EXHIBIT 10.7
LEASE AGREEMENT
between
Ki, L.C.
as
Landlord
and
ADVANCE STORES COMPANY, INCORPORATED
as
Tenant
March 16, 1995
TABLE OF CONTENTS
Paragraph Title or Subject Page No.
Parties 1
Leased Premises 1
1 Term 1
2 Rent 1
3 Taxes 2
4 Insurance 3
5 Tenant's Furnishings, Fixtures & Equipment 7
6 Alterations and Additions 7
7 Maintenance and Repairs 8
8 Utilities 9
9 Use 9
10 Signs 10
11 Assignment or Subletting 10
12 Damage by Casualty 11
13 Condemnation 12
14 Default 13
15 Hazardous Substances 17
16 Notices and Rent Payments 19
17 Miscellaneous 20
17A Identity of Interest 20
17B Quiet Enjoyment 20
17C Holding Over 20
17D Surrender of Leased Premises 20
17E Landlord's Exoneration 21
17F Right of Entry 21
17G Compliance with Laws and Insurance 21
17H Performance of Tenant's Obligations 22
17I Subordination 22
17J Estoppel Certificates 22
17K Late Payment Penalty 23
17L Additional Rent 23
17M Net Lease 24
17N Excusable Delay 24
17O Indemnification of Landlord 24
17P Non-Waiver 24
17Q Short Form Lease 25
17R Governing Law 25
17S Number and Gender 25
17T Additional Instruments 25
17U Severability 25
17V Captions 26
17W Counterparts 26
17X Binding Effect 26
17Y Entire Agreement 26
Execution by Parties 27
Notary Acknowledgement 27
Exhibit "A" 29
LEASE AGREEMENT
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THIS LEASE AGREEMENT (herein the "lease") is made March 16, 1995, by
and between Ki, L.C., a Virginia limited liability company (herein the
"Landlord"); and ADVANCE STORES COMPANY, INCORPORATED, a Virginia corporation
(herein the "Tenant").
W I T N E S S E T H
THAT in consideration of the rental reserved herein and the mutual
covenants and agreements herein contained, Landlord hereby demises and leases
unto Tenant that certain parcel of real property, together with the buildings
and improvements thereon, as more particularly described on Exhibit "A" attached
hereto and made a part hereof by this reference (herein the "Leased Premises").
1. Term: The term of this lease shall commence at 12:01 a.m. on
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March 22, 1995, and shall terminate at midnight on December 31, 2006.
2. Rent: Tenant shall pay to Landlord, without notice or demand, a
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monthly rental of $27,000.00, which shall be payable, in advance, on the first
day of each month during the term of this lease and at a prorated rate for
fractions of a month if the term shall have commenced on any day other than the
first day of any month. All payments of rent shall be made by Tenant to
Landlord at such place as Landlord may from
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time to time designate in writing. For the present, Landlord designates the
place designated in paragraph 16 of this lease as the place for the making of
the payments of rent. All rent shall be payable in current legal tender of the
United States of America, as the same is then by law, constituted. Checks must
be drawn on a Virginia bank and are subject to collection. The extension of time
for the payment of any installment of rent, or the acceptance by Landlord of any
money other than of the kind herein specified, shall not be a waiver of the
rights of Landlord to insist on having all other payments of rent made in the
manner and at the time herein specified. No payment by Tenant or receipt by
Landlord of a lesser amount than the aforesaid monthly rent shall be deemed
other than a payment on account of the earliest rent due, nor shall any
endorsement or statement on any check or on any letter accompanying any check or
payment as rent be deemed an accord and satisfaction and Landlord may accept
such check or payment without prejudice to its right to recover the balance of
the rent or to pursue any other remedy provided for in this lease.
3. Taxes: Tenant shall pay all taxes, assessments and other charges
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imposed upon the Leased Premises, and upon the buildings and improvements
thereon, which are assessed during the lease term. All such taxes and
assessments shall be paid before any fine, penalty, interest or cost may be
added thereto for nonpayment thereof. All taxes, assessments, rents or other
charges imposed prior to but payable in whole or in installments after the
effective date of the lease term, and all taxes, assessments or other charges
imposed during the term but payable in whole or in installments after the lease
term, shall be adjusted and prorated, so that Landlord shall pay his prorated
share for the period prior to and for the period subsequent to the lease term
and Tenant shall pay its
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prorated share for the lease term. Tenant shall furnish to Landlord for his
inspection, within thirty (30) days after the date any amount is payable by
Tenant, as provided in this paragraph, official receipts of the appropriate
taxing authority or proof satisfactory to Landlord evidencing payment.
Tenant shall have the right to contest and review by legal
proceedings, instituted and conducted by Tenant at Tenant's own expense and free
of expense to Landlord, any taxes, assessments or other charges imposed upon or
against the Leased Premises or buildings and improvements thereon. In the event
Tenant exercises its right to review by legal proceedings any such taxes,
assessments or other charges imposed upon or against the Leased Premises or
buildings and improvements thereon, Tenant shall continue to pay as the same
become due and payable, the full amount of such taxes, assessments or other
charges under protest, if it be so advised. The term "legal proceedings" as
here used shall be construed as including appropriate appeals of any judgments,
decrees, orders and certiorari proceedings and appeals of orders therein, to and
including appeals to the court of last resort.
4. Insurance:
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A. Insurance: Tenant shall during the lease term, at its sole
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expense, provide and keep in force the following insurance coverage:
(i) Fire and Extended Coverage: Insurance on the Leased
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Premises against loss or damage by fire and against loss or damage by other
risks, including flood and earthquake, as may be included in all risk property
insurance in an amount not less than 100% of the full replacement value of the
buildings and
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improvements, provided that such amounts in the aggregate shall not be less than
$1,350,000 during the first year of the term of this lease; and provided
further, that such amounts shall be increased annually if the replacement value
of the buildings and improvements shall have increased in order to maintain such
insurance coverage in amounts at least equal to the replacement value of the
buildings and improvements. Any disagreement between Landlord and Tenant with
respect to the replacement value of the buildings and improvements shall be
determined by one disinterested arbitrator if one can be agreed upon, otherwise
before three disinterested arbitrators, one named by Landlord, one by Tenant,
and one by the two thus chosen. The cost of such arbitration shall be paid by
Tenant.
(ii) Rental Value: Rental insurance against loss of rent
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under a rental value insurance policy covering risk of loss due to the
occurrence of any of the hazards described in the preceding subparagraph in an
amount sufficient to pay for one (1) year the rent and additional rent payable
pursuant to this lease.
(iii) Liability: Comprehensive general public liability
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insurance insuring against claims for personal injury, death or property damage
occurring on, in or about the Leased Premises or arising out of the conduct by
the Tenant of its business at the Leased Premises. The limits of such insurance
shall be in such amounts as may be reasonably requested by Landlord from time to
time, but not less than $1,000,000 for injury or property damage arising out of
any one occurrence.
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(iv) Umbrella/Excess Coverage: Umbrella or excess liability
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insurance with limits of not less than $10,000,000.
(v) Miscellaneous: Such other insurance against other
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insurable hazards in such amounts as may from time to time be required by
Landlord or by the holder of any mortgage or deed of trust covering the Leased
Premises.
B. Policies: All insurance provided for in this paragraph shall
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be effected under policies issued by insurers of recognized responsibility
licensed to do business in Virginia. Tenant shall throughout the term of this
lease deliver to Landlord evidence, in the form of an insurance certificate or
binder, that such insurance policies are in effect. Within fifteen (15) days
after the premium on any policy shall become due and payable, Landlord shall be
furnished with satisfactory evidence of its payment.
