notices to
Tenant are to be sent; (e) that this Lease is subject and subordinate to all
Mortgages encumbering the Premises; (f) that Tenant has accepted the Premises;
and (g) such other matters as Landlord may reasonably request. Any such
statement may be relied upon by any owner of the Premises, any prospective
purchaser of the Premises, any holder or prospective holder of a Mortgage or any
other person or entity. Tenant acknowledges that time is of the essence to the
delivery of such statements and that Tenant's failure to deliver timely such
statements may cause substantial damages resulting from, for example, delays in
obtaining financing secured by the Premises. Tenant shall be liable for all such
damages. If any such statement is not delivered timely by Tenant, then all
matters contained in such statement shall be deemed true and accurate.
(b) From time to time (but not more often then once in any twelve
(12) month period), upon not less than five (5) business days' prior written
notice, Landlord shall execute, acknowledge and deliver to Tenant a written
statement certifying, to the best of Landlord's actual knowledge: (a) whether or
not Tenant is in default in the performance of any obligation under this Lease,
and if so, specifying the nature of such default; (b) the address to which
notices
29
to Landlord are to be sent; and (c) such other matters as Tenant may reasonably
request. Any such statement may be relied upon by Tenant and any lender
providing financing to Tenant.
23.4 Arbitration.
(a) Notwithstanding anything to the contrary contained in this
Lease, except with respect to the payment of Base Rent and additional rent
hereunder, in the event a controversy arises between the parties as to any of
the requirements of this Lease, which the parties are unable to resolve, the
parties agree to waive the remedy of litigation (except for extraordinary relief
in an emergency situation) and agree that such controversy shall be determined
by arbitration as hereafter provided in this Section 23.5.
(b) The party or parties requesting arbitration shall serve upon the
other a demand therefor, in writing, specifying in detail the controversy and
matter(s) to be submitted to arbitration before the American Arbitration
Association. The selection of arbitrators shall be conducted pursuant to the
rules for resolution of commercial disputes promulgated by the American
Arbitration Association. The party or parties giving notice shall request a
listing of available arbitrators from the American Arbitration Association, and
each party shall respond in the selection process within fifteen (15) days after
each receipt of such listings until a panel of three (3) arbitrators has been
designated. If either party fails to respond within fifteen (15) days, it is
agreed that the American Arbitration Association may make such selections as are
necessary to complete the panel of three (3) arbitrators.
(c) Within five (5) business days after the selection of the
arbitration panel, the arbitrators shall give written notice to each party as to
the time and the place of each meeting, which shall be held in Washington, D C.,
at which the parties may appear and be heard, which shall be no later than
fifteen (15) days after certification of the arbitration panel. The applicable
rules shall be those in effect at the time for the resolution of commercial
disputes promulgated by the American Arbitration Association. The decision of
the arbitrators shall be in writing signed by a majority of the panel which
decision shall be final and binding upon the parties to the controversy.
Provided, however, in rendering their decisions and making awards, the
arbitrators shall not add to, subtract from or otherwise modify the provisions
of this Lease.
23.5 Notices. All notices or other communications required under this
Lease shall be in writing and shall be deemed duly given and received when
delivered in person (with receipt therefor), on the next business day after
deposit with a recognized overnight delivery service, or on the second day after
being sent by certified or registered mail, return receipt requested, postage
prepaid, to the following addresses: (a) if to Landlord, at the Landlord Notice
Address specified in Article I, with a copy to Xxxx Xxxxxxx, 0000 X Xxxxxx,
X.X., Xxxxxxxxxx, X.X. 00000, Attn: Xxxxxxx X. Xxxxxxxxxx; (b) if to Tenant, at
the Tenant Notice Address specified in Article I. Either party may change its
address for the giving of notices by notice given in accordance with this
Section. If Landlord or the holder of any Mortgage notifies Tenant that a copy
of any notice to Landlord shall be sent to such holder at a specified address,
then Tenant shall send (in the manner specified in this Section and at the same
time such notice is sent to Landlord) a copy of each such notice to such holder,
and no such notice shall be considered duly sent unless such copy is so sent to
such holder. Any cure of Landlord's default by such holder
30
shall be treated as performance by Landlord. If Tenant or the holder of any
Leasehold Financing notifies Landlord that a copy of any notice to Tenant shall
be sent to such holder at a specified address, then Landlord shall send (in the
manner specified in this Section and at the same time such notice is sent to
Tenant) a copy of each such notice to such holder, and no such notice shall be
considered duly sent unless such copy is so sent to such holder. Any cure of
Tenant's default by such holder prior to the expiration of the applicable notice
and cure period (if any) set forth in Section 17.1 shall be treated as
performance by Tenant.
