LEASE
DATE: February 27, 1995
PARTIES: Lee S. Maas, a married man dealing with his sole and separate property
("Lessor")
Sun BMW, Ltd., an Arizona corporation ("Lessee")
RECITALS:
A. Lessor owns the real property described on Exhibit A, attached hereto
and by this reference incorporated herein, and the improvements thereon, located
at 1144 East Camelback Road, Phoenix, Arizona (the "Premises").
B. Lessor and Lessee have executed that certain Real Estate Option
Agreement, dated December 1, 1994 (the "Option Agreement"), whereby Lessor has
granted Lessee an option (the "Option) to purchase the Premises after the date
hereof.
C. Lessor desires to lease the Premises to Lessee, and Lessee desires to
lease the Premises from Lessor, subject to the Option Agreement.
AGREEMENT:
In consideration of the mutual covenants and promises herein contained, the
parties agree as follows:
1. Term. The term of this Lease shall commence on the date hereof and shall
expire ten (10) years after the date hereof, unless the Option is exercised, in
which case the term hereof shall expire on the date of close of escrow under the
Option Agreement.
2. Rent. Lessee shall pay to Lessor as rent for the Premises the sum of
Fifteen Thousand Dollars ($15,000) per month, subject to adjustment as set forth
in Paragraph 3 hereof, payable on or before the first day of each month of this
Lease. Should the term of this Lease commence on any day other than the first
day of a calendar month, the rent for that calendar month shall be prorated on
the assumption of a thirty (30) day month; should the term of this Lease
terminate on any day other than the last day of a calendar month, the rent for
that month shall likewise be prorated on the assumption of a thirty (30) day
month. In addition, at the time rent is payable hereunder, Lessee shall pay any
sales tax, transaction privilege tax, education excise tax or other form of tax
(other than income tax) levied by any state, county or municipal authority on
the Lease income. Rent hereunder shall be payable to Lessor at 300 North Central
Expressway, Richardson, Texas 75080, or at such other address as Lessor may
designate in writing from time to time.
3. Rent Adjustment. Effective as of the first day of the sixth (6th) year
of the term hereof, the rent shall be adjusted as follows:
3.1. Lessor and Lessee shall ascertain the Consumer Price Index
(1982-84=100) published by the Bureau of Labor Statistics of the U.S. Department
of Labor, entitled Consumer Price Index for All Urban Consumers, U.S. Cities
Average, for the first month of the term of this Lease (the "Base CPI") and for
the fifty-ninth (59th) month of the term of this Lease (the "Current CPI").
3.2. The adjusted rental ("AR") shall be determined by multiplying the
minimum rent of $15,000.00 per month by a fraction, the numerator of which is
the Current CPI and the denominator of which is the Base CPI, except that, under
no circumstances shall the amount of the rent be adjusted to an amount greater
than 110% of the rent set forth in Paragraph 2 hereof or to an amount less than
$15,000.00 per month:
AR = $15,000 x Current CPI
-----------
Base CPI
3.3. If publication of the Consumer Price Index for All Urban
Consumers, U.S. Cities Average, shall be discontinued, the parties shall
thereafter accept comparable statistics on the cost of living for U.S. Cities as
they shall be computed and published by an agency or department of the United
States or by a responsible financial periodical of recognized authority then to
be selected by Lessor and Lessee, or, if Lessor and Lessee are unable to agree
upon a selection, then by arbitration in accordance with the commercial
arbitration rules then obtaining of the American Arbitration Association. In the
even of use of comparable statistics in lieu of the Consumer Price Index for All
Urban Consumers or nonpublication of the Index number for U.S. Cities, there
shall be made in the method of computation herein provided such revisions as the
circumstances may require to carry out the intent of this Paragraph and any
dispute between Lessor and Lessee as to the making of such adjustment shall be
determined by arbitration.
4. Use, Possession and Enjoyment. Lessor agrees that Lessee, while paying
the rent and performing the other terms and conditions of this Lease, may
peaceably hold and enjoy the Premises during the Lease term, without any
interruption by Lessor or any person lawfully claiming by, through or under
Lessor. Lessee may use the Premises only for the conduct of a motor vehicle
dealership or in a manner related to the automobile business.