C. Insureds: The rental value insurance policy above described
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shall name only Landlord as the insured. However, Tenant may furnish a combined
rental and use and occupancy policy, provided that Landlord shall be named as
the insured and the first payee with respect to an amount equal to the rent and
additional rent, and Tenant shall be named as the payee with respect to any
remaining proceeds. All other policies of insurance shall name Landlord and
Tenant as the insureds, as their respective interests may appear. At the
request of Landlord, any insurance policy shall be made payable to the holders
of any mortgage or deeds of trust covering the Leased Premises, as the interest
of such holders may appear, pursuant to a standard clause for holders of
mortgages or deeds of trust. To the extent obtainable, all policies shall
contain an agreement by the insurers (i) that any loss shall be adjusted with
Landlord and the holders of any such mortgage or
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deed of trust, notwithstanding any act or negligence of Tenant which might
otherwise result in forfeiture of such insurance, (ii) that such policies shall
not be cancelled or subject to reduction of coverage or other modification
except upon thirty (30) days prior written notice to Landlord and to the holders
of any mortgage or deed of trust to whom loss may be payable, and (iii) that the
insurance coverage shall not be affected by the performance of any work in or
about the Leased Premises.
D. Premium Apportionment: Premiums on all insurance policies
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in force at the commencement or the expiration or earlier termination of this
lease shall be apportioned between Landlord and Tenant as of the date of such
commencement or termination.
E. Blanket Policies: If Tenant provides any insurance required
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by this lease in the form of a blanket policy, Tenant shall furnish satisfactory
proof that such blanket policy complies in all respects with the provisions of
this lease, and that the coverage thereunder is at least equal to the coverage
which would be provided under a separate policy covering only the Leased
Premises.
F. Waiver of Subrogation: Neither Landlord nor Tenant shall be
----------------------
liable to the other for any business interruption or any loss or damage to
property or injury to or death of persons occurring in or about the Leased
Premises, or in any manner growing out of or connected with the Tenant's use and
occupation of the Leased Premises, whether or not caused by the negligence or
other fault of Landlord or Tenant, or of their respective agents, employees,
subtenants, licensees, or assignees. This release shall apply to the extent
that such business interruption, loss, or damage to property or injury to or
death
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of persons is covered by insurance, regardless of whether such insurance is
payable to or protects Landlord or Tenant, or both. Nothing herein shall be
construed to impose any other or greater liability upon either Landlord or
Tenant than would have existed in the absence of this provision. This release
shall be in effect only so long as the applicable insurance policies contain a
clause to the effect that this release shall not affect the right of the insured
to recover under such policies. Such clauses shall be obtained by the parties
whenever possible. The release in favor of Landlord contained herein is in
addition to, and not in substitution for, or in diminution of, the hold harmless
and indemnification provisions hereof.
5. Tenant's Furnishings, Fixtures and Equipment: Tenant, at its sole
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cost and expenses, may supply and install in the Leased Premises any
furnishings, fixtures or equipment which it deems necessary for its use of said
premises; provided, however, that Tenant shall repair, at its own expense, any
damage to the Leased Premises occasioned by such installation. Any such
furnishings, fixtures and equipment supplied and installed in the Leased
Premises, except those permanently attached, shall be and remain the property of
Tenant and Tenant shall have the right to remove same at any time so long as
Tenant is not in default in the performance of any of the terms and conditions
of this lease. Any damage to the Leased Premises occasioned by the removal of
said furnishings, fixtures and equipment shall be repaired by Tenant at its sole
cost and expense.
6. Alterations and Additions: Tenant shall not make or permit to be
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made any alterations, improvements, and/or additions of any kind or nature to
the Leased Premises or any part thereof except by and with the prior written
consent of
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Landlord which consent shall be in Landlord's sole discretion. All alterations,
improvements and additions to the Leased Premises shall be made in accordance
with all applicable laws and shall at once when made or installed be deemed to
have attached to the freehold and to have become the property of Landlord and
shall remain for the benefit of Landlord at the end of the term, or other
expiration of this lease, in as good order and condition as they were when
installed, reasonable wear and tear excepted; provided, however, if prior to the
termination of this lease, or within fifteen (15) days thereafter, Landlord so
directs, Tenant shall promptly remove the additions, improvements, fixtures and
installations which were placed in the Leased Premises by Tenant and which are
designated in said notice and repair any damage occasioned by such removal and,
in default thereof, Landlord may effect said removals and repairs at Tenant's
expense. In the event of making such alterations, improvements, and/or additions
as herein provided, Tenant shall indemnify and save harmless Landlord from all
expense, liens, claims, or damages to either persons or property arising out of,
or resulting from, the undertaking or making of said alterations, additions, and
improvements.
7. Maintenance and Repairs: Tenant shall not cause or permit any
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waste, damage, or injury to the Leased Premises. Tenant, at its sole expense,
shall keep the Leased Premises as now or hereafter constituted with all
improvements made thereto and the adjoining sidewalks, curbs, walls, parking
areas, landscaping and access roads, clean and in good condition (reasonable
wear and tear excepted), free of dirt, rubbish, snow, ice, and unlawful
obstructions, and shall make all repairs, replacements, and renewals, whether
ordinary or extraordinary, seen or unforeseen, including all structural repairs
necessary to
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maintain the Leased Premises. All repairs, replacements, and renewals shall be
at least equal in quality of materials and workmanship to that originally
existing in the Leased Premises. Landlord shall in no event be required to make
any repair, alteration, or improvement to the Leased Premises. Tenant shall
indemnify Landlord against all costs, expenses, liabilities, losses, damages,
suits, fines, penalties, claims, and demands, including reasonable attorney's
fees, because of Tenant's failure to comply with the foregoing, and Tenant shall
not call upon Landlord for any disbursement or outlay whatsoever in connection
therewith, and expressly releases and discharges Landlord of and from any
liability therefor.
8. Utilities: Tenant shall pay or cause to be paid all charges for
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air conditioning, heat, water, gas, electricity, light, telephone or any other
communication or utility service used in or rendered or supplied to the Leased
Premises throughout the term of this lease, and to indemnify Landlord and save
him harmless against any liability or damages on such account. Landlord shall
not be liable in damages or otherwise for any failure to furnish, or
interruption of the services of air conditioning, heat, water, gas, electricity,
light, telephone or any other communication or utility.
9. Use: Tenant may use and occupy the Leased Premises for any lawful
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purpose, except that Tenant shall not use or occupy or permit the Leased
Premises to be used or occupied, nor do or permit anything to be done in or on
the Leased Premises, in a manner which will in any way violate any certificate
of occupancy affecting the Leased Premises, or make void or voidable any
insurance then in force with respect thereto, or which will make it impossible
to obtain fire or other insurance required to be furnished by
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Tenant hereunder, or which will cause or be likely to cause structural damage to
the building or any part thereof, or which will constitute a public or private
nuisance, and shall not use or occupy or permit the Leased Premises to be used
or occupied in any manner which will violate any present or future laws or
regulations of any governmental authority.
10. Signs: Tenant shall have the privilege of placing on and in the
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Leased Premises such signs as Tenant deems necessary and proper in the conduct
of Tenant's business, provided (i) Tenant obtains all permits and licenses which
may be required for the erection and maintenance thereof and pays the fees for
such licenses and permits, and (ii) such signs may lawfully be permitted to be
erected and maintained. Tenant shall indemnify and save harmless Landlord
against and from any and all losses, damages, claims, suits, or actions for any
injury or damage to person or property caused by the erection and maintenance of
such signs, and insurance coverage therefor shall be included in the public
liability policy which Tenant is required to furnish under this lease.