23.6 Validity. Each provision of this Lease shall be valid and enforceable
to the fullest extent permitted by law. If any provision of this Lease or the
application thereof to any person or circumstance shall to any extent be invalid
or unenforceable, then such provision shall be deemed to be replaced by the
valid and enforceable provision most substantively similar to such invalid or
unenforceable provision, and the remainder of this Lease and the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable shall not be affected thereby. Nothing contained in
this Lease shall be construed as permitting Landlord to charge or receive
interest in excess of the maximum rate allowed by law.
23.7 Pronouns. Feminine, masculine or neuter pronouns shall be substituted
for those of another form, and the plural or singular shall be substituted for
the other number, in any place in which the context may require such
substitution.
23.8 Successors and Assigns. The provisions of this Lease shall be binding
upon and inure to the benefit of the parties and each of their respective
representatives, successors and assigns, subject to the provisions herein
restricting assignment or subletting.
23.9 Entire Agreement. This Lease and the Purchase Agreement (to the
extent surviving the transfer of the Premises to Landlord) together contain and
embody the entire agreement of the parties hereto with regard to the subject
matter hereof and supersede all prior agreements, negotiations, letters of
intent, proposals, representations, warranties, understandings, suggestions and
discussions, whether written or oral, between the parties hereto. Any
representation, inducement, warranty, understanding or agreement that is not
expressly set forth in this Lease or the Purchase Agreement (to the extent
surviving) shall be of no force or effect. This Lease may be modified or changed
in any manner only by an instrument signed by both parties. This Lease includes
and incorporates all Exhibits attached hereto.
23.10 Governing Law. This Lease shall be governed by the Laws of the
jurisdiction in which the Premises are located. There shall be no presumption
that this Lease be construed more strictly against the party who itself or
though its agent prepared it, it being agreed that all parties hereto have
participated in the preparation of this Lease and that each party had the
opportunity to consult legal counsel before the execution of this Lease.
23.11 Headings. Headings are used for convenience and shall not be
considered when construing this Lease.
23.12 Execution and Delivery. The submission of an unsigned copy of this
document to Tenant shall not constitute an offer or option to lease the
Premises. This Lease shall become
31
effective and binding only upon execution and delivery by both Landlord and
Tenant.
23.13 Time of Essence. Time is of the essence with respect to each of
Landlord's and Tenants obligations hereunder.
23.14 Counterparts. This Lease may be executed in multiple counterparts,
each of which shall be deemed an original and all of which together constitute
one and the same document. Faxed signatures shall have the same binding effect
as original signatures.
23.15 Waiver of Jury Trial. LANDLORD, TENANT, ALL GUARANTORS AND ALL
GENERAL PARTNERS OF TENANT EACH WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM BROUGHT IN CONNECTION WITH ANY MATTER ARISING OUT OF OR IN
ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT
HEREUNDER, TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM OF INJURY
OR DAMAGE. TENANT CONSENTS TO SERVICE OF PROCESS AND ANY PLEADING RELATING TO
ANY SUCH ACTION AT THE PREMISES; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL BE
CONSTRUED AS REQUIRING SUCH SERVICE AT THE PREMISES. LANDLORD, TENANT, ALL
GUARAUNTORS AND ALL GENERAL PARTNERS OF TENANT EACH WAIVES ANY OBJECTION TO THE
VENUE OF ANY ACTION FILED IN ANY COURT SITUATED IN THE COMMONWEALTH OF VIRGINIA
OR IN THE JURISDICTION IN WHICH THE PREMISES IS LOCATED. AND WAIVES ANY RIGHT,
CLAIM OR POWER, UNDER THE DOCTRINE OF FORUM NON CON VENIENS OR OTHERWISE, TO
TRANSFER ANY SUCH ACTION TO ANY OTHER COURT.