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5. Public Liability Insurance. Lessee, at its expense will maintain in full
force during the term hereof public liability and property damage insurance
covering the Premises and Lessee's activities therein against claims for
personal injury and death to limits of at least $500,000 for each person and
$1,000,000 for each occurrence and against property damage claims to a limit of
at least $100,000 or in such greater amounts as may be required by an
institutional lender who holds a first encumbrance against the Premises. Lessee
will furnish to Lessor a certificate evidencing the fact that such insurance has
been obtained and is in full force and effect, that Lessor and any such
institutional lender are additional insureds thereunder, and that such insurance
cannot be cancelled without ten (10) days' prior notice to Lessor and any such
institutional lender.
6. Indemnity. Lessee will hold harmless and indemnify Lessor from and
against any and all loss, cost or damage arising by reason of injury or death of
persons or damage to property in or upon the Premises or caused by activities
conducted thereon; provided, however, that Lessee will not be required to
indemnify Lessor against any damage or injury of any kind arising out of the
negligence of Lessor, its agents or employees.
7. Fire Insurance. Lessee, at its expense, will maintain in full force and
effect during the term hereof fire and extended coverage insurance upon the
Premises in an amount not less than the replacement cost thereof or such greater
amount as may be required by an institutional lender who holds a first
encumbrance against the Premises. Lessee will furnish to Lessor a certificate
evidencing the fact that such insurance has been obtained and is in full force
and effect, that Lessor and any such institutional lender are additional
insureds thereunder, and that such insurance cannot be cancelled without ten
(10) days' prior notice to Lessor and any such institutional Lender.
Lessor and Lessee agree that no insurer of any interest of either is to
have any right of subrogation against the other and that all fire and other
insurance policies carried by either on the Premises or the fixtures and
equipment therein or other contents thereof will contain a full waiver of
subrogation by the insurer.
8. Utilities. Lessee shall promptly pay when due all water, gas,
electricity, telephone, garbage and other utility or service charges which may
be incurred in connection with Lessee's use of the Premises or furnished to or
used in or about the Premises during the term of this Lease, including any and
all connection and disconnection charges.
9. Taxes. During the term hereof, Lessee shall pay before delinquent all
license fees, rental taxes, sales taxes and ad valorem property taxes and
assessments levied and assessed against personal property of Lessee placed upon
the Premises, except to the extent that Lessee shall in good faith be
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contesting any such tax by appropriate proceedings. During the term hereof,
Lessee shall pay before delinquent all ad valorem and other property taxes and
assessments levied and assessed against the real property and the improvements
thereon. All such taxes for the years during which the term of this Lease shall
begin and end shall be prorated to the date of commencement and the date of
termination, as applicable.
10. Repairs and Maintenance; Alterations. Lessee shall, at its sole cost
and expense, keep and maintain any and all improvements now or hereafter located
upon the Premises, including, but not limited to, fencing, trees, shrubs,
landscaping wiring, heating, air conditioning, plumbing, roof, exterior and
interior walls, glass, appliances, fixtures and other installations, in the same
or better condition as when received, ordinary wear and tear excepted, and shall
not cause or permit any unusual objectionable noises or odors to emanate from
the Premises. It is expressly understood and agreed by Lessee that Lessor shall
have no obligation to maintain, repair or improve the Premises during the term
of this Lease. Lessee may alter and improve the Premises without Lessor's
consent. Upon the expiration or termination of the Lease term, Lessor shall
retain as Lessor's property any leasehold improvements made by Lessee to the
Premises or any leasehold improvements to the Premises purchased by Lessee from
Sun-West Imports, Inc.
11. Signs. Lessee, at Lessee's sole cost and expense, may erect, maintain
and repair upon the Premises a sign or signs pertaining to the Lessee's use of
the Premises. All signs erected upon the Premises shall in all respects conform
with all state, county and municipal laws, ordinances and regulations or validly
issued variances therefrom.
12. Damage by Fire or Elements. In case of damage by fire or other action
of the elements to the Premises or any improvements thereon, Lessee shall repair
the Premises and any improvements thereon with reasonable dispatch to their
condition immediately prior to said damage.
13. Condemnation. If all or substantially all of the Premises shall be
taken or damaged under any right of eminent domain or any transfer in lieu
thereof (a "Taking"), then, and in that event, the term of the Lease shall cease
and terminate from the date of such Taking if and only if Lessee terminates the
Option Agreement or the Escrow Instructions and Addendum referred to therein, as
the case may be, as a result of the Taking pursuant to the terms thereof. In the
event of a Taking not covered by the first sentence of this paragraph, this
Lease shall terminate as to any part of the Premises taken as of the date the
condemning authority takes title or possession, whichever occurs first, and the
rent payable hereunder shall be reduced in the proportion that the square
footage taken bears to the total square footage of the Premises. All
condemnation proceeds relating to the real property shall be paid to Lessor or
its
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incumbrancer, except as may otherwise be provided in the Real Estate Agreement.