11. Assignment or Subletting: Tenant shall not assign, mortgage or
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encumber this lease, nor sublet or permit the Leased Premises or any part
thereof to be used by others, without the prior written consent of Landlord in
each instance, which consent shall be in Landlord's sole discretion. The
prohibition against assignment or subletting shall be construed to include a
prohibition against any assignment or subletting by operation of law including,
but not limited to, a merger. If Landlord consents to an assignment or
subletting, Tenant shall remain primarily liable during the term of this lease
for the performance of all the terms of this lease, and any such consent shall
not be construed to release Tenant from obtaining the consent in writing of
Landlord to any further assignment or subletting.
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12. Damage by Casualty:
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A. Landlord's Election to Terminate or Rebuild: If the Leased
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Premises shall be damaged or destroyed, in whole or in part, during the term of
this lease by fire or other casualty, then Landlord shall have the option to
rebuild or terminate this lease to be exercised by notice to Tenant given not
more than sixty (60) days from the date of such damage or destruction.
B. Termination: If Landlord elects to terminate this lease as
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provided by the preceding subparagraph, the rent and additional rent to be paid
by Tenant hereunder shall be apportioned as of the date of damage or
destruction.
C. Rebuilding: If Landlord elects to rebuild the Leased
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Premises as provided by subparagraph a of this paragraph, this lease shall
continue in full force and effect and Landlord shall (at his expense but only to
the extent of insurance proceeds made available to Landlord by any mortgagee of
the Leased Premises) promptly repair or cause to be repaired such damage;
provided, however, that Landlord's repair obligation shall not include any
alterations, decorations, additions or improvements originally made or installed
by Tenant as shall have been damaged by such fire or other casualty. If Landlord
elects to rebuild as aforesaid, then the rent and additional rent shall abate
proportionately during the period and to the extent that the Leased Premises are
unfit for use by Tenant in the ordinary conduct of its permitted uses hereunder.
Notwithstanding the foregoing provisions, in the event the Leased Premises are
damaged or destroyed by fire or other casualty due to the fault or neglect of
Tenant, its agents, employees or invitees, then, without prejudice to any other
rights and remedies of Landlord, there shall be no apportionment or abatement of
any rent.
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D. Continuing Obligations: Except as otherwise provided in this
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lease, this lease shall not terminate or be affected in any manner by reason of
the damage or destruction, by fire or other casualty, in whole or in part, of
the Leased Premises or the improvements thereon, or by reason of the
untenantability of the Leased Premises and, except as otherwise provided herein,
the rent and additional rent reserved in this lease shall be paid by Tenant in
accordance with the terms of this lease, without abatement, diminution or
reduction of rent on account of any such damage or destruction.
13. Condemnation:
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A. Total: If the whole of the Leased Premises shall be acquired
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or taken by eminent domain for any public or quasi-public use or purpose or by
private purchase in lieu thereof, then this lease and the term hereof shall
automatically cease and terminate on the date when possession shall be taken by
the condemning authority.
B. Partial: If any part of the Leased Premises shall be so
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taken, Landlord may elect to terminate this lease or to continue same in effect
to be exercised by notice to Tenant given not more than sixty (60) days from the
date when possession shall be taken by the condemning authority. If Landlord
elects to continue this lease, then all of the terms and provisions hereof shall
continue in full force and effect, except that the rent shall be reduced in
proportion to the area, if any, of the premises so taken and, Landlord shall
promptly, at his expense (but only to the extent of the net condemnation award
made available to Landlord by any mortgagee of the Leased Premises) promptly
replace or cause to be replaced the Leased Premises to its condition existing at
the time of such taking; provided, however, that Landlord's restoration
obligation shall not
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include alterations, decorations, additions or improvements originally made or
installed by Tenant as shall have been taken. In the preceding sentence, "net"
shall mean the amount remaining after the expenses of collection, including as
expenses any attorney's fees or other charges incurred by Landlord with respect
to such amount.
C. Rent: If this Lease is terminated as provided in this
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paragraph, the rent and additional rent shall be paid by Tenant up to the date
that physical possession is taken by the condemning authority, and Landlord
shall refund any rent and additional rent paid by Tenant in advance and not yet
earned, less any sum then owing by Tenant to Landlord.
D. Award: All damages or compensation awarded or paid for any
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such taking, whether for the whole or any part of the Leased Premises, shall
belong to and be the property of Landlord without any participation by Tenant;
provided, however, that nothing herein contained shall be construed to preclude
Tenant from prosecuting any claim directly against the condemning authority, but
not against Landlord, for the value of or damages to and/or for the cost of
removal of all work performed by Tenant pursuant to paragraph 5 of this lease
entitled "Tenant's Furnishings, Fixtures and Equipment" and pursuant to
paragraph 6 of this lease entitled "Alterations and Additions" as may be
recoverable by Tenant in Tenant's own right.
14. Default:
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A. Defaults: If (i) Tenant defaults in the payment of any rent
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or any additional rent and such default continues for five (5) days after the
same has become due, or (ii) Tenant defaults in fulfilling any of the covenants
or agreements of this
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lease on its part to be kept or performed, and such default is not cured or
commenced to be cured (and diligently prosecuted to completion) within ten (10)
days after written notice from Landlord or his agent, or (iii) if this lease be
transferred to or devolve upon any person or corporation or other entity other
than Tenant, except as may be specifically permitted by this lease, or if there
be any material change in the ownership or control of Tenant, then and in any of
such events Landlord, or its agent, may give Tenant a written notice specifying
a day not less than five (5) days thereafter whereupon the term shall end, and
on the day specified the term of this lease shall expire as if that day were the
day herein fixed for the expiration of the term, and Tenant shall then quit and
surrender the Leased Premises to Landlord and Tenant shall remain liable as
hereinafter provided.
B. Abandonment: If Tenant vacates or abandons the Leased
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Premises, or if the Leased Premises become vacant for a period of three (3)
days, or if the term of this lease shall expire, or if Tenant fails to take
possession of the Leased Premises within ten (10) days after commencement of the
term of this lease, Landlord may reenter the Leased Premises and remove Tenant
or its legal representatives or other occupant by summary proceedings or
otherwise and Tenant waives the service of notice of intention to reenter or to
institute legal proceedings to that end.
C. Reentry: In case of any such reentry, expiration, and/or
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dispossess by summary proceedings or otherwise, the rent shall become due
thereupon and be paid up to the time of such reentry, dispossess, and/or
expiration, together with such expenses as Landlord may incur for brokerage
and/or putting the Leased Premises in good order, or for preparing the same for
re-rental. Landlord may relet the premises or any
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part or parts thereof, either in the name of Landlord or otherwise, for a term
or terms which may at Landlord's option be less than or exceed the period which
may otherwise have constituted the balance of the term of this lease and may
grant reasonable concessions, or free rent; and Tenant or the legal
representatives of Tenant shall also pay Landlord as liquidated damages for the
failure of Tenant to observe and perform said Tenant's covenants herein
contained, any deficiency between (i) all rent and additional rent hereby
reserved and/or covenanted to be paid, and (ii) the net amount, if any, of the
rents collected on account of the lease of the Leased Premises for each month of
the period which would otherwise have constituted the balance of the term of
this lease. In computing such liquidated damages, there shall be added to the
deficiency such expenses as Landlord may incur in connection with reletting,
such as for brokerage, for keeping the Leased Premises in good order, and for
preparing the same for reletting. Any such liquidated damages shall be paid in
monthly installments by Tenant on the rent days specified in this lease and any
suit brought to collect the amount of the deficiency for any month shall not
prejudice in any way the rights of Landlord to collect the deficiency for any
subsequent month by a similar proceeding. Landlord, in his discretion, may make
such alterations, repairs, replacements, and/or decorations in the Leased
Premises as may be necessary for the purpose of reletting the Leased Premises;
and the making of such alterations and/or decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Landlord
shall not be liable for failure to relet the Leased Premises. The words
"reenter" or "reentry" as used in this lease shall not be restricted to their
technical legal meaning.