23.16 Additional Rent. Except as otherwise provided in this Lease, any
additional rent or other sum owed by Tenant to Landlord (other than Base Rent),
and any cost, expense, damage or liability incurred by Landlord for which Tenant
is liable, shall be considered additional rent payable pursuant to this Lease to
be paid by Tenant no later than ten (10) days after the date Landlord notifies
Tenant of the amount thereof.
23.17 Survival of Obligations. Tenant's liabilities and obligations with
respect to the period prior to the expiration or earlier termination of the
Lease Term shall survive such expiration or earlier termination.
23.18 Force Majeure. For purposes of this Lease, the term "Force Majeure"
shall mean fire, act of God, governmental act or failure to act, strike, labor
dispute. inability to procure materials, or any cause beyond Landlord's
reasonable control (whether similar or dissimilar to the foregoing events).
23.19 No Representations. Landlord's review, approval and consent powers
(including the right to review plans and specifications) are for its benefit
only. Such review, approval or consent (or conditions imposed in connection
therewith) shall be deemed not to constitute a representation concerning
legality, safety or any other matter.
23.20 Delivery of Keys. At the expiration or earlier termination of the
Lease Term,
32
Tenant shall deliver to Landlord all keys and security cards to the Premises and
the improvements thereon, whether such keys were furnished by Landlord or
otherwise procured by Tenant, and shall inform Landlord of the combination of
each lock, safe and vault, if any, in the Premises.
23.21 Representations Regarding Organization and Authorization.
(a) Landlord and the person executing and delivering this Lease on
Landlord's behalf each represents and warrants that such person is duly
authorized to so act; that Landlord is duly organized, is qualified to do
business in the jurisdiction in which the Premises are located, is in good
standing under the Laws of the state of its organization and the Laws of the
jurisdiction in which the Premises are located, and has the power and authority
to enter into this Lease; and that all action required to authorize Landlord and
such person to enter into this Lease has been duly taken.
(b) Tenant and the person executing and delivering this Lease on
Tenant's behalf each represents and warrants that such person is duly authorized
to so act; that Tenant is duly organized, is qualified to do business in the
jurisdiction in which the Premises are located, is in good standing under the
Laws of the state of its organization and the Laws of the jurisdiction in which
the Premises are located, and has the power and authority to enter into this
Lease and to conduct its business in the manner being conducted; and that all
action required to authorize Tenant and such person to enter into this Lease and
to conduct its business in the manner being conducted has been duly taken.
(c) Tenant and the person executing and delivering this Lease on
Tenant's behalf each represents, warrants and covenants that any Affiliate that
conducts any business on or from the Premises, whether now or hereafter, shall
be duly organized, qualified to do business in the jurisdiction in which the
Premises are located, is in good standing under the Laws of the state of its
organization and the Laws of the jurisdiction in which the Premises are located,
and shall have the power and authority to conduct its business in the manner
being conducted; and that all action required to authorize such Affiliate to so
conduct such business on or from the Premises shall have been duly taken.
23.22 Prevailing Party. In the event of any legal proceeding brought by
either party against the other under this Lease, the prevailing party. shall be
entitled to recover all reasonable costs and expenses incurred in connection
with such proceeding. including reasonable attorneys fees, disbursements and
actual costs.
23.23 Attorney-In-Fact. Tenant hereby irrevocably and unconditionally
appoints Landlord, or Landlord's authorized officer, agent, employee or
designee, as Tenant's true and lawful attorney-in-fact, to act, after an Event
of Default, for Tenant in Tenant's name, place, and stead, and for Tenant's and
Landlord's use and benefit, to execute, deliver and file all necessary
documents, to effect a transfer, reinstatement, renewal and/or extension of any
and all licenses and other governmental authorizations issued to Tenant in
connection with Tenant's operation of the Premises, and to do any and all other
acts incidental to any of the foregoing, as fully as Tenant might or could do if
personally present or acting, with frill power of substitution. Tenant
33
hereby ratifies and confirms all that said attorney shall lawfully do or cause
to be done by virtue hereof This power of attorney is coupled with an interest
and is irrevocable prior to the full performance of Tenant's obligations
hereunder.