14. Default. The occurrence of any of the following events will constitute
an event of default hereunder on the part of Lessee: (i) failure to pay any
installment of rent or any part thereof which is then due and payable within ten
(10) days after written notice thereof from Lessor to Lessee; or (ii) default in
the performance of any of Lessee's agreements or obligations hereunder, such
default (except default in the payment of any installment of rent) continuing
for thirty (30) days after written notice thereof from Lessor to Lessee,
provided that if such default is other than the payment of money and cannot
reasonably be cured within such thirty day period, then Lessee will not be in
default hereunder if Lessee, within such thirty (30) day period, commences
curing of such default and diligently and in good faith prosecutes the same.
Upon the Occurrence of any such event of default and during the continuance
thereof, Lessor shall be entitled to exercise all rights and remedies allowed by
law.
15. Holding Over. Any holding over by Lessee after the expiration of the
term of this Lease shall, with the consent of Lessor, be construed to be a
tenancy from month-to-month for the monthly rent herein provided plus ten
percent (10%) and upon the same terms and conditions as otherwise herein set
forth.
16. Attorney's Fees. In the event of litigation arising in connection with
this Lease, the unsuccessful party shall pay to the prevailing party all costs
of suit, including reasonable attorneys' fees.
17. Notices. In the event that any party hereto desires to serve a written
notice upon any other party, such notice shall be delivered or sent by United
States mail, certified or registered, return receipt requested, addressed to the
party to receive such notice. Such notice shall be sent to the addresses set
forth below:
To the Lessor: Mr. Lee S. Maas
300 North Central Expressway
Richardson, Texas 75080
With copy to: Jennings & Haug
Attn: John King, Esq.
2800 North Central, Suite 1800
Phoenix, AZ 85004-1049
To the Lessee: Sun BMW, Ltd.
Attn: Mr. Steven Knappenberger
6725 East McDowell
Scottsdale, AZ 85257
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With copy to: Fennemore Craig
Attn: Stephen M. Savage, Esq.
Two North Central, Suite 2200
Phoenix, AZ 85004-2390
or to such other addresses as may be designated from time to time and shall be
deemed to be effective when delivered or five (5) days after deposit in the
United States mail.
18. Law Governing. This Lease shall be governed by and construed in
conformity with the laws of the State of Arizona.
19. Exclusive Agreement. This Lease constitutes the exclusive agreement
between the parties hereto relating to the lease of the Premises and supersedes
any prior agreement between the parties hereto relating to the lease of the
Premises. Nothing contained herein shall be deemed to limit, modify or cancel
any representations, warranties or covenants of Lessor in the Option Agreement.
20. Paragraph Captions. The paragraph captions as to the contents of
particular paragraphs herein are inserted only for convenience, and are in no
way to be construed as a part of this Lease or as a limitation on the scope of
the paragraphs to which they refer.
21. Benefit and Burden. The rights, duties and liabilities created
hereunder shall inure to the benefit of and be binding upon the parties hereto,
their heirs, personal representatives, successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first above written.
LESSOR:
/s/ Lee S. Maas
--------------------------------
Lee S. Maas
LESSEE:
SUN BMW, LTD.
By /s/ Illegible
-----------------------------
Its Chairman
STATE OF ARIZONA )
)ss.
County of MARICOPA )
The foregoing instrument was acknowledged before me this 27th day of
February, 1995, by Lee S. Maas.
/s/ Marie M. Morrell
--------------------------------
Notary Public
My Commission Expires:
My Commission Expires January 9, 1996
- -------------------------------------
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STATE OF ARIZONA )
)ss.
County of MARICOPA )
The foregoing instrument was acknowledged before me this 27th day of
February, 1995, by Steven Knappenberger, Chairman of Sun BMW, Ltd., an Arizona
corporation, for and on behalf thereof.