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D. Injunctive Relief: In the event of a breach or threatened
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breach by Tenant of any of the covenants or provisions of this lease, Landlord
shall have the right of injunction and the right to invoke any remedy allowed at
law or in equity as if reentry, summary proceedings and other remedies were not
herein provided for. Mention in this lease of any particular remedy shall not
preclude Landlord from any other remedy, in law or in equity. Tenant expressly
waives any and all rights of redemption granted by or under any present or
future laws in the event of Tenant's being evicted or dispossessed, or in the
event of Landlord's obtaining possession of the Leased Premises by reason of
Tenant's violation of the provisions of this lease.
E. Cure Defaults: If Tenant shall default in the performance
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of any provision, covenant or condition on its part to be performed under this
lease, Landlord may, at his option, perform the same for the account and at the
expense of Tenant. If Landlord at any time shall be compelled to pay or elects
to pay any sum of money or do any act which requires the payment of any sum of
money by reason of the failure of the Tenant to comply with any provision of
this lease, or if Landlord incurs any expense in prosecuting or defending any
action or proceeding by reason of any default of Tenant under this lease, or if
Landlord incurs any expense in prosecuting or defending any action or proceeding
by reason of any default of Tenant under this lease, the sums so paid by
Landlord with interest at the rate of 12% per annum, costs and damages shall be
due from and be paid by Tenant to Landlord on demand.
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F. Chronic Defaults: Tenant will be in "Chronic Default" under
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this lease if Tenant commits a default (either a Monetary or Non-Monetary
Default) during any 365-day period in which any of the following combinations
of default has already occurred (even though said defaults may have been timely
cured): (i) Two Monetary Defaults; or (ii) Three Non-Monetary Defaults; or (iii)
One Monetary Default and two Non-Monetary Defaults. If Tenant is in Chronic
Default, Landlord may immediately exercise any or all remedies available under
this lease or at law or in equity, all without giving Tenant any notice or an
opportunity to cure the last default causing Tenant's Chronic Default
(notwithstanding any notice and cure provision or other lease provision to the
contrary). For the purposes of this paragraph, (i) a Monetary Default occurs if
Tenant fails to pay any sum of money when due (including, but not limited to,
basic rent, additional rent, and all other charges imposed upon Tenant by this
lease; and (ii) a Non-Monetary Default occurs if Tenant fails to perform any of
its obligations under this lease other than the timely payment of money.
15. Hazardous Substance:
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A. Tenant shall not cause or permit any Hazardous Substance to
be used, stored, generated, or disposed of on or in the Leased Premises by
Tenant, Tenant's agents, employees, contractors, or invitees without first
obtaining Landlord's written consent. If Hazardous Substances are used, stored,
generated, or disposed of on or in the Leased Premises except as permitted
above, or if the Leased Premises become contaminated in any manner for which
Tenant is legally liable, Tenant shall indemnify and hold harmless Landlord from
any and all claims, damages, fines, judgments, penalties, costs, liabilities, or
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losses (including, without limitation, a decrease in value of the Leased
Premises, damages caused by loss or restriction of rentable or usable space, or
any damages caused by adverse impact on marketing of the Leased Premises, and
any and all sums paid for settlement of claims, attorneys' fees, consultant, and
expert fees) arising during or after the lease term and arising as a result of
that contamination by Tenant. This indemnification includes, without limitation,
any and all costs incurred because of any investigation of the site or any
cleanup, removal, or restoration mandated by a federal, state, or local agency
or political subdivision. Without limitation of the foregoing, if Tenant causes
or permits the presence of any Hazardous Substance on the Leased Premises that
results in contamination, Tenant shall promptly, at its sole expense, take any
and all necessary actions to return the Leased Premises to the condition
existing prior to the presence of any such Hazardous Substance on the Leased
Premises. Tenant shall first obtain Landlord's approval for any such remedial
action. The provisions of this paragraph 15 shall survive the termination of
this lease.
B. As used herein, "Hazardous Substance" means any substance
that is toxic, ignitable, reactive, or corrosive and is regulated by any local
government, the State of Virginia, or the United States Government. "Hazardous
Substance" includes any and all material or substances that are defined as
"hazardous waste," extremely hazardous waste," or a "hazardous substance"
pursuant to state, federal, or local governmental law. "Hazardous Substance"
includes, but is not restricted to, asbestos, polychlorobiphenyls ("PCBs"), and
petroleum. The provisions of this paragraph 15 shall survive the termination of
this lease.
18
16. Notices and Rent Payments:
--------------------------
A. Notices: Notices under this lease shall be deemed to have
--------
been given if in writing, and when delivered personally or when deposited in the
United States mail, certified or registered, return receipt requested, with
postage prepaid, and addressed as follows:
To Landlord At: Ki, L.C.
c/o W.O.D., Inc.
Suite 1400, First Union Tower
10 South Jefferson St.
Roanoke, Virginia 24011
Attn: Douglas W. Densmore
To Tenant At: Advance Stores Company, Incorporated
PO Box 2710
Roanoke, Virginia 24001
Attn: Real Estate Department
or to either at such other place as either of them may give notice to the other,
pursuant to the provisions of this paragraph, from time to time.
B. Rent: All payments of rent to be make hereunder by Tenant
-----
shall be mailed to Landlord at the address provided for in subparagraph A of
this paragraph.
19
17. Miscellaneous:
--------------
A. Identity of Interest: The execution of this lease or the
---------------------
performance of any act pursuant to the provisions thereof shall not be deemed or
construed to have the effect of creating between Landlord and Tenant the
relationship of principal or agent, or of a partnership or joint venture.
B. Quiet Enjoyment: Tenant, upon payment of the rent and
----------------
additional rent, and the performance of all the terms of this lease, shall, at
all times during the lease term, peaceably and quietly enjoy the Leased Premises
without any disturbance from Landlord or from any other person claiming through
Landlord, subject, however, to the reservations and conditions of this lease and
the fee mortgage to which this lease is subordinate.
C. Holding Over: Any holding over after the expiration of the
-------------
term hereof with the consent of Landlord shall be construed to create a tenancy
from month to month at the monthly rent herein reserved, plus 50% of such
amount, and such tenancy shall otherwise be subject to the terms and condition
set forth in this lease.
D. Surrender of Leased Premises: Tenant shall surrender to
-----------------------------
Landlord the Leased Premises at the expiration of the term hereof, or upon
termination by virtue of Tenant's default, in as good order and condition as
same now are or hereafter may be put by Landlord or Tenant, ordinary wear and
tear and damage by fire or other casualty not occasioned by the fault of Tenant
excepted.
20
E. Landlord's Exoneration: Landlord shall not be liable or
-----------------------
responsible in any way for any damage to person or property sustained in or
about the Leased Premises during the term of this lease howsoever the same may
be caused unless due to Landlord's willful acts.