ARTICLE XXIV
REIT REPRESENTATIONS, WARRANTIES AND COVENANTS
24.1 REIT Status. Tenant acknowledges that Capital Automotive REIT, a
Maryland real estate investment trust and the general partner of Landlord (the
"Company"), intends to elect to be taxed as a real estate investment trust (a
"REIT") under the Code. Tenant shall not take or omit to take any action, or
permit any status to exist at the Premises, which would adversely affect the
Company's status as a REIT. Tenant hereby agrees to modifications of this Lease
which do not materially adversely affect Tenant's rights and liabilities
hereunder if such modifications are required to retain or clarify the Company's
status as a REIT.
24.2 Sublease and Assignment Restrictions. Notwithstanding anything
contained herein to the contrary and without limiting the generality of Section
24.1 above, Tenant shall not: (a) sublet all or part of the Premises or assign
this Lease on any basis such that the rental or other amounts to be paid by the
sublessee or assignee thereunder would be based, in whole or in part, on the
income or profits derived by the business activities of the sublessee or
assignee; (b) sublet all or part of the Premises or assign this Lease to any
person or entity in which, under Section 856(d)(2)(B) of the Internal Revenue
Code of 1986, as amended (the "Code"), Landlord or its general partner owns,
directly or indirectly (by applying constructive ownership rules set forth in
Section 856(d) (5) of the Code), a ten percent (10%) or greater interest; or (c)
sublet all or part of the Premises or assign this Lease in any other manner or
otherwise derive any income which could cause any portion of the amounts
received by Landlord pursuant hereto or any sublease to fail to qualify as
"rents from real property" within the meaning of Section 856(d) of the Code, or
which could cause any other income received by Landlord to fail to qualify as
income described in Section 856(c) (2) of the Code. The requirements of this
Section 24.2 shall likewise apply to any further subleasing by any subtenant.
All references herein to Section 856 of the Code also shall refer to any
amendments thereof or successor provisions thereto.
24.3 Personal Property. Anything contained in this Lease to the contrary
notwithstanding and without limiting the generality of Section 24.1 above, the
average of the adjusted tax bases of the items of personal property that are
leased to Tenant under this Lease, if any, at the beginning and at the end of
any calendar year shall not exceed fifteen percent (15%) of the average of the
aggregate adjusted tax bases of the Premises at the beginning and at the end of
each such calendar year. This Section 24.3 is intended to insure that the rent
payable hereunder qualifies as "rents from real property," within the meaning of
Section 856(d) of the Code, or any similar or successor provisions thereto, and
shall be interpreted in a manner consistent with such intent.
24.4 Interests in REIT. Without limiting the generality of Section 24.1
above, Tenant covenants and agrees that, during the Lease Term, Tenant and its
controlling
34
shareholders and its or their Affiliates will not acquire, directly or
indirectly, more than a nine and nine-tenths percent (9.90%) interest in Capital
Automotive REIT, within the meaning of Section 856(d)(2)(B) of the Code, and any
amendments thereof or successor provisions thereto. Tenant covenants and agrees
that it will divest itself or cause such others to divest themselves of such
shares of Capital Automotive REIT as may be necessary to satisfy the limitations
of this Section.