/s/ Marie M. Morrell
--------------------------------
Notary Public
My Commission Expires:
My Commission Expires January 9, 1996
- -------------------------------------
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EXHIBIT A TO LEASE
That part of the Southeast quarter of the Southeast quarter of the Southwest
quarter of Section 16, Township 2 North, Range 3 East of the Gila and Salt River
Base and Meridian, Maricopa County, Arizona; described as follows:
The South 250.00 feet of the following described parcel:
BEGINNING at a point on the South line of said Section 16 which bears South 89
degrees 58 minutes 4 seconds West, 322.00 feet from the Southeast corner of the
Southeast quarter of the Southeast quarter of the Southwest quarter of said
Section 16; thence North 660.20 feet, more or less, parallel to and 322.00 feet
West of the East line of the Southwest quarter of said Section 16; thence South
89 degrees 57 minutes 00 seconds West, 344.50 feet along the North line of said
Southeast quarter of the Southeast quarter of the Southwest quarter of said
Section 16, to the Northwest corner of the Southeast quarter of the Southeast
quarter of the Southwest quarter of said Section 16; thence South 0 degrees 00
minutes 26 seconds East, 660.10 feet, more or less, to a point on the South line
of said Section 16; thence East 344.41 feet, more or less, along the South line
of said Section 16, to the Point of Beginning;
EXCEPT the South 40 feet thereof; and
EXCEPT from said South 250 feet, the North 0.05 feet thereof lying Northerly of
the Southerly face of the existing wall, as said wall existed August 2, 1976.
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WHEN RECORDED RETURN TO:
Stephen M. Savage, Esq.
Fennemore Craig
Suite 2200
Two North Central Avenue
Phoenix, AZ 85004-2390
MEMORANDUM OF LEASE
This Memorandum of Lease is made and entered into as of the 27th day of
February, 1995, by and between Lee S. Maas, a married man dealing with his sole
and separate property ("Lessor"), and Sun BMW, Ltd., an Arizona corporation
("Lessee").
Lessor and Lessee have entered into a Lease of even date herewith (the
"Lease"), whereby Lessor leases to Lessee and Lessee leases from Lessor property
located at 1144 East Camelback Road, Phoenix, Arizona, more particularly
described on Exhibit A, attached hereto and by this reference incorporated
herein (the "Property").
The initial term of the Lease expires ten (10) years after the date hereof
or on such earlier date as set forth in the Lease.
Lessor and Lessee desire to give actual and constructive notice of the
Lease to all persons dealing with the Property.
Nothing in this Memorandum shall be deemed to modify, amend or supplement
the terms and conditions set forth in the Lease.
IN WITNESS WHEREOF, the parties have executed this Memorandum of Lease as
of the date first set forth above.
LESSOR:
/s/Lee S. Maas
-------------------------------
Lee S. Maas
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LESSEE:
SUN BMW, LTD.
By/s/ Steven Krappenberger
-----------------------------
Its Chairman
STATE OF ARIZONA )
) ss.
County of Maricopa
The foregoing instrument was acknowledged before me this 27th day of
February, 1995, by Lee S. Maas.
/s/ Marie M. Morrell
-----------------------------
Notary Public
My Commission Expires:
My Commission Expires Jan 9, 1996
- ----------------------------------
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STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this 27th day of
February, 1995, by Steven Krappenberger, Chairman of Sun BMW, Ltd., an Arizona
corporation, for and on behalf thereof.
/s/ Marie M. Morrell
--------------------------------
Notary Public
My Commission Expires:
My Commission Expires Jan 9, 1996
- ---------------------------------
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EXHIBIT A TO MEMORANDUM OF LEASE
That part of the Southeast quarter of the Southeast quarter of the Southwest
quarter of Section 16, Township 2 North, Range 3 East of the Gila and Salt River
Base and Meridian, Maricopa County, Arizona; described as follows:
The South 250.00 feet of the following described parcel:
BEGINNING at a point on the South line of said Section 16 which bears South 89
degrees 58 minutes 4 seconds West, 322.00 feet from the Southeast corner of the
Southeast quarter of the Southeast quarter of the Southwest quarter of said
Section 16; thence North 660.20 feet, more or less, parallel to and 322.00 feet
West of the East line of the Southwest quarter of said Section 16; thence South
89 degrees 57 minutes 00 seconds West, 344.50 feet along the North line of said
Southeast quarter of the Southeast quarter of the Southwest quarter of said
Section 16, to the Northwest corner of the Southeast quarter of the Southeast
quarter of the Southwest quarter of said Section 16; thence South 0 degrees 00
minutes 26 seconds East, 660.10 feet, more or less, to a point on the South line
of said Section 16; thence East 344.41 feet, more or less, along the South line
of said Section 16, to the Point of Beginning;
EXCEPT the South 40 feet thereof; and
EXCEPT from said South 250 feet, the North 0.05 feet thereof lying Northerly of
the Southerly face of the existing wall, as said wall existed August 2, 1976.
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