F. Right of Entry: Landlord and his representatives may enter
---------------
the Leased Premises, at any reasonable time, for the purpose of inspecting the
Leased Premises, performing any work which Landlord elects to undertake made
necessary by reason of Tenant's default under the terms of this lease,
exhibiting the Leased Premises for sale, lease, or mortgage financing, or
posting notices of non-responsibility under any mechanic's lien law.
G. Compliance with Laws and Insurance: Tenant shall, at its
-----------------------------------
sole expense, promptly comply with all laws, orders and regulations of federal,
state, and municipal governments and appropriate departments, commissions,
authorities, boards, and their officers, and the orders and regulations of the
National Board of Fire Underwriters, or any other body now or hereafter
exercising similar functions, which may be applicable to the Leased Premises,
the fixtures and equipment therein, and the parking areas, sidewalks and curbs
adjoining the Leased Premises. Tenant shall comply with the requirements of all
policies of public liability, fire, and all other types of insurance at any time
in force with respect to the building and other improvements on the Leased
Premises. Tenant, at its sole expense, shall obtain all required licenses or
permits for the conduct of its business within the terms of this lease, or for
the making of repairs, alterations, improvements, or additions, and Landlord,
where necessary, will join with Tenant in applying for all such permits or
licenses.
21
H. Performance of Tenant's Obligations: If Tenant shall default
------------------------------------
in the observance or performance of any covenant on Tenant's part to be observed
or performed under any of the provisions of this lease, Landlord may immediately
or at any time thereafter and without notice perform the same for the account of
Tenant, and if Landlord makes any expenditures or incurs any obligations for the
payment of money in connection therewith including, but not limited to, legal
fees in instituting, prosecuting, or defending any action or proceeding, such
sums paid or obligations incurred, with 12% interest per annum and costs, shall
be paid by Tenant to Landlord upon demand. Furthermore, Tenant shall pay and
indemnify Landlord against all legal costs and charges, including attorney's
fees lawfully and reasonably incurred, in obtaining possession of the Leased
Premises after a default of Tenant or after Tenant's default in surrendering
possession upon the expiration or earlier termination of the term of this lease.
I. Subordination: This lease is subject and subordinate at all
--------------
times to the lien of existing and future mortgages on the Leased Premises.
Although no instrument or act on the part of Tenant shall be necessary to
effectuate such subordination, Tenant will, nevertheless, execute and deliver
such further instruments subordinating this lease to the lien of all such
mortgages as may be desired by the mortgagee. Tenant hereby appoints Landlord
its attorney-in-fact, irrevocably, to execute and deliver any such instrument
for Tenant.
J. Estoppel Certificates: Within ten (10) days after request
----------------------
therefor by Landlord, Tenant shall deliver in recordable form a certification to
any proposed mortgagee, trustee, or purchaser certifying that this lease is in
full force and effect and that there are no defenses or offsets thereto, or
stating those claimed by Tenant.
22
K. Late Payment Penalty: Tenant acknowledges that late payment by
---------------------
Tenant to Landlord of rent and additional rent due hereunder will cause Landlord
to incur costs not contemplated by this lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed on
Landlord by the terms of any mortgage or trust deed covering the Leased
Premises. Accordingly, if any installment of rent or any additional rent due
from Tenant shall not be received by Landlord or Landlord's assignee within ten
(10) days after such amount shall be due, Tenant shall pay to Landlord a late
charge equal to 10% of such overdue amount. The parties agree that such late
charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of late payment by Tenant. Acceptance of such late charge by
Landlord shall in no event constitute a waiver of Tenant's default with respect
to such overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder.
L. Additional Rent: All taxes, charges, costs, and expenses which
----------------
Tenant is required to pay hereunder, together with all interest and penalties
that may accrue thereon in the event of Tenant's failure to pay such amounts,
and all damages, costs, and expenses which Landlord may incur by reason of any
default of Tenant or failure on Tenant's part to comply with the terms of this
lease, shall be deemed to be additional rent and, in the event of nonpayment by
Tenant, Landlord shall have all the rights and remedies with respect thereto as
Landlord has for the nonpayment of the basic rent.
23
M. Net Lease: Tenant acknowledges and agrees that it is intended
----------
that this is a net lease that is completely carefree to Landlord, except as
expressly set out in this lease; that Landlord is not responsible during the
term of this lease for any costs, charges, expenses, and outlays of any nature
whatsoever arising from or relating to the Leased Premises, or the use and
occupancy thereof, or the contents thereof, or the business carried on therein;
and Tenant shall pay all charges, expenses, costs and outlays of every nature
and kind relating to the Leased Premises except as expressly set out in this
lease.
N. Excusable Delay: Except for the payment of rent and additional
----------------
rent, if Landlord or Tenant is delayed or prevented from performing any of their
obligations under this lease by reason of strike or labor troubles or any
outside cause whatsoever beyond Landlord's or Tenant's reasonable control, the
period of such delay or such prevention shall be deemed added to the time herein
provided for the performance of any such obligations by Landlord or Tenant.
O. Indemnification of Landlord: Tenant shall defend, indemnify and
----------------------------
hold Landlord harmless from and against any claim, loss, expense or damage to
any person or property in or upon the Leased Premises arising out of Tenant's
use or occupancy of said premises, or any act or neglect of Tenant or Tenant's
servants, employees or agents, or any change, alteration or improvement made by
Tenant in the Leased Premises, or any default by Tenant of any of the covenants
and agreements of this lease on its part to be kept and performed.
P. Non-Waiver: The failure of Landlord to seek redress for violation
----------
of, or to insist upon the strict performance of, any covenant or condition of
this
24
lease, or of any rule or regulation, shall not prevent a subsequent act, which
would have originally constituted a violation, from having all the force and
effect of an original violation. The receipt by Landlord of rent with knowledge
of the breach of any covenant of this lease shall not be deemed a waiver of such
breach. No provision of this lease shall be deemed to have been waived by
Landlord, unless such waiver be in writing signed by Landlord.
Q. Short Form Lease: Tenant agrees not to record this lease, and
-----------------
Landlord and Tenant agree to execute, acknowledge and deliver, if either party
shall so request, a "Short Form Lease" suitable for recording at the expense of
the party so requesting.
R. Governing Law: The laws of the State of Virginia shall govern the
--------------
validity, performance and enforcement of this lease.
S. Number and Gender: Any word contained in the text of this lease
------------------
shall be read as the singular or the plural and as the masculine, feminine or
neuter gender as may be applicable in the particular context.
T. Additional Instruments: The parties shall execute and deliver any
-----------------------
instruments in writing necessary to carry out any agreement, term, condition, or
assurance in this lease whenever occasion shall arise and request for such
instruments shall be made.
U. Severability: If any provision of this lease shall be declared
-------------
invalid or unenforceable, the remainder of the lease shall continue in full
force and effect.
25
V. Captions: The captions in this lease are for convenience only,
---------
are not a part of this lease, and do not in any way limit or amplify the terms
and provisions of this lease.
W. Counterparts: This lease may be executed in one or more
-------------
counterparts, each of which shall be an original, and all of which shall
constitute one and the same instrument.
X. Binding Effect: Except as herein otherwise expressly provided,
---------------
the terms and provisions hereof shall be binding upon and shall inure to the
benefit of the heirs, executors, administrators, successors and permitted
assigns, respectively, of Landlord and Tenant. Each term and each provision of
this lease to be performed by Tenant shall be construed to be both an
independent covenant and a condition. The reference contained to successors and
assigns of Tenant is not intended to constitute a consent to assignment by
Tenant, but has reference only to those instances in which Landlord may have
given written consent to a particular assignment.
Y. Entire Agreement: This lease contains all of the premises,
-----------------
agreements and conditions between the parties hereto, and any subsequent
agreements between the parties altering the terms hereof must be reduced to
writing and executed by both parties.