ARTICLE XXV
FIRST RIGHT TO NEGOTIATE
25.1 In the event that Lithia Properties, LLC, or any entity controlled by
Lithia Properties, LLC (collectively, the "Selling Entity"), elects to market
any real property owned by it (each such parcel, an "Additional Property) during
the Lease Term (as the same may be extended or renewed), then Landlord shall
have a first right to negotiate for the purchase of such Additional Property on
the following terms and conditions. Prior to so marketing such Additional
Property, the Selling Entity shall notify Landlord in writing (the
"Pre-Marketing Notice") of the price at which the Selling Entity intends to
market such Additional Property (the "List Price"). If Landlord desires to
purchase such Additional Property at the List Price. then Landlord shall provide
the Selling Entity with written notice thereof within thirty (30) days after the
date of the Pre-Marketing Notice. If Landlord delivers such notice within such
thirty (30) day period, then, for a period of thirty (30) days, Landlord and the
Selling Entity shall negotiate in good faith regarding the terms and conditions
of such sale. If, during such thirty (30) day period, the parties are unable to
agree on such terms and conditions (or if Landlord did not timely respond to the
Pre-Marketing Notice), then Landlord's right to purchase the Additional Property
at the List Price shall lapse and be of no further force or effect, and
thereafter the Selling Entity may offer or sell the Additional Property at any
price equal to or greater than ninety-five percent (95%) of the List Price (or
the lowest List Price, to the extent Landlord has been offered the Additional
Property more than once) applicable to such Additional Property without
triggering Landlord's rights under this Section. However, the Selling Entity may
not offer or sell such Additional Property for less than ninety-five percent
(95%) of the List Price (or the lowest List Price applicable to such Additional
Property, to the extent Landlord has been offered such Additional Property more
than once) without again triggering Landlord's rights under this Section.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal as of the day and year first above written.
LANDLORD:
WITNESS/ATTEST: CAR LIT L.L.C.,
a Delaware limited liability company
Capital Automotive L.P.,
A Delaware limited partnership,
managing member
By: Capital Automotive REIT,
35
General partner
___________________________________ By:_______________________________[SEAL]
Name:___________________________________
Title:__________________________________
TENANT:
WITNESS/ATTEST: LITHIA REAL ESTATE,
an Oregon corporation
___________________________________ By:_______________________________[SEAL]
Name:___________________________________
Title:__________________________________
36
EXHIBIT B
FORM OF CERTIFICATE CONFIRMING LEASE COMMENCEMENT DATE
This Certificate is being provided to Tenant pursuant to the terms of that
certain Lease Agreement dated as of June ___, 1999, by and between CAR LIT
L.L.C., as Landlord, and Lithia Real Estate, Inc., as Tenant (the "Lease"). This
Certificate shall confirm that the Lease Commencement Date is June ___, 1999,
and accordingly, the initial term of the Lease shall expire on May 31, 2011,
unless earlier terminated or extended pursuant to the terms of the Lease.
CAR LIT L.L.C.
By: Capital Automotive L.P., managing member
By: Capital Automotive REIT, general partner
By:____________________________________[SEAL]
Name:________________________________________
Title:_______________________________________
37
EXHIBIT C
GLOSSARY OF DEFINED TERMS
TERM SECTION
---- -------
ADA 5
Additional Property 37
Affiliate 11
Aggregate Rent Obligations 15
Alterations 12
Annual Statements 14
Assign 8
Bankruptcy Code 25
Base Rent 1
Case 26
Cash Flow Coverage Ratio 15
Code 36
Company 36
Condemned 20
Control 11
Default Rate 25
Environmental Default 7
Environmental Law 6
Event of Bankruptcy 25
Event of Default 21
Extra Rent 23
Force Majeure 34
Franchise Agreement 31
GAAP 14
General Partner 25
Guarantor(s) 2
Guaranty 16
Hazardous Materials 6
Impositions 4
Insolvency Laws 25
Invitees 11
Landlord Recitals
Landlord's Income Taxes 4
38
Landlord Notice Address 2
Laws 5
Lease Recitals
Lease Commencement Date 1
TERM SECTION
---- -------
Lease Term 1
Lease Year 3
List Price 37
Mortgage 9
Mortgages 27
Officer 19
Pre-Marketing Notice 37
Premises 1
Quarterly Statements 14
REIT 36
Renewal Options 1
Rents from real property 36
Security Deposit Amount 2
Selling Entity 37
Sublet 8
Tenant Recitals
Tenant Notice Address 2
Trustee 26
Utilities and Services 5