26
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease
Agreement on the day and year first above written.
Landlord Tenant
-------- ------
Ki, L.C. ADVANCE STORES COMPANY,
INCORPORATED
By: W.O.D., INC.
Its Manager
By: /s/ Douglas W. Densmore By: /s/ Nicholas F. Taubman
- --------------------------- --------------------------
Douglas W. Densmore Nicholas F. Taubman
Its President Chairman of the Board
STATE OF VIRGINIA AT LARGE
CITY OF ROANOKE, to-wit:
The foregoing instrument was acknowledged before me this 21st day of March,
1995, by Douglas W. Densmore, President of W.O.D., Inc., a Virginia corporation,
Manager of Ki, L.C., a Virginia limited liability company, on behalf of said
company.
My Commission Expires: April 30, 1995
/s/
---------------------------------
Notary Public
27
STATE OF VIRGINIA AT LARGE
CITY OF ROANOKE, to-wit:
The foregoing instrument was acknowledged before me this 16th day of March,
1995, by NICHOLAS F. TAUBMAN, Chairman of the Board of Advance Stores Company,
Incorporated, a Virginia corporation, on behalf of said corporation.
MY COMMISSION EXPIRES AUGUST 31, 1997
/s/ Stephanie A Bousman
-------------------------------
Notary Public
28
FIRST AMENDMENT TO LEASE AGREEMENT
----------------------------------
This FIRST AMENDMENT TO LEASE AGREEMENT ("Amendment") is made and
entered into as of April 15, 1998 (the "Amendment Date"), by and between Ki,
L.C., a Virginia limited liability company ("Landlord"), and ADVANCE STORES
COMPANY, INCORPORATED, a Virginia corporation ("Tenant").
R E C I T A L S
---------------
A. Tenant and Landlord entered into that certain Lease Agreement
(the "Lease"), dated as of March 16, 1995, whereby Landlord leased to Tenant and
Tenant leased from Landlord the land and improvements thereon, located in
Roanoke, Virginia and commonly known as 5673 Airport Road, Roanoke, Virginia
(the "Leased Premises").
B. The parties desire to amend the Lease as set forth in this
Amendment.
A G R E E M E N T
-----------------
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree to amend the Lease as follows:
1. TERMS. All capitalized terms used herein and not otherwise
-----
defined shall have the same respective meanings as are given such terms in the
Lease.
2. ASSIGNMENT OR SUBLETTING. Notwithstanding anything to the
------------------------
contrary contained in Paragraph 11 of the Lease, Tenant shall have the right to
assign the Lease or sublet the Leased Premises, without obtaining Landlord's
prior written consent, to (i) any affiliate of Tenant (but without relieving
Tenant of its obligations thereunder), (ii) any entity with which the Tenant may
merge or consolidate, and/or (iii) any person or entity which acquires all or
substantially all of the assets of Tenant. The sale of fifty percent (50%) or
more of Tenant's voting stock (a "Stock Transfer") shall be deemed to be an
assignment of the Lease requiring Landlord's prior consent, which shall not be
unreasonably withheld. In the event Landlord withholds its consent to Stock
Transfer, the proposed buyer of the Tenant's stock ("Proposed Buyer") shall have
the right to purchase the Leased Premises as follows:
A. Option to Purchase. Proposed Buyer may exercise its option to
------------------
purchase ("Option to Purchase") all of Landlord's interest in the Leased
Premises (but not any part
thereof) only by giving a notice of Proposed Buyer's election to purchase the
Leased Premises ("Purchase Notice") within sixty (60) days of receipt of notice
of rejection by Landlord of Tenant's request for consent to a Stock Transfer.
Landlord's failure to respond within sixty (60) days from the date of receipt of
Tenant's request for consent to a Stock Transfer shall be deemed an approval of
Tenant's request for consent to such Stock Transfer.
B. Option Price. The option price ("Option Price") will be an
------------
amount equal to the Fair Market Value (as defined below) of the Leased Premises.
In addition to the Option Price, Proposed Buyer and Landlord shall bear all
closing costs and expenses in connection with the transfer of the Leased
Premises to Proposed Buyer in accordance with the prevailing custom in the
jurisdiction where the Leased Premises are located. Landlord shall be required
to convey good and marketable fee interest title to the Leased Premises free and
clear of all liens and encumbrances other than monetary liens or liens and
encumbrances which do not materially detract from the current value or use of
the Leased Premises as of the date hereof.
C. Fair Market Value. The fair market value (the "Fair Market
-----------------
Value") of the Leased Premises shall be determined as follows:
(1) The parties shall attempt to determine the Fair Market Value
by mutual agreement within fifteen (15) days after Proposed Buyer's delivery of
the Purchase Notice.
(2) However, if the parties are unable to agree on the Fair
Market Value within the fifteen (15) day period set forth above, then within ten
(10) days after the expiration of that period each party, at its cost and by
giving notice to the other party, shall appoint a real estate appraiser with at
least five (5) years' full-time commercial appraisal experience in appraising
properties similar to the Leased Premises in the area in which the Leased
Premises are located to appraise and set the Fair Market Value. Further, all of
the appraisers selected through the process described above shall be certified
as required by Virginia law as in effect at the time. If a party does not
appoint an appraiser within ten (10) days after the other party has delivered
notice of the name of its appraiser (the "Appraiser Appointment Deadline"), the
party which appointed an appraiser prior to the Appraiser Appointment Deadline
shall deliver written notice to the other party of the expiration of the time
period for the appointment of an appraiser (the "Appointment Expiration
Notice"), which notice may be delivered via facsimile. In the event that the
party which failed to appoint an appraiser prior to the Appraiser Appointment
Deadline subsequently fails to deliver notice to the other party of the
appointment of an appraiser within two (2) business days after delivery of the
Appointment Expiration Notice, the single appraiser appointed shall be the sole
appraiser and shall set the Fair Market Value. If the two appraisers are
appointed by the parties as stated in this Paragraph, they shall meet promptly
and attempt to set the Fair Market Value. If they are unable to agree within
thirty (30) days after the second appraiser has been appointed, they shall
attempt to select a third appraiser meeting the qualifications stated in this
Paragraph within ten (10) days after the last day the two appraisers are given
to set the Fair Market Value. If they are unable to agree on the
-2-
third appraiser, either of the parties to the Lease by giving ten (10) days'
notice to the other party can file a petition with the American Arbitration
Association solely for the purpose of selecting a third appraiser who meets the
qualifications stated in this Paragraph. Each party shall bear half the cost of
the American Arbitration Association appointing the third appraiser and of
paying the third appraiser's fee. The third appraiser, however selected, shall
be a person who has not previously acted in any capacity for either party.
Within thirty (30) days after the selection of the third appraiser, a majority
of the appraisers shall set the Fair Market Value. After the Fair Market Value
has been set, the appraisers shall immediately notify the parties.
3. LEASEHOLD MORTGAGES AND ENCUMBRANCES. Notwithstanding anything
------------------------------------
to the contrary contained in Paragraph 11 of the Lease, Tenant shall have the
right, without obtaining Landlord's consent, to mortgage or encumber Tenant?s
leasehold estate in connection with a general financing of Tenant or any
successor to substantially all of its assets.
4. DAMAGE BY CASUALTY. Paragraph 12(A) of the Lease is hereby
------------------
amended and restated as follows:
"A. Election to Terminate or Rebuild.
---------------------------------
If, during the term of this Lease, the Leased Premises are
totally or partially destroyed, Landlord shall restore the Leased Premises to
substantially the same condition as they were in immediately before such
destruction. Notwithstanding the foregoing, if such damage is to a material
portion of the Leased Premises ("Material Destruction"), either Landlord or
Tenant may elect to terminate the Lease by providing written notice to the other
party within thirty (30) days after such Material Destruction. For purposes of
this Paragraph, damage or destruction shall constitute "Material Destruction"
if: (i) the cost of restoration exceeds fifty percent (50%) of the then
replacement value of the Leased Premises destroyed; or (ii) the time to restore
such damage or destruction is reasonably expected to exceed nine (9) months."
Paragraph 12(B) of the Lease is hereby amended and restated as
follows:
"B. Termination. If either Landlord or Tenant elects to
-----------
terminate this Lease as provided by Paragraph 12(A), the rent and additional
rent to be paid by Tenant hereunder shall be apportioned as of the date of
damage or destruction."
The first sentence of Paragraph 12(C) of the Lease is hereby
amended and restated as follows:
"C. Rebuilding. If neither Landlord nor Tenant elects to
----------
terminate this Lease as provided in Paragraph 12(A), then this Lease shall
continue in full force and effect and Landlord shall, at his expense, but only
from insurance proceeds released by the holder of any mortgage lien upon the
Leased Premises, restore the same to substantially the condition the
-3-
Leased Premises were in immediately prior to such damage or destruction except
as otherwise provided in this Paragraph 12."
5. CONDEMNATION. The first sentence of Paragraph 13(B) of the
------------
Lease is hereby amended and restated as follows:
"B. Partial. Landlord and Tenant shall have the right to
-------
terminate the Lease upon the taking by eminent domain of a material portion (a
"Material Taking") of the Leased Premises, by providing written notice to the
other party within sixty (60) days after receipt of notice of such Material
Taking. For purposes of such right to terminate, the term "Material Taking"
shall mean a taking which involves more than twenty percent (20%) of the floor
area of the building at the Leased Premises, or more than thirty-five percent
(35%) of the land area of the Leased Premises which is not occupied by any
building."
The phrase "If Landlord elects to continue this lease" in the second
sentence of Paragraph 13(B) of the Lease is hereby amended and restated as
follows: "If neither Landlord nor Tenant elects to terminate this Lease as
provided in this Paragraph".
6. DEFAULTS. The ten (10) day cure period after notice of non-
--------
monetary defaults set forth in Paragraph 14(A)(ii) of the Lease is hereby
amended and restated to be thirty (30) days after written notice.
7. CHRONIC DEFAULTS. The following provision is hereby deleted from
----------------
the first sentence of Paragraph 14F: "(ii) Three Non-Monetary Defaults; or
(iii) One Monetary Default and two Non-Monetary Defaults."
8. HAZARDOUS SUBSTANCES. Notwithstanding anything to the contrary
--------------------
contained in Paragraph 15(A): (i) Landlord's consent shall not be required in
order for Tenant to maintain any hazardous substances which have been
customarily stored by Tenant at the Leased Premises prior to the date of this
Amendment; and (ii) Tenant shall not be required to indemnify Landlord in the
event that hazardous substances migrate on to the Leased Premises from any
neighboring property or are brought on to the Leased Premises by trespassers
(even if Tenant may be held legally liable therefor), provided however, that
Tenant shall in no way be relieved of its indemnity obligation due to its own
negligence or fault.
9. SUBORDINATION. Paragraph 17(I) of the Lease is hereby amended
-------------
and restated as follows:
"I. Subordination: Notwithstanding anything to the contrary
-------------
contained in this Lease, this Lease shall be subordinate to any mortgage
recorded prior to the date of this Lease; provided, however, Lessor shall use
reasonable best efforts to deliver to Lessee a Non-Disturbance Agreement (as
defined below) from the holder of any such mortgage no later than sixty (60)
days after the date of this Amendment. Notwithstanding anything to the
-4-
contrary contained in this Lease, this Lease shall not be subordinate to any
mortgage recorded after the date of this Lease, unless Lessor shall have
provided Lessee with a non-disturbance agreement ("Non-Disturbance Agreement")
in favor of Lessee from the holder of any such mortgage. The Non-Disturbance
Agreement shall be in a form reasonably acceptable to Lessee. Upon provision of
a Non-Disturbance Agreement to Lessee, in a form reasonably acceptable to
Lessee, Lessee shall execute such Non-Disturbance Agreement."
10. SENIOR LIENS. Landlord hereby subordinates any landlord's lien
------------
it might hold, statutory, constitutional, contractual or otherwise, to any
inventory, fixtures, equipment or other personal property owned or leased by
Tenant and now or hereafter located at the Leased Premises to the lien of any
lender providing general financing to Tenant. Landlord agrees to execute any
instrument, releases or other documents that may be necessary to evidence the
waiver and release of any such liens.
11. EXTENSION OPTION. Tenant is given one (1) option to extend the
----------------
initial term of the Lease, subject to all the provisions contained in the Lease,
as amended and restated by this Amendment, except for monthly rent, for a period
of five (5) years ("Extended Term"). In order to exercise an option to extend,
Tenant shall give notice of exercise of the option ("Option Notice") to Landlord
at least three (3) months but not more than nine (9) months before the
expiration of the term. The monthly rent during the Extended Term shall be
equal to the fair market rental for the Leased Premises, which in no event shall
be less than the rent payable immediately prior to the Extended Term. The
parties shall have thirty (30) days after Landlord receives the Option Notice in
which to agree on monthly rent during the Extended Term. If the parties agree
on the monthly rent for the Extended Term during that period, they shall
immediately execute an amendment to the Lease stating the monthly rent.
If the parties are unable to agree on the monthly rent for the
Extended Term within the thirty (30) day period set forth above, then within ten
(10) days after the expiration of that period each party, at its cost and by
giving notice to the other party, shall appoint a real estate appraiser with at
least five (5) years' full-time commercial appraisal experience in appraising
properties similar to the Leased Premises in the area in which the Leased
Premises are located to appraise and set the monthly rent for the Extended Term.
Further, all of the appraisers selected through the process described above
shall be certified as required by Virginia law as in effect at the time. If a
party does not appoint an appraiser within ten (10) days after the other party
has given notice of the name of its appraiser, the single appraiser appointed
shall be the sole appraiser and shall set the monthly rent for the Extended
Term. If the two appraisers are appointed by the parties as stated in this
Paragraph, they shall meet promptly and attempt to set the monthly rent for the
Extended Term. If they are unable to agree within thirty (30) days after the
second appraiser has been appointed, they shall attempt to select a third
appraiser meeting the qualifications stated in this Paragraph within ten (10)
days after the last day the two appraisers are given to set the monthly rent.
If they are unable to agree on the third appraiser, either of the parties to the
Lease by giving ten (10) days' notice to the other party can file a petition
with the American Arbitration Association solely for the purpose of
-5-
selecting a third appraiser who meets the qualifications stated in this
Paragraph. Each party shall bear half the cost of the American Arbitration
Association appointing the third appraiser and of paying the third appraiser's
fee. The third appraiser, however selected, shall be a person who has not
previously acted in any capacity for either party. Within thirty (30) days after
the selection of the third appraiser, a majority of the appraisers shall set the
monthly rent for the Extended Term. After the monthly rent for the Extended Term
has been set, the appraisers shall immediately notify the parties.
12. LEASEHOLD MORTGAGES. Notwithstanding anything to the contrary
-------------------
contained in this Lease, Tenant may execute, deliver and perform one or more
mortgages, deeds of trust or other leasehold security agreements ("Leasehold
Indentures") without the consent of Landlord in connection with an overall
financing of Advance Stores Company, Incorporated or a successor to
substantially all of its assets ("ASCI"). If either Tenant or the mortgagee,
grantee or trustee under any such Leasehold Indenture sends Landlord a notice
advising of the existence of such Leasehold Indenture and the address of the
mortgagee, grantee or trustee thereunder for the service of such notices, such
mortgagee, grantee or trustee shall be deemed to be a "Leasehold Lender."
Landlord shall be under no obligation under this paragraph to any mortgagee,
grantee or trustee under a Leasehold Indenture who is not a Leasehold Lender.
Anything to the contrary herein notwithstanding, there shall only be one
Leasehold Lender with respect to the Leased Premises at any time.
A. Upon the occurrence of any default hereunder by Tenant,
written notice to that effect shall be sent by Landlord to each Leasehold Lender
at the same time notice of such default is sent to Tenant. Landlord shall not
terminate this Lease or exercise any other right or remedy hereunder unless it
first gives notice of such default to each Leasehold Lender, and:
(1) If such default is a failure to pay a monetary
obligation of Tenant, the Leasehold Lender shall fail to cure such default
within thirty (30) days of receipt of notice thereof from Landlord; or
(2) If such default is not a failure to pay a monetary
obligation of Tenant, the Leasehold Lender shall fail within forty-five (45)
days of receipt of said written notice to remedy such default; or
(3) If any such default cannot be cured by the Leasehold
Lender by payment of money and without the Leasehold Lender obtaining possession
of the Leased Premises by appropriate proceedings and/or title to Tenant's
leasehold estate by judicial or non-judicial foreclosure proceedings or by deed
in lieu thereof, then any such default shall be remedied or deemed remedied if
the Leasehold Lender shall have complied with the following provisions:
-6-
(i) Within thirty (30) days after receiving notice
from Landlord setting forth the nature of such default, or prior thereto, the
Leasehold Lender shall have acquired Tenant's leasehold estate or within fifteen
(15) days shall have commenced judicial or non-judicial foreclosure proceedings
or appropriate proceedings to obtain possession of the Leased Premises;
(ii) The Leasehold Lender shall diligently prosecute
any such proceedings to completion;
(iii) The Leasehold Lender shall have fully cured and
continue to cure any default arising from failure to pay or perform any monetary
obligations in accordance with the terms of this Lease; and
(iv) After gaining possession of the Leased Premises,
the Leasehold Lender shall perform all other obligations of Tenant as and when
the same are due in accordance with the terms of this Lease.
B. If any Leasehold Lender or a person designated by a Leasehold
Lender shall either become the owner of the interest of Tenant hereunder upon
the exercise of any remedy provided for in the Leasehold Indenture or shall
enter into a new Lease with Landlord as provided in paragraph (d), then,
notwithstanding anything to the contrary contained in this Lease, such Leasehold
Lender or such person shall have the right to assign such interest or such new
Lease to any person without obtaining the consent or approval of Landlord,
provided, however, that following such assignment, the Landlord?s consent shall
be required with respect to any subsequent tenants to the extent required under
this Lease.
C. If this Lease is terminated, rejected or disaffirmed for any
reason pursuant to bankruptcy law or other law affecting creditors' rights, any
Leasehold Lender, or a person designated by any Leasehold Lender, shall have the
right, exercisable by notice to Landlord within thirty (30) days after the
effective date of termination, rejection or disaffirmance, to enter into a new
Lease of the Leased Premises with Landlord to the extent enforceable under law.
The term of the new Lease shall begin on the date of the termination of this
Lease and shall continue for the remainder of the term of this Lease (including
any options to renew if the right thereto is exercised by such Leasehold Lender
or its assignee).
Such new Lease shall otherwise contain the same terms and
conditions as those set forth herein, except for requirements which are no
longer applicable or have already been performed, provided that all defaults
which are susceptible of being remedied by the payment of money shall have been
cured, and provided further that such new lease shall require the Tenant
thereunder promptly to commence and expeditiously continue to remedy all other
defaults on the part of Tenant thereunder to the extent reasonably possible. It
is the intention of the parties hereto that such new Lease shall have the same
priority relative to other rights or
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interests to or in the fee estate in the land covered by this Lease. The
provisions of this paragraph shall survive the termination of this Lease and
shall continue in full force and effect thereafter to the same extent as if this
paragraph (d) were a separate and independent contract by and among Landlord,
Tenant and each Leasehold Lender. From the date on which any Leasehold Lender
shall serve upon Landlord the aforesaid notice of the exercise of its rights to
enter into a new Lease, such Leasehold Lender may use and enjoy the Leased
Premises without hindrance or interference by Landlord.
D. Subject to the cure rights set forth herein, no Leasehold Lender
shall become liable for the performance or observance of any covenants or
conditions to be performed or observed by Tenant unless and until such Leasehold
Lender becomes the owner of Tenant's interest hereunder upon the exercise of any
remedy provided for in any Leasehold Indenture or occupies the Leased Premises
or enters into a new Lease with Landlord as herein provided. Thereafter, such
Leasehold Lender shall be liable for the performance and observance of such
covenants and conditions only until such Leasehold Lender assigns such interest
or assigns the new Lease as permitted hereby whereupon all obligations of such
Leasehold Lender under this Lease or such new Lease arising subsequent to such
assignment shall terminate.
E. Landlord agrees that the exercise of its rights under this Lease
in case of a default by Tenant shall not, without the prior written consent of
each Leasehold Lender, result in the merger of the estate of the subtenant under
any sublease with the estate of the sublandlord thereunder.
F. Without the prior written consent of each Leasehold Lender,
Landlord will not accept a voluntary surrender of this Lease or the estate
created hereby and will not consent to any amendment of this Lease that
adversely affects the rights of the Leasehold Lender hereunder.
G. In the event of any default by Tenant under the Lease or the
Leasehold Indenture, Landlord will allow the Leasehold Lender to enforce its
lien and security interest on Tenant's assets located at the Leased Premises and
Landlord will allow the Leasehold Lender to assemble and remove all of Tenant's
assets located on the Leased Premises (provided that (i) the Leasehold Lender
shall only be permitted to remove assets which Tenant would be entitled to
remove pursuant to the terms of Paragraph 5 of the Lease, and (ii) the Leasehold
Lender promptly repairs all material damage resulting from such removal) without
the Leasehold Lender assuming any of Tenant's obligations under the Lease.
13. NO OTHER MODIFICATIONS. Except as otherwise provided herein, all
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other terms and provisions of the Lease shall remain in full force and effect,
unmodified by this Amendment.
14. BINDING EFFECT. The provisions of this Amendment shall be
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binding upon and inure to the benefit of the heirs, representatives, successors
and permitted assigns of the parties hereto.
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15. COUNTERPARTS. This Amendment may be executed in any number of
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original counterparts. Any such counterpart, when executed, shall constitute an
original of this Amendment, and all such counterparts together shall constitute
one and the same Amendment.
Remainder of page intentionally left blank
IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the date first set forth above.
"LANDLORD" "TENANT"
Ki, L.C., ADVANCE STORES, INCORPORATED,
a Virginia limited liability company a Virginia corporation
By W.O.D., Inc. Manager
By: /s/ Douglas W. Densmore By: /s/ Garnett E. Smith
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Name: Douglas W. Densmore Name: Garnett E. Smith
Its: President Its: President
By: /s/ J O'Neil Leftwich
-----------------------------
Name: J O'Neil Leftwich
Its: SVP/CFO Senior President